AFSI AFS1-2 Kraft Acquires Cadbury PLCLO 3 The following information from the financial statements of Kraft Foods and Cadbury PLC is avail while for the three years prior to their merger Evaluate the performance of each company leading up to the year of the acquisition (2010) Note that Cadbury's financial statements are in millions of pounds, while Kran's Matements are in millions of dollars Required: A. Evaluate the health of the target company and point out any trends that might have been wor- risome to Kralt. Also indicate any strengths in the firm's performance. Hint: A supplemental appendix "Evaluating Firm Performance is available from your instructor and may prove useful in addressing this question 2007 2008 2009 67993 40.698 27,295 63.173 40,817 22,356 66,714 40.742 25.972 50,480 10.737 17,086 5,197 4,096 13.624 12,209 48,110 9,917 11.044 4.704 3.881 19,354 13,440 40.111 12454 11.491 5,197 3,775 18.537 14.636 37,241 24,651 12.590 2.590 2.590 40,492 27,164 13,328 1,678 2,884 38,754 24,819 13.935 2,810 3,021 Kraft Foodt ($ millions) 8 Balance Sheet Assets Total liabilities Stockholders' equity Selected Balance Sheet Items Market value of equity Current assets Current liabilities Accounts receivable Inventory Long-term debut Retained earning Income Statement Total revenues Cost of goods sold Gross margin Income continuing operations Net income Selected Income Statement items Interest expense Thx expense Statement of Cash Flows Cash from operations (CFO) Cash interest paid Cash taxes paid Cadbury ( million) Balance Sheet Assets Total Stockholders' cquity Selected Balance Sheet items Market value of equity Current assets Current liabilities Accounts receivable Inventory Long term debe Retained canings Income Statement Total revenues Cost of goods sold 604 3,137 1.240 658 1.237 1.136 3,571 628 1766 2007 4,141 968 964 2008 5.084 1,308 1.025 2009 8,129 oties 11.338 7,165 3,123 8,895 5.36) 3.534 4,607 3522 9.581 2,600 4.614 1,197 821 1,120 2,677 8.241 2,635 3.388 1.067 767 1.194 2.498 12.266 2,125 2.434 978 748 1,349 3.502 4,699 5,504 5,384 2,870 5.975 3.210 35 2007 2.195 149 405 2008 2,514 370 364 2009 2.765 275 309 Kraft Foods (5 millions) Gross margin Incone continuing operations Net in die Selected Income Statement items Interest expense Tax expense Statement of Cash Flows Cash from operations (CFO) Cash interest paid Cash taxes paid 88 105 50 30 172 103 812 193 235 469 165 153 523 122 163 B. Evaluate the bealth of Kraft Foods, and point out any positive or negative trends. Refer to the supplemental appendix "Evaluating Firm Performance
