What were the primary drivers of the significant increase in net revenues for the quarter?

The primary drivers for the 26.0% increase in net revenues to $11.3 billion were the Cadbury acquisition, which contributed $1.69 billion in net revenues from February 2, 2010, and favorable foreign currency movements, particularly the strength of the euro, Canadian dollar, and British pound against the U.S. dollar. Organic revenue growth, excluding these impacts, was 3.3%.

How did the Cadbury acquisition and pizza divestiture impact the company's earnings and balance sheet?

The Cadbury acquisition significantly increased total assets by $28.9 billion, primarily through goodwill ($9.15 billion) and intangible assets ($12.6 billion). It also led to a substantial increase in long-term debt by $11.4 billion. The divestiture of the frozen pizza business provided $3.7 billion in cash and resulted in a significant gain on discontinued operations. These large-scale transactions also resulted in considerable acquisition-related and integration costs, impacting profitability from continuing operations.

What is the company's current debt level and its outlook on liquidity?

The company's total debt increased to $31.0 billion as of March 31, 2010, up from $19.0 billion at the end of 2009, largely due to the financing of the Cadbury acquisition. The debt-to-capitalization ratio rose to 0.48. Despite the increased leverage, the company believes its cash from operations, existing credit facilities, and authorization for long-term financing will provide sufficient liquidity to meet its obligations, including working capital needs, capital expenditures, and dividends.

How is the company managing the integration of Cadbury and what are the expected costs?

The company expects to incur approximately $1.3 billion in total integration charges over the first three years following the Cadbury acquisition to combine operations. In the first quarter of 2010, $43 million in integration charges were recorded, primarily within general corporate expenses. The company anticipates meaningful revenue synergies and annual cost savings of at least $675 million by the end of the third year post-acquisition.

MDLZ 10-Q Quarterly Report Q1 FY2010 — Revenue, Net Income, EPS

Summary

Mondelez International, Inc. (MDLZ), formerly Kraft Foods Inc., reported significant changes in its first quarter 2010 results, primarily driven by the substantial acquisition of Cadbury plc and the divestiture of its North American frozen pizza business. Net revenues saw a notable increase of 26.0% year-over-year, reaching $11.3 billion, largely due to the inclusion of Cadbury's operations and favorable foreign currency movements. However, earnings per share (EPS) from continuing operations declined significantly, indicating the integration costs and financing expenses associated with these major transactions. The company successfully raised substantial debt financing to fund the Cadbury acquisition, increasing its total debt to $31.0 billion. Despite the increased leverage, management expressed confidence in maintaining sufficient liquidity through operating cash flow, existing credit facilities, and future financing. The strategic moves signify a major transformation for the company, shifting its portfolio and global footprint. Investors should note the impact of one-time transaction and integration costs related to the Cadbury acquisition and the gain from the pizza business divestiture on the reported net earnings and EPS. While the underlying business showed some organic growth, the headline figures are heavily influenced by these large-scale corporate actions.

Financial Highlights

50 data points

Beta

Revenue

$11.32B

0.4% Gross Margin

Net Income

$1.88B

0.2% Net Margin

EPS (Diluted)

$1.16

Total Assets

$95.71B

Cash & Equivalents

$3.88B

Free Cash Flow

-$246.00M

Financial Statements

Beta

Revenue	$11.32B
Cost of Revenue	$7.23B
Gross Profit	$4.09B
SG&A Expenses	$2.85B
Operating Income	$1.21B
Net Income	$1.88B
EPS (Basic)	$1.17
EPS (Diluted)	$1.16
Shares Outstanding (Basic)	1.61B
Shares Outstanding (Diluted)	1.62B

Key Highlights

1Net revenues increased by 26.0% to $11.3 billion in Q1 2010, largely due to the Cadbury acquisition and favorable foreign currency.
2Diluted EPS attributable to Kraft Foods increased to $1.16, driven by a significant gain from the discontinued frozen pizza business ($1.02 EPS), while EPS from continuing operations decreased to $0.15.
3The company completed the acquisition of a controlling stake in Cadbury plc for $18.5 billion, significantly increasing goodwill and intangible assets.
4The North American frozen pizza business was divested to Nestlé for $3.7 billion, resulting in a gain of $1.6 billion (net of tax) recognized in discontinued operations.
5Total debt significantly increased to $31.0 billion from $19.0 billion, primarily due to $9.5 billion in senior unsecured notes issued to finance the Cadbury acquisition.
6Operating income saw a modest increase of 2.6% to $1.2 billion, despite integration and acquisition-related costs impacting profitability.
7The company updated its 2010 outlook, expecting Diluted EPS of at least $2.35, including contributions from Cadbury, integration costs, and the gain on pizza divestiture.

Mondelez International, Inc. Quarterly Report for Q1 Ended Mar 31, 2010

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions