What changed in this filing

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Item 1. Financial Statements

2023-07-27 compared with 2023-04-27 · 287 added, 156 removed, 883 unchanged (33% of the section changed)

6 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

Net revenues $ 8,507 $ 7,274 $ 17,673 $ 15,038

7 unchanged sentences

Interest and other expense, net 97 98 192 266

Gain on marketable securities ( 796 ) —

Loss/(gain) on marketable securities 189 — ( 607 ) —

Earnings before income taxes 1,161 859 3,386 1,818

Income tax provision ( 268 ) ( 201 ) ( 926 ) ( 411 )

Gain/(loss) on equity method investment transactions 487 ( 5 )

(Loss)/gain on equity method investment transactions ( 23 ) ( 8 ) 464 ( 13 )

Equity method investment net earnings 71 98 106 215

14 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

Net earnings $ 941 $ 748 $ 3,030 $ 1,609

18 unchanged sentences

Cash and cash equivalents $ 1,482 $ 1,923

Trade receivables (net of allowances of $ 60 at March 31, 2023

Trade receivables (net of allowances of $ 64 at June 30, 2023

and $ 45 at December 31, 2022)

Other receivables (net of allowances of $ 65 at March 31, 2023

Other receivables (net of allowances of $ 54 at June 30, 2023

and $ 59 at December 31, 2022)

27 unchanged sentences

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

1,996,537,778 shares issued at March 31, 2023 and December 31, 2022)

1,996,537,778 shares issued at June 30, 2023 and December 31, 2022)

Additional paid-in capital 32,148 32,143

1 unchanged sentence

Accumulated other comprehensive losses ( 10,710 ) ( 10,947 )

Treasury stock, at cost ( 634,260,938 shares at March 31, 2023 and

Treasury stock, at cost ( 635,538,156 shares at June 30, 2023 and

630,646,687 shares at December 31, 2022)

18 unchanged sentences

Interest Total

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Balances at April 1, 2023 $ — $ 32,112 $ 33,040 $ ( 10,814 ) $ ( 26,110 ) $ 46 $ 28,274

Comprehensive earnings/(losses):

Net earnings — — 944 — — ( 3 ) 941

Other comprehensive earnings/(losses),

net of income taxes

— — — 104 — ( 8 ) 96

Exercise of stock options and issuance of

other stock awards

— 36 ( 1 ) — 57 — 92

Common Stock repurchased — — ( 196 ) — ( 196 )

Cash dividends declared ($ 0.385 per share)

— — ( 525 ) — — — ( 525 )

Dividends paid on noncontrolling interest

and other activities

— — — — — ( 3 ) ( 3 )

Balances at June 30, 2023 $ — $ 32,148 $ 33,458 $ ( 10,710 ) $ ( 26,249 ) $ 32 $ 28,679

Six Months Ended June 30, 2023

Balances at January 1, 2023 $ — $ 32,143 $ 31,481 $ ( 10,947 ) $ ( 25,794 ) $ 37 $ 26,920

13 unchanged sentences

— — 14 — — ( 4 ) 10

Balances at March 31, 2023 $ — $ 32,112 $ 33,040 $ ( 10,814 ) $ ( 26,110 ) $ 46 $ 28,274

Three Months Ended March 31, 2022

Balances at June 30, 2023 $ — $ 32,148 $ 33,458 $ ( 10,710 ) $ ( 26,249 ) $ 32 $ 28,679

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

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

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

9 unchanged sentences

Distributions from equity method investments 102 121

Unrealized gain on derivative contracts ( 67 ) ( 13 )

Unrealized (gain)/loss on derivative contracts ( 229 ) 137

Unrealized gain on marketable securities ( 593 ) —

Non-cash items, net 25 —

Other non-cash items, net 27 13

Change in assets and liabilities,

10 unchanged sentences

Acquisitions, net of cash received 19 ( 1,402 )

Proceeds from divestitures including equity method investments 1,034 66

Proceeds from divestitures including equity method and marketable security investments 1,960 595

(Payments)/proceeds from investments and derivative settlements ( 234 ) 193

1 unchanged sentence

CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES

Net issuances/(repayments) of short-term borrowings 156 217

Issuances of commercial paper, maturities greater than 90 days 67 —

Net (repayments)/issuances of short-term borrowings ( 186 ) 219

Long-term debt proceeds 189 1,991

32 unchanged sentences

We recorded $ 143 million of total expenses ($ 145 million after-tax) incurred as a direct result of the war.

We reversed $ 22 million during the remainder of 2022 and $ 3 million during the first quarter of 2023 of previously recorded charges primarily as a result of higher than expected collection of trade receivables and inventory recoveries.

We reversed $ 22 million during the remainder of 2022 and $ 3 million during the first six months of 2023 of previously recorded charges primarily as a result of higher than expected collection of trade receivables and inventory recoveries.

We continue to make targeted repairs on both our plants and have partially reopened and restarted limited production in both plants.

5 unchanged sentences

Within our consolidated entities, Argentina and Türkiye (Turkey) are accounted for as highly inflationary economies.

Argentina and Türkiye represent 1.5 % and 1.0 % of our consolidated net revenues with remeasurement losses of $ 11 million and $ 1 million for the period ended March 31, 2023, respectively.

Argentina and Türkiye represent 1.6 % and 0.8 % of our consolidated net revenues with remeasurement losses of $ 10 million and $ 16 million for the three months ended June 30, 2023, respectively, and 2.3 % and 0.9 % of our consolidated net revenues with remeasurement losses of $ 21 million and $ 17 million for the six months ended June 30, 2023.

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 within other current assets of $ 22 million as of March 31, 2023 and $ 25 million as of December 31, 2022.

Total cash, cash equivalents and restricted cash was $ 1,939 million as of March 31, 2023 and $ 1,948 million as of December 31, 2022.

We also have restricted cash within other current assets of $ 71 million as of June 30, 2023 and $ 25 million as of December 31, 2022.

Total cash, cash equivalents and restricted cash was $ 1,553 million as of June 30, 2023 and $ 1,948 million as of December 31, 2022.

Allowances for Credit Losses

3 unchanged sentences

Balance at January 1, 2023 $ ( 45 ) $ ( 59 ) $ ( 14 )

Current period provision for expected credit losses ( 16 ) ( 5 ) —

Current period provision/(recovery) for expected credit losses ( 22 ) 6 —

Write-offs charged against the allowance 3 — —

Currency — ( 1 ) ( 1 )

Balance at March 31, 2023 $ ( 60 ) $ ( 65 ) $ ( 14 )

Balance at June 30, 2023 $ ( 64 ) $ ( 54 ) $ ( 15 )

Transfers of Financial Assets

The outstanding principal amount of receivables under our uncommitted revolving non-recourse accounts receivable factoring arrangements amounted to $ 858 million as of March 31, 2023 and $ 516 million as of December 31, 2022.

The outstanding principal amount of receivables under our uncommitted revolving non-recourse accounts receivable factoring arrangements amounted to $ 744 million as of June 30, 2023 and $ 516 million as of December 31, 2022.

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 $ 39 million in operating lease and $ 27 million in finance lease right-of-use assets obtained in exchange for lease obligations during the three months ended March 31, 2023 and $ 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.

We recorded $ 62 million in operating lease and $ 73 million in finance lease right-of-use assets obtained in exchange for lease obligations during the six months ended June 30, 2023 and $ 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.

Supply Chain Financing

7 unchanged sentences

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, 2023 and December 31, 2022, $ 2.5 billion and $ 2.4 billion, respectively, of our outstanding accounts payable related to suppliers that participate in the SCF programs.

We have been informed by the participating financial institutions that our outstanding accounts payable related to suppliers that participate in the SCF programs was $ 2.3 billion and $ 2.4 billion, respectively, as of June 30, 2023 and December 31, 2022.

New Accounting Pronouncements

19 unchanged sentences

Indefinite-life intangible assets 339

Other assets 3

Assets acquired $ 1,614

12 unchanged sentences

None of the goodwill recognized is expected to be deductible for income tax purposes.

All of the goodwill was assigned to the Latin American operating segment.

Ricolino added incremental net revenues of $ 171 million and operating income of $ 9 million during the three months ended March 31, 2023.

We incurred acquisition integration costs of $ 6 million during the three months ended March 31, 2023.

All of the goodwill was assigned to the Latin America operating segment.

Ricolino added incremental net revenues of $ 155 million during the three months and $ 326 million during the six months ended June 30, 2023, and operating income of $ 7 million during the three months and $ 16 million during the six months ended June 30, 2023.

We incurred acquisition integration costs of $ 10 million during the three months and $ 16 million during the six months ended June 30, 2023.

We incurred $ 1 million of acquisition-related costs during the three months and six months ended June 30, 2022.

On August 1, 2022, we acquired 100 % of the equity of Clif Bar & Company (“Clif Bar”), a leading U.S.

3 unchanged sentences

This compensation expense is considered an acquisition-related cost.

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.

11 unchanged sentences

Indefinite-life intangible assets 1,450

Goodwill 1,020

Other assets 11

15 unchanged sentences

Tax deductible goodwill is expected to be $ 1.4 billion and will be amortized.

Clif Bar added incremental net revenues of $ 218 million and operating income of $ 35 million during the three months ended March 31, 2023.

We incurred acquisition integration costs of $ 39 million during the three months ended March 31, 2023.

Clif Bar added incremental net revenues of $ 240 million during the three months and $ 458 million during the six months ended June 30, 2023, and operating income of $ 35 million during the three months and $ 70 million during the six months ended June 30, 2023.

We incurred acquisition integration costs of $ 16 million during the three months and $ 55 million during the six months ended June 30, 2023.

These acquisition integration costs include an increase to the contingent consideration liability due to changes to underlying assumptions.

Refer to Note 9, Financial Instruments for additional information.

We incurred $ 4 million of acquisition-related costs during the three months and six months ended June 30, 2022.

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

1 unchanged sentence

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

The cash consideration paid for Chipita totaled € 1.2 billion ($ 1.4 billion), net of cash received, plus the assumption of Chipita’s debt of € 0.5 billion ($ 0.4 billion) for a total purchase price of € 1.7 billion ($ 1.8 billion).

The cash consideration paid for Chipita totaled € 1.2 billion ($ 1.4 billion), net of cash received, plus the assumption

of Chipita’s debt of € 0.4 billion ($ 0.4 billion) for a total purchase price of € 1.7 billion ($ 1.8 billion).

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

23 unchanged sentences

All of the goodwill was assigned to the Europe operating segment.

We incurred acquisition integration costs of $ 6 million during the three months ended March 31, 2023.

We incurred acquisition-related costs of $ 21 million and acquisition integration costs of $ 35 million during the three months ended March 31, 2022.

We incurred acquisition integration costs of $ 4 million during the three months and $ 10 million during the six months ended June 30, 2023.

We incurred acquisition integration costs of $ 36 million during the three months and $ 71 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.

Developed Market Gum - Held for Sale

On December 16, 2022, Mondelēz entered into an agreement to sell its developed market gum business in North America and Europe for $ 1.4 billion.

On December 16, 2022, we entered into an agreement to sell our developed market gum business in North America and Europe for $ 1.4 billion.

It is expected to close in Q4 2023, subject to relevant antitrust approvals and closing conditions.

1 unchanged sentence

The disposal group is included as part of the North America and Europe operating segments.

We incurred divestiture-related costs of $ 30 million during the three months ended March 31, 2023.

We incurred divestiture-related costs of $ 22 million in the three months ended June 30, 2023 and $ 52 million in the six months ended June 30, 2023.

Total assets and liabilities held for sale are comprised of the following:

As of March 31,

As of June 30,

2023 As of December 31, 2022

9 unchanged sentences

Current liabilities held for sale (3)

Accrued pension costs 1 —

Deferred income taxes 15 15

5 unchanged sentences

Inventories consisted of the following:

As of March 31,

As of June 30,

2023 As of December 31, 2022

6 unchanged sentences

Property, plant and equipment consisted of the following:

As of March 31,

As of June 30,

2023 As of December 31, 2022

7 unchanged sentences

Property, plant and equipment, net $ 9,308 $ 9,020

For the three months ended March 31, 2023, capital expenditures of $ 223 million excluded $ 290 million of accrued capital expenditures remaining unpaid at March 31, 2023 and included payment for a portion of the $ 324 million of capital expenditures that were accrued and unpaid at December 31, 2022.

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 six months ended June 30, 2023, capital expenditures of $ 495 million excluded $ 305 million of accrued capital expenditures remaining unpaid at June 30, 2023 and included payment for the $ 324 million of capital expenditures that were accrued and unpaid at December 31, 2022.

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 the $ 249 million of capital expenditures that were accrued and unpaid at December 31, 2021.

Goodwill and Intangible Assets

Changes in goodwill consisted of:

Changes in goodwill consisted of (in millions):

Latin America AMEA Europe North America Total

8 unchanged sentences

Currency 172 ( 82 ) 134 19 243

Balance at March 31, 2023 $ 1,516 $ 3,114 $ 8,082 $ 10,892 $ 23,604

Acquisitions (1) (2)

( 2 ) — — ( 21 ) ( 23 )

Balance at June 30, 2023 $ 1,591 $ 3,050 $ 8,143 $ 10,886 $ 23,670

(1) Refer to Note 2, Acquisitions and Divestitures for more information.

(2) Relates to purchase price allocation adjustments for Ricolino and Clif Bar during 2023.

Intangible Assets

Intangible assets consisted of the following:

As of March 31, 2023 As of December 31, 2022

Intangible assets consisted of the following (in millions):

As of June 30, 2023 As of December 31, 2022

Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount

3 unchanged sentences

Total $ 21,911 $ ( 2,072 ) $ 19,839 $ 21,767 $ ( 2,057 ) $ 19,710

(1) In 2022, we recorded $ 101 million of intangible asset impairment charges related to two biscuit brands in AMEA segment, of which $ 78 million was recorded in the first quarter and $ 23 million was recorded in the third quarter.

(1) In 2022, we recorded $ 101 million of intangible asset impairment charges related to two biscuit brands in the AMEA segment, of which $ 78 million was recorded in the first quarter and $ 23 million was recorded in the third quarter.

Indefinite-life intangible assets consist principally of brand names purchased through our acquisitions of Nabisco Holdings Corp., the global LU biscuit business of Groupe Danone S.A., Cadbury Limited and Clif Bar.

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

Amortization expense for intangible assets was $ 39 million for the three months ended March 31, 2023 and $ 32 million for the three months ended March 31, 2022.

For the next five years, we currently estimate annual amortization expense of approximately $ 150 million in 2023-2025, approximately $ 95 million in 2026 and approximately $ 90 million in 2027 (reflecting March 31, 2023 exchange rates).

Definite-life

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

Amortization expense for intangible assets was $ 37 million for the three months and $ 76 million for the six months ended June 30, 2023 and $ 32 million for the three months and $ 64 million for the six months ended June 30, 2022.

Impairment Assessment

We test our reporting units and brands for impairment annually as of July 1, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit or brand is less than its carrying amount.During the first quarter of 2023, we evaluated our goodwill impairment and intangible asset impairment risk through an assessment of potential triggering events.

During the second quarter of 2023, we evaluated our goodwill impairment and intangible asset impairment risk through an assessment of potential triggering events.

We considered qualitative and quantitative information in our assessment.

1 unchanged sentence

During our 2022 annual indefinite-life intangible asset testing, we identified eight brands that each had a fair value in excess of book value of 10% or less.

The aggregate book value of the eight brands was $ 1.6 billion as of March 31, 2023.

The aggregate book value of the eight brands was $ 1.6 billion as of June 30, 2023.

We believe our current plans for each of these brands will allow them to not be impaired, but if the brand earnings expectations are not met or specific valuation factors outside of our control, such as discount rates, change significantly then a brand or brands could become impaired in the future.

Marketable Securities

On March 2, 2023, we sold approximately 30 million shares of Keurig Dr Pepper Inc.

"KDP"), which reduced our ownership interest by 2.1 %, from 5.3 % to 3.2 % of the total outstanding shares.

We received approximately $ 1.0 billion in proceeds and recorded a pre-tax gain of $ 493 million (or $ 366 million after tax) on this sale during the first quarter of 2023.

This reduction in ownership, to below 5 % of the outstanding shares of KDP, resulted in a change of accounting for our KDP investment, from equity method investment accounting to accounting for equity interests with readily determinable fair values ("marketable securities") as we no longer have significant influence over KDP.

Our reduction in ownership in Keurig Dr Pepper Inc.

"KDP") during the first quarter of 2023, to below 5 % of the outstanding shares, resulted in a change of accounting for our KDP investment, from equity method investment accounting to accounting for equity interests with readily determinable fair values ("marketable securities") as we no longer have significant influence.

These marketable securities are measured at fair value based on quoted prices in active markets for identical assets (Level 1).

On March 2, 2023, the date we changed from equity method accounting to marketable securities accounting for this investment, we recorded unrealized gains for marketable securities of $ 755 million (or $ 562 million after tax).

We recorded an additional unrealized gain of $ 32 million (or $ 24 million after tax) during the first quarter, for a total unrealized gain of $ 787 million (or $ 586 million after tax) during the first quarter of 2023.

We reported marketable securities of $ 1.6 billion as of March 31, 2023 in other current assets in the Company's Condensed Consolidated Balance Sheet.

On June 8, 2023, we sold 23 million shares of KDP, which reduced our ownership by 1.6 %, from 3.2 % to 1.6 % of the total outstanding shares.

We received proceeds of approximately $ 708 million.

On March 2, 2023, we sold 30 million shares of KDP, which reduced our ownership interest by 2.1 %, from 5.3 % to 3.2 % of the total outstanding shares.

We received proceeds of approximately $ 1.0 billion and recorded a pre-tax gain on equity method transactions of $ 493 million (or $ 366 million after tax) during the first quarter of 2023.

Pre-tax gains and losses for marketable securities are summarized below (in millions):

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

(in millions)

Loss/(gain) on marketable securities sold during the period $ 104 $ ( 293 )

Unrealized loss/(gain) on equity securities held as of the end of the period 90 ( 300 )

Dividend income ( 5 ) ( 14 )

Total loss/(gain) on marketable securities $ 189 $ ( 607 )

In the table above, loss/(gain) on marketable securities sold during the period reflects the difference between the sale proceeds and the carrying value of the equity securities at the beginning of the period or the date of the change of accounting for our investment in KDP, if later.

We reported marketable securities of $ 705 million as of June 30, 2023 in other current assets in the Company's Condensed Consolidated Balance Sheet.

On July 13, 2023, we sold the remainder of our KDP investment, approximately 23 million shares, and received approximately $ 704 million in proceeds.

Equity Method Investments

2 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, 2023, we owned 19.7 %, 50.0 % and 49.0 %, respectively, of these companies' outstanding shares.

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

As we continue to have significant influence, we continue to account for our investment in JDEP under the equity method.

Our investments accounted for under the equity method of accounting totaled $ 3.4 billion as of March 31, 2023 and $ 4.9 billion as of December 31, 2022.

As of June 30, 2023, we owned 18.1 %, 50.0 % and 49.0 %, respectively, of these companies' outstanding shares.

Our investments accounted for under the equity method of accounting totaled $ 3.2 billion as of June 30, 2023 and $ 4.9 billion as of December 31, 2022.

The investment balance as of December 31, 2022 is inclusive of our investment in KDP.

We recorded equity earnings of $ 35 million and cash dividends of $ 102 million in the first quarter of 2023 and equity earnings of $ 117 million and cash dividends of $ 107 million in the first quarter of 2022.

Based on the quoted closing prices as of March 31, 2023, the fair value of our publicly-traded investment in JDEP wa s $ 2.8 billion , and there was no other than temporary impairment identified.

In 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 9 % of our equity interest in JDE Peet's as of March 31, 2023.

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

We recorded equity earnings of $ 71 million and cash dividends of zero in the three months ended June 30, 2023, and equity earnings of $ 98 million and cash dividends of $ 14 million in the three months ended June 30, 2022.

We recorded equity earnings of $ 106 million and cash dividends of $ 102 million in the six months ended June 30, 2023 and equity earnings of $ 215 million and cash dividends of $ 121 million in the six months ended June 30, 2022.

Based on the quoted closing prices as of June 30, 2023, the fair value of our publicly-traded investment in JDEP wa s $ 2.6 billion , and there was no other than temporary impairment identified.

JDEP Transactions

On April 3, 2023, we sold approximately 7.7 million shares of JDEP, which reduced our ownership interest by 1.6 %, from 19.7 % to 18.1 % of the total outstanding shares.

We received cash proceeds of € 198 million ($ 217 million) and recorded a loss of € 18 million ($ 19 million) on this sale during the three months ended June 30, 2023.

We continue to have board representation with two directors on JDEP's Board of Directors and have retained certain additional governance rights.

As we continue to have significant influence, we continue to account for our investment in JDEP under the equity method.

On March 30, 2023, we issued options to sell shares of JDEP in tranches equivalent to approximately 7.7 million shares.

These options are exercisable at their maturities which are between July 3, 2023 and September 29, 2023, with strike prices ranging from € 26.10 to € 28.71 per share.

In addition, on April 3, 2023, we sold approximately 7.7 million shares of JDEP and received cash proceeds of € 199 million.

This reduced our ownership interest by 1.6 %, from 19.7 % to 18.1 % of the total outstanding shares.

If all options issued on March 30, 2023 are exercised, our ownership interest will be reduced by an additional 1.6 %.

As we continue to have significant influence, we will continue to account for our investment in JDEP under the equity method.

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

We received cash proceeds of € 500 million ($ 529 million) and recorded a loss of € 8 million ($ 8 million) on this sale during the three months ended June 30, 2022.

In 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 JDEP’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 JDEP's shares, this would represent approximately 8.5 million shares or approximately 10 % of our equity interest in JDEP as of June 30, 2023.

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

Restructuring Program

2 unchanged sentences

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.

On October 21, 2021, our Board of Directors approved an extension of the restructuring program through 2023, and on July 25, 2023, our Board of Directors approved a further extension of the restructuring program through December 31, 2024.

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

1 unchanged sentence

The primary objective of the Simplify to Grow Program is to reduce our operating cost structure in both our supply chain and overhead costs.

The program covers severance as well as asset disposals and other manufacturing and procurement-related one-time costs.

The program covers severance as well as asset disposals and other manufacturing and

procurement-related one-time costs.

Since inception, we have incurred total restructuring and implementation charges of $ 5.2 billion related to the Simplify to Grow Program.

1 unchanged sentence

Restructuring Costs

The Simplify to Grow Program liability activity for the three months ended March 31, 2023 was:

The Simplify to Grow Program liability activity for the six months ended June 30, 2023 was:

Write-downs and Other (1)

6 unchanged sentences

Currency 4 — 4

Liability balance, March 31, 2023 (5)

Liability balance, June 30, 2023 (5)

$ 159 $ — $ 159

(1) Includes gains as a result of assets sold which are included in the restructuring program.

(2) We recorded restructuring charges of $ 30 million in the first quarter of 2023 and $ 11 million in the first quarter of 2022 within asset impairment and exit costs and benefit plan non-service income.

(3) We spent $ 18 million in the first quarter of 2023 and $ 17 million in the first quarter of 2022 in cash severance and related costs.

(5) At March 31, 2023, $ 135 million of our net restructuring liability was recorded within other current liabilities and $ 42 million was recorded within other long-term liabilities.

(2) We recorded restructuring charges of $ 2 million in the three months ended June 30, 2023 and $ 4 million in the three months ended June 30, 2022 and restructuring charges of $ 32 million in the six months ended June 30, 2023 and $ 15 million in the six months ended June 30, 2022 within asset impairment and exit costs and benefit plan non-service income.

(3) We spent $ 17 million in the three months ended June 30, 2023 and $ 16 million in the three months ended June 30, 2022 and spent $ 35 million in the six months ended June 30, 2023 and $ 33 million in the six months ended June 30, 2022 in cash severance and related costs.

(4) We recognized non-cash asset write-downs (including accelerated depreciation and asset impairments), and other non-cash adjustments, including any gains on sale of restructuring program assets, which totaled a charge of $ 5 million in the three months ended June 30, 2023 and a charge of $ 7 million in the three months ended June 30, 2022 and a charge of $ 6 million in the six months ended June 30, 2023 and $ 9 million in the six months ended June 30, 2022.

(5) At June 30, 2023, $ 118 million of our net restructuring liability was recorded within other current liabilities and $ 41 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 $ 5 million in

the first quarter of 2023 and $ 20 million in the first quarter of 2022.

Within our continuing results of operations, we recorded implementation costs of $ 4 million in the three months ended June 30, 2023 and $ 19 million in the three months ended June 30, 2022, and we recorded implementation costs of $ 9 million in the six months ended June 30, 2023 and $ 39 million in the six months ended June 30, 2022.

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, 2023 and March 31, 2022, 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, 2023 and June 30, 2022, 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, 2023

For the Three Months Ended June 30, 2023

Restructuring Costs $ ( 1 ) $ 1 $ ( 3 ) $ 6 $ ( 1 ) $ 2

1 unchanged sentence

Total $ ( 2 ) $ 1 $ ( 1 ) $ 9 $ ( 1 ) $ 6

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 For the Six Months Ended June 30, 2023

Restructuring Costs $ ( 1 ) $ 2 $ 27 $ 5 $ — $ 32

Implementation Costs ( 1 ) — 2 3 5 9

Total $ ( 2 ) $ 2 $ 29 $ 8 $ 5 $ 41

For the 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

Total Project

6 unchanged sentences

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

As of March 31, 2023 As of December 31, 2022

As of June 30, 2023 As of December 31, 2022

Outstanding Weighted-

5 unchanged sentences

Total short-term borrowings $ 2,178 $ 2,299

Our uncommitted credit lines and committed credit lines available as of March 31, 2023 and December 31, 2022 include:

As of March 31, 2023 As of December 31, 2022

Our uncommitted credit lines and committed credit lines available as of June 30, 2023 and December 31, 2022 include:

As of June 30, 2023 As of December 31, 2022

Facility Amount Borrowed Amount Facility Amount Borrowed Amount

1 unchanged sentence

Uncommitted credit facilities $ 1,311 $ 98 $ 1,335 $ 90

Credit facility expiry (1) :

Credit facilities:

February 22, 2023 (1)

March 11, 2023 (1)

December 29, 2023 (1)

February 21, 2024 (1)

1 unchanged sentence

— — 2,000 2,000

October 18, 2025 (2)

February 23, 2027 (1)

(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, 2023, we complied with this covenant as our shareholders' equity, as defined by the covenant, was $ 39.0 billion.

4,500 — 4,500 —

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

The revolving credit agreements include 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 June 30, 2023, we complied with this covenant as our shareholders' equity, as defined by the covenant, was $ 39.4 billion.

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

There are no credit rating triggers, provisions or other financial covenants that could require us to post collateral as security.

(2) On April 18, 2023, we entered into a credit facility secured by pledged deposits.

Under this agreement, we may draw up to a total of $ 0.2 billion in loans from the facility.

On April 25, 2023, we drew down $ 0.2 billion bearing a variable rate based on SOFR plus an applicable margin.

(3) On March 31, 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.

Amounts borrowed and repaid under the facility may not be reborrowed.

On July 29, 2022, we drew down $ 2.0 billion in term loans, due July 29, 2025, bearing interest at a variable annual rate based on SOFR plus an applicable margin.

On March 3, 2023, we repaid $ 1.0 billion in term loans.

Subsequently on April 3, 2023, we repaid $ 0.3 billion.

On April 6, 2023, we entered into an additional revolving credit agreement that can be utilized for general corporate purposes and to support our commercial paper program.

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

This agreement will terminate on December 29, 2023.

We repaid $ 1.0 billion on March 3, 2023, $ 0.3 billion on April 3, 2023, and $ 0.7 billion on May 3, 2023 in term loans.

Long-Term Debt

As of March 31, 2023, the Company reclassified the net carrying value of debt of $ 800 million due within one year from long-term debt to current portion of long-term debt.

As of June 30, 2023, the Company reclassified the net carrying value of debt of $ 500 million due within one year from long-term debt to current portion of long-term debt.

Fair Value of Our Debt

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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, 2023 As of December 31, 2022

As of June 30, 2023 As of December 31, 2022

(in millions)

4 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

(in millions)

2 unchanged sentences

related expenses 1 — 1 129

Other (income), net ( 58 ) ( 52 )

Other (income)/expense, net ( 49 ) 9 ( 107 ) ( 43 )

Interest and other expense, net $ 97 $ 98 $ 192 $ 266

Other income, net includes amounts excluded from hedge effectiveness related to our net investment hedge derivative contracts.

Other (income)/expense, net includes amounts excluded from hedge effectiveness related to our net investment hedge derivative contracts.

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, 2023 As of December 31, 2022

As of June 30, 2023 As of December 31, 2022

Derivatives Liability

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

As of March 31, 2023

As of June 30, 2023

Fair Value of Net

37 unchanged sentences

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

Our options to sell shares of JDEP are valued using the Black-Scholes option pricing model.

This model requires assumptions related to the stock price of JDE Peet's shares, strike price of each European style option, time to expiry, expected dividend yield and the interpolated market-implied volatility of JDE Peet's active market of listed options.

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

7 unchanged sentences

Notional Amount

As of March 31,

As of June 30,

2023 As of December 31, 2022

11 unchanged sentences

Canadian dollar notes

(1) Prior year notional value has been revised.

Cash Flow Hedges

3 unchanged sentences

Cash Flow Hedge Coverage

As of March 31, 2023, our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 3 years, 5 months .

As of June 30, 2023, our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 3 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, 2023 was $ 7.6 billion.

The aggregate notional value as of June 30, 2023 was $ 7.8 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

2023 2022 2023 2022

(in millions)

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

After-tax gain on NIH contracts (1)

$ 22 $ 307 $ 17 $ 348

(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

2023 2022 2023 2022

(in millions)

Amounts excluded from the assessment of hedge effectiveness (1)

$ 36 $ 30 $ 72 $ 52

(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

2023 2022 2023 2022

(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

2023 2022 2023 2022

(in millions)

9 unchanged sentences

Equity method investment

contracts 2 — Gain on equity method investment transactions

contracts 1 — 3 — (Loss)/gain on equity method investment transactions

Total $ 166 $ 30 $ 190 $ 272

2 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

(in millions)

Liability at beginning of period $ 659 $ 165 $ 642 $ 159

Contingent consideration arising from acquisitions — — — —

Changes in fair value ( 2 ) 8 15 14

Payments ( 90 ) — ( 90 ) —

Currency — ( 1 ) — ( 1 )

Liability at end of period $ 567 $ 172 $ 567 $ 172

Contingent consideration was recorded at fair value in the condensed consolidated balance sheets as follows:

As of March 31, 2023

As of June 30, 2023

Total Fair Value of

25 unchanged sentences

Refer to Note 2, Acquisitions and Divestitures for additional information.

(2) The other contingent consideration liabilities are recorded at fair value, with $ 113 million and $ 102 million classified as other current liabilities and $ 81 million and $ 88 million classified as long term liabilities at March 31, 2023 and December 31, 2022.

(2) The other contingent consideration liabilities are recorded at fair value, with $ 12 million and $ 102 million classified as other current liabilities and $ 83 million and $ 88 million classified as long term liabilities at June 30, 2023 and December 31, 2022.

The fair value of this contingent consideration was determined using a Monte Carlo valuation model based on Level 3 inputs, including management's latest estimate of forecasted future results.

8 unchanged sentences

For the Three Months Ended

March 31, For the Three Months Ended

June 30, For the Three Months Ended

2023 2022 2023 2022

5 unchanged sentences

Net loss from experience differences — 2 10 15

Settlement losses and other expenses 3 4 — —

Net periodic pension (benefit)/cost $ ( 3 ) $ 2 $ ( 1 ) $ ( 16 )

Plans Non-U.S.

For the Six Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

(in millions)

Service cost $ 2 $ 3 $ 27 $ 55

Interest cost 32 23 152 88

Expected return on plan assets ( 49 ) ( 36 ) ( 202 ) ( 186 )

Amortization:

Net loss from experience differences — 5 21 33

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

2 unchanged sentences

Employer Contributions

During the three months ended March 31, 2023, we contributed $ 2 million to our U.S.

During the six months ended June 30, 2023, we contributed $ 3 million to our U.S.

pension plans and $ 65 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, 2023, we plan to make further contributions of approximately $ 4 million to our U.S.

As of June 30, 2023, we plan to make further contributions of approximately $ 3 million to our U.S.

plans and $ 54 million to our non-U.S.

4 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, 2023 and March 31, 2022, within interest and other expense, net.

As of March 31, 2023, the remaining discounted withdrawal liability was $ 340 million, with $ 15 million recorded in other current liabilities and $ 325 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 for the three and six months ended June 30, 2023 and 2022, within interest and other expense, net.

As of June 30, 2023, the remaining discounted withdrawal liability was $ 336 million, with $ 15 million recorded in other current liabilities and $ 321 million recorded in long-term other liabilities.

Postretirement and Postemployment Benefit Plans

The net periodic postretirement cost was zero for the three months ended March 31, 2023 and $ 3 million for the three months ended March 31, 2022.

The net periodic postemployment cost was $ 1 million for the three months ended March 31, 2023 and $ 1 million for the three months ended March 31, 2022.

The net periodic postretirement (benefit)/cost was $( 2 ) million for the three and six months ended June 30, 2023 and $ 3 million and $ 6 million for the three and six months ended June 30, 2022.

The net periodic postemployment

cost was zero and $ 1 million for the three and six months ended June 30, 2023 and 2022.

Stock Options

11 unchanged sentences

Options canceled ( 159,460 ) 53.03

Balance at March 31, 2023 21,382,157 49.27 6 years $ 437 million

(1) Cash received from options exercised was $ 49 million in the three months ended March 31, 2023.

The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the option exercises totaled $ 8 million in the three months ended March 31, 2023.

Balance at June 30, 2023 19,942,372 49.81 5 years $ 461 million

(1) Cash received from options exercised was $ 56 million in the three months and $ 105 million in the six months ended June 30, 2023.

The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the option exercises totaled $ 9 million in the three months and $ 17 million in the six months ended June 30, 2023

Performance Share Units and Other Stock-Based Awards

15 unchanged sentences

( 144,096 ) 61.28

Balance at March 31, 2023 4,910,838 61.99

Balance at June 30, 2023 4,865,426 62.18

(1) Includes PSUs and DSUs.

(2) Includes PSUs, DSUs and other stock-based awards.

(3) The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the shares vested totaled $ 2 million in the three months ended March 31, 2023.

(3) The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the shares vested totaled zero in the three months and $ 2 million in the six months ended June 30, 2023.

(4) The grant date fair value of PSUs 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.

5 unchanged sentences

Our Board of Directors approved a new program authorizing the repurchase of up to $ 6.0 billion of our Common Stock through December 31, 2025.

This authorization, effective January 1, 2023, replaces our current share repurchase program.

This authorization, effective January 1, 2023, replaced our previous share repurchase program.

Repurchases under the program are determined by management and are wholly discretionary.

During the three months ended March 31, 2023, we repurchased approximately 6.2 million shares of Common Stock at an average cost of $ 65.93 per share, or an aggregate cost of approximately $ 407 million, all of which was paid during the period except for approximately $ 8 million settled in April 2023.

All share repurchases were funded

through available cash and commercial paper issuances.

As of March 31, 2023, we have approximately $ 5.6 billion in remaining share repurchase capacity.

During the six months ended June 30, 2023, we repurchased approximately 8.8 million shares of Common Stock at an average cost of $ 68.16 per share, or an aggregate cost of approximately $ 602 million, all of which was paid

during the period except for approximately $ 6 million settled in July 2023.

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

As of June 30, 2023, we have approximately $ 5.4 billion in remaining share repurchase capacity.

Commitments and Contingencies

10 unchanged sentences

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

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

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

District Court for the Northern District of Illinois (the "District Court") related to the trading of December 2011 wheat futures contracts that occurred prior to the spin-off of Kraft Foods Group.

The complaint alleged that 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;

disgorgement of profits;

and costs and fees.

and (3) engaged in non-competitive trades.

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;

costs and fees;

and injunctive, declaratory and other unspecified relief.

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.

Several class action complaints also were filed against Mondelēz Global in the District Court by investors who copied and expanded upon the CFTC allegations in a series of private claims for monetary damages as well as injunctive, declaratory, and other unspecified relief.

In June 2015, these suits were consolidated as case number 15-cv-2937, Harry Ploss et al.

Kraft Foods Group, Inc.

1 unchanged sentence

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

In November 2022, the District Court adjourned the trial date it had previously set for November 30 and ordered the parties to brief Kraft’s motions to decertify the class and for summary judgment, which was completed on July 25, 2023.

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 class action.

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.

As previously disclosed, 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 allegedly restricting cross-border trade within the European Economic Area.

1 unchanged sentence

We have been cooperating with the investigation and discussions with the European Commission are progressing in an effort to reach a negotiated, proportionate resolution in this matter.

As of March 31, 2023 and December 31, 2022, we have accrued (in accordance with U.S.

GAAP) a liability of € 300 million ($ 325 million as of March 31, 2023) within other current liabilities in the consolidated balance sheet as an estimate of the possible cost to resolve this matter.

As of June 30, 2023 and December 31, 2022, we have accrued (in accordance with U.S.

GAAP) a liability of € 300 million ($ 328 million as of June 30, 2023) within other current liabilities in the consolidated balance sheet as an estimate of the possible cost to resolve this matter.

It is not possible to predict if our ongoing discussions will result in a negotiated resolution, or result in a negotiated resolution in a higher amount, or when we will have clarity on the ultimate outcome of these discussions.

If our discussions do not result in a negotiated resolution, we expect that the European Commission will pursue

proceedings against the Company, including the imposition of a fine, and we would defend against any allegations made in such proceedings.

If our discussions do not result in a negotiated resolution, we expect that the European Commission will pursue proceedings against the Company, including the imposition of a fine, and we would defend against any allegations made in such proceedings.

There is a possibility that the final liability could be materially higher than the amount accrued.

3 unchanged sentences

As part of these transactions, we guarantee that third parties will make contractual payments or achieve performance measures.

At March 31, 2023, we had no material third-party guarantees recorded on our condensed consolidated balance sheet.

As of June 30, 2023 and December 31, 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 gains of $ 30 million in the first quarter of 2023 and $ 42 million in the first quarter of 2022.

Amounts reclassified from accumulated other comprehensive earnings/(losses) to net earnings (net of tax) were net (losses)/gains of $ 11 million in the second quarter of 2023 and $ 82 million in the second quarter of 2022 and $ 41 million in the first six months of 2023 and $ 40 million in the first six months of 2022..

For the Three Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

(in millions)

14 unchanged sentences

Tax expense/(benefit) on reclassifications (3)

( 3 ) ( 6 ) ( 6 ) ( 12 )

Currency impact ( 26 ) 72 ( 44 ) 104

6 unchanged sentences

Losses/(gains) reclassified into net earnings:

Currency exchange contracts (2)

Interest rate contracts (2)

5 ( 99 ) 23 ( 53 )

Tax expense/(benefit) on reclassifications (3)

11 unchanged sentences

(3) Taxes reclassified to earnings are recorded within the provision for income taxes.

As of the first quarter of 2023, our estimated annual effective tax rate, which excludes discrete tax impacts, was 24.3 %.

As of the second quarter of 2023, our estimated annual effective tax rate, which excludes discrete tax impacts, was 24.6 %.

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

1 unchanged sentence

jurisdictions.

Our 2023 first quarter effective tax rate of 29.6 % was high due to a $ 127 million net tax expense incurred in connection with the KDP share sale (the earnings are reported separately on our statement of earnings and thus not included in earnings before income taxes).

Associated with the KDP share sale, we also recorded a $ 201 million net tax expense related to the change of accounting for our KDP investment from equity method investment accounting to accounting for equity interests with readily determinable fair values.

Excluding these tax impacts as well as the associated pre-tax impacts, our effective tax rate for the three months ended March 31, 2023 of 23.0 % was favorably impacted by discrete net tax benefits of $ 20 million, primarily driven by a $ 30 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.

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

Our 2023 second quarter effective tax rate of 23.1 % included a $ 50 million net tax benefit related to gains and losses on KDP marketable securities and a $ 29 million net tax expense incurred in connection with unrealized gains and losses on hedging activities as well as other discrete net tax expense of $ 4 million.

Our effective tax rate for the six months ended June 30, 2023 of 27.3 % was higher due to a $ 127 million net tax expense incurred in connection with the KDP share sale during the first quarter (the earnings are reported separately on our statement of earnings and thus not included in earnings before income taxes).

Excluding this impact, our effective tax rate for the six months ended June 30, 2023 was 23.6 %.

The 23.6% rate included a $ 151 million net tax expense related to gains and losses on KDP marketable securities ($ 201 million net tax expense in Q1 and $ 50 million net tax benefit in Q2) as well as the associated pre-tax impacts.

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

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

2 unchanged sentences

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.

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.

Earnings per Share

1 unchanged sentence

For the Three Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

(in millions, except per share data)

10 unchanged sentences

Mondelēz International $ 0.69 $ 0.54 $ 2.20 $ 1.15

We exclude antidilutive Mondelēz International stock options and long-term incentive plan shares from our calculation of weighted-average shares for diluted EPS, which are 2.2 million in the first quarter of 2023 and 2.1 million in the first quarter of 2022.

We exclude antidilutive Mondelēz International stock options and long-term incentive plan shares from our calculation of weighted-average shares for diluted EPS.

We excluded antidilutive stock options and performance share units of 2.8 million for the three months ended June 30, 2023 and 3.4 million for the three months ended June 30, 2022 and 2.7 million for the six months ended June 30, 2023 and 2022.

Segment Reporting

14 unchanged sentences

For the Three Months Ended

June 30, For the Six Months Ended

2023 2022 2023 2022

(in millions)

8 unchanged sentences

Latin America $ 134 $ 90 $ 273 $ 193

AMEA 207 211 567 483

Europe 449 380 956 757

8 unchanged sentences

Interest and other expense, net ( 97 ) ( 98 ) ( 192 ) ( 266 )

Gain on marketable securities 796 —

(Loss)/gain on marketable securities ( 189 ) — 607 —

Earnings before income taxes $ 1,161 $ 859 $ 3,386 $ 1,818

2 unchanged sentences

Net revenues by product category were:

For the Three Months Ended March 31, 2023

For the Three Months Ended June 30, 2023

America AMEA Europe North

7 unchanged sentences

Total net revenues $ 1,228 $ 1,609 $ 2,926 $ 2,744 $ 8,507

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

For the Six Months Ended June 30, 2023

America AMEA Europe North

America Total

(in millions)

Biscuits $ 585 $ 1,239 $ 2,191 $ 4,696 $ 8,711

Chocolate 684 1,310 2,911 140 5,045

Gum & Candy 716 441 453 617 2,227

Beverages 223 358 59 — 640

Cheese & Grocery 231 200 619 — 1,050

Total net revenues $ 2,439 $ 3,548 $ 6,233 $ 5,453 $ 17,673

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

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