Why does Kraft Foods use non-GAAP financial measures like 'Organic Net Revenues' and 'Operating EPS'?

Kraft Foods uses non-GAAP measures to provide investors with a clearer view of the company's ongoing operational performance. Organic Net Revenues exclude volatile items like currency fluctuations and the one-time impacts of acquisitions and divestitures. Operating EPS excludes costs related to integration programs, acquisition expenses, and other unusual items, which management believes allows for better comparability of results on a going-forward basis.

How does the Cadbury acquisition impact the reported financial measures?

The Cadbury acquisition significantly influences the reported financials. Kraft Foods uses 'Combined Organic Net Revenues' to reflect the organic growth rates of both its base business and Cadbury, post-acquisition. 'Operating EPS' also excludes specific costs associated with the Cadbury acquisition and its integration.

What is 'Segment Operating Income' and why is it disclosed?

Segment Operating Income is a measure management uses to assess the performance of individual business segments and to make decisions about resource allocation. It excludes certain items like unrealized gains/losses on hedging and components of U.S. pension plan costs to provide a more focused view of segment profitability.

MDLZ 8-K: Earnings & Results

Q: What is the main purpose of this 8-K filing?

The primary purpose of this 8-K filing is to publicly furnish Kraft Foods Inc.'s earnings press release for the third quarter ended September 30, 2010. This includes financial results and management's commentary on performance.

Summary

This 8-K filing by Kraft Foods Inc. (the predecessor to Mondelez International, Inc.) on November 4, 2010, primarily serves to furnish an earnings press release for the third quarter ended September 30, 2010. Investors should note that the company is providing non-GAAP financial measures, including "organic net revenues" and "Operating EPS," to offer a clearer view of performance by excluding items like currency fluctuations, acquisition/divestiture impacts, and integration costs. The inclusion of the Cadbury acquisition is a significant factor influencing these non-GAAP metrics, with "Combined Organic Net Revenues" being used to reflect the growth of both the base business and Cadbury. Management uses these adjusted measures to provide a forward-looking perspective and improve comparability. The filing also clarifies the use of "segment operating income" for internal performance evaluation and resource allocation.

Key Highlights

1Kraft Foods Inc. (predecessor to MDLZ) filed an 8-K on November 4, 2010, to announce its Q3 2010 earnings.
2The company is reporting using non-GAAP financial measures, including Organic Net Revenues and Operating EPS.
3Organic Net Revenues exclude the impact of acquisitions, divestitures, and currency.
4Combined Organic Net Revenues are used to reflect the growth of both Kraft Foods' base business and Cadbury, including acquisition impacts.
5Operating EPS excludes integration costs, acquisition-related costs (including Cadbury integration), financing fees, and other one-time impacts.
6Segment Operating Income is used internally to evaluate segment performance and allocate resources, excluding certain hedging and pension costs.
7The filing references a press release (Exhibit 99.1) for detailed Q3 financial data and reconciliations of non-GAAP measures.

Mondelez International, Inc. 8-K Report, Financial Results (Nov 4, 2010)

Summary

Key Highlights

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