SEC Filing | Mondelēz International, Inc.

View:

Download DOC

Download PDF

Download XLS

Download XBRL

Document

Table of Contents

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 September 30, 2019



	☐	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

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.)

Three Parkway North,
Deerfield,	Illinois	60015
(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
2.375% Notes due 2021	MDLZ21	The Nasdaq Stock Market LLC
1.000% Notes due 2022	MDLZ22	The Nasdaq Stock Market LLC
1.625% Notes due 2023	MDLZ23	The Nasdaq Stock Market LLC
1.625% Notes due 2027	MDLZ27	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
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 T 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 T No ¨

Table of Contents

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	T	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 T

At October 25, 2019, there were 1,439,824,371 shares of the registrant’s Class A Common Stock outstanding.

Table of Contents

Mondelēz International, Inc.

Table of Contents



		Page No.
PART I -	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Earnings for the Three and Nine Months Ended September 30, 2019 and 2018	1

	Condensed Consolidated Statements of Comprehensive Earnings for the Three and Nine Months Ended September 30, 2019 and 2018	2

	Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018	3

	Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2019 and 2018	4

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	62

Item 4.	Controls and Procedures	63

PART II -	OTHER INFORMATION

Item 1.	Legal Proceedings	64

Item 1A.	Risk Factors	64

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64

Item 6.	Exhibits	65

Signature		66

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.

Table of Contents

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 September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Net revenues	$	6,355		$	6,288		$	18,955		$	19,165
Cost of sales	3,839			3,874			11,377			11,362
Gross profit	2,516			2,414			7,578			7,803
Selling, general and administrative expenses	1,466			1,508			4,386			4,939
Asset impairment and exit costs	134			125			169			290
Net gain on divestiture	(3		)	—			(44		)	—
Amortization of intangibles	43			44			130			132
Operating income	876			737			2,937			2,442
Benefit plan non-service income	(13		)	(19		)	(42		)	(47		)
Interest and other expense, net	205			86			386			414
Earnings before income taxes	684			670			2,593			2,075
Benefit/(provision) for income taxes	633			(310		)	228			(662		)
Net gain/(loss) on equity method investment transactions	—			757			(2		)	757
Equity method investment net earnings	111			80			337			399
Net earnings	1,428			1,197			3,156			2,569
Noncontrolling interest earnings	(5		)	(3		)	(12		)	(11		)
Net earnings attributable to Mondelēz International	$	1,423		$	1,194		$	3,144		$	2,558
Per share data:
Basic earnings per share attributable to Mondelēz International	$	0.98		$	0.81		$	2.17		$	1.73
Diluted earnings per share attributable to Mondelēz International	$	0.98		$	0.81		$	2.15		$	1.72

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Mondelēz International, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Earnings

(in millions of U.S. dollars)

(Unaudited)



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Net earnings	$	1,428		$	1,197		$	3,156		$	2,569
Other comprehensive earnings/(losses), net of tax:
Currency translation adjustment	(314		)	(193		)	(157		)	(859		)
Pension and other benefit plans	86			46			150			209
Derivative cash flow hedges	43			25			(88		)	5
Total other comprehensive earnings/(losses)	(185		)	(122		)	(95		)	(645		)
Comprehensive earnings/(losses)	1,243			1,075			3,061			1,924
less: Comprehensive earnings/(losses) attributable to noncontrolling interests	(4		)	—			4			11
Comprehensive earnings/(losses) attributable to Mondelēz International	$	1,247		$	1,075		$	3,057		$	1,913

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Mondelēz International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in millions of U.S. dollars, except share data)

(Unaudited)



	September 30, 2019			December 31, 2018
ASSETS
Cash and cash equivalents	$	1,537		$	1,100
Trade receivables (net of allowances of $39 at September 30, 2019 and $40 at December 31, 2018)	2,492			2,262
Other receivables (net of allowances of $48 at September 30, 2019 and $47 at December 31, 2018)	683			744
Inventories, net	2,742			2,592
Other current assets	1,176			906
Total current assets	8,630			7,604
Property, plant and equipment, net	8,316			8,482
Operating lease right of use assets	596			—
Goodwill	20,465			20,725
Intangible assets, net	17,642			18,002
Prepaid pension assets	136			132
Deferred income taxes	696			255
Equity method investments	7,040			7,123
Other assets	374			406
TOTAL ASSETS	$	63,895		$	62,729
LIABILITIES
Short-term borrowings	$	3,253		$	3,192
Current portion of long-term debt	3,674			2,648
Accounts payable	5,322			5,794
Accrued marketing	1,745			1,756
Accrued employment costs	646			701
Other current liabilities	2,480			2,646
Total current liabilities	17,120			16,737
Long-term debt	12,593			12,532
Long-term operating lease liabilities	429			—
Deferred income taxes	3,232			3,552
Accrued pension costs	947			1,221
Accrued postretirement health care costs	355			351
Other liabilities	2,345			2,623
TOTAL LIABILITIES	37,021			37,016
Commitments and Contingencies (Note 13)
EQUITY
Common Stock, no par value (5,000,000,000 shares authorized and 1,996,537,778 shares issued at September 30, 2019 and December 31, 2018)	—			—
Additional paid-in capital	31,998			31,961
Retained earnings	26,345			24,491
Accumulated other comprehensive losses	(10,717		)	(10,630		)
Treasury stock, at cost (555,861,683 shares at September 30, 2019 and 545,537,923 shares at December 31, 2018)	(20,820		)	(20,185		)
Total Mondelēz International Shareholders’ Equity	26,806			25,637
Noncontrolling interest	68			76
TOTAL EQUITY	26,874			25,713
TOTAL LIABILITIES AND EQUITY	$	63,895		$	62,729

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Mondelēz International, Inc. and Subsidiaries

Condensed Consolidated Statements of Equity

(in millions of U.S. dollars, except per share data)

(Unaudited)



	Mondelēz International Shareholders’ Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Earnings/ (Losses)			Treasury Stock			Non-controlling Interest			Total Equity
Three Months Ended September 30, 2019
Balances at July 1, 2019	$	—	$	31,970	$	25,348		$	(10,541	)	$	(20,684	)	$	81		$	26,174
Comprehensive earnings/(losses):
Net earnings	—		—		1,423			—			—			5			1,428
Other comprehensive earnings/(losses), net of income taxes	—		—		—			(176		)	—			(9		)	(185		)
Exercise of stock options and issuance of other stock awards	—		28		(15		)	—			70			—			83
Common Stock repurchased	—		—		—			—			(206		)	—			(206		)
Cash dividends declared ($0.285 per share)	—		—		(411		)	—			—			—			(411		)
Dividends paid on noncontrolling interest and other activities	—		—		—			—			—			(9		)	(9		)
Balances at September 30, 2019	$	—	$	31,998	$	26,345		$	(10,717	)	$	(20,820	)	$	68		$	26,874
Nine Months Ended September 30, 2019
Balances at January 1, 2019	$	—	$	31,961	$	24,491		$	(10,630	)	$	(20,185	)	$	76		$	25,713
Comprehensive earnings/(losses):
Net earnings	—		—		3,144			—			—			12			3,156
Other comprehensive earnings/(losses), net of income taxes	—		—		—			(87		)	—			(8		)	(95		)
Exercise of stock options and issuance of other stock awards	—		37		(126		)	—			512			—			423
Common Stock repurchased	—		—		—			—			(1,147		)	—			(1,147		)
Cash dividends declared ($0.805 per share)	—		—		(1,164		)	—			—			—			(1,164		)
Dividends paid on noncontrolling interest and other activities	—		—		—			—			—			(12		)	(12		)
Balances at September 30, 2019	$	—	$	31,998	$	26,345		$	(10,717	)	$	(20,820	)	$	68		$	26,874
Three Months Ended September 30, 2018
Balances at July 1, 2018	$	—	$	31,913	$	23,290		$	(10,523	)	$	(19,489	)	$	84		$	25,275
Comprehensive earnings/(losses):
Net earnings	—		—		1,194			—			—			3			1,197
Other comprehensive earnings/(losses), net of income taxes	—		—		—			(119		)	—			(3		)	(122		)
Exercise of stock options and issuance of other stock awards	—		19		(30		)	—			67			—			56
Common Stock repurchased	—		—		—			—			(486		)	—			(486		)
Cash dividends declared ($0.26 per share)	—		—		(379		)	—			—			—			(379		)
Dividends paid on noncontrolling interest and other activities	—		—		—			—			—			(9		)	(9		)
Balances at September 30, 2018	$	—	$	31,932	$	24,075		$	(10,642	)	$	(19,908	)	$	75		$	25,532
Nine Months Ended September 30, 2018
Balances at January 1, 2018	$	—	$	31,915	$	22,631		$	(9,997	)	$	(18,555	)	$	80		$	26,074
Comprehensive earnings/(losses):
Net earnings	—		—		2,558			—			—			11			2,569
Other comprehensive earnings/(losses), net of income taxes	—		—		—			(645		)	—			—			(645		)
Exercise of stock options and issuance of other stock awards	—		17		(90		)	—			283			—			210
Common Stock repurchased	—		—		—			—			(1,636		)	—			(1,636		)
Cash dividends declared ($0.70 per share)	—		—		(1,030		)	—			—			—			(1,030		)
Dividends paid on noncontrolling interest and other activities	—		—		6			—			—			(16		)	(10		)
Balances at September 30, 2018	$	—	$	31,932	$	24,075		$	(10,642	)	$	(19,908	)	$	75		$	25,532

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Mondelēz International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions of U.S. dollars)

(Unaudited)



	For the Nine Months Ended September 30,
	2019			2018
CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES
Net earnings	$	3,156		$	2,569
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization	777			613
Stock-based compensation expense	101			92
U.S. tax reform transition tax	2			89
Deferred income tax provision/(benefit)	(738		)	179
Asset impairments and accelerated depreciation	103			120
Loss on early extinguishment of debt	—			140
Net gain on divestiture	(44		)	—
Net loss/(gain) on equity method investment transactions	2			(757		)
Equity method investment net earnings	(337		)	(399		)
Distributions from equity method investments	217			151
Other non-cash items, net	70			344
Change in assets and liabilities, net of acquisitions and divestitures:
Receivables, net	(217		)	(230		)
Inventories, net	(219		)	(431		)
Accounts payable	(259		)	(143		)
Other current assets	(113		)	41
Other current liabilities	(499		)	(320		)
Change in pension and postretirement assets and liabilities, net	(120		)	(173		)
Net cash provided by operating activities	1,882			1,885
CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES
Capital expenditures	(686		)	(810		)
Acquisition, net of cash received	(284		)	(528		)
Proceeds from divestiture, net of disbursements	166			—
Proceeds from sale of property, plant and equipment and other	69			136
Net cash used in investing activities	(735		)	(1,202		)
CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES
Issuances of commercial paper, maturities greater than 90 days	809			2,433
Repayments of commercial paper, maturities greater than 90 days	(2,367		)	(1,494		)
Net issuances of other short-term borrowings	1,637			403
Long-term debt proceeds	1,596			2,948
Long-term debt repaid	(415		)	(1,821		)
Repurchase of Common Stock