Summary
This Form 8-K filing by Kraft Foods Inc. (predecessor to Mondelez International) on March 25, 2009, details significant changes to its operating structure and accounting policies, effective January 1, 2009. The company has reorganized its European operations, consolidating its Biscuit, Chocolate, Coffee, and Cheese categories into fully integrated business units to enhance focus and decision-making speed. Additionally, Central Europe operations will now be reported under the Developing Markets segment to build scale. These structural shifts aim to improve operational efficiency and market responsiveness. Furthermore, the company has adopted new accounting policies, including changing the inventory valuation method for U.S. inventories from LIFO to average cost, reclassifying excise taxes for better revenue clarity, and revising its cost assignment methodology for headquarter functions. These accounting changes, along with the adoption of new FASB pronouncements on noncontrolling interests and share-based payments, were applied retrospectively, with restated prior period results included in accompanying financial schedules. Management asserts these changes do not materially impact financial statements or the previously issued 2009 earnings guidance.
Key Highlights
- 1Reorganization of Kraft Foods Europe into fully integrated business units for core categories (Biscuit, Chocolate, Coffee, Cheese) to improve focus and speed of decision-making.
- 2Alignment of Central Europe operations reporting under the Developing Markets segment to build critical scale in those countries.
- 3Change in U.S. inventory valuation method from LIFO to average cost, with prior periods restated.
- 4Reclassification of excise taxes to a net presentation within cost of sales for improved clarity on net revenues and margins.
- 5Revision of cost assignment methodology for headquarter functional costs, reclassifying certain costs from operating expenses to cost of sales without impacting net earnings.
- 6Adoption of new accounting standards SFAS No. 160 (Noncontrolling Interests) and FSP EITF 03-6-1 (Participating Securities in EPS calculation), with no significant impact on financial statements.
- 7Confirmation that these structural and accounting changes do not impact the company's 2009 earnings guidance.