Mondelez International, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Description of the Company We make and sell primarily snacks, including biscuits, 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. Recent Developments and Significant Items Affecting Comparability War in Ukraine In February 2022, Russia began a military invasion of Ukraine. For the safety of our employees, we stopped production and closed our facilities in Ukraine. We are providing all of our employees with compensation and with help in securing shelter in neighboring countries. We have also made cash and in-kind donations to several humanitarian aid organizations in the region. In March 2022, our two Ukrainian manufacturing facilities in Trostyanets and Vyshhorod were significantly damaged. In connection with the damage to these plants and impairment of other assets, primarily inventory, other plant, property and equipment, as well as increased allowances on our receivables, we recorded $143 million of total charges directly incurred as a result of the war in Ukraine, including an accrual for continued compensation for our employees in Ukraine (see Note 1, Basis of Presentation, to the condensed consolidated financial statements, and refer to Items Affecting Comparability of Financial Results for additional information.) We are increasing operations and providing resources in other primarily European manufacturing and distribution facilities to seek to continue supplying our Ukraine business's customers and consumers across Europe. As a food company, we continue to work to support the continuity of food supply and provide packaged foods to consumers. We have discontinued new capital investments and suspended our advertising spending in Russia, but as a food company with more than 2,500 employees in Russia, we have not ceased operations given we believe we play a role in the continuity of the food supply. We are required to comply with applicable international sanctions and other measures that have been imposed on Russian entities and additional sanctions and measures are under consideration. We continue to evaluate the situation in Ukraine and Russia and our ability to control our operating activities and businesses on an ongoing basis, and we continue to consolidate both our Ukrainian and Russian subsidiaries. Prior to the onset of the war, Ukraine generated 0.5% and Russia generated 2.9% of 2021 consolidated net revenues. We provide more information on risks related to the war in Ukraine in our Financial Outlook section and under Item 1A, Risk Factors . COVID-19 In the third year of the COVID-19 global pandemic, our main priority remains the safety of our employees as well as continuing to help maintain the global food supply. During the pandemic, particularly in 2020 and also in 2021, we experienced an overall increase in demand and revenue growth as consumers increased their food purchases for in-home consumption in many markets, while parts of our business were negatively affected by related lockdowns and restrictions. In late 2021, global supply chain, transportation and labor issues escalated and we experienced significantly higher operating costs, including higher overall raw material, transportation, labor and energy costs that have continued to rise in 2022 as the pandemic continues to affect global markets and operations. During the first quarter of 2022, our net revenues continued to grow with net revenue growth of 7.3% and Organic Net Revenue growth of 8.6%, compared to the first quarter of 2021. In the first quarter of 2022, we continued to see increased demand primarily for our snack category products and revenue growth in both our emerging and 29 Table of Contents developed markets relative to the first quarter of 2021. We continued to also experience significantly higher operating costs. See additional details on our results in our Discussion and Analysis of Historical Results . During the pandemic, we continued to closely monitor our cash position and cash flows and worked to increase our access to financing. As of March 31, 2022, our liquidity remains strong. During the first quarter of 2022, we funded our acquisition of Chipita (see additional information below) and issued $2 billion of long-term debt, refinancing approximately $2 billion of tendered and redeemed debt (refer to Note 8, Debt and Borrowing Arrangements for details) ahead of a 2022 rising interest rate environment. We generated $1.1 billion of cash from operations, ending the quarter with cash and cash equivalents of $1.9 billion as of March 31, 2022. We also have $9 billion of unused credit facilities available as well as ongoing access to additional financing. Our JDE Peet's and KDP equity method investments also give us additional financial flexibility. We will continue to proactively manage our business in response to the evolving global economic environment and related uncertainty and business risks as well as prioritize and support our employees and customers. We continue to take steps to mitigate impacts to our supply chain, operations, technology and assets. We intend to continue to execute on our strategic operating plans as the situation evolves. We seek to further our strategic priorities and position the Company to withstand the current uncertainties and 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. We paid cash consideration of €1.3 billion ($1.4 billion), net of cash received, and we assumed and 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 our Discussion and Analysis of Historical Results for more information on the impact of the acquisition on our first quarter 2022 results and refer to Note 2, Acquisitions and Divestitures , for additional details on the acquisition. 30 Table of Contents Summary of Results • Net revenues increased 7.3% to $7.8 billion in the first three months of 2022 as compared to the same period in the prior year. In the first quarter of 2022, 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 2021. Overall, our net revenue growth was driven by higher net pricing, favorable volume/mix and incremental net revenues from acquisitions, partially offset by unfavorable currency translation. • Organic Net Revenue, a non-GAAP financial measure, increased 8.6% to $7.9 billion in the first three months of 2022 as compared to same period in the prior year. During the first three months of 2022, Organic Net Revenue grew due to higher net pricing and favorable volume/mix. Refer to our Discussion and Analysis of Historical Results below for additional information. Organic Net Revenue is on a constant currency basis and excludes revenue from acquisitions and divestitures. We use Organic Net Revenue as it provides improved year-over-year comparability of our underlying operating results (see the definition of Organic Net Revenue and our reconciliation with net revenues within Non-GAAP Financial Measures appearing later in this section). • Diluted EPS attributable to Mondelēz International decreased (10.3)% to $0.61 in the first three months of 2022 as compared to the same period in the prior year. The decrease was primarily driven by incremental costs incurred due to the war in Ukraine, unfavorable year-over-year mark-to-market impacts from currency and commodity derivatives and intangible asset impairment charges incurred in 2022, partially offset by an increase in Adjusted EPS and lower Simplify to Grow program costs. • Adjusted EPS, a non-GAAP financial measure, increased 6.3% to $0.84 in the first three months of 2022 as compared to the same period in the prior year. On a constant currency basis, Adjusted EPS increased 13.9% to $0.90 in the first three months of 2022 as compared to the same periods in the prior year. The increase in Adjusted EPS was driven by operating gains, lower interest expense and fewer shares outstanding, partially offset by unfavorable currency translation, higher taxes primarily due to lower net benefits from non-recurring discrete tax items and lower benefit plan non-service income. Adjusted EPS and Adjusted EPS on a constant currency basis are non-GAAP financial measures. We use these measures as they provide improved year-over-year comparability of our underlying results (see the definition of Adjusted EPS and our reconciliation with diluted EPS within Non-GAAP Financial Measures appearing later in this section). Financial Outlook We seek to achieve profitable, long-term growth and manage our business to attain this goal using our key operating metrics: Organic Net Revenue, Adjusted Operating Income and Adjusted EPS. We use these non-GAAP financial metrics and related computations, particularly growth in profit dollars, to evaluate and manage our business and to plan and make near- and long-term operating and strategic decisions. As such, we believe these metrics are useful to investors as they provide supplemental information in addition to our U.S. Generally Accepted Accounting Principles ("U.S. GAAP") financial results. We believe it is useful to provide investors with the same financial information that we use internally to make comparisons of our historical operating results, identify trends in our underlying operating results and evaluate our business. We believe our non-GAAP financial measures should always be considered in relation to our GAAP results. We have provided reconciliations between our GAAP and non-GAAP financial measures in Non-GAAP Financial Measures , which appears later in this section. In addition to monitoring our key operating metrics, we monitor developments and trends that could impact our revenue and profitability objectives, similar to those we highlighted in our most recently filed Annual Report on Form 10-K for the year ended December 31, 2021 and discussed in the footnotes to our financial statements. 31 Table of Contents • Market conditions. Snack categories continued to grow in the first quarter of 2022. This is consistent with the latest findings in the third annual State of Snacking report, commissioned by Mondelēz International and issued in January 2022. The research 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. The report underscores the growth of snacking worldwide and how behavior, sentiment and routines surrounding food are being reshaped by factors such as the COVID-19 pandemic. Snacking, which was already increasing among consumers, continues to grow as we noted in our latest Annual Report on Form 10-K. Our outlook for future snacks revenue growth remains strong, but we anticipate some volatility in revenues while current events and conditions continue. As the COVID-19 pandemic, war in Ukraine and related impacts continue, we could see shifts in consumer demand and in our sales and product mix that could have a negative impact on our results. We continue to monitor volatility across markets, including global consumer, energy and other commodity, transportation, labor, currency and capital markets. We expect greater inflation, including input cost volatility and a higher aggregate cost environment in 2022, as the war in Ukraine, the pandemic, supply chain disruptions (affecting the availability of raw materials, packaging, transportation and other costs), rising energy costs, labor shortages, adverse weather events and conditions and other factors are expected to continue. Refer also to Commodity Trends and Item 3, Quantitative and Qualitative Disclosures about Market Risk. • War in Ukraine . We expect to experience increased volatility and higher costs in international supply chains and global markets (including energy and other commodities, currencies and capital markets) in connection with the war in Ukraine with related negative impacts to our operating results that we cannot fully predict. We also expect increased inflationary pressures that will adversely impact our operating costs, particularly as the war continues. Demand for our products may also be negatively impacted, particularly in those markets closest to Ukraine or other markets that are more vulnerable to consumer price increases. We have also been expanding operations in other European facilities to continue supplying the majority of our Ukraine business's customers and consumers across Europe. We continue to take action and evaluate additional ways to mitigate risks, including executing business continuity plans to cover products produced in Ukraine and taking actions to adjust product offerings, package sizes and pricing to help address rising costs. While we are working to mitigate negative effects on our business, we may not be able to fully predict or respond to all impacts on a timely basis to prevent adverse impacts to our results. We also continue to monitor the situation in Russia and any risks to our employees, operations or assets. Any ongoing or new developments in the war could have a material negative effect on our business and results in the future. • COVID-19 . As described above, we continue to monitor and respond to the COVID-19 pandemic. While its impact is not 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, product mix or operating costs; significant disruptions to the supply, production or distribution of our products; or deterioration of the credit or financial stability of our customers and other business partners. While we have seen some improvements in many markets where we sell and operate, COVID-19 variants and spikes in infections continue across a number of markets. Disruptions or our failure to effectively respond to them could further increase product or distribution costs and prices and negatively affect operations and results. Although we hedge to mitigate exposures to commodity and other input cost 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. 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 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 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. 32 Table of Contents • Ricolino acquisition. On April 24, 2022, we entered into an agreement with Grupo Bimbo to acquire Ricolino, its confectionery business located primarily in Mexico for a purchase price of approximately $1.3 billion, subject to closing purchase price adjustments. The transaction, which will be funded through a combination of an issuance of debt and cash on hand, is subject to relevant antitrust approvals and closing conditions and is expected to close in late Q3 or early Q4 2022. • Taxes . We continue to monitor existing and potential future tax reform around the world. In March 2022, President Biden sent a proposed 2023 budget to Congress and in November 2021, the U.S. House of Representatives passed a bill that has not yet been acted on by the Senate; both proposals contain significant changes to currently enacted U.S. tax rules. In addition, the Organization of Economic Cooperation and Development (OECD) continues to work toward agreement regarding model rules for a global minimum tax. These proposed U.S. and global legislative changes could have a material effect on us if enacted. • Türkiye, Argentina and currency volatility . During the first quarter of 2022, currency exchange rate volatility increased. We discuss currency impacts on our results in our Discussion and Analysis of Historical Results . As further discussed in Note 1, Basis of Presentation – Currency Translation and Highly Inflationary Accounting, during the first quarter of 2022, we concluded that Türkiye became a highly inflationary economy for accounting purposes. As of April 1, 2022, we expect to apply highly inflationary accounting for our subsidiaries operating in Türkiye and change their functional currency from the Turkish lira to the U.S. dollar. Our operations in Türkiye contributed $43 million, or 0.6% of our condensed consolidated net revenues in the three months ended March 31, 2022. Based on a review of our Turkish lira-denominated monetary assets and liabilities, our operations in Türkiye had an immaterial net monetary liability position as of March 31, 2022. We also continue to apply highly inflationary accounting for our Argentinean subsidiaries. During the three months ended March 31, 2022, we recorded a remeasurement loss of $5 million within selling, general and administrative expenses related to the revaluation of our Argentinean peso denominated net monetary position. The mix of monetary assets and liabilities and the exchange rate to convert Turkish lira and Argentinean pesos to U.S. dollars could change over time, so it is difficult to predict the overall impact of the Türkiye and Argentina highly inflationary accounting on future net earnings. • Gum Portfolio Review. During 2021, we began to conduct a strategic review of our developed market gum business. We continue to conduct the review and expect to have more information to share in mid-2022. • 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. In the three months ended March 31, 2022, we generated 9.3% of our consolidated net revenues in the U.K. • Cybersecurity Risks. Global cybersecurity risks continue to increase and 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 also continue to monitor 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. 33 Table of Contents Discussion and Analysis of Historical Results Items Affecting Comparability of Financial Results The following table includes significant income or (expense) items that affected the comparability of our results of operations and our effective tax rates. Please refer to the notes to the condensed consolidated financial statements indicated below for more information. Refer also to the Consolidated Results of Operations – Net Earnings and Earnings per Share Attributable to Mondelēz International table for the after-tax per share impacts of these items. For the Three Months Ended March 31, See Note 2022 2021 (in millions, except percentages) Simplify to Grow Program Note 7 Restructuring charges $ (11) $ (88) Implementation charges (20) (34) Intangible asset impairment charges Note 5 (78) — Mark-to-market gains/(losses) from derivatives (1) Note 9 28 117 Acquisitions and divestiture-related costs: Note 2 Acquisition integration costs and contingent consideration adjustments (1) (35) (1) Acquisition-related costs (21) (7) Gain on acquisition — 9 Divestiture-related costs (1) — Incremental costs due to war in Ukraine (2) Note 1 (143) — Remeasurement of net monetary position Note 1 (5) (5) Impact from pension participation changes (1) Note 10 (3) (4) Loss on debt extinguishment and related expenses Note 8 (129) (137) Initial impacts from enacted tax law changes Note 14 — (4) Loss on equity method investment transactions (3) (5) (7) Equity method investee items (4) 1 (57) Effective tax rate Note 14 21.9 % 19.1 % (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 9, Financial Instruments) that are recorded in the gain on equity method investment transactions on our condensed consolidated statement of earnings. (2) Incremental costs due to the war in Ukraine include direct charges such as asset impairments due to damaged facilities and inventory, higher expected allowances for uncollectible accounts receivable and committed compensation. Please see the Non-GAAP Financial Measures section at the end of this item and Note 1, Basis of Presentation – War in Ukraine , for additional information. (3) Loss on equity method investment transactions is recorded outside pre-tax operating results on the condensed 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. 34 Table of Contents Consolidated Results of Operations Three Months Ended March 31: For the Three Months Ended March 31, 2022 2021 $ change % change (in millions, except per share data) Net revenues $ 7,764 $ 7,238 $ 526 7.3 % Operating income 1,094 1,283 (189) (14.7) % Net earnings attributable to Mondelēz International $ 855 $ 961 $ (106) (11.0) % Diluted earnings per share attributable to Mondelēz International $ 0.61 $ 0.68 $ (0.07) (10.3) % Net Revenues – Net revenues increased $526 million (7.3%) to $7,764 million in the first quarter of 2022, and Organic Net Revenue (1) increased $619 million (8.6%) to $7,857 million. Developed markets net revenues increased 2.7% and developed markets Organic Net Revenue increased 4.2% (1) . Emerging markets net revenues increased 15.6% and emerging markets Organic Net Revenue increased 16.5% (1) . The underlying changes in net revenues and Organic Net Revenue are detailed below: 2022 Change in net revenues (by percentage point) Total change in net revenues 7.3 % Remove the following items affecting comparability: Unfavorable currency 4.1 pp Impact of acquisitions (2.8) pp Total change in Organic Net Revenue (1) 8.6 % Higher net pricing 4.8 pp Favorable volume/mix 3.8 pp (1) Please see the Non-GAAP Financial Measures section at the end of this item. Net revenue increase of 7.3% was driven by our underlying Organic Net Revenue growth of 8.6% and the impact of acquisitions, partially offset by unfavorable currency translation. Overall, we continued to see increased demand for our snack category products, though some markets are still challenged due to the pandemic. Organic Net Revenue growth was driven by higher net pricing and favorable volume/mix. Higher net pricing in all regions was due to the benefit of carryover pricing from 2021 as well as the effects of input cost-driven pricing actions taken during the first three months of 2022. Favorable volume/mix across all regions was driven primarily by strong volume gains primarily across our snack category products. The January 3, 2022 acquisition of Chipita added incremental net revenues of $169 million (constant currency basis), the April 1, 2021 acquisition of Gourmet Food added incremental net revenues of $15 million (constant currency basis) and the March 25, 2021 acquisition of Grenade added incremental net revenues of $22 million (constant currency basis). Refer to Note 2, Acquisitions and Divestitures, for additional information. Unfavorable currency impacts decreased net revenues by $299 million, due primarily to the strength of the U.S. dollar relative to several currencies, including the euro, Turkish lira, Russian ruble, Argentinean peso, British pound sterling and Australian dollar, partially offset by the strength of several currencies relative to the U.S. dollar, including the Brazilian real and Chinese yuan. 35 Table of Contents Operating Income – Operating income decreased $189 million (14.7%) to $1,094 million in the first quarter of 2022. Adjusted Operating Income (1) increased $86 million (6.7%) to $1,378 million and Adjusted Operating Income on a constant currency basis (1) increased $175 million (13.5%) to $1,467 million due to the following: Operating Income % Change (in millions) Operating Income for the Three Months Ended March 31, 2021 $ 1,283 Simplify to Grow Program (2) 122 Mark-to-market gains from derivatives (3) (118) Acquisition integration costs and contingent consideration adjustments (4) 1 Acquisition-related costs (4) 7 Gain on acquisition (4) (9) Remeasurement of net monetary position (5) 5 Impact from pension participation changes (6) 1 Adjusted Operating Income (1) for the Three Months Ended March 31, 2021 $ 1,292 Higher net pricing 349 Higher input costs (191) Favorable volume/mix 79 Higher selling, general and administrative expenses (77) Lower amortization of intangible assets 7 Impact from acquisitions (4) 7 Other 1 Total change in Adjusted Operating Income (constant currency) (1) 175 13.5 % Unfavorable currency translation (89) Total change in Adjusted Operating Income (1) 86 6.7 % Adjusted Operating Income (1) for the Three Months Ended March 31, 2022 $ 1,378 Simplify to Grow Program (2) (31) Intangible asset impairment charges (7) (78) Mark-to-market gains from derivatives (3) 27 Acquisition integration costs and contingent consideration adjustments (4) (32) Acquisition-related costs (4) (21) Divestiture-related costs (4) (1) Incremental costs due to war in Ukraine (5) (143) Remeasurement of net monetary position (5) (5) Operating Income for the Three Months Ended March 31, 2022 $ 1,094 (14.7) % (1) Refer to the Non-GAAP Financial Measures section at the end of this item. (2) Refer to Note 7, Restructuring Program, for more information. (3) Refer to Note 9, Financial Instruments , and the Non-GAAP Financial Measures section at the end of this item for more information on the unrealized gains/losses on commodity and forecasted currency transaction derivatives. (4) Refer to Note 2, Acquisitions and Divestitures , for more information on the January 3, 2022 acquisition of Chipita, the April 1, 2021 acquisition of Gourmet Food Holdings Pty Ltd, the March 25, 2021 acquisition of a majority interest in Grenade and the January 4, 2021 acquisition of the remaining 93% of equity in Hu Master Holdings. (5) Refer to Note 1, Basis of Presentation , for information on our accounting for the war in Ukraine and our application of highly inflationary accounting for Argentina. (6) Refer to Note 10, Benefit Plans , for more information. (7) Refer to Note 5, Goodwill and Intangible Assets , for more information. 36 Table of Contents During the first quarter of 2022, we realized higher net pricing and favorable volume/mix, which was partially offset by increased input costs. Higher net pricing, which included the carryover impact of pricing actions taken in 2021 as well as the effects of input cost-driven pricing actions taken during the first three months of 2022, was reflected across all regions. Favorable volume/mix was driven by Europe, Latin America and AMEA, partially offset by unfavorable volume/mix in North America. Overall volume/mix benefited from strong volume growth due to continued increased demand for our snack category products. The increase in input costs was driven by higher raw material costs, partially offset by lower manufacturing costs driven by productivity. Higher raw material costs were in part due to higher packaging, edible oils, dairy, energy, grains, sugar and other ingredient costs, partially offset by favorable year-over-year currency exchange transaction costs on imported materials and lower cocoa costs. Total selling, general and administrative expenses increased $129 million from the first quarter of 2021, due to a number of factors noted in the table above, including in part, the impact of acquisitions, higher acquisition integration costs, incremental costs incurred due to the war in Ukraine and higher acquisition-related costs, which were partially offset by a favorable currency impact related to expenses and lower implementation costs incurred for the Simplify to Grow Program. Excluding these factors, selling, general and administrative expenses increased $77 million from the first quarter of 2021. The increase was driven primarily by higher advertising and consumer promotion costs and higher overhead costs reflecting increased investments in route-to-market capabilities. Unfavorable currency changes decreased operating income by $89 million due primarily to the strength of the U.S. dollar relative to most currencies, including the Russian ruble, euro, Argentinean peso, British pound sterling, Turkish lira and Australian dollar, partially offset by the strength of a few currencies relative to the U.S. dollar, including the Brazilian real and Chinese yuan. Operating income margin decreased from 17.7% in the first quarter of 2021 to 14.1% in the first quarter of 2022. The decrease was driven primarily by incremental costs incurred due to the war in Ukraine, unfavorable year-over-year change in mark-to-market gains/(losses) from currency and commodity hedging activities, intangible asset impairment charges incurred in 2022, higher acquisition integration costs, lower Adjusted Operating Income margin, higher acquisition-related costs and lapping a prior-year gain on acquisition, partially offset by lower Simplify to Grow program costs. Adjusted Operating Income margin decreased from 17.9% for the first quarter of 2021 to 17.7% for the first quarter of 2022. The decrease was driven primarily by higher raw material costs and unfavorable product mix, partially offset by higher net pricing and overhead cost leverage. 37 Table of Contents Net Earnings and Earnings per Share Attributable to Mondelēz International – Net earnings attributable to Mondelēz International of $855 million decreased by $106 million (11.0%) in the first quarter of 2022. Diluted EPS attributable to Mondelēz International was $0.61 in the first quarter of 2022, down $0.07 (10.3%) from the first quarter of 2021. Adjusted EPS (1) was $0.84 in the first quarter of 2022, up $0.05 (6.3%) from the first quarter of 2021. Adjusted EPS on a constant currency basis (1) was $0.90 in the first quarter of 2022, up $0.11 (13.9%) from the first quarter of 2021. Diluted EPS Diluted EPS Attributable to Mondelēz International for the Three Months Ended March 31, 2021 $ 0.68 Simplify to Grow Program (2) 0.07 Mark-to-market gains from derivatives (2) (0.07) Acquisition-related costs (2) 0.01 Net earnings from divestitures (3) (0.01) Loss on debt extinguishment and related expenses (4) 0.07 Equity method investee items (5) 0.04 Adjusted EPS (1) for the Three Months Ended March 31, 2021 $ 0.79 Increase in operations 0.09 Changes in benefit plan non-service income (0.01) Changes in interest and other expense, net (6) 0.03 Changes in income taxes (7) (0.02) Changes in shares outstanding (8) 0.02 Adjusted EPS (constant currency) (1) for the Three Months Ended March 31, 2022 $ 0.90 Unfavorable currency translation (0.06) Adjusted EPS (1) for the Three Months Ended March 31, 2022 $ 0.84 Simplify to Grow Program (2) (0.02) Intangible asset impairment charges (2) (0.04) Mark-to-market gains from derivatives (2) 0.02 Acquisition integration costs and contingent consideration adjustments (2) 0.01 Acquisition-related costs (2) (0.02) Incremental costs due to war in Ukraine (2) (0.11) Loss on debt extinguishment and related expenses (4) (0.07) Diluted EPS Attributable to Mondelēz International for the Three Months Ended March 31, 2022 $ 0.61 (1) Refer to the Non-GAAP Financial Measures section appearing later in this section. (2) See the Operating Income table above and the related footnotes for more information. (3) Includes the impact from 2021 partial sales of our equity method investment in KDP as if the sales occurred at the beginning of all periods presented. (4) Refer to Note 8, Debt and Borrowing Arrangements , for more information on the loss on debt extinguishment and related expenses. (5) 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. (6) Excludes the currency impact on interest expense related to non-U.S. dollar-denominated debt, which is included in currency translation. (7) Refer to Note 14, Income Taxes , for more information on the items affecting income taxes. (8) Refer to Note 11, Stock Plans , for more information on our equity compensation programs and share repurchase program and Note 15, Earnings per Share , for earnings per share weighted-average share information. 38 Table of Contents Results of Operations by Reportable Segment Our operations and management structure are organized into four operating segments: • Latin America • AMEA • Europe • North America We manage our operations by region to leverage regional operating scale, manage different and changing business environments more effectively and pursue growth opportunities as they arise across our key markets. Our regional management teams have responsibility for the business, product categories and financial results in the regions. We use segment operating income to evaluate segment performance and allocate resources. We believe it is appropriate to disclose this measure to help investors analyze segment performance and trends. See Note 16, Segment Reporting, for additional information on our segments and Items Affecting Comparability of Financial Results earlier in this section for items affecting our segment operating results. Our segment net revenues and earnings were: For the Three Months Ended March 31, 2022 2021 (in millions) Net revenues: Latin America $ 826 $ 669 AMEA 1,867 1,745 Europe 2,935 2,847 North America 2,136 1,977 Net revenues $ 7,764 $ 7,238 Earnings before income taxes: Operating income: Latin America $ 103 $ 76 AMEA 272 362 Europe 377 557 North America 418 270 Unrealized gains/(losses) on hedging activities (mark-to-market impacts) 27 118 General corporate expenses (50) (64) Amortization of intangible assets (32) (38) Gain on acquisition — 9 Acquisition-related costs (21) (7) Operating income 1,094 1,283 Benefit plan non-service income 33 44 Interest and other expense, net (168) (218) Earnings before income taxes $ 959 $ 1,109 39 Table of Contents Latin America For the Three Months Ended March 31, 2022 2021 $ change % change (in millions) Net revenues $ 826 $ 669 $ 157 23.5 % Segment operating income 103 76 27 35.5 % Three Months Ended March 31: Net revenues increased $157 million (23.5%), due to higher net pricing (17.0 pp) and favorable volume/mix (8.7 pp), partially offset by unfavorable currency (2.2 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 region continued to see increased demand for our snack category products. 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, primarily the Argentinean peso, partially offset by the strength of a few currencies relative to the U.S. dollar, primarily the Brazilian real. Segment operating income increased $27 million (35.5%), primarily due to higher net pricing, favorable volume/mix, lower manufacturing costs due to productivity 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 and higher other selling, general and administrative expenses. AMEA For the Three Months Ended March 31, 2022 2021 $ change % change (in millions) Net revenues $ 1,867 $ 1,745 $ 122 7.0 % Segment operating income 272 362 (90) (24.9) % Three Months Ended March 31: Net revenues increased $122 million (7.0%), due to favorable volume/mix (6.4 pp), higher net pricing (2.5 pp) and the impact of an acquisition (0.9 pp), partially offset by unfavorable currency (2.8 pp). Favorable volume/mix reflected overall volume gains from increased demand for our snack category products, though some markets were still challenged due to the pandemic. Favorable volume/mix was driven by gains in chocolate, biscuits, refreshment beverages, gum and candy, partially offset by declines in cheese & grocery. Higher net pricing was reflected across all categories except gum. The April 1, 2021 acquisition of Gourmet Food added incremental net revenues of $15 million (constant currency basis) in the first quarter of 2022. Unfavorable currency impacts were due to the strength of the U.S. dollar relative to most currencies in the region, including the Australian dollar, Indian rupee and Philippine peso, partially offset by the strength of a few currencies relative to the U.S. dollar, primarily the Chinese yuan. Segment operating income decreased $90 million (24.9%), primarily due to intangible asset impairment charges incurred in the first quarter of 2022, higher raw material costs, higher costs incurred for the Simplify to Grow Program, higher advertising and consumer promotion costs, unfavorable currency and higher other selling, general and administrative expenses. These unfavorable items were partially offset by higher net pricing, favorable volume/mix and lower manufacturing costs driven by productivity. 40 Table of Contents Europe For the Three Months Ended March 31, 2022 2021 $ change % change (in millions) Net revenues $ 2,935 $ 2,847 $ 88 3.1 % Segment operating income 377 557 (180) (32.3) % Three Months Ended March 31: Net revenues increased $88 million (3.1%), due to the impact of acquisitions (6.4 pp), favorable volume/mix (3.4 pp) and higher net pricing (1.5 pp), partially offset by unfavorable currency (8.2 pp). The January 3, 2022 acquisition of Chipita added incremental net revenues of $162 million (constant currency basis) and the March 25, 2021 acquisition of Grenade added incremental net revenues of $22 million (constant currency basis) in the first quarter of 2022. Favorable volume/mix was driven by strong volume growth as we experienced increased demand for our snack category products and our world travel business grew as global travel continued to improve though still below pre-pandemic levels. Favorable volume/mix was driven by gains in chocolate, biscuits, candy and gum, partially offset by declines in cheese & grocery and refreshment beverages. Higher net pricing was reflected across all categories except refreshment beverages. Unfavorable currency impacts reflected the strength of the U.S. dollar relative to most currencies across the region, including the euro, Turkish lira, Russian ruble, British pound sterling, Polish zloty and Swedish krona. Segment operating income decreased $180 million (32.3%), primarily due to incremental costs incurred due to the war in Ukraine, unfavorable currency, acquisition integration costs incurred in the first quarter of 2022, higher advertising and consumer promotion costs and higher other selling, general and administrative expenses. These unfavorable items were partially offset by higher net pricing, favorable volume/mix, lower Simplify to Grow program costs, the impact of acquisitions and lower manufacturing costs due to productivity. North America For the Three Months Ended March 31, 2022 2021 $ change % change (in millions) Net revenues $ 2,136 $ 1,977 $ 159 8.0 % Segment operating income 418 270 148 54.8 % Three Months Ended March 31: Net revenues increased $159 million (8.0%), due to higher net pricing (7.5 pp), the impact of an acquisition (0.3 pp) and favorable volume/mix (0.2 pp). Higher net pricing was reflected across all categories driven by pricing actions taken in the first three months of 2022. The January 3, 2022 acquisition of Chipita added incremental net revenues of $7 million in the first quarter of 2022. Favorable volume/mix was driven by gains in candy, chocolate and gum, mostly offset by a decline in biscuits which primarily reflected the impact of supply chain constraints on volume. Segment operating income increased $148 million (54.8%), primarily due to higher net pricing and lower Simplify to Grow Program costs. These favorable items were partially offset by higher raw material costs, unfavorable volume/mix and higher manufacturing costs net of productivity. 41 Table of Contents Liquidity and Capital Resources We believe that cash from operations, our revolving credit and term loan facilities, short-term borrowings and our authorized long-term financing will continue to provide sufficient liquidity for our working capital needs, planned capital expenditures, 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 available 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 we continue to monitor our operations in Europe and effects from the war in Ukraine. To date, we have been successful in generating cash and raising financing as needed. However, in connection with the COVID-19 pandemic, war in Ukraine or other circumstances, 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 8, Debt and Borrowing Arrangements ), our U.S. tax reform transition tax liability which is payable through 2026 and deferred taxes (refer to Note 16, Income Taxes, in our Annual Report on Form 10-K), our long-term benefit plan obligations (refer to Note 10, Benefit Plans, and Note 11 , Benefit Plans, in our Annual report on Form 10-K) and commodity-related purchase commitments and derivative contracts (refer to Note 9, 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 is noted below: Three months ended March 31, 2022 2021 Net cash provided by operating activities $ 1,131 $ 915 Net cash used in investing activities $ (1,441) $ (690) Net cash used in financing activities $ (1,280) $ (1,781) Net Cash Provided by Operating Activities: The increase in net cash provided by operating activities was due primarily to lower year-over-year working capital requirements, higher cash earnings, lower tax payments and higher dividends received from our equity method investments, partially offset by higher acquisition integration-related costs. Net Cash Used in Investing Activities: The increase in net cash used in investing activities was largely driven by higher cash payments for acquisitions, including $1.4 billion cash consideration paid for the Chipita acquisition during January 2022 relative to $490 million paid to acquire a majority interest in Grenade and the remaining equity of Hu Master Holdings during the first quarter of 2021 (refer to Note 2, Acquisitions and Divestitures ), partially offset by proceeds related to a sale of an acquired Chipita equity method investment and lower capital expenditures. 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 approximately $1.2 billion, including capital expenditures in connection with our Simplify to Grow Program. We expect to continue to fund these expenditures with cash from operations. 42 Table of Contents Net Cash Used in Financing Activities: The decrease in cash used in financing activities was primarily due to lower share repurchases as well as lower net debt repayments as we largely refinanced debt during the first quarter of 2022 with lower interest rate debt (refer to Note 8, Debt and Borrowing Arrangements ) and we lapped higher amounts of net long-term debt repayments in the prior-year first quarter. The decrease in cash used in financing activities was partially offset by higher dividends paid in the first three months of 2022 than in the same prior-year period. 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 March 31, 2022, and March 31, 2021, $2.5 billion and $2.3 billion, respectively, of our accounts payable to suppliers that participate in the SCF programs are outstanding. Guarantees: As discussed in Note 12, 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 March 31, 2022, we had no material third-party guarantees recorded on our condensed 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 8, Debt and Borrowing Arrangements , for details of our debt activity during the first three months of 2022. In the next 12 months, we expect to repay approximately $0.7 billion of maturing long-term debt including $0.2 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 March 31, 2022, $5 billion of the long-term financing authorization remained available, with $2 billion of this amount allocated for any borrowings that we may make under the term loan facility we entered into in March 2022. Refer to Note 8, Debt and Borrowing Arrangements. Our total debt was $19.7 billion at March 31, 2022 and $19.5 billion at December 31, 2021. Our debt-to-capitalization ratio was 0.41 at March 31, 2022 and 0.41 at December 31, 2021. At March 31, 2022, the weighted-average term of our outstanding long-term debt was 9.4 years. Our average daily commercial paper borrowings outstanding were $1.2 billion in the first three months of 2022 and $0.2 billion in the first three months of 2021. We had commercial paper outstanding totaling $0.5 billion as of March 31, 2022 and $0.2 billion as of December 31, 2021. We expect to continue to use cash or commercial paper to finance various short-term financing needs. Through March 31, 2022, we continue to comply with our debt covenants. 43 Table of Contents One of our subsidiaries, Mondelez International Holdings Netherlands B.V. (“MIHN”), has outstanding debt. The operations held by MIHN generated approximately 74.4% (or $5.8 billion) of the $7.8 billion of consolidated net revenue in the three months ended March 31, 2022. The operations held by MIHN represented approximately 81.6% (or $23.0 billion) of the $28.2 billion of net assets as of March 31, 2022 and 79.2% (or $22.4 billion) of the $28.3 billion of net assets as of December 31, 2021. Refer to Note 8, 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 the first three months of 2022, the primary drivers of the increase in our aggregate commodity costs were higher packaging, edible oils, dairy, energy, grains, sugar and other ingredient costs, partially offset by favorable year-over-year currency exchange transaction costs on imported materials and lower cocoa costs. A number of external factors such as the COVID-19 global pandemic, effects of the war in Ukraine, 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 first quarter of 2022, we expect price volatility and a higher aggregate cost environment to continue in the remainder of 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 and Share Repurchases: See Note 11, Stock Plans , to our condensed consolidated financial statements and Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds , for more information on our stock plans, grant activity and share repurchase program for the three months ended March 31, 2022. As of March 31, 2022, our Board of Directors has authorized share repurchases up to $23.7 billion through December 31, 2023. Under this program, we have repurchased approximately $20.8 billion of shares through March 31, 2022 ($0.8 billion in the first three months of 2022, $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 $42.50 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. Dividends: We paid dividends of $491 million in the first three months of 2022 and $453 million in the first three months of 2021. The first quarter 2022 dividend of $0.35 per share, declared on February 3, 2022 for shareholders of record as of March 31, 2022, was paid on April 14, 2022. 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. 44 Table of Contents We anticipate that the 2022 distributions will be characterized as dividends under U.S. federal income tax rules. The final determination will be made on an IRS Form 1099–DIV issued in early 2023. Significant Accounting Estimates We prepare our condensed consolidated financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions. Our significant accounting policies are described in Note 1 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021. Our significant accounting estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2021. See also Note 1, Basis of Presentation , in this report. New Accounting Guidance: See Note 1, Basis of Presentation , for a discussion of new accounting standards. Contingencies: See Note 12, Commitments and Contingencies , and Part II, Item 1. Legal Proceedings, for a discussion of contingencies. Forward-Looking Statements This report contains a number of forward-looking statements. Words, and variations of words, such as “will,” “may,” “expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,” “likely,” “estimate,” “anticipate,” “objective,” “predict,” “project,” “seek,” “aim,” “potential,” “outlook” and similar expressions are intended to identify our forward-looking statements, including but not limited to statements about: the impact on our business of the war in Ukraine and current and future sanctions imposed by governments or other authorities, including the impact on matters such as costs, markets, the global economic environment, availability of commodities, demand, supplying our Ukraine business's customers and consumers, impairments, continuation of and our ability to control our operating activities and businesses in Russia and Ukraine, and our operating results; the impact of the COVID-19 pandemic and related disruptions on our business including consumer demand, costs, product mix, our strategic initiatives, our and our partners’ global supply chains, operations, technology and assets, and our financial performance; our future performance, including our future revenue and earnings growth; our strategy to accelerate consumer-centric growth, drive operational excellence and create a winning growth culture; our leadership position in snacking; volatility in global consumer, commodity, transportation, labor, currency and capital markets; price volatility, inflation and pricing actions; the cost environment, including higher labor, customer service, commodity, transportation, operating, and other costs, factors affecting costs and measures we are taking to address increased costs; supply, transportation and labor disruptions and constraints; consumer behavior, consumption and demand trends and our business in developed and emerging markets, our channels, our brands and our categories; our tax rate, tax positions, tax proceedings, tax liabilities, valuation allowances and the impact on us of potential U.S. and global tax reform; advertising and promotion bans and restrictions in the U.K.; the costs of, timing of expenditures under and completion of our restructuring program; consumer snacking behaviors; commodity prices, supply and availability; our investments and our ownership interests in those investments, including JDE Peet's and KDP; innovation; political, business and economic conditions and volatility; currency exchange rates, controls and restrictions, volatility in foreign currencies and the effect of currency translation on our results of operations; the application of highly inflationary accounting for our subsidiaries in Argentina and Türkiye and the potential for and impacts from currency devaluation in other countries; the outcome and effects on us of legal proceedings and government investigations; the estimated value of goodwill and intangible assets; amortization expense for intangible assets; impairment of goodwill and intangible assets and our projections of operating results and other factors that may affect our impairment testing; our accounting estimates and judgments and the impact of new accounting pronouncements; pension expenses, contributions and assumptions; our ability to prevent and respond to cybersecurity breaches and disruptions; our liquidity, funding sources and uses of funding, including debt issuances and our use of commercial paper and international credit lines; our capital structure, credit availability and our ability to raise capital, and the impact of market disruptions on us, our counterparties and our business partners; the planned phase out of London Interbank Offered Rates and transition to any other interest rate benchmark; our risk management program, including the use of financial instruments and the impacts and effectiveness of our hedging activities; working capital; capital expenditures and funding; funding of debt maturities, acquisitions and other 45 Table of Contents obligations; share repurchases; dividends; long-term value for our shareholders; guarantees; the characterization of 2022 distributions as dividends; compliance with our debt covenants; and our contractual and other obligations. These forward-looking statements involve risks and uncertainties, many of which are beyond our control, and many of these risks and uncertainties are currently amplified by and may continue to be amplified by the COVID-19 pandemic, including the spread of new variants of COVID-19 such as Omicron. Important factors that could cause our actual results to differ materially from those described in our forward-looking statements include, but are not limited to, the impact of ongoing or new developments in the war in Ukraine, related current and future sanctions imposed by governments and other authorities, and related impacts on our business, growth, reputation, prospects, financial condition, operating results (including components of our financial results), cash flows and liquidity; uncertainty about the effectiveness of efforts by health officials and governments to control the spread of COVID-19 and inoculate and treat populations impacted by COVID-19; uncertainty about the reimposition or lessening of restrictions imposed by governments intended to mitigate the spread of COVID-19 and the magnitude, duration, geographic reach and impact on the global economy of COVID-19; the ongoing, and uncertain future, impact of the COVID-19 pandemic on our business, growth, reputation, prospects, financial condition, operating results (including components of our financial results), cash flows and liquidity; risks from operating globally including in emerging markets; changes in currency exchange rates, controls and restrictions; volatility of commodity and other input costs and availability of commodities; weakness in economic conditions; weakness in consumer spending; pricing actions; tax matters including changes in tax laws and rates, disagreements with taxing authorities and imposition of new taxes; use of information technology and third party service providers; unanticipated disruptions to our business, such as malware incidents, cyberattacks or other security breaches, and our compliance with privacy and data security laws; global or regional health pandemics or epidemics, including COVID-19; competition and our response to channel shifts and pricing and other competitive pressures; promotion and protection of our reputation and brand image; changes in consumer preferences and demand and our ability to innovate and differentiate our products; the restructuring program and our other transformation initiatives not yielding the anticipated benefits; changes in the assumptions on which the restructuring program is based; management of our workforce and shifts in labor availability; consolidation of retail customers and competition with retailer and other economy brands; changes in our relationships with customers, suppliers or distributors; compliance with legal, regulatory, tax and benefit laws and related changes, claims or actions; the impact of climate change on our supply chain and operations; strategic transactions; significant changes in valuation factors that may adversely affect our impairment testing of goodwill and intangible assets; perceived or actual product quality issues or product recalls; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; volatility of and access to capital or other markets, the effectiveness of our cash management programs and our liquidity; pension costs; the expected discontinuance of London Interbank Offered Rates and transition to any other interest rate benchmark; and our ability to protect our intellectual property and intangible assets. There may be other factors not presently known to us or which we currently consider to be immaterial that could cause our actual results to differ materially from those projected in any forward-looking statements we make. We disclaim and do not undertake any obligation to update or revise any forward-looking statement in this report except as required by applicable law or regulation. Non-GAAP Financial Measures We use non-GAAP financial information and believe it is useful to investors as it provides additional information to facilitate comparisons of historical operating results, identify trends in our underlying operating results and provide additional insight and transparency on how we evaluate our business. We use non-GAAP financial measures to budget, make operating and strategic decisions and evaluate our performance. We have detailed the non-GAAP adjustments that we make in our non-GAAP definitions below. The adjustments generally fall within the following categories: acquisition & divestiture activities, gains and losses on intangible asset sales and non-cash impairments, major program restructuring activities, constant currency and related adjustments, major program financing and hedging activities and other major items affecting comparability of operating results. We believe the non-GAAP measures should always be considered along with the related U.S. GAAP financial measures. We have provided the reconciliations between the GAAP and non-GAAP financial measures below, and we also discuss our underlying GAAP results throughout our Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q. Our primary non-GAAP financial measures are listed below and reflect how we evaluate our current and prior-year operating results. As new events or circumstances arise, these definitions could change. When our definitions change, we provide the updated definitions and present the related non-GAAP historical results on a comparable basis (1) . 46 Table of Contents • “Organic Net Revenue” is defined as net revenues excluding the impacts of acquisitions, divestitures (2) and currency rate fluctuations (3) . We also evaluate Organic Net Revenue growth from emerging markets and developed markets. • Our emerging markets include our Latin America region in its entirety; the AMEA region, excluding Australia, New Zealand and Japan; and the following countries from the Europe region: Russia, Ukraine, 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) ; incremental costs due to the war in Ukraine (8) ; impact from pension participation changes (9) ; 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) ; initial impacts from enacted tax law changes (10) ; 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 first quarter of 2022, we added to the non-GAAP definitions the exclusion of incremental costs due to the war in Ukraine (refer to footnote (8) 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. Related to acquisitions, we exclude the impact of 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 6, Equity Method Investments , for information on acquisitions and divestitures impacting the comparability of our results. (3) Constant currency operating results are calculated by dividing or multiplying, as appropriate, the current-period local currency operating results by the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period. (4) Non-GAAP adjustments related to the Simplify to Grow Program reflect costs incurred that relate to the objectives of our program to transform our supply chain network and organizational structure. Costs that do not meet the program objectives are not reflected in the non-GAAP adjustments. (5) During the third quarter of 2018, as we began to apply highly inflationary accounting for Argentina (refer to Note 1, Basis of Presentation ), we excluded the remeasurement gains or losses related to remeasuring net monetary assets or liabilities in Argentina during the period to be consistent with our prior accounting for these remeasurement gains/losses for Venezuela when it was subject to highly inflationary accounting prior to deconsolidation in 2015. (6) We exclude unrealized gains and losses (mark-to-market impacts) from outstanding commodity and forecasted currency and equity method investment transaction derivative contracts 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) Refer to Note 12, Commitments and Contingencies – Tax Matters , in this report, and Note 14, Commitments and Contingencies –Tax Matters , in our Annual Report on Form 10-K for the year ended December 31, 2021. (8) In February 2022, Russia began a military invasion of Ukraine and we stopped our production and closed our facilities in Ukraine. We began to incur incremental costs directly related to the war including asset impairments, such as property and inventory losses, higher expected allowances for uncollectible accounts receivable and committed compensation. We have isolated and exclude these costs from our operating results to facilitate evaluation and comparisons of our ongoing results. Incremental costs related to increasing operations in other primarily European facilities are not included with these costs. 47 Table of Contents (9) The impact from pension participation changes represents the charges incurred when employee groups are withdrawn from multiemployer pension plans and other changes in employee group pension plan participation. We exclude these charges from our non-GAAP results because those amounts do not reflect our ongoing pension obligations. See Note 10, Benefit Plans , for more information on the multiemployer pension plan withdrawal. (10) We 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. 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 our Annual Report on Form 10-K for the year ended December 31, 2021 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-Q. 48 Table of Contents Organic Net Revenue: Applying the definition of “Organic Net Revenue,” the adjustments made to “net revenues” (the most comparable U.S. GAAP financial measure) were to exclude the impact of currency and acquisitions. We believe that Organic Net Revenue reflects the underlying growth from the ongoing activities of our business and provides improved comparability of results. We also evaluate our Organic Net Revenue growth from emerging markets and developed markets, and these underlying measures are also reconciled to U.S. GAAP below. For the Three Months Ended March 31, 2022 For the Three Months Ended March 31, 2021 Emerging Markets Developed Markets Total Emerging Markets Developed Markets Total (in millions) (in millions) Net Revenues $ 2,964 $ 4,800 $ 7,764 $ 2,563 $ 4,675 $ 7,238 Impact of currency 139 160 299 — — — Impact of acquisitions (116) (90) (206) — — — Organic Net Revenue $ 2,987 $ 4,870 $ 7,857 $ 2,563 $ 4,675 $ 7,238 49 Table of Contents Adjusted Operating Income: Applying the definition of “Adjusted Operating Income,” the adjustments made to “operating income” (the most comparable U.S. GAAP financial measure) were to exclude Simplify to Grow Program; 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; gain on an acquisition; incremental costs due to the war in Ukraine; the remeasurement of net monetary position; and impact from pension participation changes. We also evaluate Adjusted Operating Income on a constant currency basis. We believe these measures provide improved comparability of underlying operating results. For the Three Months Ended March 31, 2022 2021 $ Change % Change (in millions) Operating Income $ 1,094 $ 1,283 $ (189) (14.7) % Simplify to Grow Program (1) 31 122 (91) Intangible asset impairment charges (2) 78 — 78 Mark-to-market gains from derivatives (3) (27) (118) 91 Acquisition integration costs and contingent consideration adjustments (4) 32 1 31 Acquisition-related costs (4) 21 7 14 Divestiture-related costs (4) 1 — 1 Gain on acquisition (4) — (9) 9 Incremental costs due to war in Ukraine (5) 143 — 143 Remeasurement of net monetary position (5) 5 5 — Impact from pension participation changes (6) — 1 (1) Adjusted Operating Income $ 1,378 $ 1,292 $ 86 6.7 % Unfavorable currency translation 89 — 89 Adjusted Operating Income (constant currency) $ 1,467 $ 1,292 $ 175 13.5 % (1) Refer to Note 7, Restructuring Program, for more information. (2) Refer to Note 5, Goodwill and Intangible Assets , for more information. (3) Refer to Note 9, Financial Instruments , and the Non-GAAP Financial Measures section 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, the April 1, 2021 acquisition of Gourmet Food Holdings Pty Ltd, the March 25, 2021 acquisition of a majority interest in Grenade and the January 4, 2021 acquisition of the remaining 93% of equity in Hu Master Holdings. (5) Refer to Note 1, Basis of Presentation , for information on our accounting for the war in Ukraine and our application of highly inflationary accounting for Argentina. (6) Refer to Note 10, Benefit Plans , for more information. 50 Table of Contents Adjusted EPS: Applying the definition of “Adjusted EPS,” (1) the adjustments made to “diluted EPS attributable to Mondelēz International” (the most comparable U.S. GAAP financial measure) were to exclude the impacts of the items listed in the Adjusted Operating Income tables above as well as net earnings from divestitures; losses on debt extinguishment and related expenses; initial impacts from enacted tax law changes; 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 Three Months Ended March 31, 2022 2021 $ Change % Change Diluted EPS attributable to Mondelēz International $ 0.61 $ 0.68 $ (0.07) (10.3) % Simplify to Grow Program (2) 0.02 0.07 (0.05) Intangible asset impairment charges (2) 0.04 — 0.04 Mark-to-market gains from derivatives (2) (0.02) (0.07) 0.05 Acquisition integration costs and contingent consideration adjustments (2) (0.01) — (0.01) Acquisition-related costs (2) 0.02 0.01 0.01 Net earnings from divestitures (3) — (0.01) 0.01 Incremental costs due to war in Ukraine (2) 0.11 — 0.11 Loss on debt extinguishment and related expenses (4) 0.07 0.07 — Equity method investee items (5) — 0.04 (0.04) Adjusted EPS $ 0.84 $ 0.79 $ 0.05 6.3 % Unfavorable currency translation 0.06 — 0.06 Adjusted EPS (constant currency) $ 0.90 $ 0.79 $ 0.11 13.9 % (1) The tax expense/(benefit) of each of the pre-tax items excluded from our GAAP results was computed based on the facts and tax assumptions associated with each item, and such impacts have also been excluded from Adjusted EPS. • For the three months ended March 31, 2022, taxes for the: Simplify to Grow Program were $(7) million, intangible asset impairment charges were $(19) million, mark-to-market gains from derivatives were $(5) million, acquisition integration costs and contingent consideration adjustments were $(50) million, acquisition-related costs were $(1) million, incremental costs due to the war in Ukraine were $2 million and loss on debt extinguishment and related expenses were $(31) million. • For the three months ended March 31, 2021, taxes for the: Simplify to Grow Program were $(31) million, mark-to-market gains from derivatives were $22 million, acquisition-related costs were $(1) million, net earnings from divestitures were $3 million, loss on debt extinguishment and related expenses were $(34) million and equity method investee items were $(2) million. (2) See the Adjusted Operating Income table above and the related footnotes for more information. (3) Includes the impact from 2021 partial sales of our equity method investment in KDP as if the sales occurred at the beginning of all periods presented. (4) Refer to Note 8, Debt and Borrowing Arrangements , for more information on the loss on debt extinguishment and related expenses. (5) Includes our proportionate share of significant operating and non-operating items recorded by our JDE Peet's and KDP equity method investees, such as acquisition and divestiture-related costs and restructuring program costs. 51 Table of Contents