What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-04 compared with 2021-02-05 · 240 added, 326 removed, 1809 unchanged (24% of the section changed)

8 unchanged sentences

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

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.

As described in the Report of Management on Internal Control Over Financial Reporting, management has excluded Hu Master Holdings (“Hu”), Lion/Gemstone Topco Ltd (“Grenade”), and Gourmet Food Holdings Pty Ltd (“Gourmet Food”) from its assessment of internal control over financial reporting as of December 31, 2021 because they were acquired by the Company in purchase business combinations during 2021.

We have also excluded Hu, Grenade, and Gourmet Food from our audit of internal control over financial reporting.

Hu and Gourmet Food are wholly-owned subsidiaries, and Grenade 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 collectively represent 0.2% and 0.5%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

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.

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 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.

Indefinite-Life Intangible Assets Annual Impairment Assessments for Certain Brand Names

As described in Notes 1 and 6 to the consolidated financial statements, the Company’s consolidated indefinite-life intangible asset balance was $17.3 billion as of December 31, 2021, which consists principally of brand names.

At least annually management assesses indefinite-life intangible assets for impairment and 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.

As disclosed by management, 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 to determine a brand name’s fair value.

The principal considerations for our determination that performing procedures relating to the indefinite-life intangible asset annual impairment assessments for certain brand names is a critical audit matter are (i) the significant judgment by management when developing the fair value of the indefinite-life intangible assets;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to estimates of future sales, earnings growth rates, royalty rates, and discount rates for certain brand names;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

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 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;

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.

These procedures included testing the effectiveness of controls relating to the indefinite-life intangible asset impairment assessments, including controls over the annual valuation of certain brand names.

These procedures also included, among others (i) testing management’s process for developing the fair value of the indefinite-life intangible assets;

(ii) evaluating the appropriateness of the valuation methods;

(iii) testing the completeness and accuracy of underlying data used in the methods;

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

Evaluating management’s significant assumptions related to estimates of future sales and earnings growth rates involved evaluating whether the significant assumptions used by management were reasonable considering (i) the current and past performance of the certain brand names;

(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 evaluating (i) the appropriateness of the Company’s valuation methods and (ii) the reasonableness of the royalty rate and discount rate significant assumptions.

/s/ PricewaterhouseCoopers LLP

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Asset impairment and exit costs 212 301 228

Net gain on divestiture — ( 44 ) —

Net gain on acquisition and divestitures ( 8 ) — ( 44 )

Amortization of intangible assets 134 194 174

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tax reform transition tax/(benefit) — — 5

Deferred income tax (benefit)/provision ( 70 ) ( 631 ) 233

Deferred income tax provision/(benefit) 205 ( 70 ) ( 631 )

Asset impairments and accelerated depreciation 128 136 109

Loss on early extinguishment of debt 110 185 —

Net gain on divestitures — ( 44 ) —

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

Net gain on acquisition and divestitures ( 8 ) — ( 44 )

Net (gain)/loss on equity method investment transactions ( 742 ) ( 989 ) 2

Equity method investment net earnings ( 393 ) ( 421 ) ( 501 )

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Other non-cash items, net ( 230 ) 243 97

Change in assets and liabilities, net of acquisitions and divestitures:

Change in assets and liabilities,

net of acquisitions and divestitures:

Receivables, net ( 197 ) 59 124

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Proceeds from sale of property, plant and equipment and other 233 10 82

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

Net cash (used in)/provided by investing activities ( 26 ) 500 ( 960 )

CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES

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Cash, cash equivalents and restricted cash:

Increase/(decrease) 2,322 228 339

(Decrease)/increase ( 97 ) 2,322 228

Balance at beginning of period 3,650 1,328 1,100

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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.

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

Historically, the aggregate differences, if any, between our estimates and actual amounts in any year have not had a material effect on our consolidated financial statements.

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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, 2020, our Argentinean operations had

$ 3 million of Argentinean peso denominated net monetary liabilities.

As of December 31, 2021, our Argentinean operations had $ 9 million of Argentinean peso denominated net monetary assets.

Our Argentinean operations contributed $ 401 million, or 1.4 % of consolidated net revenues in 2021.

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 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.

We recorded a remeasurement loss of $ 13 million in 2021, a remeasurement loss of $ 9 million in 2020 and a remeasurement gain of $ 4 million in 2019 within selling, general and administrative expenses related to the revaluation of the Argentinean peso denominated net monetary position over these periods.

Following the separation of the United Kingdom from the European Union (“Brexit”) in 2020, a new trade arrangement was reached between the U.K.

that began on January 1, 2021.

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

subject to prescribed trade terms, including but not limited to meeting product and labeling standards for both the U.K.

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.

is also subject to new customs regulations, documentation and reviews.

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.

We have made investments in resources, systems and processes to meet the new ongoing requirements and we work to mitigate disruptions to our local supply chain and distribution, including those related to the recent transportation labor shortage in the U.K., to reduce the impact on our input and distribution costs.

Despite our efforts to control costs, we have seen inflationary cost pressures rise in our U.K.

business this year, as we have also experienced in other markets.

If the U.K.’s separation from, or new 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, disruptions to sales or collections, or further increases in inflationary cost pressures, the impact to our results of operations, financial condition and cash flows could be material.

In 2021, we generated 9.3 % of our net revenues in the U.K.

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Since we sell our products in over 150 countries and have operations in approximately 80 countries, we monitor economic and currency-related risks and seek to take protective measures in response to these exposures.

Some of the countries in which we do business have recently experienced periods of significant economic uncertainty and exchange rate volatility, including Brazil, China, Mexico, Russia, Ukraine, Turkey, Egypt, Nigeria, South Africa and Pakistan.

We continue to monitor operations, currencies and net monetary exposures in these countries.

At this time, we do not anticipate that these countries are at risk of becoming highly inflationary economies.

We continue to monitor the ongoing COVID-19 pandemic and related impacts to our `business operations, currencies and net monetary exposures.

Since the global onset of COVID-19 in early 2020, most countries in which we do business experienced periods of significant economic uncertainty as well as exchange rate volatility.

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

Cash, Cash Equivalents and Restricted Cash:

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

Current period provision for expected credit losses ( 3 ) ( 13 ) —

Write-offs charged against the allowance 5 3 2

Currency 3 3 —

Balance at December 31, 2021 $ ( 37 ) $ ( 49 ) $ ( 10 )

Transfers of Financial Assets:

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Long-Lived Assets:

Property, plant and equipment are stated at historical cost and depreciated by the straight-line method over the estimated useful lives of the assets.

Property, plant and equipment are stated at historical cost and depreciated by the straight-line method over the estimated useful lives of the assets with the expense recorded in cost of sales or selling, general and administrative expenses depending on the nature of the long-lived assets.

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

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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.

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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 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.

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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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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See Note 10, Financial Instruments, for more information on the types of derivative instruments we use.

We record derivative financial instruments on a gross basis and at fair value in our consolidated balance sheets within other current assets or other current liabilities due to their relatively short-term duration.

We record derivative financial instruments on a gross basis in our consolidated balance sheets.

The fair value of our asset derivatives is recorded within other current assets and other assets and the fair value of our liability derivatives is recorded within other current liabilities and other liabilities.

Non-cash changes in unrealized gains and losses related to our unsettled derivative instruments are classified in the consolidated statements of cash flows in other non-cash items, net, within operating activities.

Cash flows related to the settlement of derivative instruments designated as net investment hedges of foreign operations are classified in the consolidated statements of cash flows within investing activities.

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Based on the size and location of our businesses, we use these instruments to hedge our exposure to certain currencies, including the euro, pound sterling, Swiss franc, Canadian dollar and Mexican peso.

Any unrealized gains or losses (mark-to-market impacts) and realized gains or losses are recorded in earnings (see Note 10, Financial Instruments , for additional information).

Any unrealized gains or losses (mark-to-market impacts)

and realized gains or losses are recorded in earnings (see Note 10, Financial Instruments , for additional information).

Interest rate cash flow and fair value hedges .

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

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

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

net investments against adverse movements in exchange rates.

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New Accounting Pronouncements:

In December 2019, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update ("ASU") that removes certain exceptions in accounting for income taxes, improves consistency in application and clarifies existing guidance.

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

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

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

In October 2021, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) which requires companies to recognize and measure customer contract assets and contract liabilities acquired in a business combination as if the acquiring company originated the related revenue contracts.

Prior to adopting this ASU, acquired contract assets and liabilities were measured at fair value.

This ASU is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted.

We are evaluating the timing and effects of adopting this ASU and currently we do not expect this ASU to have a material impact on our consolidated financial statements.

In March 2020 and subsequently in January 2021, the FASB issued an ASU to provide optional accounting guidance for a limited period of time to ease the potential burden in accounting for reference rate reform.

The guidance provides optional expedients and exceptions to existing accounting requirements for contract modifications and hedge accounting related to transitioning from discontinued reference rates, such as LIBOR, to alternative reference rates, if certain criteria are met.

The new accounting requirements can be applied as of the beginning of the interim period including March 12, 2020, or any date thereafter, through December 31, 2022.

We expect to adopt this standard in the fourth quarter of 2022.

Based on our evaluation of our contracts to date, we do not expect this ASU to have a material impact on our consolidated financial statements.

In December 2019, the FASB issued an ASU that removes certain exceptions in accounting for income taxes, improves consistency in application and clarifies existing guidance.

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

On January 1, 2020, we adopted the standard on a prospective basis and the standard did not have a material impact 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 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 adopted the standard on January 1, 2020 and there was no material impact to our consolidated financial statements upon adoption.

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

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

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

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

Reclassifications:

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

During the second quarter of 2020, in connection with the JDE Peet's (as defined below) transaction (refer to Note 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.

On January 1, 2021, we adopted this ASU and it did not have a material impact on our consolidated financial statements.

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 January 3, 2022, we acquired 100 % of equity of Chipita S.A.

(“Chipita”), a leading croissants and baked snacks company in the Central and Eastern European markets.

The acquisition of Chipita offers a strategic complement to our existing portfolio and advances our strategy to become the global leader in broader snacking.

The cash consideration for Chipita totaled € 1.3 billion ($ 1.5 billion) plus the assumption of Chipita’s debt of € 0.4 billion ($ 0.4 billion) totaling the purchase price of € 1.7 billion ($ 1.9 billion).

In 2021, we incurred acquisition-related costs of $ 6 million and integration costs of $ 17 million in preparation for the acquisition.

On November 1, 2021, we completed the sale of MaxFoods Pty Ltd, an Australian packaged seafood business that we had acquired as part of our acquisition of Gourmet Food Holdings Pty Ltd (“Gourmet Food”).

The sales price was $ 57 million Australian dollars ($ 41 million), net of cash divested with the business, and we recorded an immaterial loss on the transaction.

The packaged seafood business added incremental net revenues of $ 35 million in 2021 and operating income of $ 5 million during 2021.

On April 1, 2021, we acquired Gourmet Food, a leading Australian food company in the premium biscuit and cracker category, for closing cash consideration of approximately $ 450 million Australian dollars ($ 343 million), net of cash received.

We are working to complete the valuation and have recorded a preliminary purchase price allocation of $ 41 million to indefinite-lived intangible assets, $ 80 million to definite-lived intangible assets, $ 164 million to goodwill, $ 19 million to property, plant and equipment, $ 18 million to inventory, $ 25 million to accounts receivable, $ 12 million to other assets, $ 5 million to operating right of use assets, $ 3 million to other current assets, $ 19 million to current liabilities and $ 5 million to long-term operating lease liabilities.

The acquisition added incremental net revenues of $ 49 million and operating income of $ 7 million during 2021.

We incurred acquisition-related costs of $ 7 million in 2021.

On March 25, 2021, we acquired a majority interest in Lion/Gemstone Topco Ltd (“Grenade”), a performance nutrition leader in the United Kingdom, for closing cash consideration of £ 188 million ($ 261 million), net of cash received.

The acquisition of Grenade expands our position into the premium nutrition market.

We are working to complete the valuation and have recorded a preliminary purchase price allocation of $ 82 million to indefinite-lived intangible assets, $ 28 million to definite-lived intangible assets, $ 181 million to goodwill, $ 1 million to property, plant and equipment, $ 11 million to inventory, $ 18 million to accounts receivable, $ 25 million to current liabilities, $ 20 million to deferred tax liabilities and $ 15 million to long-term other liabilities.

The acquisition added incremental net revenues of $ 67 million and operating income of $ 6 million during 2021.

We incurred acquisition-related costs of $ 2 million in 2021.

On January 4, 2021, we acquired the remaining 93 % of equity of Hu Master Holdings (“Hu”), a category leader in premium chocolate in the United States, which provides a strategic complement to our snacking portfolio in North America through growth opportunities in chocolate and other offerings in the well-being category.

The initial cash consideration paid was $ 229 million, net of cash received, and we may be required to pay additional contingent consideration.

The estimated fair value of the contingent consideration obligation at the acquisition date was $ 132 million and was determined using a Monte Carlo simulation based on forecasted future results.

During 2021, based on latest estimates, we recorded a $ 70 million reduction to the liability as recent economic and market conditions related to COVID-19 and supply chain challenges in the U.S.

have impacted the pace of growth.

This reduction was recorded in selling, general and administrative expenses.

As a result of acquiring the remaining equity interest, we consolidated the operations prospectively from the date of acquisition and recorded a pre-tax gain of $ 9 million ($ 7 million after-tax) related to stepping up our previously-held $ 8 million ( 7 %) investment to fair value.

We are working to complete the valuation and have recorded a preliminary purchase price allocation of $ 123 million to indefinite-lived intangible assets, $ 51 million to definite-lived intangible assets, $ 202 million to goodwill, $ 1 million to property, plant and equipment, $ 2 million to inventory, $ 4 million to accounts receivable, $ 5 million to current liabilities and $ 132 million to long-term other liabilities.

The acquisition added incremental net revenues of $ 38 million and operating income (inclusive of the adjustment to the contingent consideration liability) of $ 44 million during 2021.

We incurred acquisition-related costs of $ 9 million in 2021.

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.

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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:

We have recorded a purchase price allocation of net tangible and intangible assets acquired and liabilities assumed as follows:

(in millions)

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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.

Through the one-year anniversary of the acquisition, Give & Go added incremental net revenues of $ 106 million and operating income of $ 6 million during 2021.

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

We incurred acquisition integration costs of $ 6 million in 2021 and $ 2 million in 2020.

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

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

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

premium biscuit company, Tate’s Bake Shop, within our North America segment and extended our premium biscuit offering.

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-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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Property, plant and equipment, net $ 8,658 $ 9,026

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.

Capital expenditures as presented on the statement of cash flow were approximately $ 1.0 billion, $ 0.9 billion and $ 0.9 billion for the years ending December 31, 2021, 2020 and 2019 and excluded $ 249 million, $ 275 million and $ 334 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) 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 ):

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We assume the majority of our termination options will not be exercised when determining the lease term of our leases.

We do not include significant restrictions or covenants in our lease agreements, and residual value guarantees are generally not included within our operating leases, with the exception of some fleet leases.

Some of our leasing arrangements require variable payments that are dependent on usage or output or may vary for other reasons, such as product costs, insurance and tax payments.

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Total lease cost $ 853 $ 764

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:

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Finance Leases:

Finance leases, net of amortization (within property, plant & equipment) $ 252 $ 122

Finance leases, net of amortization (within property, plant and equipment) $ 233 $ 252

Current portion of long-term debt $ 82 $ 74

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Total reported lease liability $ 633 $ 239

On October 5, 2021, the Company closed an asset sale-leaseback transaction on a property in New Jersey.

The Company received proceeds of approximately $ 142 million, net of selling costs for the property, which had a carrying value of $ 51 million, and resulted in an approximately $ 91 million gain on the sale transaction.

The leaseback is accounted for as an operating lease.

The leaseback is expected to end in 2023 and has three 90-day renewal options.

Goodwill and Intangible Assets

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Amortization expense for intangible assets was $ 134 million in 2021, $ 194 million in 2020 and $ 174 million in 2019.

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.

For the next five years, we estimate annual amortization expense of approximately $ 125 million in years one to three, approximately $ 100 million in year four and approximately $ 60 million in year five, reflecting December 31, 2021 exchange rates.

Changes in goodwill and intangible assets consisted of:

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Changes to goodwill and intangibles were:

• 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.

• Divestitures – During the fourth quarter of 2021, we completed the sale of MaxFoods Pty Ltd, an Australian packaged seafood business that we had acquired as part of our acquisition of Gourmet Food, resulting in a decrease in intangible assets of $ 17 million.

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.

• Acquisitions – In connection with our 2021 acquisitions of Gourmet Food, Grenade and the remaining interest in Hu, we recorded preliminary purchase price allocations totaling $ 547 million of goodwill and $ 405 million of intangible assets.

In connection with our 2020 acquisition of a majority interest in Give & Go, we recorded a purchase price allocation of $ 531 million to goodwill and $ 553 million to intangible assets.

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

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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.

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.

In 2021, we recorded $ 32 million of intangible asset impairment charges related to one biscuit brand in North America.

We also identified eight brands with $ 1,146 million of aggregate book value as of December 31, 2021 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.

If a brand's 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 2020, we recorded $ 144 million of impairment charges for 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.

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.

Equity Method Investments

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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.

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

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

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.

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 KDP’s ongoing results once KDP has publicly reported its results.

The change was retrospectively applied to all prior periods presented.

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 2, 2021, we sold approximately 14.7 million shares of KDP, which reduced our ownership interest by 1 % to 5.3 % of the total outstanding shares.

We received $ 500 million of proceeds and recorded a pre-tax gain of $ 248 million (or $ 189 million after-tax) during the third quarter of 2021.

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.

We continue to have board representation with one director on the KDP Board of Directors and we retained certain additional governance rights.

On June 7, 2021, we participated in a secondary offering of KDP shares and sold approximately 28.0 million shares, which reduced our ownership interest by 2 % to 6.4 % of the total outstanding shares.

We received $ 997 million of proceeds and recorded a pre-tax gain of $ 520 million (or $ 392 million after-tax) during the second quarter of 2021.

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.

We received $ 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.

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.

$ 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.

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.

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.

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 %.

JDE Peet’s Transaction:

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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.

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

On September 20, 2021, we issued € 300 million exchangeable bonds, which are redeemable at maturity at their principal amount in cash or, at our option, through the delivery of an equivalent number of JDE Peet’s ordinary shares based on an initial exchange price of € 35.40 and, as the case may be, an additional amount in cash.

If all bonds were redeemed in exchange for JDE Peet's shares, this would represent approximately 8.5 million shares or approximately 7 % of our equity interest in JDE Peet's.

Refer to Note 9, Debt and Borrowing Arrangements , for further details on this transaction.

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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Mondelēz International ownership interests 5 - 50 %

Mondelēz International share of investee net income $ 421 $ 501 $ 472

Keurig shareholder loan interest income — — 12

Equity method investment net earnings $ 393 $ 421 $ 501

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On September 6, 2018, our Board of Directors approved an extension of the restructuring program through 2022, an increase of $ 1.3 billion in the program charges and an increase of $ 700 million in capital expenditures.

On October 21, 2021, our Board of Directors approved an extension of the restructuring program through 2023.

The total $ 7.7 billion program now consists of $ 5.4 billion of program charges ($ 4.1 billion of cash costs and $ 1.3 billion of non-cash costs) and total capital expenditures of $ 2.3 billion to be incurred over the life of the program.

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• We spent $ 160 million in 2021 and $ 169 million in 2020 in cash severance and related costs.

• 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.

• In 2021, we recognized non-cash asset write-downs (including accelerated depreciation and asset impairments), non-cash pension settlement losses and other non-cash adjustments, partially offset by gains on sale of assets, primarily real estate, included in the restructuring program totaling $ 73 million.

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

• At December 31, 2021, $ 180 million of our net restructuring liability was recorded within other current liabilities and $ 31 million was recorded within other long-term liabilities.

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Total short-term borrowings $ 216 $ 29

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, 2021 and December 31, 2020 include:

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due through 2025

Finance leases 256 123

Finance leases and other 244 256

Total 19,296 20,017

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Tenders Offers:

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

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

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

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Debt Redemptions:

During 2021 we completed an early redemption of euro and U.S.

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

Interest Rate Redemption Date Maturity Date Amount Redeemed USD Equivalent

2.000 % September 2021 October 2021 $ 1,500 $ 1,500

3M LIBOR + 0.700 %

September 2021 October 2022 $ 500 $ 500

3M LIBOR + 0.800 %

September 2021 October 2024 $ 500 $ 500

1.000 % March 2021 March 2022 € 500 $ 587

1.625 % March 2021 January 2023 € 700 $ 821

2.125 % March 2021 April 2023 $ 500 $ 500

4.000 % March 2021 February 2024 $ 492 $ 492

We recorded an extinguishment loss of $ 137 million within interest and other expense, net related to $ 110 million paid in excess of carrying value of the debt and from recognizing unamortized discounts and deferred financing in earnings and $ 27 million foreign currency derivative loss related to the redemption 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.

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

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Debt Repayments:

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

In 2021, we repaid the following notes or term loans (in millions):

Interest Rate Maturity Date Amount USD Equivalent

0.625 % December 2021 Fr.

2.375 % January 2021 € 679 827

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

Interest Rate Maturity Date Amount USD Equivalent

0.625 % October 2020 Fr.

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(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:

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Gross Proceeds USD Equivalent

October 2020 1.875 % October 2032 $ 625 $ 625

October 2020 & September 2020 (2)

September 2021 (2)

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September 2021 (2)(3)

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

0.000 % September 2024 € 300 $ 352

September 2021 (2)(4)

0.250 % September 2029 € 650 $ 769

September 2021 (2)(4)

0.625 % September 2032 € 650 $ 769

September 2021 (2)(4)

1.250 % September 2041 € 700 $ 828

March 2021 0.250 % March 2028 € 750 $ 896

March 2021 0.750 % March 2033 € 600 $ 717

March 2021 1.375 % March 2041 € 650 $ 777

In 2020, we issued the following notes:

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Gross Proceeds USD Equivalent

October 2019 (3)

0.875 % October 2031 € 500 $ 548

September 2019 (3)(4)

October 2020 1.875 % October 2032 $ 625 $ 625

October 2020 & September 2020 (5)

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

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September 2020 (2)

Variable September 2022 $ 500 500

0.375 % September 2029 € 750 $ 882

Variable September 2024 $ 500 500

February 2019 3.625 % February 2026 $ 600 600

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 (5)

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

April 2020 2.125 % April 2023 $ 500 $ 500

(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.

(2) 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.

(5) MIHN entered into a term loan agreement.

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

(3) Issuance of exchangeable bonds that were issued at 102 % of their principal amount and are redeemable for cash or existing ordinary shares of JDE Peet's at our option (see Note 7, Equity Method Investments).

Bondholders have an option to redeem bonds before maturity subject to exchange periods.

We have identified our option to settle in either cash or existing ordinary shares of JDE Peet's as an embedded derivative that is bifurcated and accounted for separately from the bond.

See Note 10, Financial Instruments.

(4) Issuance of green bonds where we have committed to allocate an amount equal to the € 1.97 billion total net proceeds from the offering over time to eligible projects that align with our sustainability priorities in the areas of building a thriving ingredient supply chain and reducing our environmental impact.

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

Fair Value of Our Debt:

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Loss on debt extinguishment and related expenses 137 185 —

Loss/(gain) related to interest rate swaps 103 111 ( 10 )

Other (income)/expense, net ( 103 ) ( 139 ) ( 72 )

Loss related to interest rate swaps — 103 111

Other income, net ( 55 ) ( 103 ) ( 139 )

Interest and other expense, net $ 447 $ 608 $ 456

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Commodity contracts 387 137 205 128

Equity method investment contracts (2)

$ 543 $ 180 $ 339 $ 247

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dollar denominated debt acting as net investment hedges are also disclosed in the Derivative Volume table and the Hedges of Net Investments in International Operations section appearing later in this footnote.

(2) Equity method investment contracts consist of the bifurcated embedded derivative option that was a component of the September 20, 2021 € 300 million exchangeable bonds issuance.

Refer to Note 9, Debt and Borrowing Arrangements .

Derivatives designated as accounting hedges above include cash flow and net investment hedge derivative contracts.

Our currency exchange and commodity derivative contracts are economic hedges that are not designated as accounting hedges.

Our currency exchange, commodity derivative and equity method investment contracts are economic hedges that are not designated as accounting hedges.

We record derivative assets and liabilities on a gross basis on our consolidated balance sheets.

The fair value of our asset derivatives is recorded within other current assets and the fair value of our liability derivatives is recorded within other current liabilities.

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

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Net investment hedge contracts 71 — 71 —

Equity method investment contracts ( 3 ) — ( 3 ) —

Total derivatives $ 445 $ 161 $ 284 $ —

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commodity forwards and options;

net investment hedge contracts;

and interest rate swaps.

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Commodity derivatives are valued using an income approach based on the observable market commodity index prices less the contract rate multiplied by the notional amount or based on pricing models that rely on market observable inputs such as commodity prices.

Our bifurcated exchange options are valued, as derivative instrument liabilities, using the Black-Scholes option pricing model.

This model requires assumptions related to the market price of the underlying note and associated credit spread combined with the share of price, expected dividend yield, and expected volatility of the JDE Peet’s shares over the life of the option.

Our calculation of the fair value of interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the observable market interest rate curve.

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Interest rate contracts $ 155 $ ( 161 ) $ ( 154 )

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 .

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 and a loss of $ 111 million in 2019.

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

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Cash Flow Hedge Coverage:

As of December 31, 2020, our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 3 years and 9 months.

As of December 31, 2021, our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 4 years, 8 months .

Hedges of Net Investments in International Operations:

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Commodity contracts 385 4 67 Cost of sales

Equity method investment contracts 2 — — Gain on equity method investment contracts

Total $ 523 $ ( 30 ) $ 173

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The combined U.S.

pension plans resulted in a net pension liability of $ 614 million at December 31, 2020 and $ 709 million at December 31, 2019.

pension plans resulted in a net pension asset of $ 297 million at December 31, 2021 and a net pension liability of $ 614 million at December 31, 2020.

We recognized these amounts in our consolidated balance sheets as follows:

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

Settlement losses and other expenses (1)

Curtailment credit (1)

— — — ( 17 ) — —

Settlement losses and other expenses 19 18 16 3 4 ( 3 )

Net periodic pension cost $ 13 $ 14 $ 57 $ ( 42 ) $ ( 15 ) $ 59

(1) Settlement losses of $ 3 million in 2020, $ 5 million in 2019 and $ 5 million in 2018 were incurred in connection with our Simplify to Grow Program.

See Note 8, Restructuring Program , for more information.

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.

plans in 2019 and settlement losses of $ 31 million for our U.S.

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

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

(1) During the third quarter of 2021, we terminated our Defined Benefit Pension Scheme in Nigeria.

During the second quarter of 2021, we made a decision to freeze our Defined Benefit Pension Scheme in the United Kingdom.

As a result, we recognized curtailment credits of ($ 17 million) in 2021 recorded within benefit plan non-service income.

In connection with the United Kingdom plan freeze, we also incurred incentive payment charges and other expenses of $ 48 million in 2021 included in operating income.

plans, we determine the expected return on plan assets component of net periodic benefit cost using a calculated market return value that recognizes the cost over a four-year period.

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Private equity 4 — — 4

Cash 117 107 10 —

Other 162 157 5 —

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

The increase in Level 3 pension plan investments during 2021 was primarily due to purchases of corporate bond, annuity contracts and other fixed income securities.

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:

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The current portion of our accrued postretirement benefit obligation of $ 16 million at December 31, 2021 and $ 16 million at December 31, 2020 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.

The actuarial (gain) for all postretirement plans in 2020 and 2021 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.

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

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As of December 31, 2021, the estimated net gain for the postemployment benefit plans that we expect to amortize from accumulated other comprehensive earnings/(losses) into net periodic postemployment costs during 2022 is approximately $ 4 million.

Under our Amended and Restated 2005 Performance Incentive Plan (the “Plan”), we are authorized through May 21, 2024 to issue a maximum of 243.7 million shares of our Common Stock to employees and non-employee directors.

Under our Amended and Restated 2005 Performance Incentive Plan (the “2005 Plan”), we are authorized through May 21, 2024 to issue a maximum of 243.7 million shares of our Class A common stock (“Common Stock”) to employees and non-employee directors.

As of December 31, 2021, there were 48.9 million shares available to be granted under the 2005 Plan.

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The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the option exercises totaled $ 24 million in 2021, $ 27 million in 2020 and $ 40 million in 2019.

Deferred Stock Units, Performance Share Units and Restricted Stock:

Historically we have made grants of deferred stock units, performance share units and restricted stock.

Beginning in 2016, we only grant deferred stock units and performance share units and no longer grant restricted stock.

Deferred Stock Units, Performance Share Units and Other Stock-Based Awards:

Deferred stock units granted to eligible employees have most shareholder rights, except that they may not sell, assign, pledge or otherwise encumber the shares and our deferred stock units do not have voting rights until vested.

Shares of deferred stock units are subject to forfeiture if certain employment conditions are not met.

Deferred stock units are subject to forfeiture if certain employment conditions are not met.

Deferred stock units generally vest on the third anniversary of the grant date.

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Dividend equivalents accumulated over the vesting period are paid only after the performance share units vest.

The fair value of the deferred stock units, performance share units and restricted stock at the date of grant is amortized to earnings over the vesting period.

The fair value of our deferred stock units and restricted stock is measured at the market price of our Common Stock on the grant date.

The fair value of the deferred stock units, performance share units and other stock-based awards at the date of grant is amortized to earnings over the vesting period.

The fair value of our deferred stock units and other stock-based awards is measured at the market price of our Common Stock on the grant date.

Performance share unit awards generally have targets tied to both performance and market-based conditions.

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The number of performance share units that ultimately vest ranges from 0 - 200 percent of the number granted, based on the achievement of the performance and market-based components.

We recorded compensation expense related to deferred stock units, performance share units and restricted stock of $ 98 million in 2020, $ 97 million in 2019 and $ 85 million in 2018 in our results from continuing operations.

We recorded compensation expense related to deferred stock units, performance share units and other stock-based awards of $ 98 million in 2021, $ 98 million in 2020 and $ 97 million in 2019 in our results from continuing operations.

The deferred tax benefit recorded related to this compensation expense was $ 16 million in 2021, $ 15 million in 2020 and $ 16 million in 2019.

The unamortized compensation expense related to our deferred stock units, performance share units and restricted stock was $ 107 million at December 31, 2020 and is expected to be recognized over a weighted-average period of 1.7 years.

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

The unamortized compensation expense related to our deferred stock units, performance share units and other stock-based awards was $ 107 million at December 31, 2021 and is expected to be recognized over a weighted-average period of 1.7 years.

Our performance share unit, deferred stock unit and other stock-based award activity is reflected below:

of Shares Grant Date Weighted-Average

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(1) Includes performance share units and deferred stock units.

(2) Includes performance share units, deferred stock units and historically granted restricted stock.

(2) Includes performance share units, deferred stock units and other stock-based awards.

(3) The actual tax benefit/(expense) realized and recorded in the provision for income taxes for the tax deductions from the shares vested totaled $ 6 million in 2021, $ 5 million in 2020 and $ 2 million in 2019.

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Capital Stock

Our amended and restated articles of incorporation authorize 5.0 billion shares of Class A common stock (“Common Stock”) and 500 million shares of preferred stock.

Our amended and restated articles of incorporation authorize 5.0 billion shares of Common Stock and 500 million shares of preferred stock.

There were no preferred shares issued and outstanding at December 31, 2021, 2020 and 2019.

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

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

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

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

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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.

The complaints make similar allegations as those made in the CFTC action, and the plaintiffs are seeking class action certification;

monetary damages, interest and unjust enrichment;

The complaints make similar allegations as those made in the CFTC action, and the plaintiffs are seeking monetary damages, interest and unjust enrichment;

costs and fees;

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

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

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

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

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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 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.

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.

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.

We are cooperating with the investigation and expect to continue to engage 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.

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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.

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.

Reclassifications from Accumulated Other Comprehensive Income

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

Amounts reclassified from accumulated other comprehensive earnings/(losses) to net earnings (net of tax) were net losses of $ 285 million in 2020, $ 279 million in 2019 and $ 169 million in 2018.

Amounts reclassified from accumulated other comprehensive earnings/(losses) to net earnings (net of tax) were net (gains)/losses of $( 44 ) million in 2021, $ 285 million in 2020 and $ 279 million in 2019.

For the Years Ended December 31,

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Settlement losses and other expenses (1)

Curtailment credit (2)

Tax expense/(benefit) on reclassifications (3)

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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.

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

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

With the acquisition of Chipita in January 2022 (refer to Note 2, Acquisitions and Divestitures ), we believe there is a reasonable possibility that a significant portion of the valuation allowance recorded against the deferred tax asset for the step-up of intangible assets will no longer be needed.

The amount of the valuation allowance to be released in 2022 is dependent on the increase in Switzerland's future taxable income.

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

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Reversal of other tax accruals no longer required ( 0.5 )% ( 0.8 )% ( 3.0 )%

Tax accrual on investment in KDP (including tax

impact share sales) 6.7 % 0.8 % 8.4 %

Tax accrual on investment in KDP (including tax impact of

share sales) 4.7 % 6.7 % 0.8 %

Excess tax benefits from equity compensation ( 0.7 )% ( 1.0 )% ( 1.2 )%

Tax legislation (non-U.S.

and non-Swiss tax reform) 1.0 % 0.4 % 0.3 %

Tax legislation (non-Swiss tax reform) 2.3 % 1.0 % 0.4 %

Swiss tax reform — — ( 22.3 )%

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

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

tax reform - changes in indefinite reinvestment assertion — — 2.1 %

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

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

Our 2021 effective tax rate of 27.2 % was high due to the $ 187 million net tax expense incurred in connection with the KDP share sales during the second and third quarters.

Excluding this impact, our effective tax rate was 23.0 %, which reflects unfavorable provisions from the 2017 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.

The 23.0 % includes a discrete net tax benefit of $ 2 million, primarily driven by a $ 47 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 and a $ 44 million benefit from two U.S.

tax returns amended to reflect new guidance from the U.S.

Treasury Department, offset by $ 100 million net tax expense from the increase of our deferred tax liabilities resulting from enacted tax legislation (mainly in the United Kingdom).

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).

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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 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.

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.

Tax effects of temporary differences that gave rise to deferred income tax assets and liabilities consisted of:

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and Switzerland.

valuation allowance relates to excess foreign tax credits generated by the deemed repatriation under U.S.

valuation allowance mainly 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.

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Our 2021 provision for income taxes included $ 11 million expense for interest and penalties.

In connection with the 2017 enacted U.S.

tax reform, we recorded a $ 1.3 billion transition tax liability that is payable in installments through 2026.

As of December 31, 2021, the remaining liability was approximately $ 720 million.

Our income tax filings are regularly examined by federal, state and non-U.S.

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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 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.

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 acquisitions 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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Amortization of intangible assets ( 134 ) ( 194 ) ( 174 )

Net gain on divestiture — 44 —

Net gain on acquisition and divestitures 8 — 44

Acquisition-related costs ( 25 ) ( 15 ) ( 3 )

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Total assets $ 67,092 $ 67,810 $ 64,515

(1) Segment assets do not reflect outstanding intercompany asset balances as intercompany accounts have been eliminated at a segment level.

(1) Segment assets do not reflect outstanding intercompany asset balances that have been eliminated at a segment level.

(2) Unallocated assets consist primarily of cash and cash equivalents, deferred income taxes, centrally held property, plant and equipment, prepaid pension assets and derivative financial instrument balances.

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Does not include amortization of intangible assets or leased assets.

Refer to the consolidated statement of cash flows for 2020 for total depreciation and amortization expenses.

Refer to the consolidated statement of cash flows for total depreciation and amortization expenses.

For the Years Ended December 31,

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United States $ 1,851 $ 1,956 $ 1,806

United Kingdom 1,125 888 843

Other 7,675 7,784 7,527

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Total net revenues $ 3,018 $ 5,770 $ 9,972 $ 7,108 $ 25,868

Quarterly Financial Data (Unaudited)

Our summarized operating results by quarter are detailed below.

2020 Quarters

Second Third Fourth

(in millions, except per share data)

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 )

Net earnings attributable to Mondelēz International $ 736 $ 544 $ 1,119 $ 1,156

Weighted-average shares for basic EPS 1,434 1,431 1,432 1,429

Plus incremental shares from assumed conversions of

stock options and long-term incentive plan shares 11 8 10 10

Weighted-average shares for diluted EPS 1,445 1,439 1,442 1,439

Per share data:

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)

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 )

Net earnings attributable to Mondelēz International $ 967 $ 803 $ 1,426 $ 733

Weighted-average shares for basic EPS 1,449 1,445 1,445 1,441

Plus incremental shares from assumed conversions of

stock options and long-term incentive plan shares 12 13 13 12

Weighted-average shares for diluted EPS 1,461 1,458 1,458 1,453

Per share data:

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.

Refer to Note 16, Income Taxes , for more information.

Basic and diluted EPS are computed independently for each of the periods presented.

Accordingly, the sum of the quarterly EPS amounts may not equal the total for the year.

During 2020 and 2019, we recorded the following pre-tax (charges)/benefits in earnings from continuing operations:

2020 Quarters

First Second Third Fourth

(in millions)

Asset impairment and exit costs $ ( 15 ) $ ( 115 ) $ ( 123 ) $ ( 48 )

Impact from pension participation changes ( 3 ) ( 3 ) ( 3 ) ( 2 )

Impact from the resolution of tax matters — — — 48

Loss related to interest rate swaps ( 103 ) — — —

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 )

Net gain on divestiture — 41 3 —

Impact from pension participation changes — 35 ( 3 ) ( 3 )

Impact from the resolution of tax matters — — — ( 85 )

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