What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-07-29 compared with 2020-04-29 · 515 added, 204 removed, 498 unchanged (59% of the section changed)

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We have been actively monitoring the outbreak of COVID-19 and its impact globally.

Our highest priorities have been the safety of our employees and working with our employees and network of suppliers and customers to help maintain the global food supply chain.

Our highest priorities continue to be the safety of our employees and working with our employees and network of suppliers and customers to help maintain the global food supply chain.

During the first quarter of 2020, we experienced a significant increase in demand and revenue growth in developed markets as consumers increased their food purchases for in-home consumption.

Results were particularly strong in modern trade (such as large grocery supermarkets and retail chains) and e-commerce, especially for some categories like biscuits.

Other parts of our business were negatively affected by mandated lockdowns and other related restrictions including some of our emerging markets with a greater concentration of traditional trade (such as small family-run stores) as well as our travel retail (such as international duty-free stores) and foodservice businesses.

We also experienced temporary disruptions in operations in some of our emerging market that were not material to our consolidated results for the first quarter of 2020.

We discuss these and other impacts of COVID-19 below and provide more information on risks related to COVID-19 under Item 1A, Risk Factors .

Other parts of our business were negatively affected by mandated lockdowns and other related restrictions including some of our emerging markets with a greater concentration of traditional trade (such as small family-run stores) as well as our world travel retail (such as international duty-free stores) and foodservice businesses.

During the second quarter, we continued to see elevated demand in modern trade, particularly the biscuits category in the North America region due to higher at-home consumption.

Lockdowns and other related restrictions continued to have a negative impact on emerging markets with a greater concentration of traditional trade due to store closures (particularly in our Latin America region as well as parts of our AMEA region) as well as in categories like gum and candy, which are more traditionally purchased and consumed out of home.

A sharp reduction in global travel continued to negatively impact our world travel retail business, and lower out-of-home consumption continued to negatively impact our foodservice business.

We also experienced temporary disruptions in operations in some of our emerging markets that were not material to our consolidated results for the first half of 2020.

We discuss these and other impacts of COVID-19 below.

Our Employees, Customers and Communities

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At a local level, we have also provided additional flexibility and support to employees in our manufacturing facilities, distribution and logistics operations and sales organization.

On March 23, 2020, we announced that we expect to hire 1,000 U.S.

employees to promote the uninterrupted functioning of our U.S.

distribution and sales network as we respond to additional marketplace demand and reinforce our workforce.

We also announced a $15 million global commitment to assist those most impacted by COVID-19.

We are supporting local and global organizations that are responding to food instability and providing emergency relief.

We have been hiring frontline employees in the U.S.

and other locations to meet additional marketplace demand and promote uninterrupted functioning of our manufacturing, distribution and sales network.

We increased our $15 million global commitment to assist those most impacted by COVID-19 to over $25 million to date.

We have been supporting local and global organizations that are responding to food instability and providing emergency relief.

Our Supply Chain and Operations

We operate in the food and beverages industry and are part of the global food supply chain.

One of our main objectives as this crisis unfolds is to maintain the availability of our products to meet the needs of our consumers.

One of our main objectives during the pandemic is to maintain the availability of our products to meet the needs of our consumers.

In response to increased demand, we have increased production and, to date, we have not experienced material disruptions in our supply chain or operations:

We are leveraging learnings from our timely response to the initial outbreak in China, and we put in place procedures across our supply chain to help mitigate the risk that our manufacturing sites experience material closures or disruptions.

We have been able to source raw ingredients, packaging, energy and transportation and deliver our products to our customers.

We were able to leverage learnings from our timely response to the initial outbreak in China, and we put in place procedures across our supply chain to help mitigate the risk that our manufacturing sites will experience material closures or disruptions.

We have been able to continue to source raw ingredients, packaging, energy and transportation and deliver our products to our customers.

We have not experienced material disruptions in our workforce;

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We anticipate continued commodity cost volatility as the pandemic continues.

We have experienced temporary disruptions in operations in some of our emerging markets that were not material to our consolidated results for the first quarter of 2020.

The COVID-19 outbreak could disrupt our global supply chain, operations and routes to market or those of our suppliers, their suppliers, or our co-manufacturers or distributors.

We have experienced temporary disruptions in operations in some of our emerging markets.

The disruptions were not material to our consolidated results for the first half of 2020.

In the future, the ongoing COVID-19 outbreak could disrupt our global supply chain, operations and routes to market or those of our suppliers, their suppliers, or our co-manufacturers or distributors.

These disruptions or our failure to effectively respond to them could increase product or distribution costs, prices and potentially affect the availability of our products.

Our first quarter net revenue and net earnings in U.S.

Our first half of 2020 net revenue and net earnings in U.S.

dollars were negatively affected by currency translation losses from a generally stronger U.S.

dollar relative to other currencies in the countries in which we operate.

While our global supply chain and operations are currently not materially negatively affected, we do not know whether or how they may be negatively affected if the pandemic persists for an extended period.

While we respond to this evolving situation, we intend to continue to execute on our strategic operating plans.

However, disruptions or uncertainties like those noted above could result in delays or modifications to our plans and initiatives.

We incurred higher operating costs in the second quarter of 2020 primarily for labor, customer service and logistics, security, personal protective equipment and cleaning.

Most other aspects of our global supply chain and operations did not change materially during the first half of 2020.

We do not know whether or how our supply chain or operations may be negatively affected if the pandemic persists for an extended period or worsens.

As we respond to this evolving situation, we intend to continue to execute on our strategic operating plans.

However, disruptions, higher operating costs or uncertainties like those noted above could result in delays or modifications to our plans and initiatives.

Our Liquidity

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During 2019, we generated $4.0 billion of cash from operations, or $3.0 billion after deducting capital expenditures.

During the first quarter of 2020, we generated $284 million of cash from operations, or $70 million after capital expenditures.

As discussed further in Note 8, Debt and Borrowing Arrangements , we also increased our borrowing capacity under our credit facilities to $10.25 billion, and on March 12, 2020, we borrowed $1.0 billion under one of the credit facilities 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 the quarter, we also received $185 million of cash related to our participation in the Keurig Dr Pepper Inc.

("KDP") secondary offering, as a cautionary measure we suspended our share repurchase program in March and we repaid $662 million of maturing long-term debt.

At March 31, 2020, we had $1.9 billion of cash and cash equivalents on hand and $9.25 billion of available net borrowing capacity under our credit facilities.

In April 2020, we closed on the Give & Go acquisition in North America and paid approximately $1.2 billion from cash on hand and an increase in our borrowings under one of our credit facilities.

We subsequently issued $1.0 billion of U.S.

dollar denominated long-term notes and used the net proceeds to repay a portion of the amounts borrowed under one of our credit facilities.

At April 28, 2020, our available net borrowing capacity under our credit facilities was $8.45 billion.

Refer to Note 8, Debt and Borrowing Arrangements , for additional information.

Based on our current access to cash and financing, we do not anticipate any issue in funding our next long-term debt maturities of approximately $750 million in May 2020 and approximately $140 million in October 2020.

While the commercial paper market has become significantly more volatile in recent weeks, we have continued to be able to raise short-term financing from these markets.

We have also been able to draw on our available credit facilities and access funds through existing lines of credit and intercompany loans.

We may also issue additional long-term debt this year.

During the first half of 2020, we generated $1,558 million of cash from operations, or $1,113 million after capital expenditures and as of June 30, 2020, we had $1.6 billion of cash and cash equivalents on hand.

Due to the significant uncertainty in the global markets resulting from the COVID-19 outbreak, we have increased our available borrowing capacity under our credit facilities to $6.95 billion as of the date of this filing, and we issued both short-term and long-term debt, in part to fund the second quarter 2020 acquisition of Give & Go and refinance expected debt maturities.

We also received cash of €350 million ($394 million) from our participation in the JDE Peet's initial and secondary public offerings and $185 million from our participation in the KDP secondary offering (see additional information below and in Note 6, Equity Method Investments ).

As a cautionary measure, in March, we suspended our share repurchase program.

In connection with various legislatively authorized tax payment deferral mechanisms available for income tax, indirect tax (such as value-added tax) and payroll tax in a number of jurisdictions, we were able to defer certain of these tax payments, which provided a cash benefit that will reverse when the cash tax payments become due.

The benefits associated with the deferral of these tax payments are not material to our financial statements.

We continue to have our undrawn credit facilities and other forms of short-term and long-term financing options available (refer to the Liquidity and Capital Resources section).

Based on our current access to cash and financing, we do not anticipate any issue in funding our next long-term debt maturities of approximately $140 million in October 2020 and approximately $760 million in January 2021.

While the commercial paper market experienced a significantly increased level of volatility in March, it has stabilized significantly since the beginning of April and in recent months, we have been able to raise short-term financing from these markets with favorable terms.

We have also been able to draw on our available

credit facilities and access funds through existing lines of credit and intercompany loans.

We have issued and may issue additional long-term debt this year.

We have been, and we expect to continue to be, in compliance with our debt covenants.

In the event of a broader economic or credit crisis, credit availability and our ability to raise capital when needed could become impaired.

A disruption in the financial markets may also have a negative effect on our derivative counterparties and could also impair our banking or other business partners, on whom we rely for access to capital and as counterparties for a number of our derivative contracts.

In the event of a broader global economic or credit crisis, credit availability and our ability to raise capital when needed could become impaired.

A disruption in the financial markets may also have a negative effect on our derivative counterparties and could impair our banking or other business partners, on whom we rely for access to capital and as counterparties for a number of our derivative contracts.

Any of these or other developments we may not be able to fully predict or respond to could materially harm our business, results of operations and financial condition.

Our Financial Position

We evaluated the realizability of our assets and whether there were any impairment indicators in the first quarter, which included a review of our receivables, inventory, right-of-use lease assets, long-lived assets, equity method and other long-term investments, goodwill and intangible assets.

We concluded that as of the end of the first quarter of 2020, our assets were fairly stated and recoverable.

Restructuring and implementation activities in the first quarter were consistent with our expectations and our Simplify to Grow Program strategic objectives.

We did not incur significant restructuring or implementation costs specifically in response to COVID-19.

We evaluated the realizability of our assets and whether there are any impairment indicators.

We reviewed our receivables, inventory, right-of-use lease assets, long-lived assets, equity method and other long-term investments, deferred tax assets, goodwill and intangible assets.

I n connection with the ongoing 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 intangible assets.

We concluded that six brands were impaired and we recorded $90 million of impairment charges.

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

If 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.

Refer to Note 5, Goodwill and Intangible Assets , for additional details on our intangible asset impairment evaluation.

Restructuring and implementation activities were in line with our Simplify to Grow Program strategic objectives.

Our equity investments in JDE Peet's and KDP give us additional financial flexibility.

We will continue to monitor the quality of our assets and our overall financial position over coming quarters.

We also continue to hold our equity investments in Jacobs Douwe Egberts ("JDE") and KDP, which give us additional financial flexibility.

The business and economic environment is changing rapidly and additional impacts may arise that we cannot currently anticipate.

While there is still significant uncertainty about the ongoing impacts of the COVID-19 outbreak on the global economy and on our business, barring material business disruptions or other negative developments, we anticipate continuing to meet the demand of consumers for our snacks, food and beverage products.

However, elevated consumer demand we experienced in the first quarter of 2020 may not continue indefinitely and could decline.

We continue to maintain oversight over our core process controls through our centralized shared service model, and our key controls are operating as designed.

The business and economic environment continues to be volatile and additional impacts may arise that we cannot currently anticipate, particularly as infection rates are still rising.

While there is still significant uncertainty about the ongoing impacts of the COVID-19 outbreak on the global economy and on our business, barring material business disruptions or other negative developments, we expect to continue to meet the demand of consumers for our snacks, food and beverage products.

However, the elevated consumer demand we experienced primarily in some of our developed market countries in the first half of 2020 may not continue.

We are unable to predict how long this sustained demand will last or how significant it will be.

We expect the COVID-19 outbreak to result in lower revenues in some of our emerging market countries that have a higher concentration of traditional trade outlets (such as small family-run stores), as well as in our travel retail (such as international duty-free stores) and foodservice businesses.

We could also see declines in developed markets if current demand tapers off due to the ongoing COVID-19 outbreak and response.

We continue to communicate with and support our employees and customers;

We expect the COVID-19 outbreak to result in lower revenues primarily in some of our emerging market countries that have a higher concentration of traditional trade outlets (such as small family-run stores), our gum and candy categories (which are more instant consumption in nature), as well as our world travel retail (such as international duty-free stores) and foodservice businesses.

As we continue to proactively manage our business in response to the evolving impacts of the pandemic, we continue to communicate with and support our employees and customers;

monitor and take steps to further safeguard our supply chain, operations, technology and assets;

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work toward our strategic priorities and monitor our financial performance as we seek to position the Company to withstand the current uncertainty related to this pandemic.

Keurig Dr Pepper Secondary Offering

JDE Peet's and KDP Equity Method Investment Transactions

During the second quarter of 2020, in connection with the JDE Peet's offering of its ordinary shares, we exchanged our 26.4% ownership interest in JDE for a 26.5% equity interest in JDE Peet’s.

On May 29, 2020, we participated in the JDE Peet's offering and, with the subsequent exercise of the over-allotment option, we sold a total of approximately 11.1 million shares during the second quarter, retaining a 22.9% ownership interest in JDE Peet's.

We received €350 million ($394 million) of total proceeds from the sales of JDE Peet's shares and we recorded a pre-tax gain of $121 million during the second quarter.

We also incurred a $261 million tax expense that is payable in 2020 and 2021.

Consistent with our accounting for KDP, in connection with JDE Peet's becoming a public company, we changed our accounting principle to reflect our share of 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.

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

This change was applied retrospectively to all periods presented.

Refer to Note 6, Equity Method Investments , and Note 14, Income

Taxes , for additional information.

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.

Refer to Note 6, Equity Method Investments , for additional information on our investment in KDP and related gains on equity method investment transactions.

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

Refer to Note 6, Equity Method Investments , for additional information.

Summary of Results

Net revenues increased 2.6% to $6.7 billion in the first three months of 2020 as compared to the same period in the prior year.

Net revenues were significantly impacted by the COVID-19 outbreak and response.

Net revenues decreased 2.5% to $5.9 billion in the second quarter of 2020 and increased 0.1% to $12.6 billion in the first six months of 2020 as compared to the same periods in the prior year.

During the second quarter and the first six months of 2020, net revenues were significantly impacted by the COVID-19 outbreak and response.

In developed markets, particularly North America, demand for our products grew significantly as consumers increased their food purchases for in-home consumption.

In some of our emerging markets, where we have a greater concentration of traditional trade, as well as in our travel retail and foodservice businesses, net revenues were negatively affected by mandated lockdowns and other related restrictions.

Overall, favorable volume/mix and higher net pricing as well as incremental net revenues from our July 16, 2019 acquisition of Perfect Snacks drove our net revenue increase.

These items were partially offset by the significant impact of unfavorable currency translation, as the U.S.

dollar strengthened against most currencies in which we operate compared to exchange rates in the prior year, and a prior-year divestiture of most of our cheese business in the Middle East and Africa.

Organic Net Revenue, a non-GAAP financial measure, increased 6.4% to $6.9 billion in the first three months of 2020 as compared to same period in the prior year.

During the first three months of 2020 , Organic Net Revenue also grew due to favorable volume/mix, in part driven by increased consumer demand during the COVID-19 outbreak, and higher net pricing.

In some of our emerging markets, where we have a greater concentration of traditional trade, as well as in our gum and candy, world travel retail and foodservice businesses, where we sell products that are typically consumed away from home, net revenues were negatively affected by mandated lockdowns and other related restrictions.

Net revenue decreased in the second quarter of 2020, driven by the significant impact of unfavorable currency translation, as the U.S.

dollar strengthened against most currencies in which we operate compared to exchange rates in the prior year, unfavorable volume/mix, and the May 28, 2019 divestiture of most of our cheese business in the Middle East and Africa.

These items were partially offset by higher net pricing and incremental net revenues from our April 1, 2020 acquisition of Give & Go and our July 16, 2019 acquisition of Perfect Snacks.

Net revenue increased in the first six months of 2020, driven by higher net pricing, favorable volume/mix, and incremental net revenues from our acquisitions of Give & Go and Perfect Snacks.

These items were mostly offset by the significant impact of unfavorable currency translation, as the U.S.

dollar strengthened against most currencies in which we operate compared to exchange rates in the prior year, and the prior-year divestiture of most of our cheese business in the Middle East and Africa.

Organic Net Revenue, a non-GAAP financial measure, increased 0.7% to $6.1 billion in the second quarter of 2020 and increased 3.7% to $13.0 billion in the first six months of 2020 as compared to same periods in the prior year.

Organic Net Revenue increased in the second quarter of 2020, due to higher net pricing, partially offset by unfavorable volume/mix.

Organic Net Revenue increased in the first six months of 2020 , due to higher net pricing and favorable volume/mix.

Refer to our Recent Developments and Significant Items Affecting Comparability above and Discussion and Analysis of Historical Results below , including the Results of Operations by Reportable Segment, for additional information.

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We use Organic Net Revenue as it provides improved year-over-year comparability of our underlying operating results (see the definition of Organic Net Revenue and our reconciliation with net revenues within Non-GAAP Financial Measures appearing later in this section).

Diluted EPS attributable to Mondelēz International decreased 17.5% to $0.52 in the first three months of 2020 as compared to the same period in the prior year.

The decrease was primarily driven by unfavorable year-over-year mark-to-market impacts from currency and commodity derivatives, a loss related to an interest rate swap and unfavorable currency translation, partially offset by higher gains on equity method investment transactions, operating gains, an increase in equity method investment earnings, fewer shares outstanding and lower taxes.

Adjusted EPS, a non-GAAP financial measure, increased 6.2% to $0.69 in the first three months of 2020 as compared to the same period in the prior year.

On a constant currency basis, Adjusted EPS increased 10.8% to $0.72 in the first three months of 2020 as compared to the same period in the prior year.

For the first three months of 2020 , operating gains, an increase in equity method investment earnings, fewer shares outstanding and lower taxes were significant drivers of growth.

Diluted EPS attributable to Mondelēz International decreased 30.9% to $0.38 in the second quarter of 2020 and decreased 26.4% to $0.89 in the first six months of 2020 as compared to the same periods in the prior year.

Diluted EPS decrease d in the second quarter of 2020, primarily driven by costs associated with the JDE Peet's transaction, intangible asset impairment charges, lapping a prior-year net gain on divestiture, lapping prior-year impact from pension participation changes, unfavorable year-over-year mark-to-market impacts from currency and commodity derivatives, a decline from operating activities as a result of COVID-19 related impacts and unfavorable currency translation.

These factors were partially offset by a gain on an equity method investment transaction and lower taxes primarily due to non-recurring discrete tax items (refer to Note 14, Income Taxes ).

Diluted EPS decrease d during the first six months of 2020, primarily driven by costs associated with the JDE Peet's transaction, unfavorable year-over-year mark-to-market impacts from currency and commodity derivatives, a loss related to an interest rate swap, intangible asset impairment charges, unfavorable currency translation, lapping a prior-year gain on divestiture, lapping a prior-year impact from pension participation changes and a decrease in equity method investment earnings.

factors were partially offset by gains on equity method investment transactions, lower taxes associated with operating activities, an increase in benefit plan non-service income, fewer shares outstanding and an increase from operating activities, which were tempered by COVID-19 related impacts.

Adjusted EPS, a non-GAAP financial measure, increased 12.5% to $0.63 in the second quarter of 2020 and increased 4.0% to $1.30 in the first six months of 2020 as compared to the same periods in the prior year.

On a constant currency basis, Adjusted EPS increased 16.1% to $0.65 in the second quarter of 2020 and increased 8.0% to $1.35 in the first six months of 2020 as compared to the same periods in the prior year.

Adjusted EPS increased in the second quarter of 2020, driven by lower taxes primarily due to non-recurring discrete tax items, an increase in equity method investment earnings, an increase in benefit plan non-service income, lower interest and other expense, net, and lower shares outstanding, partially offset by a decline from operating activities and unfavorable currency.

Adjusted EPS increased in the first six months of 2020 , driven by lower taxes, an increase in benefit plan non-service income and fewer shares outstanding, partially offset by unfavorable currency and a decrease in equity method investment earnings.

Adjusted EPS and Adjusted EPS on a constant currency basis are non-GAAP financial measures.

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Market conditions.

Snack categories continued to grow in the first quarter of 2020, in part due to increased consumer demand for snacks purchases for in-home consumption during the COVID-19 outbreak.

As further discussed below and in Item 3, Quantitative and Qualitative Disclosures about Market Risks , volatility in global consumer, commodity, currency and capital markets increased significantly during the first quarter of 2020 and is expected to continue while and until the COVID-19 outbreak is largely resolved.

Snack categories continued to grow in the first half of 2020, in part due to increased consumer demand for snacks purchases for in-home consumption during the COVID-19 outbreak.

As further discussed below and in Item 3, Quantitative and Qualitative Disclosures about Market Risks , volatility in global consumer, commodity, currency and capital markets increased significantly during the first six months of 2020 and is expected to continue while and until the COVID-19 outbreak is largely resolved.

We have been monitoring the COVID-19 outbreak.

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We will continue to prioritize the safety of our employees and consumers.

We expect increased labor, customer service, logistics and other costs and we anticipate a shift in product mix that could have a negative impact on results.

As we manage operations during the pandemic, we may continue to incur increased labor, customer service, logistics and other costs.

As consumer demand for our products evolves, we could continue to see a shift in product mix that could have a negative impact on results.

As discussed in Recent Developments and Significant Items Affecting Comparability , we are working to mitigate any negative impacts to our business from the COVID-19 outbreak, but we may not be able to fully predict or respond to all impacts on a timely basis to prevent near- and long-term adverse impacts to our results.

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

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.

Our exposure to disruptions to our supply chain, the imposition of tariffs and currency devaluation in the United Kingdom could result in a material impact to our consolidated revenue, earnings and cash flow.

In the three months ended March 31, 2020 , we generated 9.4% of our consolidated net revenues in the United Kingdom and our supply chain in this market relies on imports of raw and packaging materials as well as finished goods.

In the six months ended June 30, 2020 , we generated 8.8% of our consolidated net revenues in the United Kingdom and our supply chain in this market relies on imports of raw and packaging materials as well as finished goods.

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

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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.

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.

Resulting impacts and market volatility can vary significantly depending on the final terms of the U.K.’s exit from the European Union.

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Refer to our Annual Report on Form 10-K for the year ended December 31, 2019 for more information on Swiss and U.S.

As further discussed in Note 1, Basis of Presentation – Currency Translation and Highly Inflationary Accounting, we continue to apply highly inflationary accounting for our Argentinian subsidiaries, and during the three months ended March 31, 2020 , we recorded a remeasurement loss of $2 million within selling, general and administrative expenses related to the revaluation of our Argentinian peso denominated net monetary position.

As further discussed in Note 1, Basis of Presentation – Currency Translation and Highly Inflationary Accounting, we continue to apply highly inflationary accounting for our Argentinian subsidiaries, and during the six months ended June 30, 2020 , we recorded a remeasurement loss of $5 million within selling, general and administrative expenses related to the revaluation of our Argentinian peso denominated net monetary position.

The mix of monetary assets and liabilities and the exchange rate to convert Argentinian pesos to U.S.

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For the Three Months Ended

For the Six Months Ended

(in millions, except percentages)

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Implementation charges

Intangible asset impairment charges

Mark-to-market (losses)/gains from derivatives (1)

Acquisition and divestiture-related costs

Acquisition integration costs

Acquisition-related costs

Divestiture-related costs

Net gain on divestiture

Costs associated with JDE Peet's transaction

Remeasurement of net monetary position

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Loss related to interest rate swaps

Gains on equity method investment transactions (3)

Gain/(loss) on equity method investment

transactions (3)

Equity method investee acquisition-

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Please see the Non-GAAP Financial Measures section at the end of this item for additional information.

Gains on equity method investment transactions is recorded outside pre-tax operating results on the condensed consolidated statement of earnings.

Gain/(loss) on equity method investment transactions is recorded outside pre-tax operating results on the condensed consolidated statement of earnings.

Refer to Note 14, Income Taxes , for more information on our effective tax rate and to our Annual Report on Form 10-K for the year ended December 31, 2019 for more information on the impact of Swiss and U.S.

Consolidated Results of Operations

Three Months Ended March 31 :

Three Months Ended June 30 :

For the Three Months Ended

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Mondelēz International

Net Revenues – Net revenues increased $169 million ( 2.6% ) to $6,707 million in the first three months of 2020 , and Organic Net Revenue (1) increased $419 million ( 6.4% ) to $6,924 million .

Net Revenues – Net revenues decreased $151 million ( 2.5% ) to $5,911 million in the second quarter of 2020 , and Organic Net Revenue (1) increased $40 million ( 0.7% ) to $6,080 million .

Developed markets net revenue increased 5.4% and developed markets Organic Net Revenue increased 4.1% .

Emerging markets net revenues decreased 3.4% , including an unfavorable currency impact, and emerging markets Organic Net Revenue increased 4.5% (1) .

Emerging markets net revenues decreased 15.6% , including an unfavorable currency impact, and emerging markets Organic Net Revenue decreased 5.1% (1) .

The underlying changes in net revenues and Organic Net Revenue are detailed below:

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Impact of divestiture

Impact of acquisitions

Total change in Organic Net Revenue (1)

Higher net pricing

Unfavorable volume/mix

Please see the Non-GAAP Financial Measures section at the end of this item.

Net revenue decrease of 2.5% was driven by unfavorable currency and the impact of a prior-year divestiture, partially offset by the impact of acquisitions and our underlying Organic Net Revenue growth of 0.7% .

Overall, for the second quarter of 2020, net revenues were higher in developed markets, particularly North America, where due to the COVID-19 outbreak and response, demand for our products grew significantly as consumers increased their food purchases for in-home consumption.

In some of our emerging markets, where we have a greater concentration of traditional trade, as well as in our gum and candy, world travel retail and foodservice businesses, revenues were negatively affected by mandated lockdowns and other related restrictions.

Unfavorable currency impacts decreased net revenues by $283 million, due primarily to the strength of the U.S.

dollar relative to most currencies, including the Brazilian real, Argentinian peso, Mexican peso, euro, Russian ruble, British pound sterling dollar and Indian rupee.

The impact of the May 28, 2019 divestiture of most of our cheese business in the Middle East and Africa resulted in a year-over-year decline in net revenues of $22 million .

The April 1, 2020 acquisition of Give & Go added incremental net revenues of $91 million and the July 16, 2019 acquisition of a majority interest in Perfect Snacks added incremental net revenues of $23 million in the second quarter of 2020.

Refer to Note 2, Acquisitions and Divestitures , for additional information.

Organic Net Revenue growth was driven by higher net pricing, partially offset by unfavorable volume/mix.

Higher net pricing was reflected in all regions except Europe.

Net pricing was up, due to the benefit of carryover pricing from 2019 as well as the effects of input cost-driven pricing actions taken during the first six months of 2020.

Unfavorable volume/mix, driven by unfavorable product mix as volume gains were tempered by the net negative volume impact from the COVID-19 outbreak, was reflected in all regions except North America.

Operating Income – Operating income decreased $312 million ( 30.4% ) to $713 million in the second quarter of 2020 .

Adjusted Operating Income (1) decreased $66 million ( 6.5% ) to $942 million and Adjusted Operating Income on a constant currency basis (1) decreased $38 million ( 3.8% ) to $970 million due to the following:

(in millions)

Operating Income for the Three Months Ended June 30, 2019

Simplify to Grow Program (2)

Mark-to-market gains from derivatives (3)

Acquisition-related costs (4)

Divestiture-related costs (4)

Operating income from divestiture (4)

Net gain on divestiture (4)

Remeasurement of net monetary position (5)

Impact from pension participation changes (6)

CEO transition remuneration (1)

Adjusted Operating Income (1) for the

Three Months Ended June 30, 2019

Higher net pricing

Higher input costs

Unfavorable volume/mix

Lower selling, general and administrative expenses

Impact from acquisitions (4)

Prior-year VAT-related settlement

Total change in Adjusted Operating Income (constant currency) (1)

Unfavorable currency translation

Total change in Adjusted Operating Income (1)

Adjusted Operating Income (1) for the

Three Months Ended June 30, 2020

Simplify to Grow Program (2)

Intangible asset impairment charges (7)

Mark-to-market losses from derivatives (3)

Acquisition integration costs (4)

Acquisition-related costs (4)

Divestiture-related costs (4)

Costs associated with JDE Peet's transaction (8)

Remeasurement of net monetary position (5)

Operating Income for the Three Months Ended June 30, 2020

Refer to the Non-GAAP Financial Measures section at the end of this item.

Refer to Note 7, Restructuring Program , for more information.

Refer to Note 9, Financial Instruments , Note 16, Segment Reporting , and Non-GAAP Financial Measures section at the end of this item for more information on the unrealized gains/losses on commodity and forecasted currency transaction derivatives.

Refer to Note 2, Acquisitions and Divestitures , for more information on the April 1, 2020 acquisition of a significant majority interest in Give & Go, the July 16, 2019 acquisition of a majority interest in Perfect Snacks and the May 28, 2019 divestiture of most of our cheese business in the Middle East and Africa.

Refer to Note 1, Basis of Presentation – Currency Translation and Highly Inflationary Accounting , for information on our application of highly inflationary accounting for Argentina.

Refer to Note 10, Benefit Plans , for more information.

Refer to Note 5, Goodwill and Intangible Assets , for more information.

Refer to Note 6, Equity Method Investments , for more information on the JDE Peet's transaction.

During the second quarter of 2020 , we realized higher net pricing, which was mostly offset by increased input costs.

Higher net pricing, which included the carryover impact of pricing actions taken in 2019 as well as the effects of input cost-driven pricing actions taken during the first six months of 2020, was reflected across all regions except Europe.

The increase in input costs was driven by higher raw material costs, as manufacturing costs were essentially flat as productivity was offset by incremental COVID-19 related costs.

Higher raw material costs were in part due to higher currency exchange transaction costs on imported materials, as well as higher dairy, cocoa, sugar, oils, nuts and other ingredients costs, partially offset by lower costs for grains and packaging.

Unfavorable volume/mix, primarily due to unfavorable mix as overall volume increased despite the negative volume impact from the COVID-19 outbreak, was driven by Latin America, AMEA and Europe, which was partially offset by favorable volume/mix in North America.

Total selling, general and administrative expenses increased $26 million from the second quarter of 2019 , due to a number of factors noted in the table above, including in part, costs associated with the JDE Peet's transaction, lapping the benefit from prior-year pension participation changes, the impact of acquisitions and higher acquisition-related costs, which were partially offset by a favorable currency impact related to expenses, lower divestiture-related costs, lower implementation costs incurred for the Simplify to Grow Program, lapping prior-year CEO transition remuneration, lapping the prior-year divestiture and lapping a prior-year VAT-related settlement.

Excluding these factors, selling, general and administrative expenses decreased $13 million from the second quarter of 2019 .

The decrease was driven primarily by lower advertising and consumer promotion costs.

Overhead costs were flat as productivity efforts offset incremental COVID-19 related costs.

We recorded an expense of $2 million from a VAT-related settlement in Latin America in the second quarter of 2019.

Unfavorable currency changes decreased operating income by $28 million due primarily to the strength of the U.S.

dollar relative to most currencies, including the Brazilian real, euro, British pound sterling, Russian ruble, Indian rupee, Chinese yuan and South African rand.

Operating income margin decreased from 16.9% in the second quarter of 2019 to 12.1% in the second quarter of 2020 .

The decrease in operating income margin was driven primarily by intangible asset impairment charges, costs associated with the JDE Peet's transaction, lower Adjusted Operating Income margin reflecting COVID-19 related impacts, lapping prior-year gain on a divestiture, lapping the benefit from prior-year pension participation changes and the year-over-year unfavorable change in mark-to-market gains/(losses) from currency and commodity hedging activities.

Adjusted Operating Income margin decreased from 16.7% for the second quarter of 2019 to 15.9% for the second quarter of 2020 .

The decrease in Adjusted Operating Income margin was driven primarily by COVID-19 related costs, higher raw material costs, the impact of acquisitions and unfavorable volume/mix, partially offset by higher pricing, productivity and lower advertising and promotion costs.

Net Earnings and Earnings per Share Attributable to Mondelēz International – Net earnings attributable to Mondelēz International of $544 million decreased by $259 million ( 32.3% ) in the second quarter of 2020 .

Diluted EPS attributable to Mondelēz International was $0.38 in the second quarter of 2020 , down $0.17 ( 30.9% ) from the second quarter of 2019 .

Adjusted EPS (1) was $0.63 in the second quarter of 2020 , up $0.07 ( 12.5% ) from the second quarter of 2019 .

Adjusted EPS on a constant currency basis (1) was $0.65 in the second quarter of 2020 , up $0.09 ( 16.1% ) from the second quarter of 2019 .

Diluted EPS Attributable to Mondelēz International for the

Three Months Ended June 30, 2019

Simplify to Grow Program (2)

Mark-to-market gains from derivatives (2)

Divestiture-related costs (2)

Net earnings from divestiture (2)

Net gain on divestitures (2)

Impact from pension participation changes (2)

Net loss on equity method investment transactions (3)

Equity method investee acquisition-related or other charges/(benefits), net (4)

Adjusted EPS (1) for the Three Months Ended June 30, 2019

Decrease in operations

Increase in equity method investment net earnings

Impact from acquisition (2)

Changes in benefit plan non-service income

Changes in interest and other expense, net (5)

Changes in income taxes (6)

Changes in shares outstanding (7)

Adjusted EPS (constant currency) (1) for the Three Months Ended June 30, 2020

Unfavorable currency translation

Adjusted EPS (1) for the Three Months Ended June 30, 2020

Simplify to Grow Program (2)

Intangible asset impairment charges (2)

Acquisition-related costs (2)

Costs associated with JDE Peet's transaction (2)

Gain on equity method investment transaction (3)

Equity method investee acquisition-related or other (charges)/benefits, net (4)

Diluted EPS Attributable to Mondelēz International for the

Three Months Ended June 30, 2020

Refer to the Non-GAAP Financial Measures section appearing later in this section.

See the Operating Income table above and the related footnotes for more information.

Within earnings per share, taxes related to the JDE Peet's transaction are included in costs associated with the JDE Peet's transaction (refer to Note 14, Income Taxes , for more information).

Refer to Note 6, Equity Method Investments , for more information on the gain/(loss) on equity method investment transactions.

Includes our proportionate share of unusual or infrequent items, such as acquisition and divestiture-related costs and restructuring program costs, recorded by our JDE and KDP equity method investees.

Excludes the currency impact on interest expense related to our non-U.S.

dollar-denominated debt, which is included in currency translation.

Refer to Note 14, Income Taxes , for more information on the items affecting income taxes.

Refer to Note 11, Stock Plans , for more information on our equity compensation programs and share repurchase program and Note 15, Earnings per Share , for earnings per share weighted-average share information.

Six Months Ended June 30 :

For the Six Months Ended

(in millions, except per share data)

Operating income

Net earnings attributable to

Mondelēz International

Diluted earnings per share attributable to

Mondelēz International

Net Revenues – Net revenues increased $18 million ( 0.1% ) to $12,618 million in the first six months of 2020 , and Organic Net Revenue (1) increased $459 million ( 3.7% ) to $13,004 million .

Developed markets net revenue increased 5.9% and developed markets Organic Net Revenue increased 5.9% .

Emerging markets net revenues decreased 9.2% , including an unfavorable currency impact, and emerging markets Organic Net Revenue decreased 0.1% (1) .

The underlying changes in net revenues and Organic Net Revenue are detailed below:

Change in net revenues (by percentage point)

Total change in net revenues

Add back the following items affecting comparability:

Unfavorable currency

Impact of divestiture

Impact of acquisition

Total change in Organic Net Revenue (1)

Favorable volume/mix

Higher net pricing

Favorable volume/mix

Please see the Non-GAAP Financial Measures section at the end of this item.

Net revenue increase of 2.6% was driven by our underlying Organic Net Revenue growth of 6.4% and the impact of an acquisition, partially offset by unfavorable currency and the impact of a prior-year divestiture.

Net revenues were higher in developed markets, particularly North America, where due to the COVID-19 outbreak and response, demand for our products grew significantly as consumers increased their food purchases for in-home consumption.

In some of our emerging markets, where we have a greater concentration of traditional trade, as well as in our travel retail and foodservice businesses, revenues were negatively affected by mandated lockdowns and other related restrictions.

Organic Net Revenue growth was driven by both favorable volume/mix and higher net pricing.

Favorable volume/mix was reflected in all regions except Latin America.

Net pricing was up, which includes the benefit of carryover pricing from 2019 as well as the effects of input cost-driven pricing actions taken during the first three months of 2020.

Higher net pricing was reflected in all regions.

The July 16, 2019 acquisition of a majority interest in Perfect Snacks added incremental net revenues of $32 million in the first three months of 2020.

Net revenue increase of 0.1% was driven by our underlying Organic Net Revenue growth of 3.7% and the impact of acquisitions, mostly offset by unfavorable currency and the impact of a prior-year divestiture.

Overall, net revenues were higher in developed markets, particularly North America, where due to the COVID-19 outbreak and response, demand for our products grew significantly as consumers increased their food purchases for in-home consumption.

Organic Net Revenue growth was driven by both higher net pricing and favorable volume/mix.

Net pricing was up, which includes the benefit of carryover pricing from 2019 as well as the effects of input cost-driven pricing actions taken during the first six months of 2020.

Higher net pricing was reflected in all regions except Europe.

Favorable volume/mix, reflecting overall volume gains despite being tempered by the net negative impact from the COVID-19 outbreak, was reflected in North America and Europe, partially offset by unfavorable volume/mix in Latin America and AMEA.

Unfavorable currency impacts decreased net revenues by $532 million, due primarily to the strength of the U.S.

dollar relative to most currencies, including the Brazilian real, Argentinian peso, euro, Australian dollar and British pound sterling.

The impact of the divestiture of most of our cheese business in the Middle East and Africa on May 28, 2019 resulted in a year-over-year decline in net revenues of $33 million.

dollar relative to most currencies, including the Brazilian real, Argentinian peso, euro, Australian dollar, British pound sterling, Mexican peso, Russian ruble and Indian rupee.

The impact of the May 28, 2019 divestiture of most of our cheese business in the Middle East and Africa resulted in a year-over-year decline in net revenues of $55 million .

Refer to Note 2, Acquisitions and Divestitures , for additional information.

Operating Income – Operating income decreased $180 million ( 17.4% ) to $856 million in the first three months of 2020 .

Adjusted Operating Income (1) increased $16 million ( 1.5% ) to $1,106 million and Adjusted Operating Income on a constant currency basis (1) increased $62 million ( 5.7% ) to $1,152 million due to the following:

Operating Income – Operating income decreased $492 million ( 23.9% ) to $1,569 million in the first six months of 2020 .

Adjusted Operating Income (1) decreased $50 million ( 2.4% ) to $2,048 million and Adjusted Operating Income on a constant currency basis (1) increased $24 million ( 1.1% ) to $2,122 million due to the following:

(in millions)

Operating Income for the Three Months Ended March 31, 2019

Operating Income for the Six Months Ended June 30, 2019

Simplify to Grow Program (2)

Mark-to-market gains from derivatives (3)

Acquisition-related costs (4)

Divestiture-related costs (4)

Operating income from divestiture (4)

Net gain on divestiture (4)

Remeasurement of net monetary position (5)

Impact from pension participation changes (6)

CEO transition remuneration (1)

Adjusted Operating Income (1) for the

Three Months Ended March 31, 2019

Six Months Ended June 30, 2019

Higher net pricing

3 unchanged sentences

Impact from acquisition (4)

Prior-year VAT-related settlement

Prior-year VAT-related settlements

Total change in Adjusted Operating Income (constant currency) (1)

2 unchanged sentences

Adjusted Operating Income (1) for the

Three Months Ended March 31, 2020

Six Months Ended June 30, 2020

Simplify to Grow Program (2)

Intangible asset impairment charges (7)

Mark-to-market losses from derivatives (3)

Acquisition integration costs (4)

Acquisition-related costs (4)

Divestiture-related costs (4)

Costs associated with JDE Peet's transaction (8)

Remeasurement of net monetary position (5)

Operating Income for the Three Months Ended March 31, 2020

Operating Income for the Six Months Ended June 30, 2020

Refer to the Non-GAAP Financial Measures section at the end of this item.

3 unchanged sentences

Refer to Note 1, Basis of Presentation – Currency Translation and Highly Inflationary Accounting , for information on our application of highly inflationary accounting for Argentina.

During the first three months of 2020 , we realized higher net pricing, which was mostly offset by increased input costs.

Higher net pricing, which included the carryover impact of pricing actions taken in 2019 as well as the effects of input cost-driven pricing actions taken during the first three months of 2020, was reflected across all regions.

The increase in input costs was driven by higher raw material costs, as manufacturing costs were essentially flat as productivity was offset by COVID-19 related costs.

Higher raw material costs were in part due to higher currency exchange transaction costs on imported materials, as well as higher dairy, energy, packaging, grains and other ingredients costs, partially offset by lower costs for sugar and cocoa.

Refer to Note 10, Benefit Plans , for more information.

Refer to Note 5, Goodwill and Intangible Assets , for more information.

Refer to Note 6, Equity Method Investments , for more information on the JDE Peet's transaction.

During the first six months of 2020 , we realized higher net pricing, which was mostly offset by increased input costs.

The increase in input costs was driven by higher raw material costs, as manufacturing costs were essentially flat as productivity was offset by incremental COVID-19 related costs.

Higher raw material costs were in part due to higher currency exchange transaction costs on imported materials, as well as higher dairy, energy, cocoa, oil, nuts, sugar and other ingredients costs, partially offset by lower costs for grains.

Favorable volume/mix was driven by North America and Europe, which was partially offset by unfavorable volume/mix in Latin America and AMEA.

Total selling, general and administrative expenses increased $44 million from the first three months of 2019 , due to a number of factors noted in the table above, including in part, the impact of an acquisition and acquisition-related costs incurred in the first three months of 2020, which were more than offset by a favorable currency impact related to expenses, lapping a prior-year VAT-related settlement, lower implementation costs incurred for the Simplify to

Grow Program, lower CEO transition remuneration and the impact from a prior-year divestiture.

Excluding these factors, selling, general and administrative expenses increased $85 million from the first three months of 2019 .

The increase was driven primarily by higher advertising and consumer promotion costs and higher overheads reflecting route-to-market investments.

We recorded an expense of $9 million from a VAT-related settlement in Latin America in the first three months of 2019.

Total selling, general and administrative expenses increased $70 million from the first six months of 2019 , due to a number of factors noted in the table above, including in part, costs associated with the JDE Peet's transaction, the impact of acquisitions, lapping the benefit from prior-year pension participation changes and higher acquisition-related costs, which were more than offset by a favorable currency impact related to expenses, lower implementation costs incurred for the Simplify to Grow Program, lower divestiture-related costs, lapping prior-year VAT-related settlements, lapping prior-year CEO transition remuneration and lapping the prior-year divestiture.

Excluding these factors, selling, general and administrative expenses increased $72 million from the first six months of 2019 .

The increase was driven primarily by higher overheads reflecting route-to-market investments as well as incremental COVID-19 related costs and higher advertising and consumer promotion costs.

We recorded an expense of $11 million from VAT-related settlements in Latin America in the first six months of 2019.

Unfavorable currency changes decreased operating income by $74 million due primarily to the strength of the U.S.

dollar relative to most currencies, including the Argentinian peso, Brazilian real, euro, Australian dollar, British pound sterling and Chinese yuan.

Operating income margin decreased from 15.8% in the first three months of 2019 to 12.8% in the first three months of 2020 .

Adjusted Operating Income margin decreased from 16.8% for the first three months of 2019 to 16.5% for first three months of 2020 .

The decrease in Adjusted Operating Income margin was driven primarily by higher raw material costs and higher advertising and promotion costs, partially offset by higher pricing and overhead cost leverage.

Net Earnings and Earnings per Share Attributable to Mondelēz International – Net earnings attributable to Mondelēz International of $753 million decreased by $161 million ( 17.6% ) in the first three months of 2020 .

Diluted EPS attributable to Mondelēz International was $0.52 in the first three months of 2020 , down $0.11 ( 17.5% ) from the first three months of 2019 .

Adjusted EPS (1) was $0.69 in the first three months of 2020 , up $0.04 ( 6.2% ) from the first three months of 2019 .

Adjusted EPS on a constant currency basis (1) was $0.72 in the first three months of 2020 , up $0.07 ( 10.8% ) from the first three months of 2019 .

dollar relative to most currencies, including the Brazilian real, euro, Argentinian peso, British pound sterling, Australian dollar, Chinese yuan and Russian ruble.

Operating income margin decreased from 16.4% in the first six months of 2019 to 12.4% in the first six months of 2020 .

The decrease in operating income margin was driven primarily by the year-over-year unfavorable change in mark-to-market gains/(losses) from currency and commodity hedging activities, intangible asset impairment charges, lower Adjusted Operating Income margin reflecting COVID-19 related impacts, lapping the prior-year gain on a divestiture, costs associated with the JDE Peet's transaction and lapping the benefit from prior-year pension participation changes, partially offset by lower implementation costs for the Simplify to Grow Program.

Adjusted Operating Income margin decreased from 16.7% for the first six months of 2019 to 16.2% for first six months of 2020 .

The decrease in Adjusted Operating Income margin was driven primarily by higher raw material costs, COVID-19 related costs and the impact of acquisitions, partially offset by higher pricing and productivity.

Net Earnings and Earnings per Share Attributable to Mondelēz International – Net earnings attributable to Mondelēz International of $1,280 million decreased by $490 million ( 27.7% ) in the first six months of 2020 .

Diluted EPS attributable to Mondelēz International was $0.89 in the first six months of 2020 , down $0.32 ( 26.4% ) from the first six months of 2019 .

Adjusted EPS (1) was $1.30 in the first six months of 2020 , up $0.05 ( 4.0% ) from the first six months of 2019 .

Adjusted EPS on a constant currency basis (1) was $1.35 in the first six months of 2020 , up $0.10 ( 8.0% ) from the first six months of 2019 .

Diluted EPS Attributable to Mondelēz International for the

Three Months Ended March 31, 2019

Six Months Ended June 30, 2019

Simplify to Grow Program (2)

Mark-to-market gains from derivatives (2)

Gain on equity method investment transaction (3)

Divestiture-related costs (2)

Net earnings from divestiture (2)

Net gain on divestitures (2)

Impact from pension participation changes (2)

CEO transition remuneration (2)

Net loss on equity method investment transactions (3)

Equity method investee acquisition-related or other charges/(benefits), net (4)

Adjusted EPS (1) for the Three Months Ended March 31, 2019

Adjusted EPS (1) for the Six Months Ended June 30, 2019

Increase in operations

Increase in equity method investment net earnings

Decrease in equity method investment net earnings

Changes in benefit plan non-service income

1 unchanged sentence

Changes in shares outstanding (6)

Adjusted EPS (constant currency) (1) for the Three Months Ended March 31, 2020

Adjusted EPS (constant currency) (1) for the Six Months Ended June 30, 2020

Unfavorable currency translation

Adjusted EPS (1) for the Three Months Ended March 31, 2020

Adjusted EPS (1) for the Six Months Ended June 30, 2020

Simplify to Grow Program (2)

Intangible asset impairment charges (2)

Mark-to-market losses from derivatives (2)

Acquisition-related costs (2)

Costs associated with JDE Peet's transaction (2)

Loss related to interest rate swaps (7)

Gain on equity method investment transaction (3)

Gain on equity method investment transactions (3)

Equity method investee acquisition-related or other (charges)/benefits, net (4)

Diluted EPS Attributable to Mondelēz International for the

Three Months Ended March 31, 2020

Six Months Ended June 30, 2020

Refer to the Non-GAAP Financial Measures section appearing later in this section.

See the Operating Income table above and the related footnotes for more information.

Refer to Note 6, Equity Method Investments , for more information on the gains on equity method investment transactions.

Within earnings per share, taxes related to the JDE Peet's transaction are included in costs associated with the JDE Peet's transaction (refer to Note 14, Income Taxes , for more information).

Refer to Note 6, Equity Method Investments , for more information on the gain/(loss) on equity method investment transactions.

13 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

7 unchanged sentences

Segment operating income

Three Months Ended March 31 :

For the Six Months Ended

(in millions)

Segment operating income

Three Months Ended June 30 :

Net revenues decreased $226 million ( 30.7% ), due to unfavorable currency (19.4 pp) and unfavorable volume/mix (18.8 pp), partially offset by higher net pricing (7.5 pp).

1 unchanged sentence

dollar relative to most currencies in the region including the Brazilian real, Argentinian peso and Mexican peso.

Unfavorable volume/mix was due to the impact of pricing-related elasticity and COVID-19 related impacts which emerged late in the quarter.

Unfavorable volume/mix was driven by declines in refreshment beverages, gum, chocolate and candy, partially offset by gains in biscuits and cheese & grocery.

Higher net pricing was reflected across all categories, driven primarily by Argentina and Mexico.

Segment operating income decreased $20 million ( 20.4% ), primarily due to higher raw material costs, unfavorable volume/mix, unfavorable currency and higher other selling, general and administrative expenses (net of lapping the expense of a VAT-related settlement in 2019).

These unfavorable items were partially offset by higher net pricing, lower manufacturing costs and lower costs incurred for the Simplify to Grow Program.

Unfavorable volume/mix was due to the negative volume impact from the COVID-19 outbreak as well as the impact of pricing-related elasticity.

Unfavorable volume/mix was driven by declines in gum, candy, biscuits, chocolate and refreshment beverages, partially offset by gains in cheese & grocery.

Higher net pricing was reflected across all categories, driven primarily by Argentina, Brazil and Mexico.

Segment operating income decreased $74 million ( 108.8% ), primarily due to unfavorable volume/mix, higher raw material costs and higher other selling, general and administrative expenses (net of lapping the expense of a VAT-related settlement in 2019).

These unfavorable items were partially offset by higher net pricing, lower advertising and consumer promotion costs and lower costs incurred for the Simplify to Grow Program.

Six Months Ended June 30 :

Net revenues decreased $300 million ( 19.5% ), due to unfavorable currency (17.7 pp) and unfavorable volume/mix (10.0 pp), partially offset by higher net pricing (8.2 pp).

Unfavorable currency impacts were due primarily to the strength of the U.S.

dollar relative to most currencies in the region including the Brazilian real, Argentinian peso and Mexican peso.

Unfavorable volume/mix was due to the negative volume impact from the COVID-19 outbreak as well as the impact of pricing-related elasticity.

Unfavorable volume/mix was driven by declines in gum, candy, chocolate, refreshment beverages and biscuits, partially offset by gains in cheese & grocery.

Higher net pricing was reflected across all categories, driven primarily by Argentina, Mexico and Brazil.

Segment operating income decreased $94 million ( 56.6% ), primarily due to unfavorable volume/mix, higher raw material costs, higher other selling, general and administrative expenses (net of lapping the expense of VAT-related settlements in 2019) and unfavorable currency.

These unfavorable items were partially offset by higher net pricing, lower advertising and consumer promotion costs, lower costs incurred for the Simplify to Grow Program and lower manufacturing costs (net of incremental COVID-19 related costs).

For the Three Months Ended

1 unchanged sentence

Segment operating income

Three Months Ended March 31 :

Net revenues decreased $39 million ( 2.5% ), due to unfavorable currency (2.6 pp) and the impact of a divestiture (2.1 pp), partially offset by higher net pricing (1.3 pp) and favorable volume/mix (0.9 pp).

For the Six Months Ended

(in millions)

Segment operating income

Three Months Ended June 30 :

Net revenues decreased $115 million ( 8.5% ), due to unfavorable volume/mix (4.6 pp), unfavorable currency (3.9 pp) and the impact of a divestiture (1.5 pp), partially offset by higher net pricing (1.5 pp).

Unfavorable volume/mix was due to the negative impact from COVID-19 related lockdowns impacting our traditional trade markets.

Unfavorable volume/mix was driven by declines in chocolate, gum, candy and refreshment beverages, partially offset by gains in biscuits and cheese & grocery.

Unfavorable currency impacts were due to the strength of the U.S.

dollar relative to several currencies in the region, including the Australian dollar, Chinese yuan, South African rand and Indian rupee.

The divestiture of most of our cheese business in the Middle East and Africa on May 28, 2019, resulted in a year-over-year decline in net revenues of $33 million.

Higher net pricing was driven by refreshment beverages and biscuits, partially offset by lower net pricing in chocolate, candy, gum and cheese & grocery.

Favorable volume/mix, despite the negative impact from COVID-19 related lockdowns impacting our traditional trade markets, was driven by gains in biscuits, chocolate and cheese & grocery, partially offset by declines in gum, refreshment beverages and candy.

Segment operating income decreased $22 million ( 8.6% ), primarily due to higher raw material costs, higher advertising and consumer promotion costs, unfavorable volume/mix, higher other selling, general and administrative expenses, unfavorable currency and the impact of the divestiture.

These unfavorable items were partially offset by higher net pricing, lower manufacturing costs and lower costs incurred for the Simplify to Grow Program.

dollar relative to several currencies in the region, including the Indian rupee, South African rand, Australian dollar and Chinese yuan.

The May 28, 2019 divestiture of most of our cheese business in the Middle East and Africa resulted in a year-over-year decline in net revenues of $22 million .

Higher net pricing was driven by chocolate, refreshment beverages, biscuits and cheese & grocery, partially offset by lower net pricing in gum and candy.

Segment operating income decreased $20 million ( 10.5% ), primarily due to unfavorable volume/mix, higher raw material costs, unfavorable currency, intangible asset impairment charges and the impact of the prior-year divestiture.

These unfavorable items were partially offset by higher net pricing, lower other selling, general and administrative expenses, lower advertising and consumer promotion costs and lower manufacturing costs (net of incremental COVID-19 related costs).

Six Months Ended June 30 :

Net revenues decreased $154 million ( 5.3% ), due to unfavorable currency (3.2 pp), the impact of a divestiture (1.8 pp) and unfavorable volume/mix (1.7 pp), partially offset by higher net pricing (1.4 pp).

Unfavorable currency impacts were due to the strength of the U.S.

dollar relative to several currencies in the region, including the Australian dollar, Indian rupee, Chinese yuan and South African rand.

The May 28, 2019 divestiture of most of our cheese business in the Middle East and Africa resulted in a year-over-year decline in net revenues of $55 million .

Unfavorable volume/mix was due to unfavorable product mix as overall higher volume was tempered by the negative volume impact from COVID-19 related lockdowns impacting our traditional trade markets.

Unfavorable volume/mix was driven by declines in gum, chocolate, refreshment beverages and candy, partially offset by gains in biscuits and cheese & grocery.

Higher net pricing was driven by refreshment beverages, biscuits, chocolate and cheese & grocery, partially offset by lower net pricing in candy and gum.

Segment operating income decreased $42 million ( 9.4% ), primarily due to higher raw material costs, unfavorable volume/mix, unfavorable currency, the impact of the prior-year divestiture and intangible asset impairment charges.

These unfavorable items were partially offset by higher net pricing, lower manufacturing costs (net of incremental COVID-19 related costs), lower costs incurred for the Simplify to Grow Program, lower divestiture-related costs (including the current year reversal of accruals no longer required) and higher other selling, general and administrative expenses.

For the Three Months Ended

1 unchanged sentence

Segment operating income

Three Months Ended March 31 :

Net revenues increased $33 million ( 1.3% ), due to favorable volume/mix (3.9 pp) and higher net pricing (0.4 pp), partially offset by unfavorable currency (3.0 pp).

Favorable volume/mix was driven by gains across all categories except refreshment beverages.

Volume/mix was impacted by COVID-19, as increased food purchases for in-home consumption were more than offset by a negative impact on our travel retail and foodservice businesses due to lockdowns and other restrictions.

Higher net pricing was reflected across all categories.

For the Six Months Ended

(in millions)

Segment operating income

Three Months Ended June 30 :

Net revenues decreased $109 million ( 4.9% ), due to unfavorable currency (3.7 pp), lower net pricing (0.8 pp) and unfavorable volume/mix (0.4 pp).

Unfavorable currency impacts reflected the strength of the U.S.

dollar relative to most currencies in the region, primarily the euro, British pound sterling, Turkish lira, Norwegian krone and Russian ruble.

Segment operating income decreased $28 million ( 5.6% ), primarily due to higher raw material costs, higher advertising and consumer promotion costs, unfavorable currency, higher manufacturing costs, higher other selling, general and administrative expenses and higher costs incurred for the Simplify to Grow Program.

These unfavorable items were partially offset by favorable volume/mix and higher net pricing.

dollar relative to most currencies in the region, primarily the euro, Russian ruble, British pound sterling, Norwegian krone and Turkish lira.

Lower net pricing was driven by chocolate, biscuits and refreshment beverages, partially offset by higher net pricing in cheese & grocery, candy and gum.

Unfavorable volume/mix was due to unfavorable product mix, as overall higher volume was tempered by the net negative volume impact from the COVID-19 outbreak as increased food purchases for in-home consumption were more than offset by a negative volume impact on our world travel retail and foodservice businesses due to lockdowns and other restrictions.

Unfavorable volume/mix was driven by declines in biscuits, gum and candy, mostly offset by gains in chocolate, cheese & grocery and refreshment beverages.

Segment operating income decreased $111 million ( 27.2% ), primarily due to intangible asset impairment charges, unfavorable volume/mix, unfavorable currency, lower net pricing, higher manufacturing costs driven by incremental COVID-19 related costs, higher raw material costs and higher other selling, general and administrative expenses.

These unfavorable items were partially offset by lower advertising and consumer promotion costs and lower costs incurred for the Simplify to Grow Program.

Six Months Ended June 30 :

Net revenues decreased $76 million ( 1.6% ), due to unfavorable currency (3.4 pp) and lower net pricing (0.2 pp), partially offset by favorable volume/mix (2.0 pp).

Unfavorable currency impacts reflected the strength of the U.S.

dollar relative to most currencies in the region, primarily the euro, British pound sterling, Russian ruble, Norwegian krone and Turkish lira.

Lower net pricing was driven by chocolate, biscuits and refreshment beverages, partially offset by higher net pricing in cheese & grocery, candy and gum.

Favorable volume/mix, despite unfavorable product mix, was tempered by the net impact from the COVID-19 outbreak, as increased food purchases for in-home consumption were more than offset by a negative volume impact on our world travel retail and foodservice businesses due to lockdowns and other restrictions.

Favorable volume/mix was driven by gains in chocolate, cheese & grocery and refreshment beverages, partially offset by declines in gum, candy and biscuits.

Segment operating income decreased $139 million ( 15.3% ), primarily due to intangible asset impairment charges, unfavorable currency, higher raw material costs, higher manufacturing costs driven by incremental COVID-19 related costs, higher other selling, general and administrative expenses and lower net pricing.

These unfavorable items were partially offset by favorable volume/mix and lower advertising and consumer promotion costs.

North America

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Segment operating income

Three Months Ended March 31 :

Net revenues increased $249 million ( 15.1% ), due to favorable volume/mix (12.2 pp), the impact of an acquisition (1.9 pp) and higher net pricing (1.2 pp), partially offset by unfavorable currency (0.2 pp).

Favorable volume/mix, in part due to the impact from COVID-19 as consumers increased their food purchases for in-home consumption, was driven by gains in biscuits, candy and gum, partially offset by a decline in chocolate.

The July 16, 2019 acquisition of a majority interest in Perfect Snacks added net revenues of $32 million in the first three months of 2020.

Higher net pricing was reflected across all categories except gum.

For the Six Months Ended

(in millions)

Segment operating income

Three Months Ended June 30 :

Net revenues increased $299 million ( 17.3% ), due to favorable volume/mix (7.4 pp), the impact of acquisitions (6.6 pp) and higher net pricing (3.6 pp), partially offset by unfavorable currency (0.3 pp).

Favorable volume/mix, in part due to the positive volume impact from COVID-19 as consumers increased their food purchases for in-home consumption, was driven by gains in biscuits, partially offset by declines in gum, candy and chocolate.

The April 1, 2020 acquisition of Give & Go added incremental net revenues of $91 million and the July 16, 2019 acquisition of a majority interest in Perfect Snacks added net revenues of $23 million in the second quarter of 2020.

Higher net pricing was reflected across all categories except candy.

Unfavorable currency impact was due to the strength of the U.S.

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Segment operating income increased $17 million ( 4.2% ), primarily due to favorable volume/mix and higher net pricing.

These favorable items were partially offset by higher advertising and consumer promotion costs, higher other selling, general and administrative expenses, higher manufacturing costs reflecting COVID-19 related costs and higher raw material costs.

These favorable items were partially offset by intangible asset impairment charges, lapping the benefit from prior-year pension participation changes, higher advertising and consumer promotion costs, higher other selling, general and administrative expenses (including incremental COVID-19 related costs) and higher raw material costs.

Six Months Ended June 30 :

Net revenues increased $548 million ( 16.3% ), due to favorable volume/mix (9.8 pp), the impact of acquisitions (4.3 pp) and higher net pricing (2.4 pp), partially offset by unfavorable currency (0.2 pp).

Favorable volume/mix, in part due to the positive volume impact from COVID-19 as consumers increased their food purchases for in-home consumption, was driven by gains in biscuits and candy, partially offset by declines in gum and chocolate.

Higher net pricing was driven by biscuits and chocolate, partially offset by lower net pricing in gum and candy.

Unfavorable currency impact was due to the strength of the U.S.

dollar relative to the Canadian dollar.

Segment operating income increased $79 million ( 10.9% ), primarily due to favorable volume/mix and higher net pricing.

These favorable items were partially offset by higher advertising and consumer promotion costs, intangible asset impairment charges, lapping the benefit from prior-year pension participation changes, higher other selling, general and administrative expenses (including incremental COVID-19 related costs), higher raw material costs and higher manufacturing costs driven by incremental COVID-19 related costs.

Liquidity and Capital Resources

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Any of these and other developments could materially harm our access to capital or financial condition.

As a precautionary measure and to preserve financial flexibility, we increased our credit facility borrowing capacity and increased our cash position by borrowing under one of our credit facilities.

As a precautionary measure and to preserve financial flexibility, we increased our credit facility borrowing capacity in the first half of 2020.

Refer to Recent Developments and Significant Items Affecting Comparability and Note 8, Debt and Borrowing Arrangements , for additional details.

We also continue to utilize our commercial paper program and international credit lines and evaluate long-term debt issuances to meet our short- and longer-term funding requirements.

We also continue to utilize our commercial paper program and international credit lines, and we recently secured and continue to evaluate long-term debt issuances to meet our short- and longer-term funding requirements.

We also use intercompany loans with our international subsidiaries to improve financial flexibility.

Overall, we do not expect any negative effects to our funding sources that would have a material effect on our liquidity, however if a serious economic or credit market crisis ensues, it could have a material adverse effect on our liquidity, results of operations and financial condition.

Overall, we do not expect any negative effects to our funding sources that would have a material effect on our liquidity;

however, if a serious economic or credit market crisis ensues, it could have a material adverse effect on our liquidity, results of operations and financial condition.

Net Cash Provided by Operating Activities:

Net cash provided by operating activities was $284 million in the first three months of 2020 and $465 million in the first three months of 2019 .

The decrease in net cash provided by operating activities was due primarily to payments of effective interest rate swap cash settlements and payments for several indirect tax matters that were resolved during the fourth quarter of 2019 under a tax amnesty program in India.

Net cash provided by operating activities was $1,558 million in the first six months of 2020 and $1,046 million in the first six months of 2019 .

The increase in net cash provided by operating activities was due primarily to lower cash tax payments and lower working capital requirements, partially offset by payments of interest rate swap cash settlements and payments for several indirect tax matters that were resolved during the fourth quarter of 2019 under a tax amnesty program in India.

Net Cash Used in Investing Activities:

Net cash used in investing activities was $55 million in the first three months of 2020 and $223 million in the first three months of 2019 .

The decrease in net cash used in investing activities was due primarily to cash received from our participation in the KDP secondary offering and lower capital expenditures, partially offset by the payment of interest rate swaps for which the planned tenor of the related forecasted debt was changed and lower cash receipts from the settlement and replacement of net investment hedge derivative contracts.

Net cash used in investing activities was $1,037 million in the first six months of 2020 and $267 million in the first six months of 2019 .

The increase in net cash used in investing activities was due primarily to cash paid to acquire a majority interest in Give & Go, the payment of interest rate swaps for which the planned tenor of the related forecasted debt was changed and lower cash receipts from the settlement and replacement of net investment hedge derivative contracts, partially offset by cash received from the sale of shares in the JDE Peet's and KDP offerings and lower capital expenditures.

We continue to make capital expenditures primarily to modernize manufacturing facilities and support new product and productivity initiatives.

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We expect to continue to fund these expenditures with cash from operations.

Net Cash Provided by Financing Activities:

Net cash provided by financing activities was $455 million in the first three months of 2020 and $201 million in the first three months of 2019 .

The increase in cash provided by financing activities was primarily due to higher net debt issuances, partially offset by higher dividends paid and higher share repurchases.

Net Cash Used in Financing Activities:

Net cash used in financing activities was $181 million in the first six months of 2020 and $639 million in the first six months of 2019 .

The decrease in cash used in financing activities was primarily due to higher net debt issuances and lower share repurchases, partially offset by higher dividends paid.

From time to time we refinance long-term and short-term debt.

Refer to Note 8, Debt and Borrowing Arrangements , for details of our debt activity during the first three months of 2020 .

Refer to Note 8, Debt and Borrowing Arrangements , for details of our debt activity during the first six months of 2020 .

The nature and amount of our long-term and short-term debt and the proportionate amount of each varies as a result of current and expected business requirements, market conditions and other factors.

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(“MIHN”), has outstanding debt.

The operations held by MIHN generated approximately 71.6% (or $4.8 billion ) of the $6.7 billion of consolidated net revenue in the three months ended March 31, 2020 .

The operations held by MIHN represented approximately 88.0% (or $22.7 billion ) of the $25.8 billion of net assets as of March 31, 2020 and 87.2% (or $23.9 billion) of the $27.4 billion of net assets as of December 31, 2019 .

The operations held by MIHN generated approximately 70.6% (or $8.9 billion ) of the $12.6 billion of consolidated net revenue in the six months ended June 30, 2020 .

The operations held by MIHN represented approximately 90.4% (or $23.6 billion ) of the $26.1 billion of net assets as of June 30, 2020 and 87.2% (or $23.9 billion) of the $27.3 billion of net assets as of December 31, 2019 .

During February 2020, our Board of Directors approved a new $8.0 billion long-term financing authority to replace the prior $5.0 billion authority.

As of March 31, 2020 , we had $8.0 billion of long-term financing authority remaining.

In the 12 months subsequent to March 31, 2020 , approximately $1.6 billion of long-term debt will mature as follows:

$750 million in May 2020, $140 million in October 2020 and $749 million in January 2021.

As of June 30, 2020 , we had $5.5 billion of long-term financing authority remaining.

In the 12 months subsequent to June 30, 2020 , approximately $0.9 billion of long-term debt will mature as follows:

$143 million in October 2020 and $763 million in January 2021.

We expect to fund these repayments with a combination of cash from operations, short-term borrowings, including issuance of commercial paper, and long-term debt.

Our total debt was $19.8 billion at March 31, 2020 and $18.4 billion at December 31, 2019 .

Our debt-to-capitalization ratio was 0.44 at March 31, 2020 and 0.40 at December 31, 2019 .

At March 31, 2020 , the weighted-average term of our outstanding long-term debt was 5.8 years.

Our average daily commercial paper borrowings outstanding were $3.7 billion in the first three months of 2020 and $4.1 billion in the first three months of 2019 .

We had commercial paper outstanding totaling $3.7 billion as of March 31, 2020 and $2.6 billion as of December 31, 2019 .

Our total debt was $19.7 billion at June 30, 2020 and $18.4 billion at December 31, 2019 .

Our debt-to-capitalization ratio was 0.43 at June 30, 2020 and 0.40 at December 31, 2019 .

At June 30, 2020 , the weighted-average term of our outstanding long-term debt was 6.0 years.

Our average daily commercial paper borrowings outstanding were $3.6 billion in the first six months of 2020 and $4.2 billion in the first six months of 2019 .

We had commercial paper outstanding totaling $2.7 billion as of June 30, 2020 and $2.6 billion as of December 31, 2019 .

We expect to continue to use commercial paper to finance various short-term financing needs.

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We regularly monitor worldwide supply, commodity cost and currency trends so we can cost-effectively secure ingredients, packaging and fuel required for production.

During the first three months of 2020 , the primary drivers of the increase in our aggregate commodity costs were higher currency exchange transaction costs on imported materials, as well as increased costs for dairy, energy, packaging, grains and other ingredients, partially offset by lower costs for sugar and cocoa.

During the first six months of 2020 , the primary drivers of the increase in our aggregate commodity costs were higher currency exchange transaction costs on imported materials, as well as increased costs for dairy, energy, cocoa, oils, nuts, sugar and other ingredients, partially offset by lower costs for grains.

A number of external factors such as the current COVID-19 global pandemic, weather conditions, commodity market conditions, currency fluctuations and the effects of governmental agricultural or other programs affect the cost and availability of raw materials and agricultural materials used in our products.

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Stock Plans and Share Repurchases:

See Note 11, Stock Plans , for more information on our stock plans, grant activity and share repurchase program for the three months ended March 31, 2020 .

See Note 11, Stock Plans , for more information on our stock plans, grant activity and share repurchase program for the six months ended June 30, 2020 .

Between 2013 and 2017, our Board of Directors authorized the repurchase of a total of $13.7 billion of our Common Stock through December 31, 2018 .

On January 31, 2018 , our Finance Committee, with authorization delegated from our Board of Directors, approved an increase of $6.0 billion in the share repurchase program, raising the authorization to $19.7 billion of Common Stock repurchases, and extended the program through December 31, 2020 .

We repurchased shares at an aggregate cost of $17.2 billion , at a weighted-average cost of $40.09 per share, through March 31, 2020 ( $0.7 billion in the first three months of 2020 , $1.5 billion in 2019 , $2.0 billion in 2018, $2.2 billion in 2017, $2.6 billion in 2016, $3.6 billion in 2015, $1.9 billion in 2014 and $2.7 billion in 2013).

The number of shares that we ultimately repurchase under our share repurchase program may vary depending on numerous factors, including share price and other market conditions, our ongoing capital allocation planning, levels of cash and debt balances, other demands for cash, such as acquisition activity, general economic or business conditions

and Board and management discretion.

We repurchased shares at an aggregate cost of $17.2 billion , at a weighted-average cost of $40.09 per share, through June 30, 2020 ( $0.7 billion in the first six months of 2020 , $1.5 billion in 2019, $2.0 billion in 2018, $2.2 billion in 2017, $2.6 billion in 2016, $3.6 billion in 2015, $1.9 billion in 2014 and $2.7 billion in 2013).

The number of

shares that we ultimately repurchase under our share repurchase program may vary depending on numerous factors, including share price and other market conditions, our ongoing capital allocation planning, levels of cash and debt balances, other demands for cash, such as acquisition activity, general economic or business conditions and Board and management discretion.

Additionally, our share repurchase activity during any particular period may fluctuate.

We may accelerate, suspend, delay or discontinue our share repurchase program at any time, without notice.

We paid dividends of $409 million in the first three months of 2020 and $380 million in the first three months of 2019 .

On July 30, 2019, the Finance Committee, with authorization delegated from our Board of Directors, increased the quarterly cash dividend to $0.285 per share of Class A Common Stock, an increase of 10 percent, which would be $1.14 per common share on an annualized basis.

The first quarter 2020 dividend was payable on April 14, 2020, to shareholders of record as of March 31, 2020.

We paid dividends of $819 million in the first six months of 2020 and $756 million in the first six months of 2019 .

The second quarter 2020 dividend of $0.285 per share, declared on May 13, 2020 for shareholders of record as of June 30, 2020, was paid on July 14, 2020.

On July 28, 2020, the Finance Committee, with authorization delegated from our Board of Directors, declared a quarterly cash dividend of $0.315 per share of Class A Common Stock, an increase of 11 percent.

This dividend is payable on October 14, 2020, to shareholders of record as of September 30, 2020.

The declaration of dividends is subject to the discretion of our Board of Directors and depends on various factors, including our net earnings, financial condition, cash requirements, future prospects and other factors that our Board of Directors deems relevant to its analysis and decision making.

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This report contains a number of forward-looking statements.

Words, and variations of words, such as “will,” “may,” “expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,” “likely,” “estimate,” “anticipate,” “objective,” “predict,” “seek,” “aim,” “potential,” “outlook” and similar expressions are intended to identify our forward-looking statements, including but not limited to statements about:

the impact of the recent outbreak of COVID-19 on consumer demand and our global supply chain, operations and routes to market;

Words, and variations of words, such as “will,” “may,” “expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,” “likely,” “estimate,” “anticipate,” “objective,” “predict,” “project,” “position,” “seek,” “aim,” “potential,” “outlook” and similar expressions are intended to identify our forward-looking statements, including but not limited to statements about:

the impact of the COVID-19 outbreak on consumer demand, costs, product mix, the availability of our products, our strategic initiatives, our and our partners’ global supply chains, operations and routes to market, and our financial results;

our future performance, including our future revenue and earnings growth;

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commodity prices and supply;

our investments including in JDE and KDP;

political and economic conditions and volatility;

our investments including in JDE Peet's and KDP;

political, business and economic conditions and volatility;

currency exchange rates, controls and restrictions and the effect of currency translation on our results of operations;

the application of highly inflationary accounting for our Argentinian subsidiaries and the potential for and impacts from currency devaluation in other countries;

the purchase price allocation for the Give & Go transaction;

the outcome and effects on us of legal proceedings and government investigations;

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pension expenses, contributions and assumptions;

our liquidity, funding sources and

uses of funding, including debt issuances and our use of commercial paper, steps we have taken to enhance our capital structure and liquidity, and our borrowing costs;

our liquidity, funding sources and uses of funding, including debt issuances and our use of commercial paper;

steps we have taken to enhance our capital structure and liquidity, credit availability and our ability to raise capital, and the impact of market disruptions on counterparties and business partners;

the planned phase out of London Interbank Offered Rates;

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Russia, Ukraine, Turkey, Kazakhstan, Georgia, Poland, Czech Republic, Slovak Republic, Hungary, Bulgaria, Romania, the Baltics and the East Adriatic countries.

Our developed markets include the entire

North America region, the Europe region excluding the countries included in the emerging markets definition, and Australia, New Zealand and Japan from the AMEA region.

Our developed markets include the entire North America region, the Europe region excluding the countries included in the emerging markets definition, and Australia, New Zealand and Japan from the AMEA region.

“Adjusted Operating Income” is defined as operating income excluding the impacts of the Simplify to Grow Program (4) ;

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Swiss tax reform impacts (10) ;

and incremental expenses related to the 2017 malware incident.

and costs associated with the JDE Peet's transaction (1) .

We also present “Adjusted Operating Income margin,” which is subject to the same adjustments as Adjusted Operating Income.

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“Adjusted EPS” is defined as diluted EPS attributable to Mondelēz International from continuing operations excluding the impacts of the items listed in the Adjusted Operating Income definition as well as losses on debt extinguishment and related expenses;

gain on equity method investment transactions;

gains or losses on equity method investment transactions;

net earnings from divestitures (2) ;

gains or losses on interest rate swaps no longer designated as accounting cash flow hedges due to changed financing and hedging plans and U.S.

gains or losses on interest rate swaps no longer designated as accounting cash flow hedges due to changed financing and hedging plans;

and Swiss tax reform impacts (10) .

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When items no longer impact our current or future presentation of non-GAAP operating results, we remove these items from our non-GAAP definitions.

Divestitures include completed sales of businesses and exits of major product lines upon completion of a sale or licensing agreement.

During the second quarter of 2020, we added to the non-GAAP definitions the exclusion of costs associated with the JDE Peet's transaction.

Refer to Note 6, Equity Method Investments and Note 14, Income Taxes , for more information on the JDE Peet's transaction.

Divestitures include completed sales of businesses (including the partial or full sale of an equity method investment) and exits of major product lines upon completion of a sale or licensing agreement.

See Note 2, Acquisitions and Divestitures , for information on acquisitions and divestitures impacting the comparability of our results.

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Rosenfeld’s compensation arrangements together as “CEO transition remuneration.” We are excluding amounts we expense as CEO transition remuneration from our non-GAAP results because those amounts are not part of our regular compensation program and are incremental to amounts we would have incurred as ongoing CEO compensation.

As a result, in 2017, we excluded amounts expensed for the cash payment to Mr.

As a result, in 2017, we excluded

amounts expensed for the cash payment to Mr.

Van de Put and partial vesting of his equity grants.

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During the third quarter of 2019, Swiss Federal and Zurich Cantonal tax events drove our recognition of a Swiss tax reform net benefit to our results of operations.

December 22, 2017, the United States enacted tax reform legislation that included a broad range of business tax provisions.

On December 22, 2017, the United States enacted tax reform legislation that included a broad range of business tax provisions.

We exclude these tax reform impacts from our Adjusted EPS as they do not reflect our ongoing tax obligations under the new tax reforms.

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We also evaluate our Organic Net Revenue growth from emerging markets and developed markets, and these underlying measures are also reconciled to U.S.

For the Three Months Ended March 31, 2020

For the Three Months Ended March 31, 2019

For the Three Months Ended June 30, 2020

For the Three Months Ended June 30, 2019

(in millions)

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Organic Net Revenue

For the Six Months Ended June 30, 2020

For the Six Months Ended June 30, 2019

(in millions)

Impact of currency

Impact of acquisition

Impact of divestiture

Organic Net Revenue

Adjusted Operating Income:

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GAAP financial measure) were to exclude Simplify to Grow Program;

intangible asset impairment charges;

mark-to-market impacts from commodity and forecasted currency transaction derivative contracts;

acquisition integration costs;

acquisition and divestiture-related costs;

operating income from a divestiture;

net gain on a divestiture;

costs associated with the JDE Peet's transaction;

the remeasurement of net monetary position;

impact from pension participation changes;

and CEO transition remuneration.

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Simplify to Grow Program (1)

Intangible asset impairment charges (2)

Mark-to-market losses/(gains) from derivatives (3)

Acquisition integration costs (4)

Acquisition-related costs (4)

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Operating income from divestiture (4)

Net gain on divestiture (4)

Costs associated with JDE Peet's transaction (5)

Remeasurement of net monetary position (6)

Impact from pension participation changes (7)

CEO transition remuneration (8)

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Adjusted Operating Income (constant currency)

For the Six Months Ended

(in millions)

Operating Income

Simplify to Grow Program (1)

Intangible asset impairment charges (2)

Mark-to-market losses/(gains) from derivatives (3)

Acquisition integration costs (4)

Acquisition-related costs (4)

Divestiture-related costs (4)

Operating income from divestiture (4)

Net gain on divestiture (4)

Costs associated with JDE Peet's transaction (5)

Remeasurement of net monetary position (6)

Impact from pension participation changes (7)

CEO transition remuneration (8)

Adjusted Operating Income

Unfavorable currency translation

Adjusted Operating Income (constant currency)

Refer to Note 7, Restructuring Program , for more information.

Refer to Note 5, Goodwill and Intangible Assets , for more information.

Refer to Note 9, Financial Instruments , Note 16, Segment Reporting , and Non-GAAP Financial Measures section for more information on the unrealized gains/losses on commodity and forecasted currency transaction derivatives.

Refer to Note 2, Acquisitions and Divestitures , for more information on the April 1, 2020 acquisition of a significant majority interest in Give & Go and the May 28, 2019 divestiture of most of our cheese business in the Middle East and Africa.

Refer to Note 6, Equity Method Investments , for more information on the JDE Peet's transaction.

Refer to Note 1, Basis of Presentation – Currency Translation and Highly Inflationary Accounting , for information on our application of highly inflationary accounting for Argentina.

Refer to Note 10, Benefit Plans , for more information.

Refer to the Non-GAAP Financial Measures definition and related table notes.

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GAAP financial measure) were to exclude the impacts of the items listed in the Adjusted Operating Income tables above as well as a loss related to interest rate swaps;

gains on equity method investment transactions;

gains or losses on equity method investment transactions;

and our proportionate share of unusual or infrequent items recorded by our JDE and KDP equity method investees.

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Simplify to Grow Program (2)

Intangible asset impairment charges (2)

Mark-to-market losses/(gains) from derivatives (2)

Acquisition-related costs (2)

Divestiture-related costs (2)

Net earnings from divestiture (2)

Net gain on divestiture (2)

Costs associated with JDE Peet's transaction (2)

Impact from pension participation changes (2)

(Gain)/loss on equity method investment

transactions (3)

Equity method investee acquisition-related or

other charges/(benefits), net (4)

Unfavorable currency translation

Adjusted EPS (constant currency)

For the Six Months Ended

Diluted EPS attributable to Mondelēz International

Simplify to Grow Program (2)

Intangible asset impairment charges (2)

Mark-to-market losses/(gains) from derivatives (2)

Acquisition-related costs (2)

Divestiture-related costs (2)

Net earnings from divestiture (2)

Net gain on divestiture (2)

Costs associated with JDE Peet's transaction (2)

Impact from pension participation changes (2)

CEO transition remuneration (2)

Loss related to interest rate swaps (5)

Gains on equity method investment transactions (4)

(Gain)/loss on equity method investment

transactions (3)

Equity method investee acquisition-related or

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The tax expense/(benefit) of each of the pre-tax items excluded from our GAAP results was computed based on the facts and tax assumptions associated with each item, and such impacts have also been excluded from Adjusted EPS.

For the three months ended March 31, 2020 , taxes for the:

Simplify to Grow Program were $(13) million, mark-to-market losses from derivatives were $(32) million, loss related to interest rate swaps were $(24) million, gain on equity method investment transactions were $17 million and equity method investee and other adjustments were $(1) million.

For the three months ended March 31, 2019 , taxes for the:

Simplify to Grow Program were $(19) million, mark-to-market gains from derivatives were $3 million, gain on equity method investment transaction were $5 million and equity method investee and other adjustments were $(4) million.

For the three months ended June 30, 2020, taxes for the:

Simplify to Grow Program were $(20) million, intangible asset impairment charges were $(21) million, acquisition-related costs were $(2) million, costs associated with the JDE Peet's transaction were $261 million and equity method investee and other adjustments were $(7) million.

For the three months ended June 30, 2019 , taxes for the:

Simplify to Grow Program were $(19) million, mark-to-market gains from derivatives were $3 million, divestiture-related costs were $(1) million, net gain on divestiture were $3 million, impact from pension participation changes were $9 million, net loss on equity method investment transactions were $2 million and equity method investee and other adjustments were $(3) million.

For the six months ended June 30, 2020 , taxes for the:

Simplify to Grow Program were $(33) million, intangible asset impairment charges were $(21) million, mark-to-market losses from derivatives were $(32) million, acquisition-related costs were $(3) million, costs associated with the JDE Peet's transaction were $261 million, loss related to interest rate swaps were $(24) million, gain on equity method investment transactions were $17 million and equity method investee and other adjustments were $(8) million.

For the six months ended June 30, 2019 , taxes for the:

Simplify to Grow Program were $(38) million, mark-to-market gains from derivatives were $6 million, divestiture-related costs were $(1) million, net earnings from divestiture were $1 million, gain on divestiture were $3 million, impact from pension participation changes were $9 million, CEO transition remuneration were zero, net loss on equity method investment transaction were $7 million and equity method investee and other adjustments were $(7) million.

See the Adjusted Operating Income table above and the related footnotes for more information.

Refer to Note 9, Financial Instruments , for information on our interest rate swaps that we no longer designate as cash flow hedges.

Refer to Note 6, Equity Method Investments , for more information on the gains on equity method investment transactions.

Refer to Note 9, Financial Instruments , for information on our interest rate swaps that we no longer designate as cash flow hedges.

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 2. Management’s Discussion and Analysis