Mondelez Earnings 2019-06-30

MDLZ 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

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 June 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)

Mondelez International, Inc.

(Exact name of registrant as registered with the SEC)



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 ¨

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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 July 26, 2019, there were 1,442,150,501 shares of the registrant’s Class A Common Stock outstanding.

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Mondelēz International, Inc.

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		Page No.
PART I -	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

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

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

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

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

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 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	31

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	59

Item 4.	Controls and Procedures	60

PART II -	OTHER INFORMATION

Item 1.	Legal Proceedings	61

Item 1A.	Risk Factors	61

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61

Item 6.	Exhibits	62

Signature		63

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.

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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 June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
Net revenues	$	6,062		$	6,112		$	12,600		$	12,877
Cost of sales	3,593			3,572			7,538			7,488
Gross profit	2,469			2,540			5,062			5,389
Selling, general and administrative expenses	1,427			1,904			2,920			3,431
Asset impairment and exit costs	15			111			35			165
Net gain on divestiture	(41		)	—			(41		)	—
Amortization of intangibles	43			44			87			88
Operating income	1,025			481			2,061			1,705
Benefit plan non-service income	(12		)	(15		)	(29		)	(28		)
Interest and other expense, net	101			248			181			328
Earnings before income taxes	936			248			1,909			1,405
Provision for income taxes	(216		)	(15		)	(405		)	(352		)
Net loss on equity method investment transactions	(25		)	—			(2		)	—
Equity method investment net earnings	113			87			226			319
Net earnings	808			320			1,728			1,372
Noncontrolling interest earnings	(1		)	(2		)	(7		)	(8		)
Net earnings attributable to Mondelēz International	$	807		$	318		$	1,721		$	1,364
Per share data:
Basic earnings per share attributable to Mondelēz International	$	0.56		$	0.22		$	1.19		$	0.92
Diluted earnings per share attributable to Mondelēz International	$	0.55		$	0.21		$	1.18		$	0.91

See accompanying notes to the condensed consolidated financial statements.

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Mondelēz International, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Earnings

(in millions of U.S. dollars)

(Unaudited)



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
Net earnings	$	808		$	320		$	1,728		$	1,372
Other comprehensive earnings/(losses), net of tax:
Currency translation adjustment	(33		)	(876		)	157			(666		)
Pension and other benefit plans	54			169			64			163
Derivative cash flow hedges	(62		)	26			(131		)	(20		)
Total other comprehensive earnings/(losses)	(41		)	(681		)	90			(523		)
Comprehensive earnings/(losses)	767			(361		)	1,818			849
less: Comprehensive earnings/(losses) attributable to noncontrolling interests	3			(10		)	8			11
Comprehensive earnings/(losses) attributable to Mondelēz International	$	764		$	(351	)	$	1,810		$	838

See accompanying notes to the condensed consolidated financial statements.

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Mondelēz International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

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

(Unaudited)



	June 30, 2019			December 31, 2018
ASSETS
Cash and cash equivalents	$	1,248		$	1,100
Trade receivables (net of allowances of $38 at June 30, 2019 and $40 at December 31, 2018)	2,179			2,262
Other receivables (net of allowances of $49 at June 30, 2019 and $47 at December 31, 2018)	712			744
Inventories, net	2,731			2,592
Other current assets	966			906
Total current assets	7,836			7,604
Property, plant and equipment, net	8,550			8,482
Operating lease right of use assets	637			—
Goodwill	20,701			20,725
Intangible assets, net	17,943			18,002
Prepaid pension assets	136			132
Deferred income taxes	263			255
Equity method investments	7,095			7,123
Other assets	412			406
TOTAL ASSETS	$	63,573		$	62,729
LIABILITIES
Short-term borrowings	$	3,780		$	3,192
Current portion of long-term debt	3,675			2,648
Accounts payable	5,312			5,794
Accrued marketing	1,638			1,756
Accrued employment costs	611			701
Other current liabilities	2,782			2,646
Total current liabilities	17,798			16,737
Long-term debt	11,764			12,532
Long-term operating lease liabilities	447			—
Deferred income taxes	3,591			3,552
Accrued pension costs	1,057			1,221
Accrued postretirement health care costs	355			351
Other liabilities	2,387			2,623
TOTAL LIABILITIES	37,399			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 June 30, 2019 and December 31, 2018)	—			—
Additional paid-in capital	31,970			31,961
Retained earnings	25,348			24,491
Accumulated other comprehensive losses	(10,541		)	(10,630		)
Treasury stock, at cost (554,035,528 shares at June 30, 2019 and 545,537,923 shares at December 31, 2018)	(20,684		)	(20,185		)
Total Mondelēz International Shareholders’ Equity	26,093			25,637
Noncontrolling interest	81			76
TOTAL EQUITY	26,174			25,713
TOTAL LIABILITIES AND EQUITY	$	63,573		$	62,729

See accompanying notes to the condensed consolidated financial statements.

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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 June 30, 2019
Balances at April 1, 2019	$	—	$	31,933		$	24,954		$	(10,498	)	$	(20,561	)	$	81		$	25,909
Comprehensive earnings/(losses):
Net earnings	—		—			807			—			—			1			808
Other comprehensive earnings/(losses), net of income taxes	—		—			—			(43		)	—			2			(41		)
Exercise of stock options and issuance of other stock awards	—		37			(35		)	—			153			—			155
Common Stock repurchased	—		—			—			—			(276		)	—			(276		)
Cash dividends declared ($0.26 per share)	—		—			(378		)	—			—			—			(378		)
Dividends paid on noncontrolling interest and other activities	—		—			—			—			—			(3		)	(3		)
Balances at June 30, 2019	$	—	$	31,970		$	25,348		$	(10,541	)	$	(20,684	)	$	81		$	26,174
Six Months Ended June 30, 2019
Balances at January 1, 2019	$	—	$	31,961		$	24,491		$	(10,630	)	$	(20,185	)	$	76		$	25,713
Comprehensive earnings/(losses):
Net earnings	—		—			1,721			—			—			7			1,728
Other comprehensive earnings/(losses), net of income taxes	—		—			—			89			—			1			90
Exercise of stock options and issuance of other stock awards	—		9			(111		)	—			442			—			340
Common Stock repurchased	—		—			—			—			(941		)	—			(941		)
Cash dividends declared ($0.52 per share)	—		—			(753		)	—			—			—			(753		)
Dividends paid on noncontrolling interest and other activities	—		—			—			—			—			(3		)	(3		)
Balances at June 30, 2019	$	—	$	31,970		$	25,348		$	(10,541	)	$	(20,684	)	$	81		$	26,174
Three Months Ended June 30, 2018
Balances at April 1, 2018	$	—	$	31,876		$	23,305		$	(9,854	)	$	(18,881	)	$	98		$	26,544
Comprehensive earnings/(losses):
Net earnings	—		—			318			—			—			2			320
Other comprehensive earnings/(losses), net of income taxes	—		—			—			(669		)	—			(12		)	(681		)
Exercise of stock options and issuance of other stock awards	—		37			(9		)	—			42			—			70
Common Stock repurchased	—		—			—			—			(650		)	—			(650		)
Cash dividends declared ($0.22 per share)	—		—			(324		)	—			—			—			(324		)
Dividends paid on noncontrolling interest and other activities	—		—			—			—			—			(4		)	(4		)
Balances at June 30, 2018	$	—	$	31,913		$	23,290		$	(10,523	)	$	(19,489	)	$	84		$	25,275
Six Months Ended June 30, 2018
Balances at January 1, 2018	$	—	$	31,915		$	22,631		$	(9,997	)	$	(18,555	)	$	80		$	26,074
Comprehensive earnings/(losses):
Net earnings	—		—			1,364			—			—			8			1,372
Other comprehensive earnings/(losses), net of income taxes	—		—			—			(526		)	—			3			(523		)
Exercise of stock options and issuance of other stock awards	—		(2		)	(60		)	—			216			—			154
Common Stock repurchased	—		—			—			—			(1,150		)	—			(1,150		)
Cash dividends declared ($0.44 per share)	—		—			(651		)	—			—			—			(651		)
Dividends paid on noncontrolling interest and other activities	—		—			6			—			—			(7		)	(1		)
Balances at June 30, 2018	$	—	$	31,913		$	23,290		$	(10,523	)	$	(19,489	)	$	84		$	25,275

See accompanying notes to the condensed consolidated financial statements.

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Mondelēz International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions of U.S. dollars)

(Unaudited)



	For the Six Months Ended June 30,
	2019			2018
CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES
Net earnings	$	1,728		$	1,372
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization	517			407
Stock-based compensation expense	71			67
U.S. tax reform transition tax	2			86
Deferred income tax provision/(benefit)	36			(15		)
Asset impairments and accelerated depreciation	4			43
Loss on early extinguishment of debt	—			140
Net gain on divestiture	(41		)	—
Net loss on equity method investment transactions	2			—
Equity method investment net earnings	(226		)	(319		)
Distributions from equity method investments	188			151
Other non-cash items, net	(46		)	366
Change in assets and liabilities, net of acquisitions and divestitures:
Receivables, net	135			112
Inventories, net	(145		)	(240		)
Accounts payable	(430		)	(325		)
Other current assets	(20		)	(41		)
Other current liabilities	(638		)	(481		)
Change in pension and postretirement assets and liabilities, net	(91		)	(141		)
Net cash provided by operating activities	1,046			1,182
CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES
Capital expenditures	(465		)	(532

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$51.35	1,441	$73,970

10-Q	2019-06-30	Quarter: 2019-06-30
10-Q	2019-03-31	Quarter: 2019-03-31
10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-Q	2016-03-31	Quarter: 2016-03-31
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-03-31	Quarter: 2015-03-31
10-K	2014-12-31	Annual: 2014-12-31
10-Q	2014-09-30	Quarter: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-Q	2014-03-31	Quarter: 2014-03-31
10-K	2013-12-31	Annual: 2013-12-31

8-K	2019-07-30	Earnings, Exhibits
8-K	2019-07-16	Officers
8-K	2019-07-11	Regulation FD, Exhibits
8-K	2019-05-15	Shareholder Vote
8-K	2019-04-30	Earnings, Exhibits
8-K	2019-02-19	Regulation FD, Exhibits
8-K	2019-02-11	Other Events, Exhibits
8-K	2019-01-30	Earnings, Exhibits
8-K	2018-10-23	Earnings, Officers, Exhibits
8-K	2018-10-16	Regulation FD, Exhibits
8-K	2018-09-06	Exit Costs, Regulation FD, Exhibits
8-K	2018-08-13	Officers, Exhibits
8-K	2018-08-01	Officers, Exhibits
8-K	2018-07-25	Earnings, Exhibits
8-K	2018-07-09	Enter Agreement, Leave Agreement, Exhibits
8-K	2018-06-14	Officers, Exhibits
8-K	2018-05-16	Shareholder Vote
8-K	2018-05-07	Leave Agreement, Other Events, Exhibits
8-K	2018-05-01	Earnings, Exhibits
8-K	2018-04-30	Officers, Exhibits
8-K	2018-04-16	Other Events, Exhibits
8-K	2018-04-13	Regulation FD, Exhibits
8-K	2018-04-02	Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K	2018-03-07	Other Events, Exhibits
8-K	2018-03-05	Other Events, Exhibits
8-K	2018-03-01	Regulation FD, Exhibits
8-K	2018-02-28	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2018-02-20	Regulation FD, Exhibits
8-K	2018-02-08	Officers, Exhibits
8-K	2018-01-31	Earnings, Other Events, Exhibits
8-K	2018-01-29	Other Events

SIVB	Silicon Valley Bank	13,090
CARG	Cargurus	4,430
HR	Healthcare Realty Trust	3,970
WTI	W&T Offshore	729
RFP	Resolute Forest Products	641
CMTL	Comtech Telecommunications	561
SADDP	Saddlebrook Resorts	0
BAR	Graniteshares Gold Trust	0
BNI	Burlington Northern Santa Fe	0
GLF	Gulfmark Offshore	0

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EX-10.2	a63019ex102.htm
EX-31.1	a63019ex311.htm
EX-31.2	a63019ex312.htm
EX-32.1	a63019ex321.htm