SEC Filing | Mondelēz International, Inc.

View:

mdlz-20230331

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, 2023


			☐			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.)

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:

Title 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 ¨

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

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 24, 2023, there were 1,361,853,497 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 Months Ended March 31, 2023 and 2022	1

	Condensed Consolidated Statements of Comprehensive Earnings for the Three Months Ended March 31, 2023 and 2022	2

	Condensed Consolidated Balance Sheets at March 31, 2023 and December 31, 2022	3

	Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2023 and 2022	4

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	50

Item 4.	Controls and Procedures	50

PART II -	OTHER INFORMATION

Item 1.	Legal Proceedings	52

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52

Item 6.	Exhibits	53

Signature		54

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 March 31,
	2023		2022
Net revenues	$	9,166	$	7,764
Cost of sales	5,720		4,781
Gross profit	3,446		2,983
Selling, general and administrative expenses	1,855		1,693
Asset impairment and exit costs	47		164

Amortization of intangible assets	39		32
Operating income	1,505		1,094
Benefit plan non-service income	(19)		(33)
Interest and other expense, net	95		168
Gain on marketable securities	(796)		—
Earnings before income taxes	2,225		959
Income tax provision	(658)		(210)
Gain/(loss) on equity method investment transactions	487		(5)
Equity method investment net earnings	35		117
Net earnings	2,089		861
Noncontrolling interest earnings	(8)		(6)
Net earnings attributable to Mondelēz International	$	2,081	$	855
Per share data:
Basic earnings per share attributable to Mondelēz International	$	1.52	$	0.62
Diluted earnings per share attributable to Mondelēz International	$	1.52	$	0.61

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 March 31,
	2023		2022
Net earnings	$	2,089	$	861
Other comprehensive earnings/(losses), net of tax:
Currency translation adjustment	151		50
Pension and other benefit plans	(6)		93
Derivative cash flow hedges	(10)		52
Total other comprehensive earnings/(losses)	135		195
Comprehensive earnings/(losses)	2,224		1,056
less: Comprehensive earnings/(losses) attributable to noncontrolling interests	10		2
Comprehensive earnings/(losses) attributable to Mondelēz International	$	2,214	$	1,054

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)


	March 31, 2023		December 31, 2022
ASSETS
Cash and cash equivalents	$	1,917	$	1,923
Trade receivables (net of allowances of $60 at March 31, 2023 and $45 at December 31, 2022)	3,502		3,088
Other receivables (net of allowances of $65 at March 31, 2023 and $59 at December 31, 2022)	810		819
Inventories, net	3,627		3,381
Other current assets	2,815		880
Total current assets	12,671		10,091
Property, plant and equipment, net	9,131		9,020
Operating lease right of use assets	657		660
Goodwill	23,604		23,450
Intangible assets, net	19,810		19,710
Prepaid pension assets	1,065		1,016
Deferred income taxes	451		473
Equity method investments	3,397		4,879
Other assets	2,000		1,862
TOTAL ASSETS	$	72,786	$	71,161
LIABILITIES
Short-term borrowings	$	2,461	$	2,299
Current portion of long-term debt	1,185		383
Accounts payable	7,885		7,562
Accrued marketing	2,668		2,370
Accrued employment costs	785		949
Other current liabilities	3,547		3,168
Total current liabilities	18,531		16,731
Long-term debt	18,556		20,251
Long-term operating lease liabilities	508		514
Deferred income taxes	3,648		3,437
Accrued pension costs	387		403
Accrued postretirement health care costs	214		217
Other liabilities	2,668		2,688
TOTAL LIABILITIES	44,512		44,241
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, 2023 and December 31, 2022)	—		—
Additional paid-in capital	32,112		32,143
Retained earnings	33,040		31,481
Accumulated other comprehensive losses	(10,814)		(10,947)
Treasury stock, at cost (634,260,938 shares at March 31, 2023 and 630,646,687 shares at December 31, 2022)	(26,110)		(25,794)
Total Mondelēz International Shareholders’ Equity	28,228		26,883
Noncontrolling interest	46		37
TOTAL EQUITY	28,274		26,920
TOTAL LIABILITIES AND EQUITY	$	72,786	$	71,161

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 March 31, 2023
Balances at January 1, 2023	$	—	$	32,143	$	31,481	$	(10,947)	$	(25,794)	$	37	$	26,920
Comprehensive earnings/(losses):
Net earnings	—		—		2,081		—		—		8		2,089
Other comprehensive earnings/(losses), net of income taxes	—		—		—		133				2		135
Exercise of stock options and issuance of other stock awards	—		(31)		(8)		—		93		—		54
Common Stock repurchased	—		—		—		—		(409)		—		(409)
Cash dividends declared ($0.390 per share)	—		—		(528)		—		—		—		(528)
Dividends paid on noncontrolling interest and other activities	—		—		14		—		—		(1)		13
Balances at March 31, 2023	$	—	$	32,112	$	33,040	$	(10,814)	$	(26,110)	$	46	$	28,274










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		—		—		6		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 ($0.315 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

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 Three Months Ended March 31,
	2023		2022
CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES
Net earnings	$	2,089	$	861
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization	303		275
Stock-based compensation expense	38		24
Deferred income tax provision/(benefit)	199		(70)
Asset impairments and accelerated depreciation	18		155
Loss on early extinguishment of debt	—		38

(Gain)/loss on equity method investment transactions	(487)		5
Equity method investment net earnings	(35)		(117)
Distributions from equity method investments	102		107

Unrealized gain on derivative contracts	(67)		(13)
Unrealized gain on marketable securities	(787)		—
Non-cash items, net	25		—
Change in assets and liabilities, net of acquisitions and divestitures:
Receivables, net	(590)		(517)
Inventories, net	(232)		(81)
Accounts payable	216		397
Other current assets	(137)		(104)
Other current liabilities	517		230
Change in pension and postretirement assets and liabilities, net	(49)		(59)
Net cash provided by operating activities	1,123		1,131
CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES
Capital expenditures	(223)		(167)
Acquisitions, net of cash received	1		(1,418)
Proceeds from divestitures including equity method investments	1,034		66
(Payments)/proceeds from investments and derivative settlements	(176)		78
Net cash provided by/(used in) investing activities	636		(1,441)
CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES


Net issuances/(repayments) of short-term borrowings	156		217
Long-term debt proceeds	—		1,991
Long-term debt repayments	(1,036)		(2,306)
Repurchases of Common Stock	(399)		(751)
Dividends paid	(529)		(491)
Other	51		60
Net cash used in financing activities	(1,757)		(1,280)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(11)		(10)
Cash, cash equivalents and restricted cash:
(Decrease)/Increase	(9)		(1,600)
Balance at beginning of period	1,948		3,553
Balance at end of period	$	1,939	$	1,953

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Mondelēz International, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Basis of Presentation

Our interim condensed consolidated financial statements are unaudited. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted. It is management’s opinion that these financial statements include all normal and recurring adjustments necessary for a fair presentation of our results of operations, financial position and cash flows. Results of operations for any interim period are not necessarily indicative of future or annual results. For a complete set of consolidated financial statements and related notes, refer to our Annual Report on Form 10-K for the year ended December 31, 2022.

Principles of Consolidation

The condensed consolidated financial statements include Mondelēz International, Inc. as well as our wholly owned and majority owned subsidiaries, except our Venezuelan subsidiaries that were deconsolidated in 2015. All intercompany transactions are eliminated. The noncontrolling interest represents the noncontrolling investors' interests in the results of subsidiaries that we control and consolidate. We account for investments over which we exercise significant influence under the equity method of accounting. Investments with readily determinable fair values for which we do not have the ability to exercise significant influence are measured at fair value.

War in Ukraine

In February 2022, Russia began a military invasion of Ukraine and we closed our operations and facilities in Ukraine. In March 2022, our two Ukrainian manufacturing facilities in Trostyanets and Vyshhorod were significantly damaged. During the first quarter of 2022, we evaluated and impaired these and other related assets. We recorded $143 million of total expenses ($145 million after-tax) incurred as a direct result of the war. We reversed $22 million during the remainder of 2022 and $3 million during the first quarter of 2023 of previously recorded charges primarily as a result of higher than expected collection of trade receivables and inventory recoveries. We continue to make targeted repairs on both our plants and have partially reopened and restarted limited production in both plants. We also continue to support our Ukraine employees, including paying salaries to those not yet able to return to work until full production returns. We continue to consolidate both our Ukrainian and Russian subsidiaries and continue to evaluate our ability to control our operating activities and businesses on an ongoing basis. We base our estimates on historical experience, expectations of future impacts and other assumptions that we believe are reasonable. Given the uncertainty of the ongoing effects of the war in Ukraine, and its impact on the global economic environment, our estimates could be significantly different than future performance.

Highly Inflationary Accounting

Within our consolidated entities, Argentina and Türkiye (Turkey) are accounted for as highly inflationary economies. Argentina and Türkiye represent 1.5% and 1.0% of our consolidated net revenues with remeasurement losses of $11 million and $1 million for the period ended March 31, 2023, respectively.

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 within other current assets of $22 million as of March 31, 2023 and $25 million as of December 31, 2022. Total cash, cash equivalents and restricted cash was $1,939 million as of March 31, 2023 and $1,948 million as of December 31, 2022.

Table of Contents

Allowances for Credit Losses

Changes in allowances for credit losses consisted of:


	Allowance for Trade Receivables		Allowance for Other Current Receivables		Allowance for Long-Term Receivables
	(in millions)
Balance at January 1, 2023	$	(45)	$	(59)	$	(14)
Current period provision for expected credit losses	(16)		(5)		—
Write-offs charged against the allowance	2		—		—

Currency	(1)		(1)		—
Balance at March 31, 2023	$	(60)	$	(65)	$	(14)

Transfers of Financial Assets

The outstanding principal amount of receivables under our uncommitted revolving non-recourse accounts receivable factoring arrangements amounted to $858 million as of March 31, 2023 and $516 million as of December 31, 2022. The incremental cost of factoring receivables under this arrangement was not material for all periods presented. The proceeds from the sales of receivables are included in cash from operating activities in the condensed consolidated statements of cash flows.

Non-Cash Lease Transactions

We recorded $39 million in operating lease and $27 million in finance lease right-of-use assets obtained in exchange for lease obligations during the three months ended March 31, 2023 and $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.

Supply Chain Financing

As part of our continued efforts to improve our working capital efficiency, we have worked with our suppliers over the past several years to optimize our terms and conditions, which include the extension of payment terms. Our current payment terms with a majority of our suppliers are from 30 to 180 days, which we deem to be commercially reasonable. We also facilitate voluntary supply chain financing (“SCF”) programs through several participating financial institutions. Under these programs, our suppliers, at their sole discretion, determine invoices that they want to sell to participating financial institutions. Our suppliers’ voluntary inclusion of invoices in SCF programs has no bearing on our payment terms or amounts due. Our responsibility is limited to making payments based upon the agreed-upon contractual terms. No guarantees are provided by the Company or any of our subsidiaries under the SCF programs and we have no economic interest in the suppliers’ decision to participate in the SCF programs. Amounts due to our suppliers that elected to participate in the SCF program are included in accounts payable in our consolidated balance sheet. We have been informed by the participating financial institutions that as of March 31, 2023 and December 31, 2022, $2.5 billion and $2.4 billion, respectively, of our outstanding accounts payable related to suppliers that participate in the SCF programs.

New Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) which requires companies to recognize and measure customer contract assets and contract liabilities acquired in a business combination as if the acquiring company originated the related revenue contracts. Prior to adopting this ASU, acquired contract assets and liabilities were measured at fair value. This ASU is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. We adopted this standard in the first quarter of 2023 and it did not have an impact on our consolidated financial statements.

In September 2022, the FASB issued an ASU which enhances the transparency of supplier finance programs by requiring additional disclosure about the key terms of these programs and a roll-forward of the related obligations to understand the effects of these programs on working capital, liquidity and cash flows. The ASU is effective for fiscal years beginning after December 15, 2022, except for the roll-forward requirement, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. We adopted, with the exception of the roll-forward requirement, this standard in the first quarter of 2023 and it did not have a material impact on our consolidated financial statements and related disclosures.

Table of Contents

Note 2. Acquisitions and Divestitures

Acquisitions

Ricolino

On November 1, 2022, we acquired 100% of the equity of Grupo Bimbo's confectionery business, Ricolino, located primarily in Mexico. The acquisition of Ricolino builds on our continued prioritization of fast-growing snacking segments in key geographies. The cash consideration paid for Ricolino totaled $26 billion Mexican pesos ($1.3 billion), net of cash received.

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


	(in millions)
Cash	$	22
Receivables	86
Inventory	70
Other current assets	3
Property, plant and equipment	144
Operating leases right of use assets	17

Definite-life intangible assets	218
Indefinite-life intangible assets	339
Goodwill	714

Assets acquired	$	1,613
Current liabilities	177
Deferred tax liability	77
Operating lease liabilities	17
Other liabilities	12
Total purchase price	$	1,330
Less: cash received	(22)
Net Cash Paid	$	1,308

Within identifiable intangible assets, we allocated $339 million to trade names, which have an indefinite life. The fair value for the Ricolino, Dulces Vero, LaCorona and Coronado trade names were determined using the Relief from Royalty method, a form of the income approach, at the acquisition date. The fair value measurement of indefinite-life intangible assets are based on significant unobservable inputs, and thus represent Level 3 inputs. Significant assumptions used in assessing the fair values of intangible assets include estimates of future sales, discount and royalty rates.

Goodwill was determined as the excess of the purchase price over the fair value of the net assets acquired and arises principally as a result of expansion opportunities and synergies across both new and legacy product categories in Mexico. None of the goodwill recognized is expected to be deductible for income tax purposes. All of the goodwill was assigned to the Latin American operating segment.

Ricolino added incremental net revenues of $171 million and operating income of $9 million during the three months ended March 31, 2023. We incurred acquisition integration costs of $6 million during the three months ended March 31, 2023.

Clif Bar

On August 1, 2022, we acquired 100% of the equity of Clif Bar & Company (“Clif Bar”), a leading U.S. maker of nutritious energy bars with organic ingredients. The acquisition expands our global snack bar business and complements our refrigerated snacking and performance nutrition bar portfolios. The total cash payment of $2.9 billion includes purchase price consideration of $2.6 billion, net of cash received, and one-time compensation expense of $0.3 billion related to the buyout of the non-vested employee stock ownership plan ("ESOP") shares. This compensation expense is considered an acquisition-related cost. The acquisition of Clif Bar includes a contingent consideration arrangement that may require us to pay additional consideration to the sellers for achieving certain revenue and earnings targets in 2025 and 2026 that exceed our base financial projections for the business

Table of Contents

implied in the upfront purchase price. The possible payments range from zero to a maximum total of $2.4 billion, with higher payouts requiring the achievement of targets that generate rates of returns in excess of the base financial projections. The estimated fair value of the contingent consideration obligation at the acquisition date was $440 million determined using a Monte Carlo simulation. Significant assumptions used in assessing the fair value of the liability include financial projections for net revenue, gross profit, and earnings before interest, tax, depreciation and amortization ("EBITDA"), as well as discount and volatility rates.

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


	(in millions)
Cash	$	99
Receivables	76
Inventory	124
Other current assets	9
Property, plant and equipment	186
Operating leases right of use assets	22
Deferred tax assets	92

Definite-life intangible assets	200
Indefinite-life intangible assets	1,450
Goodwill	1,020
Other assets	11
Assets acquired	$	3,289
Current liabilities	159

Contingent consideration	440
Other liabilities	15
Total purchase price	$	2,675
Less: cash received	(99)
Net Cash Paid	$	2,576

Within identifiable intangible assets, we allocated $1,450 million to trade names, which have an indefinite life. The fair value for the Clif and Luna trade names, were determined using the Relief from Royalty method, a form of the income approach, at the acquisition date. The fair value measurement of intangible assets are based on significant unobservable inputs, and thus represent Level 3 inputs. Significant assumptions used in assessing the fair values of intangible assets include forecasted future revenue, discount and royalty rates. We expect to generate a meaningful cash tax benefit over time from the amortization of acquisition-related intangibles.

Goodwill was determined as the excess of the purchase price over the fair value of the net assets acquired and arises principally as a result of expansion opportunities and synergies across the U.S. and other key markets. All of the goodwill was assigned to the North America operating segment. Tax deductible goodwill is expected to be $1.4 billion and will be amortized.

Clif Bar added incremental net revenues of $218 million and operating income of $35 million during the three months ended March 31, 2023. We incurred acquisition integration costs of $39 million during the three months ended March 31, 2023. These acquisition integration costs include an increase to the contingent consideration liability due to changes to underlying assumptions. Refer to Note 9, Financial Instruments for additional information.

Chipita

On January 3, 2022, we acquired 100% of the equity of Chipita Global S.A. (“Chipita”), a leading croissants and baked snacks company in the Central and Eastern European markets. The acquisition of Chipita offers a strategic complement to our existing portfolio and advances our strategy to become the global leader in broader snacking. The cash consideration paid for Chipita totaled €1.2 billion ($1.4 billion), net of cash received, plus the assumption of Chipita’s debt of €0.5 billion ($0.4 billion) for a total purchase price of €1.7 billion ($1.8 billion).

Table of Contents

We have recorded a purchase price allocation of net tangible and intangible assets acquired and liabilities assumed as follows:


	(in millions)
Cash	$	52
Receivables	102
Inventory	60
Other current assets	3
Property, plant and equipment	379
Finance leases right of use assets	8
Definite-life intangible assets	48
Indefinite-life intangible assets	686
Goodwill	795
Other assets	77
Assets acquired	$	2,210
Current liabilities	133
Deferred tax liability	158
Finance lease liabilities	8
Other liabilities	21
Total purchase price	$	1,890
Less: long-term debt	(436)
Less: cash received	(52)
Net Cash Paid	$	1,402

Within identifiable intangible assets, we allocated $686 million to trade names, which have an indefinite life. The fair value for the 7 Days trade name, which is the primary asset acquired, was determined using the multi-period excess earnings method under the income approach at the acquisition date. The fair value measurements of intangible assets are based on significant unobservable inputs, and thus represent 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 operating segment.

We incurred acquisition integration costs of $6 million during the three months ended March 31, 2023. We incurred acquisition-related costs of $21 million and acquisition integration costs of $35 million during the three months ended March 31, 2022.

Table of Contents

Divestitures

Developed Market Gum - Held for Sale

On December 16, 2022, Mondelēz entered into an agreement to sell its developed market gum business in North America and Europe for $1.4 billion. It is expected to close in Q4 2023, subject to relevant antitrust approvals and closing conditions. In connection with these agreements, we concluded that the disposal group met the held for sale criteria as of December 31, 2022. The disposal group is included as part of the North America and Europe operating segments.

We incurred divestiture-related costs of $30 million during the three months ended March 31, 2023.

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


	As of March 31, 2023		As of December 31, 2022
	(in millions)
Inventories, net	$	90	$	79
Current assets held for sale (1)	$	90	$	79
Property, plant and equipment, net	161		159
Goodwill	292		292
Intangible assets, net	677		671
Noncurrent assets held for sale (2)	$	1,130	$	1,122

Accrued employment costs	6		4
Current liabilities held for sale (3)	$	6	$	4
Deferred income taxes	13		15
Noncurrent liabilities held for sale (4)	$	13	$	15

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

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

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

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

Note 3. Inventories

Inventories consisted of the following:


	As of March 31, 2023		As of December 31, 2022
	(in millions)
Raw materials	$	1,096	$	1,031
Finished product	2,680		2,501
	3,776		3,532
Inventory reserves	(149)		(151)
Inventories, net	$	3,627	$	3,381

Table of Contents

Note 4. Property, Plant and Equipment

Property, plant and equipment consisted of the following:


	As of March 31, 2023		As of December 31, 2022
	(in millions)
Land and land improvements	$	378	$	378
Buildings and building improvements	3,319		3,250
Machinery and equipment	12,050		11,724
Construction in progress	825		879
	16,572		16,231
Accumulated depreciation	(7,441)		(7,211)
Property, plant and equipment, net	$	9,131	$	9,020

For the three months ended March 31, 2023, capital expenditures of $223 million excluded $290 million of accrued capital expenditures remaining unpaid at March 31, 2023 and included payment for a portion of the $324 million of capital expenditures that were accrued and unpaid at December 31, 2022. 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.

Note 5. Goodwill and Intangible Assets

Goodwill

Changes in goodwill consisted of:


	Latin America		AMEA		Europe		North America		Total
January 1, 2022	$	674	$	3,365	$	7,830	$	10,109	$	21,978
Currency	41		(233)		(550)		(15)		(757)
Acquisitions (1)	714		—		795		1,020		2,529
Held for Sale (1)	—		—		(66)		(226)		(292)
Divestitures	(8)		—		—		—		(8)
Balance at December 31, 2022	$	1,421	$	3,132	$	8,009	$	10,888	$	23,450
Currency	95		(18)		73		4		154


Balance at March 31, 2023	$	1,516	$	3,114	$	8,082	$	10,892	$	23,604

(1)Refer to Note 2, Acquisitions and Divestitures for more information.

Intangible Assets

Intangible assets consisted of the following:


	As of March 31, 2023						As of December 31, 2022
	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Definite-life intangible assets	$	3,389	$	(2,110)	$	1,279	$	3,354	$	(