Mondelez International, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Description of the Company Our core business is making and selling chocolate, biscuits and baked snacks, with additional businesses in adjacent, locally relevant categories including gum & candy, cheese & grocery and powdered beverages around the world. We aim to be the global leader in snacking. Our strategy is to drive long-term growth by focusing on four strategic priorities: accelerating consumer-centric growth, driving operational excellence, creating a winning growth culture and scaling sustainable snacking. We believe the successful implementation of our strategic priorities and leveraging of our attractive global footprint, strong core of iconic global and local brands, marketing, sales, distribution and cost excellence capabilities, and top talent with a growth mindset, will drive consistent top- and bottom-line growth, enabling us to continue to create long-term value for our shareholders. Recent Developments and Significant Items Affecting Comparability Macroeconomic environment We continue to observe significant market and geopolitical uncertainty, increasing inflationary pressures, supply constraints and exchange rate volatility. As a result, we experienced significantly higher operating costs, including higher overall raw material, transportation, labor and energy costs that have continued to rise. Our overall outlook for future snacks revenue growth remains strong; however, we anticipate ongoing volatility in response to supply chain issues, including labor and transportation constraints. We will continue to proactively manage our business in response to the evolving global economic environment and related uncertainty and business risks while also prioritizing and supporting our employees and customers. We continue to take steps to mitigate impacts to our supply chain, operations, technology and assets. War in Ukraine In February 2022, following the Russian military invasion of Ukraine, we stopped production and closed our facilities in Ukraine; since then we have taken steps to protect the safety of our employees and to restore operations on a limited basis at our two manufacturing facilities, which were significantly damaged in March 2022. We continue to support our Ukraine employees, including paying salaries to those not yet able to return to work until full production returns. See Note 1, Basis of Presentation - War in Ukraine , to the condensed consolidated financial statements, and refer to Items Affecting Comparability of Financial Results for additional information. We have suspended new capital investments and our advertising spending in Russia, but as a food company with more than 2,500 employees in the country, we have not ceased operations given we believe we play a role in the continuity of the food supply. We continue to evaluate the situation in Ukraine and Russia and our ability to control our operating activities and businesses on an ongoing basis and comply with applicable international sanctions, and we continue to consolidate both our Ukrainian and Russian subsidiaries. During the second quarter of 2022, Ukraine generated 0.2% and Russia generated 3.7% of consolidated net revenue and during the second quarter of 2023, Ukraine generated 0.3% and Russia generated 2.8% of consolidated net revenue. Our Russian net revenues declined in the second quarter of 2023 due to the suspension of advertising as well as currency weakness that more than offset increased pricing. Despite the decrease in revenues, the profitability of our Russian business has increased significantly and contributed to the growth of our consolidated performance. We continue to reduce our activities in Russia and expect further volume declines as we work to have the business operate on a stand-alone basis, with a self-sufficient supply chain before the end of the year. We cannot predict if the recent strength in our Russian business will continue in the future. Our operations in Russia are subject to risks, including the temporary or permanent loss of assets or our ability to conduct business operations in Russia and the partial or full impairment of our Russian assets in future periods, or the termination of our business operations, based on actions taken by Russia, other parties or us. For more information, see the risk factors in our Annual Report on Form 10-K for the year ended December 31, 2022, including the risk entitled “ The war in Ukraine has impacted and could continue to impact our business operations, financial performance and results of operations. ” 32 Table of Contents Acquisitions and Divestitures During 2022, we completed the following acquisitions to strategically complement and expand our existing portfolio: • Ricolino, a confectionery business with products sold primarily in Mexico • Clif Bar & Company (“Clif Bar”), a leading U.S. maker of nutritious energy bars with organic ingredients • Chipita Global S.A. ("Chipita"), a high-growth leader in the Central and Eastern European croissant and baked snacks category Additionally in 2022, we announced our intention to divest our developed market gum and global Halls candy businesses and in the fourth quarter of 2022, we announced an agreement to sell the developed market gum business with an anticipated closing in the fourth quarter of 2023, subject to relevant antitrust approvals and closing conditions. Refer to Note 2, Acquisitions and Divestitures , for additional details. Investment Transactions Keurig Dr Pepper Transactions On March 2, 2023, we sold approximately 30 million shares of KDP, which reduced our ownership interest by 2.1% to 3.2%. We recorded a pre-tax gain on equity method transactions of $493 million (or $366 million after tax) during the first quarter of 2023. Our reduction in ownership to below 5% eliminated our governance rights that had allowed us to exert substantial influence over KDP and resulted in a change of accounting from equity method investment accounting to accounting for equity interests with readily determinable fair values ("marketable securities") during the first quarter of 2023. On June 8, 2023, we sold approximately 23 million shares of KDP, which reduced our ownership to 1.6% of the total outstanding shares. We received proceeds of approximately $708 million. On July 13, 2023, we sold our remaining 23 million shares and received approximately $704 million in proceeds. JDE Peet’s Transactions On April 3, 2023, we sold approximately 7.7 million shares of JDEP, which reduced our ownership interest by 1.6%, to 18.1%. 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. 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 maturity during the third quarter of 2023 with a potential impact to our ownership if the options are exercised. For additional information, refer to Note 6, Investments and Note 9, Financial Instruments. U.K. advertising and promotion ban In the United Kingdom, a ban on specific types of TV and online advertising of food containing levels of fat, sugar or salt above specified thresholds as well as measures restricting multi buy promotions are expected to go into effect in October 2025. Restrictions on in-store placement of some of those products went into effect in October 2022. Although we are unable to estimate precisely the impact of the restrictions, they did not have a significant impact on our consolidated financial statements in the three and six months ended June 30, 2023. Taxes We continue to monitor existing and potential future tax reform around the world. On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. Based on the guidance available thus far, while we meet the criteria of a large corporation we do not believe this legislation will have a material impact on our consolidated financial statements. We will continue to evaluate it as additional guidance and clarification becomes available. We also continue to monitor countries’ progress toward enactment of the Organization of Economic Cooperation and Development’s model rules on a global minimum tax. While numerous countries have proposed new legislation in this area (and two countries have enacted it as of June 30, 2023), any new law is only expected to be effective for taxable years beginning after December 31, 2023. If broadly enacted, these laws could have a material effect on us. 33 Table of Contents Financial Outlook We seek to achieve profitable, long-term growth and manage our business to attain this goal using our key operating metrics: Organic Net Revenue, Adjusted Operating Income and Adjusted EPS. We use these non-GAAP financial metrics and related computations, particularly growth in profit dollars, to evaluate and manage our business and to plan and make near- and long-term operating and strategic decisions. As such, we believe these metrics are useful to investors as they provide supplemental information in addition to our U.S. Generally Accepted Accounting Principles ("U.S. GAAP") financial results. We believe it is useful to provide investors with the same financial information that we use internally to make comparisons of our historical operating results, identify trends in our underlying operating results and evaluate our business. We believe our non-GAAP financial measures should always be considered in relation to our U.S. GAAP results. We have provided reconciliations between our GAAP and non-GAAP financial measures in Non-GAAP Financial Measures , which appears later in this section. In addition to monitoring our key operating metrics, we monitor developments and trends that could impact our revenue and profitability objectives, as highlighted in our most recently filed Annual Report on Form 10-K for the year ended December 31, 2022. 34 Table of Contents Summary of Results • Net revenues increased 17.0% to $8.5 billion in the second quarter of 2023 and increased 17.5% to $17.7 billion in the first six months of 2023 as compared to the same periods in the prior year. In the second quarter and first six months of 2023, our net revenue growth continued to reflect strong demand for most of our snack category products in both our emerging and developed markets relative to 2022. Overall, our net revenue growth in both the second quarter and first six months of 2023 was driven by higher net pricing, incremental net revenues from our acquisitions of Clif Bar and Ricolino in 2022 and favorable volume/mix (reflecting growth in the first quarter while the second quarter was flat), partially offset by unfavorable currency translation and the impact of divestitures in 2022. • Organic Net Revenue, a non-GAAP financial measure, increased 15.8% to $8.4 billion in the second quarter of 2023 and increased 17.7% to $17.7 billion in the first six months of 2023 as compared to same periods in the prior year. During the second quarter, Organic Net Revenue grew due to higher net pricing while volume/mix was flat. During the first six months of 2023, Organic Net Revenue grew due to both higher net pricing and favorable volume/mix. Organic Net Revenue is on a constant currency basis and excludes revenue from acquisitions and divestitures. Refer to Non-GAAP Financial Measures for the definition of Organic Net Revenue and Consolidated Results of Operations for our reconciliation with net revenues. • Diluted EPS attributable to Mondelēz International increased 27.8% to $0.69 in the second quarter of 2023 and increased 91.3% to $2.20 in the first six months of 2023 as compared to the same period in the prior year. – Diluted EPS increased in the second quarter of 2023, driven by favorable year-over-year change in mark-to-market impacts from currency and commodity derivatives, increase in Adjusted EPS, lower acquisition integration costs and contingent consideration adjustments and lapping prior-year initial impacts from enacted tax law changes. These favorable items were partially offset by a mark-to-market loss on marketable securities, lapping prior-year net earnings from divestitures, higher divestiture-related costs, higher remeasurement loss of net monetary position, higher loss on equity method investment transactions and lapping prior-year decrease in estimated allowances and reserves associated with incremental costs incurred due to the war in Ukraine. – Diluted EPS increased during the first six months of 2023, driven by a mark-to-market gain on marketable securities, net gain on equity method investment transactions, favorable year-over-year change in mark-to-market impacts from currency and commodity derivatives, an increase in Adjusted EPS, lapping prior-year incremental costs due to the war in Ukraine, lapping prior-year loss on debt extinguishment, lapping prior-year intangible asset impairment charges, lapping prior-year acquisition-related costs and lapping prior-year initial impacts from enacted tax law changes. These favorable items were partially offset by lower net earnings from divestitures, higher equity investee items, higher divestiture-related costs, higher acquisition integration costs and contingent consideration adjustments and higher remeasurement loss of net monetary position. • Adjusted EPS, a non-GAAP financial measure, increased 16.9% to $0.76 in the second quarter of 2023 and increased 13.0% to $1.65 in the first six months of 2023 as compared to the same periods in the prior year. On a constant currency basis, Adjusted EPS increased 21.5% to $0.79 in the second quarter of 2023 and increased 19.9% to $1.75 in the first six months of 2023 as compared to the same periods in the prior year. Refer to Non-GAAP Financial Measures for the definition of Adjusted EPS and Consolidated Results of Operations for our reconciliation with diluted EPS. – Adjusted EPS increased in the second quarter of 2023, primarily driven by operating gains, impact from acquisitions, fewer shares outstanding and higher equity method investment earnings, partially offset by unfavorable currency translation, higher taxes, higher interest expense and lower benefit plan non-service income. – Adjusted EPS increased in the first six months of 2023, primarily driven by operating gains, impact from acquisitions, fewer shares outstanding and dividend income from marketable securities, partially offset by unfavorable currency translation, higher interest expense, higher taxes and lower benefit plan non-service income. 35 Table of Contents Discussion and Analysis of Historical Results Items Affecting Comparability of Financial Results The following table includes significant income or (expense) items that affected the comparability of our results of operations and our effective tax rates. Please refer to the notes to the condensed consolidated financial statements indicated below for more information. Refer also to the Consolidated Results of Operations – Net Earnings and Earnings per Share Attributable to Mondelēz International table for the after-tax per share impacts of these items. For the Three Months Ended June 30, For the Six Months Ended June 30, See Note 2023 2022 2023 2022 (in millions, except percentages) Simplify to Grow Program Note 7 Restructuring charges $ (2) $ (4) $ (32) $ (15) Implementation charges (4) (19) (9) (39) Intangible asset impairment charges Note 5 — — — (78) Mark-to-market gains/(losses) from derivatives (1) Note 9 168 (128) 216 (100) Acquisition and divestiture-related costs: Note 2 Acquisition integration costs and contingent consideration adjustments (1) (24) (37) (75) (72) Acquisition-related costs — (5) — (26) Divestiture-related costs (22) (5) (52) (6) Incremental costs due to war in Ukraine (2) Note 1 — 15 3 (128) Remeasurement of net monetary position Note 1 (26) (10) (38) (15) Impact from pension participation changes (1) Note 10 (2) (2) (5) (5) Loss on debt extinguishment and related expenses Note 8 (1) — (1) (129) Initial impacts from enacted tax law changes Note 14 (2) (9) (2) (9) (Loss)/gain on marketable securities Note 6 (194) — 593 — (Loss)/gain on equity method investment transactions (3) (23) (8) 462 (13) Equity method investee items (4) — 4 (48) (6) Effective tax rate Note 14 23.1 % 23.4 % 27.3 % 22.6 % (1) Includes impacts recorded in operating income and interest expense and other, net. Mark-to-market gains/(losses) above also include our equity method investment-related derivative contract mark-to-market gains/(losses) (refer to Note 9, Financial Instruments) that are recorded in the (loss)/gain on equity method investment transactions on our condensed consolidated statement of earnings. (2) Incremental costs due to the war in Ukraine include direct charges such as asset impairments due to damaged facilities and inventory, higher expected allowances for uncollectible accounts receivable and committed compensation. Please see the Non-GAAP Financial Measures section at the end of this item and Note 1, Basis of Presentation – War in Ukraine , for additional information. (3) (Loss)/gain on equity method investment transactions is recorded outside pre-tax operating results on the condensed consolidated statement of earnings. See footnote (1) as mark-to-market gains/(losses) on our equity method-investment-related derivative contracts are presented in the table above within mark-to-market gains/(losses) from derivatives. (4) Includes our proportionate share of significant operating and non-operating items recorded by our JDE Peet's equity method investee, including acquisition and divestiture-related costs and restructuring program costs. 36 Table of Contents Consolidated Results of Operations Three Months Ended June 30 For the Three Months Ended June 30, 2023 2022 $ change % change (in millions, except per share data) Net revenues $ 8,507 $ 7,274 $ 1,233 17.0 % Operating income 1,425 927 498 53.7 % Net earnings attributable to Mondelēz International 944 747 197 26.4 % Diluted earnings per share attributable to Mondelēz International 0.69 0.54 0.15 27.8 % Net Revenues – Net revenues increased $1,233 million (17.0%) to $8,507 million in the second quarter of 2023, and Organic Net Revenue (1) increased $1,151 million (15.8%) to $8,413 million. Emerging markets net revenues increased 17.8% and emerging markets Organic Net Revenue increased 23.3% (1) . Developed markets net revenues increased 16.4% and developed markets Organic Net Revenue increased 11.2% (1) . The underlying changes in net revenues and Organic Net Revenue are detailed below: Emerging Markets Developed Markets Mondelēz International Three Months Ended June 30, 2023 Reported (GAAP) $ 3,306 $ 5,201 $ 8,507 Acquisitions (137) (240) (377) Currency 277 6 283 Organic (Non-GAAP) $ 3,446 $ 4,967 $ 8,413 Three Months Ended June 30, 2022 Reported (GAAP) $ 2,806 $ 4,468 $ 7,274 Divestitures (12) — (12) Organic (Non-GAAP) $ 2,794 $ 4,468 $ 7,262 % Change Reported (GAAP) 17.8 % 16.4 % 17.0 % Divestitures 0.5 pp — pp 0.1 pp Acquisitions (4.9) (5.3) (5.2) pp Currency 9.9 0.1 3.9 pp Organic (Non-GAAP) 23.3 % 11.2 % 15.8 % Vol/Mix 2.1 pp (1.2)pp — pp Pricing 21.2 12.4 15.8 (1) Please see the Non-GAAP Financial Measures section at the end of this item. Net revenue increase of 17.0% was driven by our underlying Organic Net Revenue growth of 15.8% and the impact of acquisitions, partially offset by unfavorable currency translation and the impact of divestitures. Overall, we continued to see strong demand for our snack category products across most regions. Organic Net Revenue growth was driven by higher net pricing as overall volume/mix was flat for the quarter. Higher net pricing in all regions was due to the benefit of carryover pricing from 2022 as well as the effects of input cost-driven pricing actions taken during the first six months of 2023. Volume/mix was flat as favorable volume/mix in North America, AMEA and Latin America was offset by unfavorable volume/mix in Europe reflecting the impact from customer price negotiation disruptions. The November 1, 2022 acquisition of Ricolino added incremental net revenues of $137 million (constant currency basis) and the August 1, 2022 acquisition of Clif Bar added incremental net revenues of $240 million. Unfavorable currency impacts decreased net revenues by $283 million, primarily due to the strength of the U.S. dollar relative to most currencies, including the Argentinean peso, Russian ruble, Chinese yuan, Indian rupee, Turkish Lira, Egyptian pound, South African rand and Australian dollar, partially offset by the strength of a few currencies relative to the U.S. dollar, primarily the Mexican peso and euro. The impact of our 2022 divestitures resulted in a year-over-year reduction in net revenues of $12 million. Refer to Note 2, Acquisitions and Divestitures, for additional information. 37 Table of Contents Operating Income – Operating income increased $498 million (53.7%) to $1,425 million in the second quarter of 2023. Adjusted Operating Income (1) increased $235 million (21.4%) to $1,332 million and Adjusted Operating Income on a constant currency basis (1) increased $288 million (26.3%) to $1,385 million due to the following: For the Three Months Ended June 30, 2023 2022 $ Change % Change (in millions) Operating Income $ 1,425 $ 927 $ 498 53.7 % Simplify to Grow Program (2) 6 22 (16) Mark-to-market (gains)/losses from derivatives (3) (171) 109 (280) Acquisition integration costs and contingent consideration adjustments (4) 24 37 (13) Acquisition-related costs (4) — 5 (5) Divestiture-related costs (4) (6) 22 5 17 Operating income from divestitures (4) — (3) 3 Incremental costs due to war in Ukraine (5) — (15) 15 Remeasurement of net monetary position (5) 26 10 16 Adjusted Operating Income (1) $ 1,332 $ 1,097 $ 235 21.4 % Unfavorable currency translation 53 — 53 Adjusted Operating Income (constant currency) (1) $ 1,385 $ 1,097 $ 288 26.3 % Key Drivers of Adjusted Operating Income (constant currency) $ Change Higher net pricing 1,149 Higher input costs (752) Favorable volume/mix 12 Higher selling, general and administrative expenses (145) Impact from acquisitions (4) 41 Lower amortization of intangible assets 1 Higher asset impairment charges (18) Total change in Adjusted Operating Income (constant currency) (1) $ 288 (1) Refer to the Non-GAAP Financial Measures section. (2) Refer to Note 7, Restructuring Program, for more information. (3) Refer to Note 9, Financial Instruments , and the Non-GAAP Financial Measures section at the end of this item for more information on the unrealized gains/losses on commodity and forecasted currency transaction derivatives. (4) Refer to Note 2, Acquisitions and Divestitures , for more information on the November 1, 2022 acquisition of Ricolino, August 1, 2022 acquisition of Clif Bar and January 3, 2022 acquisition of Chipita. (5) Refer to Note 1, Basis of Presentation , for information on our accounting for the war in Ukraine and our application of highly inflationary accounting for Argentina and Türkiye. (6) Divestiture-related costs includes costs incurred associated with our publicly-announced processes to divest our developed markets gum and global Halls businesses. 38 Table of Contents During the second quarter of 2023, we realized higher net pricing and favorable volume/mix, which was partially offset by increased input costs. Higher net pricing, which included the carryover impact of pricing actions taken in 2022 as well as the effects of input cost-driven pricing actions taken during the first six months of 2023, was reflected across all regions. Overall, volume/mix benefited from improved product mix and continued strong demand for our snack category products across most regions. Favorable volume/mix was driven by AMEA, North America and Latin America, partially offset by unfavorable volume/mix in Europe reflecting the impact from customer price negotiation disruptions. The increase in input costs was driven by higher raw material costs, partially offset by lower manufacturing costs driven by productivity. Higher raw material costs were in part due to higher energy, sugar, dairy, grains, packaging, cocoa, edible oils and other ingredients costs as well as unfavorable year-over-year currency exchange transaction costs on imported materials. Total selling, general and administrative expenses increased $193 million from the second quarter of 2022, due to a number of factors noted in the table above, including in part, the impact of acquisitions, higher divestiture-related costs, higher remeasurement loss of net monetary position and lapping prior-year decrease in estimated allowances and reserves associated with incremental costs incurred due to the war in Ukraine, which were partially offset by a favorable currency impact related to expenses, lower acquisition integration costs and contingent consideration adjustments, lapping prior-year acquisition-related costs and lower implementation costs incurred for the Simplify to Grow program. Excluding these factors, selling, general and administrative expenses also increased $145 million from the second quarter of 2022. The increase was driven primarily by higher advertising and consumer promotion costs and higher overhead costs in part due to increased investments in route to market capabilities. Unfavorable currency changes decreased operating income by $53 million due primarily to the strength of the U.S. dollar relative to most currencies, including the Russian ruble, Argentinean peso, Egyptian pound, Chinese yuan, Indian rupee and South African rand, partially offset by the strength of a few currencies relative to the U.S. dollar, including the Mexican peso and euro. Operating income margin increased from 12.7% in the second quarter of 2022 to 16.8% in the second quarter of 2023. The increase was primarily driven by favorable year-over-year change in mark-to-market gains/(losses) from currency and commodity hedging activities, higher Adjusted Operating Income margin, lower costs incurred for the Simplify to Grow program and lower acquisition integration costs and contingent consideration adjustments, partially offset by higher divestiture-related costs, lapping prior-year decrease in estimated allowances and reserves associated with incremental costs incurred due to the war in Ukraine and higher remeasurement loss of net monetary position. Adjusted Operating Income margin increased from 15.1% for the second quarter of 2022 to 15.7% for the second quarter of 2023. The increase was driven primarily by higher net pricing, overhead cost leverage, lower manufacturing and favorable product mix, partially offset by higher raw material costs. 39 Table of Contents Net Earnings and Earnings per Share Attributable to Mondelēz International – Net earnings attributable to Mondelēz International of $944 million increased by $197 million (26.4%) in the second quarter of 2023. Diluted EPS attributable to Mondelēz International was $0.69 in the second quarter of 2023, up $0.15 (27.8%) from the second quarter of 2022. Adjusted EPS (1) was $0.76 in the second quarter of 2023, up $0.11 (16.9%) from the second quarter of 2022. Adjusted EPS on a constant currency basis (1) was $0.79 in the second quarter of 2023, up $0.14 (21.5%) from the second quarter of 2022. For the Three Months Ended June 30, 2023 2022 $ Change % Change Diluted EPS attributable to Mondelēz International $ 0.69 $ 0.54 $ 0.15 27.8 % Simplify to Grow Program (2) 0.01 0.01 — Mark-to-market (gains)/losses from derivatives (2) (0.11) 0.08 (0.19) Acquisition integration costs and contingent consideration adjustments (2) 0.01 0.03 (0.02) Divestiture-related costs (2) 0.01 — 0.01 Net earnings from divestitures (2) — (0.03) 0.03 Incremental costs due to war in Ukraine (2) — (0.01) 0.01 Remeasurement of net monetary position (2) 0.02 0.01 0.01 Initial impacts from enacted tax law changes (3) — 0.01 (0.01) Loss on marketable securities (4) 0.11 — 0.11 Loss on equity method investment transactions (4) 0.02 0.01 0.01 Adjusted EPS (1) $ 0.76 $ 0.65 $ 0.11 16.9 % Unfavorable currency translation 0.03 — 0.03 Adjusted EPS (constant currency) (1) $ 0.79 $ 0.65 $ 0.14 21.5 % Key Drivers of Adjusted EPS (constant currency) $ Change Increase in operations $ 0.15 Impact from acquisitions (2) 0.02 Change in benefit plan non-service income (0.01) Change in interest and other expense, net (5) (0.01) Change in equity method investment net earnings 0.01 Change in income taxes (3) (0.03) Change in shares outstanding (6) 0.01 Total change in Adjusted EPS (constant currency) (1) $ 0.14 (1) Refer to the Non-GAAP Financial Measures section appearing later in this section. The tax expense/(benefit) of each of the pre-tax items excluded from our U.S. GAAP results was computed based on the facts and tax assumptions associated with each item, and such impacts have also been excluded from Adjusted EPS. • For the three months ended June 30, 2023, taxes for the: Simplify to Grow Program were $(1) million, mark-to-market gains from derivatives were $21 million, acquisition integration costs and contingent consideration adjustments were $(9) million, divestiture-related costs were $(4) million, remeasurement of net monetary position were zero, initial impacts from enacted tax law changes were $2 million, loss on marketable securities were $(45) million and loss on equity method investment transactions were $(1) million. • For the three months ended June 30, 2022, taxes for the: Simplify to Grow Program were $(6) million, mark-to-market losses from derivatives were $(14) million, acquisition integration costs and contingent consideration adjustments were $(1) million, acquisition-related costs were $(2) million, divestiture-related costs were $(1) million, net earnings from divestitures were $7 million, incremental costs due to the war in Ukraine were zero, remeasurement of net monetary position were zero, initial impacts from enacted tax law changes were $9 million and loss on equity method transactions were zero. (2) See the Operating Income table above and the related footnotes for more information. (3) Refer to Note 14, Income Taxes , for more information on the items affecting income taxes. (4) Refer to Note 6, Investments , for more information on gains/losses on equity method investment transactions and marketable securities. (5) Excludes the currency impact on interest expense related to non-U.S. dollar-denominated debt, which is included in currency translation. (6) Refer to Note 11, Stock Plans , for more information on our equity compensation programs and share repurchase program and Note 15, Earnings per Share , for earnings per share weighted-average share information. 40 Table of Contents Six Months Ended June 30: For the Six Months Ended June 30, 2023 2022 $ change % change (in millions, except per share data) Net revenues $ 17,673 $ 15,038 $ 2,635 17.5 % Operating income 2,930 2,021 909 45.0 % Net earnings attributable to Mondelēz International 3,025 1,602 1,423 88.8 % Diluted earnings per share attributable to Mondelēz International 2.20 1.15 1.05 91.3 % Net Revenues – Net revenues increased $2,635 million (17.5%) to $17,673 million in the first six months of 2023, and Organic Net Revenue (1) increased $2,653 million (17.7%) to $17,670 million. Emerging markets net revenues increased 19.7% and emerging markets Organic Net Revenue increased 24.3% (1) . Developed markets net revenues increased 16.2% and developed markets Organic Net Revenue increased 13.6% (1) . The underlying changes in net revenues and Organic Net Revenue are detailed below: Emerging Markets Developed Markets Mondelēz International Six Months Ended June 30, 2023 Reported (GAAP) $ 6,904 $ 10,769 $ 17,673 Acquisitions (293) (458) (751) Currency 535 213 748 Organic (Non-GAAP) $ 7,146 $ 10,524 $ 17,670 Six Months Ended June 30, 2022 Reported (GAAP) $ 5,770 $ 9,268 $ 15,038 Divestitures (21) — (21) Organic (Non-GAAP) $ 5,749 $ 9,268 $ 15,017 % Change Reported (GAAP) 19.7 % 16.2 % 17.5 % Divestitures 0.4 pp — pp 0.2 pp Acquisitions (5.1) (4.9) (5.0) Currency 9.3 2.3 5.0 Organic (Non-GAAP) 24.3 % 13.6 % 17.7 % Vol/Mix 3.4 pp 0.7 pp 1.7 pp Pricing 20.9 12.9 16.0 (1) Please see the Non-GAAP Financial Measures section at the end of this item. Net revenue increase of 17.5% was driven by our underlying Organic Net Revenue growth of 17.7% and the impact of acquisitions, partially offset by unfavorable currency translation and the impact of divestitures. Overall, we continued to see strong demand for our snack category products across most regions. Organic Net Revenue growth was driven by higher net pricing and favorable volume/mix. Higher net pricing in all regions was due to the benefit of carryover pricing from 2022 as well as the effects of input cost-driven pricing actions taken during the first six months of 2023. Favorable volume/mix was driven by AMEA, North America and Latin America reflecting both improved product mix and volume gains, partially offset by unfavorable volume/mix in Europe reflecting the impact from customer price negotiation disruptions. The November 1, 2022 acquisition of Ricolino added incremental net revenues of $293 million (constant currency basis) and the August 1, 2022 acquisition of Clif Bar added incremental net revenues of $458 million. Unfavorable currency impacts decreased net revenues by $748 million, due primarily to the strength of the U.S. dollar relative to most currencies, including the Argentinean peso, British pound sterling, Indian rupee, Egyptian pound, Turkish lira, Chinese yuan, euro, Australian dollar and South African rand, partially offset by the strength of a few currencies relative to the U.S. dollar, primarily the Mexican peso. The impact of our 2022 divestitures resulted in a year-over-year reduction in net revenues of $21 million. Refer to Note 2, Acquisitions and Divestitures, for additional information. 41 Table of Contents Operating Income – Operating income increased $909 million (45.0%) to $2,930 million in the first six months of 2023. Adjusted Operating Income (1) increased $439 million (17.7%) to $2,913 million and Adjusted Operating Income on a constant currency basis (1) increased $573 million (23.2%) to $3,047 million due to the following: For the Six Months Ended June 30, 2023 2022 $ Change % Change (in millions) Operating Income $ 2,930 $ 2,021 $ 909 45.0 % Simplify to Grow Program (2) 41 53 (12) Intangible asset impairment charge (3) — 78 (78) Mark-to-market (gains)/losses from derivatives (4) (220) 82 (302) Acquisition integration costs and contingent consideration adjustments (5) 75 69 6 Acquisition-related costs (5) — 26 (26) Divestiture-related costs (5) (7) 52 6 46 Operating income from divestitures (5) — (4) 4 Incremental costs due to war in Ukraine (6) (3) 128 (131) Remeasurement of net monetary position (6) 38 15 23 Adjusted Operating Income (1) $ 2,913 $ 2,474 $ 439 17.7 % Unfavorable currency translation 134 — 134 Adjusted Operating Income (constant currency) (1) $ 3,047 $ 2,474 $ 573 23.2 % Key Drivers of Adjusted Operating Income (constant currency) $ Change Higher net pricing 2,403 Higher input costs (1,681) Favorable volume/mix 108 Higher selling, general and administrative expenses (307) Impact from acquisitions (5) 84 Lower amortization of intangible assets 1 Higher asset impairment charges $ (35) Total change in Adjusted Operating Income (constant currency) (1) $ 573 (1) Refer to the Non-GAAP Financial Measures section at the end of this item. (2) Refer to Note 7, Restructuring Program, for more information. (3) Refer to Note 5, Goodwill and Intangible Assets , for more information. (4) Refer to Note 9, Financial Instruments , Note 16, Segment Reporting , and Non-GAAP Financial Measures section at the end of this item for more information on the unrealized gains/losses on commodity and forecasted currency transaction derivatives. (5) Refer to Note 2, Acquisitions and Divestitures , for more information on the November 1, 2022 acquisition of Ricolino, August 1, 2022 acquisition of Clif Bar and the January 3, 2022 acquisition of Chipita. (6) Refer to Note 1, Basis of Presentation , for information on our accounting for the war in Ukraine and our application of highly inflationary accounting for Argentina and Türkiye. (7) Divestiture-related costs includes costs incurred associated with our publicly-announced processes to divest our developed markets gum and global Halls businesses. 42 Table of Contents During the first six months of 2023, we realized higher net pricing and favorable volume/mix, which was partially offset by increased input costs. Higher net pricing, which included the carryover impact of pricing actions taken in 2022 as well as the effects of input cost-driven pricing actions taken during the first six months of 2023, was reflected across all regions. Overall, volume/mix benefited from improved product mix and continued strong demand for our snack category products across most regions. Favorable volume/mix was driven by AMEA, Latin America and North America, partially offset by unfavorable volume/mix in Europe reflecting the impact from customer price negotiation disruptions. The increase in input costs was driven by higher raw material costs, partially offset by lower manufacturing costs driven by productivity. Higher raw material costs were in part due to higher energy, dairy, sugar, grains, edible oils, packaging, cocoa, nuts and other ingredients costs as well as unfavorable year-over-year currency exchange transaction costs on imported materials. Total selling, general and administrative expenses increased $355 million from the first six months of 2022, due to a number of factors noted in the table above, including in part, the impact of acquisitions, higher divestiture-related costs and higher remeasurement loss of net monetary position, which were partially offset by a favorable currency impact related to expenses, lapping prior-year acquisition-related costs, lapping prior-year incremental costs due to the war in Ukraine, lower implementation costs incurred for the Simplify to Grow program and lower acquisition integration costs and contingent consideration adjustments. Excluding these factors, selling, general and administrative expenses increased $307 million from the first six months of 2022. The increase was driven primarily by higher advertising and consumer promotion costs and higher overhead costs in part due to increased investments in route to market capabilities, Unfavorable currency changes decreased operating income by $134 million primarily due to the strength of the U.S. dollar relative to most currencies, including the Argentinean peso, British pound sterling, Egyptian pound, Russian ruble, Indian rupee, Chinese yuan, and South African rand, partially offset by the strength of a few currencies relative to the U.S. dollar, primarily the Mexican peso. Operating income margin increased from 13.4% in the first six months of 2022 to 16.6% in the first six months of 2023. The increase in operating income margin was driven primarily by the favorable year-over-year change in mark-to-market gains/(losses) from currency and commodity hedging activities, lapping prior-year incremental costs due to the war in Ukraine, lapping prior-year intangible asset impairment charges, lower costs incurred for the Simplify to Grow program and lapping prior-year acquisition-related costs, partially offset by higher divestiture-related costs, and higher remeasurement loss of net monetary position. Adjusted Operating Income margin of 16.5% for the first six months of 2023 was flat compared to the first six months of 2022, as higher net pricing and overhead cost leverage was offset by higher raw material costs. 43 Table of Contents Net Earnings and Earnings per Share Attributable to Mondelēz International – Net earnings attributable to Mondelēz International of $3,025 million increased by $1,423 million (88.8%) in the first six months of 2023 . Diluted EPS attributable to Mondelēz International was $2.20 in the first six months of 2023, up $1.05 (91.3%) from the first six months of 2022. Adjusted EPS (1) was $1.65 in the first six months of 2023, up $0.19 (13.0%) from the first six months of 2022. Adjusted EPS on a constant currency basis (1) was $1.75 in the first six months of 2023, up $0.29 (19.9%) from the first six months of 2022. For the Six Months Ended June 30, 2023 2022 $ Change % Change Diluted EPS attributable to Mondelēz International $ 2.20 $ 1.15 $ 1.05 91.3 % Simplify to Grow Program (2) 0.03 0.03 — Intangible asset impairment charge (2) — 0.04 (0.04) Mark-to-market (gains)/losses from derivatives (2) (0.14) 0.06 (0.20) Acquisition integration costs and contingent consideration adjustments (2) 0.04 0.02 0.02 Acquisition-related costs (2) — 0.02 (0.02) Divestiture-related costs (2) 0.03 — 0.03 Net earnings from divestitures (2) (0.01) (0.05) 0.04 Incremental costs due to war in Ukraine (2) — 0.09 (0.09) Remeasurement of net monetary position (2) 0.03 0.01 0.02 Loss on debt extinguishment and related expenses (3) — 0.07 (0.07) Initial impacts from enacted tax law changes (4) — 0.01 (0.01) Gain on marketable securities (5) (0.32) — (0.32) (Gain)/loss on equity method investment transactions (5) (0.25) 0.01 (0.26) Equity method investee items (6) 0.04 — 0.04 Adjusted EPS (1) $ 1.65 $ 1.46 $ 0.19 13.0 % Unfavorable currency translation 0.10 — 0.10 Adjusted EPS (constant currency) (1) $ 1.75 $ 1.46 $ 0.29 19.9 % Key Drivers of Adjusted EPS (constant currency) $ Change Increase in operations $ 0.27 Impact from acquisitions 0.05 Change in benefit plan non-service income (0.01) Change in interest and other expense, net (7) (0.04) Dividend income from marketable securities 0.01 Change in equity method investment net earnings (5) — Change in income taxes (4) (0.02) Change in shares outstanding (8) 0.03 Total change in Adjusted EPS (constant currency) (1) $ 0.29 (1) Refer to the Non-GAAP Financial Measures section appearing later in this section. The tax expense/(benefit) of each of the pre-tax items excluded from our U.S. GAAP results was computed based on the facts and tax assumptions associated with each item, and such impacts have also been excluded from Adjusted EPS. • For the six months ended June 30, 2023, taxes for the: Simplify to Grow Program were $(7) million, mark-to-market gains from derivatives were $29 million, acquisition integration costs and contingent consideration adjustments were $(22) million, divestiture-related costs were $(8) million, net earnings from divestitures were $4 million, remeasurement of net monetary position were zero, initial impacts from enacted tax law changes were $2 million, gain on marketable securities were $156 million, gain on equity method investment transactions were $124 million and equity method investee items were zero. • For the six months ended June 30, 2022, taxes for the: Simplify to Grow Program were $(13) million, intangible asset impairment charge was $(19) million, mark-to-market losses from derivatives were $(19) million, acquisition integration costs and contingent consideration adjustments were $(51) million, acquisition-related costs were $(3) million, net earnings from divestitures were $17 million, incremental costs due to the war in Ukraine were $2 million, remeasurement of net monetary position were zero, loss on debt extinguishment and related expenses were $(31) million, initial impacts from enacted tax law changes were $9 million and loss on equity method investment transactions were zero. (2) See the Operating Income table above and the related footnotes for more information. 44 Table of Contents (3) Refer to Note 8, Debt and Borrowing Arrangements , for more information on the loss on debt extinguishment and related expenses. (4) Refer to Note 14, Income Taxes , on the items affecting income taxes. (5) Refer to Note 6, Investments , for more information on the gain/(loss) on equity method investment transactions and marketable securities. (6) Includes our proportionate share of significant operating and non-operating items recorded by our JDE Peet's equity method investee, such as acquisition and divestiture-related costs and restructuring program costs. (7) Excludes the currency impact on interest expense related to our non-U.S. dollar-denominated debt, which is included in currency translation. (8) Refer to Note 11, Stock Plans , for more information on our equity compensation programs and share repurchase program and Note 15, Earnings per Share , for earnings per share weighted-average share information. 45 Table of Contents Results of Operations by Reportable Segment Our operations and management structure are organized into four operating segments: • Latin America • AMEA • Europe • North America We manage our operations by region to leverage regional operating scale, manage different and changing business environments more effectively and pursue growth opportunities as they arise across our key markets. Our regional management teams have responsibility for the business, product categories and financial results in the regions. We use segment operating income to evaluate segment performance and allocate resources. We believe it is appropriate to disclose this measure to help investors analyze segment performance and trends. See Note 16, Segment Reporting, for additional information on our segments and Items Affecting Comparability of Financial Results earlier in this section for items affecting our segment operating results. Our segment net revenues and earnings were: For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 (in millions) Net revenues: Latin America $ 1,228 $ 876 $ 2,439 $ 1,702 AMEA 1,609 1,535 3,548 3,402 Europe 2,926 2,626 6,233 5,561 North America 2,744 2,237 5,453 4,373 Net revenues $ 8,507 $ 7,274 $ 17,673 $ 15,038 Earnings before income taxes: Operating income: Latin America $ 134 $ 90 $ 273 $ 193 AMEA 207 211 567 483 Europe 449 380 956 757 North America 580 454 1,146 872 Unrealized gains/(losses) on hedging activities (mark-to-market impacts) 171 (109) 220 (82) General corporate expenses (79) (62) (156) (112) Amortization of intangible assets (37) (32) (76) (64) Acquisition-related costs — (5) — (26) Operating income 1,425 927 2,930 2,021 Benefit plan non-service income 22 30 41 63 Interest and other expense, net (97) (98) (192) (266) (Loss)/gain on marketable securities (189) — 607 — Earnings before income taxes $ 1,161 $ 859 $ 3,386 $ 1,818 46 Table of Contents Latin America For the Three Months Ended June 30, 2023 2022 $ change % change (in millions) Net revenues $ 1,228 $ 876 $ 352 40.2 % Segment operating income 134 90 44 48.9 % For the Six Months Ended June 30, 2023 2022 $ change % change (in millions) Net revenues $ 2,439 $ 1,702 $ 737 43.3 % Segment operating income 273 193 80 41.5 % Three Months Ended June 30 Net revenues increased $352 million (40.2%), due to higher net pricing (35.1 pp), the impact of an acquisition (15.9 pp) and favorable volume/mix (2.6 pp), partially offset by unfavorable currency (11.5 pp) and the impact of divestitures (1.9 pp). Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories, primarily in Argentina, Brazil and Mexico. The November 1, 2022 acquisition of Ricolino added incremental net revenues of $137 million (constant currency basis) in the second quarter of 2023. Favorable volume/mix reflected continued strong demand for our snack category products. Favorable volume/mix was driven by gains in gum, biscuits & baked snacks and candy, partially offset by declines in chocolate, refreshment beverages and cheese & grocery. Unfavorable currency impacts were primarily due to the strength of the U.S. dollar relative to several currencies in the region, primarily the Argentinean peso, Colombian peso and Brazilian real, partially offset by the strength of several currencies relative to the U.S. dollar, primarily the Mexican peso. The impact of divestitures resulted in a year-over-year decline in net revenues of $12 million. Segment operating income increased $44 million (48.9%), primarily due to higher net pricing, the impact of our Ricolino acquisition and favorable volume/mix. These favorable items were partially offset by higher raw material costs, higher other selling, general and administrative expenses, higher advertising and consumer promotion costs, unfavorable currency and acquisition integration costs incurred in the second quarter of 2023. Six Months Ended June 30: Net revenues increased $737 million (43.3%), due to higher net pricing (33.4 pp), the impact of an acquisition (17.4 pp) and favorable volume/mix (5.0 pp), partially offset by unfavorable currency (10.7 pp) and the impact of divestitures (1.8 pp). Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories, primarily in Argentina, Brazil and Mexico. The November 1, 2022 acquisition of Ricolino added incremental net revenues of $293 million (constant currency basis) in the first six months of 2023. Favorable volume/mix reflected strong volume growth as the region continued to see increased demand for our snack category products. Favorable volume/mix was driven by gains in gum, biscuits & baked snacks, candy and cheese & grocery, partially offset by declines in refreshment beverages and chocolate. Unfavorable currency impacts were primarily due to the strength of the U.S. dollar relative to several currencies in the region, primarily the Argentinean peso and Colombian peso, partially offset by the strength of several currencies relative to the U.S. dollar, primarily the Mexican peso. The impact of divestitures resulted in a year-over-year decline in net revenues of $21 million. Segment operating income increased $80 million (41.5%), primarily due to higher net pricing, favorable volume/mix and the impact of our Ricolino acquisition. These favorable items were partially offset by higher raw material costs, higher other selling, general and administrative expenses, higher advertising and consumer promotion costs, acquisition integration costs incurred in the first six months of 2023, unfavorable currency and higher remeasurement loss on net monetary position. 47 Table of Contents AMEA For the Three Months Ended June 30, 2023 2022 $ change % change (in millions) Net revenues $ 1,609 $ 1,535 $ 74 4.8 % Segment operating income 207 211 (4) (1.9) % For the Six Months Ended June 30, 2023 2022 $ change % change (in millions) Net revenues $ 3,548 $ 3,402 $ 146 4.3 % Segment operating income 567 483 84 17.4 % Three Months Ended June 30 Net revenues increased $74 million (4.8%), due to higher net pricing (9.9 pp) and favorable volume/mix (3.3 pp), partially offset by unfavorable currency (8.4 pp). Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories. Favorable volume/mix reflected continued strong demand for our snack category products. Favorable volume/mix was driven by gains in chocolate, gum, candy and refreshment beverages, partially offset by declines in biscuits & baked snacks and cheese & grocery. Unfavorable currency impacts were due to the strength of the U.S. dollar relative to most currencies in the region, including the Chinese yuan, Indian rupee, Egyptian pound, South African Rand and Australian dollar. Segment operating income decreased $4 million (1.9%), primarily due to higher raw material costs, higher other selling, general and administrative expenses, higher advertising and consumer promotion costs and unfavorable currency. These unfavorable items were partially offset by higher net pricing, favorable volume/mix and lower manufacturing costs driven by productivity. Six Months Ended June 30: Net revenues increased $146 million (4.3%), due to higher net pricing (8.9 pp) and favorable volume/mix (4.6 pp), partially offset by unfavorable currency (9.2 pp). Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories. Favorable volume/mix reflected overall volume gains from increased demand for our snack category products. Favorable volume/mix was driven by gains in chocolate, refreshment beverages, gum, candy and biscuits & baked snacks, partially offset by a decline in cheese & grocery. Unfavorable currency impacts were due to the strength of the U.S. dollar relative to most currencies in the region, including the Indian rupee, Egyptian pound, Chinese yuan, Australian dollar, South African Rand and Pakistan rupee. Segment operating income increased $84 million (17.4%), primarily due to higher net pricing, favorable volume/mix, lapping prior-year intangible asset impairment charges and lower manufacturing costs driven by productivity. These favorable items were partially offset by higher raw material costs, unfavorable currency, higher advertising and consumer promotion costs, higher other selling, general and administrative expenses and higher fixed asset impairment charges. 48 Table of Contents Europe For the Three Months Ended June 30, 2023 2022 $ change % change (in millions) Net revenues $ 2,926 $ 2,626 $ 300 11.4 % Segment operating income 449 380 69 18.2 % For the Six Months Ended June 30, 2023 2022 $ change % change (in millions) Net revenues $ 6,233 $ 5,561 $ 672 12.1 % Segment operating income 956 757 199 26.3 % Three Months Ended June 30 Net revenues increased $300 million (11.4%), due to higher net pricing (17.6 pp), partially offset by unfavorable volume/mix (4.5 pp) and unfavorable currency (1.7 pp). Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories. Overall, unfavorable volume/mix reflected volume declines due to the impact from customer price negotiation disruptions. Unfavorable volume/mix was driven by declines in biscuits & baked snacks, cheese & grocery, chocolate and candy, partially offset by gains in gum and refreshment beverages. Unfavorable currency impacts reflected the strength of the U.S. dollar relative to several currencies across the region, including the Russian ruble and Turkish lira, partially offset by the strength of several currencies relative to the U.S. dollar, primarily the euro. Segment operating income increased $69 million (18.2%), primarily due to higher net pricing, lower other selling, general and administrative expenses, lower acquisition integration costs, lower manufacturing costs driven by productivity and lower costs incurred for the Simplify to Grow program. These favorable items were partially offset by higher raw material costs, unfavorable volume/mix, unfavorable currency, remeasurement loss on monetary position, lapping the prior-year decrease in estimated allowances and reserves associated with incremental costs incurred due to the war in Ukraine, divestiture-related costs incurred in the second quarter of 2023, and higher advertising and consumer promotion costs. Six Months Ended June 30: Net revenues increased $672 million (12.1%), due to higher net pricing (17.7 pp), partially offset by unfavorable currency (4.1 pp) and unfavorable volume/mix (1.5 pp). Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories. Unfavorable currency impacts reflected the strength of the U.S. dollar relative to most currencies across the region, including the British pound sterling, Turkish lira, euro, Ukrainian hryvnya, Norwegian krone, Russian ruble and Swedish krona. Overall, unfavorable volume/mix reflected volume declines due to the impact from customer price negotiation disruptions. Unfavorable volume/mix was driven by declines in biscuits & baked snacks, cheese & grocery and chocolate, partially offset by gains in gum, candy and refreshment beverages. Segment operating income increased $199 million (26.3%), primarily due to higher net pricing, lapping the prior-year incremental costs incurred due to the war in Ukraine, lower other selling, general and administrative expenses and lower acquisition integration costs. These favorable items were partially offset by higher raw material costs, unfavorable currency, divestiture-related costs incurred in the first six months of 2023, higher advertising and consumer promotion costs, unfavorable volume/mix, higher manufacturing costs, remeasurement loss on net monetary position and higher costs incurred for the Simplify to Grow program. 49 Table of Contents North America For the Three Months Ended June 30, 2023 2022 $ change % change (in millions) Net revenues $ 2,744 $ 2,237 $ 507 22.7 % Segment operating income 580 454 126 27.8 % For the Six Months Ended June 30, 2023 2022 $ change % change (in millions) Net revenues $ 5,453 $ 4,373 $ 1,080 24.7 % Segment operating income 1,146 872 274 31.4 % Three Months Ended June 30 Net revenues increased $507 million (22.7%), due to the impact of an acquisition (10.8 pp), higher net pricing (10.4 pp) and favorable volume/mix (2.0 pp), partially offset by unfavorable currency (0.5 pp). The August 1, 2022 acquisition of Clif Bar added incremental net revenues of $240 million in the second quarter of 2023. Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories. Overall, favorable volume/mix reflected volume gains from increased demand for our snack category products. Favorable volume/mix was driven by gains in biscuits & baked snacks and gum, partially offset by declines in candy and chocolate. Unfavorable currency impact was due to the strength of the U.S. dollar relative to the Canadian dollar. Segment operating income increased $126 million (27.8%), primarily due to higher net pricing, the impact of our Clif Bar acquisition, lower manufacturing costs driven by productivity, favorable volume/mix and lower costs incurred for the Simplify to Grow Program. These favorable items were partially offset by higher raw material costs, higher other selling, general and administrative expenses, higher advertising and consumer promotion costs, higher acquisition integration costs and contingent consideration adjustments, higher divestiture-related costs and higher fixed asset impairment charges. Six Months Ended June 30: Net revenues increased $1,080 million (24.7%), due to higher net pricing (12.7 pp), the impact of an acquisition (10.5 pp) and favorable volume/mix (2.1 pp), partially offset by unfavorable currency (0.6 pp). Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories. The August 1, 2022 acquisition of Clif Bar added incremental net revenues of $458 million in the first six months of 2023. Overall, favorable volume/mix reflected volume gains from increased demand for our snack category products. Favorable volume/mix was driven by gains in biscuits & baked snacks and gum, partially offset by declines in candy and chocolate. Unfavorable currency impact was due to the strength of the U.S. dollar relative to the Canadian dollar. Segment operating income increased $274 million (31.4%), primarily due to higher net pricing, the impact of our Clif Bar acquisition, favorable volume/mix, lower costs incurred for the Simplify to Grow Program and lower manufacturing costs driven by productivity. These favorable items were partially offset by higher raw material costs, higher advertising and consumer promotion costs, higher other selling, general and administrative expenses, higher acquisition integration costs and contingent consideration adjustments, higher fixed asset impairment charges, higher divestiture-related costs and unfavorable currency. 50 Table of Contents Liquidity and Capital Resources We believe that cash from operations, our revolving credit facilities, short-term borrowings and our authorized long-term financing will continue to provide sufficient liquidity for our working capital needs, planned capital expenditures and future payments of our contractual, tax and benefit plan obligations and payments for acquisitions, share repurchases and quarterly dividends. We expect to continue to utilize our commercial paper program and international credit lines as needed. We continually evaluate long-term debt issuances to meet our short- and longer-term funding requirements. We also use intercompany loans with our international subsidiaries to improve financial flexibility. Our investment in JDE Peet's also provides us additional flexibility. Overall, we do not expect negative effects to our funding sources that would have a material effect on our liquidity, and we continue to monitor our operations in Europe and related effects from the war in Ukraine. To date, we have been successful in generating cash and raising financing as needed. However, if a serious economic or credit market crisis ensues or other adverse developments arise, it could have a material adverse effect on our liquidity, results of operations and financial condition. Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for raw materials, labor, manufacturing and distribution, trade and promotions, advertising and marketing, tax liabilities, benefit plan obligations and lease expenses) as well as periodic expenditures for acquisitions, shareholder returns (such as dividend payments and share repurchases), property, plant and equipment and any significant one-time non-operating items. Long-term cash requirements primarily relate to funding long-term debt repayments (refer to Note 8, Debt and Borrowing Arrangements ), our U.S. tax reform transition tax liability and deferred taxes (refer to Note 16, Income Taxes, in our Annual Report on Form 10-K for the year ended December 31, 2022), our long-term benefit plan obligations (refer to Note 10, Benefit Plans, and Note 11 , Benefit Plans, in our Annual report on Form 10-K for the year ended December 31, 2022) and commodity-related purchase commitments and derivative contracts (refer to Note 9, Financial Instruments ). We generally fund short- and long-term cash requirements with cash from operating activities as well as cash proceeds from short- and long-term debt financing (refer to Debt below). We generally do not use equity to fund our ongoing obligations. Cash Flow We believe our ability to generate substantial cash from operating activities and readily access capital markets and secure financing at competitive rates are key strengths and give us significant flexibility to meet our short- and long-term financial commitments. Our cash flow activity is noted below: Six Months Ended June 30, 2023 2022 (in millions) Net cash provided by operating activities $ 1,973 $ 1,967 Net cash provided by/(used in) investing activities $ 1,250 $ (999) Net cash used in financing activities $ (3,539) $ (2,516) Net Cash Provided by Operating Activities The change in net cash provided by operating activities was essentially flat primarily due to an increase in cash-basis net earnings partially offset by increased year-over-year working capital requirements. This is largely a result of business growth and acquisitions completed during 2022. Net Cash (Used in)/Provided by Investing Activities The improvement in net cash provided by/used in investing activities was largely driven by higher proceeds from the current year KDP and JDEP share sales compared to the prior year JDEP share sale (refer to Note 6, Investments ) and lapping prior-year cash consideration paid for the Chipita acquisition (refer to Note 2, Acquisitions and Divestitures ). We continue to make capital expenditures primarily to modernize manufacturing facilities, implement new product manufacturing and support productivity initiatives. We expect 2023 capital expenditures to be up to $1.2 billion, including capital expenditures in connection with our Simplify to Grow Program and for funding our strategic priorities. We expect to continue to fund these expenditures with cash from operations. 51 Table of Contents Net Cash Used in Financing Activities The increase in cash used in financing activities was primarily due to lower debt proceeds, partially offset by lower share repurchases in the first six months of 2023 compared to the same prior-year period. Dividends We paid dividends of $1,055 million in the first six months of 2023 and $977 million in the first six months of 2022. The second quarter 2023 dividend of $0.385 per share, declared on May 17, 2023 for shareholders of record as of June 30, 2023, was paid on July 14, 2023. On July 27, 2023, the Audit Committee, with authorization delegated from our Board of Directors, declared a quarterly cash dividend of $0.425 per share of Class A Common Stock, an increase of 10 percent. This dividend is payable on October 13, 2023, to shareholders of record as of September 29, 2023. The declaration of dividends is subject to the discretion of our Board of Directors and depends on various factors, including our net earnings, financial condition, cash requirements, future prospects and other factors that our Board of Directors deems relevant to its analysis and decision making. We anticipate that the 2023 distributions will be characterized as dividends under U.S. federal income tax rules. The final determination will be made on an IRS Form 1099–DIV issued in early 2024. Guarantees As discussed in Note 12, Commitments and Contingencies , we enter into third-party guarantees primarily to cover the long-term obligations of our vendors. As part of these transactions, we guarantee that third parties will make contractual payments or achieve performance measures. As of June 30, 2023 and December 31, 2022, we had no material third-party guarantees recorded on our condensed consolidated balance sheet. Guarantees do not have, and we do not expect them to have, a material effect on our liquidity. Debt The nature and amount of our long-term and short-term debt and the proportionate amount of each varies as a result of current and expected business requirements, market conditions and other factors. As such, we may issue commercial paper or secure other forms of financing throughout the year to meet short-term working capital or other financing needs. At its July 2022 meeting, the Board of Directors approved a new $2 billion long-term financing authorization that replaced the prior long-term financing authorization of $7 billion. As of June 30, 2023, $1.5 billion of the long-term financing authorization remained available. Our total debt was $21.2 billion at June 30, 2023 and $22.9 billion at December 31, 2022. Our debt-to-capitalization ratio was 0.43 at June 30, 2023 and 0.46 at December 31, 2022. At June 30, 2023, the weighted-average term of our outstanding long-term debt was 8.3 years. Our average daily commercial paper borrowings outstanding were $3 billion in the first six months of 2023 and $1.2 billion in the first six months of 2022. One of our subsidiaries, Mondelez International Holdings Netherlands B.V. (“MIHN”), has outstanding debt. The operations held by MIHN generated approximately 71.2% (or $12.6 billion) of the $17.7 billion of consolidated net revenue in the six months ended June 30, 2023. The operations held by MIHN represented approximately 83.6% (or $24.0 billion) of the $28.7 billion of net assets as of June 30, 2023. Refer to Note 8, Debt and Borrowing Arrangements, for more information on our debt and debt covenants. Commodity Trends We regularly monitor worldwide supply, commodity cost and currency trends so we can cost-effectively secure ingredients, packaging and fuel required for production. During the first six months of 2023, the primary drivers of the increase in our aggregate commodity costs were higher energy, dairy, sugar, grains, edible oils, packaging, cocoa, nuts and other ingredient costs, as well as unfavorable year-over-year currency exchange transaction costs on imported materials. A number of external factors such as the current macroeconomic environment, including global inflation, effects of the war in Ukraine, climate and weather conditions, commodity, transportation and labor market conditions, currency fluctuations and the effects of governmental agricultural or other programs affect the cost and availability of raw materials and agricultural materials used in our products. We address higher commodity costs and currency impacts primarily through hedging, higher pricing and manufacturing and overhead cost control. We use hedging techniques 52 Table of Contents to limit the impact of fluctuations in the cost of our principal raw materials; however, we may not be able to fully hedge against commodity cost changes, such as dairy, where there is a limited ability to hedge, and our hedging strategies may not protect us from increases in specific raw material costs. Due to competitive or market conditions, planned trade or promotional incentives, fluctuations in currency exchange rates or other factors, our pricing actions may also lag commodity cost changes temporarily. As a result of international supply chain, transportation and labor market disruptions and generally higher commodity, transportation and labor costs in the first six months of 2023, we expect price volatility and a higher aggregate cost environment to continue. While the costs of our principal raw materials fluctuate, we believe there will continue to be an adequate supply of the raw materials we use and that they will generally remain available. Significant Accounting Estimates We prepare our condensed consolidated financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions. Our significant accounting policies are described in Note 1 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022. Our significant accounting estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022. See also Note 1, Basis of Presentation , in this report. Forward-Looking Statements This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management, including for future operations, capital expenditures or share repurchases; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief or expectation; and any statements of assumptions underlying any of the foregoing or other future events. Forward-looking statements may include, among others, the words, and variations of words, “will,” “may,” “expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,” “likely,” “estimate,” “anticipate,” “objective,” “predict,” “project,” “drive,” “seek,” “aim,” “target,” “potential,” “commitment,” “outlook,” “continue” or any other similar words. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results or outcomes could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Important factors that could cause our actual results or performance to differ materially from those contained in or implied by our forward-looking statements include, but are not limited to, the following: • weakness in macroeconomic conditions in our markets, including as a result of inflation (and related monetary policy actions by governments in response to inflation), instability of certain financial institutions, volatility of commodity and other input costs and availability of commodities; • geopolitical uncertainty, including the impact of ongoing or new developments in the war in Ukraine, related current and future sanctions imposed by governments and other authorities and related impacts, including on our business operations, employees, reputation, brands, financial condition and results of operations; • global or regional health pandemics or epidemics; • competition and our response to channel shifts and pricing and other competitive pressures; • pricing actions and customer and consumer responses to such actions; • promotion and protection of our reputation and brand image; • weakness in consumer spending and/or changes in consumer preferences and demand and our ability to predict, identify, interpret and meet these changes; • risks from operating globally, including in emerging markets, such as political, economic and regulatory risks; • the outcome and effects on us of legal and tax proceedings and government investigations, including the European Commission legal matter; 53 Table of Contents • use of information technology and third party service providers; • unanticipated disruptions to our business, such as malware incidents, cyberattacks or other security breaches, and supply, commodity, labor and transportation constraints; • our ability to identify, complete, manage and realize the full extent of the benefits, cost savings or synergies presented by strategic transactions, including our recently completed acquisitions of Ricolino, Clif Bar, Chipita, Gourmet Food, Grenade and Hu, and the anticipated closing of our planned divestiture of our developed market gum business in North America and Europe; • our investments and our ownership interests in those investments, including JDE Peet's; • the restructuring program and our other transformation initiatives not yielding the anticipated benefits; • changes in the assumptions on which the restructuring program is based; • the impact of climate change on our supply chain and operations; • consolidation of retail customers and competition with retailer and other economy brands; • changes in our relationships with customers, suppliers or distributors; • management of our workforce and shifts in labor availability or labor costs; • compliance with legal, regulatory, tax and benefit laws and related changes, claims or actions; • perceived or actual product quality issues or product recalls; • failure to maintain effective internal control over financial reporting or disclosure controls and procedures; • our ability to protect our intellectual property and intangible assets; • tax matters including changes in tax laws and rates, disagreements with taxing authorities and imposition of new taxes; • changes in currency exchange rates, controls and restrictions; • volatility of and access to capital or other markets, rising interest rates, the effectiveness of our cash management programs and our liquidity; • pension costs; • significant changes in valuation factors that may adversely affect our impairment testing of goodwill and intangible assets; and • the risks and uncertainties, as they may be amended from time to time, set forth in our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent Quarterly Reports on Form 10-Q. There may be other factors not presently known to us or which we currently consider to be immaterial that could cause our actual results to differ materially from those projected in any forward-looking statements we make. We disclaim and do not undertake any obligation to update or revise any forward-looking statement in this report except as required by applicable law or regulation. In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Non-GAAP Financial Measures We use non-GAAP financial information and believe it is useful to investors as it provides additional information to facilitate comparisons of historical operating results, identify trends in our underlying operating results and provide additional insight and transparency on how we evaluate our business. We use non-GAAP financial measures to budget, make operating and strategic decisions and evaluate our performance. We have detailed the non-GAAP adjustments that we make in our non-GAAP definitions below. The adjustments generally fall within the following categories: acquisition & divestiture activities, gains and losses on intangible asset sales and non-cash impairments, major program restructuring activities, constant currency and related adjustments, major program financing and hedging activities and other major items affecting comparability of operating results. We believe the non-GAAP measures should always be considered along with the related U.S. GAAP financial measures. We have provided the reconciliations between the U.S. GAAP and non-GAAP financial measures below, and we also discuss our underlying U.S. GAAP results throughout our Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q. Our primary non-GAAP financial measures are listed below and reflect how we evaluate our current and prior-year operating results. As new events or circumstances arise, these definitions could change. When our definitions change, we provide the updated definitions and present the related non-GAAP historical results on a comparable basis (1) . • “Organic Net Revenue” is defined as net revenues (the most comparable U.S. GAAP financial measure) excluding the impacts of acquisitions, divestitures (2) and currency rate fluctuations (3) . We believe that 54 Table of Contents Organic net revenue reflects the underlying growth from the ongoing activities of our business and provides improved comparability of results. We also evaluate Organic Net Revenue growth from emerging markets and developed markets, and these underlying measures are also reconciled to U.S. GAAP above. • Our emerging markets include our Latin America region in its entirety; the AMEA region, excluding Australia, New Zealand and Japan; and the following countries from the Europe region: Russia, Ukraine, Türkiye, Kazakhstan, Georgia, Poland, Czech Republic, Slovak Republic, Hungary, Bulgaria, Romania, the Baltics and the East Adriatic countries. • Our developed markets include the entire North America region, the Europe region excluding the countries included in the emerging markets definition, and Australia, New Zealand and Japan from the AMEA region. • “Adjusted Operating Income” is defined as operating income (the most comparable U.S. GAAP financial measure) excluding the impacts of the Simplify to Grow Program (4) ; gains or losses (including non-cash impairment charges) on goodwill and intangible assets; divestiture (2) or acquisition gains or losses, divestiture-related costs (5) , acquisition-related costs (6) , and acquisition integration costs and contingent consideration adjustments (7) ; inventory step-up charges (8) ; the operating results of divestitures (2) ; remeasurement of net monetary position (9) ; mark-to-market impacts from commodity, forecasted currency and equity method investment transaction derivative contracts (10) ; impact from resolution of tax matters (11) ; 2017 malware incident net recoveries; incremental costs due to the war in Ukraine (12) ; impact from the European Commission legal matter (13) ; and impact from pension participation changes (14) . We also present “Adjusted Operating Income margin,” which is subject to the same adjustments as Adjusted Operating Income. We also evaluate growth in our Adjusted Operating Income on a constant currency basis (3) . We believe these measures provide improved comparability of underlying operating results. • “Adjusted EPS” is defined as diluted EPS attributable to Mondelēz International (the most comparable U.S. GAAP financial measure) from continuing operations excluding the impacts of the items listed in the Adjusted Operating Income definition as well as losses on debt extinguishment and related expenses; gains or losses on interest rate swaps no longer designated as accounting cash flow hedges due to changed financing and hedging plans; net earnings from divestitures (2) ; mark-to-market unrealized gains or losses and realized gains or losses from marketable securities (15) ; initial impacts from enacted tax law changes (16) ; and gains or losses on equity method investment transactions. Similarly, within Adjusted EPS, our equity method investment net earnings exclude our proportionate share of our investees’ significant operating and non-operating items (15) . We also evaluate growth in our Adjusted EPS on a constant currency basis (3) . We believe Adjusted EPS provides improved comparability of underlying operating results. (1) When items no longer impact our current or future presentation of non-GAAP operating results, we remove these items from our non-GAAP definitions. In the first quarter of 2023, we added to the non-GAAP definition for divestitures the inclusion of changes from equity method investment accounting to accounting for equity interests with readily determinable fair values (“marketable securities”; refer to footnote (2) below). In addition, we added to the non-GAAP definitions the exclusion of gains or losses associated with marketable securities (see footnote (15) below). (2) Divestitures include completed sales of businesses, exits of major product lines upon completion of a sale or licensing agreement, the partial or full sale of an equity method investment and changes from equity method investment accounting to accounting for marketable securities. As we record our share of JDE Peet’s ongoing earnings on a one-quarter lag basis, any JDE Peet’s ownership reductions are reflected as divestitures within our non-GAAP results the following quarter. (3) Constant currency operating results are calculated by dividing or multiplying, as appropriate, the current-period local currency operating results by the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period. (4) Non-GAAP adjustments related to the Simplify to Grow Program reflect costs incurred that relate to the objectives of our program to transform our supply chain network and organizational structure. Costs that do not meet the program objectives are not reflected in the non-GAAP adjustments. (5) Divestiture-related costs, which includes costs incurred in relation to the preparation and completion (including one-time costs such as severance related to elimination of stranded costs) of our divestitures as defined in footnote (2), also includes costs incurred associated with our publicly-announced processes to sell businesses. We exclude these items to better facilitate comparisons of our underlying operating performance across periods. (6) Acquisition-related costs, which includes transaction costs such as third party advisor, investment banking and legal fees, also includes one-time compensation expense related to the buyout of non-vested ESOP shares. We exclude these items to better facilitate comparisons of our underlying operating performance across periods. (7) Acquisition integration costs and contingent consideration adjustments include one-time costs related to the integration of acquisitions as well as any adjustments made to the fair market value of contingent compensation liabilities that have been previously booked for earn-outs related to acquisitions that do not relate to employee compensation expense. We exclude these items to better facilitate comparisons of our underlying operating performance across periods. 55 Table of Contents (8) In the third quarter of 2022, we began to exclude the one-time inventory step-up charges associated with acquired companies related to the fair market valuation of the acquired inventory. We exclude this item to better facilitate comparisons of our underlying operating performance across periods. (9) In connection with our applying highly inflationary accounting (refer to Note 1, Basis of Presentation ) for Argentina (beginning in the third quarter of 2018) and Türkiye (beginning in the second quarter of 2022), we exclude the related remeasurement gains or losses related to remeasuring net monetary assets or liabilities denominated in the local currency to the U.S. dollar during the periods presented. (10) We exclude unrealized gains and losses (mark-to-market impacts) from outstanding commodity and forecasted currency and equity method investment transaction derivative contracts from our non-GAAP earnings measures. The mark-to-market impacts of commodity and forecasted currency transaction derivatives are excluded until such time that the related exposures impact our operating results. Since we purchase commodity and forecasted currency transaction contracts to mitigate price volatility primarily for inventory requirements in future periods, we make this adjustment to remove the volatility of these future inventory purchases on current operating results to facilitate comparisons of our underlying operating performance across periods. We exclude equity method investment transaction derivative contract settlements as they represent protection of value for future divestitures. (11) Refer to Note 12, Commitments and Contingencies – Tax Matters , in this report, and Note 14, Commitments and Contingencies –Tax Matters , in our Annual Report on Form 10-K for the year ended December 31, 2022. (12) In February 2022, Russia began a military invasion of Ukraine and we stopped our production and closed our facilities in Ukraine for a period of time due to damage incurred to our facilities during the invasion. We began to incur incremental costs directly related to the war including asset impairments, such as property and inventory losses, higher expected allowances for uncollectible accounts receivable and committed compensation. We have isolated and exclude these costs and related impacts as well as subsequent recoveries from our operating results to facilitate evaluation and comparisons of our ongoing results. Incremental costs related to increasing operations in other primarily European facilities are not included with these costs. (13) In the fourth quarter of 2022, we began to exclude the impact from the European Commission legal matter. 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. On January 28, 2021, the European Commission announced it had taken the next procedural step in its investigation and opened formal proceedings. We have been cooperating with the investigation and are currently engaged in discussions with the European Commission in an effort to reach a negotiated, proportionate resolution to this matter. As of December 31. 2022, we recorded an estimate of the possible cost to resolve this matter. Due to the unique nature of this matter, we believe it to be infrequent and unusual and therefore exclude it to better facilitate comparisons of our underlying operating performance across periods. Refer to Note 12, Commitments and Contingencies . (14) The impact from pension participation changes represents the charges incurred when employee groups are withdrawn from multiemployer pension plans and other changes in employee group pension plan participation. We exclude these charges from our non-GAAP results because those amounts do not reflect our ongoing pension obligations. See Note 10, Benefit Plans , for more information on the multiemployer pension plan withdrawal. (15) In the first quarter of 2023, we began to exclude mark-to-market unrealized gains or losses, as well as realized gains or losses, associated with our marketable securities from our non-GAAP earnings measures. These marketable securities gains or losses are not indicative of underlying operations and are excluded to better facilitate comparisons of our underlying operating performance across periods. (16) We have excluded the initial impacts from enacted tax law changes. Initial impacts include items such as the remeasurement of deferred tax balances and the transition tax from the 2017 U.S. tax reform. We exclude initial impacts from enacted tax law changes from our Adjusted EPS as they do not reflect our ongoing tax obligations under the enacted tax law changes. (17) We have excluded our proportionate share of our equity method investees’ significant operating and non-operating items such as acquisition and divestiture-related costs, restructuring program costs and initial impacts from enacted tax law changes, in order to provide investors with a comparable view of our performance across periods. Although we have shareholder rights and board representation commensurate with our ownership interests in our equity method investees and review the underlying operating results and significant operating and non-operating items each reporting period, we do not have direct control over their operations or resulting revenue and expenses. Our use of equity method investment net earnings on an adjusted basis is not intended to imply that we have any such control. Our U.S. GAAP “diluted EPS attributable to Mondelēz International from continuing operations” includes all of the investees’ significant operating and non-operating items. We believe that the presentation of these non-GAAP financial measures, when considered together with our U.S. GAAP financial measures and the reconciliations to the corresponding U.S. GAAP financial measures, provides a more complete understanding of the factors and trends affecting our business than could be obtained absent these disclosures. Because non-GAAP financial measures vary among companies, the non-GAAP financial measures presented in this report may not be comparable to similarly titled measures used by other companies. Our use of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for any U.S. GAAP financial measures. A limitation of these non-GAAP financial measures is they exclude items that have an impact on our U.S. GAAP reported results. The best way this limitation can be addressed is by evaluating our non-GAAP financial measures in combination with our U.S. GAAP reported results and carefully evaluating the tables that reconcile U.S. GAAP reported figures to the non-GAAP financial measures in this Form 10-Q, which can be found above under Consolidated Results of Operations . 56 Table of Contents