Mondelez International, Inc. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis contains forward-looking statements. It should be read in conjunction with the other sections of this Annual Report on Form 10-K, including the consolidated financial statements and related notes contained in Forward-Looking Statements and Item 1A, Risk Factors . Overview of Business and Strategy 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 around the world. 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. For more detailed information on our business and strategy, refer to Item 1, Business. Recent Developments and Significant Items Affecting Comparability COVID-19 As the COVID-19 global pandemic continues and new variants of the virus emerge, such as Omicron in late 2021, our main priorities continue 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, the first year of the pandemic, 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), digital 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), and our foodservice businesses as well as 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 began to subside 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; however, our gum and candy, world travel retail and foodservice businesses as well as parts of our traditional trade business in parts of emerging markets continued to be negatively affected by the ongoing pandemic. During 2021, we continued to see increased demand for most of our snack category products in both our emerging and developed markets relative to 2020; however, revenue from parts of our business were not yet back to pre-pandemic levels. In 2021, net revenue growth was 8.0% and Organic Net Revenue growth was 5.2%. In 2021, while we experienced double-digit revenue growth in gum as well as significant growth in other areas such as foodservice and world travel retail, revenues in these businesses were not fully recovered to pre-pandemic levels. Our overall outlook for future snacks revenue growth remains strong, but as the pandemic continues, we anticipate increased volatility in revenues until COVID-related risks and the international supply chain issues and labor and transportation constraints subside and snacks consumption stabilizes to a more normal growth level. We continue to track new developments and ongoing impacts from the pandemic. Most disruptions we experienced in our operations due to the pandemic have been temporary and not material to our consolidated results. In the second half of 2021, we experienced higher operating costs, including higher overall raw material, transportation, labor and fuel costs, that we anticipate will continue into 2022. We discuss these and other ongoing impacts of COVID-19 below. 31 Table of Contents 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 were 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. We have worked with governments and healthcare providers to help provide access to vaccines for our frontline and office employees when and where possible at a local level. At a local level, we have also provided additional flexibility and support to employees in our manufacturing facilities, distribution and logistics operations and sales organization. As more employees who have been working remotely return to shared workplaces, we have enhanced safety protocols we will follow while also encouraging continued flexible and virtual work arrangements wherever possible. • 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. Labor markets, particularly in the U.S., U.K. as well as in other countries, have significantly tightened. We recognize the demand for talent and continue to actively work to safeguard, engage, attract and retain our employees. • Since the start of the pandemic, we have donated over $30 million to assist those impacted by COVID-19 and to support local and global organizations responding to food instability and providing emergency relief. Our Supply Chain and Operations We operate in the food and beverages industry and are part of the global food supply chain. One of our main objectives during the pandemic is to maintain the availability of our products to meet the needs of our consumers. In response to increased demand, we increased production and until recently, we have not experienced material disruptions in our supply chain or operations. Beginning in the second half of 2021, we began to experience more significant supply chain disruptions and higher operating costs as noted below: • As global supply, transportation and labor disruptions escalated in the second half of 2021, particularly in the U.S. and U.K., we incurred higher operating costs in our business. • We also experienced labor disruptions primarily in our North America region in the third quarter of 2021, including a strike that affected six of our U.S. manufacturing and sales distribution facilities for several weeks. In September 2021, after working with our employees and union representatives to resolve the strike, we entered into a new collective bargaining agreement at these facilities. In the fourth quarter of 2021, we did not experience significant operating or labor disruptions. However, we anticipate some disruption in early 2022 and higher expected absenteeism due to illness within our operations and among our third-party suppliers and business partners primarily as a result of the Omicron variant. Throughout the second half of 2021, we also experienced labor-related disruptions in our network of third-party logistics and external manufacturing, and we anticipate labor shortage-related issues will continue into 2022. As a result of incremental pandemic-related expenditures and labor disruptions, we incurred and expect to incur higher labor costs, particularly as the pandemic continues. • We continue to source raw ingredients, packaging, energy and transportation and deliver our products to our customers. Costs for resources, particularly commodity and transportation costs, have continued to increase. External factors, including the pandemic, adverse weather conditions, supply chain disruptions, and transportation and labor shortages, have impacted and are expected to continue to impact our operating costs. 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 materials or other costs. We also may not be able to adjust pricing timely or fully, and this may negatively affect our revenue, margins or earnings. We anticipate some of the supply, transportation and labor constraints and higher cost trends we experienced in 2021 will continue in 2022. While we have not had significant delays or unavailability of raw ingredients or other supplies, we continue to monitor this risk. At this time, we believe we will be able to continue to source raw materials and other supplies we use in our business. • The ongoing COVID-19 pandemic and related economic effects may disrupt our global supply chain, operations and routes to market or those of our suppliers, their suppliers, our co-manufacturers, distributors or other business partners. These disruptions or our failure to effectively respond to them could increase product or distribution costs and prices and continue to negatively affect operations and results. • During the pandemic, we have incurred higher operating costs primarily for labor, customer service and logistics, security, personal protective equipment and cleaning. While we have not had long-term, severe supply chain disruptions, we do not know whether or how our supply chain or operations may be negatively 32 Table of Contents affected if the pandemic continues. We intend to continue to execute on our strategic operating plans as the situation evolves. 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: • In 2021, we generated $4.1 billion of cash from operations, or approximately $3.2 billion after deducting capital expenditures. During 2020 and 2019, we also generated $4.0 billion of cash from operations, or $3.1 billion in 2020 and $3.0 billion in 2019 after deducting capital expenditures. • As of December 31, 2021, we had $3.5 billion of cash and cash equivalents on hand. As further discussed below, in January 2022, we acquired Chipita S.A. to expand our snacks portfolio. We paid approximately €1.3 billion ($1.5 billion) in cash and we assumed and substantially paid down €0.4 billion ($0.4 billion) of Chipita’s debt in January for a total purchase price of approximately €1.7 billion ($1.9 billion). Based on our current available cash and access to financing markets, we do not anticipate any issue funding our obligations, including funding our next long-term debt maturities of approximately $1.2 billion in July 2022 and $0.5 billion in September 2022. • During 2021, we generated cash of approximately $1.5 billion from the sale of KDP shares. During 2020, we also received cash of €350 million ($394 million) from our participation in the JDE Peet’s public share offerings and approximately $2.1 billion from our participation in the KDP secondary offering and subsequent KDP share sales (see additional information below and in Note 7, Equity Method Investments ). • We also have access to short-term and long-term financing markets and actively utilized these markets in 2020 and 2021. We continue to utilize the commercial paper markets in the United States and Europe for flexible, low-cost, short-term financing. We have 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 debt to long-term debt at a low cost. We renewed one of our credit facilities in early 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. As of December 31, 2021, we were, and we expect to continue to be, in compliance with our debt covenants (refer to the Liquidity and Capital Resources section and Note 9, Debt and Borrowing Arrangements ). Our Financial Position • We continue to evaluate the realizability of our assets and indicators of potential impairment. 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. • During the third quarter of 2021, we completed our annual impairment testing of goodwill and intangible assets and noted no impairments. Over the course of the ongoing pandemic, we have identified declines in demand for certain of our brands, primarily in the gum category, that prompted additional evaluation of our indefinite-life intangible assets. During the second quarter of 2021, we concluded that one biscuit brand was impaired and we recorded a $32 million impairment charge. During 2020, we concluded that eight brands were impaired and we recorded $144 million of impairment charges. While we did not identify impairment triggers for 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 6, Goodwill and Intangible Assets , for additional details on our intangible asset impairment evaluation. • Restructuring and implementation activities were in line with our Simplify to Grow Program strategic objectives. • Our equity investments in JDE Peet’s and KDP give us additional financial flexibility. • We 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. At this point in the pandemic, while we have seen some improvements in business and economic conditions across many markets in which we do business, additional adverse impacts could arise such as those noted above and some that we cannot currently anticipate. Barring material business disruptions or other negative developments, we expect to meet the demand of consumers for our snacks, food and beverage products. Our overall outlook for future snacks revenue growth remains strong, but as the pandemic continues, we anticipate increased volatility in revenues until COVID-related risks and current international supply chain issues and labor and transportation constraints subside and snacks consumption stabilizes to a more normal growth level. Also, different markets and 33 Table of Contents parts of our business may recover from the COVID-19 pandemic at different rates depending on many factors including vaccination levels or new COVID-19 variants and related outbreaks. As we continue to proactively manage our business in response to the evolving impacts of the pandemic, we continue to prioritize and support our employees and customers; monitor and work 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. Chipita Acquisition On January 3, 2022, we closed on our acquisition of Chipita S.A., which is a strategic complement to our existing snacks 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) and we assumed and also substantially paid down €0.4 billion ($0.4 billion) of Chipita’s debt in January for a total purchase price of approximately €1.7 billion ($1.9 billion). Refer to Note 2, Acquisitions and Divestitures , and Liquidity and Capital Resources for additional details. KDP and JDE Peet’s Equity Method Investment Transactions KDP On June 7, 2021, we sold approximately 28 million shares of KDP, which reduced our ownership interest to 6.4%. 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 August 2, 2021, we sold approximately 14.7 million KDP shares, which reduced our ownership interest to 5.3%. 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. The cash taxes associated with the KDP share sales were paid in 2021. 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%. 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%. 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 sold approximately 40.0 million shares, which reduced our ownership interest by 2.8% to 8.4%. 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. The cash taxes associated with the KDP share sales were paid in 2020. During 2019, we recognized a $23 million pre-tax gain related to the impact of a KDP acquisition that decreased our ownership interest from 13.8% to 13.6%. JDE Peet’s 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. 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. 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 and we paid the associated cash tax by the end of 2021. For additional information, refer to Note 7, Equity Method Investments , Note 16, Income Taxes , and Note 9, Debt and Borrowing Arrangements . Tax Reform We continue to monitor existing and potential future tax reform. In 2019, the most significant tax reform impact was from Swiss tax reform. On August 6, 2019, Switzerland published changes to its Federal tax law in the Official Federal Collection of Laws. On September 27, 2019, the Zurich Canton published their decision on the September 1, 2019 Zurich Canton public vote regarding the Cantonal changes associated with the Swiss Federal tax law change. The intent of these tax law changes was to replace certain preferential tax regimes with a new set of 34 Table of Contents internationally accepted measures that are hereafter referred to as “Swiss tax reform”. Based on these Federal / Cantonal events, our position is the enactment of Swiss tax reform for U.S. GAAP purposes was met as of September 30, 2019, and we recorded the impacts in the third quarter 2019. The net impact was a benefit of $767 million, which consisted of a $769 million reduction in deferred tax expense from an allowed step-up of intangible assets for tax purposes and remeasurement of our deferred tax balances, partially offset by a $2 million indirect tax impact in selling, general and administrative expenses. The ongoing impacts of these Swiss tax reform law changes became effective January 1, 2020. See Note 16, Income Taxes , for more information. Summary of Results • Net revenues were approximately $28.7 billion in 2021 and $26.6 billion in 2020, an increase of 8.0% in 2021 and an increase of 2.8% in 2020. In 2021, our net revenue growth continued to reflect increased demand for most of our snack category products in both our emerging and developed markets relative to 2020, though some markets were not yet back to pre-pandemic levels. In developed markets, increased food purchases for in-home consumption continued to drive net revenue growth, partially offset by declines in some markets as they lapped prior-year strong volume growth resulting from increased consumer demand due to the pandemic. In emerging markets, we lapped the negative initial impacts we experienced from the pandemic in 2020, with strong revenue growth in 2021 across most of our key markets, though some markets remained challenged. In addition, our out-of-home consumption businesses, which experienced significant negative impacts from the pandemic in 2020, continued to recover, particularly our gum and candy, foodservice and world travel retail businesses. – Net revenues increased in 2021, driven by favorable volume/mix, higher net pricing, a significant impact from favorable currency translation, as most currencies we operate in strengthened against the U.S. dollar compared to exchange rates in the prior year, and incremental net revenues from our acquisitions of Gourmet Foods, Grenade and Hu in 2021 and Give & Go in 2020. – Net revenues increased in 2020, driven by higher net pricing, favorable volume/mix and incremental net revenues from our acquisitions of Give & Go in 2020 and Perfect Snacks in 2019. These items were partially offset by the significant impact of unfavorable currency translation, as the U.S. dollar strengthened against most currencies in which we operate compared to exchange rates in the prior year, as well as the May 28, 2019 divestiture of most of our cheese business in the Middle East and Africa. • Organic Net Revenue increased 5.2% to $28.0 billion in 2021 and increased 3.7% to $26.8 billion in 2020. Organic Net Revenue increased in both 2021 and 2020 due to favorable volume/mix and higher net pricing, despite impacts from the COVID-19 pandemic described above. 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 23.1% to $3.04 in 2021 and decreased 8.2% to $2.47 in 2020. – Diluted EPS increased in 2021 primarily driven by an increase in Adjusted EPS, lapping prior-year costs associated with the JDE Peet’s transaction, favorable year-over-year mark-to-market impacts from currency and commodity derivatives, lower intangible asset impairment charges, lapping the prior-year loss on interest rate swaps, lower losses on debt extinguishment and related expenses, lower Simplify to Grow program costs and a net benefit from acquisition integration costs and contingent consideration adjustments. These factors were partially offset by a lower gain on equity method investment transactions, higher initial impacts from enacted tax law changes, lower net earnings from divestitures, lapping the prior-year benefit from the resolution of tax matters and higher impact from pension participation changes. – Diluted EPS decreased in 2020 primarily driven by lapping the prior-year benefit from initial impacts from enacted tax law changes, costs associated with the JDE Peet's transaction, loss on debt extinguishment, unfavorable year-over year change in equity method investee items, higher intangible asset impairment charges, unfavorable year-over-year mark-to-market impacts from currency and commodity derivatives, lapping a prior-year gain on divestiture and lapping the prior-year benefit from pension participation changes. These factors were partially offset by gains on equity method investment transactions, higher Adjusted EPS, favorable change from the resolution of tax matters (a benefit in 2020 as compared to an expense in 2019), lower Simplify to Grow program costs and lower losses related to interest rate swaps. 35 Table of Contents • Adjusted EPS increased 12.1% to $2.87 in 2021 and increased 6.7% to $2.56 in 2020. On a constant currency basis, Adjusted EPS increased 9.0% to $2.79 in 2021 and increased 8.3% to $2.60 in 2020. – For 2021, operating gains, favorable currency translation, fewer shares outstanding, higher equity method investment earnings and lower interest expense, partially offset by higher taxes primarily due to a lower net benefit from non-recurring discrete tax items, drove the Adjusted EPS growth. – For 2020, operating gains, an increase in benefit plan non-service income and fewer shares outstanding, partially offset by unfavorable currency translation, primarily drove the Adjusted EPS growth. 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 a number of developments and trends that could impact our revenue and profitability objectives. COVID-19 – As described above, we continue to monitor and respond to the COVID-19 pandemic. While its impact is not yet fully known, it has had a material negative effect on the global and local economies 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, COVID-19 variants such as Omicron and spikes in infections continue across a number of markets. If a 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 also impair our banking or other business partners, on whom we rely for access to capital and as counterparties for a number of our derivative contracts. As we continue to manage operations during the pandemic, we will continue to prioritize the safety of our employees and consumers and we may continue to incur increased labor, customer service, commodity, transportation and other costs. We could see shifts in consumer demand and 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 negative impacts to our business from the COVID-19 pandemic, 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. Any of these and other developments could materially harm our business, results of operations and financial condition. Chipita acquisition – As described above, on January 3, 2022, we closed on our acquisition of Chipita S.A. The cash consideration for Chipita totaled €1.3 billion ($1.5 billion) and we assumed and substantially paid down €0.4 billion ($0.4 billion) of Chipita’s debt in January for a total purchase price of approximately €1.7 billion ($1.9 billion). Refer to Note 2, Acquisitions and Divestitures , and Liquidity and Capital Resources for additional details. Demand – We monitor consumer spending and our market share within the food and beverage categories in which we sell our products. Core snacks categories continued to expand in 2021 due to the continued growth of snacking as a consumer behavior around the world. As part of our strategic plan, we seek to drive category growth by leveraging our local and consumer-focused commercial approach, making investments in our brand and snacks portfolio, building strong routes to market in both emerging and developed markets and improving our availability 36 Table of Contents across multiple channels. We believe these actions will help drive demand in our categories and strengthen our positions across markets. Long-Term Demographics and Consumer Trends – Snack food consumption is highly correlated to GDP growth, urbanization of populations and rising discretionary income levels associated with a growing middle class, particularly in emerging markets. Our recent research underscores the growth of snacking worldwide and how behavior, sentiment and routines surrounding food are being reshaped by COVID-19. Snacking, which was already increasing among consumers, continues to grow according to snack category findings noted above and supported by the findings from the third annual State of Snacking report, commissioned by Mondelēz International and issued in January 2022. The report was conducted in conjunction with consumer poll specialist The Harris Poll and summarizes the findings from interviews with thousands of consumers across 12 countries. We believe that snacks continue to be a source of comfort as well as excitement and variety for consumers. Social media increasingly helps consumers find food trends, inspiration and connection on their social media and other feeds. Consumers are also interested in buying snacks conveniently, whether through same-day delivery apps, shipped sources or different retail settings. Many consumers also continue to prioritize sustainability in their purchase decisions, valuing sustainably sourced ingredients, low carbon footprint preparation and lower waste packaging. We seek to continue to offer snacks that meet consumer needs and preferences and align with our strategic priorities. Volatility of Global Markets – Our growth strategy depends in part on our ability to expand our operations, including in emerging markets. Some emerging markets have greater political, economic and currency volatility and greater vulnerability to infrastructure and labor disruptions. Volatility in these markets affects demand for and the costs of our products and requires frequent changes in how we operate our business. As further discussed in COVID-19 above and in Item 7A, Quantitative and Qualitative Disclosures about Market Risk, we continue to monitor volatility in global consumer, commodity, transportation, labor, currency and capital markets that may continue until the COVID-19 pandemic or related issues are largely resolved. We expect input cost volatility and a higher aggregate cost environment to continue into 2022 as we manage through the pandemic and new COVID-19 variants, the related recovery, labor shortages, inflation, supply chain disruptions (including any potential disruptions in the availability of raw materials, packaging, transportation, energy or other supplies) and adverse weather factors. (See also below for a discussion of Brexit and Argentina, which was designated a highly inflationary economy in 2018.) In addition, the imposition of increased or new tariffs, quotas, trade barriers or similar restrictions on our sales or key commodities and potential changes in U.S. trade programs, trade relations, regulations, taxes or fiscal policies might negatively affect our sales or profitability. To help mitigate adverse effects of ongoing volatility across markets, we aim to protect profitability through the management of costs (including hedging) and pricing as well as targeted investments in our brands and new routes to market. Competition – We operate in highly competitive markets that include global, regional and local competitors. Our advantaged geographic footprint, operating scale and portfolio of brands have all significantly contributed to building our market-leading positions across most of the product categories in which we sell. To grow and maintain our market positions, we focus on meeting consumer needs and preferences through a local-first commercial focus, new digital and other sales and marketing initiatives, product innovation and high standards of product quality. We also continue to optimize our manufacturing and other operations and invest in our brands through ongoing research and development, advertising, marketing and consumer promotions. Pricing – Our net revenue growth and profitability may be affected as we adjust prices to address new conditions, such as increasing input and operating costs due to supply, transportation and labor constraints and higher cost trends we experienced, particularly in the second half of 2021. We adjust our product prices based on a number of variables including market factors, transportation, logistics and changes in our product input costs, and we have increased prices to control costs given recent significant cost inflation. However, we may not be able to adjust pricing fully or timely in response to rising costs, and this may negatively affect our revenue, margins or earnings. Operating Costs – Our operating costs include raw materials, labor, selling, general and administrative expenses, taxes, currency impacts and financing costs. We manage these costs through cost saving and productivity initiatives, sourcing and hedging programs, pricing actions, refinancing and tax planning. To remain competitive on our operating structure, we continue to work on programs to expand our profitability, such as our Simplify to Grow Program, which is designed to bring about significant reductions in our operating cost structure in both our supply chain and overhead costs. During the second half of 2021, in particular, we experienced higher operating costs, including higher overall raw material, transportation, labor and fuel costs that we anticipate will continue into 2022. 37 Table of Contents Taxes – We continue to monitor existing and potential future tax reform around the world. During November 2021, the U.S. House of Representatives passed a bill that contains significant changes to currently enacted U.S. tax rules but the Senate has not yet acted on it. In December 2021, the OECD released model rules for a global minimum tax. Both of these proposed legislative changes could have a material effect on us if enacted. Currency – As a global company with 75.1% of our net revenues generated outside the United States, we are continually exposed to changes in global economic conditions and currency movements. While we hedge significant forecasted currency exchange transactions as well as currency translation impacts from certain net assets of our non-U.S. operations, we cannot fully predict or eliminate all adverse impacts arising from changes in currency exchange rates on our consolidated financial results. To partially offset currency translation impacts arising from our overseas operations, we enter into net investment hedges primarily in the form of local currency-denominated debt, cross-currency swaps and other financial instruments. While we work to mitigate our exposure to currency risks, factors such as continued global and local market volatility, actions by foreign governments, political uncertainty, limited hedging opportunities and other factors could lead to unfavorable currency impacts in the future and could adversely affect our results of operations or financial position. See additional discussion of Brexit and Argentina below and refer also to Note 1, Summary of Significant Accounting Policies – Currency Translation and Highly Inflationary Accounting , and Note 10, Financial Instruments , for additional information on how we manage currency and related risks. As currency movements can make comparison of year-over-year operating performance challenging, we isolate the impact of currency and also report growth on a constant currency basis, holding prior-year currency exchange rates constant, so that prior-year and current-year results can be compared on a consistent basis. Brexit – Following Brexit 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, including but not limited to meeting product and labeling standards for both the U.K. and E.U. Cross-border trade between the U.K. and E.U. is also 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 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, inflationary cost pressures increased in our U.K. business in 2021, as we 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 consolidated net revenues in the U.K. U.K. advertising and promotion ban – In the United Kingdom, a ban on specific types of TV and online advertising of food containing levels of fat, sugar or salt above specified thresholds is expected to go into effect in 2023, and new measures restricting certain promotions and in-store placement of some of those products are expected to go into effect in October 2022. Although we are unable to estimate precisely the impact of the restrictions, they could significantly negatively affect our U.K. results of operations in 2022 and thereafter. Argentina – as further discussed in Note 1, Summary of Significant Accounting Policies – Currency Translation and Highly Inflationary Accounting, on July 1, 2018, we began to apply highly inflationary accounting for our Argentinean subsidiaries. As a result, 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. 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. Gum Portfolio Review – During 2021, we began and continue to conduct a strategic review of our developed market gum business. We expect to complete the review and have more information in mid 2022. 38 Table of Contents Financing Costs – We regularly evaluate our variable and fixed-rate debt. We continue to use low-cost, short- and long-term debt to finance our ongoing working capital, capital expenditures and other investments, dividends and share repurchases. We continued to secure low-cost short and long-term debt during 2021. In September 2021, we issued our first green bonds, raising nearly €2.0 billion and enabling us to cost-effectively fund eligible projects that align with our sustainability priorities in the areas of building a thriving ingredient supply chain and reducing our environmental impact. In September 2021, through our subsidiary Mondelez International Holdings Netherlands B.V. (“MIHN”), we also issued €300 million of zero interest exchangeable notes that are redeemable for cash or existing ordinary shares of JDE Peet's at our option. We also continue to use interest rate swaps and other financial instruments to manage our exposure to interest rate and cash flow variability, protect the value of our existing currency assets and liabilities and protect the value of our debt. We also enter into cross-currency interest rate swaps, forwards and option collars to hedge our non-U.S. net investments against adverse movements in exchange rates. Our net investment hedge derivative contracts have had and are expected to have a favorable impact and reduce some of the financing costs and related currency impacts within our interest costs. Refer to Note 9, Debt and Borrowing Arrangements , and Note 10, Financial Instruments , for additional information on our debt and derivative activity. Cybersecurity Risks – Global cybersecurity risks continue to increase, including during the pandemic and as more employees are working remotely and virtually outside of traditional workplaces. In response, we continue to be on heightened alert and dedicate focused resources to network security, backup and disaster recovery and to provide ongoing workforce training and employ security measures to protect our systems and data. We are also focusing on enhancing the monitoring and detection of threats in our environment, including but not limited to the manufacturing environment and operational technologies, as well as adjusting information security controls based on updated threats. While we have taken security measures to protect our systems and data, security measures cannot provide absolute certainty or guarantee that we will be successful in preventing or responding to every breach or disruption on a timely basis. 39 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 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 Years Ended December 31, See Note 2021 2020 2019 (in millions, except percentages) Simplify to Grow Program Note 8 Restructuring Charges $ (154) $ (156) $ (176) Implementation Charges (167) (207) (272) Intangible asset impairment charges Note 6 (32) (144) (57) Mark-to-market gains from derivatives (1) Note 10 277 19 90 Acquisition and divestiture-related costs Note 2 Acquisition integration costs and contingent consideration adjustments 40 (4) — Acquisition-related costs (25) (15) (3) Net gain on acquisition and divestitures 8 — 44 Divestiture-related costs (22) (4) (6) Costs associated with JDE Peet's transaction Note 7 — (48) — Remeasurement of net monetary position Note 1 (13) (9) 4 Impact from pension participation changes (1) Note 11 (42) (11) 29 Impact from resolution of tax matters (1) Note 14 7 48 (85) CEO transition remuneration (2) — — (9) Loss related to interest rate swaps Note 9 & 10 — (103) (111) Loss on debt extinguishment Note 9 (137) (185) — Initial impacts from enacted tax law changes Note 16 (100) (36) 752 Gain/(loss) on equity method investment transactions (3) Note 7 740 989 (2) Equity method investee items (4) (68) (80) 17 Effective tax rate Note 16 27.2 % 36.2 % 0.1 % (1) Includes impacts recorded in operating income and interest expense and other, net. Mark-to-market gains/(losses) above also include our equity method investment-related derivative contract mark-to-market gains/(losses) (refer to Note 10, Financial Instruments ) that are recorded in the gain on equity method investment transactions on our consolidated statement of earnings. (2) Please see the Non-GAAP Financial Measures section at the end of this item for additional information. (3) Gain/(loss) on equity method investment transactions is recorded outside pre-tax operating results on the consolidated statement of earnings. See footnote (1) as mark-to-market gains/(losses) on our equity method-investment-related derivative contracts are presented in the table above within mark-to-market gains/(losses) from derivatives. (4) Includes our proportionate share of significant operating and non-operating items recorded by our JDE Peet's and KDP equity method investees, including acquisition and divestiture-related costs and restructuring program costs. 40 Table of Contents Consolidated Results of Operations The following discussion compares our consolidated results of operations for 2021 with 2020 and 2020 with 2019. 2021 compared with 2020 For the Years Ended December 31, 2021 2020 $ change % change (in millions, except per share data) Net revenues $ 28,720 $ 26,581 $ 2,139 8.0 % Operating income 4,653 3,853 800 20.8 % Earnings from continuing operations 4,314 3,569 745 20.9 % Net earnings attributable to Mondelēz International 4,300 3,555 745 21.0 % Diluted earnings per share attributable to Mondelēz International 3.04 2.47 0.57 23.1 % Net Revenues – Net revenues increased $2,139 million (8.0%) to $28,720 million in 2021, and Organic Net Revenue increased $1,388 million (5.2%) to $27,969 million. Developed markets net revenues increased 6.3% and developed markets Organic Net Revenue increased 1.6%. Emerging markets net revenues increased 11.4% and emerging markets Organic Net Revenue increased 12.2%. 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 8.0 % Removing the following items affecting comparability: Favorable currency (1.7) pp Impact of acquisitions (1.0) pp Impact of divestiture (0.1) pp Total change in Organic Net Revenue (1) 5.2 % Favorable volume/mix 2.6 pp Higher net pricing 2.6 pp (1) Please see the Non-GAAP Financial Measures section at the end of this item. Net revenue increase of 8.0% was driven by our underlying Organic Net Revenue growth of 5.2%, favorable currency, the impact of acquisitions and the partial year contribution of a business divested on November 1, 2021 which had been part of an earlier 2021 acquisition. Overall, we continued to see increased demand for our snack category products, though parts of our business were not yet back to pre-pandemic levels. In developed markets, increased food purchases for in-home consumption continued to drive net revenue growth, partially offset by declines in some markets as they lapped strong volume growth in 2020 resulting from increased consumer demand due to the pandemic. In emerging markets, we lapped the negative initial impacts we experienced from the pandemic in 2020, with strong revenue growth in 2021 across most of our key markets, though some markets remained challenged. In addition, sales of our gum and candy products grew as out-of-home consumption continued to recover, as did our world travel business as global travel improved, though still below pre-pandemic levels. Favorable currency translation and incremental net revenues from acquisitions also added to revenue growth in 2021. Organic Net Revenue growth was driven by favorable volume/mix and higher net pricing. Favorable volume/mix in Europe, AMEA and Latin America was primarily driven by strong volume gains as we lapped the significant negative impacts of the pandemic in many of our key markets. This was partially offset by unfavorable volume/mix in North America as the region lapped very strong prior-year volume growth from significant food purchases for in-home consumption due to the pandemic. 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 2021. Favorable currency impacts 41 Table of Contents increased net revenues by $462 million, due primarily to the strength of several currencies relative to the U.S. dollar, including the euro, British pound sterling, Chinese yuan, Australian dollar, Canadian dollar, South African rand and Mexican peso, partially offset by the strength of the U.S. dollar relative to several currencies, including the Argentinean peso, Brazilian real and Turkish lira. The April 1, 2021 acquisition of Gourmet Food added incremental net revenues of $47 million (constant currency basis), the March 25, 2021 acquisition of Grenade added incremental net revenues of $63 million (constant currency basis), the January 4, 2021 acquisition of Hu added incremental net revenues of $38 million and the April 1, 2020 acquisition of Give & Go added incremental net revenues of $106 million in 2021. The packaged seafood business, which was part of our April 1, 2021 acquisition of Gourmet Food but divested on November 1, 2021, added incremental net revenues of $35 million prior to its divestiture. Refer to Note 2, Acquisitions and Divestitures , for more information. 42 Table of Contents Operating Income – Operating income increased $800 million (20.8%) to $4,653 million in 2021, Adjusted Operating Income (1) increased $374 million (8.5%) to $4,775 million and Adjusted Operating Income on a constant currency basis increased $256 million (5.8%) to $4,657 million due to the following: Operating Income Change (in millions) Operating Income for the Year Ended December 31, 2020 $ 3,853 Simplify to Grow Program (2) 360 Intangible asset impairment charges (3) 144 Mark-to-market gains from derivatives (4) (16) Acquisition integration costs (5) 4 Acquisition-related costs (5) 15 Divestiture-related costs (5) 4 Costs associated with JDE Peet's transaction (6) 48 Remeasurement of net monetary position (7) 9 Impact from resolution of tax matters (8) (20) Adjusted Operating Income (1) for the Year Ended December 31, 2020 $ 4,401 Higher net pricing 678 Higher input costs (474) Favorable volume/mix 107 Higher selling, general and administrative expenses (133) Lower amortization of intangible assets 80 Other (2) Total change in Adjusted Operating Income (constant currency) (1) 256 5.8 % Favorable currency translation 118 Total change in Adjusted Operating Income (1) 374 8.5 % Adjusted Operating Income (1) for the Year Ended December 31, 2021 $ 4,775 Simplify to Grow Program (2) (319) Intangible asset impairment charges (3) (32) Mark-to-market gains from derivatives (4) 279 Acquisition integration costs and contingent consideration adjustments (5) 40 Acquisition-related costs (5) (25) Net gain on acquisition and divestiture (5) 8 Divestiture-related costs (5) (22) Operating income from divestiture (5) 5 Remeasurement of net monetary position (7) (13) Impact from pension participation changes (9) (48) Impact from resolution of tax matters (8) 5 Operating Income for the Year Ended December 31, 2021 $ 4,653 20.8 % (1) Refer to the Non-GAAP Financial Measures section at the end of this item. (2) Refer to Note 8, Restructuring Program , for more information. (3) Refer to Note 6, Goodwill and Intangible Assets , for more information. (4) Refer to Note 10, Financial Instruments , Note 18, Segment Reporting , and Non-GAAP Financial Measures at the end of this item for more information on the unrealized gains/losses on commodity and forecasted currency transaction derivatives. (5) Refer to Note 2, Acquisitions and Divestitures , for more information on the January 3, 2022 acquisition of Chipita, April 1, 2021 acquisition of Gourmet Food, March 25, 2021 acquisition of a majority interest in Grenade, January 4, 2021 acquisition of the remaining 93% of equity in Hu and April 1, 2020 acquisition of a significant majority interest in Give & Go. (6) Refer to Note 7, Equity Method Investments , for more information on the JDE Peet's transaction. (7) Refer to Note 1, Summary of Significant Accounting Policies – Currency Translation and Highly Inflationary Accounting , for information on our application of highly inflationary accounting for Argentina. (8) Refer to Note 14, Commitments and Contingencies – Tax Matters , for more information. (9) Refer to Note 11, Benefit Plans , for more information. 43 Table of Contents During 2021, we realized higher net pricing and favorable volume/mix, which was largely 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 2021, was reflected in all regions. Favorable volume/mix was driven by Europe, AMEA and Latin America, which was partially offset by unfavorable volume/mix in North America. Overall, volume/mix benefited from volume gains as we lapped the significant negative impacts of the pandemic in many of our key markets, while in North America, we lapped high volume growth in 2020 from significant food purchases for in-home consumption due to the pandemic. The increase in input costs was driven by higher raw material costs, partially offset by lower manufacturing costs driven by productivity and lower year-over-year incremental COVID-19 related costs. Higher raw material costs were in part due to higher foreign currency transaction costs on imported materials, as well as increased costs for edible oils, packaging, sugar, cocoa, grains, dairy and other ingredients. Total selling, general and administrative expenses increased $165 million from 2020, due to a number of factors noted in the table above, including in part, an unfavorable currency impact related to expenses, incremental expenses from acquisitions, the impact from pension participation changes, lower benefits from the resolution of tax matters and higher acquisition-related costs, which were partially offset by lower implementation costs incurred for the Simplify to Grow Program, lapping prior-year costs associated with the JDE Peet's transaction and a net benefit from acquisition integration costs and contingent consideration adjustments. Excluding these factors, selling, general and administrative expenses increased $133 million from 2020. The increase was driven primarily by higher advertising and consumer promotion costs, partially offset by lower overhead spending including lower year-over-year incremental COVID-19 related costs. Favorable currency changes increased operating income by $118 million due primarily to the strength of several currencies relative to the U.S. dollar, including the British pound sterling, euro, Chinese yuan. Australian dollar and Canadian dollar, partially offset by the strength of the U.S. dollar relative to several currencies, including the Argentinean peso, Brazilian real and Turkish lira. Operating income margin increased from 14.5% in 2020 to 16.2% in 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, lower intangible asset impairment charges, lower Simplify to Grow program costs, a net benefit from acquisition integration costs and contingent consideration adjustments and lapping prior-year costs associated with the JDE Peet's transaction, partially offset by the impact from pension participation changes, higher divestiture-related costs and higher acquisition-related costs. Adjusted Operating Income margin for 2021 was flat to 2020 at 16.6%. Adjusted Operating Income margin was unchanged as higher net pricing, lower manufacturing costs due to productivity and lower year-over-year incremental COVID-19 costs, and lower selling, general and administrative costs were offset by higher raw material costs, unfavorable product mix and higher advertising and consumer promotion costs. 44 Table of Contents Net Earnings and Earnings per Share Attributable to Mondelēz International – Net earnings attributable to Mondelēz International of $4,300 million increased by $745 million (21.0%) in 2021. Diluted EPS attributable to Mondelēz International was $3.04 in 2021, up $0.57 (23.1%) from 2020. Adjusted EPS (1) was $2.87 in 2021, up $0.31 (12.1%) from 2020. Adjusted EPS on a constant currency basis was $2.79 in 2021, up $0.23 (9.0%) from 2020. Diluted EPS Diluted EPS Attributable to Mondelēz International for the Year Ended December 31, 2020 $ 2.47 Simplify to Grow Program (2) 0.20 Intangible asset impairment charges (2) 0.08 Mark-to-market gains from derivatives (2) (0.01) Acquisition-related costs (2) 0.01 Net earnings from divestitures (2) (3) (0.07) Costs associated with JDE Peet's transaction (2) 0.20 Remeasurement of net monetary position (2) 0.01 Impact from pension participation changes (2) 0.01 Impact from resolution of tax matters (2) (0.02) Loss related to interest rate swaps (4) 0.05 Loss on debt extinguishment (5) 0.10 Initial impacts from enacted tax law changes (6) 0.02 Gain on equity method investment transaction (7) (0.55) Equity method investee items (8) 0.06 Adjusted EPS (1) for the Year Ended December 31, 2020 $ 2.56 Increase in operations 0.14 Increase in equity method investment net earnings 0.03 Changes in interest and other expense, net (9) 0.02 Changes in income taxes (6) (0.01) Changes in shares outstanding (10) 0.05 Adjusted EPS (constant currency) (1) for the Year Ended December 31, 2021 $ 2.79 Favorable currency translation 0.08 Adjusted EPS (1) for the Year Ended December 31, 2021 $ 2.87 Simplify to Grow Program (2) (0.17) Intangible asset impairment charges (2) (0.02) Mark-to-market gains from derivatives (2) 0.17 Acquisition integration costs and contingent consideration adjustments (2) 0.02 Acquisition-related costs (2) (0.01) Divestiture-related costs (2) (0.01) Net earnings from divestitures (2) (3) 0.02 Remeasurement of net monetary position (2) (0.01) Impact from pension participation changes (2) (0.02) Loss on debt extinguishment (5) (0.07) Initial impacts from enacted tax law changes (6) (0.07) Gain on equity method investment transactions (7) 0.39 Equity method investee items (8) (0.05) Diluted EPS Attributable to Mondelēz International for the Year Ended December 31, 2021 $ 3.04 (1) Refer to the Non-GAAP Financial Measures section appearing later in this section. (2) See the Operating Income table above and the related footnotes for more information. Within earnings per share, taxes related to the JDE Peet's transaction are included in costs associated with the JDE Peet's transaction. (3) Divestitures include completed sales of businesses, partial or full sales of equity method investments and exits of major product lines upon completion of a sale or licensing agreement. As we record our share of KDP and JDE Peet’s ongoing earnings on a one-quarter lag basis, we reflected the impact of prior-quarter sales of KDP and JDE Peet’s shares within divested results as if the sales occurred at the beginning of all periods presented. 45 Table of Contents (4) Refer to Note 10, Financial Instruments , for information on our interest swaps that we no longer designate as cash flow hedges. (5) Refer to Note 9, Debt and Borrowing Arrangements , for more information on the loss on debt extinguishment and related expenses. (6) Refer to Note 16, Income Taxes , for information on income taxes. (7) Refer to Note 7, Equity Method Investments , for more information on gains and losses on equity method investment transactions. (8) 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. (9) Excludes the currency impact on interest expense related to our non-U.S. dollar-denominated debt which is included in currency translation. (10) Refer to Note 12, Stock Plans , for more information on our equity compensation programs and share repurchase program and Note 17, Earnings per Share , for earnings per share weighted-average share information. 46 Table of Contents 2020 compared with 2019 For the Years Ended December 31, 2020 2019 $ change % change (in millions, except per share data) Net revenues $ 26,581 $ 25,868 $ 713 2.8 % Operating income 3,853 3,843 10 0.3 % Earnings from continuing operations 3,569 3,944 (375) (9.5) % Net earnings attributable to Mondelēz International 3,555 3,929 (374) (9.5) % Diluted earnings per share attributable to Mondelēz International 2.47 2.69 (0.22) (8.2) % Net Revenues – Net revenues increased $713 million (2.8%) to $26,581 million in 2020, and Organic Net Revenue increased $960 million (3.7%) to $26,773 million. Developed markets net revenue increased 8.0% and developed markets Organic Net Revenue increased 4.5%. Emerging markets net revenues decreased 6.0%, including an unfavorable currency impact, and emerging markets Organic Net Revenue increased 2.3%. The underlying changes in net revenues and Organic Net Revenue are detailed below: 2020 Change in net revenues (by percentage point) Total change in net revenues 2.8 % Removing the following items affecting comparability: Unfavorable currency 2.4 pp Impact of divestiture 0.2 pp Impact of acquisitions (1.7) pp Total change in Organic Net Revenue (1) 3.7 % Higher net pricing 1.9 pp Favorable volume/mix 1.8 pp (1) Please see the Non-GAAP Financial Measures section at the end of this item. Net revenue increase of 2.8% was driven by our underlying Organic Net Revenue growth of 3.7% and the impact of acquisitions, mostly offset by unfavorable currency and the impact of a prior-year divestiture. Net revenues were higher in developed markets, particularly North America, where due to the COVID-19 outbreak and response, demand for our products, primarily biscuits and chocolate, grew significantly as consumers increased their food purchases for in-home consumption. However, our gum and candy categories as well as our world travel retail and foodservice businesses were negatively impacted by COVID-19. In emerging markets, where we have a greater concentration of traditional trade, several markets were challenged by COVID-19 impacts, particularly those with significant gum and candy portfolios. Overall, as the negative impacts of COVID-19 experienced in the first half of the year subsided in the second half of the year, revenue growth began to recover in a number of our key emerging markets, though overall emerging markets net revenues declined due to unfavorable currency impacts. Organic Net Revenue growth was driven by higher net pricing and favorable volume/mix. Higher net pricing in all regions except Europe was due to the benefit of carryover pricing from 2019 as well as the effects of input cost-driven pricing actions taken during 2020. Favorable volume/mix in North America and Europe, partially offset by unfavorable volume/mix in Latin America and AMEA, included strong volume gains tempered by unfavorable mix reflecting shifts in consumer purchases in response to the COVID-19 outbreak. The April 1, 2020 acquisition of Give & Go added incremental net revenues of $390 million and the July 16, 2019 acquisition of a majority interest in Perfect Snacks added incremental net revenues of $55 million in 2020. Unfavorable currency impacts decreased net revenues by $637 million, due primarily to the strength of the U.S. dollar relative to most currencies, including the Brazilian real, Argentinean peso, Russian ruble, Mexican peso, Indian rupee, South African rand and Turkish lira, partially offset by the strength of several currencies relative to the U.S. dollar, including the euro, Philippine peso, British pound sterling, Egyptian pound and Swedish krona. The impact of the May 28, 2019 divestiture of most of our cheese business in the Middle East and Africa resulted in a year-over-year decline in net revenues of $55 million. Refer to Note 2, Acquisitions and Divestitures , for more information. 47 Table of Contents Operating Income – Operating income increased $10 million (0.3%) to $3,853 million in 2020. Adjusted Operating Income (1) increased $137 million (3.2%) to $4,401 million and Adjusted Operating Income on a constant currency basis increased $196 million (4.6%) to $4,460 million due to the following: Operating Income Change (in millions) Operating Income for the Year Ended December 31, 2019 $ 3,843 Simplify to Grow Program (2) 442 Intangible asset impairment charges (3) 57 Mark-to-market gains from derivatives (4) (91) Acquisition-related costs (5) 3 Divestiture-related costs (5) 6 Operating income from divestiture (5) (9) Net gain on divestiture (5) (44) Remeasurement of net monetary position (6) (4) Impact from pension participation changes (7) (35) Impact from resolution of tax matters (8) 85 CEO transition remuneration (1) 9 Initial impacts from enacted tax law changes (9) 2 Adjusted Operating Income (1) for the Year Ended December 31, 2019 $ 4,264 Higher net pricing 495 Higher input costs (394) Favorable volume/mix 142 Higher selling, general and administrative expenses (77) VAT-related settlement 11 Impact from acquisition (5) 23 Other (4) Total change in Adjusted Operating Income (constant currency) (1) 196 4.6 % Unfavorable currency translation (59) Total change in Adjusted Operating Income (1) 137 3.2 % Adjusted Operating Income (1) for the Year Ended December 31, 2020 $ 4,401 Simplify to Grow Program (2) (360) Intangible asset impairment charges (3) (144) Mark-to-market gains from derivatives (4) 16 Acquisition integration costs (5) (4) Acquisition-related costs (5) (15) Divestiture-related costs (5) (4) Costs associated with JDE Peet's transaction (10) (48) Remeasurement of net monetary position (6) (9) Impact from resolution of tax matters (8) 20 Operating Income for the Year Ended December 31, 2020 $ 3,853 0.3 % (1) Refer to the Non-GAAP Financial Measures section at the end of this item. (2) Refer to Note 8, Restructuring Program , for more information. (3) Refer to Note 6, Goodwill and Intangible Assets , for more information. (4) Refer to Note 10, Financial Instruments , Note 18, Segment Reporting , and Non-GAAP Financial Measures at the end of this item for more information on the unrealized gains/losses on commodity and forecasted currency transaction derivatives. (5) Refer to Note 2, Acquisitions and Divestitures , for more information on the April 1, 2020 acquisition of a significant majority interest in Give & Go, the July 16, 2019 acquisition of a majority interest in Perfect Snacks and the May 28, 2019 divestiture of most of our cheese business in the Middle East and Africa. (6) Refer to Note 1, Summary of Significant Accounting Policies – Currency Translation and Highly Inflationary Accounting , for information on our application of highly inflationary accounting for Argentina. (7) Refer to Note 11, Benefit Plans , for more information. (8) Refer to Note 14, Commitments and Contingencies – Tax Matters , for more information. 48 Table of Contents (9) Refer to Note 16, Income Taxes , for more information on initial impacts from enacted tax law changes. (10) Refer to Note 7, Equity Method Investments , for more information on the JDE Peet's transaction. During 2020, we realized higher net pricing and favorable volume/mix, which was largely offset by increased input costs. Higher net pricing, which included the carryover impact of pricing actions taken in 2019 as well as the effects of input cost-driven pricing actions taken during 2020, was reflected in all regions except Europe. Favorable volume/mix was driven by North America and Europe, which was partially offset by unfavorable volume/mix in Latin America and AMEA. 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 foreign currency transaction costs on imported materials, as well as higher cocoa, dairy, sugar, energy, packaging, nuts, grains and other ingredients costs, partially offset by lower costs for oils. Total selling, general and administrative expenses decreased $38 million from 2019, due to a number of factors noted in the table above, including in part, a favorable currency impact related to expenses, favorable change from the resolution of tax matters (a benefit in 2020 as compared to an expense in 2019), lower implementation costs incurred for the Simplify to Grow Program, lapping prior-year value-added tax (“VAT”) related settlements, lapping prior-year CEO transition remuneration and lapping the prior-year divestiture. These decreases were partially offset by the impact of acquisitions, costs associated with the JDE Peet's transaction, lapping the benefit from prior-year pension participation changes, unfavorable change in remeasurement of net monetary position in Argentina (remeasurement loss in 2020 as compared to a remeasurement gain in 2019) and higher acquisition-related costs. Excluding these factors, selling, general and administrative expenses increased $77 million from 2019. The increase was driven primarily by higher advertising and consumer promotion costs, partially offset by lower overhead spending net of incremental COVID-19 related costs. We recorded an expense of $11 million from a VAT-related settlement in Latin America in 2019. Unfavorable currency changes decreased operating income by $59 million due primarily to the strength of the U.S. dollar relative to most currencies, including the Brazilian real, Russian ruble, Indian rupee, Swiss franc, South African rand and Turkish lira, partially offset by the strength of several currencies relative to the U.S. dollar, including the euro, Egyptian pound, Philippine peso, British pound sterling and Swedish krona. Operating income margin decreased from 14.9% in 2019 to 14.5% in 2020. The decrease in operating income margin was driven primarily by the year-over-year unfavorable change in mark-to-market gains/(losses) from currency and commodity hedging activities, higher intangible asset impairment charges, costs associated with the JDE Peet's transaction, lapping the prior-year gain on a divestiture and lapping the benefit from prior-year pension participation changes, partially offset by the favorable impact from the resolution of tax matters and lower costs for the Simplify to Grow Program. Adjusted Operating Income margin increased from 16.5% in 2019 to 16.6% in 2020. The increase in Adjusted Operating Income margin was driven primarily by higher pricing, lower manufacturing costs reflecting productivity net of incremental COVD-19 costs, and selling, general and administrative cost leverage, mostly offset by higher raw material costs. 49 Table of Contents Net Earnings and Earnings per Share Attributable to Mondelēz International – Net earnings attributable to Mondelēz International of $3,555 million decreased by $374 million (9.5%) in 2020. Diluted EPS attributable to Mondelēz International was $2.47 in 2020, down $0.22 (8.2%) from 2019. Adjusted EPS (1) was $2.56 in 2020, up $0.16 (6.7%) from 2019. Adjusted EPS on a constant currency basis was $2.60 in 2020, up $0.20 (8.3%) from 2019. Diluted EPS Diluted EPS Attributable to Mondelēz International for the Year Ended December 31, 2019 $ 2.69 Simplify to Grow Program (2) 0.24 Intangible asset impairment charges (2) 0.03 Mark-to-market gains from derivatives (2) (0.05) Net earnings from divestitures (2) (3) (0.08) Net gain on divestitures (2) (0.03) Impact from pension participation changes (2) (0.02) Impact from resolution of tax matters (2) 0.05 CEO transition remuneration (2) 0.01 Loss related to interest rate swaps (4) 0.08 Initial impacts of enacted tax law changes (5) (0.52) Loss on equity method investment transaction (6) 0.01 Equity method investee items (7) (0.01) Adjusted EPS (1) for the Year Ended December 31, 2019 $ 2.40 Increase in operations 0.08 Increase in equity method investment net earnings 0.02 VAT-related settlements 0.01 Impact from acquisitions (2) 0.01 Changes in benefit plan non-service income 0.04 Changes in interest and other expense, net (8) (0.01) Changes in income taxes (5) 0.02 Changes in shares outstanding (9) 0.03 Adjusted EPS (constant currency) (1) for the Year Ended December 31, 2020 $ 2.60 Unfavorable currency translation (0.04) Adjusted EPS (1) for the Year Ended December 31, 2020 $ 2.56 Simplify to Grow Program (2) (0.20) Intangible asset impairment charges (2) (0.08) Mark-to-market gains from derivatives (2) 0.01 Acquisition-related costs (2) (0.01) Net earnings from divestitures (2) (3) 0.07 Costs associated with JDE Peet's transaction (2) (0.20) Remeasurement of net monetary position (2) (0.01) Impact from pension participation changes (2) (0.01) Impact from resolution of tax matters (2) 0.02 Loss related to interest rate swaps (4) (0.05) Loss on debt extinguishment (10) (0.10) Initial impacts of enacted tax law changes (5) (0.02) Gain on equity method investment transactions (6) 0.55 Equity method investee items (7) (0.06) Diluted EPS Attributable to Mondelēz International for the Year Ended December 31, 2020 $ 2.47 (1) Refer to the Non-GAAP Financial Measures section appearing later in this section. (2) See the Operating Income table above and the related footnotes for more information. Within earnings per share, taxes related to the JDE Peet's transaction are included in costs associated with the JDE Peet's transaction. 50 Table of Contents (3) Divestitures include completed sales of businesses, partial or full sales of equity method investments and exits of major product lines upon completion of a sale or licensing agreement. As we record our share of KDP and JDE Peet’s ongoing earnings on a one-quarter lag basis, we reflected the impact of prior-quarter sales of KDP and JDE Peet’s shares within divested results as if the sales occurred at the beginning of all periods presented. (4) Refer to Note 10, Financial Instruments , for information on interest rate swaps no longer designated as cash flow hedges. (5) Refer to Note 16, Income Taxes , for information on income taxes. (6) Refer to Note 7, Equity Method Investments , for more information on 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. (8) Excludes the currency impact on interest expense related to our non-U.S. dollar-denominated debt which is included in currency translation. (9) Refer to Note 12, Stock Plans , for more information on our equity compensation programs and share repurchase program and Note 17, Earnings per Share , for earnings per share weighted-average share information. (10) Refer to Note 9, Debt and Borrowing Arrangements , for more information on losses on debt extinguishment. 51 Table of Contents Results of Operations by Operating 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 18, 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 Years Ended December 31, 2021 2020 2019 (in millions) Net revenues: Latin America $ 2,797 $ 2,477 $ 3,018 AMEA 6,465 5,740 5,770 Europe 11,156 10,207 9,972 North America 8,302 8,157 7,108 Net revenues $ 28,720 $ 26,581 $ 25,868 For the Years Ended December 31, 2021 2020 2019 (in millions) Earnings before income taxes: Operating income: Latin America $ 261 $ 189 $ 341 AMEA 1,054 821 691 Europe 2,092 1,775 1,732 North America 1,371 1,587 1,451 Unrealized gains/(losses) on hedging activities (mark-to-market impacts) 279 16 91 General corporate expenses (253) (326) (330) Amortization of intangible assets (134) (194) (174) Net gain on acquisition and divestitures 8 — 44 Acquisition-related costs (25) (15) (3) Operating income 4,653 3,853 3,843 Benefit plan non-service income 163 138 60 Interest and other expense, net (447) (608) (456) Earnings before income taxes $ 4,369 $ 3,383 $ 3,447 52 Table of Contents Latin America For the Years Ended December 31, 2021 2020 $ change % change (in millions) Net revenues $ 2,797 $ 2,477 $ 320 12.9 % Segment operating income 261 189 72 38.1 % For the Years Ended December 31, 2020 2019 $ change % change (in millions) Net revenues $ 2,477 $ 3,018 $ (541) (17.9) % Segment operating income 189 341 (152) (44.6) % 2021 compared with 2020: Net revenues increased $320 million (12.9%), due to higher net pricing (13.6 pp) and favorable volume/mix (6.8 pp), partially offset by unfavorable currency (7.5 pp). Higher net pricing was reflected across all categories, driven primarily by Argentina, Brazil and Mexico. Favorable volume/mix reflected strong volume growth as the negative impacts from the pandemic that we experienced in the prior year subsided across the region. Favorable volume/mix was driven by gains in chocolate, biscuits, gum and candy, partially offset by declines in refreshment beverages and cheese & grocery. Unfavorable currency impacts were due primarily to the strength of the U.S. dollar relative to most currencies in the region including the Argentinean peso and Brazilian real. Segment operating income increased $72 million (38.1%), primarily due to higher net pricing, lower manufacturing costs (productivity and lower incremental COVID-19 related costs), favorable volume/mix and lower costs incurred for the Simplify to Grow Program. These favorable items were partially offset by higher raw material costs, higher advertising and consumer promotion costs, unfavorable currency, divestiture-related costs incurred in 2021, higher other selling, general and administrative expenses and lower benefits from the resolution of tax matters. 2020 compared with 2019: Net revenues decreased $541 million (17.9%), due to unfavorable currency (18.1 pp) and unfavorable volume/mix (7.5 pp), partially offset by higher net pricing (7.7 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, Argentinean peso and Mexican peso. Unfavorable volume/mix was due to the negative volume impact from the COVID-19 outbreak as well as the impact of pricing-related elasticity. Unfavorable volume/mix was driven by declines in gum and candy, partially offset by gains in cheese & grocery, chocolate, refreshment beverages and biscuits. Higher net pricing was reflected across all categories, driven primarily by Argentina, Brazil and Mexico. Segment operating income decreased $152 million (44.6%), primarily due to higher raw material costs, unfavorable volume/mix, unfavorable currency, higher other selling, general and administrative expenses (net of lapping the expense of VAT-related settlements in 2019) and an unfavorable change in remeasurement of net monetary position in Argentina (remeasurement loss in 2020 as compared to a remeasurement gain in 2019). These unfavorable items were partially offset by higher net pricing, lower manufacturing costs (net of incremental COVID-19 related costs), lower costs incurred for the Simplify to Grow Program and higher benefits from the resolution of a tax matter. 53 Table of Contents AMEA For the Years Ended December 31, 2021 2020 $ change % change (in millions) Net revenues $ 6,465 $ 5,740 $ 725 12.6 % Segment operating income 1,054 821 233 28.4 % For the Years Ended December 31, 2020 2019 $ change % change (in millions) Net revenues $ 5,740 $ 5,770 $ (30) (0.5) % Segment operating income 821 691 130 18.8 % 2021 compared with 2020: Net revenues increased $725 million (12.6%), due to favorable volume/mix (5.3 pp), favorable currency (3.8 pp), higher net pricing (2.0 pp), the impact of an acquisition (0.9 pp) and the partial year contribution of a business divested on November 1, 2021 which had been part of an earlier 2021 acquisition (0.6 pp). Favorable volume/mix reflected net overall volume gains as the negative impacts from the pandemic that we experienced in the prior year subsided across most of the region, though some markets were still challenged. Favorable volume/mix was driven by gains in chocolate, biscuits, gum and candy, partially offset by declines in cheese & grocery and refreshment beverages. Favorable currency impacts were due to the strength of most currencies relative to the U.S. dollar, including the Chinese yuan, Australian dollar, South African rand and New Zealand dollar. Higher net pricing was reflected across all categories except cheese & grocery. The April 1, 2021 acquisition of Gourmet Food added incremental net revenues of $47 million (constant currency basis) in 2021. The packaged seafood business, which was part of our April 1, 2021 acquisition of Gourmet Food but divested on November 1, 2021, added incremental net revenues of $35 million prior to its divestiture. Segment operating income increased $233 million (28.4%), primarily due to lower manufacturing costs (productivity and lower incremental COVID-19 related costs), higher net pricing, favorable volume/mix, lower costs incurred for the Simplify to Grow Program, favorable currency, the impact of an acquisition, lapping prior-year intangible asset impairment charges and the partial year contribution of a business divested which had been part of an earlier 2021 acquisition. These favorable items were partially offset by higher raw material costs, higher advertising and consumer promotion costs and higher other selling, general and administrative expenses. 2020 compared with 2019: Net revenues decreased $30 million (0.5%), due to unfavorable currency (1.3 pp), the impact of a divestiture (0.9 pp) and unfavorable volume/mix (0.6 pp), partially offset by higher net pricing (2.3 pp). Unfavorable currency impacts were due to the strength of the U.S. dollar relative to several currencies in the region, including the Indian rupee, South African rand, Australian dollar and Pakistan rupee, partially offset by the strength of several currencies relative to the U.S. dollar, including the Philippine peso, Egyptian pound, Japanese yen and Chinese yuan. The May 28, 2019 divestiture of most of our cheese business in the Middle East and Africa resulted in a year-over-year decline in net revenues of $55 million. Unfavorable volume/mix was due to unfavorable product mix as overall higher volume was tempered by the negative volume impact from COVID-19 related lockdowns impacting our traditional trade markets. Unfavorable volume/mix was driven by declines in gum, chocolate, candy and refreshment beverages, partially offset by gains in biscuits and cheese & grocery. Higher net pricing was driven by chocolate, biscuits, refreshment beverages and cheese & grocery, partially offset by lower net pricing in candy and gum. Segment operating income increased $130 million (18.8%), primarily due to higher net pricing, lapping prior-year expenses from the resolution of tax matters in India totaling $87 million, lower manufacturing costs (net of incremental COVID-19 related costs), lower other selling, general and administrative expenses, lower intangible asset impairment charges and lower costs incurred for the Simplify to Grow Program. These favorable items were partially offset by higher raw material costs, unfavorable volume/mix, unfavorable currency and the impact of the prior-year divestiture. 54 Table of Contents Europe For the Years Ended December 31, 2021 2020 $ change % change (in millions) Net revenues $ 11,156 $ 10,207 $ 949 9.3 % Segment operating income 2,092 1,775 317 17.9 % For the Years Ended December 31, 2020 2019 $ change % change (in millions) Net revenues $ 10,207 $ 9,972 $ 235 2.4 % Segment operating income 1,775 1,732 43 2.5 % 2021 compared with 2020: Net revenues increased $949 million (9.3%), due to favorable currency (3.7 pp), favorable volume/mix (3.6 pp), higher net pricing (1.4 pp) and the impact of an acquisition (0.6 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, Norwegian krone, Swedish krona and Czech koruna, partially offset by the strength of the U.S. dollar relative to a few currencies, including the Turkish lira and Russian ruble. Favorable volume/mix was driven by strong volume growth as we experienced increased demand for most of our snack category products and our world travel business continued to recover as global travel improved though still remained below pre-pandemic levels. Favorable volume/mix was driven by gains in chocolate, biscuits, cheese & grocery, and refreshment beverages, partially offset by declines in gum and candy. Higher net pricing was reflected across all categories except cheese & grocery. The March 25, 2021 acquisition of Grenade added incremental net revenues of $63 million (constant currency basis) in 2021. Segment operating income increased $317 million (17.9%), primarily due to favorable volume/mix, higher net pricing, lower Simplify to Grow Program costs, lower manufacturing costs (productivity and lower incremental COVID-19 related costs), favorable currency, lapping prior-year intangible asset impairment charges, lower other selling, general and administrative expenses and the impact of an acquisition. These favorable items were partially offset by higher raw material costs, higher advertising and consumer promotion costs, the impact from pension participation changes and acquisition integration costs incurred in 2021. 2020 compared with 2019: Net revenues increased $235 million (2.4%), due to favorable volume/mix (2.8 pp), partially offset by lower net pricing (0.3 pp) and unfavorable currency (0.1 pp). Favorable volume/mix due to overall higher volume was tempered by the net impact from the COVID-19 outbreak, as overall increased food purchases for in-home consumption were partially offset by a negative volume impact on our world travel retail and foodservice businesses due to lockdowns and other restrictions. Favorable volume/mix was driven by gains in chocolate, cheese & grocery, biscuits and refreshment beverages, partially offset by declines in candy and gum. Lower net pricing was driven by biscuits and chocolate, partially offset by higher net pricing in cheese & grocery, candy, gum and refreshment beverages. Unfavorable currency impacts reflected the strength of the U.S. dollar relative to several currencies in the region, including the Russian ruble, Turkish lira, Norwegian krone and Ukrainian hryvnia, mostly offset by the strength of several currencies in the region relative to the U.S. dollar, primarily the euro, British pound sterling, Swedish krona and Swiss franc. Segment operating income increased $43 million (2.5%), primarily due to favorable volume/mix, lower costs incurred for the Simplify to Grow Program and lower advertising and consumer promotion costs. These favorable items were partially offset by higher raw material costs, lower net pricing, higher intangible asset impairment charges, higher other selling, general and administrative expenses and unfavorable currency. 55 Table of Contents North America For the Years Ended December 31, 2021 2020 $ change % change (in millions) Net revenues $ 8,302 $ 8,157 $ 145 1.8 % Segment operating income 1,371 1,587 (216) (13.6) % For the Years Ended December 31, 2020 2019 $ change % change (in millions) Net revenues $ 8,157 $ 7,108 $ 1,049 14.8 % Segment operating income 1,587 1,451 136 9.4 % 2021 compared with 2020: Net revenues increased $145 million (1.8%), due to the impact of acquisitions (1.8 pp), higher net pricing (1.0 pp) and favorable currency (0.6 pp), partially offset by unfavorable volume/mix (1.6 pp). The April 1, 2020 acquisition of Give & Go added incremental net revenues of $106 million and the January 4, 2021 acquisition of Hu added incremental net revenues of $38 million in 2021. Higher net pricing was driven by biscuits, gum and candy, partially offset by lower net pricing in chocolate. Favorable currency impact was due to the strength of the Canadian dollar relative to the U.S. dollar. Unfavorable volume mix reflected volume declines as the region lapped prior-year strong volume growth driven by significantly increased food purchases for in-home consumption due to the pandemic as well as impacts from labor disruptions and supply chain constraints in the second half of 2021. Unfavorable volume/mix was driven by declines in biscuits, candy, chocolate and gum. Segment operating income decreased $216 million (13.6%), primarily due to unfavorable volume/mix, higher raw material costs, higher Simplify to Grow Program costs and higher advertising and consumer promotion costs. These unfavorable items were partially offset by higher net pricing, lower other selling, general and administrative expenses (including lower COVID-19 related costs), a net benefit from acquisition integration costs and contingent consideration adjustments, lower intangible asset impairment charges, lower manufacturing costs (lower incremental COVID-19 related costs and productivity) and favorable currency. 2020 compared with 2019: Net revenues increased $1,049 million (14.8%), due to favorable volume/mix (6.3 pp), the impact of acquisitions (6.3 pp) and higher net pricing (2.3 pp), partially offset by unfavorable currency (0.1 pp). Favorable volume/mix, in part due to the positive volume impact from COVID-19 as consumers increased their food purchases for in-home consumption, was driven by gains in biscuits, partially offset by declines in gum, chocolate and candy. The April 1, 2020 acquisition of Give & Go added incremental net revenues of $390 million and the July 16, 2019 acquisition of a majority interest in Perfect Snacks added net revenues of $55 million in 2020. Higher net pricing was driven by biscuits, chocolate and candy, partially offset by lower net pricing in gum. Unfavorable currency impact was due to the strength of the U.S. dollar relative to the Canadian dollar. Segment operating income increased $136 million (9.4%), primarily due to favorable volume/mix, higher net pricing and the impact of acquisitions. These favorable items were partially offset by higher advertising and consumer promotion costs, intangible asset impairment charges, higher other selling, general and administrative expenses (including incremental COVID-19 related costs), higher raw material costs, lapping the benefit from prior-year pension participation changes and higher costs incurred for the Simplify to Grow Program. 56 Table of Contents Critical Accounting Estimates We prepare our 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. Note 1, Summary of Significant Accounting Policies , to the consolidated financial statements includes a summary of the significant accounting policies we used to prepare our consolidated financial statements. We have discussed the selection and disclosure of our critical accounting policies and estimates with our Audit Committee. The following is a review of our most significant assumptions and estimates. Goodwill and Indefinite-Life Intangible Assets : We test goodwill and indefinite-life intangible assets for impairment on an annual basis on July 1. We assess goodwill impairment risk throughout the year by performing a qualitative review of entity-specific, industry, market and general economic factors affecting our goodwill reporting units. We review our operating segment and reporting unit structure for goodwill testing annually or as significant changes in the organization occur. Annually, we may perform qualitative testing, or depending on factors such as prior-year test results, current year developments, current risk evaluations and other practical considerations, we may elect to do quantitative testing instead. In our quantitative testing, we compare a reporting unit’s estimated fair value with its carrying value. We estimate a reporting unit’s fair value using a discounted cash flow method which incorporates planned growth rates, market-based discount rates and estimates of residual value. This year, for our Europe and North America reporting units, we used a market-based, weighted-average cost of capital of 6.4% to discount the projected cash flows of those operations. For our Latin America and AMEA reporting units, we used a risk-rated discount rate of 9.4%. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans and industry and economic conditions based on available information. Given the uncertainty of the global economic environment and the impact of COVID-19, those estimates could be significantly different than future performance. If the carrying value of a reporting unit’s net assets exceeds its fair value, we would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit's fair value. In 2021, 2020 and 2019, there were no impairments of goodwill. In connection with our 2021 annual impairment testing, each of our reporting units had sufficient fair value in excess of carrying value. 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. Annually, we assess indefinite-life intangible assets for impairment by performing a qualitative review and assessing events and circumstances that could affect the fair value or carrying value of these assets. If significant potential impairment risk exists for a specific asset, we quantitatively test it for impairment by comparing its estimated fair value with its carrying value. We determine estimated fair value using planned growth rates, market-based discount rates and estimates of royalty rates. If the carrying value of the asset exceeds its estimated fair value, the asset is impaired and its carrying value is reduced to the estimated fair value. During 2021, we recorded $32 million of intangible asset impairment charges related to a biscuit brand in North America. The impairment charges were calculated as the excess of the carrying value over the estimated fair value of the intangible assets on a global basis and were recorded within asset impairment and exit costs. We use 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 in determining a brand's global fair value. 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 are not met or specific valuation factors outside of our control, such as discount rates, change significantly, then a brand or brands could become impaired in the future. In 2020, we recorded $144 million of intangible asset impairment charges related to gum, chocolate, biscuits and candy brands, with $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 intangible asset impairment charges related to gum, chocolate, biscuits and candy brands, with $39 million in Europe, $15 million in AMEA and $3 million in Latin America. Refer to Note 6, Goodwill and Intangible Assets , for additional information. 57 Table of Contents Trade and Marketing Programs: We promote our products with trade and sales incentives as well as marketing and advertising programs. These programs include, but are not limited to, new product introduction fees, discounts, coupons, rebates and volume-based incentives as well as cooperative advertising, in-store displays and consumer marketing promotions. Trade and sales incentives are recorded as a reduction to revenues based on amounts estimated due to customers and consumers at the end of a period. We base these estimates principally on historical utilization and redemption rates. For interim reporting purposes, advertising and consumer promotion expenses are charged to operations as a percentage of volume, based on estimated sales volume and estimated program spending. We do not defer costs on our year-end consolidated balance sheet and all marketing and advertising costs are recorded as an expense in the year incurred. Employee Benefit Plans: We sponsor various employee benefit plans throughout the world. These include primarily pension plans and postretirement healthcare benefits. For accounting purposes, we estimate the pension and postretirement healthcare benefit obligations utilizing assumptions and estimates for discount rates; expected returns on plan assets; expected compensation increases; employee-related factors such as turnover, retirement age and mortality; and health care cost trends. We review our actuarial assumptions on an annual basis and make modifications to the assumptions based on current rates and trends when appropriate. Our assumptions also reflect our historical experiences and management’s best judgment regarding future expectations. These and other assumptions affect the annual expense and obligations recognized for the underlying plans. As permitted by U.S. GAAP, we generally amortize the effect of changes in the assumptions over future periods. The cost or benefit of plan changes, such as increasing or decreasing benefits for prior employee service (prior service cost), is deferred and included in expense on a straight-line basis over the average remaining service period of the employees expected to receive benefits. Since pension and postretirement liabilities are measured on a discounted basis, the discount rate significantly affects our plan obligations and expenses. For plans that have assets held in trust, the expected return on plan assets assumption affects our pension plan expenses. The assumptions for discount rates and expected rates of return and our process for setting these assumptions are described in Note 11, Benefit Plans , to the consolidated financial statements. While we do not anticipate further changes in the 2021 assumptions for our U.S. and non-U.S. pension and postretirement health care plans, as a sensitivity measure, a fifty-basis point change in our discount rates or the expected rate of return on plan assets would have the following effects, increase/(decrease), on our annual benefit plan costs: As of December 31, 2021 U.S. Plans Non-U.S. Plans Fifty-Basis-Point Fifty-Basis-Point Increase Decrease Increase Decrease (in millions) Effect of change in discount rate on pension costs $ (1) $ 2 $ (21) $ 68 Effect of change in expected rate of return on plan assets on pension costs (8) 8 (54) 54 Effect of change in discount rate on postretirement health care costs 1 — — — See additional information on our employee benefit plans in Note 11, Benefit Plans . Income Taxes: As a global company, we calculate and provide for income taxes in each tax jurisdiction in which we operate. The provision for income taxes includes the amounts payable or refundable for the current year, the effect of deferred taxes and impacts from uncertain tax positions. Our provision for income taxes is significantly affected by shifts in the geographic mix of our pre-tax earnings across tax jurisdictions, changes in tax laws and regulations, tax planning opportunities available in each tax jurisdiction and the ultimate outcome of various tax audits. 58 Table of Contents Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement and tax bases of our assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those differences are expected to be recovered or settled. Valuation allowances are established for deferred tax assets when it is more likely than not that a tax benefit will not be realized. We believe our tax positions comply with applicable tax laws and that we have properly accounted for uncertain tax positions. We recognize tax benefits in our financial statements from uncertain tax positions only if it is more likely than not that the tax position will be sustained by the taxing authorities based on the technical merits of the position. The amount we recognize is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon resolution. We evaluate uncertain tax positions on an ongoing basis and adjust the amount recognized in light of changing facts and circumstances, such as the progress of a tax audit or expiration of a statute of limitations. We believe the estimates and assumptions used to support our evaluation of uncertain tax positions are reasonable. However, final determination of historical tax liabilities, whether by settlement with tax authorities, judicial or administrative ruling or due to expiration of statutes of limitations, could be materially different from estimates reflected on our consolidated balance sheet and historical income tax provisions. The outcome of these final determinations could have a material effect on our provision for income taxes, net earnings or cash flows in the period in which the determination is made. See Note 16, Income Taxes , for further discussion of the impacts from Swiss tax reform in our financial statements, as well as additional information on our effective tax rate, current and deferred taxes, valuation allowances and unrecognized tax benefits. Contingencies: See Note 14, Commitments and Contingencies , to the consolidated financial statements. New Accounting Guidance: See Note 1, Summary of Significant Accounting Policies , to the consolidated financial statements for a discussion of new accounting standards. 59 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 and future payments of our contractual, tax and benefit plan obligations and payments for acquisitions, share repurchases and quarterly dividends. We expect to continue to utilize our commercial paper program and international credit lines as needed. We continually 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. Our investments in JDE Peet's and KDP also provide us additional flexibility. Overall, we do not expect negative effects to our funding sources that would have a material effect on our liquidity, and to date, we have been successful in raising financing as needed, including during the pandemic, and generally on favorable terms. However, in connection with the COVID-19 pandemic or otherwise, if a serious economic or credit market crisis ensues, it could have a material adverse effect on our liquidity, results of operations and financial condition. Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for raw materials, labor, manufacturing and distribution, trade and promotions, advertising and marketing, tax liabilities, benefit plan obligations and lease expenses) as well as periodic expenditures for acquisitions, shareholder returns (such as dividend payments and share repurchases) and property, plant and equipment. Long-term cash requirements primarily relate to funding long-term debt repayments (refer to Note 9, Debt and Borrowing Arrangements ), our U.S. tax reform transition tax liability and deferred taxes (refer to Note 16, Income Taxes ), our long-term benefit plan obligations (refer to Note 11, Benefit Plans ) and commodity-related purchase commitments and derivative contracts (refer to Note 10, Financial Instruments ). We generally fund short- and long-term cash requirements with cash from operating activities as well as cash proceeds from short- and long-term debt financing (refer to Debt below). We generally do not use equity to fund our ongoing obligations. Cash Flow: We believe our ability to generate substantial cash from operating activities and readily access capital markets and secure financing at competitive rates are key strengths and give us significant flexibility to meet our short and long-term financial commitments. Our cash flow activity over the last three years is noted below: 2021 2020 2019 Net cash provided by operating activities $ 4,141 $ 3,964 $ 3,965 Net cash (used in)/provided by investing activities $ (26) $ 500 $ (960) Net cash used in financing activities $ (4,069) $ (2,215) $ (2,787) Net Cash Provided by Operating Activities: The increase in net cash provided by operating activities in 2021 was due primarily to higher earnings and lower working capital requirements, partially offset by higher tax payments and lower dividends received from our equity method investments. Net cash provided by operating activities was largely flat in 2020 relative to 2019 as higher cash tax payments in 2020 (primarily related to sales of KDP and JDE Peet's shares and the resolution of several indirect tax matters under a tax amnesty program in India) and the payment of costs associated with the JDE Peet's transaction in 2020 were largely offset by working capital improvements. Net Cash Used in/Provided by Investing Activities: Net cash from investing activities was lower in 2021 due primarily to lower cash proceeds from partial sales of our equity method investment shares (refer to Note 7, Equity Method Investments ) and higher capital expenditures, partially offset by less cash paid for acquisitions in 2021 for Hu, Grenade and Gourmet Food than in 2020 for Give & Go (refer to Note 2, Acquisitions and Divestitures ). The increase in net cash provided by investing activities in 2020 relative to 2019 was primarily due to cash received from the sale of shares in the JDE Peet's and KDP offerings and lower capital expenditures, partially offset by cash paid to acquire a majority interest in Give & Go. Capital expenditures were $965 million in 2021, $863 million in 2020 and $925 million in 2019. We continue to make capital expenditures primarily to modernize manufacturing facilities and support new product and productivity initiatives. We expect 2022 capital expenditures to be up to $1.2 billion, including capital expenditures in connection 60 Table of Contents with our Simplify to Grow Program and for funding our strategic priorities. We expect to continue to fund these expenditures with cash from operations. Net Cash Used in Financing Activities: The increase in cash used in financing activities was primarily due to higher amounts of net long-term debt repayments, higher share repurchases and higher dividends paid in 2021 than in 2020. The decrease in net cash used in financing activities in 2020 relative to 2019 was primarily due to higher net debt issuances and lower share repurchases, partially offset by higher dividends paid and lower proceeds from stock option exercises in 2020. Chipita Acquisition On January 3, 2022, we closed on our acquisition of Chipita S.A. The cash consideration for Chipita totaled €1.3 billion ($1.5 billion) and we assumed and substantially paid down €0.4 billion ($0.4 billion) of Chipita's debt in January for a total purchase price of approximately €1.7 billion ($1.9 billion). Cash paid for the business was raised from cash from operations and by issuing long-term debt in the third quarter of 2021. Refer to Note 2, Acquisitions and Divestitures , and Note 9, Debt and Borrowing Arrangements , for additional details. Supply Chain Financing As part of our continued efforts to improve our working capital efficiency, we have worked with our suppliers over the past several years to optimize our terms and conditions, which include the extension of payment terms. Our current payment terms with a majority of our suppliers are from 30 to 180 days, which we deem to be commercially reasonable. We also facilitate voluntary supply chain financing (“SCF”) programs through several participating financial institutions. Under these programs, our suppliers, at their sole discretion, determine invoices that they want to sell to participating financial institutions. Our suppliers’ voluntary inclusion of invoices in SCF programs has no bearing on our payment terms or amounts due. Our responsibility is limited to making payments based upon the agreed-upon contractual terms. No guarantees are provided by the Company or any of our subsidiaries under the SCF programs and we have no economic interest in the suppliers’ decision to participate in the SCF programs. Amounts due to our suppliers that elected to participate in the SCF program are included in accounts payable in our consolidated balance sheet. We have been informed by the participating financial institutions that as of December 31, 2021, and December 31, 2020, $2.5 billion and $2.1 billion, respectively, of our accounts payable to suppliers that participate in the SCF programs are outstanding. Guarantees: As discussed in Note 14, Commitments and Contingencies , we enter into third-party guarantees primarily to cover the long-term obligations of our vendors. As part of these transactions, we guarantee that third parties will make contractual payments or achieve performance measures. At December 31, 2021, we had no material third-party guarantees recorded on our consolidated balance sheet. Guarantees do not have, and we do not expect them to have, a material effect on our liquidity. Debt: 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 or other financing needs. Refer to Note 9, Debt and Borrowing Arrangements , for a projection of long-term debt scheduled to mature (including current maturities and finance leases) in future periods. In the next 12 months, we expect to repay approximately $1.7 billion of maturing long-term debt including: $1.2 billion in July 2022 and $0.5 billion in September 2022. We fund ongoing debt maturities and other long-term obligations using cash on hand or we may refinance obligations with long-term debt or short-term financing (such as our commercial paper borrowings) depending on financing available, timing considerations, flexibility to raise funding and the cost of financing. During December 2021, our Board of Directors approved a new $7.0 billion long-term financing authority to replace the prior $6.0 billion authority. As of December 31, 2021, all $7.0 billion of the long-term financing authorization remained available. Our total debt was $19.5 billion at December 31, 2021 and $20.0 billion at December 31, 2020. Our debt-to-capitalization ratio was 0.41 at December 31, 2021 and 0.42 at December 31, 2020. The weighted-average term of 61 Table of Contents our outstanding long-term debt was 9.5 years at December 31, 2021 and 7.4 years at December 31, 2020. Our average daily commercial borrowings were $0.5 billion in 2021, $2.3 billion in 2020 and $4.1 billion in 2019. We had commercial paper borrowings of $0.2 billion at December 31, 2021 and no commercial paper borrowings outstanding as of December 31, 2020. We expect to continue to use cash or commercial paper to finance various short-term financing needs. As of December 31, 2021, we continued to be in compliance with our debt covenants. One of our subsidiaries, MIHN, has outstanding debt. Refer to Note 9, Debt and Borrowing Arrangements . The operations held by MIHN generated approximately 73.5% (or $21.1 billion) of the $28.7 billion of consolidated net revenue during fiscal year 2021 and represented approximately 79.2% (or $22.4 billion) of the $28.3 billion of net assets as of December 31, 2021. Refer to Note 9, Debt and Borrowing Arrangements , for more information on our debt and debt covenants. 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 2021, the primary drivers of the increase in our aggregate commodity costs were higher foreign currency transaction costs on imported materials, as well as increased costs for edible oils, packaging, sugar, cocoa, grains, dairy and other ingredients. A number of external factors such as the current COVID-19 pandemic, climate and weather conditions, commodity, transportation and labor 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. As a result of international supply chain, transportation and labor market disruptions and generally higher commodity, transportation and labor costs in the second half of 2021, we expect price volatility and a higher aggregate cost environment to continue in 2022. 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. Equity and Dividends Stock Plans: See Note 12, Stock Plans , to the consolidated financial statements for more information on our stock plans and grant activity during 2019-2021. Share Repurchases: See Note 13, Capital Stock , to the consolidated financial statements and Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Issuer Purchases of Equity Securities, for more information on our share repurchase program. As of December 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 $20.0 billion of shares through December 31, 2021 ($2.1 billion in 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 $41.95 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 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. 62 Table of Contents Dividends: We paid dividends of $1,826 million in 2021, $1,678 million in 2020 and $1,542 million in 2019. On July 27, 2021, the Finance Committee, with authorization delegated from our Board of Directors, declared a quarterly cash dividend of $0.35 per share of Class A Common Stock, an increase of 11 percent, which would be $1.40 per common share on an annualized basis. In 2020, our quarterly cash dividend increased from $0.285 to $0.315 per share of Class A Common Stock, an increase of 11 percent, and in 2019, our quarterly cash dividend increased from $0.26 to $0.285 per share of Class A Common Stock, an increase of 10 percent. 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. For U.S. income tax purposes only, the Company has determined that 100% of the distributions paid to its shareholders in 2021 are characterized as a qualified dividend paid from U.S. earnings and profits. Shareholders should consult their tax advisors for a full understanding of the tax consequences of the receipt of dividends. 63 Table of Contents 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 and 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-K. 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) . • “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, Türkiye, 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, divestiture-related costs (2) , acquisition-related costs, and acquisition integration costs and contingent consideration adjustments (2) ; the operating results of divestitures (2) ; remeasurement of net monetary position (5) ; mark-to-market impacts from commodity, forecasted currency and equity method investment transaction derivative contracts (6) ; impact from resolution of tax matters (7) ; CEO transition remuneration (8) ; impact from pension participation changes (9) ; initial impacts from enacted tax law changes (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 interest rate swaps no longer designated as accounting cash flow hedges due to changed financing and hedging plans, net earnings from divestitures (2) ; and gains or losses on equity method investment transactions. 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. In the second quarter of 2021, we added to the non-GAAP definitions the exclusion of initial impacts from enacted tax law changes (refer to footnote (10) below). In the third quarter of 2021, we also added the exclusion of contingent consideration adjustments (refer to footnote (2) below) and the mark-to-market impacts from equity method investment transaction derivatives contracts (refer to footnote (6) below). (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. During the third quarter of 2021, we began to exclude the impact of certain adjustments made to our acquisition contingent consideration liabilities that were recorded at the date of acquisition. We made this adjustment to better facilitate comparisons of our underlying operating performance across periods. See Note 2, Acquisitions and Divestitures , and Note 7, Equity Method Investments , for information on acquisitions and divestitures impacting the comparability of our results. 64 Table of Contents (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, Summary of Significant Accounting Policies ), 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 and equity method investment transaction derivative from our non-GAAP earnings measures. The mark-to-market impacts of commodity and forecasted currency transaction derivatives are excluded 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 make 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 exclude equity method investment transaction derivative contract settlements as they represent protection of value for future divestitures. (7) See Note 14, Commitments and Contingencies – Tax Matters , 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 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 11, Benefit Plans , for more information on the multiemployer pension plan withdrawal. (10) We have excluded the initial impacts from enacted tax law changes. Initial impacts include items such as the remeasurement of deferred tax balances and the transition tax from the 2017 U.S. tax reform. Previously, we only excluded the initial impacts from more material tax reforms, specifically the impacts of the 2019 Swiss tax reform and 2017 U.S. tax reform. We exclude initial impacts from enacted tax law changes from our Adjusted EPS as they do not reflect our ongoing tax obligations under the enacted tax law changes. Refer to Note 16, Income Taxes , 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 initial impacts from enacted tax law changes, 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 measures. 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-K. 65 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, acquisitions and divestitures. 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 Year Ended December 31, 2021 For the Year Ended December 31, 2020 Emerging Markets Developed Markets Total Emerging Markets Developed Markets Total (in millions) (in millions) Net Revenue $ 10,132 $ 18,588 $ 28,720 $ 9,097 $ 17,484 $ 26,581 Impact of currency 74 (536) (462) — — — Impact of acquisitions — (254) (254) — — — Impact of a divestiture — (35) (35) — — — Organic Net Revenue $ 10,206 $ 17,763 $ 27,969 $ 9,097 $ 17,484 $ 26,581 For the Year Ended December 31, 2020 For the Year Ended December 31, 2019 Emerging Markets Developed Markets Total Emerging Markets Developed Markets Total (in millions) (in millions) Net Revenue $ 9,097 $ 17,484 $ 26,581 $ 9,675 $ 16,193 $ 25,868 Impact of currency 749 (112) 637 — — — Impact of acquisitions — (445) (445) — — — Impact of a divestiture — — — (55) — (55) Organic Net Revenue $ 9,846 $ 16,927 $ 26,773 $ 9,620 $ 16,193 $ 25,813 66 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 the impacts of the Simplify to Grow Program; intangible asset impairment charges; mark-to-market impacts from commodity, forecasted currency and equity method investment transaction derivative contracts; acquisition integration costs and contingent consideration adjustments; acquisition related costs; divestiture-related costs; operating income from divestitures; net gain on an acquisition and divestitures; costs associated with JDE Peet's transaction; the remeasurement of net monetary position; impact from pension participation changes; impact from resolution of tax matters; CEO transition remuneration; and initial impacts from enacted tax law 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 Years Ended December 31, 2021 2020 $ Change % Change (in millions) Operating Income $ 4,653 $ 3,853 $ 800 20.8 % Simplify to Grow Program (1) 319 360 (41) Intangible asset impairment charges (2) 32 144 (112) Mark-to-market gains from derivatives (3) (279) (16) (263) Acquisition integration costs and contingent consideration adjustments (4) (40) 4 (44) Acquisition-related costs (4) 25 15 10 Net gain on acquisition and divestiture (4) (8) — (8) Divestiture-related costs (4) 22 4 18 Operating income from divestiture (4) (5) — (5) Costs associated with JDE Peet's transaction (5) — 48 (48) Remeasurement of net monetary position (6) 13 9 4 Impact from pension participation changes (7) 48 — 48 Impact from resolution of tax matters (8) (5) (20) 15 Adjusted Operating Income $ 4,775 $ 4,401 $ 374 8.5 % Favorable currency translation (118) — (118) Adjusted Operating Income (constant currency) $ 4,657 $ 4,401 $ 256 5.8 % 67 Table of Contents For the Years Ended December 31, 2020 2019 $ Change % Change (in millions) Operating Income $ 3,853 $ 3,843 $ 10 0.3 % Simplify to Grow Program (1) 360 442 (82) Intangible asset impairment charges (2) 144 57 87 Mark-to-market gains from derivatives (3) (16) (91) 75 Acquisition integration costs (4) 4 — 4 Acquisition-related costs (4) 15 3 12 Divestiture-related costs (4) 4 6 (2) Operating income from divestiture (4) — (9) 9 Net gain on divestiture (4) — (44) 44 Costs associated with JDE Peet's transaction (5) 48 — 48 Remeasurement of net monetary position (6) 9 (4) 13 Impact from pension participation changes (7) — (35) 35 Impact from resolution of tax matters (8) (20) 85 (105) CEO transition remuneration (9) — 9 (9) Initial impacts from enacted tax law changes (10) — 2 (2) Adjusted Operating Income $ 4,401 $ 4,264 $ 137 3.2 % Unfavorable currency translation 59 — 59 Adjusted Operating Income (constant currency) $ 4,460 $ 4,264 $ 196 4.6 % (1) Refer to Note 8, Restructuring Program , for more information. (2) Refer to Note 6, Goodwill and Intangible Assets, for more information. (3) Refer to Note 10, Financial Instruments , Note 18, Segment Reporting , and Non-GAAP Financial Measures section at the end of this item for more information on the unrealized gains/losses on commodity, forecasted currency and equity method investment transaction derivatives. (4) Refer to Note 2, Acquisitions and Divestitures , for more information on the January 3, 2022 acquisition of Chipita, April 1, 2021 acquisition of Gourmet Food, March 25, 2021 acquisition of a majority interest in Grenade, January 4, 2021 acquisition of the remaining 93% of equity in Hu and April 1, 2020 acquisition of a significant majority interest in Give & Go. (5) Refer to Note 7, Equity Method Investments , for more information on the JDE Peet's transaction. (6) Refer to Note 1, Summary of Significant Accounting Policies – Currency Translation and Highly Inflationary Accounting , for information on our application of highly inflationary accounting for Argentina. (7) Refer to Note 11, Benefit Plans , for more information. (8) Refer to Note 14, Commitments and Contingencies – Tax Matters , for more information. (9) Refer to the Non-GAAP Financial Measures definition and related notes. (10) Refer to Note 16, Income Taxes , for more information. 68 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; losses related to interest rate swaps; losses on debt extinguishment and related expenses; initial impacts from enacted tax laws changes; gains or losses 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 Years Ended December 31, 2021 2020 $ Change % Change Diluted EPS attributable to Mondelēz International $ 3.04 $ 2.47 $ 0.57 23.1 % Simplify to Grow Program (2) 0.17 0.20 (0.03) Intangible asset impairment charges (2) 0.02 0.08 (0.06) Mark-to-market gains from derivatives (2) (0.17) (0.01) (0.16) Acquisition integration costs and contingent consideration adjustments (2) (0.02) — (0.02) Acquisition-related costs (2) 0.01 0.01 — Divestiture-related costs (2) 0.01 — 0.01 Net earnings from divestitures (2) (0.02) (0.07) 0.05 Costs associated with JDE Peet's transaction (2) — 0.20 (0.20) Remeasurement of net monetary position (2) 0.01 0.01 — Impact from pension participation changes (2) 0.02 0.01 0.01 Impact from resolution of tax matters (2) — (0.02) 0.02 Loss related to interest rate swaps (3) — 0.05 (0.05) Loss on debt extinguishment (4) 0.07 0.10 (0.03) Initial impacts from enacted tax law changes (5) 0.07 0.02 0.05 Gain on equity method investment transactions (6) (0.39) (0.55) 0.16 Equity method investee items (7) 0.05 0.06 (0.01) Adjusted EPS $ 2.87 $ 2.56 $ 0.31 12.1 % Favorable currency translation (0.08) — (0.08) Adjusted EPS (constant currency) $ 2.79 $ 2.56 $ 0.23 9.0 % 69 Table of Contents For the Years Ended December 31, 2020 2019 $ Change % Change Diluted EPS attributable to Mondelēz International $ 2.47 $ 2.69 $ (0.22) (8.2) % Simplify to Grow Program (2) 0.20 0.24 (0.04) Intangible asset impairment charges (2) 0.08 0.03 0.05 Mark-to-market gains from derivatives (2) (0.01) (0.05) 0.04 Acquisition-related costs (2) 0.01 — 0.01 Net earnings from divestitures (2) (0.07) (0.08) 0.01 Net gain on divestiture (2) — (0.03) 0.03 Costs associate with JDE Peet's transaction (2) 0.20 — 0.20 Remeasurement of net monetary position (2) 0.01 — 0.01 Impact from pension participation changes (2) 0.01 (0.02) 0.03 Impact from resolution of tax matters (2) (0.02) 0.05 (0.07) CEO transition remuneration (2) — 0.01 (0.01) Loss related to interest rate swaps (3) 0.05 0.08 (0.03) Loss on debt extinguishment (4) 0.10 — 0.10 Initial impacts from enacted tax law changes (5) 0.02 (0.52) 0.54 (Gain)/loss on equity method investment transactions (6) (0.55) 0.01 (0.56) Equity method investee items (7) 0.06 (0.01) 0.07 Adjusted EPS $ 2.56 $ 2.40 $ 0.16 6.7 % Unfavorable currency translation 0.04 — 0.04 Adjusted EPS (constant currency) $ 2.60 $ 2.40 $ 0.20 8.3 % (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. • 2021 taxes for the: Simplify to Grow Program were $(83) million, intangible asset impairment charges were $(8) million, mark-to-market gains from derivatives were $44 million, acquisition-related costs were $(4) million, acquisition integration costs and contingent consideration adjustments were $12 million, divestiture-related costs were $(8) million, net earnings from divestitures were $9 million, remeasurement of net monetary position were zero, impact from pension participation changes were $(8) million, loss on debt extinguishment were $(34) million, initial impacts from enacted tax law changes were $100 million, gain on equity method investment transactions were $184 million and equity method investee items were $(4) million. • 2020 taxes for the: Simplify to Grow Program were $(81) million, intangible asset impairment charges were $(33) million, mark-to-market gains from derivatives were $8 million, acquisition-related costs were zero, net earnings from divestitures were $26 million, costs associated with the JDE Peet's transaction were $250 million, loss on remeasurement of net monetary position were zero, impact from pension participation changes were $(2) million, impact from resolution of tax matters were $16 million, loss related to interest rate swaps were $(24) million, loss on debt extinguishment were $(46) million, initial impacts from enacted tax law changes were $36 million, gains on equity method investment transactions were $202 million and equity method investee items were $(4) million. • 2019 taxes for the: Simplify to Grow Program were $(103) million, intangible asset impairment charges were $(14) million, mark-to-market gains from derivatives were $19 million, net earnings from divestitures were $23 million, net gain on divestiture were $3 million, impact from pension participation changes were $8 million, impact from resolution of tax matters were $(21) million, CEO transition remuneration were zero, loss related to interest rate swaps were zero, initial impacts from enacted tax law changes were $(754) million, net loss on equity method investment transactions were $6 million and equity method investee items were $(3) million. (2) See the Adjusted Operating Income table above and the related footnotes for more information. (3) Refer to Note 10, Financial Instruments , for information on our interest rate swaps that we no longer designate as cash flow hedges. (4) Refer to Note 9, Debt and Borrowing Arrangements , for more information on the loss on debt extinguishment and related expenses. (5) Refer to Note 16, Income Taxes , and the Non-GAAP Financial Measures section for more information. (6) Refer to Note 7, 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. 70 Table of Contents