What changed in this filing

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Item 1. Financial Statements

2020-07-29 compared with 2020-04-29 · 331 added, 165 removed, 672 unchanged (42% of the section changed)

6 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Cost of sales

1 unchanged sentence

Asset impairment and exit costs

Net gain on divestiture

Amortization of intangibles

4 unchanged sentences

Provision for income taxes

Gains on equity method investment transactions

Gain/(loss) on equity method investment

Equity method investment net earnings

Noncontrolling interest earnings

Net earnings attributable to Mondelēz International

Net earnings attributable to

Mondelēz International

Per share data:

Basic earnings per share attributable to Mondelēz International

Diluted earnings per share attributable to Mondelēz International

Basic earnings per share attributable to

Mondelēz International

Diluted earnings per share attributable to

Mondelēz International

See accompanying notes to the condensed consolidated financial statements.

4 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Other comprehensive earnings/(losses), net of tax:

14 unchanged sentences

Cash and cash equivalents

Trade receivables (net of allowances of $39 at March 31, 2020

Trade receivables (net of allowances of $40 at June 30, 2020

and $35 at December 31, 2019)

Other receivables (net of allowances of $40 at March 31, 2020

Other receivables (net of allowances of $40 at June 30, 2020

and $44 at December 31, 2019)

24 unchanged sentences

Common Stock, no par value (5,000,000,000 shares authorized and

1,996,537,778 shares issued at March 31, 2020 and December 31, 2019)

1,996,537,778 shares issued at June 30, 2020 and December 31, 2019)

Additional paid-in capital

1 unchanged sentence

Accumulated other comprehensive losses

Treasury stock, at cost (569,185,208 shares at March 31, 2020 and

Treasury stock, at cost (568,483,191 shares at June 30, 2020 and

561,531,524 shares at December 31, 2019)

11 unchanged sentences

Non-controlling

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Balances at April 1, 2020

Comprehensive earnings/(losses):

Other comprehensive earnings/(losses),

net of income taxes

Exercise of stock options and issuance of

other stock awards

Cash dividends declared ($0.285 per share)

Dividends paid on noncontrolling interest

and other activities

Balances at June 30, 2020

Six Months Ended June 30, 2020

Balances at January 1, 2020

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and other activities

Balances at March 31, 2020

Three Months Ended March 31, 2019

Balances at June 30, 2020

Three Months Ended June 30, 2019

Balances at April 1, 2019

Comprehensive earnings/(losses):

Other comprehensive earnings/(losses),

net of income taxes

Exercise of stock options and issuance of

other stock awards

Common Stock repurchased

Cash dividends declared ($0.26 per share)

Dividends paid on noncontrolling interest

and other activities

Balances at June 30, 2019

Six Months Ended June 30, 2019

Balances at January 1, 2019

6 unchanged sentences

Cash dividends declared ($0.52 per share)

Balances at March 31, 2019

Dividends paid on noncontrolling interest

and other activities

Balances at June 30, 2019

See accompanying notes to the condensed consolidated financial statements.

3 unchanged sentences

(in millions of U.S.

For the Three Months Ended

For the Six Months Ended

CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES

2 unchanged sentences

Stock-based compensation expense

Deferred income tax provision/(benefit)

tax reform transition tax

Deferred income tax (benefit)/provision

Asset impairments and accelerated depreciation

Gains on equity method investment transactions

Net gain on divestiture

(Gain)/loss on equity method investment transactions

Equity method investment net earnings

11 unchanged sentences

Capital expenditures

Acquisition, net of cash received

Proceeds from divestitures including equity method investments

8 unchanged sentences

Dividends paid

Net cash provided by financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash, cash equivalents and

32 unchanged sentences

dollars using the exchange rate as of the balance sheet date, with remeasurement and other transaction gains and losses recorded in net earnings.

As of March 31, 2020 , our Argentinian operations had $ 9 million of Argentinian peso denominated net monetary assets.

Our Argentinian operations contributed $ 98 million , or 1.5 % of consolidated net revenues in the three months ended March 31, 2020 .

Within selling, general and administrative expenses, we recorded a remeasurement loss of $ 2 million during the three months ended March 31, 2020 as well as a remeasurement loss of $ 2 million during the three months ended March 31, 2019 related to the revaluation of the Argentinian peso denominated net monetary position over these periods.

In the three months ended March 31, 2020 , we generated 9.4 % of our consolidated net revenues in the United Kingdom.

As of June 30, 2020 , our Argentinian operations had $ 3 million of Argentinian peso denominated net monetary assets .

Our Argentinian operations contributed $ 76 million , or 1.3 % of consolidated net revenues in the three months and $ 174 million , or 1.4 % of consolidated net revenues in the six months ended June 30, 2020 .

Within selling, general and administrative expenses, we recorded a remeasurement loss of $ 3 million during the three months and $ 5 million during the six months ended June 30, 2020 as well as a remeasurement gain of $ 1 million during the three months and a remeasurement loss of $ 1 million during the six months ended June 30, 2019 related to the revaluation of the Argentinian peso denominated net monetary position over these periods.

In the six months ended June 30, 2020 , we generated 8.8 % of our consolidated net revenues in the United Kingdom.

On January 31, 2020, the United Kingdom began the withdrawal process from the European Union under the European and U.K.

Parliament approved Withdrawal Agreement.

During a transition period currently scheduled to end on December 31, 2020, the United Kingdom will effectively remain in the E.U.’s customs union and single market while a trade deal with the European Union is negotiated.

The deadline for extending the transition period ends on June 30, 2020.

If the transition period is not extended, on December 31, 2020, the United Kingdom will either exit the European Union without a trade deal or will begin a new trade relationship with the European Union.

During a transition period scheduled to end on December 31, 2020, the United Kingdom will effectively remain in the E.U.’s customs union and single market while a trade deal with the European Union is negotiated.

The deadline for extending the transition period was June 30, 2020 and the United Kingdom did not seek an extension.

As a result, on December 31, 2020, the United Kingdom will either exit the European Union and begin a new trade relationship with the European Union or will exit without a trade deal.

During the transition period, we continue to take protective measures in response to the potential impacts on our results of operations and financial condition.

Following the Brexit vote in June 2016, there was significant volatility in the global stock markets and currency exchange rates.

The value of the British pound sterling relative to the U.S.

dollar declined significantly and negatively affected our translated results reported in U.S.

If the ultimate terms of the United Kingdom’s separation from the European Union negatively impact the

economy or result in disruptions to sales or our supply chain, the impact to our results of operations and financial condition could be material.

We have taken measures to increase our resources in customer service & logistics together with increasing our inventory levels of imported raw materials, packaging and finished goods in the United Kingdom to help us manage through the Brexit transition and the inherent risks.

If the ultimate terms of the United Kingdom’s separation from the European Union negatively impact the U.K.

economy or result in disruptions to sales or our supply chain,

the impact to our results of operations and financial condition could be material.

We are taking measures to increase our resources in customer service & logistics together with increasing our inventory levels of imported raw materials, packaging and finished goods in the United Kingdom to help us manage through the Brexit transition and the inherent risks.

Other Countries.

Since we sell our products in over 150 countries and have operations in approximately 80 countries, we monitor economic and currency-related risks and seek to take protective measures in response to these exposures, including the impacts related to the global outbreak of the novel coronavirus (“COVID-19”) during the first quarter of 2020.

Most countries in which we do business have recently experienced periods of significant economic uncertainty as well as exchange rate volatility.

We continue to monitor the COVID-19 and other impacts to our business operations, currencies and net monetary exposures in the countries in which we operate.

We continue to monitor COVID-19 and other impacts to our business operations, currencies and net monetary exposures in the countries in which we operate.

At this time, except for Argentina which is accounted for as a highly inflationary economy, we do not anticipate any other countries in which we operate to be at risk of becoming highly inflationary countries.

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Cash and cash equivalents include demand deposits with banks and all highly liquid investments with original maturities of three months or less.

We also have restricted cash that is recorded within other current assets and which was $ 27 million as of March 31, 2020 and $ 37 million as of December 31, 2019.

Total cash, cash equivalents and restricted cash was $ 1,952 million as of March 31, 2020 and $ 1,328 million as of December 31, 2019.

We also have restricted cash that is recorded within other current assets and which was $ 29 million as of June 30, 2020 and $ 37 million as of December 31, 2019.

Total cash, cash equivalents and restricted cash was $ 1,631 million as of June 30, 2020 and $ 1,328 million as of December 31, 2019.

Allowances for Credit Losses:

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Current period provision for expected credit losses

Balance at March 31, 2020

Write-offs charged against the allowance

Balance at June 30, 2020

Transfers of Financial Assets:

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We may then continue to collect the receivables sold, acting solely as a collecting agent on behalf of the banks.

The outstanding principal amount of receivables under these arrangements amounted to $ 840 million as of March 31, 2020 and $ 760 million as of December 31, 2019 .

The outstanding principal amount of receivables under these arrangements amounted to $ 686 million as of June 30, 2020 and $ 760 million as of December 31, 2019 .

The incremental cost of factoring receivables under this arrangement was not material for all periods presented.

1 unchanged sentence

Non-Cash Lease Transactions:

We recorded $ 89 million in operating lease and $ 25 million in finance lease right-of-use assets obtained in exchange for lease obligations during the three months ended March 31, 2020 and $ 26 million in operating lease and $ 7 million in finance lease right-of-use assets obtained in exchange for lease obligations during the three months ended March 31, 2019 .

We recorded $ 122 million in operating lease and $ 68 million in finance lease right-of-use assets obtained in exchange for lease obligations during the six months ended June 30, 2020 and $ 78 million in operating lease and $ 17 million in finance lease right-of-use assets obtained in exchange for lease obligations during the six months ended June 30, 2019 .

New Accounting Pronouncements:

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We do not expect this ASU to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued an ASU that aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs for internal-use software.

This ASU is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.

On January 1, 2020, we adopted the standard on a prospective basis and the standard did not have a material impact to our first quarter 2020 consolidated financial results.

In August 2018, the FASB issued an ASU that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

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This ASU is not expected to have an impact on our consolidated financial statements.

In August 2018, the FASB issued an ASU that modifies the disclosure requirements on fair value measurements.

The ASU is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.

We adopted the standard on January 1, 2020 and there was no material impact to our consolidated financial statements upon adoption.

In June 2016, the FASB issued an ASU on the measurement of credit losses on financial instruments.

This ASU requires entities to measure the impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses.

This ASU is effective for fiscal years beginning after December 15, 2019.

We adopted the standard on January 1, 2020 using the modified retrospective basis and there was no material impact to our consolidated financial statements.

Reclassifications:

Certain amounts previously reported have been reclassified to conform to current-year presentation.

During the second quarter of 2020, in connection with the JDE Peet's (as defined below) transaction (refer to Note 6, Equity Method Investments ), we changed our accounting principle to reflect our share of Jacobs Douwe Egberts ("JDE") historical results and JDE Peet's ongoing results on a one-quarter lag basis while we continue to record dividends when cash is received.

This change was applied retrospectively to all periods presented.

Acquisitions and Divestitures

On April 1, 2020, we acquired a significant majority interest in Give & Go, a North American leader in fully-finished sweet baked goods and owners of the famous two-bite ® brand of brownies and the Create-A-Treat ® brand, known for cookie and gingerbread house decorating kits.

The acquisition of Give and Go provides access to the in-store bakery channel as well as expands our position in broader snacking.

The purchase consideration for Give & Go totaled approximately $ 1.2 billion .

Funding for the acquisition consisted of short-term borrowings and cash on hand.

We are currently in the process of determining the allocation of the purchase price, which we expect to predominantly be allocated to identifiable intangible assets and goodwill.

During the first quarter of 2020, we incurred $ 5 million of acquisition-related costs.

On April 1, 2020, we acquired a majority interest in Give & Go, a North American leader in fully-finished sweet baked goods and owner of the famous two-bite ® brand of brownies and the Create-A-Treat ® brand, known for cookie and gingerbread house decorating kits.

The acquisition of Give & Go provides access to the in-store bakery channel and expands our position in broader snacking.

The purchase consideration for Give & Go totaled $ 1,141 million , net of cash received.

We are working to complete the valuation and have recorded a preliminary purchase price allocation of $ 511 million to definite-lived intangible assets, $ 42 million to indefinite-lived intangible assets, $ 530 million to goodwill, $ 136 million to property, plant and equipment, $ 71 million to operating lease right of use assets, $ 38 million to inventory, $ 29 million to accounts receivable, $ 3 million to other current assets, $ 41 million to current liabilities, $ 83 million to deferred tax liabilities, $ 66 million to long-term operating lease liabilities, $ 7 million to long-term debt and $ 19 million to long-term other liabilities.

The acquisition added incremental net revenues of $ 91 million and an operating loss of $ 8 million during the three and six months ended June 30, 2020 .

We incurred $ 10 million of acquisition-related costs during the three months and $ 15 million during the six months ended June 30, 2020.

On July 16, 2019, we acquired a majority interest in a U.S.

1 unchanged sentence

During the first quarter of 2020, we finalized the purchase price allocation of $ 31 million to definite-lived intangible assets, $ 107 million to indefinite-lived intangible assets, $ 150 million to goodwill, $ 1 million to property, plant and equipment, $ 12 million to inventory, $ 8 million to accounts receivable, $ 13 million to current liabilities, $ 3 million to deferred tax liabilities and $ 9 million to other liabilities.

The acquisition added incremental net revenues of $ 32 million and an immaterial amount of incremental operating income during the three months ended March 31, 2020 .

The acquisition added incremental net revenues of $ 23 million in the three months and $ 55 million in the six months ended June 30, 2020 , and an immaterial amount of incremental operating income during the three and six months ended June 30, 2020 .

On May 28, 2019 , we completed the sale of most of our cheese business in the Middle East and Africa to Arla Foods of Denmark.

In 2019, we received cash proceeds of $ 161 million and divested $ 19 million of current assets and $ 96 million of non-current assets.

We also recorded a net pre-tax gain of $ 44 million on the sale.

The divestiture resulted in a quarter-over-quarter decline in net revenues of $ 33 million and an immaterial amount of lost operating income during the three months ended March 31, 2020 .

In 2019, we received cash proceeds of $ 161 million , $ 158 million of which was received in the second quarter of 2019, and divested $ 19 million of current assets and $ 96 million of non-current assets.

During 2019, we recorded a net pre-tax gain of $ 44 million on the sale, $ 41 million of which was recorded in the second quarter of 2019.

The divestiture resulted in a year-over-year decline in net revenues of $ 22 million during the three months and $ 55 million during the six months ended June 30, 2020, and a year-over-year decline in operating income of $ 5 million during the three months and $ 9 million during the six months ended June 30, 2020 .

During the three and six months ended June 30, 2020, we recorded a $ 2 million reversal of divestiture-related cost accruals no longer required.

We incurred divestiture-related costs of $ 11 million in the three months and $ 10 million in the six months ended June 30, 2019.

Inventories consisted of the following:

As of March 31,

As of June 30,

As of December 31,

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Property, plant and equipment consisted of the following:

As of March 31,

As of June 30,

As of December 31,

6 unchanged sentences

Property, plant and equipment, net

For the three months ended March 31, 2020 , capital expenditures of $ 214 million excluded $ 259 million of accrued capital expenditures remaining unpaid at March 31, 2020 and included payment for a portion of the $ 334 million of capital expenditures that were accrued and unpaid at December 31, 2019 .

For the three months ended March 31, 2019 , capital expenditures of $ 265 million excluded $ 218 million of accrued capital expenditures remaining unpaid at March 31, 2019 and included payment for a portion of the $ 331 million of capital expenditures that were accrued and unpaid at December 31, 2018 .

For the six months ended June 30, 2020 , capital expenditures of $ 445 million excluded $ 195 million of accrued capital expenditures remaining unpaid at June 30, 2020 and included payment for $ 334 million of capital expenditures that were accrued and unpaid at December 31, 2019 .

For the six months ended June 30, 2019 , capital expenditures of $ 465 million excluded $ 217 million of accrued capital expenditures remaining unpaid at June 30, 2019 and included payment for $ 331 million of capital expenditures that were accrued and unpaid at December 31, 2018 .

In connection with our restructuring program, we recorded non-cash property, plant and equipment write-downs (including accelerated depreciation and asset impairments) in the condensed consolidated statements of earnings within asset impairment and exit costs and within the segment results as follows (refer to Note 7, Restructuring Program ).

For the Three Months Ended

For the Six Months Ended

(in millions)

4 unchanged sentences

Goodwill by segment was:

As of March 31,

As of June 30,

As of December 31,

3 unchanged sentences

Intangible assets consisted of the following:

As of March 31,

As of June 30,

As of December 31,

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Amortizable intangible assets consist primarily of brands, customer-related intangibles, process technology, licenses and non-compete agreements.

Amortization expense for intangible assets was $ 43 million for the three months ended March 31, 2020 and $ 44 million for the three months ended March 31, 2019 .

For the next five years, we currently estimate annual amortization expense of approximately $ 170 million in 2020, approximately $ 90 million in 2021 and approximately $ 80 million in 2022-2024 (reflecting March 31, 2020 exchange rates).

Amortization expense for intangible assets was $ 50 million for the three months and $ 93 million for the six months ended June 30, 2020 and $ 43 million for the three months and $ 87 million for the six months ended June 30, 2019 .

For the next five years, we currently estimate annual amortization expense of approximately $ 190 million in 2020, approximately $ 120 million in 2021 and approximately $ 110 million in 2022-2024 (reflecting June 30, 2020 exchange rates).

Changes in goodwill and intangible assets consisted of:

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Balance at January 1, 2020

Balance at March 31, 2020

During our 2019 annual testing of non-amortizable intangible assets, we recorded $ 57 million of impairment charges in the third quarter of 2019 related to nine brands.

We recorded charges related to gum, chocolate, biscuits and candy brands of $ 39 million in Europe, $ 15 million in AMEA and $ 3 million in Latin America.

We also identified fourteen brands, including the nine impaired brands, with $ 616 million of aggregate book value as of March 31, 2020 , that each had a fair value in excess of book value of 10% or less.

We believe our current plans for each of these brands will allow them to not be impaired, but if the brand earnings expectations are not met or specific valuation factors outside of our control, such as discount rates, change significantly, then a brand or brands could become impaired in the future.

During Q1 2020, we evaluated our goodwill and intangible asset impairment risk using both qualitative and quantitative analysis and in light of the COVID-19 global pandemic.

Based on the financial performance of our goodwill reporting units and intangible assets during the first quarter of 2020 and review of other significant fair value assumptions, we concluded that no impairment indicators were present that would require a full impairment assessment.

Asset impairments

Balance at June 30, 2020

Changes to goodwill and intangibles were:

Acquisition – In connection with our acquisition of a majority interest in Give & Go during the second quarter of 2020, we recorded a preliminary purchase price allocation of $ 530 million to goodwill and $ 553 million to intangible assets.

See Note 2, Acquisitions and Divestitures , for additional information.

Asset impairments – As further described below, during the second quarter of 2020, we recorded $ 90 million of intangible asset impairments resulting primarily from the impacts of COVID-19 that led to lower than expected growth for six brands across our segments.

During the first six months of 2020, we evaluated our goodwill and intangible asset impairment risk using both qualitative and quantitative analysis and in light of the ongoing COVID-19 global pandemic.

We will continue to monitor the potential for asset impairment risk over coming quarters.

Goodwill – Based on the financial performance of our goodwill reporting units during the first half of 2020 and review of other significant fair value assumptions and qualitative factors, we concluded that no goodwill impairment indicators were present that would require additional goodwill impairment evaluation and that our goodwill as of June 30, 2020 is fairly stated.

Intangible Assets – In connection with the ongoing COVID-19 global pandemic, during the second quarter of 2020, we identified a decline in demand for certain of our brands, primarily in the gum category, that prompted additional evaluation of our indefinite-life (non-amortizable) intangible assets.

We estimated the fair value of the brands using several acceptable valuation methods, including relief of royalty, excess earnings and excess margin models.

Those models required us to make assumptions related to the future sales and earnings growth rates for the brands, as well as royalty rates and discount rates.

We made our best estimate of those assumptions using the information available;

however, given the uncertainty of the global economic environment and the impact of COVID-19, those estimates could be significantly different than future performance.

In certain instances, the estimated fair value of the brand was below the carrying value, which resulted in four gum brands, a small biscuit brand and a small candy brand being impaired as a result of lower than originally expected sales growth.

We recorded $ 90 million of impairment charges:

$ 50 million in Europe, $ 36 million in North America and $ 4 million in AMEA.

The impairment charges were calculated as the excess of the carrying value over the estimated fair value of the intangible assets on a global basis and were recorded within asset impairment and exit costs.

During our 2019 annual testing of non-amortizable intangible assets, we recorded $ 57 million of impairment charges in the third quarter of 2019 related to nine gum, chocolate, biscuits and candy brands:

$ 39 million in Europe, $ 15 million in AMEA and $ 3 million in Latin America.

Following our 2019 and 2020 impairment testing to date, we identified eight brands with fair value in excess of book value of 10% or less that totaled $ 576 million of aggregate book value as of June 30, 2020 .

We continue to monitor our brand performance, particularly in light of the COVID-19 pandemic and related impacts to our business.

While we did not identify impairment triggers for our other brands, there is significant uncertainty due to the pandemic.

If the brand earnings expectations are not met or specific valuation factors outside of our control, such as discount rates, change significantly, then a brand or brands could become impaired in the future.

Equity Method Investments

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The carrying values of our equity method investments are also impacted by our proportionate share of items impacting the investee's accumulated other comprehensive income or losses and other items, such as our share of investee dividends.

Our equity method investments include, but are not limited to, our ownership interests in Jacobs Douwe Egberts ("JDE"), Keurig Dr Pepper Inc.

Our equity method investments include, but are not limited to, our ownership interests in JDE Peet's (Euronext Amsterdam:

"JDEP"), Keurig Dr Pepper Inc.

"KDP"), Dong Suh Foods Corporation and Dong Suh Oil & Fats Co.

As of March 31, 2020 , we owned 26.4 % , 13.1 % , 50.0 % and 49.0 % , respectively, of these companies' outstanding shares.

Our investments accounted for under the equity method of accounting totaled $ 6,887 million as of March 31, 2020 and $ 7,212 million as of December 31, 2019 .

We recorded equity earnings and cash dividends of $ 138 million and $ 165 million in the first three months of 2020 and equity earnings and cash dividends of $ 113 million and $ 160 million in the first three months of 2019.

As of June 30, 2020 , we owned 22.9 % , 13.1 % , 50.0 % and 49.0 % , respectively, of these companies' outstanding shares.

Our investments accounted for under the equity method of accounting totaled $ 6,659 million as of June 30, 2020 and $ 7,178 million as of December 31, 2019 .

We recorded equity earnings and cash dividends of $ 106 million and $ 28 million in the second quarter of 2020 and equity earnings and cash dividends of $ 109 million and $ 28 million in the second quarter of 2019 .

We recorded equity earnings and cash dividends of $ 227 million and $ 193 million in the first six months of 2020 and equity earnings and cash dividends of $ 275 million and $ 188 million in the first six months of 2019 .

Based on the quoted closing price as of June 30, 2020, the fair value of our publicly-traded investments in KDP and JDEP was $ 9.9 billion , and for each investment, its fair value exceeded its carrying value.

JDE / Keurig Exchange:

On March 7, 2016, we exchanged a portion of our 43.5 % JDE equity interest for a new equity interest in Keurig Green Mountain, Inc.

Following the transaction, our JDE equity interest became 26.5 % and our new Keurig equity interest was 24.2 % .

During the first quarter of 2016, we recorded the difference between the $ 2.0 billion fair value of Keurig and our basis in the exchanged JDE shares as a gain of $ 43 million .

In the second quarter of 2019, we determined an adjustment to accumulated other comprehensive losses related to our JDE investment was required, which reduced our previously reported gain by $ 29 million .

We recorded the adjustment in the net loss on equity method transactions in the second quarter of 2019.

Keurig Dr Pepper Transactions:

On July 9, 2018, Keurig Green Mountain, Inc.

("Keurig") closed on its definitive merger agreement with Dr Pepper Snapple Group, Inc., and formed KDP, a publicly traded company.

On July 9, 2018, Keurig closed on its definitive merger agreement with Dr Pepper Snapple Group, Inc., and formed KDP, a publicly traded company.

Following the close of the transaction, our 24.2 % investment in Keurig together with our shareholder loan receivable became a 13.8 % investment in KDP.

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On March 4, 2020, we participated in a secondary offering of KDP shares and sold approximately 6.8 million shares, which reduced our ownership interest by 0.5 % to 13.1 % of the total outstanding shares.

We received $ 185 million of proceeds and recorded a pre-tax gain of $ 71 million (or $ 54 million after-tax) during the three months ended March 31, 2020 .

We received $ 185 million of proceeds and recorded a pre-tax gain of $ 71 million (or $ 54 million after-tax) during the first quarter of 2020.

We continue to retain significant influence.

Based on the quoted closing price as of March 31, 2020 , the fair value of our investment in KDP was $ 4.5 billion , which exceeded the carrying value of our investment.

JDE Peet’s Transaction:

On May 19, 2020, JDE Peet’s B.V.

(renamed JDE Peet’s N.V.

immediately prior to Settlement (as defined below), “JDE Peet’s”) announced its intention to launch an offering of its ordinary shares (the “offering”) and to apply for admission to listing and trading of all of its ordinary shares on Euronext Amsterdam, a regulated market operated by Euronext Amsterdam N.V.

(the “admission”).

On May 26, 2020, JDE Peet’s published a prospectus in connection with the offering and the admission.

On May 29, 2020, JDE Peet’s announced the final pricing terms of the offering, and JDE Peet’s and the selling shareholders, including us, agreed to sell at a price of € 31.50 per ordinary share a total of approximately 82.1 million ordinary shares, including ordinary shares subject to an over-allotment option.

The ordinary shares were listed and first traded on May 29, 2020, and payment for, and delivery of, the ordinary shares sold in the offering (excluding ordinary shares subject to the over-allotment option) took place on June 2, 2020 (“Settlement”).

Prior to Settlement, we exchanged our 26.4 % ownership interest in JDE for a 26.5 % equity interest in JDE Peet’s.

We did not invest new capital in connection with the transaction and the exchange was accounted for as a change in interest transaction.

Upon Settlement, we sold approximately 9.7 million of our ordinary shares in JDE Peet’s in the offering for gross proceeds of € 304 million ( $ 343 million ).

We subsequently sold approximately 1.4 million additional shares and received gross proceeds of € 46 million ( $ 51 million ) upon exercise of the over-allotment option.

Following Settlement and the exercise of the over-allotment option, we hold a 22.9 % equity interest in JDE Peet’s.

As a result of the Settlement and the subsequent sale of shares, we recorded a preliminary gain of $ 121 million , net of $ 33 million released from accumulated other comprehensive losses, and $ 48 million of transaction costs.

As was the case in our ownership interest in JDE, we have significant influence with respect to JDE Peet’s, and we will continue to account for our investment in JDE Peet’s under the equity method, resulting in recognizing our share of JDE Peet’s earnings within our earnings and our share of JDE Peet’s dividends within our cash flows.

In connection with this transaction, we changed our accounting principle to reflect our share of JDE’s historical and JDE Peet’s ongoing earnings on a one-quarter lag basis, although we continue to record dividends when cash is

We determined a lag was preferable as it enables us to continue to report our quarterly and annual results on a timely basis, while recording our share of JDE Peet’s ongoing results after JDE Peet’s has publicly reported its results.

This change in accounting principle was applied retrospectively to all periods.

The following tables show the primary line items on the condensed consolidated statements of earnings and comprehensive earnings and the condensed consolidated balance sheet that changed as a result of the lag.

The condensed consolidated statements of cash flow and equity were also updated to reflect these changes.

For the Three Months Ended

June 30, 2019

For the Six Months Ended

June 30, 2019

(in millions, except per share data)

Statements of Earnings

Equity method investment net earnings

Net earnings attributable to

Mondelēz International

Earnings per share attributable to

Mondelēz International:

Statements of Other Comprehensive Earnings

Currency translation adjustment

Pension and other benefit plans

Derivative cash flow hedges

Total other comprehensive earnings/(losses)

Comprehensive earnings/(losses) attributable to

Mondelēz International

As of December 31, 2019

(in millions)

Balance Sheet

Equity method investments

Retained earnings

Accumulated other comprehensive losses

Total Mondelēz International shareholders' equity

Restructuring Program

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Restructuring Costs :

The Simplify to Grow Program liability activity for the three months ended March 31, 2020 was:

The Simplify to Grow Program liability activity for the six months ended June 30, 2020 was:

(in millions)

1 unchanged sentence

Non-cash settlements/adjustments

Liability balance, March 31, 2020

We recorded restructuring charges of $ 15 million in the first three months of 2020 and $ 20 million in the first three months of 2019 within asset impairment and exit costs and benefit plan non-service income.

We spent $ 37 million in the first three months of 2020 and $ 53 million in the first three months of 2019 in cash severance and related costs.

We also recognized non-cash pension settlement losses (refer to Note 10, Benefit Plans ), non-cash asset write-downs (including accelerated depreciation and asset impairments) and other non-cash adjustments totaling $ 3 million in the first three months of 2020 and $ 29 million in the first three months of 2019 .

At March 31, 2020 , $ 243 million of our net restructuring liability was recorded within other current liabilities and $ 22 million was recorded within other long-term liabilities.

Liability balance, June 30, 2020

We recorded restructuring charges of $ 28 million in the second quarter of 2020 and $ 20 million in the second quarter of 2019 and $ 43 million in the first six months of 2020 and $ 40 million in the first six months of 2019 within asset impairment and exit costs and benefit plan non-service income.

We spent $ 32 million in the second quarter of 2020 and $ 36 million in the second quarter of 2019 and $ 69 million in the first six months of 2020 and $ 89 million in the first six months of 2019 in cash severance and related costs.

We also recognized non-cash pension settlement losses (refer to Note 10, Benefit Plans ), non-cash asset write-downs (including accelerated depreciation and asset impairments) and other non-cash adjustments totaling $ 11 million in the second quarter of 2020 and $ 6 million in the second quarter of 2019 and $ 14 million in the first six months of 2020 and $ 35 million in the first six months of 2019 .

At June 30, 2020 , $ 220 million of our net restructuring liability was recorded within other current liabilities and $ 32 million was recorded within other long-term liabilities.

Implementation Costs:

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The costs include incremental expenses related to the closure of facilities, costs to terminate certain contracts and the simplification of our information systems.

Within our continuing results of operations, we recorded implementation costs of $ 43 million in the first three months of 2020 and $ 50 million in the first three months of 2019 .

Within our continuing results of operations, we recorded implementation costs of $ 52 million in the second quarter of 2020 and $ 68 million in the second quarter of 2019 and $ 95 million in the first six months of 2020 and $ 118 million in the first six months of 2019 .

We recorded these costs within cost of sales and general corporate expense within selling, general and administrative expenses.

Restructuring and Implementation Costs:

During the three months ended March 31, 2020 and March 31, 2019 , and since inception of the Simplify to Grow Program, we recorded the following restructuring and implementation costs within segment operating income and earnings before income taxes:

Corporate (2)

During the three and six months ended June 30, 2020 and June 30, 2019 , and since inception of the Simplify to Grow Program, we recorded the following restructuring and implementation costs within segment operating income and earnings before income taxes:

(in millions)

For the Three Months Ended March 31, 2020

For the Three Months Ended June 30, 2020

Restructuring Costs

Implementation Costs

For the Three Months Ended March 31, 2019

For the Three Months Ended June 30, 2019

Restructuring Costs

Implementation Costs

Total Project (3)

For the Six Months Ended June 30, 2020

Restructuring Costs

Implementation Costs

During 2019 , our North America region implementation costs included incremental costs that we incurred related to renegotiating collective bargaining agreements that expired in February 2016 for eight U.S.

facilities and related to executing business continuity plans for the North America business.

The Corporate column includes minor adjustments for pension settlement losses and rounding.

Includes all charges recorded since program inception on May 6, 2014 through March 31, 2020 .

For the Six Months Ended June 30, 2019

Restructuring Costs

Implementation Costs

Total Project (Inception to Date)

Restructuring Costs

Implementation Costs

Debt and Borrowing Arrangements

1 unchanged sentence

Our short-term borrowings and related weighted-average interest rates consisted of:

As of March 31, 2020

As of June 30, 2020

As of December 31, 2019

1 unchanged sentence

Commercial paper

Credit facility borrowings

Total short-term borrowings

As of March 31, 2020 , commercial paper issued and outstanding had between 1 and 80 days remaining to maturity.

Commercial paper borrowings since year end increased to finance the payment of long-term debt maturities, share repurchases and dividend payments.

As of June 30, 2020 , commercial paper issued and outstanding had between 1 and 154 days remaining to maturity.

Commercial paper borrowings since year end increased to finance the payment of long-term debt maturities, share repurchases and dividend payments offset in part by proceeds from issuances of long-term debt and operating cash flows.

Some of our international subsidiaries maintain primarily uncommitted credit lines to meet short-term working capital needs.

Collectively, these credit lines amounted to $ 1.4 billion at March 31, 2020 and $ 1.7 billion at December 31, 2019 .

Borrowings on these lines were $ 69 million at March 31, 2020 and $ 57 million at December 31, 2019 .

Collectively, these credit lines amounted to $ 1.5 billion at June 30, 2020 and $ 1.7 billion at December 31, 2019 .

Borrowings on these lines were $ 73 million at June 30, 2020 and $ 57 million at December 31, 2019 .

On March 24, 2020, we entered into a $ 1.75 billion revolving credit agreement for a 364 -day senior unsecured credit facility that expires on March 23, 2021.

On April 1, 2020, we increased the credit facility from $ 1.75 billion to $ 1.95 billion .

The agreement includes terms and conditions similar to our existing $ 4.5 billion multi-year credit facility discussed below with the exception of a requirement that, once the mandatory repayment obligations of the $ 2.5 billion revolving credit facility described below are satisfied, any proceeds from additional long-term debt issuances of up to $ 1.95 billion must be used to repay outstanding borrowings under the credit facility and reduce the remaining capacity.

As of March 31, 2020, no amounts were drawn on the facility.

On March 6, 2020, we entered into a $ 2.5 billion revolving credit agreement for a 364 -day unsecured credit facility that expires on March 5, 2021.

The agreement includes terms and conditions similar to our existing $ 4.5 billion multi-year credit facility discussed below with the exception of a requirement that any proceeds from long-term debt issuances of up to $ 2.5 billion in aggregate must be used to repay outstanding borrowings under the credit facility and reduce the remaining capacity.

On March 12, 2020, we borrowed $ 1.0 billion as a strategic decision to increase cash on hand in light of the uncertainty in the global markets resulting from the COVID-19 outbreak.

During April 2020, we drew an additional $ 1.25 billion on the facility primarily to fund the acquisition of Give & Go.

Subsequently, we repaid $ 1.25 billion of the facility and reduced the size of the credit facility to $ 1.5 billion resulting in a remaining draw capacity of $ 0.5 billion .

The agreement includes the same terms and conditions as our existing $ 4.5 billion multi-year credit facility discussed below with the exception that proceeds from a long-term debt issuance would be used to reduce the credit facility.

As of June 30, 2020 , no amounts were drawn on the facility.

On July 2, 2020 we issued $ 1.0 billion of long-term debt and reduced the size of the credit facility to $ 0.95 billion .

On March 6, 2020, we entered into a $ 2.5 billion credit agreement for a 364 -day unsecured credit facility that expires on March 5, 2021.

On May 6, 2020, we terminated this facility after issuing long-term debt and repaying previous drawdowns.

On February 26, 2020, we entered into a $ 1.5 billion revolving credit agreement for a 364 -day senior unsecured credit facility that expires on February 24, 2021.

The agreement replaces our previous credit agreement that was scheduled to expire on February 26, 2020 and includes the same terms and conditions as our existing $ 4.5 billion multi-year credit facility discussed below.

As of March 31, 2020, no amounts were drawn on the facility.

As of June 30, 2020 , no amounts were drawn on the facility.

We also maintain a $ 4.5 billion multi-year senior unsecured revolving credit facility for general corporate purposes, including working capital needs, and to support our commercial paper program.

1 unchanged sentence

The revolving credit agreement includes a covenant that we maintain a minimum shareholders' equity of at least $ 24.6 billion , excluding accumulated other comprehensive earnings/(losses), the cumulative effects of any changes in accounting principles and earnings/(losses) recognized in connection with the ongoing application of any mark-to-market accounting for pensions and other retirement plans.

At March 31, 2020 , we complied with this covenant as our shareholders' equity, as defined by the covenant, was $ 37.3 billion .

At June 30, 2020 , we complied with this covenant as our shareholders' equity, as defined by the covenant, was $ 37.4 billion .

The revolving credit facility also contains customary representations, covenants and events of default.

There are no credit rating triggers, provisions or other financial covenants that could require us to post collateral as security.

As of March 31, 2020 , no amounts were drawn on the facility.

As of June 30, 2020 , no amounts were drawn on the facility.

Long-Term Debt:

On April 13, 2020, we issued $ 1.0 billion of U.S.

dollar denominated notes, consisting of $ 500 million 2.125 % notes that mature on April 13, 2023 and $ 500 million 2.750 % notes that mature on April 13, 2030.

On July 2, 2020, we issued $ 1.0 billion of 0.625 % U.S.

dollar-denominated notes that mature on July 1, 2022.

We received proceeds of $ 998.1 million , net of discounts and associated financing costs.

The proceeds were used to repay outstanding commercial paper borrowings and for general corporate purposes.

We recorded approximately $ 1.9 million of discounts and deferred financing costs that will be amortized evenly into interest expense over the life of the notes.

On May 7, 2020, $ 750 million of our 3.000 % U.S.

dollar-denominated notes matured.

The notes and accrued interest to date were paid with the issuance of commercial paper and cash on hand.

On May 4, 2020, we issued an $ 750 million of 1.500 % U.S.

dollar-denominated notes that mature on May 4, 2025.

We received proceeds of $ 743.9 million , net of discounts and associated financing costs.

The proceeds were used to repay amounts outstanding under our revolving credit agreement and commercial paper borrowings and used for general corporate purposes .

We recorded approximately $ 6.1 million of discounts and deferred financing costs that will be amortized evenly into interest expense over the life of the notes.

On April 13, 2020, we issued $ 500 million of 2.750 % U.S.

dollar-denominated notes that mature on April 13, 2030.

On May 4, 2020, we issued an additional $ 750 million of notes bringing the aggregate principal issued and due on April 13, 2030 to $ 1.25 billion .

We received proceeds of $ 1,283.9 million , net of premium and associated financing costs.

The proceeds were used to repay amounts outstanding under our revolving credit agreement and commercial paper borrowings and for general corporate purposes.

We recorded approximately $ 33.9 million of premium and deferred financing costs that will be amortized evenly into interest expense over the life of the notes.

On April 13, 2020, we issued $ 500 million of 2.125 % U.S.

dollar-denominated notes that mature on April 13, 2023.

We received proceeds of $ 497.8 million , net of discounts and associated financing costs.

The proceeds were used to repay amounts outstanding under our revolving credit agreement.

We recorded approximately $ 8.7 million of deferred financing costs and discounts that will be amortized evenly into interest expense over the life of the notes.

We recorded approximately $ 2.2 million of discounts and deferred financing costs that will be amortized evenly into interest expense over the life of the notes.

On March 30, 2020, fr 225 million (or $ 235 million ) of our 0.05 % Swiss franc notes matured.

4 unchanged sentences

Fair Value of Our Debt:

The fair value of our short-term borrowings at March 31, 2020 and December 31, 2019 reflects current market interest rates and approximates the amounts we have recorded on our condensed consolidated balance sheets.

The fair value of our short-term borrowings at June 30, 2020 and December 31, 2019 reflects current market interest rates and approximates the amounts we have recorded on our condensed consolidated balance sheets.

The fair value of our long-term debt was determined using quoted prices in active markets (Level 1 valuation data) for the publicly traded debt obligations.

At March 31, 2020 , the aggregate fair value of our total debt was $ 20,410 million and its carrying value was $ 19,790 million .

At June 30, 2020 , the aggregate fair value of our total debt was $ 21,055 million and its carrying value was $ 19,704 million .

At December 31, 2019 , the aggregate fair value of our total debt was $ 19,388 million and its carrying value was $ 18,426 million .

2 unchanged sentences

For the Three Months Ended

For the Six Months Ended

(in millions)

3 unchanged sentences

Interest and other expense, net

Other income includes amounts excluded from hedge effectiveness related to our net investment hedge derivative contracts and totaled $ 33 million for the three months ended March 31, 2020 and $ 33 million for the three months ended March 31, 2019 .

Other income includes amounts excluded from hedge effectiveness related to our net investment hedge derivative contracts and totaled $ 31 million and $ 64 million for the three and six months ended June 30, 2020 and $ 34 million and $ 67 million for the three and six months ended June 30, 2019 .

Financial Instruments

1 unchanged sentence

Derivative instruments were recorded at fair value in the condensed consolidated balance sheets as follows:

As of March 31, 2020

As of June 30, 2020

As of December 31, 2019

20 unchanged sentences

The fair values (asset/(liability)) of our derivative instruments were determined using:

As of March 31, 2020

As of June 30, 2020

Fair Value of Net

39 unchanged sentences

Notional Amount

As of March 31, 2020

As of June 30, 2020

As of December 31, 2019

14 unchanged sentences

For the Three Months Ended

For the Six Months Ended

(in millions)

Accumulated (loss)/gain at beginning of period

Transfer of realized losses/(gains) in fair value to earnings

Transfer of realized losses/(gains) in fair value

Unrealized (loss)/gain in fair value

2 unchanged sentences

For the Three Months Ended

For the Six Months Ended

(in millions)

Interest rate contracts

Within interest and other expense, net, we recognized an after-tax loss of $ 79 million ( $ 103 million pre-tax) in the three months ended March 31, 2020 related to certain forward-starting interest rate swaps for which the planned tenor of the related forecasted debt was changed.

Within interest and other expense, net, during the six months ended June 30, 2020, we recognized an after-tax loss of $ 79 million ( $ 103 million pre-tax) in the first quarter of 2020 related to certain forward-starting interest rate swaps for which the planned tenor of the related forecasted debt was changed.

After-tax gains/(losses) recognized in other comprehensive earnings/(losses) were:

For the Three Months Ended

For the Six Months Ended

(in millions)

Currency exchange contracts –

forecasted transactions

Interest rate contracts

3 unchanged sentences

Cash Flow Hedge Coverage:

As of March 31, 2020 , our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 4 years and 6 months.

As of June 30, 2020 , our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 4 years and 3 months.

Hedges of Net Investments in International Operations:

2 unchanged sentences

operations against movements in exchange rates.

The aggregate notional value as of March 31, 2020 was $ 6.7 billion .

The aggregate notional value as of June 30, 2020 was $ 6.9 billion .

The impacts of the net investment hedge derivative contracts on other comprehensive earnings and net earnings were as follows:

For the Three Months Ended

For the Six Months Ended

(in millions)

3 unchanged sentences

For the Three Months Ended

For the Six Months Ended

(in millions)

Amounts excluded from the assessment of hedge effectiveness (1)

Amounts excluded from the assessment of

hedge effectiveness (1)

We elected to record changes in the fair value of amounts excluded from the assessment of effectiveness in net earnings within interest and other expense, net.

2 unchanged sentences

For the Three Months Ended

For the Six Months Ended

(in millions)

5 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Location of Gain/(Loss) Recognized in Earnings

23 unchanged sentences

Net loss from experience differences

Prior service cost/(benefit)

Settlement losses and other expenses (1)

Net periodic pension cost

For the Six Months Ended

(in millions)

Interest cost

Expected return on plan assets

Amortization:

Net loss from experience differences

Prior service cost/(credit)

1 unchanged sentence

Net periodic pension cost

In connection with our Simplify to Grow Program, settlement losses and other expenses were $ 4 million for the three and six months ended June 30, 2020 and $ 5 million for the three and six months ended June 30, 2019 .

These losses were recorded within benefit plan non-service income on our condensed consolidated statements of earnings.

Employer Contributions:

During the three months ended March 31, 2020 , we contributed $ 10 million to our U.S.

During the six months ended June 30, 2020 , we contributed $ 11 million to our U.S.

pension plans and $ 104 million to our non-U.S.

2 unchanged sentences

Discretionary contributions are made to the extent that they are tax deductible and do not generate an excise tax liability.

As of March 31, 2020 , over the remainder of 2020 , we plan to make further contributions of approximately $ 6 million to our U.S.

As of June 30, 2020 , over the remainder of 2020 , we plan to make further contributions of approximately $ 5 million to our U.S.

plans and approximately $ 86 million to our non-U.S.

1 unchanged sentence

Multiemployer Pension Plans:

On July 11, 2019, we received an undiscounted withdrawal liability assessment related to the complete withdrawal from the Bakery and Confectionery Union and Industry International Pension Fund totaling $ 526 million requiring pro-rata monthly payments over 20 years.

On July 11, 2019, we received an undiscounted withdrawal liability assessment related to our complete withdrawal from the Bakery and Confectionery Union and Industry International Pension Fund totaling $ 526 million requiring pro-rata monthly payments over 20 years.

We began making monthly payments during the third quarter of 2019.

We record an immaterial amount of accreted interest each quarter on the long-term liability within interest and other expense, net.

As of March 31, 2020 , the remaining discounted withdrawal liability was $ 387 million , with $ 14 million recorded in other current liabilities and $ 373 million recorded in long-term other liabilities.

Within selling, general and administrative expenses, we recorded a $ 35 million ( $ 26 million net of tax) adjustment in the three months ended June 30, 2019 related to the discounted withdrawal liability.

We recorded accreted interest of $ 3 million and $ 6 million for the three and six months ended June 30, 2020 and an immaterial amount for the three and six months ended June 30, 2019 on the long-term liability within interest and other expense, net.

As of June 30, 2020 , the remaining discounted withdrawal liability was $ 383 million , with $ 14 million recorded in other current liabilities and $ 369 million recorded in long-term other liabilities.

Postretirement Benefit Plans

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

(in millions)

7 unchanged sentences

For the Three Months Ended

For the Six Months Ended

(in millions)

11 unchanged sentences

Options canceled

Balance at March 31, 2020

Cash received from options exercised was $ 119 million in the three months ended March 31, 2020 .

The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the option exercises totaled $ 17 million in the three months ended March 31, 2020 .

Balance at June 30, 2020

Cash received from options exercised was $ 23 million in the three months and $ 142 million in the six months ended June 30, 2020 .

The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the option exercises totaled $ 1 million in the three months and $ 18 million in the six months ended June 30, 2020 .

Performance Share Units and Other Stock-Based Awards:

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Total shares granted

Balance at March 31, 2020

Balance at June 30, 2020

Includes performance share units and deferred stock units.

The actual tax benefit/(expense) realized and recorded in the provision for income taxes for the tax deductions from the shares vested totaled less than $ 3 million in the three months ended March 31, 2020 .

The actual tax benefit/(expense) realized and recorded in the provision for income taxes for the tax deductions from the shares vested totaled less than $ 1 million in the three months and $ 3 million in the six months ended June 30, 2020 .

The grant date fair value of performance share units is determined based on the Monte Carlo simulation model for the market-based total shareholder return component and the closing market price of the Company’s stock on the grant date for performance-based components.

6 unchanged sentences

Prior to January 1, 2020, we had repurchased $ 16.5 billion of Common Stock pursuant to this authorization.

During the three months ended March 31, 2020 , we repurchased approximately 12.9 million shares of Common Stock at an average cost of $ 54.25 per share, or an aggregate cost of approximately $ 0.7 billion , all of which was paid during the period.

During the six months ended June 30, 2020 , we repurchased approximately 12.9 million shares of Common Stock at an average cost of $ 54.25 per share, or an aggregate cost of approximately $ 0.7 billion , all of which was paid during the period.

All share repurchases were funded through available cash and commercial paper issuances.

As of March 31, 2020 , we have $ 2.5 billion in remaining share repurchase capacity.

As of June 30, 2020 , we have $ 2.5 billion in remaining share repurchase capacity.

Commitments and Contingencies

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Commodity Futures Trading Commission ("CFTC") filed a complaint against Kraft Foods Group and Mondelēz Global LLC (“Mondelēz Global”) in the U.S.

District Court for the Northern District of Illinois (the "District Court"), Eastern Division (the “CFTC action”) following its investigation of activities related to the

trading of December 2011 wheat futures contracts that occurred prior to the spin-off of Kraft Foods Group.

District Court for the Northern District of Illinois (the "District Court"), Eastern Division (the “CFTC action”) following its investigation of activities related to the trading of December 2011 wheat futures contracts that occurred prior to the spin-off of Kraft Foods Group.

The complaint alleges that Kraft Foods Group and Mondelēz Global (1) manipulated or attempted to manipulate the wheat markets during the fall of 2011;

8 unchanged sentences

The parties have reached a new agreement in principle to resolve the CFTC action and have submitted the settlement to the District Court for approval.

The District Court has scheduled a conference on June 4, 2020 to discuss the proposed settlement agreement.

The District Court cancelled a scheduled conference on June 4, 2020 to discuss the proposed settlement agreement but indicated that it would rule on pending motions in due course .

Additionally, several class action complaints were filed against Kraft Foods Group and Mondelēz Global in the District Court by investors in wheat futures and options on behalf of themselves and others similarly situated.

11 unchanged sentences

It is not possible to predict how long the investigation will take or the ultimate outcome of this matter.

On August 21, 2018, the Virginia Department of Environmental Quality (“VDEQ”) issued a Notice of Violation (“NOV”) to Mondelēz Global.

In the NOV, the VDEQ alleges that in our Richmond bakery, one operating line did not have the proper minimum temperature on its pollution control equipment and that the bakery failed to provide certain observation and training records.

The VDEQ indicated that the alleged violations may lead to a fine and/or injunctive relief.

We are working with the VDEQ to reach a resolution of this matter.

We expect the penalty we will pay related to this matter will be less than $100,000 and thus do not expect this matter to have a material effect on our financial results.

Third-Party Guarantees:

1 unchanged sentence

As part of these transactions, we guarantee that third parties will make contractual payments or achieve performance measures.

At March 31, 2020 , we had no material third-party guarantees recorded on our condensed consolidated balance sheet.

At June 30, 2020 , we had no material third-party guarantees recorded on our condensed consolidated balance sheet.

We are a party to various tax matter proceedings incidental to our business.

2 unchanged sentences

The following table summarizes the changes in the accumulated balances of each component of accumulated other comprehensive earnings/(losses) attributable to Mondelēz International.

Amounts reclassified from accumulated other comprehensive earnings/(losses) to net earnings (net of tax) were net losses of $ 104 million in the first three months of 2020 and $ 29 million in the first three months of 2019 .

Amounts reclassified from accumulated other comprehensive earnings/(losses) to net earnings (net of tax) were net losses of $ 62 million in the second quarter of 2020 and $ 59 million in the second quarter of 2019 and $ 166 million in the first six months of 2020 and $ 88 million in the first six months of 2019 .

For the Three Months Ended

For the Six Months Ended

(in millions)

2 unchanged sentences

Currency translation adjustments

Reclassification to earnings related to:

Equity method investment transactions (1)

Tax (expense)/benefit

Other comprehensive earnings/(losses)

other comprehensive (earnings)/loss attributable to noncontrolling interests

other comprehensive (earnings)/loss attributable to

noncontrolling interests

Balance at end of period

4 unchanged sentences

Losses/(gains) reclassified into net earnings:

Amortization of experience losses and prior service costs (1)

Amortization of experience losses

and prior service costs (2)

Settlement losses and other expenses (1)

17 unchanged sentences

Total other comprehensive earnings/(losses)

other comprehensive (earnings)/loss attributable to noncontrolling interests

Other comprehensive earnings/(losses) attributable to Mondelēz International

other comprehensive (earnings)/loss attributable to

noncontrolling interests

Other comprehensive earnings/(losses) attributable to

Mondelēz International

Balance at end of period

These amounts include equity method investment transactions recorded within gain/(loss) on equity method investment transactions.

These reclassified losses are included in net periodic benefit costs disclosed in Note 10, Benefit Plans .

1 unchanged sentence

These reclassified gains or losses are recorded within interest and other expense, net.

As of the first quarter of 2020 , our estimated annual effective tax rate, which excludes discrete tax impacts, was 25.2 % .

As of the second quarter of 2020 , our estimated annual effective tax rate, which excludes discrete tax impacts, was 27.5 % .

This rate reflected the impact of unfavorable foreign provisions under U.S.

1 unchanged sentence

jurisdictions.

Our effective tax rate for the three months ended March 31, 2020 of 21.2 % was favorably impacted by discrete net tax benefits of $ 28 million , primarily driven by a $ 22 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions.

As of the first quarter of 2019 , our estimated annual effective tax rate, which excluded discrete tax impacts, was 25.9 % .

This reflected the impact of unfavorable foreign provisions under U.S.

Our 2020 second quarter effective tax rate of 51.7 % was unusually high due to a $ 261 million tax expense incurred in connection with the JDE Peet's transaction (the related gains are reported separately in our statement of earnings and thus not included in earnings before income taxes).

Excluding this impact, our second quarter effective tax rate was 12.1 % reflecting a discrete net tax benefit of $ 72 million .

The discrete net tax benefit primarily consisted of a $ 70 million net benefit from the release of a valuation allowance in China as we now expect to utilize prior-year carryforward tax benefits to offset future taxable income.

Our effective tax rate for the six months ended June 30, 2020 of 36.0 % was also unusually high due to the $ 261 million net tax expense incurred in connection with the JDE Peet's transaction.

Excluding this impact, our effective tax rate for the six months ended June 30, 2020 was 16.8 % , which was favorably impacted by discrete net tax benefits of $ 100 million , primarily driven by the $ 70 million net benefit from the release of the China valuation allowance and a $ 24 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions.

As of the second quarter of 2019 , our estimated annual effective tax rate, which excluded discrete tax impacts, was 25.5 % .

This rate reflected the impact of unfavorable foreign provisions under U.S.

tax laws and our tax related to earnings from equity method investments (the earnings are reported separately on our statement of earnings and thus not included in earnings before income taxes), partially offset by favorable impacts from the mix of pre-tax income in various non-U.S.

jurisdictions.

Our effective tax rate for the three months ended March 31, 2019 of 19.4 % was favorably impacted by discrete net tax benefits of $ 63 million , primarily driven by $ 60 million of benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in various jurisdictions.

Our 2019 second quarter effective tax rate of 23.1 % was impacted by a discrete net tax benefit of $ 8 million .

The discrete net tax benefit primarily consisted of a $ 24 million net benefit from the release of uncertain tax positions due to the expirations of statutes of limitations and audit settlements in several jurisdictions, partially offset by $ 15 million expense from U.S.

state legislative changes.

Our effective tax rate for the six months ended June 30, 2019 of 21.2 % was favorably impacted by discrete net tax benefits of $ 71 million , primarily driven by $ 84 million of benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in various jurisdictions.

Earnings per Share

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

(in millions, except per share data)

Noncontrolling interest earnings

Net earnings attributable to Mondelēz International

Net earnings attributable to

Mondelēz International

Weighted-average shares for basic EPS

Plus incremental shares from assumed conversions of stock options

and long-term incentive plan shares

Plus incremental shares from assumed conversions

of stock options and long-term incentive plan shares

Weighted-average shares for diluted EPS

Basic earnings per share attributable to Mondelēz International

Diluted earnings per share attributable to Mondelēz International

Basic earnings per share attributable to

Mondelēz International

Diluted earnings per share attributable to

Mondelēz International

We exclude antidilutive Mondelēz International stock options from our calculation of weighted-average shares for diluted EPS.

We excluded antidilutive stock options and performance share units of 4.0 million in the first three months of 2020 and 6.2 million in the first three months of 2019 .

We excluded antidilutive stock options and performance share units of 5.6 million in the second quarter of 2020 and 4.2 million in the second quarter of 2019 and 4.8 million in the first six months of 2020 and 7.3 million in the first six months of 2019 .

Segment Reporting

14 unchanged sentences

For the Three Months Ended

For the Six Months Ended

(in millions)

6 unchanged sentences

North America

Unrealized (losses)/gains on hedging activities (mark-to-market impacts)

Unrealized (losses)/gains on hedging activities

(mark-to-market impacts)

General corporate expenses

Amortization of intangibles

Net gain on divestiture

Acquisition-related costs

6 unchanged sentences

Net revenues by product category were:

For the Three Months Ended March 31, 2020

For the Three Months Ended June 30, 2020

(in millions)

1 unchanged sentence

Total net revenues

For the Three Months Ended March 31, 2019

For the Three Months Ended June 30, 2019

(in millions)

1 unchanged sentence

Total net revenues

For the Six Months Ended June 30, 2020

(in millions)

Cheese & Grocery

Total net revenues

For the Six Months Ended June 30, 2019

(in millions)

Cheese & Grocery

Total net revenues

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements