Mondelez International, Inc. 10-Q

Item 1. Financial Statements Mondelēz International, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings (in millions of U.S. dollars, except per share data) (Unaudited) For the Three Months Ended March 31, 2024 2023 Net revenues $ 9,290 $ 9,166 Cost of sales ( 4,540 ) ( 5,720 ) Gross profit 4,750 3,446 Selling, general and administrative expenses ( 1,938 ) ( 1,855 ) Asset impairment and exit costs ( 47 ) ( 47 ) Amortization of intangible assets ( 38 ) ( 39 ) Operating income 2,727 1,505 Benefit plan non-service income 23 19 Interest and other expense, net ( 68 ) ( 95 ) Gain on marketable securities — 796 Earnings before income taxes 2,682 2,225 Income tax provision ( 632 ) ( 658 ) (Loss)/gain on equity method investment transactions including impairments ( 665 ) 487 Equity method investment net earnings 31 35 Net earnings 1,416 2,089 less: Noncontrolling interest earnings ( 4 ) ( 8 ) Net earnings attributable to Mondelēz International $ 1,412 $ 2,081 Per share data: Basic earnings per share attributable to Mondelēz International $ 1.05 $ 1.52 Diluted earnings per share attributable to Mondelēz International $ 1.04 $ 1.52 See accompanying notes to the condensed consolidated financial statements. 1 Table of Contents Mondelēz International, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Earnings (in millions of U.S. dollars) (Unaudited) For the Three Months Ended March 31, 2024 2023 Net earnings $ 1,416 $ 2,089 Other comprehensive earnings/(losses), net of tax: Currency translation adjustment ( 222 ) 151 Pension and other benefit plans 38 ( 6 ) Derivative cash flow hedges ( 8 ) ( 10 ) Total other comprehensive earnings/(losses) ( 192 ) 135 Comprehensive earnings/(losses) 1,224 2,224 less: Comprehensive earnings/(losses) attributable to noncontrolling interests ( 2 ) 10 Comprehensive earnings/(losses) attributable to Mondelēz International $ 1,226 $ 2,214 See accompanying notes to the condensed consolidated financial statements. 2 Table of Contents Mondelēz International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in millions of U.S. dollars, except share data) (Unaudited) March 31, 2024 December 31, 2023 ASSETS Cash and cash equivalents $ 1,376 $ 1,810 Trade receivables, less allowance ($ 48 and $ 66 , respectively) 3,998 3,634 Other receivables, less allowance ($ 40 and $ 50 , respectively) 816 878 Inventories, net 3,562 3,615 Other current assets 9,674 1,766 Total current assets 19,426 11,703 Property, plant and equipment, net 9,574 9,694 Operating lease right-of-use assets 640 683 Goodwill 23,539 23,896 Intangible assets, net 19,614 19,836 Prepaid pension assets 1,068 1,043 Deferred income taxes 240 408 Equity method investments 2,440 3,242 Other assets 1,083 886 TOTAL ASSETS $ 77,624 $ 71,391 LIABILITIES Short-term borrowings $ 259 $ 420 Current portion of long-term debt 2,024 2,101 Accounts payable 8,618 8,321 Accrued marketing 2,791 2,683 Accrued employment costs 928 1,158 Other current liabilities 10,668 4,330 Total current liabilities 25,288 19,013 Long-term debt 16,781 16,887 Long-term operating lease liabilities 504 537 Deferred income taxes 3,408 3,292 Accrued pension costs 395 437 Accrued postretirement health care costs 125 124 Other liabilities 2,609 2,735 TOTAL LIABILITIES 49,110 43,025 Commitments and Contingencies (Note 12) EQUITY 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 Retained earnings 35,074 34,236 Accumulated other comprehensive losses ( 11,132 ) ( 10,946 ) Treasury stock, at cost ( 652,553,982 and 648,055,073 shares, respectively) ( 27,623 ) ( 27,174 ) Total Mondelēz International Shareholders’ Equity 28,482 28,332 Noncontrolling interest 32 34 TOTAL EQUITY 28,514 28,366 TOTAL LIABILITIES AND EQUITY $ 77,624 $ 71,391 See accompanying notes to the condensed consolidated financial statements. 3 Table of Contents Mondelēz International, Inc. and Subsidiaries Condensed Consolidated Statements of Equity (in millions of U.S. dollars, except per share data) (Unaudited) Mondelēz International Shareholders’ Equity Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Earnings/ (Losses) Treasury Stock Non-controlling Interest Total Equity Three Months Ended March 31, 2024 Balances at January 1, 2024 $ — $ 32,216 $ 34,236 $ ( 10,946 ) $ ( 27,174 ) $ 34 $ 28,366 Comprehensive earnings/(losses): Net earnings — — 1,412 — — 4 1,416 Other comprehensive earnings/(losses), net of income taxes — — — ( 186 ) — ( 6 ) ( 192 ) Exercise of stock options and issuance of other stock awards — ( 53 ) 1 — 117 — 65 Common Stock repurchased — — ( 566 ) — ( 566 ) Cash dividends declared ($ 0.425 per share) — — ( 575 ) — — — ( 575 ) Dividends paid on noncontrolling interest and other activities — — — — — — 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 Comprehensive earnings/(losses): Net earnings — — 2,081 — — 8 2,089 Other comprehensive earnings/(losses), net of income taxes — — — 133 — 2 135 Exercise of stock options and issuance of other stock awards — ( 31 ) ( 8 ) — 93 — 54 Common Stock repurchased — — — — ( 409 ) — ( 409 ) Cash dividends declared ($ 0.385 per share) — — ( 528 ) — — — ( 528 ) Dividends paid on noncontrolling interest and other activities — — 14 — — ( 1 ) 13 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. 4 Table of Contents Mondelēz International, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in millions of U.S. dollars) (Unaudited) For the Three Months Ended March 31, 2024 2023 CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES Net earnings $ 1,416 $ 2,089 Adjustments to reconcile net earnings to operating cash flows: Depreciation and amortization 319 303 Stock-based compensation expense 31 38 Deferred income tax provision 270 199 Asset impairments and accelerated depreciation 6 18 Loss/(gain) on equity method investment transactions including impairments 665 ( 487 ) Equity method investment net earnings ( 31 ) ( 35 ) Distributions from equity method investments 81 102 Unrealized gain on derivative contracts ( 1,134 ) ( 67 ) Gain on marketable securities — ( 787 ) Other non-cash items, net 38 25 Change in assets and liabilities, net of acquisitions and divestitures: Receivables, net ( 395 ) ( 590 ) Inventories, net ( 16 ) ( 232 ) Accounts payable 419 216 Other current assets ( 330 ) ( 137 ) Other current liabilities 45 517 Change in pension and postretirement assets and liabilities, net ( 60 ) ( 49 ) Net cash provided by operating activities 1,324 1,123 CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES Capital expenditures ( 299 ) ( 223 ) Acquisitions, net of cash received — 1 Proceeds from divestitures including equity method and marketable security investments 4 1,034 Proceeds from derivative settlements 71 61 Payments for derivative settlements ( 32 ) ( 5 ) Contributions to investments ( 192 ) ( 246 ) Proceeds from sale of property, plant and equipment and other 2 14 Net cash provided by/(used in) investing activities ( 446 ) 636 CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES Net (repayments)/issuances of short-term borrowings ( 166 ) 156 Long-term debt proceeds 547 — Long-term debt repayments ( 534 ) ( 1,036 ) Repurchases of Common Stock ( 568 ) ( 399 ) Dividends paid ( 578 ) ( 529 ) Other 76 51 Net cash used in financing activities ( 1,223 ) ( 1,757 ) 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 Balance at end of period $ 1,462 $ 1,939 See accompanying notes to the condensed consolidated financial statements. 5 Table of Contents Mondelēz International, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. Basis of Presentation Our interim condensed consolidated financial statements are unaudited. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted. It is management’s opinion that these financial statements include all normal and recurring adjustments necessary for a fair presentation of our results of operations, financial position and cash flows. Results of operations for any interim period are not necessarily indicative of future or annual results. For a complete set of consolidated financial statements and related notes, refer to our Annual Report on Form 10-K for the year ended December 31, 2023. Principles of Consolidation The condensed consolidated financial statements include Mondelēz International, Inc. as well as our wholly owned and majority owned subsidiaries, except our Venezuelan subsidiaries that were deconsolidated in 2015. All intercompany transactions are eliminated. The noncontrolling interest represents the noncontrolling investors' interests in the results of subsidiaries that we control and consolidate. We account for investments over which we exercise significant influence under the equity method of accounting. Investments with readily determinable fair values for which we do not have the ability to exercise significant influence are measured at fair value. War in Ukraine In February 2022, Russia began a military invasion of Ukraine and we closed our operations and facilities in Ukraine. In March 2022, our two Ukrainian manufacturing facilities in Trostyanets and Vyshhorod were significantly damaged. 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. We base our estimates on historical experience, expectations of future impacts and other assumptions that we believe are reasonable. Given the uncertainty of the ongoing effects of the war in Ukraine, and its impact on the global economic environment, our estimates could be significantly different than future performance. Highly Inflationary Accounting Within our consolidated entities, Argentina and Türkiye (Turkey) are accounted for as highly inflationary economies. 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. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include demand deposits with banks and all highly liquid investments with original maturities of three months or less. 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. 6 Table of Contents Allowances for Credit Losses Changes in allowances for credit losses consisted of: Allowance for Trade Receivables Allowance for Other Current Receivables Allowance for Long-Term Receivables (in millions) Balance at January 1, 2024 $ ( 66 ) $ ( 50 ) $ ( 15 ) Net recovery for expected credit losses 15 10 — Write-offs charged against the allowance 2 — — Currency 1 — — 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 $ 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. The proceeds from the sales of receivables are included in cash from operating activities in the condensed consolidated statements of cash flows. Non-Cash Lease Transactions 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. We also facilitate voluntary supply chain financing (“SCF”) programs through several participating financial institutions. 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 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. 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. 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. 7 Table of Contents Note 2. Divestitures 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. Note 3. Inventories Inventories consisted of the following: As of March 31, 2024 As of December 31, 2023 (in millions) Raw materials $ 1,003 $ 973 Finished product 2,718 2,790 3,721 3,763 Inventory reserves ( 159 ) ( 148 ) Inventories, net $ 3,562 $ 3,615 Note 4. Property, Plant and Equipment Property, plant and equipment consisted of the following: As of March 31, 2024 As of December 31, 2023 (in millions) Land and land improvements $ 376 $ 384 Buildings and building improvements 3,446 3,452 Machinery and equipment 12,693 12,736 Construction in progress 1,084 1,118 17,599 17,690 Accumulated depreciation ( 8,025 ) ( 7,996 ) Property, plant and equipment, net $ 9,574 $ 9,694 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. 8 Table of Contents Note 5. Goodwill and Intangible Assets Goodwill 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 Currency 180 ( 67 ) 341 19 473 Acquisitions (1) 6 — — ( 33 ) ( 27 ) Balance at December 31, 2023 $ 1,607 $ 3,065 $ 8,350 $ 10,874 $ 23,896 Currency 18 ( 80 ) ( 279 ) ( 16 ) ( 357 ) 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: 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 Indefinite-life intangible assets (1) 18,484 — 18,484 18,669 — 18,669 Total $ 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. Indefinite-life intangible assets consist principally of brand names purchased through our acquisitions of Nabisco Holdings Corp., the global LU biscuit business of Groupe Danone S.A., Cadbury Limited and Clif Bar. Definite-life intangible assets consist primarily of trademarks, customer-related intangibles, process technology, licenses and non-compete agreements. Amortization expense for intangible assets was $ 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. 9 Table of Contents Note 6. Investments Marketable Securities On March 2, 2023, we sold approximately 30 million shares of Keurig Dr Pepper Inc. (NASDAQ: "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) Unrealized gain on marketable securities held as of the end of the period $ 787 Dividend income and other 9 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 Our equity method investments include, but are not limited to, our ownership interests in JDE Peet's (Euronext Amsterdam: "JDEP"), Dong Suh Foods Corporation and Dong Suh Oil & Fats Co. Ltd. Our ownership interests may change over time due to investee stock-based compensation arrangements, share issuances or other equity-related transactions. As of March 31, 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 On March 30, 2023, we issued options to sell shares of JDEP in tranches equivalent to approximately 7.7 million shares. 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. Subsequent to the three months ended March 31, 2023, we exercised options on 2.2 million of the 7.7 million shares. 10 Table of Contents 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 March 31, 2024. Refer to Note 9, Financial Instruments , for further details on this transaction. Note 7. Restructuring Program On May 6, 2014, our Board of Directors approved a $ 3.5 billion 2014-2018 restructuring program and up to $ 2.2 billion of capital expenditures. On August 31, 2016, our Board of Directors approved a $ 600 million reallocation between restructuring program cash costs and capital expenditures so the $ 5.7 billion program consisted of approximately $ 4.1 billion of restructuring program charges ($ 3.1 billion cash costs and $ 1.0 billion non-cash costs) and up to $ 1.6 billion of capital expenditures. On September 6, 2018, our Board of Directors approved an extension of the restructuring program through 2022, an increase of $ 1.3 billion in the program charges and an increase of $ 700 million in capital expenditures. On October 21, 2021, our Board of Directors approved an extension of the restructuring program through 2023, and on July 25, 2023, our Board of Directors approved a further extension of the restructuring program through December 31, 2024. The total $ 7.7 billion program now consists of $ 5.4 billion of program charges ($ 4.1 billion of cash costs and $ 1.3 billion of non-cash costs) and total capital expenditures of $ 2.3 billion to be incurred over the life of the program. The current restructuring program, as increased and extended by these actions, is now called the Simplify to Grow Program. The primary objective of the Simplify to Grow Program is to reduce our operating cost structure in both our supply chain and overhead costs. The program covers severance as well as asset disposals and other manufacturing and procurement-related one-time costs. Since inception, we have incurred total restructuring and implementation charges of $ 5.3 billion related to the Simplify to Grow Program. We expect to incur the remainder of the program charges by year-end 2024. Restructuring Costs The Simplify to Grow Program liability activity for the three months ended March 31, 2024 was: Severance and related costs Asset Write-downs and Other (1) Total (in millions) Liability balance, January 1, 2024 $ 191 $ — $ 191 Charges (2) 41 1 42 Cash spent (3) ( 13 ) — ( 13 ) Non-cash settlements/adjustments (4) — ( 1 ) ( 1 ) Currency ( 4 ) — ( 4 ) 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 $ 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. (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 $ 1 million in the three months ended March 31, 2024 and a charge of $ 1 million in the three months ended March 31, 2023. (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 Implementation costs are directly attributable to restructuring activities; 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 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 $ 11 million in 11 Table of Contents 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 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: Latin America AMEA Europe North America Corporate Total (in millions) For the Three Months Ended March 31, 2024 Restructuring Costs $ 2 $ 1 $ 40 $ — $ ( 1 ) $ 42 Implementation Costs — — 1 4 6 11 Total $ 2 $ 1 $ 41 $ 4 $ 5 $ 53 For the Three Months Ended March 31, 2023 Restructuring Costs $ — $ 1 $ 30 $ ( 1 ) $ — $ 30 Implementation Costs — — — — 5 5 Total $ — $ 1 $ 30 $ ( 1 ) $ 5 $ 35 Total Project (Inception to Date) Restructuring Costs $ 547 $ 562 $ 1,282 $ 676 $ 153 $ 3,220 Implementation Costs 304 245 582 602 378 2,111 Total $ 851 $ 807 $ 1,864 $ 1,278 $ 531 $ 5,331 12 Table of Contents Note 8. Debt and Borrowing Arrangements Short-Term Borrowings Our short-term borrowings and related weighted-average interest rates consisted of: As of March 31, 2024 As of December 31, 2023 Amount Outstanding Weighted- Average Rate Amount Outstanding Weighted- Average Rate (in millions, except percentages) Commercial paper $ 204 5.5 % $ 346 5.5 % Bank loans 55 13.3 % 74 17.2 % Total short-term borrowings $ 259 $ 420 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 (in millions) Uncommitted credit facilities (1) $ 923 $ 55 $ 906 $ 74 Credit facilities: February 19, 2025 (2) 1,500 — 1,500 — February 23, 2027 (2) 4,500 — 4,500 — Various (3) 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 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. (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. 13 Table of Contents 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 long-term debt was determined using quoted prices in active markets (Level 1 valuation data) for the publicly traded debt obligations. As of March 31, 2024 As of December 31, 2023 (in millions) Fair Value $ 16,940 $ 17,506 Carrying Value $ 19,064 $ 19,408 Interest and Other Expense, net Interest and other expense, net consisted of: For the Three Months Ended March 31, 2024 2023 (in millions) Interest expense, debt $ 122 $ 153 Other income, net ( 54 ) ( 58 ) Interest and other expense, net $ 68 $ 95 Other income, net includes amounts excluded from hedge effectiveness related to our net investment hedge derivative contracts. Refer to Note 9, Financial Instruments. Note 9. Financial Instruments Fair Value of Derivative Instruments Derivative instruments were recorded at fair value in the condensed consolidated balance sheets as follows: As of March 31, 2024 As of December 31, 2023 Asset Derivatives Liability Derivatives Asset Derivatives Liability Derivatives (in millions) Derivatives designated as accounting hedges: Interest rate contracts $ 133 $ 55 $ 120 $ 57 Currency exchange contracts — 1 — — Net investment hedge derivative contracts (1) 194 195 163 382 $ 327 $ 251 $ 283 $ 439 Derivatives not designated as accounting hedges: Currency exchange contracts $ 210 $ 114 $ 195 $ 134 Commodity contracts 8,722 7,486 1,119 984 Interest rate contracts 1 3 — 2 Equity method investment contracts (2) — — — — $ 8,933 $ 7,603 $ 1,314 $ 1,120 Total fair value $ 9,260 $ 7,854 $ 1,597 $ 1,559 (1) Net investment hedge derivative contracts consist of cross-currency interest rate swaps, forward contracts and options. We also designate some of our non-U.S. dollar denominated debt to hedge a portion of our net investments in our non-U.S. operations. This debt is not reflected in the table above, but is included in long-term debt discussed in Note 8, Debt and Borrowing Arrangements . Both net investment hedge derivative contracts and non-U.S. 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 and terminates on September 20, 2024. Refer to Note 8, Debt and Borrowing Arrangements .. 14 Table of Contents 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 assets 291 250 Other current liabilities 7,637 1,209 Other liabilities 217 350 The fair values (asset/(liability)) of our derivative instruments were determined using: As of March 31, 2024 Total Fair Value of Net Asset/(Liability) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Currency exchange contracts $ 95 $ — $ 95 $ — Commodity contracts 1,236 ( 101 ) 1,337 — Interest rate contracts 76 — 76 — Net investment hedge contracts ( 1 ) — ( 1 ) — Total derivatives $ 1,406 $ ( 101 ) $ 1,507 $ — As of December 31, 2023 Total Fair Value of Net Asset/(Liability) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Currency exchange contracts $ 61 $ — $ 61 $ — Commodity contracts 135 28 107 — Interest rate contracts 61 — 61 — Net investment hedge contracts ( 219 ) — ( 219 ) — Total derivatives $ 38 $ 28 $ 10 $ — Level 1 financial assets and liabilities consist of exchange-traded commodity futures and listed options. The fair value of these instruments is determined based on quoted market prices on commodity exchanges. Level 2 financial assets and liabilities consist primarily of over-the-counter (“OTC”) currency exchange forwards, options and swaps; commodity forwards and options; net investment hedge contracts; and interest rate swaps. Our currency exchange contracts are valued using an income approach based on observable market forward rates less the contract rate multiplied by the notional amount. Commodity derivatives are valued using an income approach based on the observable market commodity index prices less the contract rate multiplied by the notional amount or based on pricing models that rely on market observable inputs such as commodity prices. Our bifurcated exchange options are valued, as derivative instrument liabilities, using the Black-Scholes option pricing model. This model requires assumptions related to the market price of the underlying note and associated credit spread combined with the share of price, expected dividend yield, and expected volatility of the JDE Peet’s shares over the life of the option. Our calculation of the fair value of interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the observable market interest rate curve. Our calculation of the fair value of financial instruments takes into consideration the risk of nonperformance, including counterparty credit risk. Our OTC derivative transactions are governed by International Swap Dealers Association agreements and other standard industry contracts. Under these agreements, we do not post nor require collateral from our counterparties. 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 15 Table of Contents ratings, limiting the amount of exposure with each counterparty and monitoring the financial condition of our counterparties. Derivative Volume The notional values of our hedging instruments were: Notional Amount As of March 31, 2024 As of December 31, 2023 (in millions) Currency exchange contracts: Intercompany loans and forecasted interest payments $ 7,133 $ 2,860 Forecasted transactions 6,079 5,550 Commodity contracts 18,833 16,631 Interest rate contracts 3,636 2,384 Net investment hedges: Net investment hedge derivative contracts 8,034 7,456 Non-U.S. dollar debt designated as net investment hedges: Euro notes 3,437 3,516 Swiss franc notes 361 386 Canadian dollar notes 443 453 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 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 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 Net investment hedge ("NIH") derivative contracts We enter into cross-currency interest rate swaps, forwards and options to hedge certain investments in our non-U.S. operations against movements in exchange rates. 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 March 31, 2024 2023 (in millions) After-tax gain/(loss) on NIH contracts (1) $ 169 $ ( 5 ) (1) Amounts recorded for unsettled and settled NIH derivative contracts are recorded in the cumulative translation adjustment within other comprehensive earnings. The cash flows from the settled contracts are reported within other investing activities in the condensed consolidated statement of cash flows. For the Three Months Ended March 31, 2024 2023 (in millions) Amounts excluded from the assessment of hedge effectiveness (1) $ 41 $ 36 (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. 16 Table of Contents Non-U.S. dollar debt designated as net investment hedges After-tax gains/(losses) related to hedges of net investments in international operations were recorded within the cumulative translation adjustment section of other comprehensive income and were: For the Three Months Ended March 31, 2024 2023 (in millions) Euro notes $ 61 $ ( 33 ) Swiss franc notes 20 ( 5 ) Canadian notes 8 ( 1 ) Economic Hedges Pre-tax gains/(losses) recorded in net earnings for economic hedges were: For the Three Months Ended March 31, Location of Gain/(Loss) Recognized in Earnings 2024 2023 (in millions) Currency exchange contracts: Intercompany loans and forecasted interest payments $ 56 $ 22 Interest and other expense, net Forecasted transactions 25 2 Cost of sales Forecasted transactions — 5 Interest and other expense, net Forecasted transactions 7 ( 5 ) Selling, general and administrative expenses Commodity contracts 1,184 ( 2 ) Cost of sales Equity method investment contracts — 2 Gain on equity method investment transactions Total $ 1,272 $ 24 17 Table of Contents Fair Value of Contingent Consideration The following is a summary of our contingent consideration liability activity: For the Three Months Ended March 31, 2024 2023 (in millions) Liability at beginning of period $ 680 $ 642 Changes in fair value 23 17 Liability at end of period $ 703 $ 659 Contingent consideration was recorded at fair value in the condensed consolidated balance sheets as follows: As of March 31, 2024 Total Fair Value of Liability Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Clif Bar (1) $ 560 $ — $ — $ 560 Other (2) 143 — — 143 Total contingent consideration $ 703 $ — $ — $ 703 As of December 31, 2023 Total Fair Value of Liability Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Clif Bar (1) $ 548 $ — $ — $ 548 Other (2) 132 — — 132 Total contingent consideration $ 680 $ — $ — $ 680 (1) In connection with the Clif Bar acquisition, we entered into a contingent consideration arrangement that may require us to pay additional consideration to the sellers for achieving certain net revenue, gross profit and EBITDA targets in 2025 and 2026 that exceed our base financial projections for the business implied in the upfront purchase price. The other contingent consideration liabilities are recorded at fair value within long-term liabilities. The estimated fair value of the contingent consideration obligation at the acquisition date was determined using a Monte Carlo simulation and recorded in other liabilities. Significant assumptions used in assessing the fair value of the liability include financial projections for net revenue, gross profit, and EBITDA, as well as discount and volatility rates. Fair value adjustments are primarily recorded in selling, general and administrative expenses in the condensed consolidated statement of earnings. (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. Other key assumptions included discount rate and volatility. Fair value adjustments are recorded in selling, general and administrative expenses in the condensed consolidated statement of earnings. 18 Table of Contents Note 10. Benefit Plans Pension Plans Components of Net Periodic Pension Cost Net periodic pension cost/(benefit) consisted of the following: U.S. Plans Non-U.S. Plans For the Three Months Ended March 31, For the Three Months Ended March 31, 2024 2023 2024 2023 (in millions) Service cost $ 1 $ 1 $ 15 $ 14 Interest cost 15 15 71 76 Expected return on plan assets ( 23 ) ( 25 ) ( 108 ) ( 102 ) Amortization: Net loss from experience differences — — 16 11 Prior service cost — 1 — — Settlement losses and other expenses 6 5 — — Net periodic pension benefit $ ( 1 ) $ ( 3 ) $ ( 6 ) $ ( 1 ) Employer Contributions 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. pension plans. We make contributions to our pension plans in accordance with local funding arrangements and statutory minimum funding requirements. Discretionary contributions are made to the extent that they are tax deductible and do not generate an excise tax liability. 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. plans for the remainder of 2024. Our actual contributions may be different due to many factors, including changes in tax and other benefit laws, significant differences between expected and actual pension asset performance or interest rates. Multiemployer Pension Plans On July 11, 2019, we received an undiscounted withdrawal liability assessment from the Bakery and Confectionery Union and Industry International Pension Fund totaling $ 491 million requiring pro-rata monthly payments over 20 years. We began making monthly payments during the third quarter of 2019. 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 $( 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. 19 Table of Contents Note 11. Stock Plans Stock Options Stock option activity is reflected below: Shares Subject to Option Weighted- Average Exercise or Grant Price Per Share Average Remaining Contractual Term Aggregate Intrinsic Value Balance at January 1, 2024 18,678,120 $ 49.96 5 years $ 420 million Annual grant to eligible employees 2,261,810 73.13 Total options granted 2,261,810 73.13 Options exercised (1) ( 1,866,312 ) 42.39 $ 59 million Options canceled ( 118,999 ) 52.53 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 Our performance share unit (PSU), deferred stock unit (DSU) and other stock-based activity is reflected below: Number of Shares Grant Date Weighted-Average Fair Value Per Share (4) Weighted-Average Aggregate Fair Value (3) Balance at January 1, 2024 4,553,166 $ 62.53 Annual grant to eligible employees: Feb 27, 2024 Performance share units 787,110 75.05 Deferred stock units 571,490 73.13 Additional shares granted (1) 916,501 Various 62.62 Total shares granted 2,275,101 69.56 $ 158 million Vested (2) (3) ( 1,946,086 ) 58.58 $ 114 million Forfeited (2) ( 82,258 ) 63.66 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 $ 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. The Monte Carlo simulation model incorporates the probability of achieving the total shareholder return market condition. Compensation expense is recognized using the grant date fair values regardless of whether the market condition is achieved, so long as the requisite service has been provided. 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 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 March 31, 2024, we have approximately $ 3.9 billion in remaining share repurchase capacity. 20 Table of Contents Note 12. Commitments and Contingencies Legal Proceedings We routinely are involved in various pending or threatened legal proceedings, claims, disputes, regulatory matters and governmental inquiries, inspections or investigations arising in the ordinary course of or incidental to our business, including those noted below in this section. We record provisions in the consolidated financial statements for pending legal matters when we determine that an unfavorable outcome is probable, and the amount of the loss can be reasonably estimated. For matters we have not provided for that are reasonably possible to result in an unfavorable outcome, management is unable to estimate the possible loss or range of loss or such amounts have been determined to be immaterial. At present we believe that the ultimate outcome of these legal proceedings and regulatory and governmental matters, individually and in the aggregate, will not materially harm our financial position, results of operations or cash flows. However, legal proceedings and regulatory and governmental matters are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could involve substantial fines, civil or criminal penalties, and other expenditures. In addition, in matters for which conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices or requiring other equitable remedies. An unfavorable outcome might result in a material adverse impact on our business, results of operations or financial position. On April 1, 2015, the U.S. Commodity Futures Trading Commission ("CFTC") filed a complaint against Kraft Foods Group and Mondelēz Global LLC (“Mondelēz Global”) in the U.S. District Court for the Northern District of Illinois (the "District Court") related to the trading of December 2011 wheat futures contracts that occurred prior to the spin-off of Kraft Foods Group. The complaint alleged that Mondelēz Global: (1) manipulated or attempted to manipulate the wheat markets during the fall of 2011; (2) violated position limit levels for wheat futures; and (3) engaged in non-competitive trades. On May 13, 2022, the District Court approved a settlement agreement between the CFTC and Mondelēz Global. The terms of the settlement, which are available in the District Court’s docket, had an immaterial impact on our financial position, results of operations and cash flows and did not include an admission by Mondelēz Global. Several class action complaints also were filed against 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 in the United States District Court for the Northern District of Illinois as case number 15-cv-2937, Harry Ploss et al. v. Kraft Foods Group, Inc. and Mondelēz Global LLC. On January 3, 2020, the District Court granted plaintiffs' request to certify a class. In November 2022, the District Court adjourned the trial date it had previously set for November 30, 2022 and ordered the parties to brief Kraft’s motions to decertify the class and for summary judgment, which has been completed. It is not possible to predict the outcome of these matters; however, based on our Separation and Distribution Agreement with Kraft Foods Group dated as of September 27, 2012, we expect to bear any monetary penalties or other payments in connection with the class action. As previously disclosed, in November 2019, the European Commission informed us that it initiated an investigation into our alleged infringement of European Union competition law through certain practices allegedly restricting cross-border trade within the European Economic Area. On January 28, 2021, the European Commission announced it had taken the next procedural step in its investigation and opened formal proceedings. 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 We enter into third-party guarantees primarily to cover 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 March 31, 2024 and December 31, 2023, we had no material third-party guarantees recorded on our condensed consolidated balance sheet. 21 Table of Contents Tax Matters We are a party to various tax matter proceedings incidental to our business. These proceedings are subject to inherent uncertainties, and unfavorable outcomes could subject us to additional tax liabilities and could materially adversely impact our business, results of operations or financial position. 22 Table of Contents Note 13. Reclassifications from Accumulated Other Comprehensive Income The following table summarizes the changes in accumulated balances of each component of accumulated other comprehensive earnings/(losses) attributable to Mondelēz International. Amounts reclassified from accumulated other comprehensive earnings/(losses) to net earnings (net of tax) were net gains of $ 23 million in the first quarter of 2024 and $ 30 million in the first quarter of 2023. For the Three Months Ended March 31, 2024 2023 (in millions) Currency Translation Adjustments: Balance at beginning of period $ ( 9,574 ) $ ( 9,808 ) Currency translation adjustments ( 182 ) 173 Tax (expense)/benefit ( 40 ) ( 22 ) Other comprehensive earnings/(losses) ( 222 ) 151 Less: other comprehensive (earnings)/loss attributable to noncontrolling interests 6 ( 2 ) Balance at end of period ( 9,790 ) ( 9,659 ) Pension and Other Benefit Plans: Balance at beginning of period $ ( 1,323 ) $ ( 1,105 ) Net actuarial gain/(loss) arising during period ( 5 ) 2 Losses/(gains) reclassified into net earnings: Amortization of experience losses and prior service costs (1) 12 8 Settlement losses and other expenses (1) 6 5 Tax expense/(benefit) on reclassifications (3) ( 4 ) ( 3 ) Currency impact 29 ( 18 ) Other comprehensive earnings/(losses) 38 ( 6 ) Balance at end of period ( 1,285 ) ( 1,111 ) Derivative Cash Flow Hedges: Balance at beginning of period $ ( 49 ) $ ( 34 ) Net derivative gains/(losses) 25 ( 28 ) Tax (expense)/benefit on net derivative gain/(loss) 3 ( 3 ) Losses/(gains) reclassified into net earnings: Interest rate contracts (2) ( 36 ) 18 Tax expense/(benefit) on reclassifications (3) ( 1 ) 2 Currency impact 1 1 Other comprehensive earnings/(losses) ( 8 ) ( 10 ) Balance at end of period ( 57 ) ( 44 ) Accumulated other comprehensive income attributable to Mondelēz International: Balance at beginning of period $ ( 10,946 ) $ ( 10,947 ) Total other comprehensive earnings/(losses) ( 192 ) 135 Less: other comprehensive (earnings)/loss attributable to noncontrolling interests 6 ( 2 ) Other comprehensive earnings/(losses) attributable to Mondelēz International ( 186 ) 133 Balance at end of period $ ( 11,132 ) $ ( 10,814 ) (1) These reclassified losses are included in net periodic benefit costs disclosed in Note 10, Benefit Plans . (2) These reclassified gains or losses are recorded within interest and other expense, net. (3) Taxes reclassified to earnings are recorded within the provision for income taxes. 23 Table of Contents Note 14. Income Taxes 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. tax laws as well as both favorable and unfavorable impacts from the mix of pre-tax income in various non-U.S. jurisdictions. 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 partially offset by favorable impacts from the mix of pre-tax income in various non-U.S. 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. Note 15. Earnings per Share Basic and diluted earnings per share (EPS) were calculated as follows: For the Three Months Ended March 31, 2024 2023 (in millions, except per share data) Net earnings $ 1,416 $ 2,089 less: Noncontrolling interest earnings ( 4 ) ( 8 ) Net earnings attributable to Mondelēz International $ 1,412 $ 2,081 Weighted-average shares for basic EPS 1,348 1,366 Plus incremental shares from assumed conversions of stock options and long-term incentive plan shares 7 7 Weighted-average shares for diluted EPS 1,355 1,373 Basic earnings per share attributable to Mondelēz International $ 1.05 $ 1.52 Diluted earnings per share attributable to Mondelēz International $ 1.04 $ 1.52 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 2.7 million for the three months ended March 31, 2024 and 2.2 million for the three months ended March 31, 2023. Note 16. Segment Reporting We manufacture and market primarily snack food products, including chocolate, biscuits and baked snacks, as well as gum & candy, cheese & grocery and powdered beverages. We manage our global business and report operating results through geographic units. 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. 24 Table of Contents Our operations and management structure are organized into four operating segments: • Latin America • AMEA • Europe • North America 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. Segment operating income excludes unrealized gains and losses on hedging activities (which are a component of cost of sales), general corporate expenses (which are a component of selling, general and administrative expenses), amortization of intangibles, gains and losses on divestitures and acquisition-related costs (which are a component of selling, general and administrative expenses) in all periods presented. We exclude these items from segment operating income in order to provide better transparency of our segment operating results. Furthermore, we centrally manage benefit plan non-service income and interest and other expense, net. Accordingly, we do not present these items by segment because they are excluded from the segment profitability measure that management reviews. Our segment net revenues and earnings were: For the Three Months Ended March 31, 2024 2023 (in millions) Net revenues: Latin America $ 1,319 $ 1,211 AMEA 1,950 1,939 Europe 3,368 3,307 North America 2,653 2,709 Net revenues $ 9,290 $ 9,166 Earnings before income taxes: Operating income: Latin America $ 157 $ 139 AMEA 411 360 Europe 591 507 North America 549 566 Unrealized gains on hedging activities (mark-to-market impacts) 1,124 49 General corporate expenses ( 67 ) ( 77 ) Amortization of intangible assets ( 38 ) ( 39 ) Operating income 2,727 1,505 Benefit plan non-service income 23 19 Interest and other expense, net ( 68 ) ( 95 ) Gain on marketable securities — 796 Earnings before income taxes $ 2,682 $ 2,225 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. 25 Table of Contents Net revenues by product category were: For the Three Months Ended March 31, 2024 Latin America AMEA Europe North America Total (in millions) Biscuits & Baked Snacks $ 286 $ 644 $ 1,030 $ 2,339 $ 4,299 Chocolate 382 771 1,770 91 3,014 Gum & Candy 393 234 206 223 1,056 Beverages 130 189 34 — 353 Cheese & Grocery 128 112 328 — 568 Total net revenues $ 1,319 $ 1,950 $ 3,368 $ 2,653 $ 9,290 For the Three Months Ended March 31, 2023 Latin America AMEA Europe North America Total (in millions) Biscuits $ 276 $ 669 $ 1,062 $ 2,313 $ 4,320 Chocolate 368 747 1,670 84 2,869 Gum & Candy 348 206 233 312 1,099 Beverages 111 208 33 — 352 Cheese & Grocery 108 109 309 — 526 Total net revenues $ 1,211 $ 1,939 $ 3,307 $ 2,709 $ 9,166 26 Table of Contents