Mondelez International, Inc. 8-K 2016
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 12, 2016
MONDELĒZ INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Three Parkway North, Deerfield, Illinois 60015
(Address of principal executive offices, including zip code)
(Registrants telephone number, including area code)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Effects of Business Reorganization
Mondelēz International, Inc. is furnishing this current report to provide supplemental financial information regarding the effect of a recent business reorganization. Effective October 1, 2016, Mondelēz International, Inc. and subsidiaries (collectively, we) integrated our Eastern Europe, Middle East and Africa (EEMEA) business into our Europe and Asia Pacific segments. Russia, Ukraine, Turkey, Belarus, Georgia and Kazakhstan were combined within our Europe operating segment, while the balance of the Middle East and African countries were combined within our Asia Pacific operating segment to form a new Asia, Middle East and Africa (AMEA) regional operating segment.
As a result, our operations and management structure are organized into four reportable operating segments:
We manage our operations by region to leverage regional operating scale, manage different and changing business environments more effectively and pursue growth opportunities as they arise in our key markets. Our regional management teams have responsibility for the business, product categories and financial results in the regions. We will report our results of operations under the new segment structure beginning in the fourth quarter of 2016.
Segment Operating Income
We use segment operating income to evaluate segment performance and allocate resources. We believe it is appropriate to disclose this measure to help investors analyze segment performance and trends. Segment operating income is defined as operating income by segment excluding unrealized gains and losses on hedging activities (which are a component of cost of sales), general corporate expenses (which are a component of selling, general and administrative expenses), amortization of intangibles, gains and losses on divestitures or acquisitions, gain on the Jacobs Douwe Egberts (JDE) coffee business transactions, loss on deconsolidation of Venezuela and acquisition-related costs (which are a component of selling, general and administrative expenses) in all periods presented. We exclude these items from segment operating income in order to provide better transparency of our segment operating results. In addition, we centrally manage interest and other expense, net. Accordingly, we do not present these items by segment because they are excluded from the segment profitability measure that management reviews. See additional information on our segment operating income within Note 17, Segment Reporting, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2015.
Non-GAAP Financial Measures
We use non-GAAP financial information and believe it is useful to investors as it provides additional information to facilitate comparisons of historical operating results, identify trends in our underlying operating results and provide additional insight and transparency on how we evaluate our business. We use non-GAAP financial measures to budget, make operating and strategic decisions and evaluate our
performance. We have detailed the non-GAAP adjustments that we make in our non-GAAP definitions below. The adjustments generally fall within the following categories: acquisition & divestiture activities, gains and losses on intangible asset sales and non-cash impairments, major program restructuring activities, constant currency and related adjustments, major program financing and hedging activities and other major items affecting comparability of operating results. We believe the non-GAAP measures should always be considered along with the related U.S. GAAP financial measures.
Our non-GAAP financial measures Organic Net Revenue and Adjusted Operating Income for all periods presented in this Form 8-K are defined below and can also be found within our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016.
Organic Net Revenuenet revenues excluding the impacts of acquisitions, divestitures (1), our historical global coffee business (2), our historical Venezuelan operations, accounting calendar changes and currency rate fluctuations (3). We believe that Organic Net Revenue reflects the underlying growth from the ongoing activities of its business and provides improved comparability of results.
Adjusted Operating Income and Adjusted Segment Operating Incomeoperating income (or segment operating income) excluding the impacts of Spin-Off Costs (4); the 2012-2014 Restructuring Program; the 2014-2018 Restructuring Program (5); Venezuela remeasurement and deconsolidation losses and historical operating results; gains or losses (including non-cash impairment charges) on goodwill and intangible assets; divestiture (1) or acquisition gains or losses and related integration and acquisition costs; the JDE coffee business transactions (2) gain and net incremental costs; the operating results of divestitures (1); our historical global coffee business operating results (2); mark-to-market impacts from commodity and forecasted currency transaction derivative contracts (6); and equity method investment earnings historically reported within operating income (7). We also present Adjusted Operating Income margin and Adjusted Segment Operating Income margin, which are subject to the same adjustments as Adjusted Operating Income and Adjusted Segment Operating Income. We believe that Adjusted Operating Income, Adjusted Segment Operating Income, Adjusted Operating Income margin and Adjusted Segment Operating Income margin provide improved comparability of underlying operating results. We also evaluate growth in our Adjusted Operating Income and Adjusted Segment Operating Income on a constant currency basis (3).
We believe that the presentation of these non-GAAP financial measures, when considered together with our U.S. GAAP financial measures and the reconciliations to the corresponding U.S. GAAP financial measures, helps provide a more complete understanding of the factors and trends affecting our business than could be obtained absent these disclosures. Because non-GAAP financial measures vary among companies, the non-GAAP financial measures presented in this report may not be comparable to similarly titled measures used by other companies. Our use of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for any U.S. GAAP financial measure. A limitation of the non-GAAP financial measures is they do not include all items of income and expense that affect us and have an impact on our U.S. GAAP reported results. The best way to address this limitation is by evaluating our non-GAAP financial measures in combination with our U.S. GAAP reported results and carefully evaluating the reconciliations of U.S. GAAP reported figures to the non-GAAP financial measures.
Exhibit 99.1 to this Form 8-K contains financial schedules that provide net revenue and segment operating income under the new and former segment reporting structures for the quarters in 2016 and 2015 and for the years ended December 31, 2015 and 2014. The financial schedules also include our non-GAAP financial measures, Organic Net Revenue and Adjusted Operating Income, and reconciliations for the same periods.
(d) The following exhibit is being furnished with this Current Report on Form 8-K.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.