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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to                
Commission file number 1-16483
mdlz-20220331_g1.jpg
Mondelēz International, Inc.
(Exact name of registrant as specified in its charter)
Virginia 52-2284372
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
905 West Fulton Market, Suite 200
Chicago, Illinois 60607
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code) (847) 943-4000

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Tile of each class Trading
Symbol(s)
Name of each exchange on which registered
Class A Common Stock, no par value MDLZ The Nasdaq Global Select Market
1.625% Notes due 2027 MDLZ27 The Nasdaq Stock Market LLC
0.250% Notes due 2028 MDLZ28 The Nasdaq Stock Market LLC
0.750% Notes due 2033 MDLZ33 The Nasdaq Stock Market LLC
2.375% Notes due 2035 MDLZ35 The Nasdaq Stock Market LLC
4.500% Notes due 2035 MDLZ35A The Nasdaq Stock Market LLC
1.375% Notes due 2041 MDLZ41 The Nasdaq Stock Market LLC
3.875% Notes due 2045 MDLZ45 The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
  Accelerated filer  
Non-accelerated filer   Smaller reporting company 
  Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   ☐  No  x

At April 22, 2022, there were 1,383,923,632 shares of the registrant’s Class A Common Stock outstanding.


Mondelēz International, Inc.
Table of Contents
 
    Page No.
PART I -  FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
1
2
3
4
5
6
Item 2.
Item 3.
Item 4.
PART II - OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 6.

In this report, for all periods presented, “we,” “us,” “our,” “the Company” and “Mondelēz International” refer to Mondelēz International, Inc. and subsidiaries. References to “Common Stock” refer to our Class A Common Stock.



PART I – FINANCIAL INFORMATION

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,
  2022 2021
Net revenues $ 7,764  $ 7,238 
Cost of sales 4,781  4,272 
Gross profit 2,983  2,966 
Selling, general and administrative expenses 1,693  1,564 
Asset impairment and exit costs 164  90 
Gain on acquisition —  (9)
Amortization of intangible assets 32  38 
Operating income 1,094  1,283 
Benefit plan non-service income (33) (44)
Interest and other expense, net 168  218 
Earnings before income taxes 959  1,109 
Income tax provision (210) (212)
Loss on equity method investment transactions (5) (7)
Equity method investment net earnings 117  78 
Net earnings 861  968 
Noncontrolling interest earnings (6) (7)
Net earnings attributable to
   Mondelēz International
$ 855  $ 961 
Per share data:
Basic earnings per share attributable to
   Mondelēz International
$ 0.62  $ 0.68 
Diluted earnings per share attributable to
   Mondelēz International
$ 0.61  $ 0.68 

See accompanying notes to the condensed consolidated financial statements.
1


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,
  2022 2021
Net earnings $ 861  $ 968 
Other comprehensive earnings/(losses), net of tax:
Currency translation adjustment 50  (136)
Pension and other benefit plans 93  69 
Derivative cash flow hedges 52 
Total other comprehensive earnings/(losses) 195  (65)
Comprehensive earnings/(losses) 1,056  903 
less: Comprehensive earnings/(losses)
   attributable to noncontrolling interests
(2)
Comprehensive earnings/(losses) attributable to
   Mondelēz International
$ 1,054  $ 905 

See accompanying notes to the condensed consolidated financial statements.
2


Mondelēz International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions of U.S. dollars, except share data)
(Unaudited)
March 31, 2022 December 31, 2021
ASSETS
Cash and cash equivalents $ 1,946  $ 3,546 
Trade receivables (net of allowances of $55 at March 31, 2022
   and $37 at December 31, 2021)
2,943  2,337 
Other receivables (net of allowances of $48 at March 31, 2022
   and $49 at December 31, 2021)
749  851 
Inventories, net 2,838  2,708 
Other current assets 1,143  900 
Total current assets 9,619  10,342 
Property, plant and equipment, net 9,015  8,658 
Operating lease right of use assets 653  613 
Goodwill 22,618  21,978 
Intangible assets, net 18,829  18,291 
Prepaid pension assets 1,046  1,009 
Deferred income taxes 561  541 
Equity method investments 5,255  5,289 
Other assets 398  371 
TOTAL ASSETS $ 67,994  $ 67,092 
LIABILITIES
Short-term borrowings $ 606  $ 216 
Current portion of long-term debt 754  1,746 
Accounts payable 7,241  6,730 
Accrued marketing 2,272  2,097 
Accrued employment costs 721  822 
Other current liabilities 2,509  2,397 
Total current liabilities 14,103  14,008 
Long-term debt 18,344  17,550 
Long-term operating lease liabilities 508  459 
Deferred income taxes 3,521  3,444 
Accrued pension costs 645  681 
Accrued postretirement health care costs 304  301 
Other liabilities 2,353  2,326 
TOTAL LIABILITIES 39,778  38,769 
Commitments and Contingencies (Note 12)
EQUITY
Common Stock, no par value (5,000,000,000 shares authorized and
   1,996,537,778 shares issued at March 31, 2022 and December 31, 2021)
—  — 
Additional paid-in capital 32,053  32,097 
Retained earnings 31,163  30,806 
Accumulated other comprehensive losses (10,425) (10,624)
Treasury stock, at cost (612,818,033 shares at March 31, 2022 and
   604,907,239 shares at December 31, 2021)
(24,630) (24,010)
Total Mondelēz International Shareholders’ Equity 28,161  28,269 
Noncontrolling interest 55  54 
TOTAL EQUITY 28,216  28,323 
TOTAL LIABILITIES AND EQUITY $ 67,994  $ 67,092 
See accompanying notes to the condensed consolidated financial statements.
3


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, 2022
Balances at January 1, 2022 $ —  $ 32,097  $ 30,806  $ (10,624) $ (24,010) $ 54  $ 28,323 
Comprehensive earnings/(losses):
Net earnings —  —  855  —  —  861 
Other comprehensive earnings/(losses),
   net of income taxes
—  —  —  199  —  (4) 195 
Exercise of stock options and issuance of
   other stock awards
—  (44) (11) —  115  —  60 
Common Stock repurchased —  —  —  —  (735) —  (735)
Cash dividends declared ($0.350 per share)
—  —  (487) —  —  —  (487)
Dividends paid on noncontrolling interest
   and other activities
—  —  —  —  —  (1) (1)
Balances at March 31, 2022 $ —  $ 32,053  $ 31,163  $ (10,425) $ (24,630) $ 55  $ 28,216 
Three Months Ended March 31, 2021
Balances at January 1, 2021 $ —  $ 32,070  $ 28,402  $ (10,690) $ (22,204) $ 76  $ 27,654 
Comprehensive earnings/(losses):
Net earnings —  —  961  —  —  968 
Other comprehensive earnings/(losses),
   net of income taxes
—  —  —  (56) —  (9) (65)
Exercise of stock options and issuance of
   other stock awards
—  (61) (15) —  130  —  54 
Common Stock repurchased —  —  —  —  (1,017) —  (1,017)
Cash dividends declared ($0.315 per share)
—  —  (445) —  —  —  (445)
Dividends paid on noncontrolling interest
   and other activities
—  —  —  —  —  —  — 
Balances at March 31, 2021 $ —  $ 32,009  $ 28,903  $ (10,746) $ (23,091) $ 74  $ 27,149 

See accompanying notes to the condensed consolidated financial statements.
4


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,
  2022 2021
CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES
Net earnings $ 861  $ 968 
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization 275  284 
Stock-based compensation expense 24  25 
Deferred income tax (benefit)/provision (70) 34 
Asset impairments and accelerated depreciation 155  43 
Loss on early extinguishment of debt 38  110 
Gain on acquisition —  (9)
Loss on equity method investment transactions
Equity method investment net earnings (117) (78)
Distributions from equity method investments 107  74 
Other non-cash items, net (13) (23)
Change in assets and liabilities,
   net of acquisitions and divestitures:
Receivables, net (517) (494)
Inventories, net (81) (37)
Accounts payable 397  283 
Other current assets (104) (140)
Other current liabilities 230  (55)
Change in pension and postretirement assets and liabilities, net (59) (77)
Net cash provided by operating activities 1,131  915 
CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES
Capital expenditures (167) (216)
Acquisitions, net of cash received (1,418) (490)
Proceeds from divestitures including equity method investments 66  — 
Proceeds from sale of property, plant and equipment and other 78  16 
Net cash used in investing activities (1,441) (690)
CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES
Issuances of commercial paper, maturities greater than 90 days —  — 
Repayments of commercial paper, maturities greater than 90 days —  — 
Net issuances/(repayments) of other short-term borrowings 217  647 
Long-term debt proceeds 1,991  2,373 
Long-term debt repayments (2,306) (3,353)
Repurchase of Common Stock (751) (1,046)
Dividends paid (491) (453)
Other 60  51 
Net cash used in financing activities (1,280) (1,781)
Effect of exchange rate changes on cash, cash equivalents
   and restricted cash
(10) (35)
Cash, cash equivalents and restricted cash:
(Decrease)/Increase (1,600) (1,591)
Balance at beginning of period 3,553  3,650 
Balance at end of period $ 1,953  $ 2,059 

See accompanying notes to the condensed consolidated financial statements.
5


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, 2021.

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 over which we do not have significant influence or control are not material and as there are no readily determinable fair values for the equity interests, these investments are carried at cost with changes in the investment recognized to the extent cash is received.

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. During the first quarter of 2022, we evaluated and impaired these and other assets. We recorded $143 million of total expenses ($145 million after-tax) incurred as a direct result of the war, including $75 million recorded in asset impairment and exit costs, $44 million in cost of sales and $24 million in selling, general and administrative expenses. We recorded $75 million of property, plant and equipment impairments, $33 million of estimated inventory reserves and write-offs, $19 million of increased estimated allowances for trade receivables and $16 million in accrued expenses. We 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. In connection with these findings and impacts, we have made estimates and assumptions based on information available to us. 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.

Currency Translation and Highly Inflationary Accounting:
We translate the results of operations of our subsidiaries from multiple currencies using average exchange rates during each period and translate balance sheet accounts using exchange rates at the end of each period. We record currency translation adjustments as a component of equity (except for highly inflationary currencies) and realized exchange gains and losses on currency transactions in earnings.

Highly inflationary accounting is triggered when a country’s three-year cumulative inflation rate exceeds 100%. It requires the remeasurement of financial statements of subsidiaries in the country from the functional currency of the subsidiary to our U.S. dollar reporting currency. Local currency monetary assets and liabilities are remeasured into U.S. dollars using exchange rates as of the latest balance sheet date, with remeasurement gains and losses recognized in net earnings.

Türkiye. During the first quarter of 2022, primarily based on data published by the Türkiye Statistical Institute that indicated that Türkiye's three-year cumulative inflation rate exceeded 100%, we concluded that Türkiye became a highly inflationary economy for accounting purposes. As of April 1, 2022, we expect to apply highly inflationary accounting for our subsidiaries operating in Türkiye and change their functional currency from the Turkish lira to the U.S. dollar. Our operations in Türkiye contributed $43 million, or 0.6% of our condensed consolidated net revenues in the three months ended March 31, 2022. Based on a review of our Turkish lira-denominated monetary assets and liabilities, our operations in Türkiye had an immaterial net monetary liability position as of March 31, 2022.

6


Argentina. During the second quarter of 2018, primarily based on published estimates that indicated that Argentina's three-year cumulative inflation rate exceeded 100%, we concluded that Argentina became a highly inflationary economy for accounting purposes. As of July 1, 2018, we began to apply highly inflationary accounting for our Argentinean subsidiaries and changed their functional currency from the Argentinean peso to the U.S. dollar. Our operations in Argentina contributed $129 million, or 1.7% of our condensed consolidated net revenues in the three months ended March 31, 2022. As of March 31, 2022, our Argentinean operations had $26 million of Argentinean peso denominated net monetary assets. Within selling, general and administrative expenses, we recorded a remeasurement loss of $5 million during the three months ended March 31, 2022 related to the revaluation of the Argentinean peso denominated net monetary position over these periods.

Other Countries. Since we sell our products in over 150 countries and have operations in approximately 80 countries, we monitor economic and currency-related risks and seek to take protective measures in response to potential exposures. We continue to monitor the developments in Ukraine and Russia as well as in the ongoing COVID-19 global pandemic and related impacts to our business operations, currencies and net monetary exposures. Since the global onset of COVID-19 in early 2020, most countries in which we do business experienced periods of significant economic uncertainty as well as exchange rate volatility. At this time, within our consolidated entities, Argentina and Türkiye are or will be accounted for as highly inflationary economies as noted above, and we continue to monitor currency volatility and associated risks, including highly inflationary economies.

Cash, Cash Equivalents and Restricted Cash:
Cash and cash equivalents include demand deposits with banks and all highly liquid investments with original maturities of three months or less. We also have restricted cash that is recorded within other current assets of $7 million as of March 31, 2022 and $7 million as of December 31, 2021. Total cash, cash equivalents and restricted cash was $1,953 million as of March 31, 2022 and $3,553 million as of December 31, 2021.

Allowances for Credit Losses:
The allowances for credit losses are recorded against our receivables. They are developed at a country and region level based on historical collection experiences, current economic condition of specific customers and the forecasted economic condition of countries using various factors such as bond default rates and consumption indexes. We write off receivables once it is determined that the receivables are no longer collectible and as allowed by local laws.

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, 2022 $ (37) $ (49) $ (10)
Current period provision for expected credit losses (19) (2) (5)
Write-offs charged against the allowance —  — 
Currency (2) (2)
Balance at March 31, 2022 $ (55) $ (48) $ (17)

Transfers of Financial Assets:
We account for transfers of financial assets, such as uncommitted revolving non-recourse accounts receivable factoring arrangements, when we have surrendered control over the related assets. Determining whether control has transferred requires an evaluation of relevant legal considerations, an assessment of the nature and extent of our continuing involvement with the assets transferred and any other relevant considerations. We use receivable factoring arrangements periodically when circumstances are favorable to manage liquidity. We have non-recourse factoring arrangements in which we sell eligible trade receivables primarily to banks in exchange for cash. We may then continue to collect the receivables sold, acting solely as a collecting agent on behalf of the banks. The outstanding principal amount of receivables under these arrangements amounted to $887 million as of March 31, 2022 and $761 million as of December 31, 2021. The 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.

7


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

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 are evaluating the timing and effects of adopting this ASU and currently we do not expect this ASU to have a material impact on our consolidated financial statements.

In March 2020 and subsequently in January 2021, the FASB issued an ASU to provide optional accounting guidance for a limited period of time to ease the potential burden in accounting for reference rate reform. The guidance provides optional expedients and exceptions to existing accounting requirements for contract modifications and hedge accounting related to transitioning from discontinued reference rates, such as LIBOR, to alternative reference rates, if certain criteria are met. The new accounting requirements can be applied as of the beginning of the interim period including March 12, 2020, or any date thereafter, through December 31, 2022. We expect to adopt this standard in the fourth quarter of 2022. Based on our evaluation of our contracts to date, we do not expect this ASU to have a material impact on our consolidated financial statements.

Note 2. Acquisitions and Divestitures

On April 24, 2022, we entered into an agreement with Grupo Bimbo to acquire Ricolino, its confectionery business located primarily in Mexico for a purchase price of approximately $1.3 billion, subject to closing purchase price adjustments. The transaction, which will be funded through a combination of an issuance of debt and cash on hand, is subject to relevant antitrust approvals and closing conditions and is expected to close in late Q3 or early Q4 2022.

On January 3, 2022, we acquired Chipita S.A. (“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 €1.3 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 ($1.9 billion).

We are working to complete the valuation and have recorded a preliminary purchase price allocation of:
(in millions)
Cash $ 52 
Receivables 102 
Inventory 62 
Other current assets
Property, plant and equipment 406 
Finance leases right of use assets
Definite life intangible assets 48 
Indefinite life intangible assets 686 
Goodwill 774 
Other assets 79 
Assets acquired $ 2,221 
Current liabilities 131 
Deferred tax liability 155 
Finance lease liabilities
Other liabilities 21 
Total purchase price $ 1,906 
Less: long-term debt (436)
Less: cash received (52)
Net Cash Paid $ 1,418 
8


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 Level 3 inputs. Significant assumptions used in assessing the fair values of intangible assets include forecasted future cash flows and discount 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. None of the goodwill recognized is expected to be deductible for income tax purposes. All of the goodwill was assigned to the Europe segment.

Chipita added incremental net revenues of $152 million and operating income of $4 million in the three months ended March 31, 2022. We incurred acquisition-related costs of $21 million and integration costs of $35 million in the three months ended March 31, 2022.

On November 1, 2021, we completed the sale of MaxFoods Pty Ltd, an Australian packaged seafood business that we had acquired as part of our acquisition of Gourmet Food Holdings Pty Ltd (“Gourmet Food”). The sales price was $57 million Australian dollars ($41 million), net of cash divested with the business, and we recorded an immaterial loss on the transaction.

On April 1, 2021, we acquired Gourmet Food, a leading Australian food company in the premium biscuit and cracker category, for closing cash consideration of approximately $450 million Australian dollars ($343 million), net of cash received. We have recorded a purchase price allocation of net tangible and intangible assets acquired and liabilities assumed of $41 million to indefinite-lived intangible assets, $80 million to definite-lived intangible assets, $164 million to goodwill, $19 million to property, plant and equipment, $18 million to inventory, $25 million to accounts receivable, $12 million to other assets, $5 million to operating right of use assets, $3 million to other current assets, $19 million to current liabilities and $5 million to long-term operating lease liabilities. The acquisition added incremental net revenues of $14 million, and operating income of $1 million in the three months ended March 31, 2022. We incurred acquisition-related costs of $1 million in the three months ended March 31, 2021.

On March 25, 2021, we acquired a majority interest in Lion/Gemstone Topco Ltd ("Grenade"), a performance nutrition leader in the United Kingdom, for closing cash consideration of £188 million ($261 million), net of cash received. The acquisition of Grenade expands our position into the premium nutrition segment. We have recorded a purchase price allocation of net tangible and intangible assets acquired and liabilities assumed of $82 million to indefinite-lived intangible assets, $28 million to definite-lived intangible assets, $181 million to goodwill, $1 million to property, plant and equipment, $11 million to inventory, $18 million to accounts receivable, $25 million to current liabilities, $20 million to deferred tax liabilities and $15 million to long-term other liabilities. Through the one-year anniversary of the acquisition, Grenade added incremental net revenues of $21 million, and operating income of $2 million in the three months ended March 31, 2022. We incurred acquisition-related costs of $2 million in the three months ended March 31, 2021.

On January 4, 2021, we acquired the remaining 93% of equity of Hu Master Holdings ("Hu"), a category leader in premium chocolate in the United States, which provides a strategic complement to our snacking portfolio in North America through growth opportunities in chocolate and other categories in the well-being category. The initial cash consideration paid was $229 million, net of cash received, and the Company may be required to pay additional contingent consideration. The estimated fair value of the contingent consideration obligation at the acquisition date was $132 million and was determined using a Monte Carlo simulation based on forecasted future results. As a result of acquiring the remaining equity interest, we consolidated the operations prospectively from the date of acquisition and recorded a pre-tax gain of $9 million ($7 million after-tax) related to stepping up our previously-held $8 million (7%) investment to fair value. We have recorded a purchase price allocation of net tangible and intangible assets acquired and liabilities assumed of $123 million to indefinite-lived intangible assets, $51 million to definite-lived intangible assets, $202 million to goodwill, $1 million to property, plant and equipment, $2 million to inventory, $4 million to accounts receivable, $5 million to current liabilities and $132 million to long-term other liabilities. We incurred acquisition-related costs of $4 million during the three months ended March 31, 2021.


9


Note 3. Inventories

Inventories consisted of the following:
As of March 31, 2022 As of December 31, 2021
  (in millions)
Raw materials $ 891  $ 770 
Finished product 2,093  2,054 
2,984  2,824 
Inventory reserves (146) (116)
Inventories, net $ 2,838  $ 2,708 
Note 4. Property, Plant and Equipment

Property, plant and equipment consisted of the following:
  As of March 31, 2022 As of December 31, 2021
  (in millions)
Land and land improvements $ 405  $ 379 
Buildings and building improvements 3,322  3,139 
Machinery and equipment 12,043  11,842 
Construction in progress 669  732 
16,439  16,092 
Accumulated depreciation (7,424) (7,434)
Property, plant and equipment, net $ 9,015  $ 8,658 

For the three months ended March 31, 2022, capital expenditures of $167 million excluded $244 million of accrued capital expenditures remaining unpaid at March 31, 2022 and included payment for a portion of the $249 million of capital expenditures that were accrued and unpaid at December 31, 2021. For the three months ended March 31, 2021, capital expenditures of $216 million excluded $230 million of accrued capital expenditures remaining unpaid at March 31, 2021 and included payment for a portion of the $275 million of capital expenditures that were accrued and unpaid at December 31, 2020.

In connection with our restructuring program, we recorded non-cash property, plant and equipment write-downs (including accelerated depreciation and asset impairments) and losses/(gains) on disposal in the condensed consolidated statements of earnings within asset impairment and exit costs and within the segment results as follows (refer to Note 7, Restructuring Program).
For the Three Months Ended
March 31,
  2022 2021
  (in millions)
Latin America $ —  $ — 
AMEA —  (16)
Europe
North America 54 
Total $ $ 40 

10


Note 5. Goodwill and Intangible Assets

Goodwill by segment was:
As of March 31, 2022 As of December 31, 2021
  (in millions)
Latin America $ 738  $ 674 
AMEA 3,371  3,365 
Europe 8,355  7,830 
North America 10,154  10,109 
Goodwill $ 22,618  $ 21,978 

Intangible assets consisted of the following:
As of March 31, 2022 As of December 31, 2021
  (in millions)
Indefinite-life intangible assets $ 17,827  $ 17,299 
Definite-life intangible assets 3,025  2,991 
20,852  20,290 
Accumulated amortization (2,023) (1,999)
Intangible assets, net $ 18,829  $ 18,291 

Indefinite-life intangible assets consist principally of brand names purchased through our acquisitions of Nabisco Holdings Corp., the Spanish and Portuguese operations of United Biscuits, the global LU biscuit business of Groupe Danone S.A. and Cadbury Limited. Definite-life intangible assets consist primarily of brands, customer-related intangibles, process technology, licenses and non-compete agreements.

Amortization expense for intangible assets was $32 million for the three months ended March 31, 2022 and $38 million for the three months ended March 31, 2021. For the next five years, we currently estimate annual amortization expense of approximately $130 million in 2022-2024, approximately $105 million in 2025 and approximately $65 million in 2026 (reflecting March 31, 2022 exchange rates).

Changes in goodwill and intangible assets consisted of:
  Goodwill Intangible
Assets, at cost
  (in millions)
Balance at January 1, 2022 $ 21,978  $ 20,290 
Currency (134) (94)
Acquisitions 774  734 
Asset impairments —  (78)
Balance at March 31, 2022 $ 22,618  $ 20,852 

Changes to goodwill and intangibles were:
Acquisitions - In connection with our acquisition of Chipita during the first three months of 2022, we recorded a preliminary purchase price allocation of $774 million to goodwill and $734 million to intangible assets. See Note 2, Acquisitions and Divestitures, for additional information.
Asset impairment - As further described below, during the first quarter of 2022, we recorded a $78 million intangible asset impairment in AMEA due to lower than expected growth and profitability of a local biscuit brand sold in select markets in AMEA and Europe.
11


During the first quarter of 2022, we evaluated our goodwill and intangible asset impairment risk through an assessment of potential triggering events. In light of the war in Ukraine and the overall global economic environment, we considered qualitative and quantitative information in our assessment of goodwill and indefinite-life intangible assets. Based on the financial performance of our goodwill reporting units, we concluded there were no impairment indicators for goodwill. Based on further quantitative analysis of our indefinite-life intangible assets, we concluded that a biscuit brand was impaired. During the first quarter of 2022, we recorded a $78 million impairment charge for the brand within asset impairment and exit costs and based on the excess carrying value over its estimated fair value. During our indefinite-life impairment testing, we use several accepted valuation methods, including relief of royalty, excess earnings and excess margin, that utilize estimates of future sales, earnings growth rates, royalty rates and discount rates in determining a brand's global fair value.

During the first quarter of 2021, there were no impairments of goodwill or intangible assets. During our 2021 annual indefinite-life intangible asset testing in the third quarter of 2021, we identified eight brands, including the one brand impaired during the first quarter of 2022, that each had a fair value in excess of book value of 10% or less. The aggregate book value of the eight brands was $1,045 million as of March 31, 2022. We continue to monitor our brand performance, particularly in light of the significant global economic uncertainties and related impacts to our business. If a brand's earnings expectations, including the timing of the expected recovery from the war and the pandemic, are not met or specific valuation factors outside of our control, such as discount rates, change significantly, then a brand or brands could become impaired in the future.

Note 6. Equity Method Investments

Equity method investments consist of our investments in entities in which we maintain an equity ownership interest and apply the equity method of accounting due to our ability to exert significant influence over decisions relating to their operating and financial affairs. Revenue and expenses of our equity method investees are not consolidated into our financial statements; rather, our proportionate share of the earnings of each investee is reflected as equity method investment net earnings. The carrying values of our equity method investments are also impacted by our proportionate share of items impacting the investee's accumulated other comprehensive income or losses and other items, such as our share of investee dividends.

Our equity method investments include, but are not limited to, our ownership interests in JDE Peet's (Euronext Amsterdam: "JDEP"), Keurig Dr Pepper Inc. (Nasdaq: "KDP"), 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, 2022, we owned 22.7%, 5.3%, 50.0% and 49.0%, respectively, of these companies' outstanding shares.

Our investments accounted for under the equity method of accounting totaled $5,255 million as of March 31, 2022 and $5,289 million as of December 31, 2021. We recorded equity earnings of $117 million and cash dividends of $107 million in the first quarter of 2022 and equity earnings of $78 million and cash dividends of $74 million in the first quarter of 2021.

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

On September 20, 2021, we issued €300 million exchangeable bonds, which are redeemable at maturity in September 2024 at their principal amount in cash or, at our option, through the delivery of an equivalent number of JDE Peet’s ordinary shares based on an initial exchange price of €35.40 and, as the case may be, an additional amount in cash. If all bonds were redeemed in exchange for JDE Peet's shares, this would represent approximately 8.5 million shares or approximately 7% of our equity interest in JDE Peet's. Refer to Note 9, Debt and Borrowing Arrangements, for further details on this transaction.

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
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$700 million in capital expenditures. On October 21, 2021, our Board of Directors approved an extension of the restructuring program through 2023. 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 $5.1 billion related to the Simplify to Grow Program. We expect to incur the remainder of the program charges by year-end 2023.

Restructuring Costs:
The Simplify to Grow Program liability activity for the three months ended March 31, 2022 was:
  Severance
and related
costs
Asset
Write-downs
Total
  (in millions)
Liability balance, January 1, 2022 $ 211  $ —  $ 211 
Charges 11 
Cash spent (17) —  (17)
Non-cash settlements/adjustments —  (2) (2)
Currency (1) —  (1)
Liability balance, March 31, 2022 $ 202  $ —  $ 202 

We recorded restructuring charges of $11 million in the first quarter of 2022 and $88 million in the first quarter of 2021 within asset impairment and exit costs and benefit plan non-service income.
We spent $17 million in the first quarter of 2022 and $34 million in the first quarter of 2021 in cash severance and related costs.
We recognized non-cash asset write-downs (including accelerated depreciation and asset impairments), and other adjustments, including any gains on sale of restructuring program assets, which totaled $2 million in the first quarter of 2022 and $40 million in the first quarter of 2021.
At March 31, 2022, $172 million of our net restructuring liability was recorded within other current liabilities and $30 million was recorded within other long-term liabilities.

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 more 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 $20 million in the first quarter of 2022 and $34 million in the first quarter of 2021. We recorded these costs within cost of sales and general corporate expense within selling, general and administrative expenses.

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Restructuring and Implementation Costs:
During the three months ended March 31, 2022 and March 31, 2021, and since inception of the Simplify to Grow Program, we recorded the following restructuring and implementation costs within segment operating income and earnings before income taxes:
Latin
America
AMEA Europe North
America
Corporate Total
  (in millions)
For the Three Months Ended March 31, 2022
Restructuring Costs $ (1) $ $ $ $ —  $ 11 
Implementation Costs 20 
Total $ —  $ $ $ 15  $ $ 31 
For the Three Months Ended March 31, 2021
Restructuring Costs $ $ (21) $ $ 101  $ (1) $ 88 
Implementation Costs 10  10  34 
Total $ $ (19) $ 16  $ 111  $ $ 122 
Total Project (Inception to Date)
Restructuring Costs $ 553  $ 543  $ 1,149  $ 653  $ 149  $ 3,047 
Implementation Costs 297  240  549  560  362  2,008 
Total $ 850  $ 783  $ 1,698  $ 1,213  $ 511  $ 5,055 

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, 2022 As of December 31, 2021
Amount
Outstanding
Weighted-
Average Rate
Amount
Outstanding
Weighted-
Average Rate
(in millions, except percentages)
Commercial paper $ 463  0.9  % $ 192  0.2  %
Bank loans 143  3.5  % 24  8.6  %
Total short-term borrowings $ 606  $ 216 

Our uncommitted credit lines and committed credit lines available as of March 31, 2022 and December 31, 2021 include:
  As of March 31, 2022 As of December 31, 2021
Facility Amount Borrowed Amount Facility Amount Borrowed Amount
(in millions)
Uncommitted credit facilities $ 1,435  $ 143  $ 1,367  $ 24 
Credit facility expiry(1):
November 30, 2022(2)
2,000  —  —  — 
February 23, 2022 —  —  2,500  — 
February 22, 2023 2,500  —  —  — 
February 27, 2024 —  —  4,500  — 
February 23, 2027 4,500  —  —  — 

(1)         We maintain a multi-year senior unsecured revolving credit facility for general corporate purposes, including working capital needs, and to support our commercial paper program. The revolving credit agreement includes a covenant that we maintain a minimum shareholders' equity of at least $25.0 billion, excluding accumulated other comprehensive earnings/(losses), the cumulative effects of any changes in accounting principles and earnings/(losses) recognized in connection with the ongoing application of any mark-to-market accounting for
14


pensions and other retirement plans. At March 31, 2022, we complied with this covenant as our shareholders' equity, as defined by the covenant, was $38.6 billion. 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 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. The maturity dates of any loans drawn under this facility will be three years after the funding date of the applicable loan(s).

Long-Term Debt:

Tender Offers:
On March 18, 2022, we completed a tender offer in cash and redeemed long term U.S. dollar denominated notes for the following amounts (in millions):
Interest Rate Redemption Date Maturity Date Amount Redeemed USD Equivalent
3.625% March 2022 February 2026 $130 $130
4.125% March 2022 May 2028 $211 $211
2.750% March 2022 April 2030 $500 $500
6.500% March 2022 November 2031 $17 $17
7.000% March 2022 August 2037 $10 $10
6.875% March 2022 February 2038 $21 $21
6.875% March 2022 January 2039 $8 $8
6.500% March 2022 February 2040 $36 $36
4.625% March 2022 May 2048 $54 $54

We recorded a $129 million loss on debt extinguishment and related expenses within interest and other expense, net, consisting of $38 million paid in excess of carrying value of the debt and from recognizing unamortized discounts and deferred financing costs in earnings and $91 million from recognizing unamortized forward starting swap losses in earnings at the time of the debt extinguishment. The cash payments related to the debt extinguishment were classified as cash outflows from financing activities in the consolidated statement of cash flows.

Redemptions:
On March 18, 2022, we completed a redemption of long term U.S. dollar denominated notes for the following amounts (in millions):
Interest Rate Redemption Date Maturity Date Amount Redeemed USD Equivalent
0.625% March 2022 July 2022 $1,000 $1,000

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

Issuances:
During the three months ended March 31, 2022, we issued the following notes (in millions):
Issuance Date Interest Rate Maturity Date
Gross Proceeds (1)
Gross Proceeds USD Equivalent
March 2022 2.125% March 2024 $500 $500
March 2022 2.625% March 2027 $750 $750
March 2022 3.000% March 2032 $750 $750

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


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Fair Value of Our Debt:
The fair value of our short-term borrowings at March 31, 2022 and December 31, 2021 reflects current market interest rates and approximates the amounts we have recorded on our consolidated balance sheets. The fair value of our long-term debt was determined using quoted prices in active markets (Level 1 valuation data) for the publicly traded debt obligations.
  As of March 31, 2022 As of December 31, 2021
(in millions)
Fair Value $ 19,009  $ 20,249 
Carrying Value $ 19,704  $ 19,512 

Interest and Other Expense, net:
Interest and other expense, net consisted of:
For the Three Months Ended
March 31,
  2022 2021
  (in millions)
Interest expense, debt $ 91  $ 98 
Loss on debt extinguishment and
   related expenses
129  137 
Other (income)/expense, net (52) (17)
Interest and other expense, net $ 168  $ 218 

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

Early settlement of forecasted currency exchange contracts comprise $20 million in other (income)/expense, net due to changes in related forecasted future cash flows in the three months ended March 31, 2022. 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, 2022 As of December 31, 2021
Asset
Derivatives
Liability
Derivatives
Asset
Derivatives
Liability
Derivatives
  (in millions)
Derivatives designated as
accounting hedges:
Currency exchange contracts $ $ $ —  $ — 
Interest rate contracts 27  27  17 
Net investment hedge derivative contracts (1)
137  51  117  45 
$ 165  $ 57  $ 144  $ 62 
Derivatives not designated as
   accounting hedges:
Currency exchange contracts $ 135  $ 124  $ 156  $ 40 
Commodity contracts 589  220  387  137 
Equity method investment contracts(2)
—  — 
$ 724  $ 347  $ 543  $ 180 
Total fair value $ 889  $ 404  $ 687  $ 242 

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(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. Refer to Note 8, Debt and Borrowing Arrangements.

Derivatives designated as accounting hedges include cash flow and net investment hedge derivative contracts. Our currency exchange, commodity derivative and equity method investment contracts are economic hedges that are not designated as accounting hedges. 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.

The fair values (asset/(liability)) of our derivative instruments were determined using:
  As of March 31, 2022
  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 $ $ —  $ $ — 
Commodity contracts 369  213  156  — 
Interest rate contracts 24  —  24  — 
Net investment hedge contracts 86  —  86  — 
Equity method investment contracts (3) —  (3) — 
Total derivatives $ 485  $ 213  $ 272  $ — 
  As of December 31, 2021
  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 $ 116  $ —  $ 116  $ — 
Commodity contracts 251  161  90  — 
Interest rate contracts 10  —  10  — 
Net investment hedge contracts 71  —  71  — 
Equity method investment contracts (3) —  (3) — 
Total derivatives $ 445  $ 161  $ 284  $ — 

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
17


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 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, 2022 As of December 31, 2021
  (in millions)
Currency exchange contracts:
Intercompany loans and forecasted interest payments
$ 3,073  $ 1,891 
Forecasted transactions
4,822  4,831 
Commodity contracts 10,281  9,694 
Interest rate contracts 1,850  1,850 
Net investment hedges:
Net investment hedge derivative contracts 7,306  3,915 
Non-U.S. dollar debt designated as net investment hedges
Euro notes
3,525  3,622 
British pound sterling notes
346  356 
Swiss franc notes
802  811 
Canadian dollar notes
480  475 

Cash Flow Hedges:
Cash flow hedge activity, net of taxes, within accumulated other comprehensive earnings/(losses) included:
  For the Three Months Ended
March 31,
  2022 2021
  (in millions)
Accumulated (loss)/gain at beginning of period $ (148) $ (161)
Transfer of realized losses/(gains) in fair value
   to earnings
25 
Unrealized (loss)/gain in fair value 27  (3)
Accumulated (loss)/gain at end of period $ (96) $ (159)

After-tax gains/(losses) reclassified from accumulated other comprehensive earnings/(losses) to net earnings were:
  For the Three Months Ended
March 31,
  2022 2021
  (in millions)
Currency exchange contracts – forecasted transactions $ (2) $ — 
Interest rate contracts (23) (5)
Total $ (25) $ (5)
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After-tax gains/(losses) recognized in other comprehensive earnings/(losses) were:
  For the Three Months Ended
March 31,
  2022 2021
  (in millions)
Currency exchange contracts –
   forecasted transactions
$ $ (1)
Interest rate contracts 25  (2)
Total $ 27  $ (3)

Cash flow hedge ineffectiveness was not material for all periods presented.

We record pre-tax (i) gains or losses reclassified from accumulated other comprehensive earnings/(losses) into earnings, (ii) gains or losses on ineffectiveness and (iii) gains or losses on amounts excluded from effectiveness testing in interest and other expense, net for interest rate contracts.

Based on current market conditions, we would expect to transfer losses of $9 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, 2022, our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 4 years, 5 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, 2022 was $7.3 billion.

The impacts of the net investment hedge derivative contracts on other comprehensive earnings and net earnings were as follows:
  For the Three Months Ended
March 31,
  2022 2021
  (in millions)
After-tax gain/(loss) on NIH contracts(1)
$ 41  $ 59 

(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,
  2022 2021
  (in millions)
Amounts excluded from the assessment of
   hedge effectiveness(1)
$ 22  $ 20 

(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.

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Non-U.S. dollar debt designated as net investment hedges:
After-tax gains/(losses) related to hedges of net investments in international operations in the form of euro, British pound sterling, Swiss franc and Canadian dollar-denominated debt were recorded within the cumulative translation adjustment section of other comprehensive income and were:
  For the Three Months Ended
March 31,
  2022 2021
  (in millions)
Euro notes $ 74  $ 124 
British pound sterling notes (2)
Swiss franc notes 56 
Canadian notes (4) (5)

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
  2022 2021
  (in millions)  
Currency exchange contracts:
Intercompany loans and forecasted interest payments $ (11) $ 70  Interest and other expense, net
Forecasted transactions
(7) 50  Cost of sales
Forecasted transactions
21  (16) Interest and other expense, net
Forecasted transactions
Selling, general and administrative expenses
Commodity contracts 237  94  Cost of sales
Equity method investment
   contracts
—  —  Gain on equity method investment transactions
Total $ 242  $ 200 

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

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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,
  2022 2021 2022 2021
  (in millions)
Service cost $ $ $ 39  $ 35 
Interest cost 11  10  41  29 
Expected return on plan assets (18) (18) (93) (106)
Amortization:
Net loss from experience differences 19  33 
Prior service cost/(benefit) —  —  (1) (2)
Settlement losses and other expenses —  — 
Net periodic pension cost/(benefit) $ —  $ $ $ (11)

Employer Contributions:
During the three months ended March 31, 2022, we contributed less than $1 million to our U.S. pension plans and $64 million to our non-U.S. pension plans, including $25 million to plans in the United Kingdom and Ireland. 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, 2022, over the remainder of 2022, we plan to make further contributions of approximately $3 million to our U.S. plans and approximately $121 million to our non-U.S. plans. 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 related to our complete withdrawal from the Bakery and Confectionery Union and Industry International Pension Fund totaling $526 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 $3 million in the three months ended March 31, 2022 and $3 million in the three months ended March 31, 2021 within interest and other expense, net. As of March 31, 2022, the remaining discounted withdrawal liability was $356 million, with $15 million recorded in other current liabilities and $341 million recorded in long-term other liabilities.

Postretirement Benefit Plans

Net periodic postretirement health care cost/(benefit) consisted of the following:
  For the Three Months Ended
March 31,
  2022 2021
  (in millions)
Service cost $ $
Interest cost
Amortization:
Net loss from experience differences — 
Prior service credit —  — 
Net periodic postretirement health care cost/(benefit) $ $

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Postemployment Benefit Plans

Net periodic postemployment cost consisted of the following:
  For the Three Months Ended
March 31,
  2022 2021
  (in millions)
Service cost $ $
Interest cost
Amortization of net gains (1) (1)
Net periodic postemployment cost $ $

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, 2022 23,503,759  $42.65 5 years $ 556   million
Annual grant to eligible employees 2,180,540  64.65
Additional options issued 1,710  65.97
Total options granted 2,182,250  64.65
Options exercised (1)
(2,329,139) 34.61 $ 74   million
Options canceled (208,761) 53.50
Balance at March 31, 2022 23,148,109  45.43 6 years $ 406   million

(1)Cash received from options exercised was $70 million in the three months ended March 31, 2022. The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the option exercises totaled $10 million in the three months ended March 31, 2022.

Performance Share Units and Other Stock-Based Awards:
Our performance share unit, deferred stock unit and historically granted restricted stock activity is reflected below:
Number
of Shares
Grant Date
Weighted-Average
Fair Value
Per Share (3)
Weighted-Average
Aggregate
Fair Value (3)
Balance at January 1, 2022 4,668,046  $57.04
Annual grant to eligible employees: Feb 24, 2022
Performance share units 806,590  61.87
Deferred stock units 505,090  64.65
Additional shares granted (1)
653,365  Various 60.17
Total shares granted 1,965,045  62.02 $ 122   million
Vested (2)
(1,670,302) 55.34 $ 92   million
Forfeited (187,367) 61.42
Balance at March 31, 2022 4,775,422  59.51

(1)Includes performance share units and deferred stock units.
(2)The actual tax benefit/(expense) realized and recorded in the provision for income taxes for the tax deductions from the shares vested totaled $5 million in the three months ended March 31, 2022.
(3)The grant date fair value of performance share units is determined based on the Monte Carlo simulation model for the market-based total shareholder return component and the closing market price of the Company’s stock on the grant date for performance-based components. 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.
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Share Repurchase Program:
Between 2013 and 2017, our Board of Directors authorized the repurchase of a total of $13.7 billion of our Common Stock through December 31, 2018. On January 31, 2018, our Finance Committee, with authorization delegated from our Board of Directors, approved an increase of $6.0 billion in the share repurchase program, raising the authorization to $19.7 billion of Common Stock repurchases, and extended the program through December 31, 2020. On December 2, 2020, our Board of Directors approved an increase of $4.0 billion in the share repurchase program, raising the authorization to $23.7 billion of Common Stock repurchases, and extended the program through December 31, 2023. Repurchases under the program are determined by management and are wholly discretionary. Prior to January 1, 2022, we had repurchased approximately $20.0 billion of Common Stock pursuant to this authorization. During the three months ended March 31, 2022, we repurchased approximately 11 million shares of Common Stock at an average cost of $65.96 per share, or an aggregate cost of approximately $0.8 billion, all of which was paid during the period. All share repurchases were funded through available cash and commercial paper issuances. As of March 31, 2022, we have approximately $2.9 billion in remaining share repurchase capacity.

Note 12. Commitments and Contingencies

Legal Proceedings:
We routinely are involved in legal proceedings, claims, disputes, regulatory matters and governmental 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 litigation 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 proceedings, individually and in the aggregate, will not materially harm our financial position, results of operations or cash flows. However, legal proceedings and government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could involve substantial monetary damages. 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 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"), Eastern Division (the “CFTC action”) following its investigation of activities related to the trading of December 2011 wheat futures contracts that occurred prior to the spin-off of Kraft Foods Group. The complaint alleges that Kraft Foods Group and Mondelēz Global (1) manipulated or attempted to manipulate the wheat markets during the fall of 2011; (2) violated position limit levels for wheat futures and (3) engaged in non-competitive trades by trading both sides of exchange-for-physical Chicago Board of Trade wheat contracts. The CFTC seeks civil monetary penalties of either triple the monetary gain for each violation of the Commodity Exchange Act (the “Act”) or $1 million for each violation of Section 6(c)(1), 6(c)(3) or 9(a)(2) of the Act and $140,000 for each additional violation of the Act, plus post-judgment interest; an order of permanent injunction prohibiting Kraft Foods Group and Mondelēz Global from violating specified provisions of the Act; disgorgement of profits; and costs and fees. On August 15, 2019, the District Court approved a settlement agreement between the CFTC and Mondelēz Global. The terms of the settlement, which are available in the District Court’s docket, had an immaterial impact on our financial position, results of operations and cash flows. On October 23, 2019, following a ruling by the United States Court of Appeals for the Seventh Circuit regarding Mondelēz Global's allegations that the CFTC and its Commissioners violated certain terms of the settlement agreement and the CFTC's argument that the Commissioners were not bound by the terms of the settlement agreement, the District Court vacated the settlement agreement and reinstated all pending motions that the District Court had previously mooted as a result of the settlement. The parties have reached a new agreement in principle to resolve the CFTC action and have submitted the settlement to the District Court for approval. The District Court cancelled a scheduled conference on June 4, 2020 to discuss the proposed settlement agreement but indicated that it would rule on pending motions in due course. Additionally, several class action complaints were filed against Kraft Foods Group and Mondelēz Global in the District Court by investors in wheat futures and options on behalf of themselves and others similarly situated. The complaints make similar allegations as those made in the CFTC action, and the plaintiffs are seeking monetary damages, interest and unjust enrichment; costs and fees; and injunctive, declaratory and other unspecified relief. In June 2015, these suits were consolidated in the District Court. On January 3, 2020, the District Court granted
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plaintiffs' request to certify a class. It is not possible to predict the outcome of these matters; however, based on our Separation and Distribution Agreement with Kraft Foods Group dated as of September 27, 2012, we expect to bear any monetary penalties or other payments in connection with the CFTC action and the class action. Although the CFTC action and the class action complaints involve the same alleged conduct, a resolution or decision with respect to one of the matters may not be dispositive as to the outcome of the other matter.

In November 2019, the European Commission informed us that it has initiated an investigation into our alleged infringement of European Union competition law through certain practices restricting cross-border trade within the European Economic Area. On January 28, 2021, the European Commission announced it has taken the next procedural step in its investigation and opened formal proceedings. We are cooperating with the investigation and expect to continue to engage with the European Commission as its investigation proceeds. It is not possible to predict how long the investigation will take or the ultimate outcome of this matter.

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. At March 31, 2022, we had no material third-party guarantees recorded on our condensed consolidated balance sheet.

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.
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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 losses of $42 million in the first quarter of 2022 and $34 million in the first quarter of 2021.
For the Three Months Ended
March 31,
2022 2021
(in millions)
Currency Translation Adjustments:
Balance at beginning of period $ (9,097) $ (8,655)
Currency translation adjustments (134)
Tax (expense)/benefit 44  (2)
Other comprehensive earnings/(losses) 50  (136)
Less: other comprehensive (earnings)/loss attributable to noncontrolling interests
Balance at end of period (9,043) (8,782)
Pension and Other Benefit Plans:
Balance at beginning of period $ (1,379) $ (1,874)
Net actuarial gain/(loss) arising during period 44  (1)
Tax (expense)/benefit on net actuarial gain/(loss) —  — 
Losses/(gains) reclassified into net earnings:
Amortization of experience losses and prior service costs (2)
20  35 
Settlement losses and other expenses (2)
Tax expense/(benefit) on reclassifications (3)
(6) (9)
Currency impact 32  41 
Other comprehensive earnings/(losses) 93  69 
Balance at end of period (1,286) (1,805)
Derivative Cash Flow Hedges:
Balance at beginning of period $ (148) $ (161)
Net derivative gains/(losses) 26  (7)
Tax (expense)/benefit on net derivative gain/(loss) (1)
Losses/(gains) reclassified into net earnings:
Interest rate contracts (2)(4)
48 
Tax expense/(benefit) on reclassifications (3)
(23) (1)
Currency impact
Other comprehensive earnings/(losses) 52 
Balance at end of period (96) (159)
Accumulated other comprehensive income
   attributable to Mondelēz International:
Balance at beginning of period $ (10,624) $ (10,690)
Total other comprehensive earnings/(losses) 195  (65)
Less: other comprehensive (earnings)/loss attributable to noncontrolling interests
Other comprehensive earnings/(losses) attributable to Mondelēz International 199  (56)
Balance at end of period $ (10,425) $ (10,746)

(1)These reclassified losses are included in net periodic benefit costs disclosed in Note 10, Benefit Plans.
(2)These amounts include equity method investment transactions recorded within gain on equity method investment transactions.
(3)Taxes reclassified to earnings are recorded within the provision for income taxes.
(4)These reclassified gains or losses are recorded within interest and other expense, net.

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Note 14. Income Taxes

As of the first quarter of 2022, our estimated annual effective tax rate, which excludes discrete tax impacts, was 24.8%. 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 are 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. jurisdictions. The estimated annual effective tax rate also considers the impact of the establishment of a valuation allowance related to a deferred tax asset arising from the anticipated 2022 Ukraine loss. Our effective tax rate for the three months ended March 31, 2022 of 21.9% was favorably impacted by discrete net tax benefits of $62 million primarily driven by the Chipita acquisition, which resulted in the release of a portion of the valuation allowance recorded against the deferred tax asset for the step-up of intangible assets in Switzerland.

As of the first quarter of 2021, our estimated annual effective tax rate, which excluded discrete tax impacts, was 25.2%. 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 are 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. jurisdictions. Our effective tax rate for the three months ended March 31, 2021 of 19.1% was favorably impacted by discrete net tax benefits of $65 million, primarily driven by a $32 million net benefit from the release of liabilities for uncertain tax positions due to expirations of statutes of limitations and audit settlements in several jurisdictions and a $27 million benefit from a U.S. amended tax return filed to reflect new guidance from the U.S. Treasury Department.

Note 15. Earnings per Share

Basic and diluted earnings per share (“EPS”) were calculated as follows:
  For the Three Months Ended
March 31,
  2022 2021
  (in millions, except per share data)
Net earnings $ 861  $ 968 
Noncontrolling interest earnings (6) (7)
Net earnings attributable to Mondelēz International $ 855  $ 961 
Weighted-average shares for basic EPS 1,389  1,412 
Plus incremental shares from assumed conversions
   of stock options and long-term incentive plan shares
10 
Weighted-average shares for diluted EPS 1,398  1,422 
Basic earnings per share attributable to
   Mondelēz International
$ 0.62  $ 0.68 
Diluted earnings per share attributable to
   Mondelēz International
$ 0.61  $ 0.68 

We exclude antidilutive Mondelēz International stock options from our calculation of weighted-average shares for diluted EPS. We excluded antidilutive stock options and performance share units of 2.1 million in the first three months of 2022 and 3.6 million in the first three months of 2021.

Note 16. Segment Reporting

We manufacture and market primarily snack food products, including biscuits, chocolate, gum & candy and various cheese & grocery products, as well as powdered beverage products.

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.

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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,
2022 2021
(in millions)
Net revenues:
Latin America $ 826  $ 669 
AMEA 1,867  1,745 
Europe 2,935  2,847 
North America 2,136  1,977 
Net revenues $ 7,764  $ 7,238 

Earnings before income taxes:
Operating income:
Latin America $ 103  $ 76 
AMEA 272  362 
Europe 377  557 
North America 418  270 
Unrealized gains/(losses) on hedging activities
   (mark-to-market impacts)
27  118 
General corporate expenses (50) (64)
Amortization of intangible assets (32) (38)
Gain on acquisition — 
Acquisition-related costs (21) (7)
Operating income 1,094  1,283 
Benefit plan non-service income 33  44 
Interest and other expense, net (168) (218)
Earnings before income taxes $ 959  $ 1,109 

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.

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Net revenues by product category were:
For the Three Months Ended March 31, 2022
Latin
America
AMEA Europe North
America
Total
(in millions)
Biscuits $ 224  $ 657  $ 951  $ 1,799  $ 3,631 
Chocolate 248  706  1,512  77  2,543 
Gum & Candy 172  203  152  260  787 
Beverages 102  197  32  —  331 
Cheese & Grocery 80  104  288  —  472 
Total net revenues $ 826  $ 1,867  $ 2,935  $ 2,136  $ 7,764 
Three Months Ended March 31, 2021 (1)
Latin
America
AMEA Europe North
America
Total
(in millions)
Biscuits $ 177  $ 583  $ 810  $ 1,736  $ 3,306 
Chocolate 192  670  1,544  63  2,469 
Gum & Candy 131  194  148  178  651 
Beverages 94  180  33  —  307 
Cheese & Grocery 75  118  312  —  505 
Total net revenues $ 669  $ 1,745  $ 2,847  $ 1,977  $ 7,238 

(1)     Our snack product categories include biscuits, chocolate and gum & candy. During 2022, we realigned some of our products between our biscuits and chocolate categories; as such, we reclassified the product category net revenues on a basis consistent with the 2022 presentation.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Description of the Company

We make and sell primarily snacks, including biscuits, chocolate, gum & candy as well as various cheese & grocery and powdered beverage products around the world.

We aim to be the global leader in snacking. Our strategy is to drive long-term growth by focusing on three strategic priorities: accelerating consumer-centric growth, driving operational excellence and creating a winning growth culture. We believe the successful implementation of our strategic priorities and leveraging of our strong foundation of iconic global and local brands, an attractive global footprint, our market leadership in developed and emerging markets, our deep innovation, marketing and distribution capabilities, and our efficiency and sustainability efforts, will drive top- and bottom-line growth, enabling us to continue to create long-term value for our shareholders.

Recent Developments and Significant Items Affecting Comparability

War in Ukraine

In February 2022, Russia began a military invasion of Ukraine. For the safety of our employees, we stopped production and closed our facilities in Ukraine. We are providing all of our employees with compensation and with help in securing shelter in neighboring countries. We have also made cash and in-kind donations to several humanitarian aid organizations in the region.

In March 2022, our two Ukrainian manufacturing facilities in Trostyanets and Vyshhorod were significantly damaged. In connection with the damage to these plants and impairment of other assets, primarily inventory, other plant, property and equipment, as well as increased allowances on our receivables, we recorded $143 million of total charges directly incurred as a result of the war in Ukraine, including an accrual for continued compensation for our employees in Ukraine (see Note 1, Basis of Presentation, to the condensed consolidated financial statements, and refer to Items Affecting Comparability of Financial Results for additional information.) We are increasing operations and providing resources in other primarily European manufacturing and distribution facilities to seek to continue supplying our Ukraine business's customers and consumers across Europe.

As a food company, we continue to work to support the continuity of food supply and provide packaged foods to consumers. We have discontinued new capital investments and suspended our advertising spending in Russia, but as a food company with more than 2,500 employees in Russia, we have not ceased operations given we believe we play a role in the continuity of the food supply. We are required to comply with applicable international sanctions and other measures that have been imposed on Russian entities and additional sanctions and measures are under consideration. We continue to evaluate the situation in Ukraine and Russia and our ability to control our operating activities and businesses on an ongoing basis, and we continue to consolidate both our Ukrainian and Russian subsidiaries. Prior to the onset of the war, Ukraine generated 0.5% and Russia generated 2.9% of 2021 consolidated net revenues.

We provide more information on risks related to the war in Ukraine in our Financial Outlook section and under Item 1A, Risk Factors.

COVID-19

In the third year of the COVID-19 global pandemic, our main priority remains the safety of our employees as well as continuing to help maintain the global food supply. During the pandemic, particularly in 2020 and also in 2021, we experienced an overall increase in demand and revenue growth as consumers increased their food purchases for in-home consumption in many markets, while parts of our business were negatively affected by related lockdowns and restrictions. In late 2021, global supply chain, transportation and labor issues escalated and we experienced significantly higher operating costs, including higher overall raw material, transportation, labor and energy costs that have continued to rise in 2022 as the pandemic continues to affect global markets and operations.

During the first quarter of 2022, our net revenues continued to grow with net revenue growth of 7.3% and Organic Net Revenue growth of 8.6%, compared to the first quarter of 2021. In the first quarter of 2022, we continued to see increased demand primarily for our snack category products and revenue growth in both our emerging and
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developed markets relative to the first quarter of 2021. We continued to also experience significantly higher operating costs. See additional details on our results in our Discussion and Analysis of Historical Results.

During the pandemic, we continued to closely monitor our cash position and cash flows and worked to increase our access to financing. As of March 31, 2022, our liquidity remains strong. During the first quarter of 2022, we funded our acquisition of Chipita (see additional information below) and issued $2 billion of long-term debt, refinancing approximately $2 billion of tendered and redeemed debt (refer to Note 8, Debt and Borrowing Arrangements for details) ahead of a 2022 rising interest rate environment. We generated $1.1 billion of cash from operations, ending the quarter with cash and cash equivalents of $1.9 billion as of March 31, 2022. We also have $9 billion of unused credit facilities available as well as ongoing access to additional financing. Our JDE Peet's and KDP equity method investments also give us additional financial flexibility.

We will continue to proactively manage our business in response to the evolving global economic environment and related uncertainty and business risks as well as prioritize and support our employees and customers. We continue to take steps to mitigate impacts to our supply chain, operations, technology and assets. We intend to continue to execute on our strategic operating plans as the situation evolves. We seek to further our strategic priorities and position the Company to withstand the current uncertainties and emerge stronger.

Chipita Acquisition

On January 3, 2022, we closed on our acquisition of Chipita S.A., which is a strategic complement to our existing snacks portfolio and advances our strategy to become the global leader in broader snacking. We paid cash consideration of €1.3 billion ($1.4 billion), net of cash received, and we assumed and paid down €0.4 billion ($0.4 billion) of Chipita's debt in January for a total purchase price of approximately €1.7 billion ($1.9 billion). Refer to our Discussion and Analysis of Historical Results for more information on the impact of the acquisition on our first quarter 2022 results and refer to Note 2, Acquisitions and Divestitures, for additional details on the acquisition.

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Summary of Results

Net revenues increased 7.3% to $7.8 billion in the first three months of 2022 as compared to the same period in the prior year. In the first quarter of 2022, our net revenue growth continued to reflect increased demand for most of our snack category products in both our emerging and developed markets relative to 2021. Overall, our net revenue growth was driven by higher net pricing, favorable volume/mix and incremental net revenues from acquisitions, partially offset by unfavorable currency translation.

Organic Net Revenue, a non-GAAP financial measure, increased 8.6% to $7.9 billion in the first three months of 2022 as compared to same period in the prior year. During the first three months of 2022, Organic Net Revenue grew due to higher net pricing and favorable volume/mix. Refer to our Discussion and Analysis of Historical Results below for additional information. Organic Net Revenue is on a constant currency basis and excludes revenue from acquisitions and divestitures. We use Organic Net Revenue as it provides improved year-over-year comparability of our underlying operating results (see the definition of Organic Net Revenue and our reconciliation with net revenues within Non-GAAP Financial Measures appearing later in this section).

Diluted EPS attributable to Mondelēz International decreased (10.3)% to $0.61 in the first three months of 2022 as compared to the same period in the prior year. The decrease was primarily driven by incremental costs incurred due to the war in Ukraine, unfavorable year-over-year mark-to-market impacts from currency and commodity derivatives and intangible asset impairment charges incurred in 2022, partially offset by an increase in Adjusted EPS and lower Simplify to Grow program costs.

Adjusted EPS, a non-GAAP financial measure, increased 6.3% to $0.84 in the first three months of 2022 as compared to the same period in the prior year. On a constant currency basis, Adjusted EPS increased 13.9% to $0.90 in the first three months of 2022 as compared to the same periods in the prior year. The increase in Adjusted EPS was driven by operating gains, lower interest expense and fewer shares outstanding, partially offset by unfavorable currency translation, higher taxes primarily due to lower net benefits from non-recurring discrete tax items and lower benefit plan non-service income. Adjusted EPS and Adjusted EPS on a constant currency basis are non-GAAP financial measures. We use these measures as they provide improved year-over-year comparability of our underlying results (see the definition of Adjusted EPS and our reconciliation with diluted EPS within Non-GAAP Financial Measures appearing later in this section).

Financial Outlook

We seek to achieve profitable, long-term growth and manage our business to attain this goal using our key operating metrics: Organic Net Revenue, Adjusted Operating Income and Adjusted EPS. We use these non-GAAP financial metrics and related computations, particularly growth in profit dollars, to evaluate and manage our business and to plan and make near- and long-term operating and strategic decisions. As such, we believe these metrics are useful to investors as they provide supplemental information in addition to our U.S. Generally Accepted Accounting Principles ("U.S. GAAP") financial results. We believe it is useful to provide investors with the same financial information that we use internally to make comparisons of our historical operating results, identify trends in our underlying operating results and evaluate our business. We believe our non-GAAP financial measures should always be considered in relation to our GAAP results. We have provided reconciliations between our GAAP and non-GAAP financial measures in Non-GAAP Financial Measures, which appears later in this section.

In addition to monitoring our key operating metrics, we monitor developments and trends that could impact our revenue and profitability objectives, similar to those we highlighted in our most recently filed Annual Report on Form 10-K for the year ended December 31, 2021 and discussed in the footnotes to our financial statements.

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Market conditions. Snack categories continued to grow in the first quarter of 2022. This is consistent with the latest findings in the third annual State of Snacking report, commissioned by Mondelēz International and issued in January 2022. The research report was conducted in conjunction with consumer poll specialist The Harris Poll and summarizes the findings from interviews with thousands of consumers across 12 countries. The report underscores the growth of snacking worldwide and how behavior, sentiment and routines surrounding food are being reshaped by factors such as the COVID-19 pandemic. Snacking, which was already increasing among consumers, continues to grow as we noted in our latest Annual Report on Form 10-K. Our outlook for future snacks revenue growth remains strong, but we anticipate some volatility in revenues while current events and conditions continue. As the COVID-19 pandemic, war in Ukraine and related impacts continue, we could see shifts in consumer demand and in our sales and product mix that could have a negative impact on our results. We continue to monitor volatility across markets, including global consumer, energy and other commodity, transportation, labor, currency and capital markets. We expect greater inflation, including input cost volatility and a higher aggregate cost environment in 2022, as the war in Ukraine, the pandemic, supply chain disruptions (affecting the availability of raw materials, packaging, transportation and other costs), rising energy costs, labor shortages, adverse weather events and conditions and other factors are expected to continue. Refer also to Commodity Trends and Item 3, Quantitative and Qualitative Disclosures about Market Risk.
War in Ukraine. We expect to experience increased volatility and higher costs in international supply chains and global markets (including energy and other commodities, currencies and capital markets) in connection with the war in Ukraine with related negative impacts to our operating results that we cannot fully predict. We also expect increased inflationary pressures that will adversely impact our operating costs, particularly as the war continues. Demand for our products may also be negatively impacted, particularly in those markets closest to Ukraine or other markets that are more vulnerable to consumer price increases. We have also been expanding operations in other European facilities to continue supplying the majority of our Ukraine business's customers and consumers across Europe. We continue to take action and evaluate additional ways to mitigate risks, including executing business continuity plans to cover products produced in Ukraine and taking actions to adjust product offerings, package sizes and pricing to help address rising costs. While we are working to mitigate negative effects on our business, we may not be able to fully predict or respond to all impacts on a timely basis to prevent adverse impacts to our results. We also continue to monitor the situation in Russia and any risks to our employees, operations or assets. Any ongoing or new developments in the war could have a material negative effect on our business and results in the future.
COVID-19. As described above, we continue to monitor and respond to the COVID-19 pandemic. While its impact is not fully known, it has had a material negative effect on the global and local economies and could have a material negative effect on our business and results in the future, particularly if there are significant adverse changes to consumer demand, product mix or operating costs; significant disruptions to the supply, production or distribution of our products; or deterioration of the credit or financial stability of our customers and other business partners. While we have seen some improvements in many markets where we sell and operate, COVID-19 variants and spikes in infections continue across a number of markets. Disruptions or our failure to effectively respond to them could further increase product or distribution costs and prices and negatively affect operations and results. Although we hedge to mitigate exposures to commodity and other input cost increases, we cannot fully hedge against all cost increases and changes in costs, and our hedging strategies may not protect us from increases in specific raw materials or other costs. We also may not be able to adjust pricing timely or fully, and this may negatively affect our revenue, margins or earnings. If a significant economic or credit deterioration occurs, it could impair credit availability and our ability to raise capital when needed. A significant disruption in the financial markets may also have a negative effect on our derivative counterparties and could impair our banking or other business partners, on whom we rely for access to capital and as counterparties for a number of our derivative contracts. As we continue to manage operations during the pandemic, we will continue to prioritize the safety of our employees and consumers and we may continue to incur increased labor, customer service, commodity, transportation and other costs. We are working to mitigate negative impacts to our business from the COVID-19 pandemic, but we may not be able to fully predict or respond to all impacts on a timely basis to prevent adverse impacts to our results. Any of these and other developments could materially harm our business, results of operations and financial condition.
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Ricolino acquisition. On April 24, 2022, we entered into an agreement with Grupo Bimbo to acquire Ricolino, its confectionery business located primarily in Mexico for a purchase price of approximately $1.3 billion, subject to closing purchase price adjustments. The transaction, which will be funded through a combination of an issuance of debt and cash on hand, is subject to relevant antitrust approvals and closing conditions and is expected to close in late Q3 or early Q4 2022.
Taxes. We continue to monitor existing and potential future tax reform around the world. In March 2022, President Biden sent a proposed 2023 budget to Congress and in November 2021, the U.S. House of Representatives passed a bill that has not yet been acted on by the Senate; both proposals contain significant changes to currently enacted U.S. tax rules. In addition, the Organization of Economic Cooperation and Development (OECD) continues to work toward agreement regarding model rules for a global minimum tax. These proposed U.S. and global legislative changes could have a material effect on us if enacted.
Türkiye, Argentina and currency volatility. During the first quarter of 2022, currency exchange rate volatility increased. We discuss currency impacts on our results in our Discussion and Analysis of Historical Results. As further discussed in Note 1, Basis of Presentation – Currency Translation and Highly Inflationary Accounting, during the first quarter of 2022, we concluded that Türkiye became a highly inflationary economy for accounting purposes. As of April 1, 2022, we expect to apply highly inflationary accounting for our subsidiaries operating in Türkiye and change their functional currency from the Turkish lira to the U.S. dollar. Our operations in Türkiye contributed $43 million, or 0.6% of our condensed consolidated net revenues in the three months ended March 31, 2022. Based on a review of our Turkish lira-denominated monetary assets and liabilities, our operations in Türkiye had an immaterial net monetary liability position as of March 31, 2022. We also continue to apply highly inflationary accounting for our Argentinean subsidiaries. During the three months ended March 31, 2022, we recorded a remeasurement loss of $5 million within selling, general and administrative expenses related to the revaluation of our Argentinean peso denominated net monetary position. The mix of monetary assets and liabilities and the exchange rate to convert Turkish lira and Argentinean pesos to U.S. dollars could change over time, so it is difficult to predict the overall impact of the Türkiye and Argentina highly inflationary accounting on future net earnings.
Gum Portfolio Review. During 2021, we began to conduct a strategic review of our developed market gum business. We continue to conduct the review and expect to have more information to share in mid-2022.
U.K. advertising and promotion ban. In the United Kingdom, a ban on specific types of TV and online advertising of food containing levels of fat, sugar or salt above specified thresholds is expected to go into effect in 2023, and new measures restricting certain promotions and in-store placement of some of those products are expected to go into effect in October 2022. Although we are unable to estimate precisely the impact of the restrictions, they could significantly negatively affect our U.K. results of operations in 2022 and thereafter. In the three months ended March 31, 2022, we generated 9.3% of our consolidated net revenues in the U.K.
Cybersecurity Risks. Global cybersecurity risks continue to increase and we continue to be on heightened alert and dedicate focused resources to network security, backup and disaster recovery and to provide ongoing workforce training and employ security measures to protect our systems and data. We also continue to monitor threats in our environment, including but not limited to the manufacturing environment and operational technologies, as well as adjusting information security controls based on updated threats. While we have taken security measures to protect our systems and data, security measures cannot provide absolute certainty or guarantee that we will be successful in preventing or responding to every breach or disruption on a timely basis.
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Discussion and Analysis of Historical Results

Items Affecting Comparability of Financial Results

The following table includes significant income or (expense) items that affected the comparability of our results of operations and our effective tax rates. Please refer to the notes to the condensed consolidated financial statements indicated below for more information. Refer also to the Consolidated Results of Operations – Net Earnings and Earnings per Share Attributable to Mondelēz International table for the after-tax per share impacts of these items.

    For the Three Months Ended
March 31,
  See Note 2022 2021
    (in millions, except percentages)
Simplify to Grow Program Note 7
Restructuring charges $ (11) $ (88)
Implementation charges (20) (34)
Intangible asset impairment charges Note 5 (78) — 
Mark-to-market gains/(losses) from derivatives (1)
Note 9 28  117 
Acquisitions and divestiture-related costs: Note 2
Acquisition integration costs and
   contingent consideration adjustments (1)
(35) (1)