What changed in this filing

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Item 1. Financial Statements

2024-04-30 compared with 2023-11-01 · 190 added, 496 removed, 722 unchanged (49% of the section changed)

6 unchanged sentences

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

Net revenues $ 9,290 $ 9,166

7 unchanged sentences

Interest and other expense, net ( 68 ) ( 95 )

Loss/(gain) on marketable securities 1 — ( 606 ) —

Gain on marketable securities

Earnings before income taxes 2,682 2,225

Income tax provision ( 632 ) ( 658 )

Gain/(loss) on equity method investment transactions

1 ( 6 ) 465 ( 19 )

(Loss)/gain on equity method investment transactions including impairments

Equity method investment net earnings 31 35

14 unchanged sentences

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

Net earnings $ 1,416 $ 2,089

16 unchanged sentences

dollars, except share data)

September 30,

2024 December 31, 2023

Cash and cash equivalents $ 1,376 $ 1,810

Trade receivables (net of allowances of $ 63 at September 30, 2023

and $ 45 at December 31, 2022)

Other receivables (net of allowances of $ 52 at September 30, 2023

and $ 59 at December 31, 2022)

Trade receivables, less allowance ($ 48 and $ 66 , respectively)

Other receivables, less allowance ($ 40 and $ 50 , respectively)

Inventories, net 3,562 3,615

25 unchanged sentences

Commitments and Contingencies (Note 12)

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

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

Common Stock, no par value ( 5,000,000,000 shares authorized, 1,996,537,778 shares issued)

Additional paid-in capital 32,163 32,216

1 unchanged sentence

Accumulated other comprehensive losses ( 11,132 ) ( 10,946 )

Treasury stock, at cost ( 635,672,022 shares at September 30, 2023 and

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

Treasury stock, at cost ( 652,553,982 and 648,055,073 shares, respectively)

( 27,623 ) ( 27,174 )

17 unchanged sentences

Interest Total

Three Months Ended September 30, 2023

Balances at July 1, 2023 $ — $ 32,148 $ 33,458 $ ( 10,710 ) $ ( 26,249 ) $ 32 $ 28,679

Comprehensive earnings/(losses):

Net earnings — — 984 — — 4 988

Other comprehensive earnings/(losses),

net of income taxes

— — — ( 522 ) — ( 6 ) ( 528 )

Exercise of stock options and issuance of

other stock awards

— 33 4 — 26 — 63

Common Stock repurchased — — ( 57 ) — ( 57 )

Cash dividends declared ($ 0.425 per share)

— — ( 580 ) — — — ( 580 )

Dividends paid on noncontrolling interest

and other activities

— — — — — ( 5 ) ( 5 )

Balances at September 30, 2023 $ — $ 32,181 $ 33,866 $ ( 11,232 ) $ ( 26,280 ) $ 25 $ 28,560

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Balances at January 1, 2024 $ — $ 32,216 $ 34,236 $ ( 10,946 ) $ ( 27,174 ) $ 34 $ 28,366

12 unchanged sentences

and other activities

— — 14 — — ( 9 ) 5

Balances at September 30, 2023 $ — $ 32,181 $ 33,866 $ ( 11,232 ) $ ( 26,280 ) $ 25 $ 28,560

Three Months Ended September 30, 2022

Balances at July 1, 2022 $ — $ 32,086 $ 31,431 $ ( 10,638 ) $ ( 25,368 ) $ 42 $ 27,553

Comprehensive earnings/(losses):

Net earnings — — 532 — — 1 533

Other comprehensive earnings/(losses),

net of income taxes

— — — ( 593 ) — ( 12 ) ( 605 )

Exercise of stock options and issuance of

other stock awards

— 30 ( 2 ) — 25 — 53

Common Stock repurchased — — — — ( 338 ) — ( 338 )

Cash dividends declared ($ 0.385 per share)

— — ( 524 ) — — — ( 524 )

Dividends paid on noncontrolling interest

and other activities

— — — — — ( 2 ) ( 2 )

Balances at September 30, 2022 $ — $ 32,116 $ 31,437 $ ( 11,231 ) $ ( 25,681 ) $ 29 $ 26,670

Nine Months Ended September 30, 2022

Balances at March 31, 2024 $ — $ 32,163 $ 35,074 $ ( 11,132 ) $ ( 27,623 ) $ 32 $ 28,514

Three Months Ended March 31, 2023

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

13 unchanged sentences

— — 14 — — ( 1 ) 13

Balances at September 30, 2022 $ — $ 32,116 $ 31,437 $ ( 11,231 ) $ ( 25,681 ) $ 29 $ 26,670

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

See accompanying notes to the condensed consolidated financial statements.

3 unchanged sentences

(in millions of U.S.

For the Nine Months Ended

September 30,

For the Three Months Ended

CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES

5 unchanged sentences

Asset impairments and accelerated depreciation 6 18

Loss on early extinguishment of debt 1 38

(Gain)/loss on equity method investment transactions ( 465 ) 19

Loss/(gain) on equity method investment transactions including impairments

Equity method investment net earnings ( 31 ) ( 35 )

Distributions from equity method investments 81 102

Unrealized (gain)/loss on derivative contracts ( 259 ) 220

Unrealized gain on derivative contracts

( 1,134 ) ( 67 )

Gain on marketable securities — ( 787 )

13 unchanged sentences

Proceeds from divestitures including equity method and marketable security investments 4 1,034

(Payments)/proceeds from investments and derivative settlements ( 180 ) 585

Proceeds from derivative settlements

Payments for derivative settlements

Contributions to investments

( 192 ) ( 246 )

Proceeds from sale of property, plant and equipment and other

Net cash provided by/(used in) investing activities ( 446 ) 636

CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES

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

Repayments of commercial paper, maturities greater than 90 days ( 67 ) —

Net (repayments)/issuances of short-term borrowings ( 166 ) 156

3 unchanged sentences

Dividends paid ( 578 ) ( 529 )

Other 134 143

Net cash used in financing activities ( 1,223 ) ( 1,757 )

Effect of exchange rate changes on cash, cash equivalents

and restricted cash ( 133 ) ( 167 )

Cash, cash equivalents and restricted cash:

Effect of exchange rate changes on cash, cash equivalents and restricted cash

( 77 ) ( 11 )

Cash, cash equivalents and restricted cash:

Decrease ( 422 ) ( 9 )

Balance at beginning of period 1,884 1,948

21 unchanged sentences

In March 2022, our two Ukrainian manufacturing facilities in Trostyanets and Vyshhorod were significantly damaged.

During the first quarter of 2022, we evaluated and impaired these and other related assets.

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 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.

We also continue to support our Ukraine employees, including paying salaries to those not yet able to return to work until full production returns.

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

We also continue to support our Ukraine employees, including paying salaries to those not yet able to return to work until production returns.

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

3 unchanged sentences

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

Argentina and Türkiye represent 1.6 % and 0.5 % of our consolidated net revenues with remeasurement losses of $ 20 million and $ 2 million for the three months ended September 30, 2023, respectively, and 1.6 % and 0.8 % of our consolidated net revenues with remeasurement losses of $ 41 million and $ 19 million for the nine months ended September 30, 2023.

Argentina and Türkiye represent 1.4 % and 0.9 % of our consolidated net revenues with remeasurement losses of $ 2 million and $ 6 million for the three months ended March 31, 2024, respectively.

Given the continued volatility of these currencies, impacts to our financial statements in future periods could be significantly different from historical levels.

1 unchanged sentence

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 $ 67 million as of September 30, 2023 and $ 25 million as of December 31, 2022.

Total cash, cash equivalents and restricted cash was $ 1,677 million as of September 30, 2023 and $ 1,948 million as of December 31, 2022.

Restricted cash primarily includes cash held on behalf of financial institutions in accordance with accounts receivable factoring arrangements and letters of credit arrangements with legally restricted cash collateral provisions.

Restricted cash is recorded within other current assets and was $ 86 million as of March 31, 2024 and $ 74 million as of December 31, 2023.

Total cash, cash equivalents and restricted cash was $ 1,462 million as of March 31, 2024 and $ 1,884 million as of December 31, 2023.

Allowances for Credit Losses

3 unchanged sentences

Balance at January 1, 2024 $ ( 66 ) $ ( 50 ) $ ( 15 )

Current period (provision)/recovery for expected credit losses

Net recovery for expected credit losses

Write-offs charged against the allowance 2 — —

Currency 1 — —

Balance at September 30, 2023 $ ( 63 ) $ ( 52 ) $ ( 14 )

Balance at March 31, 2024 $ ( 48 ) $ ( 40 ) $ ( 15 )

Transfers of Financial Assets

The outstanding principal amount of receivables under our uncommitted revolving non-recourse accounts receivable factoring arrangements amounted to $ 755 million as of September 30, 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 $ 473 million as of March 31, 2024 and $ 262 million as of December 31, 2023.

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 $ 86 million in operating lease and $ 101 million in finance lease right-of-use assets obtained in exchange for lease obligations during the nine months ended September 30, 2023 and $ 206 million in operating lease and $ 135 million in finance lease right-of-use assets obtained in exchange for lease obligations during the nine months ended September 30, 2022.

We recorded $ 12 million in operating lease and $ 22 million in finance lease right-of-use assets obtained in exchange for lease obligations during the three months ended March 31, 2024 and $ 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.

Supply Chain Financing

As part of our continued efforts to improve our working capital efficiency, we have worked with our suppliers over the past several years to optimize our terms and conditions, which include the extension of payment terms.

Our current payment terms with a majority of our suppliers are from 30 to 180 days, which we deem to be commercially reasonable.

We also facilitate voluntary supply chain financing (“SCF”) programs through several participating financial institutions.

Under these programs, our suppliers, at their sole discretion, determine invoices that they want to sell to participating financial institutions.

Our suppliers’ voluntary inclusion of invoices in SCF programs has no bearing on our payment terms or amounts due.

Our responsibility is limited to making payments based upon the agreed-upon contractual terms.

No guarantees are provided by the Company or any of our subsidiaries under the SCF programs and we have no economic interest in the suppliers’ decision to participate in the SCF programs.

Amounts due to our suppliers that elected to participate in the SCF program are included in accounts payable in our consolidated balance sheet.

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

We have been informed by the participating financial institutions that our outstanding accounts payable related to suppliers that participate in the SCF programs was $ 2.5 billion and $ 2.4 billion, respectively, as of March 31, 2024 and December 31, 2023.

New Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) which requires companies to recognize and measure customer contract assets and contract liabilities acquired in a business combination as if the acquiring company originated the related revenue contracts.

Prior to adopting this ASU, acquired contract assets and liabilities were measured at fair value.

This ASU is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted.

We adopted this standard in the first quarter of 2023 and it did not have an impact on our consolidated financial statements.

In September 2022, the FASB issued an ASU which enhances the transparency of supplier finance programs by requiring additional disclosure about the key terms of these programs and a roll-forward of the related obligations to understand the effects of these programs on working capital, liquidity and cash flows.

The ASU is effective for fiscal years beginning after December 15, 2022, except for the roll-forward requirement, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

We adopted, with the exception of the roll-forward requirement, this standard in the first quarter of 2023 and it did not have a material impact on our consolidated financial statements and related disclosures.

Acquisitions and Divestitures

On November 1, 2022, we acquired 100 % of the equity of Grupo Bimbo's confectionery business, Ricolino, located primarily in Mexico.

The acquisition of Ricolino builds on our continued prioritization of fast-growing snacking segments in key geographies.

The cash consideration paid for Ricolino totaled $ 26 billion Mexican pesos ($ 1.3 billion), net of cash received.

We are working to complete the valuation of assets acquired and liabilities assumed and have recorded a preliminary purchase price allocation of:

(in millions)

Receivables 86

Other current assets 3

Property, plant and equipment 144

Operating leases right of use assets 23

Definite-life intangible assets 218

Indefinite-life intangible assets 339

Other assets 3

Assets acquired $ 1,625

Current liabilities 182

Deferred tax liability 76

Operating lease liabilities 23

Other liabilities 14

Total purchase price $ 1,330

cash received ( 22 )

Net Cash Paid $ 1,308

Within identifiable intangible assets, we allocated $ 339 million to trade names, which have an indefinite life.

The fair value for the Ricolino, Dulces Vero, LaCorona and Coronado trade names were determined using the Relief from Royalty method, a form of the income approach, at the acquisition date.

The fair value measurement of indefinite-life intangible assets are based on significant unobservable inputs, and thus represent Leve l 3 inputs.

Significant assumptions used in assessing the fair values of intangible assets include estimates of future sales, discount and royalty rates.

Goodwill was determined as the excess of the purchase price over the fair value of the net assets acquired and arises principally as a result of expansion opportunities and synergies across both new and legacy product categories in Mexico.

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

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

Ricolino added incremental net revenues of $ 180 million during the three months and $ 506 million during the nine months ended September 30, 2023, and operating income of $ 15 million during the three months and $ 31 million during the nine months ended September 30, 2023.

We incurred acquisition integration costs of $ 14 million during the three months and $ 30 million during the nine months ended September 30, 2023.

We also incurred during the three and nine months ended September 30, 2022, acquisition integration costs of $ 7 million in preparation for the acquisition.

We incurred $ 1 million of acquisition-related costs during the nine months ended September 30, 2022.

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

nutritious energy bars with organic ingredients.

The acquisition expands our global snack bar business and complements our refrigerated snacking and performance nutrition bar portfolios.

The total cash payment of $ 2.9 billion includes purchase price consideration of $ 2.6 billion, net of cash received, and one-time compensation expense of $ 0.3 billion related to the buyout of the non-vested employee stock ownership plan ("ESOP") shares.

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.

The estimated fair value of the contingent consideration obligation at the acquisition date was $ 440 million determined using a Monte Carlo simulation.

Significant assumptions used in assessing the fair value of the liability include financial projections for net revenue, gross profit, and earnings before interest, tax, depreciation and amortization ("EBITDA"), as well as discount and volatility rates.

We have completed the valuation of assets acquired and liabilities assumed and have recorded a purchase price allocation of:

(in millions)

Receivables 76

Inventory 123

Other current assets 9

Property, plant and equipment 186

Operating lease right-of-use assets

Deferred tax assets 107

Definite-life intangible assets 200

Indefinite-life intangible assets 1,450

Other assets 11

Assets acquired $ 3,271

Current liabilities 159

Contingent consideration 440

Other liabilities 15

Total purchase price $ 2,657

cash received ( 99 )

Net Cash Paid $ 2,558

Within identifiable intangible assets, we allocated $ 1,450 million to trade names, which have an indefinite life.

The fair value for the Clif and Luna trade names, were determined using the Relief from Royalty method, a form of the income approach, at the acquisition date.

The fair value measurement of intangible assets are based on significant unobservable inputs, and thus represent Leve l 3 inputs.

Significant assumptions used in assessing the fair values of intangible assets include forecasted future revenue, discount and royalty rates.

We expect to generate a meaningful cash tax benefit over time from the amortization of acquisition-related intangibles.

Goodwill was determined as the excess of the purchase price over the fair value of the net assets acquired and arises principally as a result of expansion opportunities and synergies across the U.S.

and other key markets.

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

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

Through the one-year anniversary of the acquisition, Clif Bar added incremental net revenues of $ 71 million during the three months and $ 529 million during the nine months ended September 30, 2023, and operating income of $ 11 million during the three months and $ 81 million during the nine months ended September 30, 2023.

We also incurred acquisition integration costs of $ 37 million during the three months and $ 92 million during the nine months ended September 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.

During the three and nine months ended September 30, 2022, we incurred acquisition integration costs of $ 16 million and an inventory step-up charge of $ 20 million.

We also incurred acquisition-related costs of $ 292 million

during the three months and $ 296 million during the nine months ended September 30, 2022.

These acquisition-related costs are primarily related to the buyout of the non-vested ESOP shares.

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

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

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 € 0.4 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:

(in millions)

Receivables 102

Other current assets 3

Property, plant and equipment 379

Finance lease right-of-use assets

Definite-life intangible assets 48

Indefinite-life intangible assets 686

Other assets 77

Assets acquired $ 2,210

Current liabilities 133

Deferred tax liability 158

Finance lease liabilities 8

Other liabilities 21

Total purchase price $ 1,890

long-term debt ( 436 )

cash received ( 52 )

Net Cash Paid $ 1,402

Within identifiable intangible assets, we allocated $ 686 million to trade names, which have an indefinite life.

The fair value for the 7 Days trade name, which is the primary asset acquired, was determined using the multi-period excess earnings method under the income approach at the acquisition date.

The fair value measurements of intangible assets are based on significant unobservable inputs, and thus represent Leve l 3 inputs.

Significant assumptions used in assessing the fair values of intangible assets include forecasted future cash flows and discount rates.

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

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

We incurred acquisition integration costs of $ 5 million during the three months and $ 15 million during the nine months ended September 30, 2023.

We incurred acquisition integration costs of $ 14 million during the three months and $ 85 million during the nine months ended September 30, 2022.

We incurred acquisition-related costs of $ 21 million during the nine months ended September 30, 2022.

Developed Market Gum - Held for Sale

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.

In connection with these agreements, we concluded that the disposal group met the held for sale criteria as of December 31, 2022.

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

We incurred divestiture-related costs of $ 14 million in the three months ended September 30, 2023 and $ 66 million in the nine months ended September 30, 2023.

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

As of September 30,

2023 As of December 31, 2022

(in millions)

Assets held for sale

Other receivables, net of allowances

Inventories, net 83 79

Current assets held for sale (1)

Property, plant and equipment, net 164 159

Operating lease right-of-use assets

Goodwill 290 292

Intangible assets, net 697 671

Deferred income taxes

Noncurrent assets held for sale (2)

Total assets held for sale

$ 1,245 $ 1,201

Liabilities held for sale

Accrued employment costs $ — $ 4

Other current liabilities

Current liabilities held for sale (3)

Long-term operating lease liabilities

Deferred income taxes — 15

Noncurrent liabilities held for sale (4)

Total liabilities held for sale

(1) Reported in Other current assets on the condensed consolidated balance sheets.

(2) Reported in Other assets on the condensed consolidated balance sheets.

(3) Reported in Other current liabilities on the condensed consolidated balance sheets.

(4) Reported in Other liabilities on the condensed consolidated balance sheets.

On October 1, 2023, we completed the sale of our developed market gum business in the United States, Canada, and Europe to Perfetti Van Melle Group, excluding the Portugal business which we retained pending regulatory approval.

We completed the sale of the Portugal business to Perfetti Van Melle Group on October 23, 2023.

We received net cash proceeds of $ 1.4 billion, subject to certain closing adjustments, that can be utilized for general corporate purposes, including the support of our commercial paper program.

In November 2023, the FASB issued an ASU which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The ASU is effective for fiscal years beginning after December 15, 2023 and early adoption is permitted.

We are currently assessing the impact on our consolidated financial statements and related segment disclosures.

In December 2023, the FASB issued an ASU which enhances the transparency of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information.

The ASU is effective for fiscal years beginning after December 15, 2024 and early adoption is permitted.

We are currently assessing the impact on our consolidated financial statements and related disclosures.

Developed Market Gum

On October 1, 2023, we completed the sale of our developed market gum business in the United States, Canada and Europe to Perfetti Van Melle Group, excluding the Portugal business which we sold on October 23, 2023 after obtaining regulatory approval.

We recorded divestiture-related costs of $ 4 million in the three months ended March 31, 2024 and divestiture-related costs of $ 30 million in the three months ended March 31, 2023.

This disposition was not considered a strategic shift that would have a major effect on our operations or financial results;

therefore, the results of the disposed business were not classified as discontinued operations.

Inventories consisted of the following:

As of September 30,

As of March 31,

2024 As of December 31, 2023

6 unchanged sentences

Property, plant and equipment consisted of the following:

As of September 30,

As of March 31,

2024 As of December 31, 2023

7 unchanged sentences

Property, plant and equipment, net $ 9,574 $ 9,694

For the nine months ended September 30, 2023, capital expenditures of $ 780 million excluded $ 321 million of accrued capital expenditures remaining unpaid at September 30, 2023 and included payment for the $ 324 million of capital expenditures that were accrued and unpaid at December 31, 2022.

For the nine months ended September 30, 2022, capital expenditures of $ 621 million excluded $ 255 million of accrued capital expenditures remaining unpaid at September 30, 2022 and included payment for the $ 249 million of capital expenditures that were accrued and unpaid at December 31, 2021.

For the three months ended March 31, 2024, capital expenditures of $ 299 million excluded $ 418 million of accrued capital expenditures remaining unpaid at March 31, 2024 and included payment for a portion of the $ 471 million of capital expenditures that were accrued and unpaid at December 31, 2023.

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.

Goodwill and Intangible Assets

Changes in goodwill consisted of (in millions):

Changes in goodwill consisted of:

Latin America AMEA Europe North America Total

(in millions)

January 1, 2023 $ 1,421 $ 3,132 $ 8,009 $ 10,888 $ 23,450

2 unchanged sentences

6 — — ( 33 ) ( 27 )

Held for Sale (1)

— — ( 66 ) ( 226 ) ( 292 )

Divestitures ( 8 ) — — — ( 8 )

Balance at December 31, 2023 $ 1,607 $ 3,065 $ 8,350 $ 10,874 $ 23,896

Currency 18 ( 80 ) ( 279 ) ( 16 ) ( 357 )

Acquisitions (1) (2)

3 — — ( 33 ) ( 30 )

Balance at September 30, 2023 $ 1,560 $ 2,998 $ 7,892 $ 10,857 $ 23,307

(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.

Balance at March 31, 2024 $ 1,625 $ 2,985 $ 8,071 $ 10,858 $ 23,539

(1) Purchase price allocation adjustments for Ricolino and Clif Bar during 2023.

Intangible Assets

Intangible assets consisted of the following (in millions):

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

Intangible assets consisted of the following:

As of March 31, 2024 As of December 31, 2023

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

(in millions)

Definite-life intangible assets $ 3,304 $ ( 2,174 ) $ 1,130 $ 3,322 $ ( 2,155 ) $ 1,167

1 unchanged sentence

18,484 — 18,484 18,669 — 18,669

Total $ 21,546 $ ( 2,071 ) $ 19,475 $ 21,767 $ ( 2,057 ) $ 19,710

(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.

$ 21,788 $ ( 2,174 ) $ 19,614 $ 21,991 $ ( 2,155 ) $ 19,836

(1) In 2023, we recorded $ 26 million of intangible asset impairment charges related to a chocolate brand in the North America segment for $ 20 million and a biscuit brand in the Europe segment for $ 6 million in the third quarter.

1 unchanged sentence

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

Amortization expense for intangible assets was $ 38 million for the three months and $ 114 million for the nine months ended September 30, 2023 and $ 32 million for the three months and $ 96 million for the nine months ended September 30, 2022.

For the next five years, we currently estimate annual amortization expense of approximately $ 145 million in 2023-2025, approximately $ 95 million in 2026 and approximately $ 90 million in 2027 (reflecting September 30, 2023 exchange rates).

During the third quarter of 2023, we performed our annual impairment assessment test for goodwill and indefinite-life intangible assets as of July 1, 2023.

Our 2023 annual testing of goodwill resulted in no impairments as each reporting unit had fair value in excess of carrying value.

As part of our goodwill quantitative assessment, we compare a reporting unit's estimated fair value to its carrying value.

If the carrying value of the reporting unit exceeds the fair value, we would record an impairment for the difference.

We estimate a reporting unit's fair value using a discounted cash flow method that incorporates discount rates, planned growth rates, and estimates of residual value.

For our Europe and North America reporting units, we used a market-based weighted average cost of capital of 7.1 % to discount projected cash flows of those operations.

For our Latin America and AMEA reporting units, we used a risk-rated discount rate of 10.1 % to discount projected cash flows from those operations.

Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, industry conditions and economic conditions based on available information.

Given the uncertainty of the global macroeconomic environment, those estimates could be

significantly different than future performance.

While all reporting units passed our annual impairment testing, if planned business performance expectations are not met or specific valuation factors outside our control, such as discount rates, changes significantly, then the estimated fair values of a reporting unit might decline and lead to a goodwill impairment in the future.

Our 2023 annual testing of indefinite-life intangible assets resulted in an impairment of $ 26 million related to a chocolate brand in the North America segment and a biscuit brand in the Europe segment.

The impairments were driven by changes in projections as a result of current and expected operating environment.

The impairment charges were calculated as the excess of the carrying value over the estimated fair value of the intangible assets on a global basis and were recorded within asset impairment and exit costs.

We use several accepted valuation methods, including Relief from Royalty, excess earnings and excess margin.

The valuation methods utilize estimates of future sales, earnings growth rates, royalty rates and discount rates to determine the fair value of each intangible asset.

We identified thirteen brands that each had a fair value in excess of book value of 10% or less.

The aggregate book value of the thirteen brands was $ 3.5 billion as of September 30, 2023, of which $ 1.8 billion is related to five recently acquired brands.

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

Amortization expense for intangible assets was $ 38 million for the three months ended March 31, 2024 and $ 39 million for the three months ended March 31, 2023.

For the next five years, we currently estimate annual amortization expense of approximately $ 125 million in 2024-2026 and approximately $ 90 million in 2027 and 2028 (reflecting March 31, 2024 exchange rates).

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 2024, 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.

We concluded there were no impairment indicators.

During our 2023 annual indefinite-life intangible asset testing, we identified thirteen brands that each had a fair value in excess of book value of 10% or less.

The aggregate book value of the thirteen brands was $ 3.6 billion as of March 31, 2024, of which $ 1.9 billion is related to five recently acquired brands.

We believe our current plans for each of these brands will support the current carrying values, but if plans to grow brand earnings and expand margin are not met or specific valuation factors outside of our control, such as discount rates, change then a brand or brands could become impaired in the future.

Marketable Securities

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 were measured at fair value based on quoted prices in active markets for identical assets (Level 1).

On July 13, 2023, we sold 23 million shares, the remainder of our shares of KDP.

We received proceeds of approximately $ 704 million.

On June 8, 2023, we sold 23 million shares of KDP, which reduced our ownership by 1.6 percentage points, 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 percentage points, 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 ($ 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 September 30, 2023 Nine Months Ended September 30, 2023

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

"KDP"), which reduced our ownership interest by 2.1 percentage points, 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 on equity method transactions of $ 493 million ($ 368 million after-tax) on this sale during the first quarter of 2023.

This reduction in ownership, 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 had significant influence over KDP.

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

Subsequently in 2023, we sold the remainder of our shares of KDP and exited our investment in the company.

Pre-tax gains for marketable securities are summarized below:

Three Months Ended March 31, 2023

(in millions)

Loss/(gain) on marketable securities sold during the period $ — $ ( 593 )

Unrealized gain on marketable securities held as of the end of the period

Dividend income and other

Total loss/(gain) on marketable securities $ 1 $ ( 606 )

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.

Total gain on marketable securities $ 796

We reported no marketable securities as of March 31, 2024 and $ 1.6 billion as of March 31, 2023 in Other current assets in the condensed consolidated balance sheet.

Equity Method Investments

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

As of September 30, 2023, we owned 17.7 %, 50.0 % and 49.0 %, respectively, of these companies'

outstanding shares.

Our investments accounted for under the equity method of accounting totaled $ 3.1 billion as of September 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 $ 10 million and cash dividends of $ 34 million in the three months ended September 30, 2023, and equity earnings of $ 85 million and cash dividends of $ 48 million in the three months ended September 30, 2022.

We recorded equity earnings of $ 116 million and cash dividends of $ 136 million in the nine months ended September 30, 2023 and equity earnings of $ 300 million and cash dividends of $ 169 million in the nine months ended September 30, 2022.

Based on the quoted closing prices as of September 30, 2023, the fair value of our publicly traded investment in JDEP was $ 2.4 billion, and there was no other than temporary impairment identified.

As of March 31, 2024, we owned 17.7 %, 50.0 % and 49.0 %, respectively, of these companies' outstanding shares.

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.

Our investments accounted for under the equity method of accounting totaled $ 2.4 billion as of March 31, 2024 and $ 3.2 billion as of December 31, 2023.

We recorded equity earnings of $ 31 million and cash dividends of $ 81 million in the three months ended March 31, 2024, and equity earnings of $ 35 million and cash dividends of $ 102 million in the three months ended March 31, 2023.

During the three months ended March 31, 2024, we determined there was an other-than-temporary impairment based on the period of time for which the quoted market price fair value has been less than the carrying value of the investment and the uncertainty surrounding JDEP's stock price recovering to the carrying value.

As a result, the investment was written down to its estimated fair value based on the closing price of the underlying equity security of € 19.46 per share on March 28, 2024, resulting in an impairment charge of € 612 million ($ 665 million).

This charge was included within (Loss)/gain on equity method investment transactions including impairments in the condensed consolidated statement of earnings.

Any potential future impairments of JDEP will continue to be assessed based upon the other-than-temporary impairment criteria.

There was no other than temporary impairment identified in 2023.

JDEP Transactions

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

During the three months ended September 30, 2023, options were exercised on 2.2 million shares, which reduced our ownership by 0.4 percentage point, from 18.1 % to 17.7 % of the total outstanding shares.

We received cash proceeds of € 57 million ($ 62 million) and recorded a loss of € 3 million ($ 4 million) for these sales during the three months ended September 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 April 3, 2023, we sold approximately 7.7 million shares of JDEP, which reduced our ownership interest by 1.6 percentage points, 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 second quarter of 2023.

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 percentage points.

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

Subsequent to the three months ended March 31, 2023, we exercised options on 2.2 million of the 7.7 million shares.

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 September 30, 2023.

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 March 31, 2024.

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

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Restructuring Costs

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

The Simplify to Grow Program liability activity for the three months ended March 31, 2024 was:

Write-downs and Other (1)

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Currency ( 4 ) — ( 4 )

Liability balance, September 30, 2023 (5)

Liability balance, March 31, 2024 (5)

$ 215 $ — $ 215

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

(2) We recorded restructuring charges of $ 16 million in the three months ended September 30, 2023 and a gain of $ 10 million due to the sale of assets included in the restructuring program as well as restructuring charges of $ 3 million in the three months ended September 30, 2022.

We recorded restructuring charges of $ 48 million in the nine months ended September 30, 2023 and $ 8 million in the nine months ended September 30, 2022 within asset impairment and exit costs and benefit plan non-service income.

(3) We spent $ 12 million in the three months ended September 30, 2023 and $ 12 million in the three months ended September 30, 2022 and spent $ 47 million in the nine months ended September 30, 2023 and $ 45 million in the nine months ended September 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 $ 8 million in the three months ended September 30, 2023 and a gain of $ 10 million in the three months ended September 30, 2022 and recognized a charge of $ 14 million in the nine months ended September 30, 2023 and a gain of $ 1 million in the nine months ended September 30, 2022.

(5) At September 30, 2023, $ 111 million of our net restructuring liability was recorded within other current liabilities and $ 40 million was recorded within other long-term liabilities.

(2) We recorded restructuring charges of $ 42 million in the three months ended March 31, 2024 and restructuring charges of $ 30 million in the three months ended March 31, 2023 within asset impairment and exit costs and benefit plan non-service income.

(3) We spent $ 13 million in the three months ended March 31, 2024 and $ 18 million in the three months ended March 31, 2023 in cash severance and related costs.

(5) At March 31, 2024, $ 119 million of our net restructuring liability was recorded within other current liabilities and $ 96 million was recorded within other long-term liabilities.

Implementation Costs

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however, they do not qualify for special accounting treatment as exit or disposal activities.

We believe the disclosure of implementation costs provides readers of our financial statements with more information on the total costs of our Simplify to Grow Program.

We believe the disclosure of implementation costs provides readers of our financial statements with additional information on the total costs of our Simplify to Grow Program.

Implementation costs primarily relate to reorganizing our operations and facilities in connection with our supply chain reinvention program and other identified productivity and cost saving initiatives.

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 $ 4 million in the three months ended September 30, 2023 and $ 23 million in the three months ended September 30, 2022, and we recorded implementation costs of $ 13 million in the nine months ended September 30, 2023 and $ 62 million in the nine months ended September 30, 2022.

Within our continuing results of operations, we recorded implementation costs of $ 11 million in

the three months ended March 31, 2024 and $ 5 million in the three months ended March 31, 2023.

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 and nine months ended September 30, 2023 and September 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:

During the three months ended March 31, 2024 and March 31, 2023, 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

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(in millions)

For the Three Months Ended September 30, 2023

Restructuring Costs $ ( 1 ) $ 5 $ — $ 11 $ 1 $ 16

Implementation Costs 1 ( 1 ) 1 1 2 4

Total $ — $ 4 $ 1 $ 12 $ 3 $ 20

For the Three Months Ended September 30, 2022

Restructuring Costs $ ( 2 ) $ 1 $ 3 $ ( 8 ) $ ( 1 ) $ ( 7 )

Implementation Costs 1 — 5 8 9 23

Total $ ( 1 ) $ 1 $ 8 $ — $ 8 $ 16

For the Nine Months Ended September 30, 2023

For the Three Months Ended March 31, 2024

Restructuring Costs $ 2 $ 1 $ 40 $ — $ ( 1 ) $ 42

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Total $ 2 $ 1 $ 41 $ 4 $ 5 $ 53

For the Nine Months Ended

September 30, 2022

For the Three Months Ended March 31, 2023

Restructuring Costs $ — $ 1 $ 30 $ ( 1 ) $ — $ 30

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

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

As of March 31, 2024 As of December 31, 2023

Outstanding Weighted-

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Total short-term borrowings $ 259 $ 420

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

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

Our uncommitted credit lines and committed credit lines available as of March 31, 2024 and December 31, 2023 include:

As of March 31, 2024 As of December 31, 2023

Facility Amount Borrowed Amount Facility Amount Borrowed Amount

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Uncommitted credit facilities (1)

$ 923 $ 55 $ 906 $ 74

Credit facilities:

February 19, 2025 (2)

March 11, 2023 (1)

December 29, 2023 (1) (2)

February 21, 2024 (1)

July 29, 2025 (1) (3)

1,500 — 1,500 —

October 18, 2025 (4)

February 23, 2027 (2)

4,500 — 4,500 —

277 277 277 277

(1) Prior year facility amount has been revised.

(2) 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 September 30, 2023, we complied with this covenant as our shareholders' equity, as defined by the covenant, was $ 39.8 billion.

At March 31, 2024, we complied with this covenant as our shareholders' equity, as defined by the covenant, was $ 39.6 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 October 18, 2023, we terminated the credit facility due to expire on December 29, 2023.

(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.

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.

(4) 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.

Long-Term Debt

As of September 30, 2023, the Company reclassified the net carrying value of debt of $ 2.0 billion due within one year from long-term debt to current portion of long-term debt.

(3) On April 18, 2023, and subsequently amended on October 3, 2023, we entered into a credit facility secured by pledged deposits classified as long-term other assets.

Draw downs on the facility bear a variable rate based on SOFR plus applicable margin.

On April 5, 2024, we drew down $ 0.15 billion which is due on February 15, 2029.

Debt Repayments

During the three months ended March 31, 2024, we repaid the following notes (in millions):

Interest Rate Maturity Date Amount USD Equivalent

2.125 % March 2024 $ 500 $ 500

During the three months ended March 31, 2023, we did not complete any debt repayments.

Debt Issuances

During the three months ended March 31, 2024, we issued the following notes (in millions):

Issuance Date

Interest Rate Maturity Date Gross Proceeds (1)

Gross Proceeds USD Equivalent

February 2024 4.750 % February 2029 $ 550 $ 550

(1) Represents gross proceeds from the issuance of notes excluding debt issuance costs, discounts and premiums .

During the three months ended March 31, 2023, we did not complete any debt issuances.

Fair Value of Our Debt

The fair value of our short-term borrowings reflects current market interest rates and approximates the amounts we have recorded on our consolidated balance sheets.

The fair value of our term loans was determined using quoted prices for similar instruments in markets that are not active (Level 2 valuation data) and approximates the amounts we have recorded on our consolidated balance sheets.

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

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

As of March 31, 2024 As of December 31, 2023

(in millions)

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For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions)

Interest expense, debt $ 122 $ 153

Loss on debt extinguishment and

related expenses — — 1 129

Other income, net

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

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

As of March 31, 2024 As of December 31, 2023

Derivatives Liability

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Interest rate contracts $ 133 $ 55 $ 120 $ 57

Currency exchange contracts

Net investment hedge derivative contracts (1)

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dollar denominated debt acting as net investment hedges are also disclosed in the Derivative Volume table and the Hedges of Net Investments in International Operations section appearing later in this footnote.

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

Refer to Note 6, Investments .

We record derivative assets and liabilities on a gross basis on our condensed consolidated balance sheets.

The fair value of our asset derivatives is recorded within other current assets and other assets and the fair value of our liability derivatives is recorded within other current liabilities and other liabilities.

(2) Equity method investment contracts consist of the bifurcated embedded derivative option that was a component of the September 20, 2021 € 300 million exchangeable bonds issuance and terminates on September 20, 2024.

Refer to Note 8, Debt and Borrowing Arrangements ..

We recorded the fair value of our derivative instruments in the condensed consolidated balance sheet as follows:

As of March 31, 2024 As of December 31, 2023

(in millions)

Other current assets

$ 8,969 $ 1,347

Other current liabilities

Other liabilities

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

As of September 30, 2023

As of March 31, 2024

Fair Value of Net

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Net investment hedge contracts ( 219 ) — ( 219 ) —

Equity method investment contracts ( 3 ) — ( 3 ) —

Total derivatives $ 38 $ 28 $ 10 $ —

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The majority of our derivative contracts do not have a legal right of set-off.

We manage the credit risk in connection with these and all our derivatives by entering into transactions with counterparties with investment grade credit ratings, limiting the amount of exposure with each counterparty and monitoring the financial condition of our counterparties.

We manage the credit risk in connection with these and all our derivatives by entering into transactions with counterparties with investment grade credit

ratings, limiting the amount of exposure with each counterparty and monitoring the financial condition of our counterparties.

Derivative Volume

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Notional Amount

As of September 30,

As of March 31,

2024 As of December 31, 2023

5 unchanged sentences

Commodity contracts

18,833 16,631

Interest rate contracts 3,636 2,384

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Canadian dollar notes

(1) Prior year notional value has been revised.

Cash Flow Hedges

Cash flow hedge activity, net of taxes, is recorded within accumulated other comprehensive earnings/(losses).

Refer to Note 13, Reclassifications from Accumulated Other Comprehensive Income for further information on current period activity.

Refer to Note 13, Reclassifications from Accumulated Other Comprehensive Income for additional information on current period activity.

Based on current market conditions, we would expect to transfer gains of $ 41 million (net of taxes) for interest rate cash flow hedges to earnings during the next 12 months.

Cash Flow Hedge Coverage

As of September 30, 2023, our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 2 years, 11 months .

As of March 31, 2024, our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 4 years, 9 months .

Hedges of Net Investments in International Operations

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operations against movements in exchange rates.

The aggregate notional value as of September 30, 2023 was $ 7.6 billion.

The aggregate notional value as of March 31, 2024 was $ 8.0 billion.

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

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions)

After-tax gain on NIH contracts (1)

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

$ 169 $ ( 5 )

2 unchanged sentences

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions)

Amounts excluded from the assessment of hedge effectiveness (1)

$ 38 $ 32 $ 110 $ 84

(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

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions)

Euro notes $ 61 $ ( 33 )

British pound sterling notes — 20 — 47

Swiss franc notes 20 ( 5 )

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For the Three Months Ended

September 30, For the Nine Months Ended

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

2023 2022 2023 2022

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

(in millions)

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Commodity contracts 1,184 ( 2 ) Cost of sales

Equity method investment

contracts 4 ( 3 ) 7 ( 3 ) Gain/(loss) on equity method investment transactions

Equity method investment contracts

— 2 Gain on equity method investment transactions

Total $ 1,272 $ 24

2 unchanged sentences

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions)

Liability at beginning of period $ 680 $ 642

Contingent consideration arising from acquisitions — 440 — 440

Changes in fair value 23 17

Payments — — ( 90 ) —

Currency — — — ( 2 )

Liability at end of period $ 703 $ 659

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

As of September 30, 2023

As of March 31, 2024

Total Fair Value of

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Fair value adjustments are primarily recorded in selling, general and administrative expenses in the condensed consolidated statement of earnings.

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

(2) The other contingent consideration liabilities are recorded at fair value, with $ 108 million and $ 102 million classified as other current liabilities at September 30, 2023 and December 31, 2022, respectively, and $ 88 million classified as long-term liabilities at December 31, 2022.

(2) The other contingent consideration liabilities are recorded at fair value, with $ 143 million and $ 132 million classified as other current liabilities at March 31, 2024 and December 31, 2023, respectively.

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.

1 unchanged sentence

Fair value adjustments are recorded in selling, general and administrative expenses in the condensed consolidated statement of earnings.

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

Benefit Plans

4 unchanged sentences

For the Three Months Ended

September 30, For the Three Months Ended

September 30,

March 31, For the Three Months Ended

2024 2023 2024 2023

9 unchanged sentences

$ ( 1 ) $ ( 3 ) $ ( 6 ) $ ( 1 )

Plans Non-U.S.

For the Nine Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions)

Service cost $ 2 $ 4 $ 40 $ 77

Interest cost 48 36 228 135

Expected return on plan assets ( 73 ) ( 57 ) ( 303 ) ( 279 )

Amortization:

Net loss from experience differences — 6 31 48

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

Settlement losses and other expenses 13 12 — —

Net periodic pension (benefit)/cost $ ( 9 ) $ 2 $ ( 4 ) $ ( 20 )

Employer Contributions

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

During the three months ended March 31, 2024, we contributed $ 1 million to our U.S.

pension plans and $ 46 million to our non-U.S.

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

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

As of March 31, 2024, we plan to make further contributions of approximately $ 3 million to our U.S.

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

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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 and $ 8 million for the three and nine months ended September 30, 2023 and $ 3 million and $ 8 million for the three and nine months ended September 30, 2022, within interest and other expense, net.

As of September 30, 2023, the remaining discounted withdrawal liability was $ 332 million, with $ 15 million recorded in other current liabilities and $ 317 million recorded in long-term other liabilities.

In connection with the discounted long-term liability, we recorded accreted interest of $ 2 million for the three months ended March 31, 2024 and $ 3 million for the three months ended March 31, 2023, within interest and other expense, net.

As of March 31, 2024, the remaining discounted withdrawal liability was $ 324 million, with $ 16 million recorded in other current liabilities and $ 308 million recorded in long-term other liabilities.

Postretirement and Postemployment Benefit Plans

The net periodic postretirement (benefit)/cost was $( 2 ) million and $( 4 ) million for the three and nine months ended

September 30, 2023 and $ 3 million and $ 9 million for the three and nine months ended September 30, 2022.

The net periodic postemployment cost was $ 2 million and $ 3 million for the three and nine months ended September 30, 2023 and $ 1 million and $ 2 million for the three and nine months ended September 30, 2022.

The net periodic postretirement (benefit)/cost was $( 3 ) million for the three months ended March 31, 2024 and zero for the three months ended March 31, 2023.

The net periodic postemployment cost was $ 5 million for the three months ended March 31, 2024 and $ 1 million for the three months ended March 31, 2023.

Stock Options

6 unchanged sentences

Annual grant to eligible employees 2,261,810 73.13

Additional options issued 7,230 69.95

Total options granted 2,261,810 73.13

2 unchanged sentences

Options canceled ( 118,999 ) 52.53

Balance at September 30, 2023 19,221,834 49.82 5 years $ 376 million

(1) Cash received from options exercised was $ 29 million in the three months and $ 134 million in the nine months ended September 30, 2023.

The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the option exercises totaled $ 2 million in the three months and $ 19 million in the nine months ended September 30, 2023.

Balance at March 31, 2024 18,954,619 53.46 6 years $ 321 million

(1) Cash received from options exercised was $ 79 million in the three months ended March 31, 2024.

The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the option exercises totaled $ 10 million in the three months ended March 31, 2024.

Performance Share Units and Other Stock-Based Awards

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( 82,258 ) 63.66

Balance at September 30, 2023 4,747,691 62.18

Balance at March 31, 2024 4,799,923 67.44

(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 zero in the three months and $ 2 million in the nine months ended September 30, 2023.

(3) The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the shares vested totaled $ 7 million in the three months ended March 31, 2024.

(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.

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Share Repurchase Program

Between 2013 and 2020, our Board of Directors authorized the repurchase of a total of $ 23.7 billion of our Common Stock and extended the program through December 31, 2023.

Prior to January 1, 2023, we had repurchased approximately $ 22.0 billion of Common Stock pursuant to this authorization.

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, replaced our previous share repurchase program.

Effective January 1, 2023, our Board of Directors approved a program authorizing the repurchase of $ 6.0 billion of our Common Stock through December 31, 2025.

During the year ended December 31, 2023, we repurchased approximately $ 1.6 billion of Common Stock pursuant to this authorization.

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

During the nine months ended September 30, 2023, we repurchased approximately 9.6 million shares of Common Stock at an average cost of $ 68.55 per share, or an aggregate cost of approximately $ 659 million, all of which was paid during the period.

During the three months ended March 31, 2024, we repurchased approximately 7.7 million shares of Common Stock at an average cost of $ 72.99 per share, or an aggregate cost of approximately $ 563 million, all of which was paid during the period except for approximately $ 15 million settled in April 2024.

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

As of September 30, 2023, we have approximately $ 5.3 billion in remaining share repurchase capacity.

As of March 31, 2024, we have approximately $ 3.9 billion in remaining share repurchase capacity.

Commitments and Contingencies

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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.

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

Kraft Foods Group, Inc.

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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 discussions with the European Commission are progressing in an effort to reach a negotiated, proportionate resolution in this matter.

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

GAAP) a liability of € 300 million ($ 317 million as of September 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.

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

However, due to the inherent uncertainty of the discussions and possible outcomes, any possible loss or range of loss different from the amount accrued is not reasonably estimable at this time.

As previously disclosed, we have been cooperating with the investigation in an effort to reach a negotiated resolution in this matter.

In the fourth quarter of 2022, we had accrued (in accordance with U.S.

GAAP), on a pre-tax basis, a liability of € 300 million ($ 321 million) within other current liabilities in the consolidated balance sheet and selling, general and administrative expenses in the consolidated statement of earnings as an estimate of the possible cost to resolve this matter.

During the fourth quarter of 2023, we determined that we are likely to achieve a resolution with the European Commission that is expected to result in a liability of approximately € 340 million ($ 375 million) in total.

We have adjusted our accrual, on a pre-tax basis, accordingly.

In the event we achieve resolution as currently expected, we are likely to make payment in 2024.

We do not anticipate any modification of our business practices and agreements that would have a material impact on our ongoing business operations within the European Union.

Third-Party Guarantees

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

As of September 30, 2023 and December 31, 2022, we had no material third-party guarantees recorded on our condensed consolidated balance sheet.

As of March 31, 2024 and December 31, 2023, 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.

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

Amounts reclassified from accumulated other comprehensive earnings/(losses) to net earnings (net of tax) were net (losses)/gains of $ 35 million in the third quarter of 2023 and $ 103 million in the third quarter of 2022 and $( 6 ) million in the first nine months of 2023 and $ 143 million in the first nine months of 2022.

Amounts reclassified from accumulated other comprehensive earnings/(losses) to net earnings (net of tax) were net gains of $ 23 million in the first quarter of 2024 and $ 30 million in the first quarter of 2023.

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions)

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Net actuarial gain/(loss) arising during period ( 5 ) 2

Tax (expense)/benefit on net actuarial gain/(loss) 3 4 3 ( 23 )

Losses/(gains) reclassified into net earnings:

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Tax expense/(benefit) on reclassifications (3)

( 2 ) ( 2 ) ( 8 ) ( 14 )

Currency impact 29 ( 18 )

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Losses/(gains) reclassified into net earnings:

Currency exchange contracts (2)

Interest rate contracts (2)

( 43 ) ( 121 ) ( 20 ) ( 174 )

Tax expense/(benefit) on reclassifications (3)

( 2 ) ( 2 ) 1 ( 25 )

Currency impact 1 1

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

As of the third quarter of 2023, our estimated annual effective tax rate, which excludes discrete tax impacts, was 25.9 %.

As of the first quarter of 2024, our estimated annual effective tax rate, which excludes discrete tax impacts, was 27.9 %.

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

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jurisdictions.

Our 2023 third quarter effective tax rate was 26.6 % and includes those same impacts.

Our effective tax rate for the nine months ended September 30, 2023 of 27.1 % was high due to a $ 127 million net tax expense incurred in connection with the KDP share sale during the first quarter (the earnings were 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 nine months ended September 30, 2023 was 24.4 %.

The 24.4 % rate included a $ 151 million net tax expense related to pre-tax gains and losses on KDP marketable securities ($ 201 million net tax expense in Q1 and $ 50 million net tax benefit in Q2).

As of the third quarter of 2022, our estimated annual effective tax rate, which excluded discrete tax impacts, was 24.0 %.

Our 2024 first quarter effective tax rate was 23.6 % and includes a $ 227 million net tax expense incurred in connection with unrealized gains and losses on hedging activities as well as other discrete net tax benefits of $ 29 million.

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

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

tax laws and our tax related to earnings from equity method investments (the earnings were reported separately on our statement of earnings and thus not included in earnings before income taxes), partially offset by favorable impacts from the mix of pre-tax income in various non-U.S.

tax laws partially offset by favorable impacts from the mix of pre-tax income in various non-U.S.

jurisdictions.

The estimated annual effective tax rate also considered the impact of the establishment of a valuation allowance related to a deferred tax asset arising from the anticipated 2022 Ukraine loss as well as the expense related to the buyout of the Clif Bar ESOP that was recorded to third quarter earnings before income taxes with no associated income tax benefit, as any tax impacts are included in the tax purchase price.

Our 2022 third quarter effective tax rate of 28.8 % was high due to the Clif Bar ESOP expense.

Excluding this impact, our third quarter effective tax rate of 19.9 % was favorably impacted by discrete net tax benefits of $ 28 million.

The discrete net tax benefit primarily consisted of a $ 43 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions, partially offset by a $ 13 million expense from U.S.

state tax law changes.

Our effective tax rate for the nine months ended September 30, 2022 of 24.2 % considered the unfavorable impacts of the Ukraine loss and the Clif Bar ESOP expense as well as favorable discrete net tax benefits of $ 92 million.

The discrete net tax benefit primarily consisted of a $ 75 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions and a $ 43 million net benefit from the Chipita acquisition, partially offset by $ 22 million expense from tax law changes in various 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.

Earnings per Share

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For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions, except per share data)

1 unchanged sentence

Noncontrolling interest earnings

( 4 ) ( 1 ) ( 9 ) ( 8 )

Net earnings attributable to Mondelēz International $ 1,412 $ 2,081

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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 2.5 million for the three months ended September 30, 2023 and 3.3 million for the three months ended September 30, 2022 and 2.8 million for the nine months ended September 30, 2023 and 2.9 million for the nine months ended September 30, 2022.

We excluded antidilutive stock options and performance share units of 2.7 million for the three months ended March 31, 2024 and 2.2 million for the three months ended March 31, 2023.

Segment Reporting

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For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions)

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Latin America $ 157 $ 139

AMEA 302 257 869 740

Europe 591 507

North America 549 566

Unrealized gains/(losses) on hedging activities

Unrealized gains on hedging activities

(mark-to-market impacts)

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Amortization of intangible assets ( 38 ) ( 39 )

Acquisition-related costs — ( 292 ) — ( 318 )

Operating income 2,727 1,505

1 unchanged sentence

Interest and other expense, net ( 68 ) ( 95 )

(Loss)/gain on marketable securities ( 1 ) — 606 —

Gain on marketable securities

Earnings before income taxes $ 2,682 $ 2,225

Items impacting our segment operating results are discussed in Note 1, Basis of Presentation , Note 2, Acquisitions and Divestitures, Note 3, Inventories , Note 4, Property, Plant and Equipment, Note 5, Goodwill and Intangible Assets, and Note 7, Restructuring Program .

Also see Note 8, Debt and Borrowing Arrangements , and Note 9, Financial Instruments, for more information on our interest and other expense, net for each period.

Items impacting our segment operating results are discussed in Note 1, Basis of Presentation , Note 2, Divestitures, Note 3, Inventories , Note 4, Property, Plant and Equipment, Note 5, Goodwill and Intangible Assets, and Note 7, Restructuring Program .

Also see Note 8, Debt and Borrowing Arrangements , and Note 9, Financial Instruments, for additional information on our interest and other expense, net for each period.

Net revenues by product category were:

For the Three Months Ended September 30, 2023

America AMEA Europe North

America Total

(in millions)

Biscuits & Baked Snacks $ 313 $ 642 $ 1,120 $ 2,409 $ 4,484

Chocolate 347 701 1,428 83 2,559

Gum & Candy 408 233 199 355 1,195

Beverages 112 118 29 — 259

Cheese & Grocery 125 97 310 — 532

Total net revenues $ 1,305 $ 1,791 $ 3,086 $ 2,847 $ 9,029

For the Three Months Ended September 30, 2022

For the Three Months Ended March 31, 2024

America AMEA Europe North

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Total net revenues $ 1,319 $ 1,950 $ 3,368 $ 2,653 $ 9,290

For the Nine Months Ended September 30, 2023

America AMEA Europe North

America Total

(in millions)

Biscuits $ 898 $ 1,881 $ 3,311 $ 7,105 $ 13,195

Chocolate 1,031 2,011 4,339 223 7,604

Gum & Candy 1,124 674 652 972 3,422

Beverages 335 476 88 — 899

Cheese & Grocery 356 297 929 — 1,582

Total net revenues $ 3,744 $ 5,339 $ 9,319 $ 8,300 $ 26,702

For the Nine Months Ended September 30, 2022

For the Three Months Ended March 31, 2023

America AMEA Europe North

8 unchanged sentences

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