What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-03 compared with 2020-07-29 · 477 added, 365 removed, 648 unchanged (57% of the section changed)

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accelerating consumer-centric growth, driving operational excellence and creating a winning growth culture.

We believe the successful implementation of our strategic priorities and our leveraging our strong foundation of iconic global and local brands, an attractive global footprint, our market leadership in developed and emerging markets, our deep innovation, marketing and distribution capabilities, and our efficiency and sustainability efforts, will drive top- and bottom-line growth, enabling us to continue to create long-term value for our shareholders.

We believe the successful implementation of our strategic priorities and leveraging our strong foundation of iconic global and local brands, an attractive global footprint, our market leadership in developed and emerging markets, our deep innovation, marketing and distribution capabilities, and our efficiency and sustainability efforts, will drive top- and bottom-line growth, enabling us to continue to create long-term value for our shareholders.

Recent Developments and Significant Items Affecting Comparability

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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.

During the first nine months of 2020, we experienced a significant increase in demand and revenue growth 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, and especially for categories such as 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 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.

During the second quarter especially, lockdowns and other related measures or restrictions had 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.

In the third quarter, demand grew in both developed and emerging markets as the negative impacts of COVID-19 during the second quarter subsided and a number of our key markets returned to higher growth.

A sharp reduction in global travel continues to negatively impact our world travel retail business, and lower out-of-home consumption continues to negatively impact our foodservice business as well as sales of our gum and candy products.

During the first nine months of 2020, we also experienced temporary disruptions in operations in some of our emerging markets that were not material to our consolidated results.

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

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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 increased our $15 million global commitment to assist those most impacted by COVID-19 to nearly $27 million to date.

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

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• 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.

The disruptions were not material to our consolidated results for the first nine months 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 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.

• Our net revenue and net earnings in U.S.

dollars for the nine months ended September 30, 2020 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.

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.

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

In the third quarter of 2020, our spending in these areas was significantly less but still above pre-COVID levels.

We continued to incur higher costs in these areas in response to the ongoing pandemic as we worked to protect our employees and deliver our products timely and safely to our customers.

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

While we have not had material disruptions to date, 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.

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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 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.

• During the first nine months of 2020, we generated $2.3 billion of cash from operations, or $1.7 billion after capital expenditures.

Also, as of September 30, 2020, we had $2.8 billion of cash and cash equivalents on hand.

• During the first nine months of 2020, we also received cash of €350 million ($394 million) from our participation in the JDE Peet's public share offerings, $185 million from our participation in the KDP secondary offering and $777 million from subsequent KDP share sales (see additional information below and in Note 6, Equity Method Investments ).

• As a precautionary measure, in March, we also 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.

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

• Based on our current available cash and access to financing markets, we do not anticipate any issue in funding our next long-term debt maturity of approximately $800 million in January 2021.

• We also have access to short-term and long-term financing markets and have actively utilized these markets in 2020.

During the initial outbreak of COVID-19 in March, we put supplemental short-term credit

facilities in place, which we have since retired in full.

We also continued to utilize the commercial paper markets in the United States and Europe for flexible, low-cost, short-term financing.

We have also issued additional long-term debt several times this year due to favorable market conditions and opportunities to shift a portion of our funding mix from short-term debt to long-term debt at a low cost.

We continue to have $6.0 billion of undrawn credit facilities as well as other forms of short-term and long-term financing options available (refer to the Liquidity and Capital Resources section).

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

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

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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.

• In connection with the ongoing pandemic, 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 during the second quarter in addition to our annual testing in the third quarter of 2020.

In connection with the testing, we concluded that eight brands were impaired and we recorded a total of $144 million of impairment charges year to date.

While we did not identify impairment triggers for 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.

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• 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.

While some of the initial impacts of the pandemic on our business have moderated in the third quarter of 2020, the business and economic environment remains uncertain and additional impacts may arise that we cannot currently anticipate.

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 nine months of 2020 may not continue.

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

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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.

JDE Peet's and KDP Equity Method Investment Transactions

KDP and JDE Peet's Equity Method Investment Transactions

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.

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).

Subsequently, on August 3, 2020, we sold approximately 14.1 million shares and on September 9, 2020, we sold approximately 12.5 million shares, which reduced our KDP ownership interest to 11.2% of total outstanding shares.

During the third quarter of 2020, we received $777 million of proceeds and recorded pre-tax gains of $335 million (or $258 million after-tax).

The cash taxes associated with the KDP share sales are payable by the end of 2020.

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

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 received €350 million ($394 million) of total proceeds from the sales of JDE Peet's shares and we recorded a

preliminary 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.

During the third quarter of 2020, we increased our preliminary gain by $10 million to $131 million.

Consistent with our accounting for KDP and in connection with JDE Peet's becoming a public company, during the second quarter of 2020, 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.

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.

Refer to Note 6, Equity Method Investments , and Note 14, Income Taxes , for additional information.

Swiss Tax Reform

On August 6, 2019, Switzerland published changes to its Federal tax law in the Official Federal Collection of Laws.

On September 27, 2019, the Zurich Canton published their decision on the September 1, 2019 Zurich Canton public vote regarding the Cantonal changes associated with the Swiss Federal tax law change.

The intent of these tax law changes was to replace certain preferential tax regimes with a new set of internationally accepted measures that are hereafter referred to as “Swiss tax reform”.

Based on these Federal / Cantonal events, it is our position that enactment of Swiss tax reform for U.S.

GAAP purposes has been met as of September 30, 2019, and we recorded the impacts in the third quarter 2019.

The net impact was a benefit of $767 million, which consists of a $769 million reduction in deferred tax expense from an allowed step-up of intangible assets for tax purposes and remeasurement of our deferred tax balances, partially offset by a $2 million indirect tax impact in selling, general and administrative expenses.

The future rate impacts of these Swiss tax reform law changes were effective starting January 1, 2020.

Refer to Note 14, Income Taxes , for more information on our current- and prior-year estimated annual effective tax rates and Swiss tax reform.

Summary of Results

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.

• Net revenues increased 4.9% to $6.7 billion in the third quarter of 2020 and increased 1.7% to $19.3 billion in the first nine months of 2020 as compared to the same periods in the prior year.

During the third quarter and the first nine 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 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.

In the third quarter the negative impacts we experienced from COVID-19, particularly during the second quarter, subsided, resulting in a return to revenue growth across a number of our key markets.

In addition, growth in the third quarter benefited from the impact of trade restocking to return inventory levels closer to pre-COVID-19 rates as spikes in North America biscuit and European retail, and traditional trade closures in emerging markets resulted in trade inventories below historical levels as we exited the second quarter.

– Net revenue increased in the third quarter of 2020, driven by favorable volume/mix, higher net pricing and incremental net revenues from our April 1, 2020 acquisition of Give & Go, partially offset by the 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.

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

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, as well as the May 28, 2019 divestiture of most of our cheese business in the Middle East and Africa.

• Organic Net Revenue, a non-GAAP financial measure, increased 4.4% to $6.6 billion in the third quarter of 2020 and increased 3.9% to $19.6 billion in the first nine months of 2020 as compared to same periods in the prior year.

During the third quarter and first nine months of 2020, Organic Net Revenue grew due to favorable volume/mix and higher net pricing.

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.

Organic Net Revenue is on a constant currency basis and excludes revenue from acquisitions and divestitures.

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 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.

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 20.4% to $0.78 in the third quarter of 2020 and decreased 24.2% to $1.66 in the first nine months of 2020 as compared to the same periods in the prior year.

– Diluted EPS decreased in the third quarter of 2020, primarily driven by lapping the prior-year benefit from Swiss tax reform (refer to Note 14, Income Taxes ), partially offset by gains on equity method investment transactions, lapping the prior-year loss on interest rate swaps, favorable year-over-year mark-to-market impacts from currency and commodity derivatives and lower Simplify to Grow program costs.

– Diluted EPS decreased during the first nine months of 2020, primarily driven by lapping the prior-year benefit from Swiss tax reform, costs associated with the JDE Peet's transaction, unfavorable year-over-year mark-to-market impacts from currency and commodity derivatives, higher intangible asset impairment charges, lapping a prior-year gain on divestiture, lapping the prior-year benefit from pension participation changes and lapping prior-year net earnings from divestitures.

These factors were partially offset by gains on equity method investment transactions, higher Adjusted EPS, lower Simplify to Grow program costs and lower losses related to interest rate swaps.

• Adjusted EPS, a non-GAAP financial measure, decreased 1.6% to $0.63 in the third quarter of 2020 and increased 2.7% to $1.92 in the first nine months of 2020 as compared to the same periods in the prior year.

On a constant currency basis, Adjusted EPS was flat at $0.64 in the third quarter of 2020 and increased 5.9% to $1.98 in the first nine months of 2020 as compared to the same periods in the prior year.

– Adjusted EPS decreased in the third quarter of 2020, driven by higher taxes, primarily due to non-recurring discrete tax items and changes in our mix of earnings, and unfavorable currency translation, mostly offset by gains in operating activities, an increase in benefit plan non-service income and fewer shares outstanding.

– Adjusted EPS increased in the first nine months of 2020, driven by gains in operating activities, an increase in benefit plan non-service income, fewer shares outstanding and lower interest expense, net, partially offset by unfavorable currency translation, higher taxes 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 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.

While its full impact is not yet known, it has had a material negative effect on the economy and could have a material negative effect on our business and results in 2020, particularly if there are significant adverse changes to consumer demand or significant disruptions to the supply, production or distribution of our products or the credit or financial stability of our customers and other business partners.

Snack categories continued to grow in the first nine months 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 Risk , volatility in global consumer, commodity, currency and capital markets increased significantly during the first nine months of 2020 and is expected to continue until the COVID-19 outbreak is largely resolved.

We continue to monitor and respond to the COVID-19 outbreak.

While its full impact is not yet known, it has had a material negative effect on the economy and could have a material negative effect on our business and results in the future, particularly if there are significant adverse changes to consumer demand or significant disruptions to the supply, production or distribution of our products or the credit or financial stability of our customers and other business partners.

An economic or credit crisis could occur and impair credit availability and our ability to raise capital when needed.

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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 consumer demand for our products evolves, we could see continued shifts 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.

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

Parliament approved Withdrawal Agreement.

During a transition period

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.

On December 31, 2020, the United Kingdom will be completing the withdrawal process from the European Union.

Through 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.

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.

As we approach the planned U.K.

exit at the end of 2020, we are taking 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 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.

In the nine months ended September 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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The volatility in foreign currencies and other markets is expected to continue as the United Kingdom executes its exit from the European Union.

If the U.K.'s membership in the European Union terminates without trade and other cross-border operating agreements, there could be increased costs from re-imposition of tariffs on trade between the United Kingdom and other countries, including those in the European Union, shipping delays because of the need for customs inspections and procedures and shortages of certain goods.

If the U.K.'s membership in the European Union terminates without trade and other cross-border operating agreements, there could be increased costs from re-imposition of tariffs on trade between the United Kingdom and other countries, including those in the European Union, increased shipping costs and delays because of the need for customs inspections and procedures, and shortages or elimination of certain goods if supplies are disrupted or it becomes cost prohibitive for us to offer those goods.

The United Kingdom will also need to negotiate its own tax and trade treaties with countries all over the world, which could take years to complete.

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

If the ultimate terms of the

U.K.’s separation from the European Union negatively impact the U.K.

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

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

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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or Swiss tax reform or related interpretations could change and have an adverse effect on us that could be material.

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 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.

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

• Argentina .

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 nine months ended September 30, 2020, we recorded a remeasurement loss of $7 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

September 30, For the Nine Months Ended

September 30,

See Note 2020 2019 2020 2019

(in millions, except percentages)

Simplify to Grow Program

Simplify to Grow Program Note 7

Restructuring charges $ (68) $ (77) $ (111) $ (117)

1 unchanged sentence

Intangible asset impairment charges (54) (57) (144) (57)

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

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

Note 9 148 18 (38) 67

Acquisition and divestiture-related costs

3 unchanged sentences

Net gain on divestiture — 3 — 44

Costs associated with JDE Peet's transaction

Remeasurement of net monetary position

Costs associated with JDE Peet's transaction Note 6 — — (48) —

Remeasurement of net monetary position Note 1 (2) (1) (7) (2)

Impact from pension participation changes (1)

Note 10 (3) (3) (9) 32

CEO transition remuneration (2)

Loss related to interest rate swaps

Loss related to interest rate swaps Note 8 & 9 — (111) (103) (111)

Swiss tax reform net impacts Note 14 — 767 — 767

Gain/(loss) on equity method investment

transactions (3)

Equity method investee acquisition-

related or other (charges)/benefits, net

Note 6 345 — 537 (2)

Equity method investee items (4)

(41) (11) (82) (40)

Effective tax rate (5)

Note 14 36.1 % (92.5) % 36.0 % (8.8) %

(1) Includes impacts recorded in operating income and interest expense and other, net.

1 unchanged sentence

(3) 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.

(4) Includes our proportionate share of significant operating and non-operating items recorded by our JDE Peet's and KDP equity method investees, including acquisition and divestiture-related costs and restructuring program costs.

(5) Refer to Note 14, Income Taxes , for more information on our effective tax rate and Swiss tax reform 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 June 30 :

Three Months Ended September 30:

For the Three Months Ended

September 30,

2020 2019 $ change % change

(in millions, except per share data)

Net revenues $ 6,665 $ 6,355 $ 310 4.9 %

Operating income 1,135 876 259 29.6 %

1 unchanged sentence

Mondelēz International

1,119 1,426 (307) (21.5) %

Diluted earnings per share attributable to

Mondelēz International

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 .

0.78 0.98 (0.20) (20.4) %

Net Revenues – Net revenues increased $310 million (4.9%) to $6,665 million in the third quarter of 2020, and Organic Net Revenue (1) increased $277 million (4.4%) to $6,632 million.

Developed markets net revenue increased 9.6% and developed markets Organic Net Revenue increased 3.8% (1) .

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

Emerging markets net revenues decreased 3.1%, including an unfavorable currency impact, and emerging markets Organic Net Revenue increased 5.3% (1) .

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

2 unchanged sentences

Add back the following items affecting comparability:

Unfavorable currency

Impact of divestiture

Impact of acquisitions

Unfavorable currency 1.4 pp

Impact of acquisition (1.9) pp

Total change in Organic Net Revenue (1)

Higher net pricing

Unfavorable volume/mix

Favorable volume/mix 2.4 pp

Higher net pricing 2.0 pp

(1) 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.

Net revenue increase of 4.9% was driven by our underlying Organic Net Revenue growth of 4.4% and the impact of an acquisition, partially offset by unfavorable currency.

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

However, our gum and candy categories, as well as our world travel retail and foodservice businesses, continued to be negatively impacted by COVID-19.

In emerging markets, where we have a greater concentration of traditional trade, the majority of our markets grew but some markets were still challenged by COVID-19 impacts, particularly those with significant gum and candy portfolios.

Overall, as the negative impacts of COVID-19 experienced earlier in the year subsided in the third quarter, revenue growth returned in a number of our key emerging markets, though overall emerging markets net revenues declined due to unfavorable currency impacts.

In addition, growth in the quarter benefited from the impact of trade restocking to return inventory levels closer to pre-COVID-19 rates as spikes in North America biscuit and European retail, and traditional trade closures in emerging markets resulted in trade inventories below historical levels as we exited the second quarter.

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

Favorable volume/mix in all regions except Latin America was driven by strong volume gains tempered by unfavorable mix reflecting shifts in consumer purchases in response to the COVID-19 outbreak.

Higher net pricing in all regions except Europe was due to the benefit of carryover pricing from 2019 as well as the effects of input cost-driven pricing actions taken during the first nine months of 2020.

The April 1, 2020 acquisition of Give & Go added incremental net revenues of $125 million.

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:

Unfavorable currency impacts decreased net revenues by $92 million, due primarily to the strength of the U.S.

dollar relative to several currencies, including the Brazilian real, Argentinian peso, Russian ruble, Mexican peso and Indian rupee, partially offset by the strength of several currencies relative to the U.S.

dollar, including the euro, British pound sterling and Australian dollar.

Operating Income – Operating income increased $259 million (29.6%) to $1,135 million in the third quarter of 2020.

Adjusted Operating Income (1) increased $100 million (9.4%) to $1,165 million and Adjusted Operating Income on a constant currency basis (1) increased $112 million (10.5%) to $1,177 million due to the following:

Income % Change

(in millions)

Operating Income for the Three Months Ended June 30, 2019

Operating Income for the Three Months Ended September 30, 2019

Simplify to Grow Program (2)

Intangible asset impairment charges (3)

Mark-to-market gains from derivatives (4)

1 unchanged sentence

Divestiture-related costs (5)

Operating income from divestiture (4)

Net gain on divestiture (5)

Remeasurement of net monetary position (6)

Impact from pension participation changes (6)

CEO transition remuneration (1)

Swiss tax reform impact (7)

Other/rounding

Adjusted Operating Income (1) for the

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

Higher net pricing

Higher input costs

Unfavorable volume/mix

Lower selling, general and administrative expenses

Favorable volume/mix 53

Higher selling, general and administrative expenses (22)

Impact from acquisitions (5)

Prior-year VAT-related settlement

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

2 unchanged sentences

Adjusted Operating Income (1) for the

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Simplify to Grow Program (2)

Intangible asset impairment charges (3)

Mark-to-market losses from derivatives (3)

Acquisition integration costs (4)

Acquisition-related costs (4)

Mark-to-market gains from derivatives (4)

Divestiture-related costs (5)

Costs associated with JDE Peet's transaction (8)

Remeasurement of net monetary position (6)

Operating Income for the Three Months Ended June 30, 2020

Other/rounding

Operating Income for the Three Months Ended September 30, 2020

$ 1,135 29.6 %

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

(2) Refer to Note 7, Restructuring Program, for more information.

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

(4) 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.

1 unchanged sentence

(6) 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.

(7) Refer to Note 14, Income Taxes, and our Annual Report on Form 10-K for the year ended December 31, 2019 for more information on Swiss tax reform.

During the third quarter of 2020, we realized higher net pricing and favorable volume/mix, which was partially 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 nine months of 2020, was reflected across all regions except Europe.

Favorable volume/mix, primarily due to overall volume increases tempered by the net negative volume impact on some parts of our business from the COVID-19 outbreak, was driven by North America, Europe and AMEA, which was partially offset by unfavorable volume/mix in Latin America.

The increase in input costs was driven by higher raw material costs, partially offset by lower manufacturing costs driven by productivity net of 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 cocoa, energy, grains, nuts, packaging, sugar, oils and other ingredients costs, partially offset by lower costs for dairy.

Total selling, general and administrative expenses increased $18 million from the third quarter of 2019, due to a number of factors noted in the table above, including in part, the impact of acquisitions and higher divestiture-related costs, which were more than offset by lower implementation costs incurred for the Simplify to Grow Program, a favorable currency impact related to expenses and lapping prior-year CEO transition remuneration.

Excluding these factors, selling, general and administrative expenses increased $22 million from the third quarter of 2019.

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

Unfavorable currency changes decreased operating income by $12 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 .

dollar relative to several currencies, including the Brazilian real, Russian ruble, Indian rupee and South African rand, partially offset by the strength of several currencies relative to the U.S.

dollar, including the euro, British pound sterling and Australian dollar.

Operating income margin increased from 13.8% in the third quarter of 2019 to 17.0% in the third quarter of 2020.

The increase in operating income margin was driven primarily by the year-over-year favorable change in mark-to-market gains/(losses) from currency and commodity hedging activities, higher Adjusted Operating Income margin and lower Simplify to Grow program costs.

Adjusted Operating Income margin increased from 16.8% for the third quarter of 2019 to 17.5% for the third quarter of 2020.

The increase in Adjusted Operating Income margin was driven primarily by higher net pricing, lower manufacturing costs and selling, general and administrative cost leverage, partially offset by higher raw material costs.

Net Earnings and Earnings per Share Attributable to Mondelēz International – Net earnings attributable to Mondelēz International of $1,119 million decreased by $307 million (21.5%) in the third quarter of 2020.

Diluted EPS attributable to Mondelēz International was $0.78 in the third quarter of 2020, down $0.20 (20.4%) from the third quarter of 2019.

Adjusted EPS (1) was $0.63 in the third quarter of 2020, down $0.01 (1.6%) from the third quarter of 2019.

Adjusted EPS on a constant currency basis (1) was $0.64 in the third quarter of 2020, flat from the third quarter of 2019.

Diluted EPS Attributable to Mondelēz International for the

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

Simplify to Grow Program (2)

Intangible asset impairment charges (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

Loss related to interest rate swaps (3)

Swiss tax reform net impacts (2)

Equity method investee items (4)

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

Increase in operations 0.05

Impact from acquisition (2)

Changes in benefit plan non-service income

Changes in interest and other expense, net (5)

Changes in income taxes (5)

Changes in shares outstanding (6)

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

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

Unfavorable currency translation (0.01)

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

Adjusted EPS (1) for the Three Months Ended September 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)

Mark-to-market gains from derivatives (2)

Gain on equity method investment transactions (7)

Equity method investee items (4)

Diluted EPS Attributable to Mondelēz International for the

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

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

(2) 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.

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

(4) Includes our proportionate share of significant operating and non-operating items recorded by our JDE Peet's and KDP equity investees, such as acquisition and divestiture-related costs and restructuring program costs.

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

(6) 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

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

Nine Months Ended September 30:

For the Nine Months Ended

September 30,

2020 2019 $ change % change

(in millions, except per share data)

Net revenues $ 19,283 $ 18,955 $ 328 1.7 %

Operating income 2,704 2,937 (233) (7.9) %

1 unchanged sentence

Mondelēz International

2,399 3,196 (797) (24.9) %

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 .

1.66 2.19 (0.53) (24.2) %

Net Revenues – Net revenues increased $328 million (1.7%) to $19,283 million in the first nine months of 2020, and Organic Net Revenue (1) increased $736 million (3.9%) to $19,636 million.

Developed markets net revenue increased 7.1% and developed markets Organic Net Revenue increased 5.2%.

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

Emerging markets net revenues decreased 7.2%, including an unfavorable currency impact, and emerging markets Organic Net Revenue increased 1.7% (1) .

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

2 unchanged sentences

Add back the following items affecting comparability:

Unfavorable currency

Impact of divestiture

Impact of acquisition

Unfavorable currency 3.3 pp

Impact of divestiture 0.3 pp

Impact of acquisitions (1.4) pp

Total change in Organic Net Revenue (1)

Higher net pricing

Favorable volume/mix

Favorable volume/mix 2.0 pp

Higher net pricing 1.9 pp

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

Net revenue increase of 1.7% was driven by our underlying Organic Net Revenue growth of 3.9% 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.

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

However, our gum and candy categories as well as our world travel retail and foodservice businesses were negatively impacted by COVID-19.

In emerging markets, where we have a greater concentration of traditional trade, several markets were challenged by COVID-19 impacts, particularly those with significant gum and candy portfolios.

Overall, as the negative impacts of COVID-19 experienced earlier in the year subsided in the third quarter, revenue growth began to recover in a number of our key emerging markets, though overall emerging markets net revenues declined due to unfavorable currency impacts.

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

Favorable volume/mix in all regions except Latin America and AMEA included strong volume gains tempered by unfavorable mix reflecting shifts in consumer purchases in response to the COVID-19 outbreak.

The April 1, 2020 acquisition of Give & Go added incremental net revenues of $216 million and the July 16, 2019 acquisition of a majority interest in Perfect Snacks added incremental net revenues of $55 million in the first nine months of 2020.

Unfavorable currency impacts decreased net revenues by $624 million, due primarily to the strength of the U.S.

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

dollar relative to most currencies, including the Brazilian real, Argentinian peso, Russian ruble, Mexican peso, Indian rupee, South African rand and Australian dollar, partially offset by the strength of several currencies relative to the U.S.

dollar, including the Philippine peso, Egyptian pound and euro.

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 $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:

Operating Income – Operating income decreased $233 million (7.9%) to $2,704 million in the first nine months of 2020.

Adjusted Operating Income (1) increased $50 million (1.6%) to $3,213 million and Adjusted Operating Income on a constant currency basis (1) increased $136 million (4.3%) to $3,299 million due to the following:

Income % Change

(in millions)

Operating Income for the Six Months Ended June 30, 2019

Operating Income for the Nine Months Ended September 30, 2019

Simplify to Grow Program (2)

Intangible asset impairment charges (3)

Mark-to-market gains from derivatives (4)

6 unchanged sentences

CEO transition remuneration (1)

Swiss tax reform impact 2

Other/rounding

Adjusted Operating Income (1) for the

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

Higher net pricing

2 unchanged sentences

Higher selling, general and administrative expenses

Impact from acquisition (4)

Impact from acquisitions (5)

Prior-year VAT-related settlements

3 unchanged sentences

Adjusted Operating Income (1) for the

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Simplify to Grow Program (2)

6 unchanged sentences

Remeasurement of net monetary position (6)

Operating Income for the Six Months Ended June 30, 2020

Other/rounding

Operating Income for the Nine Months Ended September 30, 2020

$ 2,704 (7.9) %

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

(2) Refer to Note 7, Restructuring Program, for more information.

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

2 unchanged sentences

(7) Refer to Note 10, Benefit Plans , for more information.

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

(8) 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.

During the first nine months of 2020, we realized higher net pricing and favorable volume/mix, which was largely offset by increased input costs.

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 $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 in input costs was driven by higher raw material costs, partially offset by lower manufacturing costs driven by productivity net of 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 cocoa, dairy, energy, nuts, oils, packaging, sugar and other ingredients costs, partially offset by lower costs for grains.

Total selling, general and administrative expenses increased $88 million from the first nine months of 2019, due to a number of factors noted in the table above, including in part, the impact of acquisitions, costs associated with the JDE Peet's transaction, lapping the benefit from prior-year pension participation changes, higher acquisition-related costs and higher remeasurement loss of net monetary position, which were more than offset by a favorable currency impact related to expenses, lower implementation costs incurred for the Simplify to Grow Program, 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 $94 million from the first nine 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.

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

Unfavorable currency changes decreased operating income by $86 million due primarily to the strength of the U.S.

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 .

dollar relative to most currencies, including the Brazilian real, Russian ruble, Argentinian peso, Indian rupee, Australian dollar and South African rand, partially offset by the strength of several currencies relative to the U.S.

dollar, including the Egyptian pound, Philippine peso and euro.

Operating income margin decreased from 15.5% in the first nine months of 2019 to 14.0% in the first nine 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, higher intangible asset impairment charges, lapping the prior-year gain on a divestiture, costs associated with the JDE Peet's transaction, lapping the benefit from prior-year pension participation changes and higher acquisition-related costs, partially offset by lower costs for the Simplify to Grow Program.

Adjusted Operating Income margin for the first nine months of 2020 was flat to the first nine months of 2019 at 16.7%.

Adjusted Operating Income margin was unchanged as higher pricing, lower manufacturing costs reflecting productivity net of incremental COVD-19 costs, and selling, general and administrative cost leverage was offset by higher raw material costs.

Net Earnings and Earnings per Share Attributable to Mondelēz International – Net earnings attributable to Mondelēz International of $2,399 million decreased by $797 million (24.9%) in the first nine months of 2020.

Diluted EPS attributable to Mondelēz International was $1.66 in the first nine months of 2020, down $0.53 (24.2%) from the first nine months of 2019.

Adjusted EPS (1) was $1.92 in the first nine months of 2020, up $0.05 (2.7%) from the first nine months of 2019.

Adjusted EPS on a constant currency basis (1) was $1.98 in the first nine months of 2020, up $0.11 (5.9%) from the first nine months of 2019.

Diluted EPS Attributable to Mondelēz International for the

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

Simplify to Grow Program (2)

Intangible asset impairment charges (2)

Mark-to-market gains from derivatives (2)

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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 Six Months Ended June 30, 2019

Loss related to interest rate swaps (4)

Swiss tax reform net impacts (5)

Net loss on equity method investment transaction (6)

Equity method investee items (7)

Adjusted EPS (1) for the Nine Months Ended September 30, 2019

Increase in operations

Decrease in equity method investment net earnings

VAT-related settlements

Changes in benefit plan non-service income

Changes in interest and other expense, net (8)

Changes in income taxes (9)

Changes in shares outstanding (10)

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

Adjusted EPS (constant currency) (1) for the Nine Months Ended September 30, 2020

Unfavorable currency translation (0.06)

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

Adjusted EPS (1) for the Nine Months Ended September 30, 2020

Simplify to Grow Program (2)

2 unchanged sentences

Acquisition-related costs (2)

Net earnings from divestiture (2) (3)

Costs associated with JDE Peet's transaction (2)

Impact from pension participation changes (2)

Loss related to interest rate swaps (4)

Gain on equity method investment transactions (6)

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

Equity method investee items (7)

Diluted EPS Attributable to Mondelēz International for the

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

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

(2) 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).

Within earnings per share, taxes related to the JDE Peet's transaction are included in costs associated with the JDE Peet's transaction.

(3) Divestitures include completed sales of businesses, partial or full sales of equity method investments and exits of major product lines upon completion of a sale or licensing agreement.

As we record our share of KDP and JDE Peet’s ongoing earnings on a one-quarter lag basis,

we reflected the impact of prior-quarter sales of KDP and JDE Peet’s shares within divested results as if the sales occurred at the beginning of all periods presented.

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

(5) Refer to Note 14, Income Taxes, and our Annual Report on Form 10-K for the year ended December 31, 2019 for more information on Swiss tax reform.

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

(7) Includes our proportionate share of significant operating and non-operating items recorded by our JDE Peet's and KDP equity method investees, such as acquisition and divestiture-related costs and restructuring program costs.

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

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

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

(10) 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.

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

Results of Operations by Reportable Segment

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For the Three Months Ended

For the Six Months Ended

September 30, For the Nine Months Ended

September 30,

2020 2019 2020 2019

(in millions)

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Latin America $ 610 $ 736 $ 1,847 $ 2,273

AMEA 1,470 1,419 4,209 4,312

Europe 2,526 2,377 7,248 7,175

North America 2,059 1,823 5,979 5,195

Net revenues $ 6,665 $ 6,355 $ 19,283 $ 18,955

Earnings before income taxes:

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Latin America $ 77 $ 84 $ 149 $ 250

AMEA 210 188 615 635

Europe 432 331 1,201 1,239

North America 387 370 1,192 1,096

Unrealized (losses)/gains on hedging activities

Unrealized gains/(losses) on hedging activities

(mark-to-market impacts) 145 20 (42) 69

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For the Three Months Ended

September 30,

2020 2019 $ change % change

(in millions)

Net revenues $ 610 $ 736 $ (126) (17.1) %

Segment operating income 77 84 (7) (8.3) %

For the Six Months Ended

For the Nine Months Ended

September 30,

2020 2019 $ change % change

(in millions)

Net revenues $ 1,847 $ 2,273 $ (426) (18.7) %

Segment operating income 149 250 (101) (40.4) %

Three Months Ended June 30 :

Three Months Ended September 30:

Net revenues decreased $126 million (17.1%), due to unfavorable currency (20.2 pp) and unfavorable volume/mix (5.1 pp), partially offset by higher net pricing (8.2 pp).

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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, biscuits, chocolate and refreshment beverages, partially offset by gains in cheese & grocery.

Unfavorable volume/mix was due to the negative volume impact from the COVID-19 outbreak as well as the impact of pricing-related elasticity, partially offset by the benefit from trade inventory restocking to return inventory levels closer to pre-COVID-19 rates.

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

Segment operating income decreased $7 million (8.3%), primarily due to higher raw material costs, unfavorable volume/mix and unfavorable currency.

These unfavorable items were partially offset by higher net pricing, lower manufacturing costs (net of incremental COVID-19 related costs), lower other selling, general administrative expenses and lower costs incurred for the Simplify to Grow Program.

Nine Months Ended September 30:

Net revenues decreased $426 million (18.7%), due to unfavorable currency (18.5 pp) and unfavorable volume/mix (8.3 pp), partially offset by higher net pricing (8.1 pp).

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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).

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

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

Segment operating income decreased $101 million (40.4%), primarily due to higher raw material costs, unfavorable volume/mix, unfavorable currency, higher other selling, general and administrative expenses (net of lapping the expense of VAT-related settlements in 2019) and a higher remeasurement loss of net monetary position.

For the Three Months Ended

September 30,

2020 2019 $ change % change

(in millions)

Net revenues $ 1,470 $ 1,419 $ 51 3.6 %

Segment operating income 210 188 22 11.7 %

For the Six Months Ended

For the Nine Months Ended

September 30,

2020 2019 $ change % change

(in millions)

Net revenues $ 4,209 $ 4,312 $ (103) (2.4) %

Segment operating income 615 635 (20) (3.1) %

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.

Three Months Ended September 30:

Net revenues increased $51 million (3.6%), due to higher net pricing (2.4 pp) and favorable volume/mix (1.8 pp), partially offset by unfavorable currency (0.6 pp).

Higher net pricing was reflected across all categories.

Favorable volume/mix reflected overall volume gains as the negative impact from COVID-19 related lockdowns impacting our traditional trade markets subsided during the quarter.

Volume/mix also reflected a benefit from trade inventory restocking to return inventory levels closer to pre-COVID-19 rates.

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

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

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 :

dollar relative to several currencies in the region, including the Indian rupee and South African rand, partially offset by the strength of several currencies relative to the U.S.

dollar, including the Australian dollar, Chinese yuan and Philippine peso.

Segment operating income increased $22 million (11.7%), primarily due to higher net pricing, lower manufacturing costs (net of incremental COVID-19 related costs), lapping prior-year intangible asset impairment charges, favorable volume/mix and lower other selling, general and administrative expenses.

These favorable items were partially offset by higher raw material costs, higher Simplify to Grow program costs and higher divestiture-related costs.

Nine Months Ended September 30:

Net revenues decreased $103 million (2.4%), due to unfavorable currency (2.3 pp), the impact of a divestiture (1.3 pp) and unfavorable volume/mix (0.5 pp), partially offset by higher net pricing (1.7 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.

dollar relative to several currencies in the region, including the Indian rupee, South African rand, Australian dollar and Chinese yuan, partially offset by the strength of several currencies relative to the U.S.

dollar, including the Egyptian pound and Philippine peso.

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.

Unfavorable volume/mix was driven by declines in gum, candy, chocolate and refreshment beverages, 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 gum and candy.

Segment operating income decreased $20 million (3.1%), primarily due to higher raw material costs, unfavorable volume/mix, unfavorable currency, higher costs incurred for the Simplify to Grow Program and the impact of the prior-year divestiture.

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

For the Three Months Ended

September 30,

2020 2019 $ change % change

(in millions)

Net revenues $ 2,526 $ 2,377 $ 149 6.3 %

Segment operating income 432 331 101 30.5 %

For the Six Months Ended

For the Nine Months Ended

September 30,

2020 2019 $ change % change

(in millions)

Net revenues $ 7,248 $ 7,175 $ 73 1.0 %

Segment operating income 1,201 1,239 (38) (3.1) %

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, 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).

Three Months Ended September 30:

Net revenues increased $149 million (6.3%), due to favorable volume/mix (3.6 pp) and favorable currency (2.9 pp), partially offset by lower net pricing (0.2 pp).

Favorable volume/mix was due to overall higher volume, which was tempered by the net negative volume impact from the COVID-19 outbreak, as overall increased food purchases for in-home consumption and the benefit from trade inventory restocking to return inventory levels closer to pre-COVID-19 rates were partially 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, biscuits and cheese & grocery, partially offset by declines in candy, gum and refreshment beverages.

Favorable currency impacts reflected the strength of several currencies in the region relative to the U.S.

dollar, primarily the euro and British pound sterling, partially offset by the strength of the U.S.

dollar relative to several currencies, including the Russian ruble and Turkish lira.

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

Segment operating income increased $101 million (30.5%), primarily due to lower costs incurred for the Simplify to Grow Program, lower intangible asset impairment charges, favorable volume/mix, favorable currency and lower advertising and consumer promotion costs.

These favorable items were partially offset by higher raw material costs, higher other selling, general and administrative expenses and lower net pricing.

Nine Months Ended September 30:

Net revenues increased $73 million (1.0%), due to favorable volume/mix (2.5 pp), partially offset by unfavorable currency (1.3 pp) and lower net pricing (0.2 pp).

Favorable volume/mix due to overall higher volume was tempered by the net impact from the COVID-19 outbreak, as overall increased food purchases for in-home consumption were partially 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, biscuits and refreshment beverages, partially offset by declines in gum and candy.

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.

dollar relative to most currencies in the region, including the Russian ruble, Turkish lira and Norwegian krone, partially offset by the strength of several currencies in the region relative to the U.S.

dollar, primarily the euro and Swiss franc.

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

Segment operating income decreased $38 million (3.1%), primarily due to higher raw material costs, higher other selling, general and administrative expenses, unfavorable currency, higher manufacturing costs driven by incremental COVID-19 related costs, higher intangible asset impairment charges and lower net pricing.

These unfavorable items were partially offset by favorable volume/mix, lower Simplify to Grow Program costs and lower advertising and consumer promotion costs.

North America

For the Three Months Ended

September 30,

2020 2019 $ change % change

(in millions)

Net revenues $ 2,059 $ 1,823 $ 236 12.9 %

Segment operating income 387 370 17 4.6 %

For the Six Months Ended

For the Nine Months Ended

September 30,

2020 2019 $ change % change

(in millions)

Net revenues $ 5,979 $ 5,195 $ 784 15.1 %

Segment operating income 1,192 1,096 96 8.8 %

Three Months Ended June 30 :

Three Months Ended September 30:

Net revenues increased $236 million (12.9%), due to favorable volume/mix (4.2 pp), the impact of acquisitions (6.8 pp) and higher net pricing (2.1 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, 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.

Favorable volume/mix, in part due to the positive volume impact from COVID-19 as consumers increased their food purchases for in-home consumption as well as the benefit from trade inventory restocking to return inventory levels closer to pre-COVID-19 rates, was driven by gains in biscuits, partially offset by declines in gum, chocolate and candy.

The April 1, 2020 acquisition of Give & Go added incremental net revenues of $125 million in the third quarter of 2020.

Higher net pricing was reflected across all categories except gum.

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

dollar relative to the Canadian dollar.

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 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 :

Segment operating income increased $17 million (4.6%), primarily due to favorable volume/mix, higher net pricing and the impact of acquisitions.

Nine Months Ended September 30:

Net revenues increased $784 million (15.1%), due to favorable volume/mix (7.8 pp), the impact of acquisitions (5.2 pp) and higher net pricing (2.3 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.

The April 1, 2020 acquisition of Give & Go added incremental net revenues of $216 million and the July 16, 2019 acquisition of a majority interest in Perfect Snacks added net revenues of $55 million in the first nine months of 2020.

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

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.

Segment operating income increased $96 million (8.8%), primarily due to favorable volume/mix, higher net pricing and the impact of acquisitions.

These favorable items were partially offset by intangible asset impairment charges, higher advertising and consumer promotion costs, higher other selling, general and administrative expenses (including incremental COVID-19 related costs), lapping the benefit from prior-year pension participation changes, higher raw material costs, higher manufacturing costs driven by incremental COVID-19 related costs and higher Simplify to Grow Program 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 in the first half of 2020.

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

In the third quarter of 2020, we completed the retirement of this incremental short-term borrowing capacity and have returned our credit facility available capacity to pre-COVID-19 levels.

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 we recently secured and continue to 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 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.

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Net Cash Provided by Operating Activities:

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 .

Net cash provided by operating activities was $2,315 million in the first nine months of 2020 and $1,882 million in the first nine 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 $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.

Net cash used in investing activities was $357 million in the first nine months of 2020 and $735 million in the first nine months of 2019.

The decrease in net cash used in investing activities was due primarily to cash received from the sale of shares in the JDE Peet's and KDP offerings and lower capital expenditures, partially offset by cash paid to acquire a majority interest in Give & Go.

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

During the first quarter of 2020 and due to the ongoing COVID-19 situation, we reduced our expected 2020 capital expenditures from up to $0.9 billion to up to $0.8 billion, including capital expenditures in connection with our Simplify to Grow Program.

During the first quarter of 2020 and due to the ongoing COVID-19 pandemic, we reduced our expected 2020 capital expenditures from up to $0.9 billion to up to $0.8 billion, including capital expenditures in connection with our Simplify to Grow Program.

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

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.

Net cash used in financing activities was $495 million in the first nine months of 2020 and $686 million in the first nine months of 2019.

The decrease in cash used in financing activities was primarily due to lower share repurchases and higher net debt issuances, 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 six months of 2020 .

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

The operations held by MIHN generated approximately 71.0% (or $13.7 billion) of the $19.3 billion of consolidated net revenue in the nine months ended September 30, 2020.

The operations held by MIHN represented approximately 81.1% (or $21.9 billion) of the $27.0 billion of net assets as of September 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 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 $19.7 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 .

As of September 30, 2020, we had $2.0 billion of long-term financing authority remaining.

In the next 12 months, we expect $796 million of long-term debt to mature in January 2021.

We expect to fund this repayment with a combination of cash on hand and short-term borrowings, including issuance of commercial paper.

Our total debt was $20.1 billion at September 30, 2020 and $18.4 billion at December 31, 2019.

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

At September 30, 2020, the weighted-average term of our outstanding long-term debt was 6.6 years.

Our average daily commercial paper borrowings outstanding were $3.0 billion in the first nine months of 2020 and $4.2 billion in the first nine months of 2019.

We had commercial paper outstanding totaling $0.1 billion as of September 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 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.

During the first nine 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 cocoa, dairy, energy, nuts, oils, packaging, 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 six months ended June 30, 2020 .

See Note 11, Stock Plans , for more information on our stock plans, grant activity and share repurchase program for the nine months ended September 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 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.

We repurchased shares at an aggregate cost of $17.2 billion, at a weighted-average cost of $40.09 per share, through September 30, 2020 ($0.7 billion in the first nine 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 $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.

We paid dividends of $1,227 million in the first nine months of 2020 and $1,131 million in the first nine months of 2019.

The third quarter 2020 dividend of $0.315 per share, declared on July 28, 2020 for shareholders of record as of September 30, 2020, was paid on October 14, 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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and Swiss tax reform on our results;

the United Kingdom’s withdrawal from the European Union and its impact on our results, including the consequences of any trade or other cross-border operating agreements, or failure to reach agreements, following the United Kingdom’s withdrawal from the European Union;

the United Kingdom’s withdrawal from the European Union and its impact on our business and results, including the consequences of any trade or other cross-border operating agreements, or failure to reach agreements, following the United Kingdom’s withdrawal from the European Union;

the costs of, timing of expenditures under and completion of our restructuring program;

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impairment of goodwill and intangible assets and our projections of operating results and other factors that may affect our impairment testing;

our accounting estimates and judgments and the impact of new accounting pronouncements;

our accounting estimates and judgments and the impact of new accounting

pronouncements;

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, credit availability and our ability to raise capital, and the impact of market disruptions on counterparties and business partners;

our capital structure and liquidity, credit availability and our ability to raise capital, and the impact of market disruptions on us, our counterparties and our business partners;

the planned phase out of London Interbank Offered Rates;

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and Swiss tax reform impacts (10) .

Similarly, within Adjusted EPS, our equity method investment net earnings exclude our proportionate share of our investees’ unusual or infrequent items (11) .

Similarly, within Adjusted EPS, our equity method investment net earnings exclude our proportionate share of our investees’ significant operating and non-operating items (11) .

We also evaluate growth in our Adjusted EPS on a constant currency basis (3) .

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(2) 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.

As we record our share of KDP and JDE Peet’s ongoing earnings on a one-quarter lag basis, any KDP or JDE Peet’s ownership reductions are reflected as divestitures within our non-GAAP results the following quarter.

See Note 2, Acquisitions and Divestitures, and Note 6, Equity Method Investments, for information on acquisitions and divestitures impacting the comparability of our results.

(3) Constant currency operating results are calculated by dividing or multiplying, as appropriate, the current-period local currency operating results by the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S.

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Van de Put’s and Ms.

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.

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.

Van de Put and partial vesting of his equity grants.

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

Refer 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.

We have excluded our proportionate share of our equity method investees’ unusual or infrequent items such as acquisition and divestiture related costs, restructuring program costs and discrete U.S.

Refer to Note 14, Income Taxes , for information on Swiss tax reform and 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.

(11) We have excluded our proportionate share of our equity method investees’ significant operating and non-operating items such as acquisition and divestiture related costs, restructuring program costs and discrete U.S.

tax reform impacts, in order to provide investors with a comparable view of our performance across periods.

Although we have shareholder rights and board representation commensurate with our ownership interests in our equity method investees and review the underlying operating results and unusual or infrequent items with them each reporting period, we do not have direct control over their operations or resulting revenue and expenses.

Although we have shareholder rights and board representation commensurate with our ownership interests in our equity method investees and review the underlying operating results and significant operating and non-operating items each reporting period, we do not have direct control over their operations or resulting revenue and expenses.

Our use of equity method investment net earnings on an adjusted basis is not intended to imply that we have any such control.

Our GAAP “diluted EPS attributable to Mondelēz International from continuing operations” includes all of the investees’ unusual and infrequent items.

Our GAAP “diluted EPS attributable to Mondelēz International from continuing operations” includes all of the investees’ significant operating and non-operating items.

We believe that the presentation of these non-GAAP financial measures, when considered together with our U.S.

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Applying the definition of “Organic Net Revenue,” the adjustments made to “net revenues” (the most comparable U.S.

GAAP financial measure) were to exclude the impact of currency, an acquisition and a divestiture.

GAAP financial measure) were to exclude the impact of currency, acquisitions and a divestiture.

We believe that Organic Net Revenue reflects the underlying growth from the ongoing activities of our business and provides improved comparability of results.

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 June 30, 2020

For the Three Months Ended June 30, 2019

(in millions)

For the Three Months Ended September 30, 2020 For the Three Months Ended September 30, 2019

Markets Developed

Markets Total Emerging

Markets Developed

Markets Total

(in millions) (in millions)

Net Revenue $ 2,289 $ 4,376 $ 6,665 $ 2,363 $ 3,992 $ 6,355

Impact of currency 200 (108) 92 — — —

Impact of acquisition — (125) (125) — — —

Impact of divestiture

Organic Net Revenue $ 2,489 $ 4,143 $ 6,632 $ 2,363 $ 3,992 $ 6,355

For the Six Months Ended June 30, 2020

For the Six Months Ended June 30, 2019

(in millions)

For the Nine Months Ended September 30, 2020 For the Nine Months Ended September 30, 2019

Markets Developed

Markets Total Emerging

Markets Developed

Markets Total

(in millions) (in millions)

Net Revenue $ 6,623 $ 12,660 $ 19,283 $ 7,137 $ 11,818 $ 18,955

Impact of currency 582 42 624 — — —

Impact of acquisition

Impact of acquisitions — (271) (271) — — —

Impact of divestiture — — — (55) — (55)

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impact from pension participation changes;

and CEO transition remuneration.

CEO transition remuneration and Swiss tax reform impact.

We also evaluate Adjusted Operating Income on a constant currency basis.

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For the Three Months Ended

September 30,

2020 2019 $ Change % Change

(in millions)

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Intangible asset impairment charges (2)

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

Acquisition integration costs (4)

Mark-to-market gains from derivatives (3)

(145) (20) (125)

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 (5)

Impact from pension participation changes (7)

CEO transition remuneration (6)

Swiss tax reform impact (7)

Other/rounding

Adjusted Operating Income $ 1,165 $ 1,065 $ 100 9.4 %

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Adjusted Operating Income (constant currency) $ 1,177 $ 1,065 $ 112 10.5 %

For the Six Months Ended

For the Nine Months Ended

September 30,

2020 2019 $ Change % Change

(in millions)

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CEO transition remuneration (6)

Swiss tax reform impact (7)

Other/rounding

Adjusted Operating Income $ 3,213 $ 3,163 $ 50 1.6 %

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(4) 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 6, Equity Method Investments , for more information on the JDE Peet's transaction.

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

(6) Refer to the Non-GAAP Financial Measures definitions and related table notes.

(7) Refer to Note 14, Income Taxes , for more information on Swiss tax reform.

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

(9) Refer to Note 10, Benefit Plans , for more information..

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

Adjusted EPS:

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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;

Swiss tax reform net impacts;

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.

and our proportionate share of significant operating and non-operating items recorded by our JDE Peet's and KDP equity method investees.

We also evaluate Adjusted EPS on a constant currency basis.

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For the Three Months Ended

September 30,

2020 2019 $ Change % Change

Diluted EPS attributable to Mondelēz International $ 0.78 $ 0.98 $ (0.20) (20.4) %

Simplify to Grow Program (2)

0.06 0.08 (0.02)

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

Mark-to-market gains from derivatives (2)

(0.08) (0.01) (0.07)

Loss related to interest rate swaps (3)

— 0.08 (0.08)

Swiss tax reform net impacts (4)

— (0.53) 0.53

Gain on equity method investment

transactions (5)

Equity method investee acquisition-related or

other charges/(benefits), net (4)

(0.19) — (0.19)

Equity method investee items (6)

0.03 0.01 0.02

Adjusted EPS $ 0.63 $ 0.64 $ (0.01) (1.6) %

Unfavorable currency translation 0.01 — 0.01

Adjusted EPS (constant currency) $ 0.64 $ 0.64 $ — — %

For the Six Months Ended

For the Nine Months Ended

September 30,

2020 2019 $ Change % Change

Diluted EPS attributable to Mondelēz International $ 1.66 $ 2.19 $ (0.53) (24.2) %

Simplify to Grow Program (2)

0.14 0.17 (0.03)

Intangible asset impairment charges (2)

0.08 0.03 0.05

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

0.03 (0.04) 0.07

Acquisition-related costs (2)

Divestiture-related costs (2)

— 0.01 (0.01)

Net earnings from divestiture (2)

(0.01) (0.03) 0.02

Net gain on divestiture (2)

— (0.03) 0.03

Costs associated with JDE Peet's transaction (2)

Impact from pension participation changes (2)

0.01 (0.02) 0.03

CEO transition remuneration (2)

— 0.01 (0.01)

Loss related to interest rate swaps (3)

0.05 0.08 (0.03)

Swiss tax reform net impacts (4)

— (0.53) 0.53

(Gain)/loss on equity method investment

transactions (5)

Equity method investee acquisition-related or

other charges/(benefits), net (4)

(0.31) 0.01 (0.32)

Equity method investee items (6)

0.05 0.02 0.03

Adjusted EPS $ 1.92 $ 1.87 $ 0.05 2.7 %

Unfavorable currency translation 0.06 — 0.06

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(1) 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 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.

• For the three months ended September 30, 2020, taxes for the:

Simplify to Grow Program were $(22) million, intangible asset impairment charges were $(12) million, mark-to-market losses from derivatives were $27 million, gain on equity method investment transactions were $77 million and equity method investee items were $(3) million.

• For the three months ended September 30, 2019, taxes for the:

Simplify to Grow Program were $(29) million, intangible asset impairment charges were $(14) million, mark-to-market gains from derivatives were $8 million, loss related to interest rate swaps were zero, Swiss tax reform were $(769) million and equity method investee items were $(2) million.

• For the nine months ended September 30, 2020, taxes for the:

Simplify to Grow Program were $(55) million, intangible asset impairment charges were $(33) million, mark-to-market losses from derivatives were $(5) million, acquisition-related costs were zero, net earnings from divestiture were zero, costs associated with the JDE Peet's transaction were $261 million, impact from pension participation changes were $(2) million, loss related to interest rate swaps were $(24) million, gain on equity method investment transactions were $94 million and equity method investee items were $(11) million.

• For the nine months ended September 30, 2019, taxes for the:

Simplify to Grow Program were $(67) million, intangible asset impairment charges were $(14) million, mark-to-market gains from derivatives were $14 million, divestiture-related costs were zero, net earnings from divestiture were $1 million, net gain on divestiture were $2 million, impact from pension participation changes were $9 million, CEO transition remuneration were zero, loss related to interest rate swaps were zero, Swiss tax reform were $(769) million, net loss on equity method investment transaction were $7 million and equity method investee items were $(9) million.

(2) See the Adjusted 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.

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

(4) Refer to Note 14, Income Taxes , for more information on Swiss tax reform.

(5) Refer to Note 6, Equity Method Investments, for more information on the gains and losses on equity method investment transactions.

(6) Includes our proportionate share of significant operating and non-operating items recorded by our JDE Peet's and KDP equity method investees, such as acquisition and divestiture-related costs and restructuring program costs.

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