Mondelez 2014 Annual Report Download - page 65

Table of Contents
Most recently, on February 10, 2015, the Venezuelan government announced changes in the currency exchange structure. While
retaining the 6.30 official rate for food and other essentials and the SICAD I offered rate based on recently cleared auction
transactions for specific sectors of the economy, the SICAD II exchange rate is expected to be replaced with a new market-based
SIMADI rate. We will continue to monitor developments related to this currency structure. At this time, we continue to expect to use
the SICAD I rate to remeasure our net monetary assets in Venezuela. A change in the SICAD I rate from 11.50 (our last SICAD I
auction rate realized in 2014) to 12.00 (the opening SICAD I rate announced on February 10, 2015) would result in approximately a
$10 million remeasurement loss based on our net monetary assets in Venezuela as of December 31, 2014. Depending on the
SICAD I auctions that occur through March, 31, 2015, however, the amount of the remeasurement loss recorded in the first quarter
of 2015 could change.
Unlike the official rate that is fixed at 6.30 bolivars to the U.S. dollar, the SICAD I rate is expected to vary over time. If any of the
three-tier currency exchange rates, or the application of the rates to our business, were to change, we may recognize additional
currency losses, or gains, which could be significant.
In light of the ongoing difficult macroeconomic environment in Venezuela, we continue to monitor and actively manage our
investment and exposures in Venezuela. We plan to continue to do business in the country as long as we can successfully continue
to operate our local business there. We strive to locally source and produce a significant amount of the products we sell in
Venezuela. We have taken other protective measures against currency devaluation, such as converting monetary assets into non
-
monetary assets that we can use in our business. However, suitable protective measures have become less available and more
expensive and may not offset further currency devaluation that could occur.
Argentina.
On January 23, 2014, the Central Bank of Argentina adjusted its currency policy, removed its currency stabilization
measures and allowed the Argentine peso exchange rate to float relative to the U.S. dollar. On that day, the value of the Argentine
peso relative to the U.S. dollar fell by 15%, and from December 31, 2013 through December 31, 2014, the value of the peso
declined 31%. In July 2014, Argentina had a technical default on its debt as the government was blocked from making payments on
its restructured debt by certain creditors who did not participate in a debt restructuring in 2001. Based on the current state of the
Argentine economy and its restricted liquidity, access to capital, currency rules and regulations, the business operating environment
remains challenging. Further volatility and declines in the exchange rate are expected. We continue to monitor and actively manage
our investment and exposures in Argentina. We continue refining our product portfolio to improve our product offerings, mix and
profitability. We also continue to implement additional cost initiatives to protect the business. Further currency declines, economic
controls or other business restrictions could have an adverse impact on our ongoing results of operations. Our Argentinian
operations contributed approximately $693 million, or 2.0% of consolidated net revenues for the year ended December 31, 2014.
As of December 31, 2014, the net monetary liabilities of our Argentina operations were not material and they could change over
time. Argentina is not designated as a highly-inflationary economy for accounting purposes and so we continue to record currency
translation adjustments within equity and realized exchange gains and losses on transactions in earnings.
Russia. During the fourth quarter of 2014, the value of the Russian ruble relative to the U.S. dollar declined 50%, and further
volatility in the currency is expected. Russia continues to be a key market for us. We continue to take actions to protect our near-
term operating results, financial condition and cash flow. Our operations in Russia contributed approximately $1,114 million, or
3.3% of consolidated net revenues for the year ended December 31, 2014. As of December 31, 2014, the net monetary assets of
our Russia operations were not material and they could change over time. Russia is not designated as a highly-inflationary
economy for accounting purposes and so we continue to record currency translation adjustments within equity and realized
exchange gains and losses on transactions in earnings.
Ukraine. On February 5, 2015, the National Bank of Ukraine changed its currency policy by eliminating daily auctions, which
effectively supported the exchange rate, and allowed the Ukrainian hryvnya exchange rate to float relative to the U.S. dollar. The
value of the Ukrainian hryvnya relative to the U.S. dollar declined 61%, from the beginning of the year through February 11, 2015,
and further volatility in the currency is expected. Ukraine is an important emerging market and we continue to take actions to protect
our near-term operating results, cash flow and financial condition. Our Ukrainian operations contributed approximately $294 million,
or 0.9% of consolidated net revenues for the year ended December 31, 2014. As of December 31, 2014, the net monetary assets
of our Ukrainian operations were not material and they could change over time. Ukraine is not designated as a highly-inflationary
economy for accounting purposes and so we continue to record currency translation adjustments within equity and realized
exchange gains and losses on transactions in earnings.
Cash and Cash Equivalents:
Cash and cash equivalents include demand deposits with banks and all highly liquid investments with original maturities of three
months or less.
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