10-Q/APeriod: Q2 FY2006

Mondelez International, Inc. Quarterly Report (Amendment) for Q2 Ended Jun 30, 2006

Filed August 9, 2006For Securities:MDLZ

Summary

Mondelez International, Inc. (MDLZ), formerly Kraft Foods Inc., reported its financial results for the period ending June 30, 2006. The company demonstrated revenue growth, with net revenues increasing to $16.742 billion for the six months ended June 30, 2006, up from $16.393 billion in the prior year period. Net earnings also saw a significant increase to $1.688 billion for the six months ended June 30, 2006, compared to $1.185 billion in the same period of 2005. This growth was driven by continuing operations, which significantly offset losses from discontinued operations. The company continues to implement a broad restructuring program aimed at optimizing its cost structure and capacity utilization. This program, expected to conclude by 2008, has involved facility closures and workforce reductions, with substantial pre-tax charges incurred. Investments in IT services through an agreement with EDS and strategic divestitures, such as the sale of its pet snacks brand, are also shaping the company's operational landscape.

Key Highlights

  • 1Net revenues for the six months ended June 30, 2006, increased to $16.742 billion from $16.393 billion in the prior year.
  • 2Net earnings for the six months ended June 30, 2006, rose significantly to $1.688 billion, up from $1.185 billion in the same period of 2005, primarily due to earnings from continuing operations.
  • 3The company is actively engaged in a multi-year restructuring program involving facility closures and workforce reductions, with significant pre-tax charges recognized for asset impairment, exit, and implementation costs.
  • 4Significant divestitures are underway, including the announced sale of the pet snacks brand for $580 million and the sale of sugar confectionery business in June 2005 for approximately $1.4 billion.
  • 5Total assets grew slightly to $58.222 billion as of June 30, 2006, from $57.628 billion as of December 31, 2005, with Goodwill being a substantial component at $24.985 billion.
  • 6Shareholders' equity increased to $30.368 billion as of June 30, 2006, from $29.593 billion as of December 31, 2005, supported by retained earnings.
  • 7The company is expanding internationally with an agreement to acquire United Biscuits' Spanish and Portuguese operations for approximately $1.07 billion.

Frequently Asked Questions

For the six months ended June 30, 2006, Kraft Foods Inc. reported an increase in net revenues to $16.742 billion from $16.393 billion in the prior year. Net earnings also saw a substantial rise to $1.688 billion from $1.185 billion in the same period last year. This improvement was largely driven by earnings from continuing operations, which more than offset losses from discontinued operations.

The company is continuing a major three-year restructuring program aimed at cost reduction and operational efficiency, which is expected to extend through 2008. This involves facility closures and job reductions, leading to significant pre-tax charges. Additionally, Kraft has been actively divesting non-core assets, including the sale of its sugar confectionery business in June 2005 and, more recently, the announced sale of its pet snacks brand for $580 million.

As of June 30, 2006, total assets stood at $58.222 billion, a slight increase from $57.628 billion at the end of 2005. Goodwill represents a significant portion of assets at $24.985 billion. Total liabilities decreased to $27.854 billion from $28.035 billion. Shareholders' equity increased to $30.368 billion from $29.593 billion, primarily due to retained earnings.

Kraft Foods is pursuing international expansion, notably through an announced agreement to acquire United Biscuits' Spanish and Portuguese operations for approximately $1.07 billion. This acquisition includes manufacturing facilities, employees, and various business lines, aiming to bolster its presence in these key European markets.