What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-05 compared with 2020-02-07 · 711 added, 497 removed, 1424 unchanged (46% of the section changed)

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Changes in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for a certain equity method investment in 2020 and the manner in which it accounts for leases in 2019.

Basis for Opinions

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We believe that our audits provide a reasonable basis for our opinions.

As described in the Report of Management on Internal Control Over Financial Reporting appearing under Item 9A, management has excluded Give & Go from its assessment of internal control over financial reporting as of December 31, 2020 because it was acquired by the Company in a purchase business combination during 2020.

have also excluded Give & Go from our audit of internal control over financial reporting.

Give & Go is a majority-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 0.4% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2020.

Definition and Limitations of Internal Control over Financial Reporting

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Non-Amortizable Intangible Assets Impairment Assessment

As described in Notes 1 and 6 to the consolidated financial statements, the Company’s consolidated non-amortizable intangible assets balance was $17.3 billion as of December 31, 2019, and an impairment charge of $57 million was recorded in the year ended December 31, 2019.

Annually, management assesses non-amortizable intangible assets, which principally consist of brand names, for impairment by performing a qualitative review and assessing events and circumstances that could affect the fair value or carrying value of the non-amortizable intangible assets.

Indefinite-Life Intangible Assets Impairment Assessment

As described in Notes 1 and 6 to the consolidated financial statements, the Company’s consolidated indefinite-life intangible asset balance was $17.5 billion as of December 31, 2020.

At least annually management assesses indefinite-life intangible assets for impairment by performing a qualitative review and assessing events and circumstances that could affect the fair value or carrying value of the indefinite-life intangible assets.

If significant potential impairment risk exists for a specific asset, management quantitatively tests the asset for impairment by comparing its estimated fair value with its carrying value.

Management estimates fair value for each asset using several accepted valuation methods, including relief of royalty, excess earnings and excess margin, that utilize estimates of future sales, earnings growth rates, royalty rates and discount rates.

The principal considerations for our determination that performing procedures relating to the non-amortizable intangible assets impairment assessment is a critical audit matter are there was significant judgment by management when developing the fair value measurement of the non-amortizable intangible assets.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s fair value estimates and significant assumptions, including estimates of future sales, earnings growth rates, royalty rates, and discount rates.

Management estimates fair value using several accepted valuation methods, including relief of royalty, excess earnings and excess margin, that utilize estimates of future sales, earnings growth rates, royalty rates and discount rates.

The principal considerations for our determination that performing procedures relating to the indefinite-life intangible asset impairment assessment is a critical audit matter are the significant judgment by management when developing the fair value measurement of the indefinite-life intangible assets.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s fair value estimates and significant assumptions, related to estimates of future sales, earnings growth rates, royalty rates, and discount rates for certain indefinite-life intangible assets.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the non-amortizable intangible assets impairment assessment, including controls over the determination of the fair values of the Company’s non-amortizable intangible assets as part of the annual impairment assessment.

These procedures included testing the effectiveness of controls relating to the indefinite-life intangible asset impairment assessment, including controls over the determination of the fair values of certain of the Company’s indefinite-life intangible assets as part of the annual impairment assessment.

These procedures also included, among others, testing management’s process for developing the fair value estimate;

evaluating the appropriateness of the valuation methods;

testing the completeness and accuracy of underlying data used in the valuation methods;

and evaluating the significant assumptions used by management, including the estimates of future sales, earnings growth rates, royalty rates, and discount rates.

Evaluating management’s assumptions related to estimates of future sales and earnings growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the

current and past performance of the non-amortizable intangible assets, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s valuation methods and certain significant assumptions, including the royalty rates and discount rates.

/s/ P RICEWATERHOUSE C OOPERS LLP

completeness and accuracy of underlying data used in the valuation methods;

and evaluating the significant assumptions used by management related to the estimates of future sales, earnings growth rates, royalty rates, and discount rates.

Evaluating management’s assumptions related to estimates of future sales and earnings growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the indefinite-life intangible assets, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s valuation methods and the royalty rates and discount rates significant assumptions.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

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dollars, except per share data)

2020 2019 2018

Net revenues $ 26,581 $ 25,868 $ 25,938

Cost of sales 16,135 15,531 15,586

Gross profit 10,446 10,337 10,352

Selling, general and administrative expenses 6,098 6,136 6,475

Asset impairment and exit costs 301 228 389

Net gains on divestitures

Amortization of intangibles

Net gain on divestiture — ( 44 ) —

Amortization of intangible assets 194 174 176

Operating income 3,853 3,843 3,312

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Earnings before income taxes 3,383 3,447 2,842

Provision for income taxes

Net (loss)/gain on equity method investment transactions

Income tax provision ( 1,224 ) ( 2 ) ( 773 )

Gain/(loss) on equity method investment transactions 989 ( 2 ) 778

Equity method investment net earnings 421 501 484

Net earnings 3,569 3,944 3,331

Noncontrolling interest earnings ( 14 ) ( 15 ) ( 14 )

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(in millions of U.S.

2020 2019 2018

Net earnings $ 3,569 $ 3,944 $ 3,331

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

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Operating lease right of use assets 638 568

Goodwill 21,895 20,848

Intangible assets, net 18,482 17,957

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Equity method investments 6,036 7,178

Other assets 292 359

TOTAL ASSETS $ 67,810 $ 64,515

Short-term borrowings $ 29 $ 2,638

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

( 22,204 ) ( 21,139 )

Total Mondelēz International Shareholders’ Equity 27,578 27,241

Noncontrolling interest 76 76

TOTAL EQUITY 27,654 27,317

TOTAL LIABILITIES AND EQUITY $ 67,810 $ 64,515

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Mondelēz International Shareholders’ Equity

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Non-controlling

(Losses) Treasury

Stock Non-controlling

Interest Total

Balances at January 1, 2018 $ — $ 31,915 $ 22,598 $ ( 10,013 ) $ ( 18,555 ) $ 80 $ 26,025

Comprehensive earnings/(losses):

Net earnings — — 3,317 — — 14 3,331

Other comprehensive earnings/

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($ 0.96 per share)

— — ( 1,409 ) — — — ( 1,409 )

Dividends paid on noncontrolling

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Comprehensive earnings/(losses):

Net earnings — — 3,929 — — 15 3,944

Other comprehensive earnings/

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($ 1.09 per share)

— — ( 1,576 ) — — — ( 1,576 )

Dividends paid on noncontrolling

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Comprehensive earnings/(losses):

Net earnings — — 3,555 — — 14 3,569

Other comprehensive earnings/

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($ 1.20 per share)

— — ( 1,718 ) — — — ( 1,718 )

Dividends paid on noncontrolling

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(in millions of U.S.

2020 2019 2018

CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES

Net earnings $ 3,569 $ 3,944 $ 3,331

Adjustments to reconcile net earnings to operating cash flows:

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Acquisitions, net of cash received ( 1,136 ) ( 284 ) ( 528 )

Proceeds from divestitures, net of disbursements

Proceeds from divestitures including equity method investments 2,489 167 1

Proceeds from sale of property, plant and equipment and other 10 82 398

Net cash used in investing activities

Net cash provided by/(used in) investing activities 500 ( 960 ) ( 1,224 )

CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES

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Dividends paid ( 1,678 ) ( 1,542 ) ( 1,359 )

Other 131 313 211

Net cash used in financing activities ( 2,215 ) ( 2,787 ) ( 2,329 )

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Balance at end of period $ 3,650 $ 1,328 $ 1,100

Interest $ 413 $ 486 $ 491

Income taxes $ 1,264 $ 981 $ 864

See accompanying notes to the consolidated financial statements.

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We account for investments over which we exercise significant influence under the equity method of accounting.

Investments over which we do not have significant influence or control are not material and are carried at cost as there is no readily determinable fair value for the equity interests.

Under the cost method of accounting, earnings are recognized to the extent cash is received.

Investments over which we do not have significant influence or control are not material and as there is no readily determinable fair value for the equity interests, these investments are carried at cost with changes in the investment recognized to the extent cash is received.

Use of Estimates:

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GAAP”), which require us to make estimates and assumptions that affect a number of amounts in our consolidated financial statements.

Significant accounting policy elections, estimates and assumptions include, among others, pension and benefit plan assumptions, valuation assumptions of goodwill and intangible assets, useful lives of long-lived assets, restructuring program liabilities, marketing program accruals, insurance and self-insurance reserves and income taxes.

We base our estimates on historical experience and other assumptions that we believe are reasonable.

Significant accounting policy elections, estimates and assumptions include, among others, valuation assumptions of goodwill and intangible assets, useful lives of long-lived assets, restructuring program liabilities, marketing program accruals, insurance and self-insurance reserves, pension and benefit plan assumptions and income taxes.

We base our estimates on historical experience, expectations of future impacts and other assumptions that we believe are reasonable.

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

If actual amounts differ from estimates, we include the revisions in our consolidated results of operations in the period the actual amounts become known.

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As discussed below, beginning on July 1, 2018, we began to apply highly inflationary accounting for our operations in Argentina.

During the second quarter of 2018, primarily based on published estimates which indicated that Argentina's three-year cumulative inflation rate exceeded 100%, we concluded that Argentina became a highly inflationary economy for accounting purposes.

During the second quarter of 2018, primarily based on published estimates that indicated Argentina's three-year cumulative inflation rate exceeded 100%, we concluded that Argentina became a highly inflationary economy for accounting purposes.

As of July 1, 2018, we began to apply highly inflationary accounting for our Argentinean subsidiaries and changed their functional currency from the Argentinean peso to the U.S.

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

As of December 31, 2019 , our Argentinean operations had less than $ 1 million of Argentinean peso denominated net monetary liabilities .

As of December 31, 2020, our Argentinean operations had

$ 3 million of Argentinean peso denominated net monetary liabilities.

Our Argentinean operations contributed $ 335 million, or 1.3 % of consolidated net revenues in 2020.

We recorded a remeasurement gain of

$ 4 million in 2019 and a remeasurement loss of $ 11 million in 2018 within selling, general and administrative expenses related to the revaluation of the Argentinean peso denominated net monetary position over these periods.

In 2019 , we generated 8.6 % of our net revenues in the United Kingdom.

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

We recorded a remeasurement loss of $ 9 million in 2020, a remeasurement gain of $ 4 million in 2019 and a remeasurement loss of $ 11 million in 2018 within selling, general and administrative expenses related to the revaluation of the Argentinean peso denominated net monetary position over these periods.

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

Parliament approved Withdrawal Agreement.

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

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

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

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

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

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

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

If the ultimate terms of the United Kingdom’s separation from the European Union negatively impact the 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 have taken measures to increase our resources in customer service & logistics together with increasing our inventory levels of imported raw materials, packaging and finished goods in the United Kingdom to help us manage through the Brexit transition and the inherent risks.

During a transition period scheduled to end on December 31, 2020, the U.K.

effectively remained in the E.U.’s customs union and single market while a new trade deal with the E.U.

was negotiated.

On December 24, 2020, both sides reached an agreement on a new trade arrangement that became effective on January 1, 2021.

Main trade provisions include the continuation of no tariffs or quotas on trade between the U.K.

so long as we meet prescribed trade terms.

We will also need to meet product and labeling standards for both the U.K.

and we have already begun to introduce these changes gradually.

may also set its own trade policies with countries such as the United States, Australia and New Zealand that currently do not have free trade agreements with the E.U.

Cross-border trade between the U.K.

will be subject to new customs regulations, documentation and reviews.

We have been taking protective measures to limit disruptions to our supply chain and sales to limit potential negative impacts on our results of operations, financial condition and cash flows.

We continue to increase our resources in customer service & logistics as well as in our factories and on our customs support teams.

We are adapting our systems and processes for new and increased customs transactions.

We continue to enhance resilience plans to aid in dealing with anticipated border delays.

We are working to address new regulatory requirements such as packaging changes.

Also, we continue to closely monitor and manage our inventory levels of imported raw materials, packaging and finished goods in the U.K.

Any disagreements on trade terms or supply chain or distribution delays or other disruptions could negatively affect our U.K.

In 2020, we generated 9.0 % of our net revenues in the U.K.

Other Countries .

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

As of December 31, 2019 , we also had $ 37 million of restricted cash recorded within other current assets.

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

We also had restricted cash within other current assets of $ 31 million as of December 31, 2020 and $ 37 million as of December 31, 2019.

Total cash, cash equivalents and restricted cash was $ 3,650 million as of December 31, 2020 and $ 1,328 million as of December 31, 2019.

Allowances for Credit Losses:

The allowances for credit losses are recorded against our receivables.

They are developed at a country and region level based on historical collection experiences, current economic condition of specific customers and the forecasted economic condition of countries using various factors such as bond default rates and consumption indexes.

We write off receivables once it is determined that the receivables are no longer collectible and as allowed by local laws.

Changes in allowances for credit losses consisted of:

Allowance for Trade Receivables Allowance for Other Current Receivables Allowance for Long-Term Receivables

(in millions)

Balance at January 1, 2020 $ ( 35 ) $ ( 44 ) $ ( 14 )

Current period provision for expected credit losses ( 10 ) ( 1 ) ( 1 )

Write-offs charged against the allowance 2 2 —

Currency 1 1 3

Balance at December 31, 2020 $ ( 42 ) $ ( 42 ) $ ( 12 )

Transfers of Financial Assets:

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The outstanding principal amount of receivables under these arrangements amounted to $ 760 million as of December 31, 2020, $ 760 million as of December 31, 2019 and $ 819 million as of December 31, 2018.

The incremental costs of factoring receivables under this arrangement were approximately $ 10 million or less in each of the years presented.

The incremental costs of factoring receivables under these arrangements were approximately $ 10 million in each of the years presented.

The proceeds from the sales of receivables are included in cash from operating activities in the consolidated statements of cash flows.

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Machinery and equipment are depreciated over periods ranging from 3 to 20 years and buildings and building improvements over periods up to 40 years.

We review long-lived assets, including amortizable intangible assets, for realizability on an ongoing basis.

Changes in depreciation, generally accelerated depreciation, are determined and recorded when estimates of the remaining

useful lives or residual values of long-term assets change.

We review long-lived assets, including definite-life intangible assets, for realizability on an ongoing basis.

Changes in depreciation, generally accelerated depreciation, are determined and recorded when estimates of the remaining useful lives or residual values of long-term assets change.

We also review for impairment when conditions exist that indicate the carrying amount of the assets may not be fully recoverable.

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Any significant impairment losses would be recorded within asset impairment and exit costs in the consolidated statements of earnings.

On January 1, 2019, we adopted the new lease accounting standard.

We recorded $ 710 million of lease related assets and $ 730 million of lease related liabilities on our consolidated balance sheet as of January 1, 2019.

The transition method we elected for adoption included recording a cumulative effect adjustment to retained earnings as of January 1, 2019, which was not material.

We determine whether a contract is or contains a lease at contract inception.

On January 1, 2019, we began to record operating leases on our consolidated balance sheet.

We elected not to recognize right-of-use ("ROU") assets and lease liabilities for short-term operating leases with terms of 12 months or less.

Our policy is to not recognize right-of-use ("ROU") assets and lease liabilities for short-term operating leases with terms of 12 months or less.

Long-term operating lease ROU assets and long-term operating lease liabilities are presented separately and operating lease liabilities payable in the next twelve months are recorded in other current liabilities.

Finance lease ROU assets continue to be presented in property, plant and equipment and the related finance lease liabilities continue to be presented in the current portion of long-term debt and long-term debt.

Finance lease ROU assets are presented in property, plant and equipment and the related finance lease liabilities are presented in the current portion of long-term debt and long-term debt.

Lease ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

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product costs, common-area or other maintenance costs) that relate to the lease components of the agreement.

Non-lease components and the lease components to which they relate are accounted for as a single lease component as we have elected to combine lease and non-lease components for all classes of underlying assets.

Non-lease components and the lease components to which they relate are accounted for as a single lease component.

Amortization of ROU lease assets is calculated on a straight-line basis over the lease term with the expense recorded in cost of sales or selling, general and administrative expenses depending on the nature of the leased item.

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Capitalized software costs are included in property, plant and equipment and amortized on a straight-line basis over the estimated useful lives of the software, which do not exceed seven years .

Goodwill and Non-Amortizable Intangible Assets:

We test goodwill and non-amortizable intangible assets for impairment on an annual basis on July 1.

Goodwill and Indefinite-Life Intangible Assets:

We test goodwill and indefinite-life intangible assets for impairment on an annual basis on July 1.

We assess goodwill impairment risk throughout the year by performing a qualitative review of entity-specific, industry, market and general economic factors affecting our goodwill reporting units.

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We estimate a reporting unit’s fair value using a discounted cash flow method that incorporates planned growth rates, market-based discount rates and estimates of residual value.

This year, for our Europe and North America reporting units, we used a market-based, weighted-average cost of capital of 5.9 % to discount the projected cash flows of those operations.

For our Latin America and AMEA reporting units, we used a risk-rated discount rate of 8.9 % .

Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future

plans, industry and economic conditions, and our actual results and conditions may differ over time.

In 2020, we performed a quantitative annual test.

For our Europe and North America reporting units, we used a market-based, weighted-average cost of capital of 6.1 % to discount the projected cash flows of those operations, and for our Latin America and AMEA reporting units, we used a risk-rated discount rate of 9.1 %.

Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, industry and economic conditions, and our actual results and conditions may differ over time.

If the carrying value of a reporting unit’s net assets exceeds its fair value, we would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value.

Annually we assess non-amortizable intangible assets for impairment by performing a qualitative review and assessing events and circumstances that could affect the fair value or carrying value of the indefinite-lived intangible assets.

Annually we assess indefinite-life intangible assets for impairment by performing a qualitative review and assessing events and circumstances that could affect the fair value or carrying value of these intangible assets.

If significant potential impairment risk exists for a specific asset, we quantitatively test it for impairment by comparing its estimated fair value with its carrying value.

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If the carrying value of the asset exceeds its fair value, we consider the asset impaired and reduce its carrying value to the estimated fair value.

We amortize definite-lived intangible assets over their estimated useful lives and evaluate them for impairment as we do other long-lived assets.

We amortize definite-life intangible assets over their estimated useful lives and evaluate them for impairment as we do other long-lived assets.

Insurance and Self-Insurance:

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We base these estimates of expected amounts principally on historical utilization and redemption rates.

Estimates that affect revenue, such as trade incentives and product returns, are monitored and adjusted each period until the incentives or product returns are realized.

Estimates that affect

revenue, such as trade incentives and product returns, are monitored and adjusted each period until the incentives or product returns are realized.

Key sales terms, such as pricing and quantities ordered, are established on a frequent basis such that most customer arrangements and related incentives have a one year or shorter duration.

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Changes in fair value of economic hedges and the ineffective portion of all hedges are recognized in current period earnings.

Changes in the fair value of a derivative that is designated as a fair value hedge, along with the changes in the fair value of the related hedged asset or liability, are recorded in earnings in the same period.

We use non-U.S.

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We enter into commodity forward contracts primarily for wheat, sugar and other sweeteners, soybean and vegetable oils and cocoa.

Commodity forward contracts generally are not subject to the

accounting requirements for derivative instruments and hedging activities under the normal purchases exception.

Commodity forward contracts generally are not subject to the accounting requirements for derivative instruments and hedging activities under the normal purchases exception.

We also use commodity futures and options to hedge the price of certain input costs, including cocoa, energy costs, sugar and other sweeteners, wheat, packaging, dairy, corn, and soybean and vegetable oils.

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The net assets of these subsidiaries are exposed to changes and volatility in currency exchange rates.

We use local currency denominated debt to hedge our non-U.S.

currency denominated debt to hedge our non-U.S.

net investments against adverse movements in exchange rates.

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The change in the debt’s value, net of deferred taxes, is recorded in the currency translation adjustment component of accumulated other comprehensive earnings/(losses).

Additionally, beginning in the first quarter of 2018, we entered into cross-currency interest rate swaps and forwards to hedge certain investments in our non-U.S.

We use derivatives instruments such as cross-currency interest rate swaps and forwards to hedge certain investments in our non-U.S.

operations against movements in exchange rates.

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

In October 2018, the FASB issued an ASU that permits the use of the Secured Overnight Financing Rate ("SOFR") Overnight Index Swap ("OIS") Rate as a U.S.

benchmark interest rate for hedge accounting purposes.

We adopted the new standard on January 1, 2019 and there was no material impact to our consolidated financial statements upon adoption.

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

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

We will adopt this ASU as of January 1, 2020 and we do not expect this ASU to have a material impact on our consolidated financial statements.

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

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

The ASU is effective for fiscal years ending after December 15, 2020, with early adoption permitted.

We will adopt this ASU as of December 31, 2020.

The new standard will impact our year-end disclosures only and is not expected to have an impact on our consolidated financial statements.

We adopted this standard and reflected the changes within our benefit plan disclosures.

This standard did not have an impact on our consolidated financial statements.

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

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

We will adopt this ASU as of January 1, 2020.

The new standard will impact our disclosures and is not expected to have an impact on our consolidated financial statements.

In June 2018, the FASB issued an ASU that requires entities to record share-based payment transactions for acquiring goods and services from non-employees at fair value as of adoption date.

The ASU is effective for fiscal years beginning after December 15, 2018, with early adoption permitted.

We adopted the standard as of January 1, 2019 and there was no material impact to our consolidated financial statements upon adoption.

In February 2018, the FASB issued an ASU that permits entities to elect a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 enactment of U.S.

tax reform legislation.

The ASU is effective for fiscal years beginning after December 15, 2018, with early adoption permitted.

We did not elect to reclassify these stranded tax effects from U.S.

tax reform when we adopted this ASU in the first quarter of 2019.

As such, this ASU did not have a material impact on our consolidated financial statements.

Our policy is to release stranded tax effects from accumulated other comprehensive income under the portfolio method rather than on an individual item by item basis.

In July 2017, the FASB issued an ASU on financial instruments that allows for the exclusion of a down round feature when evaluating whether or not the instrument or embedded feature requires derivative classification.

The ASU is effective for fiscal years beginning after December 15, 2018, with early adoption permitted.

We adopted the standard as of January 1, 2019 and there was no material impact to our consolidated financial statements upon adoption.

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

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

This ASU requires entities to measure the impairment of certain financial instruments, including trade receivables, based on

expected losses rather than incurred losses.

This ASU is effective for fiscal years beginning after December 15, 2019, with early adoption permitted for financial statement periods beginning after December 15, 2018.

We will adopt this ASU as of January 1, 2020 and we do not expect this ASU to have a material impact on our consolidated financial statements.

In February 2016, the FASB issued an ASU on lease accounting to increase transparency and comparability among organizations by requiring the recognition of Right of Use ("ROU") assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.

The ASU revises existing U.S.

GAAP and outlines a new model for lessors and lessees to use in accounting for lease contracts.

The guidance requires lessees to recognize a ROU asset and a lease liability on the balance sheet for all leases, with the exception of short-term leases.

In the statement of earnings, lessees will classify leases as either operating or financing.

In July 2018, the FASB issued an ASU which allows for an alternative transition approach, which will not require adjustments to comparative prior-period amounts.

The ASU is effective for fiscal years beginning after December 15, 2018, with early adoption permitted.

We adopted the new standard on January 1, 2019.

We elected to apply the package of practical expedients that allowed us not to reassess the lease classification and initial direct costs for expired or existing leases or whether expired or existing contracts contain leases.

We elected not to separate non-lease components from lease components and to account for both as a single lease component by class of the underlying asset.

The impact of adopting the standard included the initial recognition as of January 1, 2019, of $ 710 million of lease related assets and $ 730 million of lease related liabilities on our consolidated balance sheet.

The transition method we elected for adoption a cumulative effect adjustment to retained earnings as of January 1, 2019, which was not material.

Divestitures and Acquisitions

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

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

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

Reclassifications:

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

During the second quarter of 2020, in connection with the JDE Peet's (as defined below) transaction (refer to Note 7, Equity Method Investments ), we changed our accounting principle to reflect our share of Jacobs Douwe Egberts ("JDE") historical results and JDE Peet's ongoing results on a one-quarter lag basis while we continue to record dividends when cash is received.

This change was applied retrospectively to all periods presented.

Acquisitions and Divestitures

On January 4, 2021, we acquired the remaining 93 % of equity of Hu Master Holdings, a category leader in premium chocolate in the United States, for closing cash consideration of approximately $ 231 million and the potential for a contingent consideration payment based on the future performance of the acquired company.

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

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

The purchase consideration for Give & Go totaled $ 1,136 million, net of cash received.

We are working to complete the valuation and have recorded a preliminary purchase price allocation of net tangible and intangible assets acquired and liabilities assumed as follows:

(in millions)

Receivables $ 29

Other current assets 5

Property, plant and equipment 136

Operating right of use assets 61

Definite-life intangible assets 511

Indefinite-life intangible assets 42

Assets acquired $ 1,353

Current liabilities 41

Deferred tax liabilities 92

Long-term operating lease liabilities 56

Long-term debt 6

Long-term other liabilities 19

Total purchase price $ 1,139

cash received 3

Net Cash Paid $ 1,136

Within definite-life intangible assets, we allocated $ 416 million to customer relationships which have an estimated useful life of 17 years.

Goodwill arises principally as a result of expansion opportunities and synergies across both new and legacy product categories.

None of the goodwill recognized is expected to be deductible for income tax purposes.

The fair value for customer relationships at the acquisition date was determined using the multi-period excess earnings method under the income approach.

The fair value measurements of intangible assets are based on significant unobservable inputs, and thus represent Level 3 inputs.

Significant assumptions used in assessing the fair values of intangible assets include discounted future cash flows, customer attrition rates and discount rates.

The acquisition added incremental net revenues of $ 390 million and operating income of $ 24 million in 2020.

We incurred acquisition-related costs of $ 15 million during 2020.

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

refrigerated nutrition bar company, Perfect Snacks, within our North America segment for $ 284 million cash paid, net of cash received, and expanded our position in broader snacking.

We are working to complete the valuation work and have recorded a preliminary purchase price allocation of $ 31 million to definite-lived intangible assets, $ 107 million to indefinite-lived intangible assets, $ 150 million to goodwill, $ 1 million to property, plant and equipment, $ 12 million to inventory, $ 8 million to accounts receivable, $ 13 million to current liabilities, $ 3 million to deferred tax liabilities and $ 9 million to other liabilities.

The acquisition added incremental net revenues of $ 53 million and an immaterial amount of incremental operating income in 2019.

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

Through the one-year anniversary of the acquisition, Perfect Snacks added incremental net revenues of $ 55 million and an immaterial amount of incremental operating income in 2020.

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

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

We also paid $ 2 million of transaction costs and recorded a net pre-tax gain of $ 44 million on the sale.

During 2019, we recorded a net pre-tax gain of $ 44 million on the sale.

The divestiture resulted in year-over-year declines in net revenues of $ 55 million and operating income of $ 9 million during 2020.

We incurred divestiture-related costs of $ 4 million in 2020 and $ 6 million in 2019.

On June 7, 2018, we acquired a U.S.

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During the second quarter of 2018, we paid $ 528 million, net of cash received, and during the second quarter of 2019, we finalized the purchase price at $ 527 million.

The purchase price allocation included $ 45 million to definite-lived intangible assets, $ 205 million to indefinite-lived intangible assets, $ 297 million to goodwill, $ 16 million to property, plant and equipment, $ 5 million to inventory, $ 9 million to accounts receivable, $ 7 million to current liabilities and $ 43 million to deferred tax liabilities.

Through the one-year anniversary of the acquisition, Tate's added incremental net revenues of $ 35 million and an immaterial amount of incremental operating income.

On December 28, 2017, we completed the sale of a confectionery business in Japan.

We received cash proceeds of ¥ 2.8 billion ( $ 24 million as of December 28, 2017) and recorded an immaterial pre-tax loss on the divestiture within our AMEA segment.

In connection with the 2012 spin-off of Kraft Foods Group, Inc.

(now a part of The Kraft Heinz Company (“KHC”)), Kraft Foods Group and we each granted the other various licenses to use certain trademarks in connection with particular product categories in specified jurisdictions.

On August 17, 2017, we entered into two agreements with KHC to terminate the licenses of certain KHC-owned brands used in our grocery business within our Europe region and to transfer to KHC inventory and certain other assets.

On August 17, 2017, the first transaction closed and we received cash proceeds of € 9 million ( $ 11 million as of August 17, 2017) and on October 23, 2017, the second transaction closed and we received cash proceeds of € 2 million ( $ 3 million as of October 23, 2017).

The gain on both transactions combined was immaterial.

On July 4, 2017, we completed the sale of most of our grocery business in Australia and New Zealand to Bega Cheese Limited for $ 456 million Australian dollars ( $ 347 million as of July 4, 2017).

We divested $ 27 million of current assets, $ 135 million of non-current assets and $ 4 million of current liabilities based on the July 4, 2017 exchange rate.

We recorded a pre-tax gain of $ 247 million Australian dollars ( $ 187 million as of July 4, 2017) on the sale.

We also recorded divestiture-related costs of $ 2 million and a foreign currency hedge loss of $ 3 million during 2017.

In the fourth quarter of 2017, we recorded a $ 3 million inventory-related working capital adjustment, increasing the pre-tax gain to $ 190 million in 2017.

On April 28, 2017, we completed the sale of several manufacturing facilities in France and the sale or license of several local confectionery brands.

We received cash of approximately € 157 million ( $ 169 million as of April 28, 2017), net of cash divested with the businesses.

On April 28, 2017, we divested $ 44 million of current assets, $ 155 million of non-current assets, $ 8 million of current liabilities and $ 22 million of non-current liabilities based on the April 28, 2017 exchange rate.

We recorded a $ 3 million loss on the sale and divestiture-related costs of $ 27 million in 2017 and $ 84 million in 2016.

These divestiture-related costs were recorded within cost of sales and selling, general and administrative expenses primarily within our Europe segment.

In prior periods, we recorded a $ 5 million impairment charge in May 2016 for a candy trademark to reduce the overall net assets to the estimated net sales proceeds after transaction costs.

On March 31, 2016, we recorded a $ 14 million impairment charge for another gum & candy trademark as a portion of its carrying value would not be recoverable based on future cash flows expected under a planned license agreement with the buyer.

The purchase price allocation included $ 45 million to definite-life intangible assets, $ 205 million to indefinite-life intangible assets, $ 297 million to goodwill, $ 16 million to property, plant and equipment, $ 5 million to inventory, $ 9 million to accounts receivable, $ 7 million to current liabilities and $ 43 million to deferred tax liabilities.

Through the one-year anniversary of the acquisition, Tate's added incremental net revenues of $ 35 million and an immaterial amount of incremental operating income in 2019.

Inventories consisted of the following:

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Construction in progress 628 680

16,355 15,537

Accumulated depreciation ( 7,329 ) ( 6,804 )

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Capital expenditures as presented on the statement of cash flow were $ 0.9 billion, $ 0.9 billion and $ 1.1 billion for the years ending December 31, 2020, 2019 and 2018 and excluded $ 275 million, $ 334 million and $ 331 million for accrued capital expenditures not yet paid.

In connection with our restructuring program, we recorded non-cash property, plant and equipment write-downs (including accelerated depreciation and asset impairments) of $ 50 million in 2019 , $ 59 million in 2018 and $ 206 million in 2017 (see Note 8, Restructuring Program ).

These charges related to property, plant and equipment

were recorded in the consolidated statements of earnings within asset impairment and exit costs and in the segment results as follows:

In connection with our restructuring program, we recorded non-cash property, plant and equipment write-downs (including accelerated depreciation and asset impairments) and losses/(gains) on disposal within asset impairment and exit costs on the consolidated statements of earnings and within the segment results as follows (refer to Note 8, Restructuring Program ):

For the Years Ended December 31,

2020 2019 2018

(in millions)

Latin America $ ( 12 ) $ — $ 25

AMEA ( 7 ) ( 2 ) 5

Europe 5 46 15

North America 1 5 13

Non-cash property, plant and equipment write-downs

Corporate — 1 1

Total $ ( 13 ) $ 50 $ 59

We have operating and finance leases for manufacturing and distribution facilities, vehicles, equipment and office space.

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The components of lease costs were as follows:

For the Year Ended December 31, 2019

For the Years Ended December 31,

(in millions)

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Total lease cost $ 764 $ 762

Rent expenses under prior lease accounting rules (ASC 840) recorded in continuing operations were $ 260 million in 2018 and $ 284 million in 2017 .

Rent expenses under prior lease accounting rules (ASC 840) recorded in continuing operations were $ 260 million in 2018.

Supplemental cash flow information related to leases was as follows:

For the Year Ended December 31, 2019

For the Years Ended December 31,

(in millions)

Cash paid for amounts included in the measurement of lease liabilities:

Cash paid for amounts included in the measurement of

lease liabilities:

Operating cash flows from operating leases $ ( 236 ) $ ( 234 )

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Weighted Average Remaining Lease Term

Operating leases

Finance leases

Operating leases 6.3 years 5.2 years

Finance leases 4.4 years 4.6 years

Weighted Average Discount Rate

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Finance leases 3.2 % 3.7 %

In 2020 , we expect to record a $ 45 million operating lease liability for a 15 year lease that has not yet commenced.

Future lease payments under non-cancelable leases under the new lease accounting rules (ASC 842) that went into effect on January 1, 2019 were as follows:

Maturities of lease liabilities were as follows:

As of December 31, 2020

Operating Leases

Finance Leases

Operating Leases Finance Leases

(in millions)

Year Ending December 31:

2021 $ 203 $ 81

Thereafter 169 22

Total future undiscounted lease payments $ 757 $ 276

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Total reported lease liability $ 660 $ 256

As of December 31, 2018, minimum rental commitments under non-cancelable operating leases under prior lease accounting rules (ASC 840) were (in millions):

Goodwill and Intangible Assets

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Latin America $ 706 $ 818

AMEA 3,250 3,151

Europe 8,038 7,523

North America 9,901 9,356

Goodwill $ 21,895 $ 20,848

Intangible assets consisted of the following:

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(in millions)

Non-amortizable intangible assets

Amortizable intangible assets

Indefinite-life intangible assets $ 17,492 $ 17,296

Definite-life intangible assets 2,907 2,374

20,399 19,670

Accumulated amortization ( 1,917 ) ( 1,713 )

Intangible assets, net $ 18,482 $ 17,957

Non-amortizable intangible assets consist principally of brand names purchased through our acquisitions of Nabisco Holdings Corp., the Spanish and Portuguese operations of United Biscuits, the global LU biscuit business of Groupe Danone S.A.

Indefinite-life intangible assets consist principally of brand names purchased through our acquisitions of Nabisco Holdings Corp., the Spanish and Portuguese operations of United Biscuits, the global LU biscuit business of Groupe Danone S.A.

and Cadbury Limited.

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

Definite-life intangible assets consist primarily of trademarks, customer-related intangibles, process technology, licenses and non-compete agreements.

Amortization expense for intangible assets was $ 194 million in 2020, $ 174 million in 2019 and $ 176 million in 2018.

For the next five years, we estimate annual amortization expense of approximately $ 175 million next year, approximately $ 90 million in year two and approximately $ 85 million in years three to five, reflecting December 31, 2019 exchange rates.

For the next five years, we estimate annual amortization expense of approximately $ 125 million next year, approximately $ 115 million in years two to four and approximately $ 100 million in year five, reflecting December 31, 2020 exchange rates.

Changes in goodwill and intangible assets consisted of:

Assets, at cost

Goodwill Intangible

Assets, at cost Goodwill Intangible

Assets, at cost

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Changes due to:

Currency 516 320 17 60

Divestitures — — ( 43 ) —

Acquisitions 531 553 149 138

Asset impairments — ( 144 ) — ( 57 )

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• Divestitures – During the second quarter of 2019, we divested the net assets of most of our cheese business in the Middle East and Africa to Arla Foods of Denmark resulting in a goodwill decrease of $ 43 million.

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

Acquisitions – In connection with the acquisition of a majority interest in Perfect Snacks during the third quarter of 2019, we recorded a preliminary purchase price allocation of $ 150 million to goodwill and $ 138 million to intangible assets.

In the second quarter of 2019, we also finalized the purchase price allocation for the 2018 acquisition of Tate's Bake Shop, resulting in a $ 1 million adjustment to goodwill.

During 2018, we recorded a preliminary purchase price allocation of $ 298 million to goodwill and $ 250 million to intangible assets related to the acquisition of Tate's Bake Shop in the second quarter of 2018.

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

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

• Acquisitions – In connection with our acquisition of a majority interest in Give & Go during the second quarter of 2020, we recorded a preliminary purchase price allocation of $ 531 million to goodwill and $ 553 million to intangible assets.

In connection with the acquisition of Perfect Snacks during the third quarter of 2019, we recorded a purchase price allocation of $ 150 million to goodwill and $ 138 million to intangible assets.

During 2019, we also finalized the purchase price allocation for the 2018 acquisition of Tate’s Bake Shop, resulting in a $ 1 million adjustment to goodwill.

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

• Asset impairments – As further discussed below, we recorded $ 144 million of intangible asset impairments in 2020 and $ 57 million in 2019.

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While all reporting units passed our annual impairment testing, if planned business performance expectations are not met or specific valuation factors outside of our control, such as discount rates, change significantly, then the estimated fair values of a reporting unit or reporting units might decline and lead to a goodwill impairment in the future.

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

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

We also identified fourteen brands, including the nine impaired trademarks, with $ 635 million of aggregate book value as of December 31, 2019 that each had a fair value in excess of book value of 10% or less.

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

In 2020, we recorded $ 144 million of intangible asset impairment charges related to eight brands.

We recorded charges related to gum, chocolate, biscuits and candy brands of $ 83 million in North America, $ 53 million in Europe, $ 5 million in AMEA and $ 3 million in Latin America.

We also identified nine brands, including the eight impaired trademarks, with $ 753 million of aggregate book value as of December 31, 2020 that each had a fair value in excess of book value of 10% or less.

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

If the brand earnings expectations, including the timing of the expected recovery from the COVID-19 pandemic impacts, 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.

In 2019, we recorded $ 57 million of impairment charges for gum, chocolate, biscuits and candy brands of $ 39 million in Europe, $ 15 million in AMEA and $ 3 million in Latin America.

In 2018, we recorded $ 68 million of impairment charges for gum, chocolate, biscuits and candy brands of $ 45 million in Europe, $ 14 million in North America and $ 9 million in AMEA.

In 2017 , we recorded $ 109 million of impairment charges, of which $ 70 million related to annual testing impairment charges for candy and gum brands of $ 52 million in AMEA, $ 11 million in Europe, $ 5 million in Latin America and $ 2 million in North America.

During 2017, we also recorded a $ 38 million intangible asset impairment charge resulting from a category decline and lower than expected product growth related to a gum brand in our North America segment and a $ 1 million intangible asset impairment charge related to a transaction.

Equity Method Investments

Equity method investments consist of our investments in entities in which we maintain an equity ownership interest and apply the equity method of accounting due to our ability to exert significant influence over decisions relating to their operating and financial affairs.

Revenue and expenses of our equity method investees are not consolidated into our financial statements;

rather, our proportionate share of the earnings of each investee is reflected as equity method investment net earnings.

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

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

"JDEP"), Keurig Dr Pepper Inc.

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

As of December 31, 2020, we owned 22.9 %, 8.4 %, 50.0 % and 49.0 %, respectively, of these companies' outstanding shares.

Our investments accounted for under the equity method of accounting totaled $ 6,036 million as of December 31, 2020 and $ 7,178 million as of December 31, 2019.

In both years, our largest equity method investments were in Jacobs Douwe Egberts (“JDE”) and Keurig Green Mountain, Inc.

("Keurig") prior to July 9, 2018 and Keurig Dr Pepper Inc.

"KDP”) subsequent to July 9, 2018.

As of December 31, 2019 , we held a 26.5 % voting interest, a 26.4 % ownership interest and a 26.3 % profit and dividend sharing interest in JDE.

We recorded JDE equity earnings of $ 195 million in 2019 , $ 230 million in 2018 (which includes a deferred tax benefit from a Dutch tax rate reduction) and $ 129 million in 2017 .

We also recorded $ 73 million of cash dividends received in both 2019 and 2018 and $ 49 million of cash dividends received in 2017.

We recorded equity earnings and cash dividends of $ 421 million and $ 246 million in 2020, equity earnings and cash dividends of $ 501 million and $ 250 million in 2019 and equity earnings and cash dividends of $ 484 million and $ 180 million in 2018.

Based on the quoted closing prices as of December 31, 2020, the combined fair value of our publicly-traded investments in JDEP and KDP was $ 8.9 billion, and for each investment, its fair value exceeded its carrying value.

JDE / Keurig Exchange:

On March 7, 2016, we exchanged a portion of our JDE equity interest for a new equity interest in Keurig.

As a result of the exchange, we recorded the difference between the $ 2.0 billion fair value of Keurig and our basis in the exchanged JDE shares as a gain of $ 43 million .

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

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

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

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

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

We recorded the adjustment as a loss on equity method transactions.

Keurig Dr Pepper Transaction:

Keurig Dr Pepper Transactions:

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

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During 2018, we recorded a net pre-tax gain of $ 778 million (or $ 586 million after-tax).

We hold two director positions on the KDP board as well as additional governance rights.

As we continue to have significant influence, we continue to account for our investment in KDP under the equity method, resulting in recognizing our share of their earnings within our earnings and our share of their dividends within our cash flows.

In connection with this transaction, we changed our accounting principle during the third quarter of 2018 to reflect our share of Keurig's historical and KDP's ongoing earnings on a one-quarter lag basis while we continue to record dividends when cash is received.

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The change was retrospectively applied to all prior periods presented.

As of December 31, 2019 , we held a 13.6 % ownership interest in KDP valued at approximately $ 5.5 billion (based on KDP's closing stock price), which exceeded the carrying value of our KDP investment.

Our KDP ownership interest could change over time due to stock-based compensation arrangements or other KDP transactions.

During the first quarter of 2019, due to the impact of a KDP acquisition that decreased our ownership interest from 13.8 % to 13.6 % , we recognized a $ 23 million pre-tax gain.

Keurig and KDP equity earnings, as adjusted for the one-quarter lag basis, totaled $ 160 million in 2019 , $ 213 million in 2018 (includes a deferred tax benefit Keurig recorded as a result of U.S.

tax reform) and $ 92 million in 2017 .

Within equity method investment net earnings, we also recorded shareholder loan interest income of $ 12 million in 2018 and $ 24 million in 2017 .

We received shareholder loan interest payments of $ 12 million in 2018 and $ 30 million in 2017 and dividends of $ 115 million in 2019 , $ 34 million in 2018 and $ 14 million in 2017 .

Other Equity Method Investment transactions:

On October 2, 2017, we completed the sale of one of our equity method investments and received cash proceeds of $ 65 million .

We recorded a pre-tax gain of $ 40 million within the gain on equity method investment transactions and $ 15 million of tax expense.

During the second quarter of 2019, we recorded an additional pre-tax gain of $ 4 million related to the sale and release of indemnity-related funds previously held in escrow that were released.

During 2019, we recognized a pre-tax gain of $ 23 million (or $ 18 million after-tax) related to the impact of a KDP acquisition that decreased our ownership interest from 13.8 % to 13.6 %.

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

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

On August 3, 2020, we sold approximately 14.1 million shares of KDP, which reduced our ownership interest by 1.0 % to 12.1 % of the total outstanding shares.

We received $ 414 million of proceeds and recorded a pre-tax gain of $ 181 million (or $ 139 million after-tax) during the third quarter of 2020.

On September 9, 2020, we sold approximately 12.5 million shares of KDP, which reduced our ownership interest by 0.9 % to 11.2 % of the total outstanding shares.

We received $ 363 million of proceeds and recorded a pre-tax gain of $ 154 million (or $ 119 million after-tax) during the third quarter of 2020.

On November 17, 2020, we participated in a secondary offering of KDP shares and sold approximately 40.0 million shares, which reduced our ownership interest by 2.8 % to 8.4 % of the total outstanding shares.

$ 1,132 million of proceeds and recorded a pre-tax gain of $ 459 million (or $ 350 million after-tax) during the fourth quarter of 2020.

We hold two director positions on the KDP board as well as additional governance rights.

JDE Peet’s Transaction:

In May 2020, JDE Peet’s B.V.

(renamed JDE Peet’s N.V.

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

(the “admission”).

In connection with this transaction, JDE Peet’s and the selling shareholders, including us, agreed to sell at a price of € 31.50 per ordinary share a total of approximately 82.1 million ordinary shares, including ordinary shares subject to an over-allotment option.

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

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

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

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

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

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

During the second quarter of 2020, we recorded a preliminary gain of $ 121 million, net of $ 33 million released from accumulated other comprehensive losses, and $ 48 million of transaction costs.

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

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

In the second quarter of 2020, in connection with this transaction, we changed our accounting principle to reflect our share of JDE’s historical and JDE Peet’s ongoing earnings on a one-quarter lag basis, although we continue to record dividends when cash is received.

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

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

The following tables show the primary line items on the consolidated statements of earnings and comprehensive earnings and the consolidated balance sheet that changed as a result of the reporting lag for JDE Peet's.

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

For the Years Ended

December 31, 2019 December 31, 2018

As Reported As Recast As Reported As Recast

(in millions, except per share data)

Statements of Earnings

Equity method investment net earnings $ 442 $ 501 $ 548 $ 484

Net earnings 3,885 3,944 3,395 3,331

Net earnings attributable to

Mondelēz International 3,870 3,929 3,381 3,317

Earnings per share attributable to

Mondelēz International:

Basic EPS $ 2.68 $ 2.72 $ 2.30 $ 2.25

Diluted EPS $ 2.65 $ 2.69 $ 2.28 $ 2.23

Statements of Other Comprehensive Earnings

Currency translation adjustment $ 299 $ 300 $ ( 865 ) $ ( 910 )

Pension and other benefit plans 116 133 284 331

Derivative cash flow hedges ( 45 ) ( 45 ) ( 54 ) ( 54 )

Total other comprehensive earnings/(losses) 370 388 ( 635 ) ( 633 )

Comprehensive earnings/(losses) attributable to

Mondelēz International 4,242 4,319 2,748 2,686

As of December 31, 2019

As Reported As Recast

(in millions)

Balance Sheet

Equity method investments $ 7,212 $ 7,178

Total assets 64,549 64,515

Retained earnings 26,653 26,615

Accumulated other comprehensive losses ( 10,258 ) ( 10,254 )

Total Mondelēz International shareholders' equity 27,275 27,241

Total equity 27,351 27,317

Summary Financial Information for Equity Method Investments:

Summarized financial information related to our equity method investments is reflected below.

The tables below reflect the adjustments noted above for the JDE and JDEP one-quarter lag.

As of December 31,

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Noncurrent assets 72,941 69,587

Total assets $ 78,863 $ 75,110

Current liabilities $ 11,784 $ 9,823

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Equity method investments (1)

$ 6,036 $ 7,178

For the Years Ended December 31,

2020 2019 2018

(in millions)

Net revenues $ 20,112 $ 19,361 $ 14,419

Gross profit 9,856 9,781 5,989

Income from continuing operations 2,078 2,216 1,753

Net income 2,078 2,216 1,753

Net income attributable to investees $ 2,070 $ 2,206 $ 1,742

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Since inception, we have incurred total restructuring and related implementation charges of $ 4.7 billion related to the Simplify to Grow Program.

We expect to incur the program charges by year-end 2022.

We expect to incur the remainder of the program charges by year-end 2022.

Restructuring Costs :

The Simplify to Grow Program liability activity for the years ended December 31, 2020 and 2019 was:

Write-downs and Other (1)

(in millions)

Liability Balance, January 1, 2019 $ 373 $ — $ 373

Charges 125 51 176

Cash spent ( 162 ) — ( 162 )

Non-cash settlements/adjustments ( 31 ) ( 51 ) ( 82 )

Currency ( 4 ) — ( 4 )

Liability Balance, December 31, 2019 $ 301 $ — $ 301

Charges 168 ( 12 ) 156

Cash spent ( 169 ) — ( 169 )

Non-cash settlements/adjustments ( 6 ) 12 6

Currency 10 — 10

Liability Balance, December 31, 2020 $ 304 $ — $ 304

Includes settlement losses of $ 5 million in 2019 and $ 5 million in 2018 recorded within benefit plan non-service income on our consolidated statements of earnings.

We adopted the new lease accounting ASU as of January 1, 2019.

The ASU requires recording onerous lease liabilities netted with right of use assets.

Therefore, during the first quarter of 2019, we reclassified onerous lease liabilities that totaled $ 23 million as of March 31, 2019, from accrued liabilities and other accrued liabilities to operating lease right of use assets.

(1) Includes gains as a result of assets sold which are included in the restructuring program

• We recorded restructuring charges of $ 156 million in 2020, $ 176 million in 2019 and $ 316 million in 2018 within asset impairment and exit costs and benefit plan non-service income.

• We spent $ 169 million in 2020 and $ 162 million in 2019 in cash severance and related costs.

We also recognized non-cash pension settlement losses (See Note 11, Benefit Plans ) , non-cash asset write-downs (including accelerated depreciation and asset impairments) and other non-cash adjustments (including a transfer of onerous lease liabilities to operating lease ROU assets during the first quarter of 2019) totaling $ 82 million in 2019 and $ 67 million in 2018 .

• In 2020, we recognized a gain on sale of assets included in the restructuring program, partially offset by non-cash asset write-downs (including accelerated depreciation and asset impairments), non-cash pension settlement losses (See Note 11, Benefit Plans) and other non-cash adjustments totaling $ 6 million.

In 2019, we recognized non-cash asset write-downs (including accelerated depreciation and asset impairments), non-cash pension settlement losses and other non-cash adjustments totaling $ 82 million.

• At December 31, 2020, $ 260 million of our net restructuring liability was recorded within other current liabilities and $ 44 million was recorded within other long-term liabilities.

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During 2020, 2019 and 2018, and since inception of the Simplify to Grow Program, we recorded the following restructuring and implementation costs within segment operating income and earnings before income taxes:

Corporate (2)

America AMEA Europe North

America Corporate Total

(in millions)

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Implementation Costs 18 23 63 72 31 207

Total $ 48 $ 46 $ 130 $ 95 $ 44 $ 363

For the Year Ended

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Implementation Costs 50 38 103 52 29 272

Total $ 74 $ 56 $ 208 $ 68 $ 42 $ 448

For the Year Ended

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Implementation Costs 67 39 73 79 57 315

Total $ 130 $ 108 $ 205 $ 111 $ 77 $ 631

Total Project

(Inception to Date)

Restructuring Costs $ 547 $ 558 $ 1,143 $ 492 $ 142 $ 2,882

Implementation Costs 287 229 511 456 338 1,821

During 2017-2019, our North America region implementation costs included incremental costs that we incurred related to renegotiating collective bargaining agreements that expired in February 2016 for eight U.S.

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

Benefit plan non-service income amounts associated with restructuring program activities that are no longer recorded in segment operating income are included in the Corporate column in the table above for all periods presented.

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

Includes all charges recorded since program inception on May 6, 2014 through December 31, 2019 .

Total $ 834 $ 787 $ 1,654 $ 948 $ 480 $ 4,703

Debt and Borrowing Arrangements

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As of December 31,

(in millions)

Outstanding Weighted-

Average Rate Amount

Outstanding Weighted-

(in millions) (in millions)

Commercial paper $ — — % $ 2,581 2.0 %

Bank loans 29 4.8 % 57 5.2 %

Total short-term borrowings $ 29 $ 2,638

As of December 31, 2019 , commercial paper issued and outstanding had between 2 and 52 days remaining to maturity.

Commercial paper borrowings decreased since the 2018 year-end primarily as a result of repayments from operating cash flow and proceeds from long-term debt issuances net of repayments, partially offset by increased borrowings for shareholder dividends and share repurchases.

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

Collectively, these credit lines amounted to $ 1.7 billion at December 31, 2019 and at December 31, 2018 .

Borrowings on these lines were $ 57 million at December 31, 2019 and $ 138 million at December 31, 2018 .

Borrowing Arrangements:

On September 13, 2019, Mondelez International Holdings Netherlands B.V.

("MIHN"), a wholly owned Dutch subsidiary of Mondelēz International, Inc., entered into a term loan agreement pursuant to which MIHN may incur up to $ 500 million of term loans with a three-year term and $ 500 million of term loans with a five-year term.

Proceeds from the term loan may be used for general corporate purposes, including repayment of debt.

On October 25, 2019, we fully drew on the term loans and received proceeds of $ 1.0 billion .

We also entered into cross-currency swaps, serving as cash flow hedges, so that the U.S.

dollar-denominated debt payments will effectively be paid in euros over the life of the debt.

On February 27, 2019, to supplement our commercial paper program, we entered into a $ 1.5 billion revolving credit agreement for a 364 -day senior unsecured credit facility that is scheduled to expire on February 26, 2020 .

The agreement replaces our previous credit agreement that matured on February 27, 2019 and includes the same terms and conditions as our existing $ 4.5 billion multi-year credit facility discussed below.

As of December 31, 2019 , no amounts were drawn on the facility.

On February 27, 2019, we entered into a $ 4.5 billion multi-year senior unsecured revolving credit facility for general corporate purposes, including working capital needs, and to support our commercial paper program.

This agreement replaced our $ 4.5 billion amended and restated five-year revolving credit agreement, dated as of October 14, 2016.

The revolving credit agreement is scheduled to expire on February 27, 2024 .

We repaid all outstanding commercial paper borrowings as of December 31, 2020 using the proceeds from net issuances of long-term debt, proceeds from sales of KDP and JDEP shares and operating cash flows.

Our uncommitted credit lines and committed credit lines available as of December 31, 2020 and December 31, 2019 include:

As of December 31,

Facility Amount Borrowed Amount Facility Amount Borrowed Amount

(in millions)

Uncommitted credit facilities $ 1,487 $ 29 $ 1,685 $ 57

Credit facility expiry (1) :

February 26, 2020 — — 1,500 —

February 24, 2021 1,500 — — —

February 27, 2024 4,500 — 4,500 —

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

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

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

As of December 31, 2019 , no amounts were drawn on the facility.

On April 2, 2018, in connection with the tender offer described below, we entered into a $ 2.0 billion revolving credit agreement for a 364 -day senior unsecured credit facility that was due to expire on April 1, 2019.

The agreement included the same terms and conditions as our existing $ 4.5 billion multi-year credit facility discussed above.

On April 17, 2018, we borrowed $ 714 million on this facility to fund the debt tender described below and availability under the facility was reduced to match the borrowed amount.

On May 7, 2018, we repaid the $ 714 million from the net proceeds received from the May 2018 $ 2.5 billion long-term debt issuance and terminated this credit facility.

Long-Term Debt:

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due through 2050

$ 11,917 $ 9,442

Euro notes, 0.000 % to 2.375 % (weighted-average effective rate 1.352 %),

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due through 2025

Finance leases and other obligations

Finance leases 256 123

Total 20,017 15,788

Less current portion of long-term debt ( 2,741 ) ( 1,581 )

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As of December 31, 2020, aggregate maturities of our debt and finance leases based on stated contractual maturities, excluding unamortized non-cash bond premiums, discounts, bank fees and mark-to-market adjustments of $( 94 ) million and imputed interest on finance leases of $( 20 ) million, were (in millions):

On October 28, 2019, $ 1.75 billion of our 1.625 % MIHN notes and $ 500 million of floating rate MIHN notes matured.

The notes and accrued interest to date were paid with the term loans drawn on October 25, 2019 and U.S.

dollar-denominated notes issued by MIHN on September 19, 2019.

On October 2, 2019, MIHN issued € 500 million of 0.875 % euro-denominated notes guaranteed by Mondelēz International, Inc.

that mature on October 1, 2031.

We received € 491 million (or $ 538 million ) of proceeds, net of discounts and associated financing costs of $ 11 million , which will be amortized into interest expense over the life of the loans.

The proceeds were earmarked for general corporate purposes, including repayment of debt.

On September 19, 2019, MIHN issued $ 1.0 billion of U.S.

dollar-denominated notes guaranteed by Mondelēz International, Inc.

and consisting of $ 500 million 2.125 % notes that mature on September 19, 2022 and $ 500 million 2.25 % notes that mature on September 19, 2024.

We received $ 997 million of proceeds, net of discounts and associated financing costs.

The proceeds were earmarked for general corporate purposes, including repayment of debt.

We recorded approximately $ 4 million of deferred financing costs and discounts, which will be amortized into interest expense over the life of the notes.

2021 2022 2023 2024 2025 Thereafter Total

$ 2,750 $ 2,851 $ 1,705 $ 1,667 $ 1,465 $ 9,693 $ 20,131

Tenders Offers:

On October 16, 2020, we completed the tender offer in cash and redeemed $ 950 million of long term U.S.

dollar-denominated notes for the following amounts (in millions):

Interest Rate Maturity Date Amount Repurchased

3.625 % May 2023 $ 359

4.000 % February 2024 203

3.625 % February 2026 249

4.125 % May 2028 27

6.500 % November 2031 5

7.000 % August 2037 1

6.875 % February 2038 24

6.875 % January 2039 10

6.500 % February 2040 1

4.625 % May 2048 71

We recorded a loss on debt extinguishment of approximately $ 154 million within interest and other expense, net primarily related to the amount we paid in excess of the carrying value of the debt and from recognizing unamortized discounts, deferred financing and unamortized forward starting swaps in earnings at the time of the debt extinguishment.

The cash payment related to the debt extinguishment were classified as cash outflows from financing activities in the consolidated statement of cash flows.

Debt Redemptions:

On December 4, 2020, we completed an early redemption of U.S.

dollar denominated notes for the following amounts (in millions):

Interest Rate Maturity Date Amount Redeemed

3.625 % May 2023 $ 391

We recorded an extinguishment loss of $ 31 million within interest and other expense, net primarily related to the amount we paid in excess of carrying value of the debt and from recognizing unamortized discounts and deferred financing in earnings at the time of the debt extinguishment.

The cash payments related to the redemption were classified as cash outflows from financing activities in the consolidated statement of cash flows.

Debt Repayments:

Subsequent to 2020, we repaid € 679 million of our 2.375 % euro-denominated notes that matured on January 26, 2021.

In 2020, we repaid the following notes or term loans (in millions):

Interest Rate Maturity Date Amount USD Equivalent

0.625 % October 2020 Fr.

Variable September 2020 (1)

3.000 % May 2020 $ 750 750

0.050 % March 2020 Fr.

5.375 % February 2020 $ 427 427

(1) We repaid the $ 750 million term loan early with proceeds from the issuance of notes.

In 2019, we repaid the following notes or term loans (in millions):

Interest Rate Maturity Date Amount USD Equivalent

1.625 % October 2019 $ 1,750 $ 1,750

Variable October 2019 500 500

Variable February 2019 400 400

Debt Issuances:

In 2020, we issued the following notes:

Issuance Date Interest Rate Maturity Date Gross Proceeds (1)

Gross Proceeds USD Equivalent

October 2020 1.875 % October 2032 $ 625 $ 625

October 2020 & September 2020 (2)

2.625 % September 2050 $ 1,125 $ 1,125

September 2020 (3)

0.000 % September 2026 € 500 $ 588

September 2020 (3)

0.375 % September 2029 € 750 $ 882

September 2020 1.500 % February 2031 $ 500 $ 500

July 2020 0.625 % July 2022 $ 1,000 $ 1,000

May 2020 1.500 % May 2025 $ 750 $ 750

May 2020 & April 2020 (2)

2.750 % April 2030 $ 1,250 $ 1,250

April 2020 2.125 % April 2023 $ 500 $ 500

In 2019, we issued the following notes:

Issuance Date Interest Rate Maturity Date Gross Proceeds (1)

Gross Proceeds USD Equivalent

October 2019 (3)

0.875 % October 2031 € 500 $ 548

September 2019 (3)(4)

2.125 % September 2022 $ 500 500

September 2019 (3)(4)

2.250 % September 2024 $ 500 500

September 2019 (4)(5)

Variable September 2022 $ 500 500

September 2019 (4)(5)

Variable September 2024 $ 500 500

February 2019 3.625 % February 2026 $ 600 600

(1) Represents gross proceeds from the issuance of notes excluding debt issuance costs, discounts and premiums.

(2) This represents a further issuance of the previously issued note and forms a single series note.

(3) Notes issued by Mondelez International Holdings Netherlands B.V.

(“MIHN”), a wholly owned Dutch subsidiary of Mondelez International, Inc.

(4) In connection with this debt issuance, we entered into cross-currency swaps, serving as cash flow hedges, so that the U.S.

dollar-denominated debt payments will effectively be paid in euros over the life of the debt.

On February 13, 2019, we issued $ 600 million of 3.625 % U.S.

dollar-denominated notes that are scheduled to mature February 13, 2026.

We received $ 595 million of net proceeds that were used to repay outstanding commercial paper borrowings and other debt.

We recorded approximately $ 5 million of discounts and deferred financing costs, which will be amortized into interest expense over the life of the notes.

On February 1, 2019, $ 400 million of our U.S.

dollar variable rate notes matured.

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

On August 23, 2018, $ 280 million of our 6.125 % U.S.

dollar notes matured.

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

On July 18, 2018, £ 76 million (or $ 99 million ) of our 7.25 % pound sterling notes matured.

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

On May 3, 2018, we issued $ 2.5 billion of U.S.

dollar-denominated, fixed-rate notes consisting of:

$ 750 million of 3.000 % notes that mature in May 2020

$ 750 million of 3.625 % notes that mature in May 2023

$ 700 million of 4.125 % notes that mature in May 2028

$ 300 million of 4.625 % notes that mature in May 2048

On May 7, 2018, we received net proceeds of $ 2.48 billion that were used to repay amounts outstanding under our revolving credit agreement facility and for other general corporate purposes, including the repayment of outstanding commercial paper borrowings and other debt.

We recorded approximately $ 22 million of discounts and deferred financing costs net of various fees associated for the bond transaction and underwriter fee reimbursement, which will be amortized into interest expense over the life of the notes.

On April 17, 2018, we completed a cash tender offer and retired $ 570 million of the long-term U.S.

dollar debt consisting of:

$ 241 million of our 6.500 % notes due in February 2040

$ 97.6 million of our 5.375 % notes due in February 2020

$ 75.8 million of our 6.500 % notes due in November 2031

$ 72.1 million of our 6.875 % notes due in February 2038

$ 42.6 million of our 6.125 % notes due in August 2018

$ 29.3 million of our 6.875 % notes due in January 2039

$ 11.7 million of our 7.000 % notes due in August 2037

We financed the repurchase of the notes, including the payment of accrued interest and other costs incurred, from the $ 2.0 billion revolving credit agreement entered into on April 2, 2018.

We recorded a loss on debt extinguishment of $ 140 million within interest and other expense, net related to the amount we paid to retire the debt in excess of its carrying value and from recognizing unamortized discounts, deferred financing and other cash costs in earnings at the time of the debt extinguishment.

Cash costs related to tendering the debt are included in long-term debt repayments in the consolidated statement of cash flows for 2018.

On March 2, 2018, we launched an offering of C$ 600 million of 3.250 % Canadian-dollar denominated notes that mature on March 7, 2025.

On March 7, 2018, we received C$ 595 million (or $ 461 million ) of proceeds, net of discounts and underwriting fees, to be used for general corporate purposes.

We recorded approximately $ 4 million of discounts and deferred financing costs, which will be amortized into interest expense over the life of the notes.

On February 1, 2018, $ 478 million of our 6.125 % U.S.

dollar notes matured.

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

On January 26, 2018, fr.

250 million (or $ 260 million ) of our 0.080 % Swiss franc notes matured.

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

Our weighted-average interest rate on our total debt was 2.2 % as of December 31, 2019 , 2.3 % as of December 31, 2018 and 2.1 % as of December 31, 2017 .

(5) MIHN entered into a term loan agreement.

The amount presented is the amount issued under the term loan.

Fair Value of Our Debt:

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

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

At December 31, 2018 , the aggregate fair value of our total debt was $ 18,650 million and its carrying value was $ 18,372 million .

As of December 31,

(in millions)

Fair Value $ 21,568 $ 19,388

Carrying Value $ 20,046 $ 18,426

Interest and Other Expense, net:

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For the Years Ended December 31,

2020 2019 2018

(in millions)

5 unchanged sentences

See Note 10, Financial Instruments , for information on the gain/loss related to U.S.

dollar interest rate swaps no longer designated as accounting cash flow hedges during 2019 and 2018 and for information on amounts in other income related to our net investment hedge derivative contracts and the amounts excluded from hedge effectiveness of $ 133 million in 2019 and $ 120 million in 2018 .

See Note 14, Commitments and Contingencies , for information on the $ 59 million of other income recorded in 2017 in connection with the resolution of a Brazilian indirect tax matter and the reversal of related accrued interest.

dollar interest rate swaps no longer designated as accounting cash flow hedges and for information on amounts in other income related to our net investment hedge derivative contracts and the amounts excluded from hedge effectiveness of $ 117 million in 2020, $ 133 million in 2019 and $ 120 million in 2018.

Financial Instruments

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As of December 31,

Derivatives Liability

Derivatives Asset

Derivatives Liability

(in millions)

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Net investment hedge derivative contracts (1)

114 129 312 65

$ 126 $ 469 $ 331 $ 255

Derivatives not designated as

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Commodity contracts 205 128 201 120

$ 339 $ 247 $ 268 $ 170

Total fair value $ 465 $ 716 $ 599 $ 425

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Fair Value of Net

Asset/(Liability)

Quoted Prices in

Asset/(Liability) Quoted Prices in

Active Markets

for Identical

(Level 1) Significant

Other Observable

(Level 2) Significant

(in millions)

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Fair Value of Net

Asset/(Liability)

Quoted Prices in

Asset/(Liability) Quoted Prices in

Active Markets

for Identical

(Level 1) Significant

Other Observable

(Level 2) Significant

(in millions)

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Intercompany loans and forecasted interest payments

$ 2,184 $ 2,474

Forecasted transactions

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Canadian dollar notes

During the fourth quarter of 2019, we changed how we report our commodity contract notional values from a net to a gross basis in line with how we report our other instruments.

We have recast 2018 to be consistent with current year presentation.

Cash Flow Hedges:

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For the Years Ended December 31,

2020 2019 2018

(in millions)

5 unchanged sentences

For the Years Ended December 31,

2020 2019 2018

(in millions)

Currency exchange contracts – forecasted transactions

Commodity contracts

Interest rate contracts $ ( 161 ) $ ( 154 ) $ 9

Within interest and other expense, net, we recognized a loss of $ 111 million in 2019 and a gain of $ 10 million in 2018 related to certain forward-starting interest rate swaps for which the planned timing and currency of the related forecasted debt was changed.

During the second quarter of 2019, we also recognized a loss of $ 12 million related to the net loss on equity method investment transactions noted in Note 7, Equity Method Investments - JDE / Keurig Exchange .

Within interest and other expense, net, we recognized losses related to forward starting interest rate swaps of $ 79 million ($ 103 million pre-tax) in 2020, a loss of $ 111 million in 2019 and a gain of $ 10 million in 2018 due to changes in related forecasted debt.

D uring the second quarter of 2019, we also recognized a loss of $ 12 million related to the net loss on equity method investment transactions noted in Note 7, Equity Method Investments – JDE / Keurig Exchange .

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

For the Years Ended December 31,

2020 2019 2018

(in millions)

Currency exchange contracts – forecasted transactions $ ( 2 ) $ 3 $ —

Commodity contracts

Interest rate contracts ( 107 ) ( 202 ) ( 45 )

Cash flow hedge ineffectiveness was not material for all periods presented.

We record pre-tax (i) gains or losses reclassified from accumulated other comprehensive earnings/(losses) into earnings, (ii) gains or losses on ineffectiveness and (iii) gains or losses on amounts excluded from effectiveness testing in:

cost of sales for currency exchange contracts related to forecasted transactions;

cost of sales for commodity contracts;

interest and other expense, net for interest rate contracts and currency exchange contracts related to intercompany loans.

Total $ ( 109 ) $ ( 199 ) $ ( 45 )

Cash flow hedge ineffectiveness was immaterial for all periods presented.

Based on current market conditions, we would expect to transfer losses of $ 179 million (net of taxes) for interest rate cash flow hedges to earnings during the next 12 months.

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For the Years Ended December 31,

2020 2019 2018

(in millions)

After-tax gain/(loss) on NIH contracts (1)

$ ( 221 ) $ ( 6 ) $ 191

(1) Amounts recorded for unsettled and settled NIH derivative contracts are recorded in the cumulative translation adjustment within other comprehensive earnings.

1 unchanged sentence

For the Years Ended December 31,

2020 2019 2018

(in millions)

1 unchanged sentence

hedge effectiveness (1)

$ 117 $ 133 $ 120

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

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For the Years Ended December 31,

2020 2019 2018

(in millions)

Euro notes $ ( 251 ) $ 60 $ 126

British pound sterling notes ( 8 ) ( 10 ) 19

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Pre-tax gains/(losses) recorded in net earnings for economic hedges were:

For the Years Ended December 31,

For the Years Ended December 31, Recognized

2020 2019 2018

(in millions)

1 unchanged sentence

Intercompany loans and

forecasted interest payments

Interest and other

Forecasted transactions

Cost of sales

Forecasted transactions

Interest and other

Forecasted transactions

Selling, general

forecasted interest payments $ ( 70 ) $ 100 $ 98 Interest and other

Forecasted transactions 41 17 103 Cost of sales

Forecasted transactions ( 4 ) ( 3 ) ( 4 ) Interest and other

Forecasted transactions ( 1 ) ( 8 ) ( 3 ) Selling, general

and administrative

Commodity contracts

Cost of sales

Commodity contracts 4 67 40 Cost of sales

Total $ ( 30 ) $ 173 $ 234

Benefit Plans

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The projected benefit obligations, plan assets and funded status of our pension plans were:

Plans Non-U.S.

2020 2019 2020 2019

(in millions)

Projected benefit obligation at January 1 $ 1,748 $ 1,511 $ 10,458 $ 9,578

Service cost 6 38 121 122

Interest cost 49 60 149 202

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Actuarial (gains)/losses 213 251 679 761

Currency — — 572 207

Projected benefit obligation at December 31 1,887 1,748 11,658 10,458

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Settlements paid ( 95 ) ( 73 ) — ( 1 )

Currency — — 489 246

Fair value of plan assets at December 31 1,959 1,739 10,972 9,758

Net pension (liabilities)/assets at December 31 $ 72 $ ( 9 ) $ ( 686 ) $ ( 700 )

(1) In 2020 we reviewed the impact of market changes on design features of certain historical defined contribution plans.

The review resulted in additional plans being accounted for as defined benefit pension plans, which resulted in increases of $ 133 million in the projected benefit obligation and $ 125 million in plan assets in 2020

The accumulated benefit obligation, which represents benefits earned to the measurement date, for U.S.

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pension plans was $ 11,404 million at December 31, 2020 and $ 10,236 million at December 31, 2019.

The actuarial (gain) loss for all pension plans in 2020 and 2019 was primarily related to a change in the discount rate used to measure the benefit obligations of those plans.

Salaried and non-union hourly employees hired after January 1, 2009 in the U.S.

11 unchanged sentences

Accrued pension costs ( 1,257 ) ( 1,190 )

$ ( 614 ) $ ( 709 )

Certain of our U.S.

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For these plans, the projected benefit obligations, accumulated benefit obligations and the fair value of plan assets were:

As of December 31,

Plans Non-U.S.

As of December 31, As of December 31,

2020 2019 2020 2019

(in millions)

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We used the following weighted-average assumptions to determine our benefit obligations under the pension plans:

As of December 31,

Plans Non-U.S.

As of December 31, As of December 31,

2020 2019 2020 2019

Discount rate 2.73 % 3.44 % 1.33 % 1.74 %

11 unchanged sentences

Net periodic pension cost consisted of the following:

For the Years Ended December 31,

Plans Non-U.S.

For the Years Ended December 31, For the Years Ended December 31,

2020 2019 2018 2020 2019 2018

(in millions)

Service cost $ 6 $ 38 $ 43 $ 121 $ 122 $ 146

Interest cost 49 60 61 149 202 199

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Amortization:

Net loss from experience differences

Net loss/(gain) 17 30 32 118 148 163

Prior service cost/(benefit) 1 1 2 ( 7 ) ( 6 ) ( 2 )

Settlement losses and other expenses (1)

18 16 35 4 ( 3 ) 5

Net periodic pension cost $ 14 $ 57 $ 85 $ ( 15 ) $ 59 $ 63

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Net settlement losses of $ 13 million for our U.S.

plans and settlement losses of $ 6 million for our non-U.S.

plans in 2020, settlement losses of $ 12 million for our U.S.

plans and settlement gains of $ 4 million for our non-U.S.

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plans and $ 4 million for our non-U.S.

plans in 2018 and $ 21 million for our U.S.

plans and $ 6 million for our non-U.S.

plans in 2018 related to lump-sum payment elections made by retired employees.

2 unchanged sentences

plans, we utilize a similar approach with varying cost recognition periods for some plans, and with others, we determine the expected return on plan assets based on asset fair values as of the measurement date.

As of December 31, 2019 , for the combined U.S.

pension plans, we expected to amortize from accumulated other comprehensive earnings/(losses) into net periodic pension cost during 2020 :

an estimated $ 133 million of net loss from experience differences;

an estimated $ 6 million of prior service credit.

We used the following weighted-average assumptions to determine our net periodic pension cost:

For the Years Ended December 31,

Plans Non-U.S.

For the Years Ended December 31, For the Years Ended December 31,

2020 2019 2018 2020 2019 2018

Discount rate 3.44 % 4.40 % 3.68 % 1.74 % 2.45 % 2.20 %

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As of December 31, 2020

Asset Category

Quoted Prices

Asset Category Total Fair

Value Quoted Prices

in Active Markets

for Identical

(Level 1) Significant

(Level 2) Significant

(in millions)

8 unchanged sentences

Total fixed-income securities 7,822 757 5,274 1,791

Real estate 212 142 — 70

Private equity 3 — — 3

Cash 117 107 10 —

Other 5 4 — 1

Total assets in the fair value hierarchy $ 10,389 $ 2,014 $ 6,510 $ 1,865

2 unchanged sentences

As of December 31, 2019

Asset Category

Quoted Prices

Asset Category Total Fair

Value Quoted Prices

in Active Markets

for Identical

(Level 1) Significant

(Level 2) Significant

(in millions)

8 unchanged sentences

Total fixed-income securities 6,630 536 4,258 1,836

Real estate 186 124 — 62

Private equity 3 — — 3

Cash 122 117 5 —

Other 2 1 — 1

Total assets in the fair value hierarchy $ 9,133 $ 1,672 $ 5,559 $ 1,902

1 unchanged sentence

Total investments at fair value $ 11,430

We excluded plan assets of $ 67 million at December 31, 2019 and December 31, 2018 from the above tables related to certain insurance contracts as they are reported at contract value, in accordance with authoritative guidance.

We excluded plan assets of $ 129 million at December 31, 2020 and $ 67 million at December 31, 2019 from the above tables related to certain insurance contracts as they are reported at contract value, in accordance with authoritative guidance.

Fair value measurements

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Changes in our Level 3 plan assets, which are recorded in other comprehensive earnings/(losses), included:

Asset Category

Asset Category January 1,

Balance Net Realized

and Unrealized

Net Purchases,

(Losses) Net Purchases,

Issuances and

Net Transfers

Settlements Net Transfers

Into/(Out of)

Level 3 Currency

Impact December 31,

(in millions)

1 unchanged sentence

fixed-income securities $ 1,836 $ 16 $ ( 110 ) $ — $ 49 $ 1,791

Real estate 62 5 — — 3 70

Private equity and other 4 — — — — 4

Total Level 3 investments $ 1,902 $ 21 $ ( 110 ) $ — $ 52 $ 1,865

Asset Category

Asset Category January 1,

Balance Net Realized

and Unrealized

Net Purchases,

(Losses) Net Purchases,

Issuances and

Net Transfers

Settlements Net Transfers

Into/(Out of)

Level 3 Currency

Impact December 31,

(in millions)

1 unchanged sentence

fixed-income securities $ 1,032 $ 8 $ 727 $ — $ 69 $ 1,836

Real estate 22 36 3 — 1 62

Private equity and other 3 1 — — — 4

Total Level 3 investments $ 1,057 $ 45 $ 730 $ — $ 70 $ 1,902

The increase in Level 3 pension plan investments during 2019 was primarily due to additional purchases of a buy-in annuity and other fixed income securities, and the increase in 2018 was primarily due to additional purchases of corporate bond and other fixed income securities, which includes private debt placements.

The decrease in Level 3 pension plan investments during 2020 was primarily due to maturities of corporate bond and other fixed income securities.

The increase in Level 3 pension plan investments during 2019 was primarily due to additional purchases of a buy-in annuity and other fixed income securities.

The percentage of fair value of pension plan assets was:

As of December 31,

Plans Non-U.S.

As of December 31, As of December 31,

Asset Category 2020 2019 2020 2019

1 unchanged sentence

Fixed-income securities 85 % 85 % 58 % 54 %

Real estate — — 5 % 6 %

Hedge funds — — 2 % 1 %

Buy-in annuity policies — — 11 % 12 %

plans, our investment strategy is to reduce the risk of underfunded plans in part through appropriate asset allocation within our plan assets.

We attempt to maintain our target asset allocation by rebalancing between asset classes as we make contributions and monthly benefit payments.

Cash — — 1 % 1 %

Total 100 % 100 % 100 % 100 %

plans, our investment strategy is to reduce our funded status risk in part through appropriate asset allocation within our plan assets.

We attempt to maintain our target asset allocation by rebalancing between asset classes as we make monthly benefit payments.

The strategy involves using indexed U.S.

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The estimated future benefit payments from our pension plans at December 31, 2020 were (in millions):

2021 2022 2023 2024 2025 2025-2030

Plans $ 168 $ 104 $ 105 $ 103 $ 104 $ 506

Plans 411 410 420 431 438 2,291

Multiemployer Pension Plans:

In accordance with obligations we have under collective bargaining agreements, we made contributions to multiemployer pension plans of $ 5 million in 2019 , $ 17 million in 2018 and $ 26 million in 2017 .

In 2017, the only individually significant multiemployer plan we contributed to was the Bakery and Confectionery Union and Industry International Pension Fund (the “Fund;” Employer Identification Number 52-6118572).

Our obligation to contribute to the Fund arose with respect to 8 collective bargaining agreements covering most of our employees represented by the Bakery, Confectionery, Tobacco and Grain Millers Union.

All of those collective bargaining agreements expired in 2016 and we continued to contribute to the Fund through December 2018.

Our contributions to the Fund were $ 12 million in 2018 and $ 22 million in 2017 .

Our contributions to other multiemployer pension plans that were not individually significant were $ 5 million in 2019 , $ 5 million in 2018 and $ 4 million in 2017 .

In accordance with obligations we have under collective bargaining agreements, we made contributions to multiemployer pension plans for continuing participation of $ 5 million in 2020, $ 5 million in 2019 and $ 17 million in 2018.

Our contributions are based on our contribution rates under our collective bargaining agreements, the number of our eligible employees and Fund surcharges.

In 2018, we executed a complete withdrawal from the Fund and recorded a $ 429 million estimated withdrawal liability.

On July 11, 2019, we received an undiscounted withdrawal liability assessment from the Fund totaling $ 526 million requiring pro-rata monthly payments over 20 years and we recorded a $ 35 million final adjustment to reduce our withdrawal liability as of June 30, 2019.

In 2018, we executed a complete withdrawal from the Bakery and Confectionery Union and Industry International Pension Fund and recorded a $ 429 million estimated withdrawal liability.

On July 11, 2019, we received an undiscounted withdrawal liability assessment from the Fund totaling $ 526 million requiring pro-rata monthly payments over 20 years.

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

Within selling, general and administrative expenses, we recorded a $ 35 million ($ 26 million net of tax) adjustment related to the discounted withdrawal liability.

Within interest and other expense, net, we recorded accreted interest of $ 11 million in 2020, $ 12 million in 2019 and $ 6 million in 2018.

As of December 31, 2020, the remaining discounted withdrawal liability was $ 375 million, with $ 14 million recorded in other current liabilities and $ 361 million recorded in long-term other liabilities.

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Accrued benefit obligation at January 1 $ 403 $ 366

Service cost 5 5

Interest cost 12 15

Benefits paid ( 17 ) ( 16 )

Assumption changes

Currency ( 1 ) 5

Actuarial losses/(gains) ( 41 ) 28

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The current portion of our accrued postretirement benefit obligation of $ 16 million at December 31, 2020 and $ 16 million at December 31, 2019 was included in other current liabilities.

The actuarial (gain) for all postretirement plans in 2020 was driven by gains related to assumption changes partially offset by losses related to a change in the discount rate used to measure the benefit obligations of those plans.

All postretirement plans in 2019 experienced an actuarial loss related to a change in the discount rate used to measure the benefit obligations of those plans.

We used the following weighted-average assumptions to determine our postretirement benefit obligations:

As of December 31,

Plans Non-U.S.

As of December 31, As of December 31,

2020 2019 2020 2019

Discount rate 2.68 % 3.41 % 3.35 % 3.86 %

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We believe this approach provides a good measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve.

Assumed health care cost trend rates have a significant impact on the amounts reported for the health care plans.

A one-percentage-point change in assumed health care cost trend rates would have the following effects:

As of December 31, 2019

One-Percentage-Point

(in millions)

Effect on postretirement benefit obligation

Effect on annual service and interest cost

Components of Net Periodic Postretirement Health Care Costs:

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For the Years Ended December 31,

2020 2019 2018

(in millions)

Service cost $ 5 $ 5 $ 6

Interest cost 12 15 14

Amortization:

Net loss from experience differences

Net loss/(gain) 7 6 15

Prior service credit ( 30 ) ( 38 ) ( 39 )

Net periodic postretirement health care costs/(benefit) $ ( 6 ) $ ( 12 ) $ ( 4 )

As of December 31, 2019 , we expected to amortize from accumulated other comprehensive earnings/(losses) into pre-tax net periodic postretirement health care costs during 2020 :

an estimated $ 10 million of net loss from experience differences, and

an estimated $ 30 million of prior service credit.

We used the following weighted-average assumptions to determine our net periodic postretirement health care cost:

For the Years Ended December 31,

Plans Non-U.S.

For the Years Ended December 31, For the Years Ended December 31,

2020 2019 2018 2020 2019 2018

Discount rate 3.41 % 4.37 % 3.66 % 3.86 % 4.40 % 4.24 %

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Our estimated future benefit payments for our postretirement health care plans at December 31, 2020 were (in millions):

2021 2022 2023 2024 2025 2025-2030

Plans $ 11 $ 11 $ 12 $ 12 $ 12 $ 60

Plans 5 5 5 5 5 29

We made contributions to multiemployer medical plans totaling $ 20 million in 2020, $ 20 million in 2019 and $ 19 million in 2018.

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Accrued benefit obligation at January 1 $ 66 $ 74

Service cost 6 6

Interest cost 3 5

Benefits paid ( 10 ) ( 9 )

Assumption changes

Actuarial losses/(gains) — ( 10 )

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For the Years Ended December 31,

2020 2019 2018

(in millions)

Service cost $ 6 $ 6 $ 6

Interest cost 3 5 4

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Our weighted-average Black-Scholes and Lattice Model fair value assumptions were:

Interest Rate

Expected Life

Dividend Yield

Interest Rate Expected Life Expected

Volatility Expected

Dividend Yield Fair Value

at Grant Date

2020 1.34 % 5 years 19.64 % 2.06 % $ 8.61

2019 2.46 % 5 years 19.96 % 2.37 % $ 7.83

2018 2.68 % 5 years 20.96 % 2.02 % $ 8.30

The risk-free interest rate represents the constant maturity U.S.

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Shares Subject

Balance at January 1, 2017

to Option Weighted-

Per Share Average

Term Aggregate

Balance at January 1, 2018 48,434,655 $ 29.92 $ 626 million

Annual grant to eligible employees 5,666,530 43.51

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Options exercised (1)

( 9,333,271 ) 25.16 $ 170 million

Options cancelled ( 1,117,390 ) 42.93

Balance at December 31, 2017

Balance at December 31, 2018 43,818,830 32.36 $ 371 million

Annual grant to eligible employees 4,793,570 47.72

2 unchanged sentences

Options exercised (1)

( 13,668,354 ) 27.53 $ 306 million

Options cancelled ( 1,156,518 ) 42.22

Balance at December 31, 2018

Balance at December 31, 2019 33,855,948 36.19 $ 640 million

Annual grant to eligible employees 2,280,440 59.04

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Options exercised (1)

( 7,847,964 ) 30.55 $ 205 million

Options cancelled ( 672,890 ) 44.94

Balance at December 31, 2019

Exercisable at December 31, 2019

Balance at December 31, 2020 27,751,894 39.51 5 years $ 527 million

Exercisable at December 31, 2020 21,444,333 36.18 4 years $ 478 million

(1) Cash received from options exercised was $ 236 million in 2020, $ 369 million in 2019 and $ 231 million in 2018.

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Our performance share unit, deferred stock unit and restricted stock activity is reflected below:

Weighted-Average

Per Share (4)

Weighted-Average

of Shares Grant Date Weighted-Average

Per Share (4) Weighted-Average

Fair Value (3)

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Additional shares granted (1)

Total shares granted

446,752 Various 41.78

Total shares granted 2,283,832 46.72 $ 107 million

Vested (2) (3)

( 2,511,992 ) 38.91 $ 98 million

Forfeited (2)

( 882,535 ) 42.00

Balance at December 31, 2018 6,559,010 42.19

3 unchanged sentences

Additional shares granted (1)

Total shares granted

205,073 Various 54.81

Total shares granted 1,763,163 53.69 $ 95 million

Vested (2) (3)

( 2,007,848 ) 37.81 $ 76 million

Forfeited (2)

( 652,380 ) 45.88

Balance at December 31, 2019 5,661,945 46.90

3 unchanged sentences

Additional shares granted (1)

Total shares granted

390,730 Various 56.90

Total shares granted 1,761,510 61.75 $ 109 million

( 2,051,054 ) 42.87 $ 88 million

Forfeited ( 475,411 ) 48.24

Balance at December 31, 2020 4,896,990 53.80

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Shares of Common Stock issued, in treasury and outstanding were:

Shares Issued

Treasury Shares

Shares Issued Treasury Shares Shares

Balance at January 1, 2018 1,996,537,778 ( 508,401,694 ) 1,488,136,084

1,996,537,778

( 468,172,237

1,528,365,541

Shares repurchased — ( 47,258,884 ) ( 47,258,884 )

2 unchanged sentences

Balance at December 31, 2018 1,996,537,778 ( 545,537,923 ) 1,450,999,855

1,996,537,778

( 508,401,694

1,488,136,084

Shares repurchased — ( 30,902,465 ) ( 30,902,465 )

2 unchanged sentences

Balance at December 31, 2019 1,996,537,778 ( 561,531,524 ) 1,435,006,254

1,996,537,778

( 545,537,923

1,450,999,855

Shares repurchased — ( 25,071,845 ) ( 25,071,845 )

2 unchanged sentences

Balance at December 31, 2020 1,996,537,778 ( 577,363,557 ) 1,419,174,221

1,996,537,778

( 561,531,524

1,435,006,254

Stock plan awards to employees and non-employee directors are issued from treasury shares.

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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 .

On December 2, 2020, our Board of Directors approved an increase of $ 4.0 billion in the share repurchase program, raising the authorization to $ 23.7 billion of Common Stock repurchases, and extended the program through December 31, 2023 .

Repurchases under the program are determined by management and are wholly discretionary.

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Legal Proceedings:

We routinely are involved in legal proceedings, claims and governmental inspections or investigations ("Legal Matters") arising in the ordinary course of our business.

In February 2013 and March 2014, Cadbury India Limited (now known as Mondelez India Foods Private Limited), a subsidiary of Mondelēz International, and other parties received show cause notices from the Indian Central Excise Authority (the “Excise Authority”) calling upon the parties to demonstrate why the Excise Authority should not collect a total of 3.7 billion Indian rupees ( $ 52 million as of December 31, 2019 ) ("Period 1") of unpaid excise tax and an equivalent amount of penalties, as well as interest, related to production at the same Indian facility.

We contested these demands and on March 27, 2015, the Commissioner of the Excise Authority (the "Commissioner") issued an order denying the excise exemption that we claimed for Period 1.

We appealed this order in June 2015.

The Excise Authority issued additional show cause notices in February 2015, December 2015 and October 2017 on the same issue covering additional periods through June 2017 ("Period 2").

These three notices added a total of 4.9 billion Indian rupees ( $ 68 million as of December 31, 2019 ) of allegedly unpaid excise taxes subject to penalties up to an equivalent amount plus accrued interest.

We contested these demands, and on May 25, 2019, the Commissioner issued an order denying the excise exemption that we claimed for Period 2.

We appealed this order in August 2019.

With the implementation of the Goods and Services Tax ("GST") in India in July 2017, we stopped receiving show

cause notices for additional amounts on this issue.

Beginning in the fall of 2019, the government of India made available an amnesty to resolve legacy tax issues following the GST implementation.

Under the amnesty, upon payment of 50 % of the principal demand for cases pending adjudication or appeal as of June 30, 2019 and 60 % of the principal demand for cases where the appeal was filed after June 30, 2019, the government would waive the remainder of the principal demand as well as any penalties imposed and interest, and it would also grant immunity from prosecution.

Although we continue to believe that our decision to claim the excise tax benefit was valid, in December 2019, we filed for the amnesty and accrued a total of 4.6 billion Indian rupees ( $ 65 million as of December 31, 2019 ) in selling, general and administrative expenses for this matter.

In January 2020, we made the related payments under the amnesty.

This matter is now resolved, and the resolution was not material to our business or financial condition.

We routinely are involved in legal proceedings, claims, disputes, regulatory matters and governmental inspections or investigations arising in the ordinary course of or incidental to our business, including those noted below in this section.

We record provisions in the consolidated financial statements for pending litigation when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated.

For matters we have not provided for that are reasonably possible to result in an unfavorable outcome, management is unable to estimate the possible loss or range of loss or such amounts have been determined to be immaterial.

At present we believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, results of operations or cash flows.

However, legal proceedings and government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur.

Unfavorable resolutions could involve substantial monetary damages.

In addition, in matters for which conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices or requiring other remedies.

An unfavorable outcome might result in a material adverse impact on our business, results of operations or financial position.

On April 1, 2015 , the U.S.

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

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

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

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The terms of the settlement, which are available in the District Court’s docket, had an immaterial impact on our financial position, results of operations and cash flows.

On October 23, 2019, following a ruling by the United States Court of Appeals for the Seventh Circuit (the "Seventh Circuit") regarding Mondelēz Global's allegations that the CFTC and its Commissioners violated certain terms of the settlement agreement and the CFTC's argument that the Commissioners were not bound by the terms of the settlement agreement, the District Court vacated the settlement agreement and reinstated all pending motions that the District Court had previously mooted as a result of the settlement.

On October 23, 2019, following a ruling by the United States Court of Appeals for the Seventh Circuit regarding Mondelēz Global's allegations that the CFTC and its Commissioners violated certain terms of the settlement agreement and the CFTC's argument that the Commissioners were not bound by the terms of the settlement agreement, the District Court vacated the settlement agreement and reinstated all pending motions that the District Court had previously mooted as a result of the settlement.

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

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

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

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In June 2015, these suits were consolidated in the District Court.

On January 3, 2020, the District Court granted plaintiffs' request to certify a class.

On January 17, 2020, we filed a petition for an interlocutory appeal of the District Court's class certification decision to the Seventh Circuit.

On January 3, 2020, the District Court granted plantiffs' request to certify a class.

It is not possible to predict the outcome of these matters;

however, based on our Separation and Distribution Agreement with Kraft Foods Group dated as of September 27, 2012, we expect to bear any monetary penalties or other payments in connection with the CFTC action.

Although the CFTC action and the class action complaints involve the same alleged conduct, a resolution or decision with respect to one of the matters may not be dispositive as to the outcome of the other matter.

In November 2019, the European Commission informed us that it has initiated an investigation into our alleged infringement of European Union competition law through certain practices restricting cross-border trade within the European Economic Area.

We are cooperating with the investigation.

The fact that an investigation has been initiated does not mean that the European Commission has concluded that there is an infringement.

In November 2019, the European Commission informed us that it had initiated an investigation into our alleged infringement of European Union competition law through certain practices restricting cross-border trade within the European Economic Area.

On January 28, 2021, the European Commission announced it has taken the next procedural step in its investigation and opened formal proceedings.

We are cooperating with the investigation and expect to engage further with the European Commission as its investigation proceeds.

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

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

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

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

We are working with the VDEQ to reach a resolution of this matter, and we do not expect this matter to have a material effect on our financial results.

We are a party to various legal proceedings, including disputes, litigation and regulatory matters, incidental to our business, including those noted above in this section.

We record provisions in the consolidated financial statements for pending litigation when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated.

For matters that are reasonably possible to result in an unfavorable outcome,

management is unable to estimate the possible loss or range of loss or such amounts have been determined to be immaterial.

At present we believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, results of operations or cash flows.

However, legal proceedings and government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur.

Unfavorable resolutions could involve substantial monetary damages.

An unfavorable outcome might result in a material adverse impact on our business, results of operations or financial position.

Third-Party Guarantees:

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During the fourth quarter of 2019, we resolved several indirect tax matters and recorded $ 85 million of net indirect tax expenses within selling, general and administrative expenses.

These amounts primarily include the matter resolved under the tax amnesty described above under “Legal Proceedings.”

A tax indemnification matter related to our 2007 acquisition of the LU biscuit business was closed during the quarter ended June 30, 2018.

The closure had no impact on net earnings, however, it did result in a $ 15 million tax benefit that was fully offset by an $ 11 million expense in selling, general and administrative expenses and a $ 4 million expense in interest and other expense, net.

During the first quarter of 2017, the Brazilian Supreme Court (the “Court”) ruled against the Brazilian tax authorities in a leading case related to the computation of certain indirect taxes.

The Court ruled that the indirect tax base should not include a value-added tax known as “ICMS”.

By removing the ICMS from the tax base, the Court effectively eliminated a “tax on a tax.” In lower courts, our Brazilian subsidiaries filed lawsuits to recover amounts paid and to discontinue subsequent payments related to the “tax on a tax.” Our Brazilian subsidiaries received injunctions against making payments for the “tax on a tax” in 2008 and since that time until December 2016, had accrued this portion of the tax each quarter in the event that the tax was reaffirmed by the Brazilian courts.

On September 30, 2017, based on legal advice and the publication of the Court’s decision related to this case, we determined that the likelihood that the increased tax base would be reinstated and assessed against us was remote.

Accordingly, we reversed our accrual of 667 million Brazilian reais, or $ 212 million as of September 30, 2017, of which $ 153 million was recorded within selling, general and administrative expenses and $ 59 million was recorded within interest and other expense, net.

In connection with the Court's 2017 decision, the Brazilian tax authority filed a motion seeking clarification and adjustment of the terms of enforcement and that motion is still to be decided.

We continue to monitor developments in this matter and currently do not expect a material future impact on our financial statements.

During the fourth quarter of 2018, in one of our lower court cases, the Brazilian Federal Court of Appeals ruled in our favor against the Brazilian tax authority, allowing one of our Brazil subsidiaries to recover amounts previously paid.

As a result, we recorded a net benefit in selling, general and administrative expenses of $ 26 million .

As part of our 2010 Cadbury acquisition, we became the responsible party for tax matters under a February 2, 2006 dated Deed of Tax Covenant between the Cadbury Schweppes PLC and related entities (“Schweppes”) and Black Lion Beverages and related entities.

The tax matters included an ongoing transfer pricing case with the Spanish tax authorities related to the Schweppes businesses Cadbury divested prior to our acquisition of Cadbury.

During the first quarter of 2017, the Spanish Supreme Court decided the case in our favor.

As a result of the final ruling, during the first quarter of 2017, we recorded a favorable earnings impact of $ 46 million in selling, general and administrative expenses and $ 12 million in interest and other expense, net, for a total pre-tax impact of $ 58 million due to the non-cash reversal of Cadbury-related accrued liabilities related to this matter.

We recorded a total of $ 4 million of income over the third and fourth quarters of 2017 in connection with the related bank guarantee releases.

Reclassifications from Accumulated Other Comprehensive Income

2 unchanged sentences

For the Years Ended December 31,

2020 2019 2018

(in millions)

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Tax expense/(benefit) on reclassifications (3)

( 31 ) ( 42 ) ( 36 )

Currency impact ( 99 ) ( 18 ) 92

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Losses/(gains) reclassified into net earnings:

Currency exchange contracts - forecasted transactions (3)

Commodity contracts (3)

Interest rate contracts (1) (4)

189 155 ( 11 )

Tax expense/(benefit) on reclassifications (3)

( 28 ) ( 1 ) 2

Currency impact ( 4 ) 6 6

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Balance at end of period $ ( 10,690 ) $ ( 10,254 ) $ ( 10,644 )

These reclassified losses are included in net periodic benefit costs disclosed in Note 11, Benefit Plans , and net loss on equity method investment transactions.

(1) Includes equity method investment transactions recorded within gain/(loss) on equity method investment transactions.

(2) These reclassified losses are included in net periodic benefit costs disclosed in Note 11, Benefit Plans .

(3) Taxes reclassified to earnings are recorded within the provision for income taxes .

These reclassified gains or losses are recorded within cost of sales.

These reclassified losses are recorded within interest and other expense, net and net loss on equity method investment transactions.

(4) These reclassified losses are recorded within interest and other expense, net .

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

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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, our position is the enactment of Swiss tax reform for U.S.

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

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

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

The net impact was a benefit of $ 767 million, which consisted of a $ 769 million reduction in deferred tax expense from an allowed step-up of intangible assets for tax purposes (recorded net of valuation allowance) 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 are effective starting January 1, 2020.

We will continue to monitor Swiss tax reform for any additional interpretative guidance that could result in changes to the amounts we have recorded.

On December 22, 2017, new U.S.

The ongoing impacts of these Swiss tax reform law changes became effective January 1, 2020.

We continue to monitor interpretative guidance on Swiss tax reform that could result in changes to the amounts we have recorded.

On December 22, 2017, U.S.

tax reform legislation ("U.S.

tax reform") was enacted that included a broad range of complex provisions impacting the taxation of businesses.

Certain impacts of the new legislation would have generally required accounting to be completed and incorporated into our 2017 year-end financial statements, however in response to the complexities of this new legislation, the SEC issued guidance to provide companies with relief.

The SEC provided up to a one-year window for companies to finalize the accounting for the impacts of this new legislation.

We finalized our accounting for the new provisions during the fourth quarter of 2018.

tax reform resulted in a total transition tax liability of $ 1,284 million ( $ 1,279 million as of December 31, 2018 and $ 5 million of 2019 related updates) based on the deemed repatriation of our accumulated foreign earnings and profits, which will be paid in installments through 2026, and a related change in our indefinite reinvestment assertion for most companies owned directly by our U.S.

subsidiaries.

In addition, the legislation reduced the U.S.

federal tax rate from 35% to 21% and established various new provisions, including a new provision that taxes U.S.

allocated expenses (e.g.

interest and general administrative expenses) as well as currently taxes certain income from foreign operations (Global Intangible Low-Tax Income, or “GILTI”).

tax reform resulted in a total transition tax liability of $ 1.3 billion based on the deemed repatriation of our accumulated foreign earnings and profits, which will be paid in installments through 2026.

Earnings/(losses) from continuing operations before income taxes and the provision for income taxes consisted of:

For the Years Ended December 31,

2020 2019 2018

(in millions)

2 unchanged sentences

Outside United States 2,869 2,696 3,012

$ 3,383 $ 3,447 $ 2,842

Provision for income taxes:

United States federal:

Current $ 440 $ 145 $ ( 34 )

Deferred ( 82 ) 97 171

State and local:

Current 98 29 23

Deferred ( 7 ) 45 61

Total United States 449 316 221

Outside United States:

Current 756 459 552

Deferred 19 ( 773 ) —

Total outside United States 775 ( 314 ) 552

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For the Years Ended December 31,

2020 2019 2018

federal statutory rate 21.0 % 21.0 % 21.0 %

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Reversal of other tax accruals no longer required ( 0.8 ) % ( 3.0 ) % ( 1.8 ) %

Tax accrual on investment in Keurig (including tax impact of the

gain from the KDP transaction)

Tax accrual on investment in KDP (including tax

impact share sales) 6.7 % 0.8 % 8.4 %

Excess tax benefits from equity compensation ( 1.0 ) % ( 1.2 ) % ( 0.8 ) %

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Swiss tax reform — ( 22.3 ) % —

tax reform - deferred benefit from tax rate change

Business sales (including tax impact from JDE Peet's transaction) 7.4 % — —

tax reform - transition tax — 0.1 % ( 1.3 ) %

1 unchanged sentence

Foreign tax provisions under TCJA (GILTI, FDII and BEAT) (1)

1.1 % 2.5 % 1.1 %

Other 0.3 % 0.6 % 0.1 %

Effective tax rate 36.2 % 0.1 % 27.2 %

1 unchanged sentence

allocated expenses and certain income from foreign operations;

the Foreign-Derived Intangible Income ("FDII")

provision, which allows a deduction against certain types of US taxable income resulting in a lower effective US tax rate on such income;

and the Base Erosion Anti-abuse Tax ("BEAT"), which is a new minimum tax based on cross-border service payments by U.S.

the Foreign-Derived Intangible Income ("FDII") provision, which allows a deduction against certain types of U.S.

taxable income resulting in a lower effective U.S.

tax rate on such income;

and the Base Erosion Anti-abuse Tax ("BEAT"), which is a minimum tax based on cross-border service payments by U.S.

Our 2020 effective tax rate of 36.2 % was high due to the $ 452 million net tax expense incurred in connection with the JDE Peet's transaction and four KDP share sales that occurred during 2020 (the related gains were reported as gains on equity method investments).

Excluding these impacts, our effective tax rate was 22.8 %, which reflects unfavorable provisions from U.S.

tax reform and taxes on earnings from equity method investments (these earnings are reported separately on our consolidated statements of earnings and not within earnings before income taxes), largely offset by favorable impacts from the mix of pre-tax income in various non-U.S.

jurisdictions and discrete net tax benefits of $ 119 million.

The discrete net benefits were primarily driven by the $ 70 million net benefit from the release of the China valuation allowance and a $ 50 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions.

Our 2019 effective tax rate of 0.1 % was significantly impacted by the $ 769 million net deferred tax benefit related to Swiss tax reform in the third quarter of 2019.

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The discrete net tax benefits were primarily driven by a $ 128 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions.

Our 2018 effective tax rate of 27.2 % was unfavorably impacted by net tax expenses from $ 128 million of discrete one-time events as well as unfavorable provisions within the new U.S.

Our 2018 effective tax rate of 27.2 % was unfavorably impacted by net tax expenses from $ 128 million of discrete one-time events as well as unfavorable provisions within U.S.

tax reform legislation and taxes on earnings from equity method investments (these earnings are reported separately on our consolidated statements of earnings and not within earnings before income taxes), partially offset by the favorable mix of pre-tax income in various non-U.S.

tax jurisdictions as well as the reduction in the U.S.

federal tax rate.

tax jurisdictions.

The discrete net tax expenses included a $ 192 million deferred tax expense related to a $ 778 million gain on the KDP transaction reported as a gain on equity method investment as well as $ 19 million expense from the final updates to the provisional impacts from U.S.

tax reform reported as of 2017 year-end, partially offset by an $ 81 million benefit from favorable audit settlements and statutes of limitations in various jurisdictions.

Our 2017 effective tax rate of 21.3 % was favorably impacted by the mix of pre-tax income in various non-U.S.

tax jurisdictions and net tax benefits from $ 97 million of discrete one-time events, partially offset by domestic earnings taxed at the higher pre-U.S.

tax reform rate of 35% as well as taxes on earnings from equity method investments (these earnings are reported separately on our consolidated statements of earnings and not within earnings before income taxes).

The discrete net tax benefits included the provisional net impact from U.S.

tax reform discussed previously, favorable audit settlements and statutes of limitations in various jurisdictions, and the net reduction of our French and Belgian deferred tax liabilities resulting from tax legislation enacted during 2017 that reduced the corporate income tax rates in each country, partially offset by the addition of a valuation allowance in one of our Chinese entities.

Tax effects of temporary differences that gave rise to deferred income tax assets and liabilities consisted of:

8 unchanged sentences

Tax credit carryforwards 790 729

Other 535 438

Total deferred income tax assets 2,932 2,625

4 unchanged sentences

Property, plant and equipment ( 747 ) ( 663 )

Other ( 513 ) ( 559 )

Total deferred income tax liabilities ( 4,211 ) ( 3,994 )

Net deferred income tax liabilities $ ( 2,556 ) $ ( 2,612 )

Our significant valuation allowances are in the U.S., Switzerland and China.

Our significant valuation allowances are in the U.S.

and Switzerland.

valuation allowance relates to excess foreign tax credits generated by the deemed repatriation under U.S.

tax reform while the Swiss valuation allowance brings the allowed step-up of intangible assets recorded under Swiss tax reform to the amount more likely than not to be realized.

The valuation allowance in China relates to character-specific deferred tax assets of one of our Chinese entities.

At December 31, 2020, the Company has pre-tax loss carryforwards of $ 3,293 million, of which $ 332 million will expire at various dates between 2021 and 2040 and the remaining $ 2,961 million can be carried forward indefinitely.

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For the Years Ended December 31,

2020 2019 2018

(in millions)

January 1 $ 426 $ 516 $ 579

Increases from positions taken during prior periods 35 27 36

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statute of limitations

( 29 ) ( 64 ) ( 31 )

Currency/other 6 ( 4 ) ( 37 )

December 31 $ 442 $ 426 $ 516

As of January 1, 2020, our unrecognized tax benefits were $ 426 million.

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We had accrued interest and penalties of $ 170 million as of January 1, 2020 and $ 170 million as of December 31, 2020.

Our 2019 provision for income taxes included $ 5 million benefit for interest and penalties.

Our 2020 provision for income taxes included $ 11 million expense for interest and penalties.

Our income tax filings are regularly examined by federal, state and non-U.S.

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tax authorities in major jurisdictions include (earliest open tax year in parentheses):

Brazil (2014), China (2009), France (2015), India (2005), Russia (2013) and Switzerland (2014).

China (2010), France (2015), India (2005), the United Kingdom (2015) and Switzerland (2014).

Earnings per Share

1 unchanged sentence

For the Years Ended December 31,

2020 2019 2018

(in millions, except per share data)

Net earnings $ 3,569 $ 3,944 $ 3,331

Noncontrolling interest earnings ( 14 ) ( 15 ) ( 14 )

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We believe it is appropriate to disclose this measure to help investors analyze segment performance and trends.

Segment operating income excludes unrealized gains and losses on hedging activities (which are a component of cost of sales), general corporate expenses (which are a component of selling, general and administrative expenses), amortization of intangibles, gains and losses on divestitures and acquisition-related costs (which are a component of selling, general and administrative expenses) in all periods presented.

Segment operating income excludes unrealized gains and losses on hedging activities (which are a component of cost of sales), general corporate expenses (which are a component of selling, general and administrative expenses), amortization of intangible assets, gains and losses on divestitures and acquisition-related costs (which are a component of selling, general and administrative expenses) in all periods presented.

We exclude these items from segment operating income in order to provide better transparency of our segment operating results.

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For the Years Ended December 31,

2020 2019 2018

(in millions)

1 unchanged sentence

Latin America

$ 2,477 $ 3,018 $ 3,202

5,740 5,770 5,729

10,207 9,972 10,122

North America

8,157 7,108 6,885

Net revenues $ 26,581 $ 25,868 $ 25,938

Earnings before income taxes:

1 unchanged sentence

Latin America $ 189 $ 341 $ 410

AMEA 821 691 702

Europe 1,775 1,732 1,734

North America 1,587 1,451 849

2 unchanged sentences

General corporate expenses ( 326 ) ( 330 ) ( 335 )

Amortization of intangibles

Net gains on divestitures

Amortization of intangible assets ( 194 ) ( 174 ) ( 176 )

Net gain on divestiture — 44 —

Acquisition-related costs ( 15 ) ( 3 ) ( 13 )

3 unchanged sentences

Earnings before income taxes $ 3,383 $ 3,447 $ 2,842

During the first quarter of 2018, in connection with adopting a new pension cost classification accounting standard, we reclassified certain of our benefit plan component costs other than service costs out of operating income into a new line item, benefit plan non-service income, on our consolidated statements of earnings.

As such, we have recast our historical operating income and segment operating income to reflect this reclassification, which had no impact to earnings before income taxes or net earnings.

No single customer accounted for 10% or more of our net revenues from continuing operations in 2020 .

Our five largest customers accounted for 17.5 % and our ten largest customers accounted for 24.0 % of net revenues from continuing operations in 2020.

Items impacting our segment operating results are discussed in Note 1, Summary of Significant Accounting Policies , Note 2, Divestitures and Acquisitions , Note 4, Property, Plant and Equipment , Note 6, Goodwill and Intangible Assets , Note 8, Restructuring Program , and Note 14, Commitments and Contingencies .

Items impacting our segment operating results are discussed in Note 1, Summary of Significant Accounting Policies , Note 2, Acquisitions and Divestitures, Note 4, Property, Plant and Equipment, Note 6, Goodwill and Intangible Assets, Note 8, Restructuring Program , and Note 14, Commitments and Contingencies .

Also see Note 9, Debt and Borrowing Arrangements , and Note 10, Financial Instruments, for more information on our interest and other expense, net for each period.

1 unchanged sentence

For the Years Ended December 31,

2020 2019 2018

(in millions)

1 unchanged sentence

Latin America (1)

$ 4,181 $ 4,716 $ 4,699

9,997 9,740 9,571

21,442 20,354 19,426

North America (1)

23,297 21,637 21,015

Equity method investments 6,036 7,178 7,012

Unallocated assets and adjustments (2)

2,857 890 895

Total assets $ 67,810 $ 64,515 $ 62,618

(1) Segment assets do not reflect outstanding intercompany asset balances as intercompany accounts have been eliminated at a segment level.

2 unchanged sentences

For the Years Ended December 31,

2020 2019 2018

(in millions)

1 unchanged sentence

Latin America $ 101 $ 105 $ 97

AMEA 159 164 159

Europe 238 238 248

North America 154 138 131

4 unchanged sentences

For the Years Ended December 31,

2020 2019 2018

(in millions)

1 unchanged sentence

Latin America $ 219 $ 197 $ 261

AMEA 177 244 277

Europe 295 297 326

North America 172 187 231

Total capital expenditures $ 863 $ 925 $ 1,095

Geographic data for net revenues (recognized in the countries where products are sold) and long-lived assets, excluding deferred tax, goodwill, intangible assets and equity method investments, were:

Geographic data for net revenues (recognized in the countries where products are sold from) and long-lived assets, excluding deferred taxes, goodwill, intangible assets and equity method investments, were:

For the Years Ended December 31,

2020 2019 2018

(in millions)

1 unchanged sentence

United States $ 7,130 $ 6,625 $ 6,401

Other 19,451 19,243 19,537

Total net revenues $ 26,581 $ 25,868 $ 25,938

As of December 31,

2020 2019 2018

(in millions)

1 unchanged sentence

United States $ 1,956 $ 1,806 $ 1,481

Other 8,672 8,370 7,539

Total long-lived assets $ 10,628 $ 10,176 $ 9,020

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For the Year Ended December 31, 2020

America AMEA Europe North

America Total

(in millions)

Biscuits $ 668 $ 2,039 $ 3,035 $ 7,024 $ 12,766

Chocolate 610 2,025 5,291 253 8,179

Gum & Candy 474 696 612 880 2,662

Beverages 403 544 102 — 1,049

Cheese & Grocery 322 436 1,167 — 1,925

1 unchanged sentence

For the Year Ended December 31, 2019

America AMEA Europe North

America Total

(in millions)

Biscuits $ 708 $ 1,844 $ 2,998 $ 5,888 $ 11,438

Chocolate 710 2,082 5,119 247 8,158

Gum & Candy 823 861 698 973 3,355

Beverages 452 546 97 — 1,095

Cheese & Grocery 325 437 1,060 — 1,822

1 unchanged sentence

For the Year Ended December 31, 2018

America AMEA Europe North

America Total

(in millions)

Biscuits $ 727 $ 1,724 $ 3,127 $ 5,607 $ 11,185

Chocolate 747 2,080 5,083 267 8,177

Gum & Candy 865 879 736 1,011 3,491

Beverages 533 553 98 — 1,184

Cheese & Grocery 330 493 1,078 — 1,901

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2020 Quarters

Second Third Fourth

(in millions, except per share data)

(Provision)/benefit for income taxes (1)

Net revenues $ 6,707 $ 5,911 $ 6,665 $ 7,298

Gross profit 2,451 2,331 2,792 2,872

Income tax (provision)/benefit ( 148 ) ( 341 ) ( 391 ) ( 344 )

Gain/(loss) on equity method investment transactions 71 121 345 452

Equity method investment net earnings 121 106 84 110

Net earnings 743 545 1,122 1,159

Noncontrolling interest ( 7 ) ( 1 ) ( 3 ) ( 3 )

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Basic EPS attributable to Mondelēz International:

$ 0.51 $ 0.38 $ 0.78 $ 0.81

Diluted EPS attributable to Mondelēz International:

$ 0.51 $ 0.38 $ 0.78 $ 0.80

Dividends declared $ 0.285 $ 0.285 $ 0.315 $ 0.315

2019 Quarters (1)

First Second Third Fourth

(in millions, except per share data)

Provision for income taxes

Gain on equity method investment transactions

Net revenues $ 6,538 $ 6,062 $ 6,355 $ 6,913

Gross profit 2,593 2,469 2,516 2,759

Income tax (provision)/benefit (2)

( 189 ) ( 216 ) 633 ( 230 )

Gain/(loss) on equity method investment transactions 23 ( 25 ) — —

Equity method investment net earnings 166 109 114 112

Net earnings 973 804 1,431 736

Noncontrolling interest ( 6 ) ( 1 ) ( 5 ) ( 3 )

6 unchanged sentences

Basic EPS attributable to Mondelēz International:

$ 0.67 $ 0.56 $ 0.99 $ 0.51

Diluted EPS attributable to Mondelēz International:

$ 0.66 $ 0.55 $ 0.98 $ 0.50

Dividends declared $ 0.26 $ 0.26 $ 0.285 $ 0.285

(1) During the second quarter of 2020, we changed to reporting JDE Peet's earnings on a quarter lag basis and we recast all prior periods presented on the same basis.

Please see Note 7, Equity Method Investments , for more information.

(2) The third quarter of 2019 was significantly impacted by the $ 769 million net deferred tax benefit related to Swiss tax reform.

4 unchanged sentences

2020 Quarters

First Second Third Fourth

(in millions)

Asset impairment and exit costs $ ( 15 ) $ ( 115 ) $ ( 123 ) $ ( 48 )

Divestiture-related costs

Net gain on divestiture

Impact from pension participation changes ( 3 ) ( 3 ) ( 3 ) ( 2 )

1 unchanged sentence

Loss related to interest rate swaps ( 103 ) — — —

Net gain/(loss) on equity method investment

Loss on debt extinguishment — — — ( 185 )

Gain on equity method investment transactions 71 121 345 452

$ ( 50 ) $ 3 $ 219 $ 265

2019 Quarters

First Second Third Fourth

(in millions)

Asset impairment and exit costs $ ( 20 ) $ ( 15 ) $ ( 134 ) $ ( 59 )

Divestiture-related costs

Net gain on divestiture — 41 3 —

Impact from pension participation changes — 35 ( 3 ) ( 3 )

Impact from the resolution of tax matters — — — ( 85 )

Gain/(loss) related to interest rate swaps

Loss on early extinguishment of

debt and related expenses

Gain on equity method investment transaction

Items impacting our operating results are discussed in Note 1, Summary of Significant Accounting Policies , Note 2, Divestitures and Acquisitions , Note 6, Goodwill and Intangible Assets , Note 7, Equity Method Investments , Note 8, Restructuring Program , Note 9, Debt and Borrowing Arrangements , Note 10, Financial Instruments , Note 11, Benefit Plans and Note 14, Commitments and Contingencies – Tax Matters .

Loss related to interest rate swaps — — ( 111 ) —

Gain/(loss) on equity method investment transactions 23 ( 25 ) — —

$ 3 $ 36 $ ( 245 ) $ ( 147 )

Items impacting our operating results are discussed in Note 1, Summary of Significant Accounting Policies, Note 2, Acquisitions and Divestitures , Note 6, Goodwill and Intangible Assets , Note 7, Equity Method Investments , Note 8, Restructuring Program, Note 9, Debt and Borrowing Arrangements , Note 10, Financial Instruments, Note 11, Benefit Plans , and Note 14, Commitments and Contingencies – Tax Matters .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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-K

Item 8. Financial Statements and Supplementary Data