Mondelez International, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Description of the Company We make and sell primarily snacks, including biscuits (cookies, crackers and salted snacks), chocolate, gum & candy as well as various cheese & grocery and powdered beverage products. We have operations in approximately 80 countries and sell our products in over 150 countries. We aim to be the global leader in snacking. Our strategy is to drive long-term growth by focusing on three strategic priorities: accelerating consumer-centric growth, driving operational excellence and creating a winning growth culture. We believe the successful implementation of our strategic priorities and leveraging of our strong foundation of iconic global and local brands, an attractive global footprint, our market leadership in developed and emerging markets, our deep innovation, marketing and distribution capabilities, and our efficiency and sustainability efforts, will drive top- and bottom-line growth, enabling us to continue to create long-term value for our shareholders. Recent Developments and Significant Items Affecting Comparability COVID-19 As we pass the one-year anniversary of the World Health Organization declaring COVID-19 a pandemic on March 11, 2020, our main priority continues to be the safety of our employees and helping maintain the global food supply. Together with our employees, customers, suppliers and other partners, we are working to emerge from the pandemic stronger. During 2020, we experienced a significant increase in demand and revenue growth in certain markets as consumers increased their food purchases for in-home consumption. Results were particularly strong in modern trade (such as large grocery supermarkets and retail chains), e-commerce and especially for categories such as biscuits. However, other parts of our business were negatively affected by mandated lockdowns and other related restrictions. This was especially so during the second quarter of 2020 for some of our emerging markets due to store closures (particularly in our Latin America region as well as parts of our AMEA region) that have a greater concentration of traditional trade (such as small family-run stores), our world travel retail (such as international duty-free stores), our foodservice businesses as well as in categories like gum and candy, which are more traditionally purchased and consumed out of home. The negative impacts experienced in the second quarter of 2020 subsided in the second half of 2020, as demand grew in both developed and emerging markets and a number of our key markets returned to higher growth. During the first quarter of 2021, many of the trends we saw in late 2020 continued. While we continued to see increased demand for most of our snack category products in both our emerging and developed markets, lower out-of-home consumption continued to negatively impact sales of our gum and candy products and our foodservice business, and the sharp reduction in global travel due to the pandemic continued to negatively impact our world travel retail business. Overall, since the beginning of the global pandemic in the first quarter of 2020, temporary disruptions experienced in operations were not material to our consolidated results. We discuss these and other impacts of COVID-19 below. Our Employees, Customers and Communities We have taken a number of actions to promote the health and safety of our employees, customers and consumers, which is our first priority: • We implemented enhanced protocols to provide a safe and sanitary working environment for our employees. In many locations, our employees are working remotely whenever possible. For employees who are unable to work remotely, we adopted a number of heightened protocols, consistent with those prescribed by the World Health Organization, related to social distancing (including staggering lunchtimes and shifts where possible and restricting in-person gatherings and non-essential travel) and enhanced hygiene and workplace sanitation. At a local level, we also provided additional flexibility and support to employees in our manufacturing facilities, distribution and logistics operations and sales organization. • We have hired frontline employees in the U.S. and other locations to meet additional marketplace demand and promote uninterrupted functioning of our manufacturing, distribution and sales network. 29 Table of Contents • To assist those most impacted by COVID-19, we made a $15 million initial global commitment to support local and global organizations responding to food instability and providing emergency relief. To date, we have increased the level of support provided to approximately $28 million. Our Supply Chain and Operations We operate in the food and beverages industry and are part of the global food supply chain. One of our main objectives during the pandemic has been to maintain the availability of our products to meet the needs of our consumers. In response to increased demand, we increased production and, to date, we have not experienced material disruptions in our supply chain or operations: • We leveraged learnings from our timely response to the initial outbreak in China, and we put in place procedures across our supply chain to help mitigate the risk that our manufacturing sites experience material closures or disruptions. • We have not experienced material disruptions in our workforce; however, mandatory and voluntary stay-at-home restrictions have resulted in increased levels of absenteeism. • We continue to source raw ingredients, packaging, energy and transportation and deliver our products to our customers. Transportation costs have increased and commodity costs have become more volatile. Although we monitor these costs and our exposure to commodity prices and hedge against input price increases, we cannot fully hedge against all cost increases and changes in costs, and our hedging strategies may not protect us from increases in specific raw material costs. We anticipate continued commodity and other cost volatility as the pandemic continues. • While to date, the temporary disruptions in operations we experienced were not material to our consolidated results, the ongoing COVID-19 outbreak could still disrupt our global supply chain, operations and routes to market or those of our suppliers, their suppliers, or our co-manufacturers or distributors. These disruptions or our failure to effectively respond to them could increase product or distribution costs, prices and potentially affect the availability of our products. • In 2020, a generally stronger U.S. dollar relative to other currencies in which we operate negatively affected our net revenue and net earnings reported in U.S. dollars. In the first quarter of 2021, other currencies, such as the euro, British pound sterling and Australian dollar, strengthened relative to the U.S. dollar, which had a favorable effect on net revenues and net earnings. • During the second quarter of 2020 especially, we incurred higher operating costs primarily for labor, customer service and logistics, security, personal protective equipment and cleaning. In the second half of 2020 and through the first quarter of 2021, our spending in these areas was significantly less but still above pre-COVID levels. Most other aspects of our global supply chain and operations did not change materially to date. While we have not had material disruptions, we do not know whether or how our supply chain or operations may be negatively affected if the pandemic persists for an extended period or worsens. As we respond to this evolving situation, we intend to continue to execute on our strategic operating plans. Disruptions, higher operating costs or uncertainties like those noted above could result in delays or modifications to our plans and initiatives. Our Liquidity We believe the steps we have taken to enhance our capital structure and liquidity, prior to and during the pandemic, strengthened our ability to operate during the pandemic: • During both 2020 and 2019, we generated $4.0 billion of cash from operations, or approximately $3 billion each year after deducting capital expenditures. • Additionally, within cash provided by other investing activities, in 2020, we also received $185 million of cash proceeds from our participation in the KDP secondary offering during the first quarter of 2020 as well as $1.9 billion from subsequent KDP share sales over the third and fourth quarters of 2020. During the second quarter of 2020, we also received €350 million ($394 million) from our participation in the JDE Peet's public share offerings. (Refer to our Annual Report on Form 10-K for the year ended December 31, 2020 and Note 7, Equity Method Investments , for additional information). • As of March 31, 2021, we had $2.0 billion, and as of December 31, 2020, we had $3.6 billion, of cash and cash equivalents on hand. Based on our current available cash and access to financing markets, we do not anticipate any issue funding our next long-term debt maturities of approximately $1.5 billion in October 2021 and approximately $0.3 billion in December 2021. • We also have access to short-term and long-term financing markets and actively utilized these markets in 2020 and the first quarter of 2021. We continue to utilize the commercial paper markets in the United States and Europe for flexible, low-cost, short-term financing. We issued additional long-term debt several times since the beginning of 2020 due to favorable market conditions and opportunities to shift a portion of our funding mix from short-term to long-term debt at a low cost. We renewed one of our credit facilities during 30 Table of Contents the first quarter of 2021 and now have $7.0 billion of undrawn credit facilities as well as other forms of short-term and long-term financing options available. We have been, and we expect to continue to be, in compliance with our debt covenants (refer to the Liquidity and Capital Resources section and Note 8, Debt and Borrowing Arrangements ). • In connection with various legislatively authorized 2020 tax payment deferral mechanisms available for income tax, indirect tax (such as value-added tax) and payroll tax in a number of jurisdictions, we were able to defer certain of these tax payments in 2020, which provided a cash benefit that reverses when the payments come due. Some of these payments were already made by the end of the first quarter of 2021; the remainder will come due in 2021 and 2022. The benefits associated with the deferral of these tax payments were not material to our financial statements. • After suspending our share repurchase program in March 2020 as a precautionary measure following the onset of the pandemic, we resumed the program in the fourth quarter of 2020. Our Financial Position • During the first quarter of 2021, we evaluated the realizability of our assets and whether there were any impairment indicators. We reviewed our receivables, inventory, right-of-use lease assets, long-lived assets, equity method and other long-term investments, deferred tax assets, goodwill and intangible assets. • In connection with the ongoing pandemic, we identified a decline in demand for certain of our brands, primarily in the gum category, that prompted additional evaluation of our indefinite-life intangible assets. During the second and third quarters of 2020, we concluded that eight brands were impaired and we recorded $144 million of impairment charges in 2020. Subsequently and through the first quarter of 2021, while we did not identify impairment triggers for these or other brands, there continues to be significant uncertainty due to the pandemic. If brand earnings expectations are not met or specific valuation factors outside of our control, such as discount rates, change significantly, then a brand or brands could become impaired in the future. Refer to Note 5, Goodwill and Intangible Assets , for additional details on our intangible asset impairment evaluation. • Restructuring and implementation activities continued to be in line with our Simplify to Grow Program strategic objectives. • Our equity investments in JDE Peet's and KDP give us additional financial flexibility. • We continue to monitor the quality of our assets and our overall financial position. • We also continue to maintain oversight over our core process controls through our centralized shared service model, with key controls operating as designed. Some of the initial impacts of the pandemic on our business moderated in the second half of 2020 and into the first quarter of 2021. While we have seen some improvements in business and economic conditions across many markets in which we do business, additional adverse impacts could arise that we cannot currently anticipate. Barring material business disruptions or other negative developments, we expect to continue to meet the demand of consumers for our snacks, food and beverage products. However, the elevated consumer demand we experienced to date may not continue. We are unable to predict with certainty how long the sustained demand will last or how significant it will be. In the near term, we continue to expect lower revenues in some markets that have a higher concentration of traditional trade outlets (such as small family-run stores), our gum and candy categories (which are more instant consumption in nature), as well as our world travel retail (such as international duty-free stores) and foodservice businesses. These businesses and different markets may also recover from the COVID-19 outbreak at different rates depending on many factors including vaccination levels. As we continue to proactively manage our business in response to the evolving impacts of the pandemic, we will continue to communicate with and support our employees and customers; monitor and take steps to further safeguard our supply chain, operations, technology and assets; protect our liquidity and financial position; work toward our strategic priorities and monitor our financial performance. We seek to position the Company to withstand the current uncertainties related to this pandemic and to emerge stronger. KDP and JDE Peet's 2020 Equity Method Investment Transactions On March 4, 2020, we participated in a secondary offering of KDP shares and sold approximately 6.8 million shares, which reduced our ownership interest by 0.5% to 13.1% of the total outstanding shares. 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. Subsequently, on August 3, 2020, we sold approximately 14.1 million shares and on September 9, 2020, we sold approximately 12.5 million shares, which in the aggregate reduced our KDP ownership interest to 11.2% of total outstanding shares. During the third quarter of 2020, we received $777 million of proceeds and recorded pre-tax gains of $335 million (or $258 million after-tax). On November 17, 2020, we also sold approximately 40.0 million 31 Table of Contents shares, which reduced our ownership interest by 2.8% to 8.4%. We received $1,132 million of proceeds and recorded a pretax gain of $459 million (or $350 million after tax) during the fourth quarter of 2020. The cash taxes associated with the KDP share sales were paid in 2020. During the second quarter of 2020, in connection with the JDE Peet's offering of its ordinary shares, we exchanged our 26.4% ownership interest in JDE for a 26.5% equity interest in JDE Peet’s. On May 29, 2020, we participated in the JDE Peet's offering and, with the subsequent exercise of the over-allotment option, we sold a total of approximately 11.1 million shares during the second quarter of 2020, retaining a 22.9% ownership interest in JDE Peet's. We received €350 million ($394 million) of total proceeds from the sales of JDE Peet's shares and we recorded a preliminary pre-tax gain of $121 million during the second quarter of 2020. We also incurred a $261 million tax expense that is payable in 2020 and 2021. During the third quarter of 2020, we increased our preliminary gain by $10 million to $131 million. During the fourth quarter of 2020, we reduced our tax expense by $11 million to $250 million. Consistent with our accounting for KDP and in connection with JDE Peet's becoming a public company, during the second quarter of 2020, we changed our accounting principle to reflect our share of JDE historical results and JDE Peet's ongoing results on a one-quarter lag basis while we continue to record dividends when cash is received. We determined a lag was preferable as it enables us to continue to report our quarterly and annual results on a timely basis and to record our share of JDE Peet's ongoing results once JDE Peet's has publicly reported its results. This change was applied retrospectively to all periods presented. Refer to our Annual Report on Form 10-K for the year ended December 31, 2020 and Note 7, Equity Method Investments , and Note 16, Income Taxes , and within this report, refer to Note 6, Equity Method Investments , for additional information. Summary of Results • Net revenues increased 7.9% to $7.2 billion in the first three months of 2021 as compared to the same period in the prior year. In the first quarter of 2021, within our developed markets, demand for our biscuits and chocolate products grew, though at a more moderate rate than in the same prior-year period, as we continued to see increased food purchases for in-home consumption due to the ongoing COVID-19 pandemic. In our emerging markets, the initial negative impacts we experienced from COVID-19 have subsided, resulting in a return to strong revenue growth across most of our key markets. However, the sharp reduction in global travel due to the pandemic continued to negatively impact our world travel retail business, and lower out-of-home consumption continued to negatively impact sales of our gum and candy products and our foodservice business. Our net revenue growth was positively impacted by favorable currency translation, higher net pricing, incremental net revenues from acquisitions and favorable volume/mix. • Organic Net Revenue, a non-GAAP financial measure, increased 3.8% to $7.0 billion in the first three months of 2021 as compared to same period in the prior year. During the first three months of 2021, Organic Net Revenue grew due to higher net pricing and favorable volume/mix. Refer to our Discussion and Analysis of Historical Results below for additional information. Organic Net Revenue is on a constant currency basis and excludes revenue from acquisitions and divestitures. We use Organic Net Revenue as it provides improved year-over-year comparability of our underlying operating results (see the definition of Organic Net Revenue and our reconciliation with net revenues within Non-GAAP Financial Measures appearing later in this section). • Diluted EPS attributable to Mondelēz International increased 33.3% to $0.68 in the first three months of 2021 as compared to the same period in the prior year. The increase was primarily driven by favorable year-over-year mark-to-market impacts from currency and commodity derivatives, an increase in Adjusted EPS and lapping the prior-year loss on interest rate swaps, partially offset by a loss on debt extinguishment, higher Simplify to Grow program costs and lapping the prior-year gain on equity method investment transactions. • Adjusted EPS, a non-GAAP financial measure, increased 16.7% to $0.77 in the first three months of 2021 as compared to the same period in the prior year. (On a constant currency basis, Adjusted EPS increased 10.6% to $0.73.) The increase in Adjusted EPS was driven by gains in operating activities, favorable currency translation and fewer shares outstanding, partially offset by lower equity method investment 32 Table of Contents earnings and higher taxes primarily due to changes in our mix of earnings. Adjusted EPS and Adjusted EPS on a constant currency basis are non-GAAP financial measures. We use these measures as they provide improved year-over-year comparability of our underlying results (see the definition of Adjusted EPS and our reconciliation with diluted EPS within Non-GAAP Financial Measures appearing later in this section). Financial Outlook We seek to achieve profitable, long-term growth and manage our business to attain this goal using our key operating metrics: Organic Net Revenue, Adjusted Operating Income and Adjusted EPS. We use these non-GAAP financial metrics and related computations, particularly growth in profit dollars, to evaluate and manage our business and to plan and make near- and long-term operating and strategic decisions. As such, we believe these metrics are useful to investors as they provide supplemental information in addition to our U.S. Generally Accepted Accounting Principles ("U.S. GAAP") financial results. We believe it is useful to provide investors with the same financial information that we use internally to make comparisons of our historical operating results, identify trends in our underlying operating results and evaluate our business. We believe our non-GAAP financial measures should always be considered in relation to our GAAP results. We have provided reconciliations between our GAAP and non-GAAP financial measures in Non-GAAP Financial Measures , which appears later in this section. In addition to monitoring our key operating metrics, we monitor developments and trends that could impact our revenue and profitability objectives, similar to those we highlighted in our most recently filed Annual Report on Form 10-K for the year ended December 31, 2020 and discussed in the footnotes to our financial statements. • Market conditions. Snack categories grew in the first quarter of 2021, in part as we continue to see increased consumer demand for snacks purchases for in-home consumption during the COVID-19 pandemic. As further discussed below and in Item 3, Quantitative and Qualitative Disclosures about Market Risk , we continue to monitor volatility in global consumer, commodity, currency and capital markets that may continue until the COVID-19 outbreak is largely resolved. • COVID-19. We continue to monitor and respond to the COVID-19 pandemic. While its full impact is not yet known, it has had a material negative effect on the economy and could have a material negative effect on our business and results in the future, particularly if there are significant adverse changes to consumer demand or significant disruptions to the supply, production or distribution of our products or the credit or financial stability of our customers and other business partners. While we have seen some improvements in overall economic conditions and the business climate in many markets where we sell and operate, new COVID-19 spikes in infections and related lockdowns continue across a number of markets. If an unexpected significant economic or credit deterioration occurs, it could impair credit availability and our ability to raise capital when needed. A significant disruption in the financial markets may also have a negative effect on our derivative counterparties and could impair our banking or other business partners, on whom we rely for access to capital and as counterparties for a number of our derivative contracts. Any of these and other developments could materially harm our business, results of operations and financial condition. We will continue to prioritize the safety of our employees and consumers. As we continue to manage operations during the pandemic, we may continue to incur increased labor, customer service, commodity, transportation and other costs. As consumer demand for our products evolves, we could see continued shifts in product mix that could have a negative impact on results. As discussed in Recent Developments and Significant Items Affecting Comparability , we are working to mitigate any negative impacts to our business from the COVID-19 outbreak, but we may not be able to fully predict or respond to all impacts on a timely basis to prevent adverse impacts to our results. • Brexit . Following the separation of the United Kingdom from the European Union in 2020, a new trade arrangement was reached between the U.K. and E.U. that began on January 1, 2021. The main trade provisions include the continuation of no tariffs or quotas on trade between the U.K. and E.U. subject to prescribed trade terms. We also need to meet product and labeling standards for both the U.K. and E.U. Cross-border trade between the U.K. and E.U. is now subject to new customs regulations, documentation and reviews. Our supply chain in this market relies on imports of raw and packaging materials as well as finished goods. To date, we have not experienced significant delays at U.K.-E.U. border crossings. To comply with the new requirements, we increased resources in customer service and logistics, in our factories, and on our customs support teams. We adapted our processes and systems for the new and increased number of customs transactions. We continue to closely monitor and manage our inventory levels of imported raw materials, packaging and finished goods in the U.K. If the U.K.’s separation from, or new 33 Table of Contents trade arrangements with, the E.U. negatively impact the U.K. economy or result in disagreements on trade terms, delays affecting our supply chain or distribution, or disruptions to sales or collections, the impact to our results of operations, financial condition and cash flows could be material. In the three months ended March 31, 2021, we generated 9.9% of our consolidated net revenues in the U.K. • Taxes . We continue to monitor existing and potential future tax reform. During 2019, we recorded the impact of Swiss tax reform and we will continue to monitor for any additional interpretative guidance that could result in changes to the amounts we have recorded. In the United States, while the 2017 U.S. tax reform reduced the U.S. corporate tax rate and included some beneficial provisions, other provisions have, and will continue to have, an adverse effect on our results. Refer to our Annual Report on Form 10-K for the year ended December 31, 2020 for more information on Swiss and U.S. tax reform. • Argentina . As further discussed in Note 1, Basis of Presentation – Currency Translation and Highly Inflationary Accounting, we continue to apply highly inflationary accounting for our Argentinean subsidiaries. During the three months ended March 31, 2021, we recorded a remeasurement loss of $5 million within selling, general and administrative expenses related to the revaluation of our Argentinean peso denominated net monetary position. The mix of monetary assets and liabilities and the exchange rate to convert Argentinean pesos to U.S. dollars could change over time, so it is difficult to predict the overall impact of the Argentina highly inflationary accounting on future net earnings. 34 Table of Contents Discussion and Analysis of Historical Results Items Affecting Comparability of Financial Results The following table includes significant income or (expense) items that affected the comparability of our results of operations and our effective tax rates. Please refer to the notes to the condensed consolidated financial statements indicated below for more information. Refer also to the Consolidated Results of Operations – Net Earnings and Earnings per Share Attributable to Mondelēz International table for the after-tax per share impacts of these items. For the Three Months Ended March 31, See Note 2021 2020 (in millions, except percentages) Simplify to Grow Program Note 7 Restructuring charges $ (88) $ (15) Implementation charges (34) (43) Mark-to-market gains/(losses) from derivatives (1) Note 9 117 (184) Acquisitions: Acquisition integration costs (1) — Acquisition-related costs (7) (5) Gain on acquisition 9 — Remeasurement of net monetary position Note 1 (5) (2) Impact from pension participation changes (1) Note 10 (4) (3) Loss related to interest rate swaps Note 8 & 9 — (103) Loss on debt extinguishment Note 8 (137) — (Loss)/gain on equity method investment transactions (2) Note 6 (7) 71 Equity method investee items (3) (16) (6) Effective tax rate (4) Note 14 19.1 % 21.2 % (1) Includes impacts recorded in operating income and interest expense and other, net. (2) (Loss)/gain on equity method investment transactions is recorded outside pre-tax operating results on the condensed consolidated statement of earnings. (3) Includes our proportionate share of significant operating and non-operating items recorded by our JDE Peet's and KDP equity method investees, including acquisition and divestiture-related costs and restructuring program costs. (4) Refer to Note 14, Income Taxes , for more information on our effective tax rate. 35 Table of Contents Consolidated Results of Operations Three Months Ended March 31: For the Three Months Ended March 31, 2021 2020 $ change % change (in millions, except per share data) Net revenues $ 7,238 $ 6,707 $ 531 7.9 % Operating income 1,283 856 427 49.9 % Net earnings attributable to Mondelēz International 961 736 225 30.6 % Diluted earnings per share attributable to Mondelēz International 0.68 0.51 0.17 33.3 % Net Revenues – Net revenues increased $531 million (7.9%) to $7,238 million in the first quarter of 2021, and Organic Net Revenue (1) increased $257 million (3.8%) to $6,964 million. Developed markets net revenue increased 9.0% and developed markets Organic Net Revenue increased 0.4% (1) . Emerging markets net revenues increased 6.0% and emerging markets Organic Net Revenue increased 9.9% (1) . The underlying changes in net revenues and Organic Net Revenue are detailed below: 2021 Change in net revenues (by percentage point) Total change in net revenues 7.9 % Add back the following items affecting comparability: Favorable currency (2.4) pp Impact of acquisitions (1.7) pp Total change in Organic Net Revenue (1) 3.8 % Higher net pricing 2.3 pp Favorable volume/mix 1.5 pp (1) Please see the Non-GAAP Financial Measures section at the end of this item. Net revenue increase of 7.9% was driven by our underlying Organic Net Revenue growth of 3.8%, favorable currency and the impact of acquisitions. Overall, our net revenues continued to be affected by the COVID-19 pandemic. In developed markets, net revenues increased as demand for our biscuits and chocolate products grew, though at a more moderate rate than in the prior-year period, reflecting continued increased food purchases for in-home consumption. However, the sharp reduction in global travel due to the pandemic continued to negatively impact our world travel retail business, and lower out-of-home consumption continued to negatively impact sales of our gum and candy products and our foodservice business. Incremental net revenues from acquisitions and favorable currency translation also added to our developed markets revenue growth in the quarter. In emerging markets, the negative initial impacts we experienced from COVID-19 have subsided, resulting in a return to strong revenue growth across most of our key markets though some markets were still challenged, particularly those with significant gum and candy portfolios. In addition, unfavorable currency translation tempered emerging markets growth in the quarter. Organic Net Revenue growth was driven by higher net pricing and favorable volume/mix. Higher net pricing in all regions was due to the benefit of carryover pricing from 2020 as well as the effects of input cost-driven pricing actions taken during the first three months of 2021. Favorable volume/mix in AMEA and Europe, driven by strong volume gains, was partially offset by unfavorable volume/mix in North America and Latin America. Favorable currency impacts increased net revenues by $160 million, due primarily to the strength of several currencies relative to the U.S. dollar, including the euro, British pound sterling, Australian dollar, Chinese yuan, Canadian dollar and Swedish krona, partially offset by the strength of the U.S. dollar relative to several currencies, including the Brazilian real, Argentinean peso and Russian ruble. The April 1, 2020 acquisition of Give & Go added incremental net revenues of $106 million and the January 4, 2021 acquisition of Hu Master Holdings added incremental net revenues of $8 million. Refer to Note 2, Acquisitions and Divestitures, for additional information. 36 Table of Contents Operating Income – Operating income increased $427 million (49.9%) to $1,283 million in the first quarter of 2021. Adjusted Operating Income (1) increased $186 million (16.8%) to $1,292 million and Adjusted Operating Income on a constant currency basis (1) increased $142 million (12.8%) to $1,248 million due to the following: Operating Income % Change (in millions) Operating Income for the Three Months Ended March 31, 2020 $ 856 Simplify to Grow Program (2) 58 Mark-to-market losses from derivatives (3) 185 Acquisition-related costs (4) 5 Remeasurement of net monetary position (5) 2 Adjusted Operating Income (1) for the Three Months Ended March 31, 2020 $ 1,106 Higher net pricing 151 Higher input costs (49) Favorable volume/mix 6 Lower selling, general and administrative expenses 19 Other 15 Total change in Adjusted Operating Income (constant currency) (1) 142 12.8 % Favorable currency translation 44 Total change in Adjusted Operating Income (1) 186 16.8 % Adjusted Operating Income (1) for the Three Months Ended March 31, 2021 $ 1,292 Simplify to Grow Program (2) (122) Mark-to-market gains from derivatives (3) 118 Acquisition integration costs (4) (1) Acquisition-related costs (4) (7) Gain on acquisition (4) 9 Remeasurement of net monetary position (5) (5) Impact from pension participation changes (1) Operating Income for the Three Months Ended March 31, 2021 $ 1,283 49.9 % (1) Refer to the Non-GAAP Financial Measures section at the end of this item. (2) Refer to Note 7, Restructuring Program, for more information. (3) Refer to Note 9, Financial Instruments , Note 16, Segment Reporting , and Non-GAAP Financial Measures section at the end of this item for more information on the unrealized gains/losses on commodity and forecasted currency transaction derivatives. (4) Refer to Note 2, Acquisitions and Divestitures , for more information on the April 1, 2021 acquisition of Gourmet Food Holdings Pty Ltd, the March 25, 2021 acquisition of a majority interest in Grenade, the January 4, 2021 acquisition of the remaining 93% of equity in Hu Master Holdings and the April 1, 2020 acquisition of a significant majority interest in Give & Go. (5) Refer to Note 1, Basis of Presentation – Currency Translation and Highly Inflationary Accounting , for information on our application of highly inflationary accounting for Argentina. 37 Table of Contents During the first quarter of 2021, we realized higher net pricing and favorable volume/mix, which was partially offset by increased input costs. Higher net pricing, which included the carryover impact of pricing actions taken in 2020 as well as the effects of input cost-driven pricing actions taken during the first three months of 2021, was reflected across all regions. Volume/mix benefited from increased food purchases for in-home consumption though at a more moderate rate than the same period last year, but the sharp reduction in global travel due to the pandemic continued to negatively impact our world travel business, while lower out-of-home consumption continued to negatively impact sales of our gum and candy products and our foodservice business. Overall, favorable volume/mix was driven by AMEA and Europe, mostly offset by unfavorable volume/mix in North America and Latin America. The increase in input costs was driven by higher raw material costs, partially offset by lower manufacturing costs driven by productivity net of incremental COVID-19 related costs. Higher raw material costs were in part due to higher currency exchange transaction costs on imported materials, as well as higher cocoa, sugar, oils, packaging, grains, nuts and other ingredients costs, partially offset by lower costs for dairy and energy. Total selling, general and administrative expenses increased $27 million from the first quarter of 2020, due to a number of factors noted in the table above, including in part, an unfavorable currency impact related to expenses, the impact of acquisitions, higher remeasurement loss of net monetary position and higher acquisition-related costs, which were partially offset by lower implementation costs incurred for the Simplify to Grow Program. Excluding these factors, selling, general and administrative expenses decreased $19 million from the first quarter of 2020. The decrease was driven primarily by lower overhead costs primarily due to productivity efforts, partially offset by higher advertising and consumer promotion costs. Favorable currency changes increased operating income by $44 million due primarily to the strength of several currencies relative to the U.S. dollar, including the euro, British pound sterling, Australian dollar and Chinese yuan, partially offset by the strength of the U.S. dollar relative to several currencies, including the Brazilian real and Russian ruble. Operating income margin increased from 12.8% in the first quarter of 2020 to 17.7% in the first quarter of 2021. The increase in operating income margin was driven primarily by the favorable year-over-year change in mark-to-market gains/(losses) from currency and commodity hedging activities and higher Adjusted Operating Income margin, partially offset by higher Simplify to Grow program costs. Adjusted Operating Income margin increased from 16.5% for the first quarter of 2020 to 17.9% for the first quarter of 2021. The increase in Adjusted Operating Income margin was driven primarily by higher net pricing, lower manufacturing costs and lower overhead costs, partially offset by higher raw material costs and higher advertising and consumer promotion costs. 38 Table of Contents Net Earnings and Earnings per Share Attributable to Mondelēz International – Net earnings attributable to Mondelēz International of $961 million increased by $225 million (30.6%) in the first quarter of 2021. Diluted EPS attributable to Mondelēz International was $0.68 in the first quarter of 2021, up $0.17 (33.3%) from the first quarter of 2020. Adjusted EPS (1) was $0.77 in the first quarter of 2021, up $0.11 (16.7%) from the first quarter of 2020. Adjusted EPS on a constant currency basis (1) was $0.73 in the first quarter of 2021, up $0.07 (10.6%) from the first quarter of 2020. Diluted EPS Diluted EPS Attributable to Mondelēz International for the Three Months Ended March 31, 2020 $ 0.51 Simplify to Grow Program (2) 0.03 Mark-to-market losses from derivatives (2) 0.11 Net earnings from divestitures (3) (0.01) Loss related to interest rate swaps (4) 0.06 Gain on equity method investment transactions (5) (0.04) Adjusted EPS (1) for the Three Months Ended March 31, 2020 $ 0.66 Increase in operations 0.08 Decrease in equity method investment net earnings (0.01) Changes in income taxes (6) (0.01) Changes in shares outstanding (7) 0.01 Adjusted EPS (constant currency) (1) for the Three Months Ended March 31, 2021 $ 0.73 Favorable currency translation 0.04 Adjusted EPS (1) for the Three Months Ended March 31, 2021 $ 0.77 Simplify to Grow Program (2) (0.07) Mark-to-market gains from derivatives (2) 0.07 Acquisition-related costs (2) (0.01) Loss on debt extinguishment and related expenses (8) (0.07) Equity method investee items (9) (0.01) Diluted EPS Attributable to Mondelēz International for the Three Months Ended March 31, 2021 $ 0.68 (1) Refer to the Non-GAAP Financial Measures section appearing later in this section. (2) See the Operating Income table above and the related footnotes for more information. (3) Includes the impact from last-year's partial sales of our equity method investments in KDP and JDE Peet’s as if the sales occurred at the beginning of all periods presented. (4) Refer to Note 9, Financial Instruments, for information on our interest swaps that we no longer designate as cash flow hedges. (5) Refer to Note 6, Equity Method Investments, for more information on the gain/(loss) on equity method investment transactions. (6) Refer to Note 14, Income Taxes , for more information on the items affecting income taxes. (7) Refer to Note 11, Stock Plans , for more information on our equity compensation programs and share repurchase program and Note 15, Earnings per Share , for earnings per share weighted-average share information. (8) Refer to Note 8, Debt and Borrowing Arrangements , for more information on the loss on debt extinguishment and related expenses. (9) Includes our proportionate share of significant operating and non-operating items recorded by our JDE Peet's and KDP equity investees, such as acquisition and divestiture-related costs and restructuring program costs. 39 Table of Contents Results of Operations by Reportable Segment Our operations and management structure are organized into four operating segments: • Latin America • AMEA • Europe • North America We manage our operations by region to leverage regional operating scale, manage different and changing business environments more effectively and pursue growth opportunities as they arise across our key markets. Our regional management teams have responsibility for the business, product categories and financial results in the regions. We use segment operating income to evaluate segment performance and allocate resources. We believe it is appropriate to disclose this measure to help investors analyze segment performance and trends. See Note 16, Segment Reporting, for additional information on our segments and Items Affecting Comparability of Financial Results earlier in this section for items affecting our segment operating results. Our segment net revenues and earnings were: For the Three Months Ended March 31, 2021 2020 (in millions) Net revenues: Latin America $ 669 $ 726 AMEA 1,745 1,502 Europe 2,847 2,584 North America 1,977 1,895 Net revenues $ 7,238 $ 6,707 Earnings before income taxes: Operating income: Latin America $ 76 $ 78 AMEA 362 234 Europe 557 472 North America 270 381 Unrealized gains/(losses) on hedging activities (mark-to-market impacts) 118 (185) General corporate expenses (64) (76) Amortization of intangibles (38) (43) Gain on acquisition 9 — Acquisition-related costs (7) (5) Operating income 1,283 856 Benefit plan non-service income 44 33 Interest and other expense, net (218) (190) Earnings before income taxes $ 1,109 $ 699 40 Table of Contents Latin America For the Three Months Ended March 31, 2021 2020 $ change % change (in millions) Net revenues $ 669 $ 726 $ (57) (7.9) % Segment operating income 76 78 (2) (2.6) % Three Months Ended March 31: Net revenues decreased $57 million (7.9%), due to unfavorable currency (15.1 pp) and unfavorable volume/mix (2.9 pp), partially offset by higher net pricing (10.1 pp). Unfavorable currency impacts were due primarily to the strength of the U.S. dollar relative to most currencies in the region including the Brazilian real and Argentinean peso. Unfavorable volume/mix was due to the continued impact from the COVID-19 pandemic as lower out-of-home consumption continued to negatively impact sales of gum and candy products, as well as the impact of pricing-related elasticity. Unfavorable volume/mix was driven by declines in gum and candy, partially offset by gains in biscuits, chocolate, refreshment beverages and cheese & grocery. Higher net pricing was reflected across all categories, driven primarily by Argentina, Brazil and Mexico. Segment operating income decreased $2 million (2.6%), primarily due to higher raw material costs, unfavorable volume/mix, unfavorable currency and higher advertising and consumer promotion costs. These unfavorable items were mostly offset by higher net pricing, lower manufacturing costs (net of incremental COVID-19 related costs), lower other selling, general administrative expenses and lower costs incurred for the Simplify to Grow Program. AMEA For the Three Months Ended March 31, 2021 2020 $ change % change (in millions) Net revenues $ 1,745 $ 1,502 $ 243 16.2 % Segment operating income 362 234 128 54.7 % Three Months Ended March 31: Net revenues increased $243 million (16.2%), due to favorable volume/mix (7.9 pp), favorable currency (5.4 pp) and higher net pricing (2.9 pp). Favorable volume/mix reflected overall volume gains as the negative impacts from COVID-19 that we experienced in the prior year period subsided across most of the region though some markets were still challenged, particularly those with significant gum and candy portfolios. Favorable volume/mix was driven by gains in chocolate, biscuits, cheese & grocery, and refreshment beverages partially offset by declines in gum and candy. Favorable currency impacts were due to the strength of most currencies relative to the U.S. dollar, including the Australian dollar, Chinese yuan, New Zealand dollar and Philippine peso. Higher net pricing was reflected across all categories. Segment operating income increased $128 million (54.7%), primarily due to favorable volume/mix, higher net pricing, lower manufacturing costs (net of incremental COVID-19 related costs), lower Simplify to Grow program costs and favorable currency. These favorable items were partially offset by higher raw material costs and higher advertising and consumer promotion costs. 41 Table of Contents Europe For the Three Months Ended March 31, 2021 2020 $ change % change (in millions) Net revenues $ 2,847 $ 2,584 $ 263 10.2 % Segment operating income 557 472 85 18.0 % Three Months Ended March 31: Net revenues increased $263 million (10.2%), due to favorable currency (6.9 pp), favorable volume/mix (2.4 pp) and higher net pricing (0.9 pp). Favorable currency impacts reflected the strength of most currencies in the region relative to the U.S. dollar, including the euro, British pound sterling Swedish krona and Norwegian krone, partially offset by the strength of the U.S. dollar relative to a few currencies, including the Russian ruble and Turkish lira. Favorable volume/mix was due to overall higher volume, reflecting continuation of increased food purchases for in-home consumption during the pandemic, though at a more moderate rate than in the prior-year period. However, the sharp reduction in global travel due to the pandemic continued to negatively impact our world travel retail business, and lower out-of-home consumption continued to negatively impact sales of our gum and candy products and our foodservice business. Favorable volume/mix was driven by gains in chocolate, cheese & grocery, biscuits and refreshment beverages, partially offset by declines in gum and candy. Higher net pricing was driven by chocolate, candy, refreshment beverages and gum, partially offset by lower net pricing in biscuits and cheese & grocery. Segment operating income increased $85 million (18.0%), primarily due to favorable currency, favorable volume/mix, higher net pricing, lower advertising and consumer promotion costs and lower manufacturing costs (net of incremental COVID-19 related costs). These favorable items were partially offset by higher raw material costs. North America For the Three Months Ended March 31, 2021 2020 $ change % change (in millions) Net revenues $ 1,977 $ 1,895 $ 82 4.3 % Segment operating income 270 381 (111) (29.1) % Three Months Ended March 31: Net revenues increased $82 million (4.3%), due to the impact of acquisitions (6.0 pp), favorable currency (0.6 pp) and higher net pricing (0.5 pp), partially offset by unfavorable volume/mix (2.8 pp). The April 1, 2020 acquisition of Give & Go added incremental net revenues of $106 million and the January 4, 2021 acquisition of Hu Master Holdings added incremental net revenues of $8 million in the first quarter of 2021. Favorable currency impact was due to the strength of the Canadian dollar relative to the U.S. dollar. Higher net pricing was driven by biscuits and chocolate, partially offset by lower net pricing in candy and gum. Unfavorable volume mix reflects impacts from the COVID-19 pandemic, as lower out-of-home consumption continued to negatively impact sales of our gum and candy products and our foodservice business. Unfavorable volume/mix was driven by declines in candy, gum and chocolate partially offset by gains in biscuits. Segment operating income decreased $111 million (29.1%), primarily due to higher Simplify to Grow Program costs, unfavorable volume/mix, higher advertising and consumer promotion costs and higher raw material costs. These unfavorable items were partially offset by lower other selling, general and administrative expenses, lower manufacturing costs (net of incremental COVID-19 related costs), higher net pricing and the impact of acquisitions. 42 Table of Contents Liquidity and Capital Resources We believe that cash from operations, our revolving credit facilities, short-term borrowings and our authorized long-term financing will continue to provide sufficient liquidity for our working capital needs, planned capital expenditures, payments of our contractual, tax and benefit plan obligations and payments for acquisitions, share repurchases and quarterly dividends. In light of the ongoing uncertainty related to the COVID-19 outbreak, however, an economic or credit crisis could occur and impair credit availability and our ability to raise capital when needed. A disruption in the financial markets could also impair our banking and other business partners, on whom we rely for access to capital and as counterparties for a number of our derivative contracts. Any of these and other developments could materially harm our access to capital or financial condition. We carry $7.0 billion of undrawn credit facilities, continue to utilize our commercial paper program and international credit lines, and we secured and continue to evaluate long-term debt issuances to meet our short- and longer-term funding requirements. We also use intercompany loans with our international subsidiaries to improve financial flexibility. In connection with various legislatively authorized tax payment deferral mechanisms available for income tax, indirect tax (such as value-added tax) and payroll tax in a number of jurisdictions, we were able to defer certain of these tax payments in 2020, which provided a cash benefit that reverses when the cash tax payments become due. Some of these payments were already made by the first quarter of 2021; the remainder will come due in 2021 and 2022. The benefits associated with the deferral of these tax payments were not material to our financial statements. Overall, at this time, we do not expect any negative effects to our funding sources that would have a material effect on our liquidity; however, if a serious economic or credit market crisis were to occur, it could have a material adverse effect on our liquidity, results of operations and financial condition. Net Cash Provided by Operating Activities: Net cash provided by operating activities was $915 million in the first three months of 2021 and $284 million in the first three months of 2020. The increase in net cash provided by operating activities was due primarily to higher earnings and lower working capital requirements, partially offset by higher cash tax payments and lower cash dividends received from our equity method investments. Net Cash Used in Investing Activities: Net cash used in investing activities was $690 million in the first three months of 2021 and $55 million in the first three months of 2020. The increase in net cash used in investing activities was due primarily to cash paid to acquire a majority interest in Grenade and the remaining equity of Hu Master Holdings and lapping the prior-year cash proceeds from our participation in the KDP secondary offering. We continue to make capital expenditures primarily to modernize manufacturing facilities and support new product and productivity initiatives. We expect 2021 capital expenditures to be approximately $1.0 billion, including capital expenditures in connection with our Simplify to Grow Program. We expect to continue to fund these expenditures with cash from operations. Net Cash Used in/Provided by Financing Activities: Net cash used in financing activities was $1,781 million in the first three months of 2021, compared to net cash provided by financing activities of $455 million in the first three months of 2020. The increase in cash used in financing activities was primarily due to the debt redeemed in the first quarter of 2021, higher share repurchases and higher dividends paid. Debt: From time to time we refinance long-term and short-term debt. Refer to Note 8, Debt and Borrowing Arrangements , for details of our debt activity during the first three months of 2021. The nature and amount of our long-term and short-term debt and the proportionate amount of each varies as a result of current and expected business requirements, market conditions and other factors. Due to seasonality, in the first and second quarters of the year, our working capital requirements grow, increasing the need for short-term financing. The second half of the year typically generates higher cash flows. As such, we may issue commercial paper or secure other forms of financing throughout the year to meet short-term working capital needs. One of our subsidiaries, Mondelez International Holdings Netherlands B.V. (“MIHN”), has outstanding debt. The operations held by MIHN generated approximately 75.0% (or $5.4 billion) of the $7.2 billion of consolidated net revenue in the three months ended March 31, 2021. The operations held by MIHN represented approximately 79.0% (or $21.4 billion) of the $27.1 billion of net assets as of March 31, 2021 and 76.2% (or $21.1 billion) of the $27.7 billion of net assets as of December 31, 2020. 43 Table of Contents During December 2020, our Board of Directors approved a new $6.0 billion long-term financing authority to replace the prior $8.0 billion authority. As of March 31, 2021, we had $3.6 billion of long-term financing authority remaining. In the next 12 months, we expect to repay approximately $1.8 billion of maturing long-term debt: $1.5 billion in October 2021 and $0.3 billion in December 2021. We expect to fund these repayments with cash on hand, as well as short-term and long-term debt. Our total debt was $19.5 billion at March 31, 2021 and $20.0 billion at December 31, 2020. Our debt-to-capitalization ratio was 0.42 at March 31, 2021 and 0.42 at December 31, 2020. At March 31, 2021, the weighted-average term of our outstanding long-term debt was 8.9 years. Our average daily commercial paper borrowings outstanding were $0.2 billion in the first three months of 2021 and $3.7 billion in the first three months of 2020. We had commercial paper outstanding totaling $0.6 billion as of March 31, 2021 and no commercial paper borrowings outstanding at December 31, 2020. We expect to continue to use cash or commercial paper to finance various short-term financing needs. We continue to comply with our debt covenants. Refer to Note 8, Debt and Borrowing Arrangements . Commodity Trends We regularly monitor worldwide supply, commodity cost and currency trends so we can cost-effectively secure ingredients, packaging and fuel required for production. During the first three months of 2021, the primary drivers of the increase in our aggregate commodity costs were higher currency exchange transaction costs on imported materials, as well as increased costs for cocoa, sugar, oils, packaging, grains, nuts and other ingredients costs, partially offset by lower costs for dairy and energy. A number of external factors such as the current COVID-19 global pandemic, weather conditions, commodity market conditions, currency fluctuations and the effects of governmental agricultural or other programs affect the cost and availability of raw materials and agricultural materials used in our products. We address higher commodity costs and currency impacts primarily through hedging, higher pricing and manufacturing and overhead cost control. We use hedging techniques to limit the impact of fluctuations in the cost of our principal raw materials; however, we may not be able to fully hedge against commodity cost changes, such as dairy, where there is a limited ability to hedge, and our hedging strategies may not protect us from increases in specific raw material costs. Due to competitive or market conditions, planned trade or promotional incentives, fluctuations in currency exchange rates or other factors, our pricing actions may also lag commodity cost changes temporarily. We expect price volatility and a higher aggregate cost environment to continue in the remainder of 2021. While the costs of our principal raw materials fluctuate, we believe there will continue to be an adequate supply of the raw materials we use and that they will generally remain available from numerous sources. Off-Balance Sheet Arrangements and Aggregate Contractual Obligations See Note 8, Debt and Borrowing Arrangements , for information on debt transactions during 2021. There were no other material developments or changes to our off-balance sheet arrangements and aggregate contractual obligations disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020. Equity and Dividends Stock Plans and Share Repurchases: See Note 11, Stock Plans , to our condensed consolidated financial statements and Part II, Item 2, Unregistered Sales of Equity and Use of Proceeds , for more information on our stock plans, grant activity and share repurchase program for the three months ended March 31, 2021. As of March 31, 2021, our Board of Directors has authorized share repurchases up to $23.7 billion through December 31, 2023. Under this program, we have repurchased approximately $19.0 billion of shares through March 31, 2021 ($1.0 billion in the first three months of 2021, $1.4 billion in 2020, $1.5 billion in 2019, $2.0 billion in 2018, $2.2 billion in 2017, $2.6 billion in 2016, $3.6 billion in 2015, $1.9 billion in 2014 and $2.7 billion in 2013), at a weighted-average cost of $41.18 per share. The number of shares that we ultimately repurchase under our share repurchase program may vary depending on numerous factors, including share price and other market conditions, our ongoing capital allocation planning, levels 44 Table of Contents of cash and debt balances, other demands for cash, such as acquisition activity, general economic or business conditions and Board and management discretion. Additionally, our share repurchase activity during any particular period may fluctuate. We may accelerate, suspend, delay or discontinue our share repurchase program at any time, without notice. Dividends: We paid dividends of $453 million in the first three months of 2021 and $409 million in the first three months of 2020. The first quarter 2021 dividend of $0.315 per share, declared on February 4, 2021 for shareholders of record as of March 31, 2021, was paid on April 14, 2021. The declaration of dividends is subject to the discretion of our Board of Directors and depends on various factors, including our net earnings, financial condition, cash requirements, future prospects and other factors that our Board of Directors deems relevant to its analysis and decision making. We anticipate that the 2021 distributions will be characterized as dividends under U.S. federal income tax rules. The final determination will be made on an IRS Form 1099–DIV issued in early 2021. Significant Accounting Estimates We prepare our condensed consolidated financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions. Our significant accounting policies are described in Note 1 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020. Our significant accounting estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020. See Note 1, Basis of Presentation , for a discussion of the impact of new accounting standards. New Accounting Guidance: See Note 1, Basis of Presentation , for a discussion of new accounting standards. Contingencies: See Note 12, Commitments and Contingencies , and Part II, Item 1. Legal Proceedings, for a discussion of contingencies. Forward-Looking Statements This report contains a number of forward-looking statements. Words, and variations of words, such as “will,” “may,” “expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,” “likely,” “estimate,” “anticipate,” “objective,” “predict,” “project,” “seek,” “aim,” “potential,” “outlook” and similar expressions are intended to identify our forward-looking statements, including but not limited to statements about: the impact of the COVID-19 pandemic on our business including consumer demand, costs, product mix, the availability of our products, our strategic initiatives, our and our partners’ global supply chains, operations, technology, assets and routes to market, and our financial performance; our future performance, including our future revenue and earnings growth; our strategy to accelerate consumer-centric growth, drive operational excellence and create a winning growth culture; volatility in global consumer, commodity, currency and capital markets; price volatility and pricing actions; the cost environment and measures to address increased costs; our ability to meet demand for our products; our tax rate, tax positions, tax proceedings and the impact of U.S. and Swiss tax reform on our results; the U.K.'s separation from the E.U. and its impact on our business and results, including in connection with disagreements on trade terms, delays affecting our supply chain or distribution, or disruptions to sales or collections; the costs of, timing of expenditures under and completion of our restructuring program; commodity prices and supply; our investments including in JDE Peet's and KDP; innovation; political, business and economic conditions and volatility; currency exchange rates, controls and restrictions, volatility in foreign currencies and the effect of currency translation on our results of operations; the application of highly inflationary accounting for our Argentinean subsidiaries and the potential for and impacts from currency devaluation in other countries; the outcome and effects on us of legal proceedings and government investigations; the estimated value of goodwill and intangible assets; amortization expense for intangible assets; impairment of goodwill and intangible assets and our projections of operating results and other factors that may affect our impairment testing; our accounting estimates and judgments and the impact of new accounting pronouncements; pension expenses, contributions and assumptions; our liquidity, funding sources and uses of 45 Table of Contents funding, including debt issuances and our use of commercial paper; our capital structure and liquidity, credit availability and our ability to raise capital, and the impact of market disruptions on us, our counterparties and our business partners; the planned phase out of London Interbank Offered Rates; our risk management program, including the use of financial instruments and the impacts and effectiveness of our hedging activities; working capital; capital expenditures and funding; funding of debt maturities; share repurchases; dividends; long-term value for our shareholders; the characterization of 2021 distributions as dividends; compliance with our debt covenants; and our contractual and other obligations. These forward-looking statements involve risks and uncertainties, many of which are beyond our control, and many of these risks and uncertainties are currently amplified by and may continue to be amplified by the COVID-19 pandemic. Important factors that could cause our actual results to differ materially from those described in our forward-looking statements include, but are not limited to, uncertainty about the magnitude, duration, geographic reach, impact on the global economy and related current and potential travel restrictions of the COVID-19 pandemic; the current, and uncertain future, impact of the COVID-19 pandemic on our business, growth, reputation, prospects, financial condition, operating results (including components of our financial results), cash flows and liquidity; risks from operating globally including in emerging markets; changes in currency exchange rates, controls and restrictions; volatility of commodity and other input costs; weakness in economic conditions; weakness in consumer spending; pricing actions; tax matters including changes in tax laws and rates, disagreements with taxing authorities and imposition of new taxes; use of information technology and third party service providers; unanticipated disruptions to our business, such as the malware incident, cyberattacks or other security breaches; global or regional health pandemics or epidemics, including COVID-19; competition; protection of our reputation and brand image; changes in consumer preferences and demand and our ability to innovate and differentiate our products; the restructuring program and our other transformation initiatives not yielding the anticipated benefits; changes in the assumptions on which the restructuring program is based; management of our workforce; consolidation of retail customers and competition with retailer and other economy brands; changes in our relationships with customers, suppliers or distributors; legal, regulatory, tax or benefit law changes, claims or actions; the impact of climate change on our supply chain and operations; strategic transactions; significant changes in valuation factors that may adversely affect our impairment testing of goodwill and intangible assets; perceived or actual product quality issues or product recalls; failure to maintain effective internal control over financial reporting; volatility of and access to capital or other markets and our liquidity; pension costs; the expected discontinuance of London Interbank Offered Rates and transition to any other interest rate benchmark; and our ability to protect our intellectual property and intangible assets. We disclaim and do not undertake any obligation to update or revise any forward-looking statement in this report except as required by applicable law or regulation. Non-GAAP Financial Measures We use non-GAAP financial information and believe it is useful to investors as it provides additional information to facilitate comparisons of historical operating results, identify trends in our underlying operating results and provide additional insight and transparency on how we evaluate our business. We use non-GAAP financial measures to budget, make operating and strategic decisions and evaluate our performance. We have detailed the non-GAAP adjustments that we make in our non-GAAP definitions below. The adjustments generally fall within the following categories: acquisition & divestiture activities, gains and losses on intangible asset sales and non-cash impairments, major program restructuring activities, constant currency and related adjustments, major program financing and hedging activities and other major items affecting comparability of operating results. We believe the non-GAAP measures should always be considered along with the related U.S. GAAP financial measures. We have provided the reconciliations between the GAAP and non-GAAP financial measures below, and we also discuss our underlying GAAP results throughout our Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q. Our primary non-GAAP financial measures are listed below and reflect how we evaluate our current and prior-year operating results. As new events or circumstances arise, these definitions could change. When our definitions change, we provide the updated definitions and present the related non-GAAP historical results on a comparable basis (1) . 46 Table of Contents • “Organic Net Revenue” is defined as net revenues excluding the impacts of acquisitions, divestitures (2) and currency rate fluctuations (3) . We also evaluate Organic Net Revenue growth from emerging markets and developed markets. • Our emerging markets include our Latin America region in its entirety; the AMEA region, excluding Australia, New Zealand and Japan; and the following countries from the Europe region: Russia, Ukraine, Turkey, Kazakhstan, Georgia, Poland, Czech Republic, Slovak Republic, Hungary, Bulgaria, Romania, the Baltics and the East Adriatic countries. • Our developed markets include the entire North America region, the Europe region excluding the countries included in the emerging markets definition, and Australia, New Zealand and Japan from the AMEA region. • “Adjusted Operating Income” is defined as operating income excluding the impacts of the Simplify to Grow Program (4) ; gains or losses (including non-cash impairment charges) on goodwill and intangible assets; divestiture (2) or acquisition gains or losses and related divestiture (2) , acquisition and integration costs (2) ; the operating results of divestitures (2) ; remeasurement of net monetary position (5) ; mark-to-market impacts from commodity and forecasted currency transaction derivative contracts (6) ; impact from resolution of tax matters (7) ; CEO transition remuneration (8) ; impact from pension participation changes (9) ; Swiss tax reform impacts (10) ; and costs associated with the JDE Peet's transaction. We also present “Adjusted Operating Income margin,” which is subject to the same adjustments as Adjusted Operating Income. We also evaluate growth in our Adjusted Operating Income on a constant currency basis (3) . • “Adjusted EPS” is defined as diluted EPS attributable to Mondelēz International from continuing operations excluding the impacts of the items listed in the Adjusted Operating Income definition as well as losses on debt extinguishment and related expenses; gains or losses on equity method investment transactions; net earnings from divestitures (2) ; gains or losses on interest rate swaps no longer designated as accounting cash flow hedges due to changed financing and hedging plans; and U.S. and Swiss tax reform impacts (10) . Similarly, within Adjusted EPS, our equity method investment net earnings exclude our proportionate share of our investees’ significant operating and non-operating items (11) . We also evaluate growth in our Adjusted EPS on a constant currency basis (3) . (1) When items no longer impact our current or future presentation of non-GAAP operating results, we remove these items from our non-GAAP definitions. (2) Divestitures include completed sales of businesses (including the partial or full sale of an equity method investment) and exits of major product lines upon completion of a sale or licensing agreement. As we record our share of KDP and JDE Peet’s ongoing earnings on a one-quarter lag basis, any KDP or JDE Peet’s ownership reductions are reflected as divestitures within our non-GAAP results the following quarter. See Note 2, Acquisitions and Divestitures , and Note 6, Equity Method Investments , for information on acquisitions and divestitures impacting the comparability of our results. (3) Constant currency operating results are calculated by dividing or multiplying, as appropriate, the current-period local currency operating results by the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period. (4) Non-GAAP adjustments related to the Simplify to Grow Program reflect costs incurred that relate to the objectives of our program to transform our supply chain network and organizational structure. Costs that do not meet the program objectives are not reflected in the non-GAAP adjustments. (5) During the third quarter of 2018, as we began to apply highly inflationary accounting for Argentina (refer to Note 1, Basis of Presentation ), we excluded the remeasurement gains or losses related to remeasuring net monetary assets or liabilities in Argentina during the period to be consistent with our prior accounting for these remeasurement gains/losses for Venezuela when it was subject to highly inflationary accounting prior to deconsolidation in 2015. (6) We exclude unrealized gains and losses (mark-to-market impacts) from outstanding commodity and forecasted currency transaction derivatives from our non-GAAP earnings measures until such time that the related exposures impact our operating results. Since we purchase commodity and forecasted currency transaction contracts to mitigate price volatility primarily for inventory requirements in future periods, we made this adjustment to remove the volatility of these future inventory purchases on current operating results to facilitate comparisons of our underlying operating performance across periods. We also discontinued designating commodity and forecasted currency transaction derivatives for hedge accounting treatment. To facilitate comparisons of our underlying operating results, we have recast all historical non-GAAP earnings measures to exclude the mark-to-market impacts. (7) See Note 12, Commitments and Contingencies – Tax Matters, and our Annual Report on Form 10-K for the year ended December 31, 2018 for additional information. (8) On November 20, 2017, Dirk Van de Put succeeded Irene Rosenfeld as CEO of Mondelēz International in advance of her retirement at the end of March 2018. In order to incent Mr. Van de Put to join us, we provided him compensation with a total combined target value of $42.5 million to make him whole for incentive awards he forfeited or grants that were not made to him when he left his former employer. The compensation we granted took the form of cash, deferred stock units, performance share units and stock options. In connection with Irene Rosenfeld’s retirement, we made her outstanding grants of performance share units for the 2016-2018 and 2017-2019 performance cycles eligible for continued vesting and approved a $0.5 million salary for her service as Chairman from January through March 2018. We refer to these elements of Mr. Van de Put’s and Ms. Rosenfeld’s compensation arrangements together as “CEO transition remuneration.” We are excluding amounts we expense as CEO 47 Table of Contents transition remuneration from our non-GAAP results because those amounts are not part of our regular compensation program and are incremental to amounts we would have incurred as ongoing CEO compensation. As a result, in 2017, we excluded amounts expensed for the cash payment to Mr. Van de Put and partial vesting of his equity grants. In 2018, we excluded amounts paid for Ms. Rosenfeld’s service as Chairman and partial vesting of Mr. Van de Put’s and Ms. Rosenfeld’s equity grants. In 2019, we excluded amounts related to the partial vesting of Mr. Van de Put’s equity grants. During the first quarter of 2020, Mr. Van de Put's equity grants became fully vested. (9) The impact from pension participation changes represents the charges incurred when employee groups are withdrawn from multiemployer pension plans and other changes in employee group pension plan participation. We exclude these charges from our non-GAAP results because those amounts do not reflect our ongoing pension obligations. See Note 10, Benefit Plans , for more information on the multiemployer pension plan withdrawal. (10) We exclude the impact of the 2019 Swiss tax reform and 2017 U.S. tax reform. During the third quarter of 2019, Swiss Federal and Zurich Cantonal tax events drove our recognition of a Swiss tax reform net benefit to our results of operations. On December 22, 2017, the United States enacted tax reform legislation that included a broad range of business tax provisions. We exclude these tax reform impacts from our Adjusted EPS as they do not reflect our ongoing tax obligations under the new tax reforms. Refer to our Annual Report on Form 10-K for the year ended December 31, 2020 for more information on the impact of Swiss and U.S. tax reform. (11) We have excluded our proportionate share of our equity method investees’ significant operating and non-operating items such as acquisition and divestiture related costs, restructuring program costs and discrete U.S. tax reform impacts, in order to provide investors with a comparable view of our performance across periods. Although we have shareholder rights and board representation commensurate with our ownership interests in our equity method investees and review the underlying operating results and significant operating and non-operating items each reporting period, we do not have direct control over their operations or resulting revenue and expenses. Our use of equity method investment net earnings on an adjusted basis is not intended to imply that we have any such control. Our GAAP “diluted EPS attributable to Mondelēz International from continuing operations” includes all of the investees’ significant operating and non-operating items. We believe that the presentation of these non-GAAP financial measures, when considered together with our U.S. GAAP financial measures and the reconciliations to the corresponding U.S. GAAP financial measures, provides you with a more complete understanding of the factors and trends affecting our business than could be obtained absent these disclosures. Because non-GAAP financial measures vary among companies, the non-GAAP financial measures presented in this report may not be comparable to similarly titled measures used by other companies. Our use of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for any U.S. GAAP financial measure. A limitation of these non-GAAP financial measures is they exclude items detailed below that have an impact on our U.S. GAAP reported results. The best way this limitation can be addressed is by evaluating our non-GAAP financial measures in combination with our U.S. GAAP reported results and carefully evaluating the following tables that reconcile U.S. GAAP reported figures to the non-GAAP financial measures in this Form 10-Q. 48 Table of Contents Organic Net Revenue: Applying the definition of “Organic Net Revenue,” the adjustments made to “net revenues” (the most comparable U.S. GAAP financial measure) were to exclude the impact of currency and acquisitions. We believe that Organic Net Revenue reflects the underlying growth from the ongoing activities of our business and provides improved comparability of results. We also evaluate our Organic Net Revenue growth from emerging markets and developed markets, and these underlying measures are also reconciled to U.S. GAAP below. For the Three Months Ended March 31, 2021 For the Three Months Ended March 31, 2020 Emerging Markets Developed Markets Total Emerging Markets Developed Markets Total (in millions) (in millions) Net Revenue $ 2,563 $ 4,675 $ 7,238 $ 2,417 $ 4,290 $ 6,707 Impact of currency 94 (254) (160) — — — Impact of acquisition — (114) (114) — — — Organic Net Revenue $ 2,657 $ 4,307 $ 6,964 $ 2,417 $ 4,290 $ 6,707 49 Table of Contents Adjusted Operating Income: Applying the definition of “Adjusted Operating Income,” the adjustments made to “operating income” (the most comparable U.S. GAAP financial measure) were to exclude Simplify to Grow Program; mark-to-market impacts from commodity and forecasted currency transaction derivative contracts; acquisition integration costs; acquisition-related costs; gain on an acquisition; the remeasurement of net monetary position; and impact from pension participation changes. We also evaluate Adjusted Operating Income on a constant currency basis. We believe these measures provide improved comparability of underlying operating results. For the Three Months Ended March 31, 2021 2020 $ Change % Change (in millions) Operating Income $ 1,283 $ 856 $ 427 49.9 % Simplify to Grow Program (1) 122 58 64 Mark-to-market (gains)/losses from derivatives (2) (118) 185 (303) Acquisition integration costs (3) 1 — 1 Acquisition-related costs (3) 7 5 2 Gain on acquisition (3) (9) — (9) Remeasurement of net monetary position (4) 5 2 3 Impact from pension participation changes 1 — 1 Adjusted Operating Income $ 1,292 $ 1,106 $ 186 16.8 % Favorable currency translation (44) — (44) Adjusted Operating Income (constant currency) $ 1,248 $ 1,106 $ 142 12.8 % (1) Refer to Note 7, Restructuring Program, for more information. (2) Refer to Note 9, Financial Instruments , Note 16, Segment Reporting , and Non-GAAP Financial Measures section for more information on the unrealized gains/losses on commodity and forecasted currency transaction derivatives. (3) Refer to Note 2, Acquisitions and Divestitures , for more information on the April 1, 2021 acquisition of Gourmet Food Holdings Pty Ltd, the March 25, 2021 acquisition of a majority interest in Grenade, the January 4, 2021 acquisition of the remaining 93% of equity in Hu Master Holdings and the April 1, 2020 acquisition of a significant majority interest in Give & Go. (4) Refer to Note 1, Basis of Presentation – Currency Translation and Highly Inflationary Accounting , for information on our application of highly inflationary accounting for Argentina. 50 Table of Contents Adjusted EPS: Applying the definition of “Adjusted EPS,” (1) the adjustments made to “diluted EPS attributable to Mondelēz International” (the most comparable U.S. GAAP financial measure) were to exclude the impacts of the items listed in the Adjusted Operating Income tables above as well as net earnings from divestitures; a loss related to interest rate swaps; a loss on debt extinguishment and related expenses; gain on equity method investment transactions; and our proportionate share of significant operating and non-operating items recorded by our JDE Peet's and KDP equity method investees. We also evaluate Adjusted EPS on a constant currency basis. We believe Adjusted EPS provides improved comparability of underlying operating results. For the Three Months Ended March 31, 2021 2020 $ Change % Change Diluted EPS attributable to Mondelēz International $ 0.68 $ 0.51 $ 0.17 33.3 % Simplify to Grow Program (2) 0.07 0.03 0.04 Mark-to-market (gains)/losses from derivatives (2) (0.07) 0.11 (0.18) Acquisition-related costs (2) 0.01 — 0.01 Net earnings from divestitures (3) — (0.01) 0.01 Loss related to interest rate swaps (4) — 0.06 (0.06) Loss on debt extinguishment (5) 0.07 — 0.07 Gain on equity method investment transactions (6) — (0.04) 0.04 Equity method investee items (7) 0.01 — 0.01 Adjusted EPS $ 0.77 $ 0.66 $ 0.11 16.7 % Favorable currency translation (0.04) — (0.04) Adjusted EPS (constant currency) $ 0.73 $ 0.66 $ 0.07 10.6 % (1) The tax expense/(benefit) of each of the pre-tax items excluded from our GAAP results was computed based on the facts and tax assumptions associated with each item, and such impacts have also been excluded from Adjusted EPS. • For the three months ended March 31, 2021, taxes for the: Simplify to Grow Program were $(31) million, mark-to-market gains from derivatives were $22 million, acquisition-related costs were $(1) million, loss on debt extinguishment were $(34) million and equity method investee items were $(1) million. • For the three months ended March 31, 2020, taxes for the: Simplify to Grow Program were $(13) million, mark-to-market losses from derivatives were $(32) million, net earnings from divestitures were $5 million, loss related to interest rate swaps were $(24) million and gain on equity method investment transactions were $17 million. (2) See the Adjusted Operating Income table above and the related footnotes for more information. (3) Includes the impact from last-year's partial sales of our equity method investments in KDP and JDE Peet’s as if the sales occurred at the beginning of all periods presented. (4) Refer to Note 9, Financial Instruments , for information on our interest rate swaps that we no longer designate as cash flow hedges. (5) Refer to Note 8, Debt and Borrowing Arrangements , for more information on the loss on debt extinguishment and related expenses. (6) Refer to Note 6, Equity Method Investments, for more information on the gains and losses on equity method investment transactions. (7) Includes our proportionate share of significant operating and non-operating items recorded by our JDE Peet's and KDP equity method investees, such as acquisition and divestiture-related costs and restructuring program costs. 51 Table of Contents