10-QPeriod: Q3 FY2002

Mondelez International, Inc. Quarterly Report for Q3 Ended Sep 30, 2002

Filed November 13, 2002For Securities:MDLZ

Summary

Mondelez International, Inc. (MDLZ), operating as Kraft Foods Inc. for this filing, reported solid performance for the nine months and third quarter ended September 30, 2002. The company demonstrated revenue growth on a reported and pro forma basis, alongside significant improvements in net earnings and earnings per share. This was largely driven by the elimination of goodwill amortization due to the adoption of new accounting standards (SFAS 141 and 142) and effective cost management, including integration savings and voluntary retirement programs. Key financial trends indicate strengthening operational performance with increased volume and positive operating companies income across most segments, particularly in North America and Europe. The company also successfully managed its debt levels and maintained strong liquidity, supported by its operating cash flow and available credit facilities. Despite some foreign currency headwinds and commodity price fluctuations, Kraft Foods appears strategically positioned for continued growth and shareholder value creation.

Key Highlights

  • 1Reported net earnings for the first nine months of 2002 increased by 84.6% to $2.46 billion, and for the third quarter by 72.8% to $869 million, significantly boosted by the adoption of SFAS 141/142 which eliminated goodwill amortization.
  • 2Pro forma diluted EPS increased by 16.2% to $1.51 for the first nine months and by 13.6% to $0.50 for the third quarter, indicating underlying operational improvement.
  • 3Total net revenues for the nine months increased by 0.9% to $21.88 billion, while for the third quarter, they grew by 2.8% to $7.22 billion, showing modest but consistent top-line growth.
  • 4Operating companies income increased by 2.8% to $4.62 billion for the nine months and by 9.8% to $1.60 billion for the third quarter, demonstrating effective cost control and productivity gains.
  • 5Debt levels were managed effectively, with total debt (including intercompany) at $15.2 billion as of September 30, 2002, down from $16.0 billion at year-end 2001, supported by strong operating cash flow and debt repayment strategies.
  • 6The company increased its quarterly dividend by 15.4% to $0.15 per share, signaling confidence in its financial health and commitment to returning value to shareholders.
  • 7Acquisitions in Turkey and Australia, along with ongoing integration efforts and cost efficiencies, contributed to segment performance and overall financial results.

Frequently Asked Questions

The primary driver for the substantial increase in net earnings was the adoption of SFAS No. 141 and SFAS No. 142 on January 1, 2002. These standards eliminated the requirement to amortize goodwill and indefinite life intangible assets, which significantly reduced reported expenses and boosted net earnings by $713 million for the nine months and $237 million for the third quarter of 2001 on a pro forma basis.

On a reported basis, net revenues grew slightly for the nine months ended September 30, 2002, to $21.88 billion, and increased by 2.8% for the third quarter to $7.22 billion. Pro forma net revenues showed a similar trend, indicating that while there were some divestitures and assets held for sale impacting reported figures, the underlying business performance was consistent, with pro forma revenues growing 0.1% for the nine months and 2.1% for the third quarter.

The company reported total debt of $15.2 billion as of September 30, 2002, down from $16.0 billion at the end of 2001, reflecting debt repayment efforts. Liquidity appears strong, supported by $2.2 billion in net cash provided by operating activities for the nine months, existing credit facilities totaling approximately $5.8 billion, and access to capital markets. The company expects these resources to be sufficient for its working capital needs, capital expenditures, and dividend payments.

Yes, the company incurred integration-related charges totaling $119 million pre-tax for the first nine months of 2002 and $37 million for the third quarter of 2001, related to consolidating production lines, closing facilities, and integrating the Nabisco acquisition. Additionally, a voluntary retirement program resulted in a $142 million pre-tax charge in the first quarter of 2002. These costs were disclosed and are part of ongoing efforts to streamline operations.