What changed in this filing

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Item 1. Financial Statements

2022-07-26 compared with 2022-04-26 · 296 added, 142 removed, 856 unchanged (34% of the section changed)

6 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

Net revenues $ 7,274 $ 6,642 $ 15,038 $ 13,880

10 unchanged sentences

Income tax provision ( 201 ) ( 398 ) ( 411 ) ( 610 )

Loss on equity method investment transactions ( 5 ) ( 7 )

(Loss)/gain on equity method investment transactions ( 8 ) 502 ( 13 ) 495

Equity method investment net earnings 98 107 215 185

14 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

Net earnings $ 748 $ 1,079 $ 1,609 $ 2,047

16 unchanged sentences

dollars, except share data)

March 31, 2022 December 31, 2021

2022 December 31, 2021

Cash and cash equivalents $ 1,924 $ 3,546

Trade receivables (net of allowances of $ 55 at March 31, 2022

Trade receivables (net of allowances of $ 45 at June 30, 2022

and $ 37 at December 31, 2021)

Other receivables (net of allowances of $ 48 at March 31, 2022

Other receivables (net of allowances of $ 48 at June 30, 2022

and $ 49 at December 31, 2021)

27 unchanged sentences

Common Stock, no par value ( 5,000,000,000 shares authorized and

1,996,537,778 shares issued at March 31, 2022 and December 31, 2021)

1,996,537,778 shares issued at June 30, 2022 and December 31, 2021)

Additional paid-in capital 32,086 32,097

1 unchanged sentence

Accumulated other comprehensive losses ( 10,638 ) ( 10,624 )

Treasury stock, at cost ( 612,818,033 shares at March 31, 2022 and

Treasury stock, at cost ( 624,240,103 shares at June 30, 2022 and

604,907,239 shares at December 31, 2021)

18 unchanged sentences

Interest Total

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Balances at April 1, 2022 $ — $ 32,053 $ 31,163 $ ( 10,425 ) $ ( 24,630 ) $ 55 $ 28,216

Comprehensive earnings/(losses):

Net earnings — — 747 — — 1 748

Other comprehensive earnings/(losses),

net of income taxes

— — — ( 213 ) — ( 11 ) ( 224 )

Exercise of stock options and issuance of

other stock awards

— 33 — — 32 — 65

Common Stock repurchased — — — — ( 770 ) — ( 770 )

Cash dividends declared ($ 0.350 per share)

— — ( 482 ) — — — ( 482 )

Dividends paid on noncontrolling interest

and other activities

— — 3 — — ( 3 ) —

Balances at June 30, 2022 $ — $ 32,086 $ 31,431 $ ( 10,638 ) $ ( 25,368 ) $ 42 $ 27,553

Six Months Ended June 30, 2022

Balances at January 1, 2022 $ — $ 32,097 $ 30,806 $ ( 10,624 ) $ ( 24,010 ) $ 54 $ 28,323

13 unchanged sentences

— — 3 — — ( 4 ) ( 1 )

Balances at March 31, 2022 $ — $ 32,053 $ 31,163 $ ( 10,425 ) $ ( 24,630 ) $ 55 $ 28,216

Three Months Ended March 31, 2021

Balances at June 30, 2022 $ — $ 32,086 $ 31,431 $ ( 10,638 ) $ ( 25,368 ) $ 42 $ 27,553

Three Months Ended June 30, 2021

Balances at April 1, 2021 $ — $ 32,009 $ 28,903 $ ( 10,746 ) $ ( 23,091 ) $ 74 $ 27,149

Comprehensive earnings/(losses):

Net earnings — — 1,078 — — 1 1,079

Other comprehensive earnings/(losses),

net of income taxes

— — — 174 — 2 176

Exercise of stock options and issuance of

other stock awards

— 33 ( 3 ) — 77 — 107

Common Stock repurchased — — — — ( 451 ) — ( 451 )

Cash dividends declared ($ 0.315 per share)

— — ( 444 ) — — — ( 444 )

Dividends paid on noncontrolling interest

and other activities

— — 4 — — — 4

Balances at June 30, 2021 $ — $ 32,042 $ 29,538 $ ( 10,572 ) $ ( 23,465 ) $ 77 $ 27,620

Six Months Ended June 30, 2021

Balances at January 1, 2021 $ — $ 32,070 $ 28,402 $ ( 10,690 ) $ ( 22,204 ) $ 76 $ 27,654

13 unchanged sentences

— — 4 — — — 4

Balances at March 31, 2021 $ — $ 32,009 $ 28,903 $ ( 10,746 ) $ ( 23,091 ) $ 74 $ 27,149

Balances at June 30, 2021 $ — $ 32,042 $ 29,538 $ ( 10,572 ) $ ( 23,465 ) $ 77 $ 27,620

See accompanying notes to the condensed consolidated financial statements.

3 unchanged sentences

(in millions of U.S.

For the Three Months Ended

For the Six Months Ended

CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES

7 unchanged sentences

Gain on acquisition — ( 9 )

Loss on equity method investment transactions 5 7

Loss/(gain) on equity method investment transactions 13 ( 495 )

Equity method investment net earnings ( 215 ) ( 185 )

17 unchanged sentences

CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES

Issuances of commercial paper, maturities greater than 90 days — —

Repayments of commercial paper, maturities greater than 90 days — —

Net issuances/(repayments) of other short-term borrowings 219 37

1 unchanged sentence

Long-term debt repayments ( 2,329 ) ( 3,376 )

Repurchase of Common Stock ( 751 ) ( 1,046 )

Repurchases of Common Stock ( 1,506 ) ( 1,498 )

Dividends paid ( 977 ) ( 896 )

29 unchanged sentences

We recorded $ 143 million of total expenses ($ 145 million after-tax) incurred as a direct result of the war, including $ 75 million recorded in asset impairment and exit costs , $ 44 million in cost of sales and $ 24 million in selling, general and administrative expenses.

We recorded $ 75 million of property, plant and equipment impairments, $ 33 million of estimated inventory reserves and write-offs, $ 19 million of increased estimated allowances for trade receivables and $ 16 million in accrued expenses.

We recorded $ 75 million of property, plant and equipment impairments, $ 33 million of estimated inventory write-offs, $ 19 million of increased estimated allowances for trade receivables and $ 16 million in accrued expenses.

During the second quarter of 2022, we reversed approximately $ 15 million of previously recorded charges as a result of higher than expected collection of trade receivables and inventory recoveries.

We continue to consolidate both our Ukrainian and Russian subsidiaries and continue to evaluate our ability to control our operating activities and businesses on an ongoing basis.

11 unchanged sentences

During the first quarter of 2022, primarily based on data published by the Türkiye Statistical Institute that indicated that Türkiye's three-year cumulative inflation rate exceeded 100%, 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.

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.

As of April 1, 2022, we began to apply highly inflationary accounting for our subsidiaries operating in Türkiye and change their functional currency from the Turkish lira to the U.S.

Our operations in Türkiye contributed $ 46 million or 0.6 % of our condensed consolidated net revenues in the three months and $ 90 million or 0.6 % of our condensed consolidated net revenues in the six months ended June 30, 2022.

As of June 30, 2022, our operations in Türkiye had $ 11 million of Turkish lira denominated net

monetary liabilities.

Within selling, general and administrative expenses, we recorded a remeasurement loss of less than $ 1 million during the three months ended June 30, 2022 related to the revaluation of the Turkish lira denominated net monetary position during the quarter.

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

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

Our operations in Argentina contributed $ 129 million, or 1.7 % of our condensed consolidated net revenues in the three months ended March 31, 2022.

As of March 31, 2022, our Argentinean operations had $ 26 million of Argentinean peso denominated net monetary assets.

Within selling, general and administrative expenses, we recorded a remeasurement loss of $ 5 million during the three months ended March 31, 2022 related to the revaluation of the Argentinean peso denominated net monetary position over these periods.

Our operations in Argentina contributed $ 138 million or 1.9 % of consolidated net revenues in the three months and $ 268 million or 1.8 % of our condensed consolidated net revenues in the six months ended June 30, 2022.

As of June 30, 2022, our Argentinean operations had $ 28 million of Argentinean peso denominated net monetary assets.

Within selling, general and administrative expenses, we recorded a remeasurement loss of $ 10 million during the three months and $ 15 million during the six months ended June 30, 2022 as well as a remeasurement loss of $ 3 million during the three months and $ 8 million during the six months ended June 30, 2021 related to the revaluation of the Argentinean peso denominated net monetary position over these periods.

Other Countries.

1 unchanged sentence

We continue to monitor the developments in Ukraine and Russia as well as in the ongoing COVID-19 global pandemic and related impacts to our business operations, currencies and net monetary exposures.

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

At this time, within our consolidated entities, Argentina and Türkiye are or will be accounted for as highly inflationary economies as noted above, and we continue to monitor currency volatility and associated risks, including highly inflationary economies.

Since the global onset of COVID-19 in early 2020 and compounded by the ongoing war in Ukraine and the impact of general economic conditions, including inflation, most countries in which we do business experienced periods of significant economic uncertainty as well as exchange rate volatility.

At this time, within our consolidated entities, Argentina and Türkiye are highly inflationary economies as noted above, and we continue to monitor currency volatility and associated risks, such as increased risk of highly inflationary economies and related accounting.

Cash, Cash Equivalents and Restricted Cash:

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

We also have restricted cash that is recorded within other current assets of $ 7 million as of March 31, 2022 and $ 7 million as of December 31, 2021.

Total cash, cash equivalents and restricted cash was $ 1,953 million as of March 31, 2022 and $ 3,553 million as of December 31, 2021.

We also have restricted cash that is recorded within other current assets of $ 11 million as of June 30, 2022 and $ 7 million as of December 31, 2021.

Total cash, cash equivalents and restricted cash was $ 1,935 million as of June 30, 2022 and $ 3,553 million as of December 31, 2021.

Allowances for Credit Losses:

9 unchanged sentences

Currency 1 2 ( 1 )

Balance at March 31, 2022 $ ( 55 ) $ ( 48 ) $ ( 17 )

Balance at June 30, 2022 $ ( 45 ) $ ( 48 ) $ ( 16 )

Transfers of Financial Assets:

2 unchanged sentences

We use receivable factoring arrangements periodically when circumstances are favorable to manage liquidity.

We have non-recourse factoring arrangements in which we sell eligible trade receivables primarily to banks in exchange for cash.

We have non-recourse

factoring arrangements in which we sell eligible trade receivables primarily to banks in exchange for cash.

We may then continue to collect the receivables sold, acting solely as a collecting agent on behalf of the banks.

The outstanding principal amount of receivables under these arrangements amounted to $ 887 million as of March 31, 2022 and $ 761 million as of December 31, 2021.

The outstanding principal amount of receivables under these arrangements amounted to $ 700 million as of June 30, 2022 and $ 761 million as of December 31, 2021.

The incremental cost of factoring receivables under this arrangement was not material for all periods presented.

1 unchanged sentence

Non-Cash Lease Transactions:

We recorded $ 95 million in operating lease and $ 56 million in finance lease right-of-use assets obtained in exchange for lease obligations during the three months ended March 31, 2022 and $ 29 million in operating lease and $ 30 million in finance lease right-of-use assets obtained in exchange for lease obligations during the three months ended March 31, 2021.

We recorded $ 125 million in operating lease and $ 76 million in finance lease right-of-use assets obtained in exchange for lease obligations during the six months ended June 30, 2022 and $ 115 million in operating lease and $ 44 million in finance lease right-of-use assets obtained in exchange for lease obligations during the six months ended June 30, 2021.

New Accounting Pronouncements:

9 unchanged sentences

Acquisitions and Divestitures

On June 20, 2022, we announced an agreement to acquire Clif Bar & Company (“Clif Bar”), a leading U.S.

maker of nutritious energy bars with organic ingredients for a purchase price of approximately $ 2.9 billion, subject to closing purchase price adjustments.

The acquisition of Clif Bar includes a contingent consideration arrangement that may require us to pay additional consideration to the sellers for achieving certain revenue and earnings targets in 2025 and 2026 that exceed our base financial projections for the business implied in the upfront purchase price.

The possible payments range from zero to a maximum total of $ 2.4 billion, with higher payouts requiring the achievement of targets that generate rates of returns in excess of the base financial projections.

In connection with this acquisition, we expect to generate a meaningful cash tax benefit over time from the amortization of acquisition-related intangibles.

The transaction, which will be funded through a combination of debt and cash on hand, is subject to relevant antitrust approvals and closing conditions and is expected to close in the third quarter of 2022.

During the second quarter of 2022, we incurred $ 4 million of acquisition-related costs.

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.

On January 3, 2022, we acquired Chipita S.A.

The transaction, which will be funded through a combination of debt and cash on hand, is subject to relevant antitrust approvals and closing conditions and is expected to close late in the third quarter or early in the fourth quarter of 2022.

During the second quarter of 2022, we incurred $ 1 million of acquisition-related costs.

On January 3, 2022, we acquired Chipita Global S.A.

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

26 unchanged sentences

All of the goodwill was assigned to the Europe segment.

Chipita added incremental net revenues of $ 152 million and operating income of $ 4 million in t he three months ended March 31, 2022.

We incurred acquisition-related costs of $ 21 million and integration cost s of $ 35 million in t he three months ended March 31, 2022.

Chipita added incremental net revenues of $ 180 million during the three months and $ 332 million during t he six months ended June 30, 2022, and operating income of $ 10 million during the three months and $ 14 million during the six months ended June 30, 2022.

We incurred acquisition-related costs of $ 21 million during the six months ended June 30, 2022 and $ 6 million during the three months and six months ended June 30, 2021.

We incurred integration costs of $ 36 million during the three months and $ 71 million during the six months ended June 30, 2022.

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

2 unchanged sentences

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

The acquisition added incremental net revenues of $ 14 million, and operating income of $ 1 million in the three months ended March 31, 2022.

We incurred acquisition-related costs of $ 1 million in the three months ended March 31, 2021.

Through the one-year anniversary of the acquisition, Gourmet Food added incremental net revenues of $ 14 million, and operating income of $ 1 million during the six months ended June 30, 2022.

We incurred acquisition-related costs of $ 6 million during the three months and $ 7 million during the six months ended June 30, 2021.

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

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

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

Through the one-year anniversary of the acquisition, Grenade added incremental net revenues of $ 21 million, and operating income of $ 2 million in the three months ended March 31, 2022.

We incurred acquisition-related costs of $ 2 million in the three months ended March 31, 2021.

We have recorded a

purchase price allocation of net tangible and intangible assets acquired and liabilities assumed of $ 82 million to indefinite-lived intangible assets, $ 28 million to definite-lived intangible assets, $ 181 million to goodwill, $ 1 million to property, plant and equipment, $ 11 million to inventory, $ 18 million to accounts receivable, $ 25 million to current liabilities, $ 20 million to deferred tax liabilities and $ 15 million to long-term other liabilities.

Through the one-year anniversary of the acquisition, Grenade added incremental net revenues of $ 21 million, and operating income of $ 2 million during the six months ended June 30, 2022.

We incurred acquisition-related costs of $ 2 million during the six months ended June 30, 2021.

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

3 unchanged sentences

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

We incurred acquisition-related costs of $ 4 million during the three months ended March 31, 2021.

We incurred acquisition-related costs of $ 5 million during the three months and $ 9 million during the six months ended June 30, 2021.

Inventories consisted of the following:

As of March 31, 2022 As of December 31, 2021

As of June 30,

2022 As of December 31, 2021

(in millions)

5 unchanged sentences

Property, plant and equipment consisted of the following:

As of March 31, 2022 As of December 31, 2021

As of June 30,

2022 As of December 31, 2021

(in millions)

6 unchanged sentences

Property, plant and equipment, net $ 8,753 $ 8,658

For the three months ended March 31, 2022, capital expenditures of $ 167 million excluded $ 244 million of accrued capital expenditures remaining unpaid at March 31, 2022 and included payment for a portion of the $ 249 million of capital expenditures that were accrued and unpaid at December 31, 2021.

For the three months ended March 31, 2021, capital expenditures of $ 216 million excluded $ 230 million of accrued capital expenditures remaining unpaid at March 31, 2021 and included payment for a portion of the $ 275 million of capital expenditures that were accrued and unpaid at December 31, 2020.

For the six months ended June 30, 2022, capital expenditures of $ 385 million excluded $ 239 million of accrued capital expenditures remaining unpaid at June 30, 2022 and included payment for $ 249 million of capital expenditures that were accrued and unpaid at December 31, 2021.

For the six months ended June 30, 2021, capital expenditures of $ 410 million excluded $ 236 million of accrued capital expenditures remaining unpaid at June 30, 2021 and included payment for $ 275 million of capital expenditures that were accrued and unpaid at December 31, 2020.

In connection with our restructuring program, we recorded non-cash property, plant and equipment write-downs (including accelerated depreciation and asset impairments) and losses/(gains) on disposal in the condensed consolidated statements of earnings within asset impairment and exit costs and within the segment results as follows (refer to Note 7, Restructuring Program ).

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

1 unchanged sentence

AMEA — — — ( 16 )

Europe 3 3 3 4

North America 3 62 4 117

2 unchanged sentences

Goodwill by segment was:

As of March 31, 2022 As of December 31, 2021

As of June 30,

2022 As of December 31, 2021

(in millions)

5 unchanged sentences

Intangible assets consisted of the following:

As of March 31, 2022 As of December 31, 2021

As of June 30,

2022 As of December 31, 2021

(in millions)

7 unchanged sentences

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

Amortization expense for intangible assets was $ 32 million for the three months ended March 31, 2022 and $ 38 million for the three months ended March 31, 2021.

For the next five years, we currently estimate annual amortization expense of approximately $ 130 million in 2022-2024, approximately $ 105 million in 2025 and approximately $ 65 million in 2026 (reflecting March 31, 2022 exchange rates).

Amortization expense for intangible assets was $ 32 million for the three months and $ 64 million for the six months ended June 30, 2022 and $ 32 million for the three months and $ 70 million for the six months ended June 30, 2021.

For the next five years, we currently estimate annual amortization expense of approximately $ 125 million in 2022-2024, approximately $ 105 million in 2025 and approximately $ 65 million in 2026 (reflecting June 30, 2022 exchange rates).

Changes in goodwill and intangible assets consisted of:

6 unchanged sentences

Asset impairments — ( 78 )

Balance at March 31, 2022 $ 22,618 $ 20,852

Balance at June 30, 2022 $ 22,103 $ 20,342

Changes to goodwill and intangibles were:

• Acquisitions - In connection with our acquisition of Chipita during the first three months of 2022, we recorded a preliminary purchase price allocation of $ 774 million to goodwill and $ 734 million to intangible assets.

• Acquisitions - In connection with our acquisition of Chipita, we recorded a preliminary purchase price allocation of $ 791 million to goodwill and $ 734 million to intangible assets.

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

• Asset impairment - As further described below, during the first quarter of 2022, we recorded a $ 78 million intangible asset impairment in AMEA due to lower than expected growth and profitability of a local biscuit brand sold in select markets in AMEA and Europe.

During the first quarter of 2022, we evaluated our goodwill and intangible asset impairment risk through an assessment of potential triggering events.

In light of the war in Ukraine and the overall global economic environment, we considered qualitative and quantitative information in our assessment of goodwill and indefinite-life intangible assets.

Based on the financial performance of our goodwill reporting units, we concluded there were no impairment indicators for goodwill.

Based on further quantitative analysis of our indefinite-life intangible assets, we concluded that a biscuit brand was impaired.

During the first quarter of 2022, we recorded a $ 78 million impairment charge for the brand within asset impairment and exit costs and based on the excess carrying value over its estimated fair value.

During our indefinite-life impairment testing, 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.

During the first quarter of 2021, there were no impairments of goodwill or intangible assets.

During the second quarter of 2022, we evaluated our goodwill and intangible asset impairment risk through an assessment of potential triggering events, including qualitative and quantitative of the overall global economic environment and impacts from the war in Ukraine.

Based on the results of our assessment, we concluded there were no impairment indicators for goodwill and intangible assets.

During the first quarter of 2022, we recorded a $ 78 million impairment charge within asset impairment and exit costs based on the excess carrying value over the estimated fair value of a biscuit brand.

During the second quarter of 2021, we recorded $ 32 million of intangible asset impairments resulting primarily from lower than expected sales growth for one brand across our North America segment.

We use several accepted valuation methods in our indefinite-life impairment testing, 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.

During our 2021 annual indefinite-life intangible asset testing in the third quarter of 2021, we identified eight brands, including the one brand impaired during the first quarter of 2022, that each had a fair value in excess of book value of 10% or less.

The aggregate book value of the eight brands was $ 1,045 million as of March 31, 2022.

The aggregate book value of the eight brands was $ 987 million as of June 30, 2022.

We continue to monitor our brand performance, particularly in light of the significant global economic uncertainties and related impacts to our business.

9 unchanged sentences

Our ownership interests may change over time due to investee stock-based compensation arrangements, share issuances or other equity-related transactions.

As of March 31, 2022, we owned 22.7 %, 5.3 %, 50.0 % and 49.0 %, respectively, of these companies' outstanding shares.

Our investments accounted for under the equity method of accounting totaled $ 5,255 million as of March 31, 2022 and $ 5,289 million as of December 31, 2021.

We recorded equity earnings of $ 117 million and cash dividends of $ 107 million in the first quarter of 2022 and equity earnings of $ 78 million and cash dividends of $ 74 million in the first quarter of 2021.

Based on the quoted closing prices as of March 31, 2022, the combined fair value of our publicly-traded investments in JDEP and KDP wa s $ 6.1 billion , and for each investment, its fair value exceeded its carrying value.

As of June 30, 2022, we owned 19.8 %, 5.3 %, 50.0 % and 49.0 %, respectively, of these companies' outstanding shares.

Our investments accounted for under the equity method of accounting totaled $ 4.7 billion as of June 30, 2022 and $ 5.3 billion as of December 31, 2021.

We recorded equity earnings of $ 98 million and cash dividends of $ 14 million in the second quarter of 2022 and equity earnings of $ 107 million and cash dividends of $ 20 million in the second quarter of 2021.

We recorded equity earnings of $ 215 million and cash dividends of $ 121 million in the first six months of 2022 and equity earnings of $ 185 million and cash dividends of $ 94 million in the first six months of 2021.

Based on the quoted closing prices as of June 30, 2022, the combined fair value of our publicly-traded investments in JDEP and KDP wa s $ 5.4 billion , and for each investment, its fair value exceeded its carrying value.

JDE Peet’s Transactions:

On May 8, 2022, we sold approximately 18.6 million of our JDE Peet’s shares back to JDE Peet’s, which reduced our ownership interest by approximately 3 %.

We received € 500 million ($ 529 million) of proceeds and recorded a loss of € 8 million ($ 8 million) on this sale during the second quarter of 2022.

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

We will continue to have board representation with two directors on the JDE Peet's Board of Directors and we retained certain additional governance rights.

On September 20, 2021, we issued € 300 million exchangeable bonds, which are redeemable at maturity in September 2024 at their principal amount in cash or, at our option, through the delivery of an equivalent number of JDE Peet’s ordinary shares based on an initial exchange price of € 35.40 and, as the case may be, an additional amount in cash.

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

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

If all bonds were redeemed in exchange for JDE Peet's shares, this would represent approximately 8.5 million shares or approximately 9 % of our equity interest in JDE Peet's as of June 30, 2022.

Refer to Note 9, Financial Instruments , for further details on this transaction.

Keurig Dr Pepper Transactions:

On June 7, 2021, we participated in a secondary offering of KDP shares and sold approximately 28 million shares, which reduced our ownership interest by 2 % of the total outstanding shares.

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

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

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

Restructuring Program

1 unchanged sentence

On August 31, 2016, our Board of Directors approved a $ 600 million reallocation between restructuring program cash costs and capital expenditures so the $ 5.7 billion program consisted of approximately $ 4.1 billion of restructuring program charges ($ 3.1 billion cash costs and $ 1.0 billion non-cash costs) and up to $ 1.6 billion of capital expenditures.

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

$ 700 million in capital expenditures.

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

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

6 unchanged sentences

Restructuring Costs :

The Simplify to Grow Program liability activity for the three months ended March 31, 2022 was:

The Simplify to Grow Program liability activity for the six months ended June 30, 2022 was:

Write-downs Total

5 unchanged sentences

Currency ( 10 ) — ( 10 )

Liability balance, March 31, 2022 $ 202 $ — $ 202

• We recorded restructuring charges of $ 11 million in the first quarter of 2022 and $ 88 million in the first quarter of 2021 within asset impairment and exit costs and benefit plan non-service income.

• We spent $ 17 million in the first quarter of 2022 and $ 34 million in the first quarter of 2021 in cash severance and related costs.

• We recognized non-cash asset write-downs (including accelerated depreciation and asset impairments), and other adjustments, including any gains on sale of restructuring program assets, which totaled $ 2 million in the first quarter of 2022 and $ 40 million in the first quarter of 2021.

• At March 31, 2022, $ 172 million of our net restructuring liability was recorded within other current liabilities and $ 30 million was recorded within other long-term liabilities.

Liability balance, June 30, 2022 $ 174 $ — $ 174

• We recorded restructuring charges of $ 4 million in the second quarter of 2022 and $ 100 million in the second quarter of 2021 and $ 15 million in the first six months of 2022 and $ 188 million in the first six months of 2021 within asset impairment and exit costs and benefit plan non-service income.

• We spent $ 16 million in the second quarter of 2022 and $ 30 million in the second quarter of 2021 and $ 33 million in the first six months of 2022 and $ 64 million in the first six months of 2021 in cash severance and related costs.

• We recognized non-cash asset write-downs (including accelerated depreciation and asset impairments), and other adjustments, including any gains on sale of restructuring program assets, which totaled $ 7 million in the second quarter of 2022 and $ 76 million in the second quarter of 2021 and $ 9 million in the first six months of 2022 and $ 116 million in the first six months of 2021.

• At June 30, 2022, $ 119 million of our net restructuring liability was recorded within other current liabilities and $ 55 million was recorded within other long-term liabilities.

Implementation Costs:

4 unchanged sentences

The costs include incremental expenses related to the closure of facilities, costs to terminate certain contracts and the simplification of our information systems.

Within our continuing results of operations, we recorded implementation costs of $ 20 million in the first quarter of 2022 and $ 34 million in the first quarter of 2021.

Within our continuing results of operations, we recorded implementation costs of $ 19 million in the second quarter of 2022 and $ 33 million in the second quarter of 2021 and $ 39 million in the first six months of 2022 and $ 67 million in the first six months of 2021.

We recorded these costs within cost of sales and general corporate expense within selling, general and administrative expenses.

Restructuring and Implementation Costs:

During the three months ended March 31, 2022 and March 31, 2021, and since inception of the Simplify to Grow Program, we recorded the following restructuring and implementation costs within segment operating income and earnings before income taxes:

During the three and six months ended June 30, 2022 and June 30, 2021, and since inception of the Simplify to Grow Program, we recorded the following restructuring and implementation costs within segment operating income and earnings before income taxes:

America AMEA Europe North

1 unchanged sentence

(in millions)

For the Three Months Ended March 31, 2022

For the Three Months Ended June 30, 2022

Restructuring Costs $ ( 2 ) $ — $ — $ 4 $ 2 $ 4

1 unchanged sentence

Total $ 1 $ 3 $ 8 $ 13 $ ( 2 ) $ 23

For the Three Months Ended March 31, 2021

For the Three Months Ended June 30, 2021

Restructuring Costs $ — $ 2 $ ( 1 ) $ 92 $ 7 $ 100

1 unchanged sentence

Total $ 4 $ 5 $ 10 $ 109 $ 5 $ 133

For the Six Months Ended June 30, 2022

Restructuring Costs $ ( 3 ) $ 2 $ 2 $ 12 $ 2 $ 15

Implementation Costs 4 4 13 16 2 39

Total $ 1 $ 6 $ 15 $ 28 $ 4 $ 54

For the Six Months Ended June 30, 2021

Restructuring Costs $ 3 $ ( 19 ) $ 5 $ 193 $ 6 $ 188

Implementation Costs 7 5 21 27 7 67

Total $ 10 $ ( 14 ) $ 26 $ 220 $ 13 $ 255

Total Project (Inception to Date)

5 unchanged sentences

Our short-term borrowings and related weighted-average interest rates consisted of:

As of March 31, 2022 As of December 31, 2021

As of June 30, 2022 As of December 31, 2021

Outstanding Weighted-

5 unchanged sentences

Total short-term borrowings $ 605 $ 216

Our uncommitted credit lines and committed credit lines available as of March 31, 2022 and December 31, 2021 include:

As of March 31, 2022 As of December 31, 2021

Our uncommitted credit lines and committed credit lines available as of June 30, 2022 and December 31, 2021 include:

As of June 30, 2022 As of December 31, 2021

Facility Amount Borrowed Amount Facility Amount Borrowed Amount

8 unchanged sentences

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

The revolving credit agreement includes a covenant that we maintain a minimum shareholders' equity of at least $ 25.0 billion, excluding accumulated other comprehensive earnings/(losses), the cumulative effects of any changes in accounting principles and earnings/(losses) recognized in connection with the ongoing application of any mark-to-market accounting for

pensions and other retirement plans.

At March 31, 2022, we complied with this covenant as our shareholders' equity, as defined by the covenant, was $ 38.6 billion.

At June 30, 2022, we complied with this covenant as our shareholders' equity, as defined by the covenant, was $ 38.1 billion.

The revolving credit facility also contains customary representations, covenants and events of default.

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The maturity dates of any loans drawn under this facility will be three years after the funding date of the applicable loan(s).

On July 11, 2022, we entered into a supplemental term loan credit facility that can be utilized for general corporate purposes, including acquisitions.

Under this agreement we may draw up to a total of $ 2.0 billion in term loans from the facility.

The maturity dates of any loans drawn under this facility will be eighteen months after the funding date of the applicable loan(s).

Long-Term Debt:

19 unchanged sentences

Debt Repayments

On January 3, 2022, we closed on our acquisition of Chipita and assumed and entirely paid down € 0.4 billion ($ 0.4 billion) of Chipita's debt during the three months ended March 31, 2022.

During the three months ended March 31, 2022, we issued the following notes (in millions):

On January 3, 2022, we closed on our acquisition of Chipita and assumed and entirely paid down € 0.4 billion ($ 0.4 billion) of Chipita's debt during the six months ended June 30, 2022.

During the six months ended June 30, 2022, we issued the following notes (in millions):

Issuance Date Interest Rate Maturity Date Gross Proceeds (1)

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Fair Value of Our Debt:

The fair value of our short-term borrowings at March 31, 2022 and December 31, 2021 reflects current market interest rates and approximates the amounts we have recorded on our consolidated balance sheets.

The fair value of our short-term borrowings at June 30, 2022 and December 31, 2021 reflects current market interest rates and approximates the amounts we have recorded on our consolidated balance sheets.

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

As of March 31, 2022 As of December 31, 2021

As of June 30, 2022 As of December 31, 2021

(in millions)

4 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

2 unchanged sentences

related expenses — — 129 137

Other (income)/expense, net ( 52 ) ( 17 )

Other expense/(income), net 9 ( 32 ) ( 43 ) ( 49 )

Interest and other expense, net $ 98 $ 58 $ 266 $ 276

Other income includes amounts excluded from hedge effectiveness related to our net investment hedge derivative contracts that totaled $ 22 million in the three months ended March 31, 2022 and $ 20 million in the three months ended March 31, 2021.

Early settlement of forecasted currency exchange contracts comprise $ 20 million in other (income)/expense, net due to changes in related forecasted future cash flows in the three months ended March 31, 2022.

Other income includes amounts excluded from hedge effectiveness related to our net investment hedge derivative contracts and early settlement of forecasted currency derivative transactions due to changes in related future cash flows.

Refer to Note 9, Financial Instruments .

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Derivative instruments were recorded at fair value in the condensed consolidated balance sheets as follows:

As of March 31, 2022 As of December 31, 2021

As of June 30, 2022 As of December 31, 2021

Derivatives Liability

23 unchanged sentences

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

Refer to Note 8, Debt and Borrowing Arrangements .

Refer to Note 6, Equity Method Investments .

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

3 unchanged sentences

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

As of March 31, 2022

As of June 30, 2022

Fair Value of Net

39 unchanged sentences

Our calculation of the fair value of financial instruments takes into consideration the risk of nonperformance, including counterparty credit risk.

Our OTC derivative transactions are governed by International Swap Dealers Association agreements and other

standard industry contracts.

Our OTC derivative transactions are governed by International Swap Dealers Association agreements and other standard industry contracts.

Under these agreements, we do not post nor require collateral from our counterparties.

4 unchanged sentences

Notional Amount

As of March 31, 2022 As of December 31, 2021

As of June 30,

2022 As of December 31, 2021

(in millions)

14 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

6 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

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

Currency exchange contracts –

forecasted transactions $ ( 2 ) $ — $ ( 4 ) $ —

Interest rate contracts 98 ( 4 ) 75 ( 9 )

2 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

7 unchanged sentences

Cash Flow Hedge Coverage:

As of March 31, 2022, our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 4 years, 5 months .

As of June 30, 2022, our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 4 years, 2 months .

Hedges of Net Investments in International Operations:

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operations against movements in exchange rates.

The aggregate notional value as of March 31, 2022 was $ 7.3 billion.

The impacts of the net investment hedge derivative contracts on other comprehensive earnings and net earnings were as follows:

The aggregate notional value as of June 30, 2022 was $ 7.1 billion.

Net investment hedge derivative contract impacts on other comprehensive earnings and net earnings were:

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

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

$ 307 $ ( 36 ) $ 348 $ 23

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

1 unchanged sentence

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

1 unchanged sentence

hedge effectiveness (1)

$ 30 $ 19 $ 52 $ 40

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

2 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

6 unchanged sentences

For the Three Months Ended

March 31, Location of Gain/(Loss) Recognized in Earnings

June 30, For the Six Months Ended

June 30, Location of Gain/(Loss) Recognized in Earnings

2022 2021 2022 2021

(in millions)

11 unchanged sentences

Total $ 30 $ 94 $ 272 $ 294

Early settlement of forecasted currency exchange contracts comprise $ 74 million in cost of sales, $ 5 million in selling, general and administrative expenses and $ 20 million in interest and other expense, net in the three months ended March 31, 2022.

In the first quarter of 2022, we had early settlements of forecasted currency exchange contracts comprised of $ 74 million in cost of sales, $ 5 million in selling, general and administrative expenses and $ 20 million in interest and other expense, net.

Benefit Plans

4 unchanged sentences

For the Three Months Ended

March 31, For the Three Months Ended

June 30, For the Three Months Ended

2022 2021 2022 2021

6 unchanged sentences

Prior service cost/(benefit) — — — ( 1 )

Curtailment credit (1)

Settlement losses and other expenses 4 6 — —

Net periodic pension cost/(benefit) $ 2 $ 5 $ ( 16 ) $ ( 24 )

Plans Non-U.S.

For the Six Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

Service cost $ 3 $ 4 $ 55 $ 70

Interest cost 23 20 88 59

Expected return on plan assets ( 36 ) ( 36 ) ( 186 ) ( 213 )

Amortization:

Net loss from experience differences 5 9 33 66

Prior service cost/(benefit) — — ( 1 ) ( 3 )

Curtailment credit (1)

Settlement losses and other expenses 7 9 — —

Net periodic pension cost/(benefit) $ 2 $ 6 $ ( 11 ) $ ( 35 )

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

As a result, we recognized a curtailment credit of $( 14 million) for the three and six months ended June 30, 2021 recorded within benefit plan non-service income.

We also incurred incentive payment charges and other expenses related to this decision of $ 44 million for the three months ended June 30, 2021 and $ 45 million for the six months ended June 30, 2021 included in operating income.

Employer Contributions:

During the three months ended March 31, 2022, we contributed less than $ 1 million to our U.S.

During the six months ended June 30, 2022, we contributed $ 1 million to our U.S.

pension plans and $ 102 million to our non-U.S.

2 unchanged sentences

Discretionary contributions are made to the extent that they are tax deductible and do not generate an excise tax liability.

As of March 31, 2022, over the remainder of 2022, we plan to make further contributions of approximately $ 3 million to our U.S.

As of June 30, 2022, over the remainder of 2022, we plan to make further contributions of approximately $ 2 million to our U.S.

plans and approximately $ 83 million to our non-U.S.

3 unchanged sentences

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

In connection with the discounted long-term liability, we recorded accreted interest of $ 3 million in the three months ended March 31, 2022 and $ 3 million in the three months ended March 31, 2021 within interest and other expense, net.

As of March 31, 2022, the remaining discounted withdrawal liability was $ 356 million, with $ 15 million recorded in other current liabilities and $ 341 million recorded in long-term other liabilities.

In connection with the discounted long-term liability, we recorded accreted interest of $ 2 million and $ 5 million in the three and six months ended June 30, 2022 and $ 3 million and $ 6 million in the three months and six months ended June 30, 2021 within interest and other expense, net.

As of June 30, 2022, the remaining discounted withdrawal liability was $ 352 million, with $ 15 million recorded in other current liabilities and $ 337 million recorded in long-term other liabilities.

Postretirement Benefit Plans

1 unchanged sentence

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

8 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

16 unchanged sentences

Options canceled ( 279,021 ) 55.03

Balance at March 31, 2022 23,148,109 45.43 6 years $ 406 million

(1) Cash received from options exercised was $ 70 million in the three months ended March 31, 2022.

The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the option exercises totaled $ 10 million in the three months ended March 31, 2022.

Balance at June 30, 2022 22,340,794 45.63 5 years $ 373 million

(1) Cash received from options exercised was $ 31 million in the three months and $ 101 million in the six months ended June 30, 2022.

The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the option exercises totaled $ 4 million in the three months and $ 14 million in the six months ended June 30, 2022.

Performance Share Units and Other Stock-Based Awards:

13 unchanged sentences

Forfeited ( 273,663 ) 61.01

Balance at March 31, 2022 4,775,422 59.51

Balance at June 30, 2022 4,698,085 59.57

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

(2) The actual tax benefit/(expense) realized and recorded in the provision for income taxes for the tax deductions from the shares vested totaled $ 5 million in the three months ended March 31, 2022.

(2) The actual tax benefit/(expense) realized and recorded in the provision for income taxes for the tax deductions from the shares vested totaled $( 1 ) million in the three months and $ 4 million in the six months ended June 30, 2022.

(3) The grant date fair value of performance share units is determined based on the Monte Carlo simulation model for the market-based total shareholder return component and the closing market price of the Company’s stock on the grant date for performance-based components.

7 unchanged sentences

Prior to January 1, 2022, we had repurchased approximately $ 20.0 billion of Common Stock pursuant to this authorization.

During the three months ended March 31, 2022, we repurchased approximately 11 million shares of Common Stock at an average cost of $ 65.96 per share, or an aggregate cost of approximately $ 0.8 billion, all of which was paid during the period.

During the six months ended June 30, 2022, we repurchased approximately 23 million shares of Common Stock at an average cost of $ 64.39 per share, or an aggregate cost of approximately $ 1.5 billion, all of which was paid during the period except for approximately $ 15 million settled in July 2022.

All share repurchases were funded through available cash and commercial paper issuances.

As of March 31, 2022, we have approximately $ 2.9 billion in remaining share repurchase capacity.

As of June 30, 2022, we have approximately $ 2.2 billion in remaining share repurchase capacity.

Commitments and Contingencies

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

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

(2) violated position limit levels for wheat futures and (3) engaged in non-competitive trades by trading both sides of exchange-for-physical Chicago Board of Trade wheat contracts.

The CFTC seeks civil monetary penalties of either triple the monetary gain for each violation of the Commodity Exchange Act (the “Act”) or $ 1 million for each violation of Section 6(c)(1), 6(c)(3) or 9(a)(2) of the Act and $ 140,000 for each additional violation of the Act, plus post-judgment interest;

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

(2) violated position limit levels for wheat futures;

and (3) engaged in non-competitive trades by trading both sides of exchange-for-physical Chicago Board of Trade wheat contracts.

The CFTC sought civil monetary penalties of either triple the monetary gain for each violation of the Commodity Exchange Act (the “Act”) or $ 1 million for each violation of Section 6(c)(1), 6(c)(3) or 9(a)(2) of the Act and $ 140,000 for each additional violation of the Act, plus post-judgment interest;

an order of permanent injunction prohibiting Kraft Foods Group and Mondelēz Global from violating specified provisions of the Act;

1 unchanged sentence

and costs and fees.

On August 15, 2019, the District Court approved a settlement agreement between the CFTC and Mondelēz Global.

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

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

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

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

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

On May 13, 2022, the District Court approved a settlement agreement between the CFTC and Mondelēz Global.

The terms of the settlement, which are available in the District Court’s docket, had an immaterial impact on our financial position, results of operations and cash flows and did not include an admission by Mondelēz Global.

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

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

1 unchanged sentence

and injunctive, declaratory and other unspecified relief.

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

On January 3, 2020, the District Court granted

plaintiffs' request to certify a class.

In June 2015, these suits were consolidated in the United States District Court for the Northern District of Illinois as case number 15-cv-2937, Harry Ploss et al.

Kraft Foods Group, Inc.

and Mondelēz Global LLC .

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

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

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

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

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

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

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

Although the CFTC action and the class action complaints involve the same alleged conduct, the resolution of the CFTC matter may not be dispositive as to the outcome of the class action.

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

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

We are cooperating with the investigation and are engaging with the European Commission as its investigation proceeds.

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

2 unchanged sentences

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.

At June 30, 2022, we had no material third-party guarantees recorded on our condensed consolidated balance sheet.

We are a party to various tax matter proceedings incidental to our business.

2 unchanged sentences

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

Amounts reclassified from accumulated other comprehensive earnings/(losses) to net earnings (net of tax) were net losses of $ 42 million in the first quarter of 2022 and $ 34 million in the first quarter of 2021.

Amounts reclassified from accumulated other comprehensive earnings/(losses) to net earnings (net of tax) were net losses of $( 82 ) million in the second quarter of 2022 and $ 25 million in the second quarter of 2021 and $( 40 ) million in the first six months of 2022 and $ 59 million in the first six months of 2021.

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

13 unchanged sentences

Settlement losses and other expenses (2)

Curtailment credit (2)

— ( 14 ) — ( 14 )

Tax expense/(benefit) on reclassifications (3)

( 6 ) ( 8 ) ( 12 ) ( 17 )

Currency impact 72 ( 18 ) 104 23

6 unchanged sentences

Losses/(gains) reclassified into net earnings:

Currency exchange contracts (4)

Interest rate contracts (2)(4)

( 99 ) 5 ( 53 ) 11

Tax expense/(benefit) on reclassifications (3)

— ( 1 ) ( 23 ) ( 2 )

Currency impact 5 ( 1 ) 7 2

12 unchanged sentences

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

As of the first quarter of 2022, our estimated annual effective tax rate, which excludes discrete tax impacts, was 24.8 %.

As of the second quarter of 2022, our estimated annual effective tax rate, which excludes discrete tax impacts, was 24.4 %.

This rate reflected the impact of unfavorable foreign provisions under U.S.

1 unchanged sentence

jurisdictions.

The estimated annual effective tax rate also considers the impact of the establishment of a valuation allowance related to a deferred tax asset arising from the anticipated 2022 Ukraine loss.

Our effective tax rate for the three months ended March 31, 2022 of 21.9 % was favorably impacted by discrete net tax benefits of $ 62 million primarily driven by the Chipita acquisition, which resulted in the release of a portion of the valuation allowance recorded against the deferred tax asset for the step-up of intangible assets in Switzerland.

As of the first quarter of 2021, our estimated annual effective tax rate, which excluded discrete tax impacts, was 25.2 %.

The estimated annual effective tax rate also considers the impact of the

establishment of a valuation allowance related to a deferred tax asset arising from the anticipated 2022 Ukraine

Our 2022 second quarter effective tax rate of 23.4 % was favorably impacted by discrete net tax benefits of $ 2 million.

The discrete net tax benefit primarily consisted of a net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions and an expense from tax law changes in various jurisdictions.

Our effective tax rate for the six months ended June 30, 2022 of 22.6 % was favorably impacted by discrete net tax benefits of $ 64 million primarily driven by the Chipita acquisition.

As of the second quarter of 2021, our estimated annual effective tax rate, which excluded discrete tax impacts, was 23.7 %.

This rate reflected the impact of unfavorable foreign provisions under U.S.

1 unchanged sentence

jurisdictions.

Our effective tax rate for the three months ended March 31, 2021 of 19.1 % was favorably impacted by discrete net tax benefits of $ 65 million, primarily driven by a $ 32 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions and a $ 27 million benefit from a U.S.

Our 2021 second quarter effective tax rate of 45.9 % was unusually high due to a $ 128 million tax expense incurred in connection with the KDP share sale that occurred during the second quarter (the related gain is reported separately in our statement of earnings and thus not included in earnings before income taxes).

Excluding this impact, our second quarter effective tax rate was 31.1 %, reflecting a discrete net tax expense of $ 81 million.

The discrete net tax expense primarily consisted of a $ 95 million net tax expense from the increase of our deferred tax liabilities resulting from tax legislation enacted during the second quarter (mainly in the United Kingdom), partially offset by a $ 11 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions.

Our effective tax rate for the six months ended June 30, 2021 of 30.9 % was also unusually high due to the $ 128 million net tax expense incurred in connection with the KDP share sale.

Excluding this impact, our effective tax rate for the six months ended June 30, 2021 was 24.5 %, which was unfavorably impacted by discrete net tax expense of $ 15 million, primarily driven by $ 99 million net tax expense from the increase of our deferred tax liabilities resulting from enacted tax legislation (mainly in the United Kingdom) partially offset by a $ 43 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions and a $ 27 million benefit from a U.S.

amended tax return filed to reflect new guidance from the U.S.

3 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions, except per share data)

11 unchanged sentences

We exclude antidilutive Mondelēz International stock options from our calculation of weighted-average shares for diluted EPS.

We excluded antidilutive stock options and performance share units of 2.1 million in the first three months of 2022 and 3.6 million in the first three months of 2021.

We excluded antidilutive stock options and performance share units of 3.4 million in the second quarter of 2022 and 3.4 million in the second quarter of 2021 and 2.7 million in the first six months of 2022 and 3.6 million in the first six months of 2021.

Segment Reporting

14 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2022 2021 2022 2021

(in millions)

8 unchanged sentences

Latin America $ 90 $ 54 $ 193 $ 130

AMEA 211 213 483 575

Europe 380 413 757 970

North America 454 299 872 569

Unrealized gains/(losses) on hedging activities

Unrealized (losses)/gains on hedging activities

(mark-to-market impacts) ( 109 ) 20 ( 82 ) 138

10 unchanged sentences

Net revenues by product category were:

For the Three Months Ended March 31, 2022

For the Three Months Ended June 30, 2022

America AMEA Europe North

7 unchanged sentences

Total net revenues $ 876 $ 1,535 $ 2,626 $ 2,237 $ 7,274

Three Months Ended March 31, 2021 (1)

Three Months Ended June 30, 2021 (1)

America AMEA Europe North

7 unchanged sentences

Total net revenues $ 669 $ 1,452 $ 2,474 $ 2,047 $ 6,642

For the Six Months Ended June 30, 2022

America AMEA Europe North

America Total

(in millions)

Biscuits $ 479 $ 1,225 $ 1,952 $ 3,700 $ 7,356

Chocolate 491 1,242 2,652 137 4,522

Gum & Candy 365 404 322 536 1,627

Beverages 194 341 56 — 591

Cheese & Grocery 173 190 579 — 942

Total net revenues $ 1,702 $ 3,402 $ 5,561 $ 4,373 $ 15,038

Six Months Ended June 30, 2021 (1)

America AMEA Europe North

America Total

(in millions)

Biscuits $ 374 $ 1,092 $ 1,659 $ 3,514 $ 6,639

Chocolate 373 1,145 2,681 117 4,316

Gum & Candy 260 409 302 393 1,364

Beverages 176 326 60 — 562

Cheese & Grocery 155 225 619 — 999

Total net revenues $ 1,338 $ 3,197 $ 5,321 $ 4,024 $ 13,880

(1) Our snack product categories include biscuits, chocolate and gum & candy.

During 2022, we realigned some of our products between our biscuits and chocolate categories;

During the first quarter of 2022, we realigned some of our products between our biscuits and chocolate categories;

as such, we reclassified the product category net revenues on a basis consistent with the 2022 presentation.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements