Item 8. Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Mondelēz International, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Mondelēz International, Inc. and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of earnings, comprehensive earnings, equity and cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021**,** and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Report of Management on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in the Report of Management on Internal Control Over Financial Reporting, management has excluded Chipita Global S.A. (“Chipita”), Clif Bar & Company (“Clif Bar”), and Ricolino from its assessment of internal control over financial reporting as of December 31, 2022 because they were acquired by the Company in purchase business combinations during 2022. We have also excluded Chipita, Clif Bar, and Ricolino from our audit of internal control over financial reporting. Chipita, Clif Bar, and Ricolino are wholly-owned subsidiaries whose total assets and total net revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent 1.2% and 3.5%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2022.

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Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Indefinite-Life Intangible Assets Annual Impairment Assessments for Certain Brand Names

As described in Notes 1 and 6 to the consolidated financial statements, the Company’s consolidated indefinite-life intangible asset balance was $18.4 billion as of December 31, 2022, which consists principally of brand names. At least annually management assesses indefinite-life intangible assets for impairment and if significant potential impairment risk exists for a specific asset, management quantitatively tests the asset for impairment by comparing its estimated fair value with its carrying value. Management estimates fair value using several accepted valuation methods, including relief from royalty, excess earnings and excess margin, that utilize estimates of future sales, earnings growth rates, royalty rates and discount rates to determine a brand name’s fair value.

The principal considerations for our determination that performing procedures relating to the indefinite-life intangible assets annual impairment assessments for certain brand names is a critical audit matter are (i) the significant judgment by management when developing the fair value of the indefinite-life intangible assets for certain brand names; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to estimates of future sales, earnings growth rates, royalty rates, and discount rates for certain brand names; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the indefinite-life intangible assets impairment assessments, including controls over the annual valuation of certain brand names. These procedures also included, among others (i) testing management’s process for developing the fair value of the indefinite-life intangible assets for certain brand names; (ii) evaluating the appropriateness of the valuation methods; (iii) testing the completeness and accuracy of underlying data used in the valuation methods; and (iv) evaluating the reasonableness of the significant assumptions used by management related to estimates of future sales, earnings growth rates, royalty rates, and discount rates. Evaluating management’s significant assumptions related to estimates of future sales and earnings growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the certain brand names; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with

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specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s valuation methods and (ii) the reasonableness of the royalty rate and discount rate significant assumptions.

Acquisition of Clif Bar - Valuation of the Clif Trade Name

As described in Note 2 to the consolidated financial statements, on August 1, 2022, the Company acquired Clif Bar for purchase price consideration of $2.6 billion. Of the acquired indefinite life intangible assets, management allocated $1.45 billion to trade names, which primarily relate to the Clif trade name. The fair value for the Clif trade name was determined using the relief from royalty method. Significant assumptions used by management in assessing the fair value include estimates of future sales, discount and royalty rates.

The principal considerations for our determination that performing procedures relating to the valuation of the Clif trade name acquired in the acquisition of Clif Bar is a critical audit matter are (i) the significant judgment by management when developing the fair value of the Clif trade name acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to estimates of future sales, discount and royalty rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statement. These procedures included testing the effectiveness of controls related to acquisition accounting, including controls over management’s valuation of the Clif trade name acquired and controls over the development of significant assumptions related to estimates of future sales, discount and royalty rates. These procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value of the Clif trade name acquired; (iii) testing the completeness and accuracy of the underlying data used in the relief from royalty method; and (iv) evaluating the reasonableness of the significant assumptions used by management related to estimates of future sales, discount and royalty rates. Evaluating management’s significant assumption related to estimates of future sales involved evaluating whether the assumption used by management was reasonable considering (i) the current and past performance of the Clif Bar business; (ii) the consistency with external market and industry data; and (iii) whether this assumption was consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s relief from royalty method and (ii) the reasonableness of the discount and royalty rate significant assumptions.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 3, 2023

We have served as the Company’s auditor since 2001.

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Mondelēz International, Inc. and Subsidiaries

Consolidated Statements of Earnings

For the Years Ended December 31

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


	2022		2021		2020
Net revenues	$	31,496	$	28,720	$	26,581
Cost of sales	20,184		17,466		16,135
Gross profit	11,312		11,254		10,446
Selling, general and administrative expenses	7,384		6,263		6,098
Asset impairment and exit costs	262		212		301
Net gain on acquisition and divestitures	—		(8)		—

Amortization of intangible assets	132		134		194
Operating income	3,534		4,653		3,853
Benefit plan non-service income	(117)		(163)		(138)
Interest and other expense, net	423		447		608
Earnings before income taxes	3,228		4,369		3,383
Income tax provision	(865)		(1,190)		(1,224)
Gain/(loss) on equity method investment transactions	(22)		742		989
Equity method investment net earnings	385		393		421
Net earnings	2,726		4,314		3,569
Noncontrolling interest earnings	(9)		(14)		(14)
Net earnings attributable to Mondelēz International	$	2,717	$	4,300	$	3,555
Per share data:
Basic earnings per share attributable to Mondelēz International	$	1.97	$	3.06	$	2.48
Diluted earnings per share attributable to Mondelēz International	$	1.96	$	3.04	$	2.47

See accompanying notes to the consolidated financial statements.

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Mondelēz International, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Earnings

For the Years Ended December 31

(in millions of U.S. dollars)


	2022		2021		2020
Net earnings	$	2,726	$	4,314	$	3,569
Other comprehensive earnings/(losses), net of tax:
Currency translation adjustment	(725)		(458)		(322)
Pension and other benefit plans	274		495		(153)
Derivative cash flow hedges	114		13		52
Total other comprehensive earnings/(losses)	(337)		50		(423)
Comprehensive earnings	2,389		4,364		3,146
less: Comprehensive earnings/(losses) attributable to noncontrolling interests	(5)		(2)		27
Comprehensive earnings attributable to Mondelēz International	$	2,394	$	4,366	$	3,119

See accompanying notes to the consolidated financial statements.

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Mondelēz International, Inc. and Subsidiaries

Consolidated Balance Sheets, as of December 31

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


	2022		2021
ASSETS
Cash and cash equivalents	$	1,923	$	3,546
Trade receivables (net of allowances of $45 at December 31, 2022 and $37 at December 31, 2021)	3,088		2,337
Other receivables (net of allowances of $59 at December 31, 2022 and $49 at December 31, 2021)	819		851
Inventories, net	3,381		2,708
Other current assets	880		900
Total current assets	10,091		10,342
Property, plant and equipment, net	9,020		8,658
Operating lease right of use assets	660		613
Goodwill	23,450		21,978
Intangible assets, net	19,710		18,291
Prepaid pension assets	1,016		1,009
Deferred income taxes	473		541
Equity method investments	4,879		5,289
Other assets	1,862		371
TOTAL ASSETS	$	71,161	$	67,092
LIABILITIES
Short-term borrowings	$	2,299	$	216
Current portion of long-term debt	383		1,746
Accounts payable	7,562		6,730
Accrued marketing	2,370		2,097
Accrued employment costs	949		822
Other current liabilities	3,168		2,397
Total current liabilities	16,731		14,008
Long-term debt	20,251		17,550
Long-term operating lease liabilities	514		459
Deferred income taxes	3,437		3,444
Accrued pension costs	403		681
Accrued postretirement health care costs	217		301
Other liabilities	2,688		2,326
TOTAL LIABILITIES	44,241		38,769
Commitments and Contingencies (Note 14)
EQUITY
Common Stock, no par value (5,000,000,000 shares authorized and 1,996,537,778 shares issued at December 31, 2022 and December 31, 2021)	—		—
Additional paid-in capital	32,143		32,097
Retained earnings	31,481		30,806
Accumulated other comprehensive losses	(10,947)		(10,624)
Treasury stock, at cost (630,646,687 shares at December 31, 2022 and 604,907,239 shares at December 31, 2021)	(25,794)		(24,010)
Total Mondelēz International Shareholders’ Equity	26,883		28,269
Noncontrolling interest	37		54
TOTAL EQUITY	26,920		28,323
TOTAL LIABILITIES AND EQUITY	$	71,161	$	67,092

See accompanying notes to the consolidated financial statements.

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Mondelēz International, Inc. and Subsidiaries

Consolidated Statements of Equity

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


	Mondelēz International Shareholders’ Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Earnings/ (Losses)		Treasury Stock		Non-controlling Interest		Total Equity
Balances at January 1, 2020	$	—	$	32,019	$	26,615	$	(10,254)	$	(21,139)	$	76	$	27,317
Comprehensive earnings/(losses):
Net earnings	—		—		3,555		—		—		14		3,569
Other comprehensive earnings/ (losses), net of income taxes	—		—		—		(436)		—		13		(423)
Exercise of stock options and issuance of other stock awards	—		51		(59)		—		336		—		328
Common Stock repurchased	—		—		—		—		(1,401)		—		(1,401)
Cash dividends declared ($1.20 per share)	—		—		(1,718)		—		—		—		(1,718)
Dividends paid on noncontrolling interest and other activities	—		—		9		—		—		(27)		(18)
Balances at December 31, 2020	$	—	$	32,070	$	28,402	$	(10,690)	$	(22,204)	$	76	$	27,654
Comprehensive earnings/(losses):
Net earnings	—		—		4,300		—		—		14		4,314
Other comprehensive earnings/ (losses), net of income taxes	—		—		—		66		—		(16)		50
Exercise of stock options and issuance of other stock awards	—		27		(34)		—		290		—		283
Common Stock repurchased	—		—		—		—		(2,096)		—		(2,096)
Cash dividends declared ($1.33 per share)	—		—		(1,867)		—		—		—		(1,867)
Dividends paid on noncontrolling interest and other activities	—		—		5		—		—		(20)		(15)
Balances at December 31, 2021	$	—	$	32,097	$	30,806	$	(10,624)	$	(24,010)	$	54	$	28,323
Comprehensive earnings/(losses):
Net earnings	—		—		2,717		—		—		9		2,726
Other comprehensive earnings/ (losses), net of income taxes	—		—		—		(323)		—		(14)		(337)
Exercise of stock options and issuance of other stock awards	—		46		(20)		—		216		—		242
Common Stock repurchased	—		—		—		—		(2,000)		—		(2,000)
Cash dividends declared ($1.47 per share)	—		—		(2,025)		—		—		—		(2,025)
Dividends paid on noncontrolling interest and other activities	—		—		3		—		—		(12)		(9)
Balances at December 31, 2022	$	—	$	32,143	$	31,481	$	(10,947)	$	(25,794)	$	37	$	26,920

See accompanying notes to the consolidated financial statements.

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Mondelēz International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31

(in millions of U.S. dollars)


	2022		2021		2020
CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES
Net earnings	$	2,726	$	4,314	$	3,569
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization	1,107		1,113		1,116
Stock-based compensation expense	120		121		126

Deferred income tax provision/(benefit)	(42)		205		(70)
Asset impairments and accelerated depreciation	233		128		136
Loss on early extinguishment of debt	38		110		185
Net gain on acquisition and divestitures	—		(8)		—
Loss/(gain) on equity method investment transactions	22		(742)		(989)
Equity method investment net earnings	(385)		(393)		(421)
Distributions from equity method investments	184		172		246
Mark-to-market and other non-cash items, net	426		(230)		243
Change in assets and liabilities, net of acquisitions and divestitures:
Receivables, net	(719)		(197)		59
Inventories, net	(635)		(170)		(24)
Accounts payable	715		702		436
Other current assets	(286)		(169)		(207)
Other current liabilities	630		(502)		(208)
Change in pension and postretirement assets and liabilities, net	(226)		(313)		(233)
Net cash provided by operating activities	3,908		4,141		3,964
CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES
Capital expenditures	(906)		(965)		(863)
Acquisitions, net of cash received	(5,286)		(833)		(1,136)
Proceeds from divestitures including equity method investments	601		1,539		2,489

Proceeds from derivative settlements and other	703		233		10
Net cash (used in)/provided by investing activities	(4,888)		(26)		500
CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES
Issuances of commercial paper, maturities greater than 90 days	—		—		677
Repayments of commercial paper, maturities greater than 90 days	—		—		(1,174)
Net issuances/(repayments) of short-term borrowings	1,914		194		(2,116)
Long-term debt proceeds	4,490		5,921		7,213
Long-term debt repayments	(3,032)		(6,247)		(3,878)
Repurchases of Common Stock	(2,017)		(2,110)		(1,390)
Dividends paid	(1,985)		(1,826)		(1,678)
Other	174		(1)		131
Net cash used in financing activities	(456)		(4,069)		(2,215)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(169)		(143)		73
Cash, cash equivalents and restricted cash:
(Decrease)/increase	(1,605)		(97)		2,322
Balance at beginning of period	3,553		3,650		1,328
Balance at end of period	$	1,948	$	3,553	$	3,650
Cash paid:
Interest	$	551	$	426	$	413
Income taxes	$	1,103	$	1,556	$	1,264

See accompanying notes to the consolidated financial statements.

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Mondelēz International, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Description of Business:

Mondelēz International, Inc. was incorporated in 2000 in the Commonwealth of Virginia. Mondelēz International, Inc., through its subsidiaries (collectively “Mondelēz International,” “we,” “us” and “our”), sells food and beverage products to consumers in over 150 countries.

Principles of Consolidation:

The 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 is no readily determinable fair value for the equity interests, these investments are carried at cost with changes in the investment recognized to the extent cash is received.

Use of Estimates:

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which require us to make estimates and assumptions that affect a number of amounts in our consolidated financial statements. Significant estimates include, valuation assumptions of goodwill and intangible assets, useful lives of long-lived assets, restructuring program liabilities, contingent consideration, marketing program accruals, insurance and self-insurance reserves, pension and benefit plan assumptions and income taxes. We base our estimates on historical experience, expectations of future impacts and other assumptions that we believe are reasonable. Given the uncertainty of the global economic environment, our estimates could be significantly different than future performance. If actual amounts differ from estimates, we include the updates in our consolidated results of operations in the period the actual amounts become known.

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, 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 write-offs, $19 million of increased estimated allowances for trade receivables and $16 million in accrued expenses. During the remainder of 2022, we reversed approximately $22 million of previously recorded charges primarily as a result of higher than expected collection of trade receivables and inventory recoveries. 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 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, with currency remeasurement gains or losses recorded in earnings. At this time, within our consolidated entities, Argentina and Türkiye are accounted for as highly inflationary economies. Argentina and Türkiye represent 1.6% and 0.7% of our consolidated net revenues, with remeasurement losses of $39 million and $1 million in 2022, respectively.

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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 had restricted cash within other current assets of $25 million as of December 31, 2022 and $7 million as of December 31, 2021. Total cash, cash equivalents and restricted cash was $1,948 million as of December 31, 2022 and $3,553 million as of December 31, 2021.

Allowances for Credit Losses:

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, 2021	$	(42)	$	(42)	$	(12)
Current period provision for expected credit losses	(3)		(13)		—
Write-offs charged against the allowance	5		3		2

Currency	3		3		—
Balance at December 31, 2021	$	(37)	$	(49)	$	(10)
Current period provision for expected credit losses	(13)		(14)		(3)
Write-offs charged against the allowance	2		3		—

Currency	3		1		(1)
Balance at December 31, 2022	$	(45)	$	(59)	$	(14)

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. We use receivable factoring arrangements periodically when circumstances are favorable to manage liquidity. We have nonrecourse factoring arrangements in which we sell eligible trade receivables primarily to banks in exchange for cash. We may 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 $516 million as of December 31, 2022, $761 million as of December 31, 2021 and $760 million as of December 31, 2020. The incremental costs of factoring receivables under these arrangements were not material for all periods presented. The proceeds from the sales of receivables are included in cash from operating activities in the consolidated statements of cash flows.

Inventories:

We record our inventory using the average cost method and record inventory reserves for excess and obsolete inventory.

Long-Lived Assets:

Property, plant and equipment are stated at historical cost and depreciated by the straight-line method over the estimated useful lives of the assets with the expense recorded in cost of sales or selling, general and administrative expenses depending on the nature of the long-lived assets. Machinery and equipment are depreciated over periods ranging from 3 to 20 years and buildings and building improvements over periods up to 40 years.

We review long-lived assets, including definite-life intangible assets, for realizability on an ongoing basis. Changes in depreciation, generally accelerated depreciation, are determined and recorded when estimates of the remaining useful lives or residual values of long-term assets change. We amortize definite-life intangible assets over their estimated useful lives and evaluate them for impairment as we do other long-lived assets. We review for impairment when conditions exist that indicate the carrying amount of the assets may not be fully recoverable. In those circumstances, we perform undiscounted operating cash flow analyses for asset and liability groups at the lowest level for which cash flows are separately identifiable to determine if an impairment exists. Any impairment loss is calculated as the excess of the asset’s carrying value over its estimated fair value. Fair value is estimated based on

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the discounted cash flows for the asset group over the remaining useful life or based on the expected cash proceeds for the asset less costs of disposal.

Leases:

We determine whether a contract is or contains a lease at contract inception. For short-term operating leases with terms of 12 months or less, we do not recognize right-of-use (“ROU”) assets and lease liabilities. ROU assets are recognized at commencement date at the value of the lease liability, adjusted for any prepayments, lease incentives received and initial direct costs incurred. Lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. The non-recurring fair value measurement is classified as Level 3 as no fair value inputs are observable. As the implicit interest rate in the lease is not readily determinable, we use our country-specific incremental borrowing rate to discount the lease liabilities.

Our leases may include options to extend or terminate the lease, which are included in the lease term when it is reasonably certain that we will exercise that option. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Many of our leases contain non-lease components (e.g. product costs, common-area or other maintenance costs) that relate to the lease components of the agreement. We account for lease and non-lease components as a single lease component.

Amortization of ROU lease assets is calculated over the lease term with the expense recorded in cost of sales or selling, general and administrative expenses depending on the nature of the leased item. Interest expense is recorded over the lease term and is recorded in interest expense (based on a front-loaded interest expense pattern) for finance leases and is recorded in cost of sales or selling, general and administrative expenses for operating leases. Variable lease payments, which are primarily comprised of product costs, insurance and tax payments based on usage or output, are recognized when the expense is incurred. Finance lease ROU assets are presented in property, plant and equipment and the related finance lease liabilities are presented in the current portion of long-term debt and long-term debt.

Software Costs:

We capitalize certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use. Capitalized software costs are included in property, plant and equipment and amortized on a straight-line basis over the estimated useful lives of the software, which do not exceed seven years.

Goodwill and Indefinite-Life Intangible Assets:

We test goodwill and indefinite-life intangible assets for impairment on an annual basis on July 1. We assess goodwill impairment risk throughout the year by performing a qualitative review of entity-specific, industry, market and general economic factors affecting our goodwill reporting units. Annually, we may perform qualitative testing, or depending on factors such as prior-year test results, current year developments, current risk evaluations and other practical considerations, we may elect to do quantitative testing instead. In our quantitative testing, we compare a reporting unit’s estimated fair value with its carrying value. We estimate a reporting unit’s fair value using a discounted cash flow method that incorporates planned growth rates, market-based discount rates and estimates of residual value. If the carrying value of a reporting unit’s net assets exceeds its fair value, we would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value.

Annually, we assess indefinite-life intangible assets for impairment by performing a qualitative review and assessing events and circumstances that could affect the fair value or carrying value of these intangible assets. If significant potential impairment risk exists for a specific asset, we quantitatively test it for impairment by comparing its estimated fair value with its carrying value. During our annual testing, we use several accepted valuation methods, including Relief from 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. If the carrying value of the asset exceeds its fair value, we consider the asset impaired and reduce its carrying value to the estimated fair value.

Held for Sale:

Assets and liabilities to be disposed of by sale ("disposal groups") are reclassified into assets and liabilities held for sale on our consolidated balance sheets. The reclassification occurs when all the held for sale criteria have been met, including when management having the requisite authority have committed to a plan to sell the assets within one year. Disposal groups are measured at the lower of carrying value or fair value less costs to sell and are not depreciated or amortized. The fair value of a disposal group, less any costs to sell, is assessed each reporting

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period it remains classified as held for sale and any remeasurement to the lower of carrying value or fair value less costs to sell is reported as an adjustment to the carrying value.

Business Combinations:

The assets acquired and liabilities assumed upon the acquisition or consolidation of a business are recorded at fair value, with the residual of the purchase price allocated to goodwill. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to assets acquired and liabilities assumed with the corresponding offset to goodwill. The results of operations of an acquired business are included in our operating results from the date of acquisition.

Further, certain of our acquisitions may include earn-out provisions or other forms of contingent consideration. As of the acquisition date, we record contingent consideration, as applicable, at the estimated fair value of expected future payments associated with the earn-out. Any changes to the recorded fair value of contingent consideration will be recognized as expenses or earnings in the period in which they occur.

Legal costs, due diligence costs, business valuation costs and all other business acquisition costs are expensed when incurred.

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.

Insurance and Self-Insurance:

We use a combination of insurance and self-insurance for a number of risks, including workers’ compensation, general liability, automobile liability, product liability and our obligation for employee healthcare benefits. We estimate the liabilities associated with these risks on an undiscounted basis by evaluating and making judgments about historical claims experience and other actuarial assumptions and the estimated impact on future results.

Revenue Recognition:

We recognize revenue when control over the products transfers to our customers, which generally occurs upon delivery or shipment of the products. We account for product shipping, handling and insurance as fulfillment activities with revenues for these activities recorded within net revenue and costs recorded within cost of sales. Any taxes collected on behalf of government authorities are excluded from net revenues.

Revenues are recorded net of trade and sales incentives and estimated product returns. Known or expected pricing or revenue adjustments, such as trade discounts, rebates or returns, are estimated at the time of sale. We base these estimates of expected amounts principally on historical utilization and redemption rates. Estimates that affect revenue, such as trade incentives and product returns, are monitored and adjusted each period until the incentives or product returns are realized.

Key sales terms, such as pricing and quantities ordered, are established on a frequent basis such that most customer arrangements and related incentives have a one year or shorter duration. As such, we do not capitalize contract inception costs and we capitalize product fulfillment costs. Deferred revenues are not material and primarily include customer advance payments typically collected a few days before product delivery, at which time deferred revenues are reclassified and recorded as net revenues. We generally do not receive non-cash consideration for the sale of goods nor do we grant payment financing terms greater than one year.

Marketing, Advertising and Research and Development:

We promote our products with marketing and advertising programs. These programs include, but are not limited to, cooperative advertising, in-store displays and consumer marketing promotions. For interim reporting purposes, advertising, consumer promotion and marketing research expenses are charged to operations as a percentage of volume, based on estimated sales volume and estimated program spending. We do not defer costs on our year-end consolidated balance sheets and all marketing and advertising costs are recorded as an expense in the year incurred. Advertising expense was $1,670 million in 2022, $1,564 million in 2021 and $1,376 million in 2020. We

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expense product research and development costs as incurred. Research and development expense was $346 million in 2022, $347 million in 2021 and $332 million in 2020. We record marketing and advertising as well as research and development expenses within selling, general and administrative expenses.

Stock-based Compensation:

We maintain a share-based compensation plan, which authorizes the granting of various equity-based incentives, including stock options (including stock appreciation rights), deferred stock units (DSUs) and performance share units (PSUs). Stock compensation expense is amortized to expense over the vesting period, generally three years.

Stock options are granted with an exercise price equal to the closing market price of our Common Stock on the grant date. Substantially all of the options become exercisable in three annual installments beginning a year from the grant date and generally expire 10 years from the grant date. We use the Black-Scholes Model to measure the fair value of stock options granted to employees. The expected life of the options represents the period of time the options are expected to be outstanding and is based on historical trends. Expected stock price volatility is based on the implied and historical volatility of the Company’s stock. The expected dividend yield is based on the Company’s most recent annual dividend rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with a term equal to the expected life.

DSUs are typically granted to selected management employees on an annual basis and vest over three years. Dividend equivalents are paid during the vesting period. The fair value of our DSUs and other stock-based awards is measured at the market price of our Common Stock on the grant date.

PSUs vest based on varying performance, market and service conditions. Dividend equivalents accumulated over the vesting period are paid after vesting. The grant date fair value of PSUs is determined based on the Monte Carlo simulation model for the market-based component and the market price of our Common Stock on the grant date for performance-based components. The final award may equal 0-200 percent of the target grant, based on the achievement of the performance and market-based components.

Forfeitures are estimated on the grant date for all of our stock-based compensation awards.

Employee Benefit Plans:

We provide a range of benefits to our current and retired employees including pension benefits, defined contribution plan benefits, postretirement health care benefits and postemployment primarily severance-related benefits depending upon local statutory requirements, employee tenure and service requirements as well as other factors. The cost for these plans is recognized in earnings primarily over the working life of the covered employee.

Financial Instruments:

We use financial instruments to manage our currency exchange rate, commodity price and interest rate risks. We monitor and manage these exposures as part of our overall risk management program, which focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on our operating results. A principal objective of our risk management strategies is to reduce significant, unanticipated earnings fluctuations that may arise from volatility in currency exchange rates, commodity prices and interest rates.

When we use derivatives, we are exposed to credit and market risks. We reduce our credit risk by entering into transactions with counterparties with high quality, investment grade credit ratings, limiting the amount of exposure with each counterparty and monitoring the financial condition of our counterparties. We also maintain a policy of requiring that all significant, non-exchange traded derivative contracts with a duration of one year or longer are governed by an International Swaps and Derivatives Association master agreement. We manage derivative market risk by limiting the types of derivative instruments, derivative strategies we use, and the degree of market risk that we plan to hedge through the use of derivative instruments.

We record derivative financial instruments on a gross basis in our consolidated balance sheets. The fair value of our instruments are recorded within other current assets, other assets, other current liabilities, and other liabilities in our consolidated balance sheets.

Mark-to-market gains or losses related to our economic hedges are classified in the consolidated statements of cash flows in other non-cash items, net, within operating activities. Cash flows related to the settlement of derivative instruments designated as hedges of net investments in non-U.S. operations are classified in the consolidated

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statements of cash flows within investing activities. Cash flows related to derivative instruments that are designated or settled economic hedges are classified in the same line item as the cash flows of the related hedged item. Cash flows related to the settlement of all other free-standing derivative instruments are classified within investing activities.

Commodity derivatives. We are exposed to price risk related to forecasted purchases of certain commodities that we primarily use as raw materials. We enter into commodity forward, futures and option contracts. Commodity forward contracts generally are not subject to the accounting requirements for derivative instruments and hedging activities under the normal purchases exception. We sell commodity futures to hedge future purchase commitments. We occasionally use related futures to cross-hedge a commodity exposure. We are not a party to leveraged derivatives and, by policy, do not use financial instruments for speculative purposes. Any mark-to-market gains or losses are recorded in earnings (see Note 10, Financial Instruments, for additional information).

Currency exchange derivatives. We enter into currency exchange forward contracts, futures, options and swaps.to mitigate our exposure to changes in exchange rates from third-party and intercompany current and forecasted transactions. Any mark-to-market gains or losses are recorded in earnings (see Note 10, Financial Instruments, for additional information).

Interest rate cash flow hedges. We manage interest rate volatility by modifying the pricing or maturity characteristics of certain liabilities so that the net impact on expense is not, on a material basis, adversely affected by movements in interest rates. We use derivative instruments, including interest rate swaps that have indices related to the pricing of specific liabilities as part of our interest rate risk management strategy. We use cross-currency interest rate swaps to hedge interest payments on newly issued debt denominated in a different currency than the functional currency of the borrowing entity. Substantially all of these derivative instruments are highly effective and qualify for hedge accounting treatment. Changes in the fair value of derivatives that are designated as a cash flow hedge, to the extent the hedge is effective, are recorded in accumulated other comprehensive earnings/(losses), net of deferred taxes, and reclassified to earnings when the hedged item affects earnings (see Note 10, Financial Instruments, for additional information).

Hedges of net investments in non-U.S. operations. We have numerous investments outside the United States. The net assets of these subsidiaries are exposed to changes and volatility in currency exchange rates. We use local currency denominated debt to hedge our non-U.S. net investments against adverse movements in exchange rates. We may designate non-U.S. dollar-denominated borrowings in the U.S. as a net investment hedge of a portion of our overall non-U.S. operations. The gains and losses on our net investment in these designated non-U.S. operations are economically offset by losses and gains designated dollar-denominated borrowings. The revaluation of designated borrowings, net of deferred taxes, is recorded within currency translation adjustment in accumulated other comprehensive earnings/(losses) (see Note 10, Financial Instruments, for additional information).

We use derivatives instruments to hedge certain investments in our non-U.S. operations against movements in exchange rates. These instruments may include cross-currency interest rate swaps, forwards and options. The after-tax gain/(loss) on these net investment hedge contracts, net of deferred taxes, is recorded within cumulative translation adjustment in accumulated other comprehensive earnings/(losses) (see Note 10, Financial Instruments, for additional information).

Income Taxes:

Our provision for income taxes includes amounts payable or refundable for the current year, the effects of deferred taxes and impacts from uncertain tax positions. We recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax basis of our assets and liabilities, operating loss carryforwards and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those differences are expected to reverse.

The realization of certain deferred tax assets is dependent on generating sufficient taxable income in the appropriate jurisdiction prior to the expiration of the carryforward periods. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. When assessing the need for a valuation allowance, we consider any carryback potential, future reversals of existing taxable temporary differences (including liabilities for unrecognized tax benefits), future taxable income and tax planning strategies.

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We recognize tax benefits in our financial statements from uncertain tax positions only if it is more likely than not that the tax position will be sustained based on the technical merits of the position. The amount we recognize is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon resolution. Future changes related to the expected resolution of uncertain tax positions could affect tax expense in the period when the change occurs.

We monitor for changes in tax laws and reflect the impacts of tax law changes in the period of enactment. When there is refinement to tax law changes in subsequent periods, we account for the new guidance in the period when it becomes known.

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 and December 2022, the FASB issued ASUs 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, 2024. We adopted this standard in the fourth quarter of 2022 and it did not have a material 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 are currently assessing the impact on our consolidated financial statements and related disclosures.

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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 indefinite-life intangible assets, we allocated $339 million to trade names. 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 $105 million and operating income of $1 million in 2022. In 2022, we recorded several items within acquisition-related costs that resulted in income of $64 million as realized gains related to hedging contracts associated with acquisition funds more than offset other acquisition transaction costs. We incurred acquisition integration costs of $11 million and an inventory step-up charge of $5 million in 2022.

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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 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 indefinite-life intangible assets, we allocated $1,450 million to trade names. 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 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. 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 estimated to be $1.4 billion and will be amortized.

Clif Bar added incremental net revenues of $361 million and operating income of $13 million in 2022. We incurred an inventory step-up charge of $20 million and acquisition integration costs of $30 million in 2022. These acquisition integration costs include an increase to the contingent consideration liability due to changes to underlying assumptions. Refer to Note 10, Financial Instruments for additional information. We also incurred acquisition-related

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costs of $296 million in 2022. These acquisition-related costs are primarily related to the buyout of the non-vested ESOP shares.

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).

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	$	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 indefinite-life intangible assets, we allocated $686 million to trade name. 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 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 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.

Chipita added incremental net revenues of $651 million and operating income of $36 million in 2022. We incurred acquisition-related costs of $22 million in 2022 and $6 million in 2021. We incurred acquisition integration costs of $90 million in 2022 and $17 million in 2021.

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Other Acquisitions

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 $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. In 2022, through the one-year anniversary of the acquisition, Gourmet Food added incremental net revenues of $14 million, and operating income of $1 million. We incurred acquisition integration costs of $1 million in 2022. We incurred acquisition-related costs of $7 million in 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 market. We have recorded a purchase price allocation 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. In 2022, through the one-year anniversary of the acquisition, Grenade added incremental net revenues of $21 million, and operating income of $2 million. We incurred acquisition-related costs of $2 million in 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 offerings in the well-being category. The initial cash consideration paid was $229 million, net of cash received, and we 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. During 2021, based on latest estimates, we recorded a $70 million reduction to the liability as recent economic and market conditions related to COVID-19 and supply chain challenges in the U.S. impacted the pace of growth. During 2022, we recorded an additional $7 million reduction to the liability due to further changes to forecasted future results. Refer to Note 10, Financial Instruments for additional information. 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 $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 $9 million in 2021.

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On April 1, 2020, we acquired a majority interest in Give & Go, a North American leader in fully-finished sweet baked goods and owner of the famous two-bite*®* brand of brownies and the Create-A-Treat*®* brand, known for cookie and gingerbread house decorating kits. The acquisition of Give & Go provides access to the in-store bakery channel and expands our position in broader snacking. The purchase consideration for Give & Go totaled $1,136 million, net of cash received. We have recorded a purchase price allocation of net tangible and intangible assets acquired and liabilities assumed as follows:


	(in millions)
Receivables	$	29
Inventory	38
Other current assets	6
Property, plant and equipment	136
Operating right of use assets	61
Definite-life intangible assets	511
Indefinite-life intangible assets	42
Goodwill	531
Assets acquired	$	1,354
Current liabilities	42
Deferred tax liabilities	92
Long-term operating lease liabilities	56
Long-term debt	6
Long-term other liabilities	19
Total purchase price	$	1,139
Less: cash received	3
Net Cash Paid	$	1,136

Within definite-life intangible assets, we allocated $416 million to customer relationships which have an estimated useful life of 17 years. Goodwill 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 North America operating segment.

The fair value for customer relationships at the acquisition date was determined using the multi-period excess earnings method under the income approach. 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 discounted future cash flows, customer attrition rates and discount rates. Through the one-year anniversary of the acquisition, Give & Go added incremental net revenues of $106 million and operating income of $6 million during 2021. We incurred acquisition integration costs of $26 million in 2022. These acquisition integration costs are primarily related to an increase to the contingent consideration liability due to changes to forecasted future results. Refer to Note 10, Financial Instruments for additional information. We incurred acquisition integration costs of $6 million in 2021.

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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 have concluded that the disposal group has met the held for sale criteria as of December 31, 2022. The disposal group was included as part of the North America and Europe operating segments.

Total assets and liabilities held for sale as of December 31, 2022 on the consolidated balance sheets are comprised of the following:


	(in millions)
Inventories, net	$	79
Current assets held for sale (1)	$	79
Property, plant and equipment, net	159
Goodwill	292
Intangible assets, net	671
Noncurrent assets held for sale (2)	$	1,122

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

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

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

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

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

MaxFoods

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. The packaged seafood business added incremental net revenues of $35 million in 2021 and operating income of $5 million during 2021.

Note 3. Inventories

Inventories consisted of the following:


	As of December 31,
	2022		2021
	(in millions)
Raw materials	$	1,031	$	770
Finished product	2,501		2,054
	3,532		2,824
Inventory reserves	(151)		(116)
Inventories, net	$	3,381	$	2,708

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Note 4. Property, Plant and Equipment

Property, plant and equipment consisted of the following:


	As of December 31,
	2022		2021
	(in millions)
Land and land improvements	$	378	$	379
Buildings and building improvements	3,250		3,139
Machinery and equipment	11,724		11,842
Construction in progress	879		732
	16,231		16,092
Accumulated depreciation	(7,211)		(7,434)
Property, plant and equipment, net	$	9,020	$	8,658

Capital expenditures as presented on the statement of cash flow were approximately $0.9 billion, $1.0 billion and $0.9 billion for the years ending December 31, 2022, 2021 and 2020 and excluded $324 million, $249 million and $275 million for accrued capital expenditures not yet paid.

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 within asset impairment and exit costs on the consolidated statements of earnings and within the segment results as follows (refer to Note 8, Restructuring Program):


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Latin America	$	(3)	$	1	$	(12)
AMEA	3		(15)		(7)
Europe	4		7		5
North America	(1)		65		1
Corporate	—		—		—
Total	$	3	$	58	$	(13)

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Note 5. Leases

We have operating and finance leases for manufacturing and distribution facilities, vehicles, equipment and office space. Our leases have remaining lease terms of 1 to 17 years, some of which include options to extend the leases for up to 6 years.

The components of lease costs were as follows:


	For the Years Ended December 31,
	2022		2021
	(in millions)
Operating lease cost	$	213	$	228

Finance lease cost:
Amortization of right-of-use assets	95		89
Interest on lease liabilities	8		7

Short-term lease cost	11		29
Variable lease cost	602		506

Sublease income	(4)		(6)

Total lease cost	$	925	$	853

Supplemental cash flow information related to leases was as follows:


	For the Years Ended December 31,
	2022		2021
	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(212)	$	(229)
Operating cash flows from finance leases	(8)		(8)
Financing cash flows from finance leases	(95)		(88)

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	220	$	186
Finance leases	148		76

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Supplemental balance sheet information related to leases was as follows:


	As of December 31,
	2022			2021
	(in millions)
Operating Leases:
Operating lease right-of-use assets, net of amortization	$	660		$	613

Other current liabilities	$	166		$	174
Long-term operating lease liabilities	514			459
Total operating lease liabilities	$	680		$	633

Finance Leases:
Finance leases, net of amortization (within property, plant and equipment)	$	287		$	233

Current portion of long-term debt	$	95		$	82
Long-term debt	198			157
Total finance lease liabilities	$	293		$	239

Weighted Average Remaining Lease Term
Operating leases	7.0 years			6.6 years
Finance leases	4.1 years			3.9 years

Weighted Average Discount Rate
Operating leases	4.2		%	3.3		%
Finance leases	4.0		%	2.9		%

Maturities of lease liabilities were as follows:


	As of December 31, 2022
	Operating Leases		Finance Leases
	(in millions)
Year Ending December 31:
2023	$	195	$	105
2024	142		85
2025	105		61
2026	70		38
2027	52		14
Thereafter	244		18
Total future undiscounted lease payments	$	808	$	321
Less imputed interest	(128)		(28)
Total reported lease liability	$	680	$	293

On October 5, 2021, the Company closed an asset sale-leaseback transaction on a property in New Jersey. The Company received proceeds of approximately $142 million, net of selling costs for the property, which had a carrying value of $51 million, and resulted in an approximately $91 million gain on the sale transaction. The leaseback is accounted for as an operating lease. The leaseback is expected to end in 2023 and has three 90-day renewal options.

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Note 6. Goodwill and Intangible Assets

Goodwill by operating segment was:


	As of December 31,
	2022		2021
	(in millions)
Latin America	$	1,421	$	674
AMEA	3,132		3,365
Europe	8,009		7,830
North America	10,888		10,109
Goodwill	$	23,450	$	21,978

Intangible assets consisted of the following:


	As of December 31,
	2022		2021
	(in millions)
Indefinite-life intangible assets	$	18,413	$	17,299
Definite-life intangible assets	3,354		2,991
	21,767		20,290
Accumulated amortization	(2,057)		(1,999)
Intangible assets, net	$	19,710	$	18,291

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

Amortization expense for intangible assets was $132 million in 2022, $134 million in 2021 and $194 million in 2020. For the next five years, we estimate annual amortization expense of approximately $150 million in 2023-2025, approximately $95 million in 2026 and approximately $90 million in 2027 (reflecting December 31, 2022 exchange rates).

Changes in goodwill and intangible assets consisted of:


	2022				2021
	Goodwill		Intangible Assets, at cost		Goodwill		Intangible Assets, at cost
	(in millions)
Balance at January 1	$	21,978	$	20,290	$	21,895	$	20,399
Changes due to:
Currency	(757)		(692)		(464)		(465)
Acquisitions	2,529		2,941		547		405
Held for Sale	(292)		(671)		—		—
Divestitures	(8)		—		—		(17)
Asset impairments	—		(101)		—		(32)
Balance at December 31	$	23,450	$	21,767	$	21,978	$	20,290

Changes to goodwill and intangibles were:

Acquisitions – In connection with our 2022 acquisitions, we recorded $1.0 billion to goodwill and $1.7 billion to intangible assets for Clif Bar, $795 million to goodwill and $734 million to intangible assets for Chipita, and $714 million to goodwill and $557 million to intangible assets for Ricolino as part of purchase accounting. In connection with our 2021 acquisitions of Gourmet Food, Grenade and the remaining interest

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in Hu, we recorded $547 million of goodwill and $405 million of intangible assets as part of purchase accounting. See Note 2, Acquisitions and Divestitures, for additional information.

Held for Sale - During the fourth quarter of 2022, we agreed to sell our gum business in North America and Europe. As a result, we reclassified $292 million of goodwill and $671 million of intangible assets to held for sale. See Note 2, Acquisitions and Divestitures, for additional information.
Divestitures – During 2022 and 2021, we made divestitures in Latin America and AMEA which were not material.
Asset impairments – As further discussed below, we recorded $101 million of intangible asset impairments in 2022 and $32 million in 2021.

In 2022, 2021 and 2020, there were no goodwill impairments and each of our reporting units had sufficient fair value in excess of its carrying value. While all reporting units passed our annual impairment testing, if planned business performance expectations are not met or specific valuation factors outside of our control, such as discount rates, change significantly, then the estimated fair values of a reporting unit or reporting units might decline and lead to a goodwill impairment in the future.

In 2022, we recorded $101 million of intangible asset impairment charges related to two biscuit brands in AMEA. We also identified eight brands with $1.5 billion of aggregate book value as of December 31, 2022 that each had a fair value in excess of book value of 10% or less. We believe our current plans for each of these brands will allow them to not be impaired, but if the brand earnings expectations 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. In 2021, we recorded a $32 million of intangible asset impairment charge related to one biscuit brand in North America.

Note 7. Equity Method Investments

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 December 31, 2022, we owned 19.7%, 5.3%, 50.0% and 49.0%, respectively, of these companies' outstanding shares.

Our investments accounted for under the equity method of accounting totaled $4.9 billion as of December 31, 2022 and $5.3 billion as of December 31, 2021. We recorded equity earnings and cash dividends of $385 million and $184 million in 2022, equity earnings and cash dividends of $393 million and $172 million in 2021 and equity earnings and cash dividends of $421 million and $246 million in 2020.

Based on the quoted closing prices as of December 31, 2022, the combined fair value of our publicly-traded investments in JDEP and KDP was $5.5 billion, and for each investment, there was no other than temporary impairment identified.

JDE Peet’s Transactions:

In 2022, we sold approximately 18.6 million of our JDE Peet’s shares back to JDE Peet’s, which reduced our ownership interest by approximately 3% to 19.8% of the total outstanding shares. We received €500 million ($529 million) of proceeds and recorded a loss of €8 million ($8 million) on this sale during the second quarter of 2022.

In 2021, we issued €300 million exchangeable bonds, which are redeemable at maturity 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 9% of our equity interest in JDE Peet's. Refer to Note 10, Financial Instruments, for further details on this transaction.

In 2020, JDE Peet’s B.V. (renamed JDE Peet’s N.V. immediately prior to Settlement (as defined below), “JDE Peet’s”) consummated the offering, listing and trading of its ordinary shares on Euronext Amsterdam, a regulated market operated by Euronext Amsterdam N.V. In connection with this transaction, JDE Peet’s and the selling shareholders, including us, agreed to sell at a price of €31.50 per ordinary share a total of approximately 82.1 million ordinary shares, including ordinary shares subject to an over-allotment option. The ordinary shares were listed and first traded on May 29, 2020, and payment for, and delivery of, the ordinary shares sold in the offering (excluding ordinary shares subject to the over-allotment option) took place on June 2, 2020 (“Settlement”).

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Prior to Settlement, we exchanged our 26.4% ownership interest in JDE for a 26.5% equity interest in JDE Peet’s. We did not invest new capital in connection with the transaction and the exchange was accounted for as a change in interest transaction. Upon Settlement, we sold approximately 9.7 million of our ordinary shares in JDE Peet’s in the offering for gross proceeds of €304 million ($343 million). We subsequently sold approximately 1.4 million additional shares and received gross proceeds of €46 million ($51 million) upon exercise of the over-allotment option. Following Settlement and the exercise of the over-allotment option, we held a 22.9% equity interest in JDE Peet’s. During the second quarter of 2020, we recorded a preliminary gain of $121 million, net of $33 million released from accumulated other comprehensive losses, and $48 million of transaction costs. During the third quarter of 2020, we increased our preliminary gain by $10 million to $131 million.

As we continue to have significant influence, we continue to account for our investment in JDE Peet’s under the equity method, resulting in recognizing our share of their earnings within our earnings and our share of their dividends within our cash flows. We continue to have board representation with two directors on the JDE Peet's Board of Directors and have retained certain additional governance rights.

Keurig Dr Pepper Transactions:

In 2021, we sold approximately 42.7 million shares of KDP, which reduced our ownership interest by 3.0% to 5.3% of the total outstanding shares. We received $1,497 million of proceeds and recorded a pre-tax gain of $768 million (or $581 million after-tax) during 2021.

In 2020, we sold approximately 73.4 million shares, which reduced our ownership interest by 5.2% to 8.4% of the total outstanding shares. We received $2,094 million of proceeds and recorded a pre-tax gain of $865 million (or $662 million after-tax) during 2020.

As we continue to have significant influence, we continue to account for our investment in KDP under the equity method, resulting in recognizing our share of their earnings within our earnings and our share of their dividends within our cash flows. We continue to have board representation with one director on the KDP Board of Directors and have retained certain additional governance rights.

Summary Financial Information for Equity Method Investments:

Summarized financial information related to our equity method investments is reflected below.


	As of December 31,
	2022		2021
	(in millions)
Current assets	$	8,740	$	6,313
Noncurrent assets	71,375		71,949
Total assets	$	80,115	$	78,262
Current liabilities	$	12,711	$	11,105
Noncurrent liabilities	26,671		27,204
Total liabilities	$	39,382	$	38,309
Equity attributable to shareowners of investees	$	40,596	$	39,798
Equity attributable to noncontrolling interests	137		155
Total net equity of investees	$	40,733	$	39,953
Mondelēz International ownership interests	5-50%		5-50%
Equity method investments (1)	$	4,879	$	5,289

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	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Net revenues	$	23,518	$	22,149	$	20,112
Gross profit	10,738		10,804		9,856
Income from continuing operations	2,984		2,614		2,078
Net income	2,984		2,614		2,078
Net income attributable to investees	$	2,990	$	2,618	$	2,070
Mondelēz International ownership interests	5-50%		5-50%		8-50%


Equity method investment net earnings	$	385	$	393	$	421

(1)Includes a basis difference of approximately $419 million as of December 31, 2022 and $475 million as of December 31, 2021 between the U.S. GAAP accounting basis for our equity method investments and the U.S. GAAP accounting basis of our investees’ equity.

Note 8. 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 costs ($3.1 billion cash costs and $1.0 billion non-cash costs) and up to $1.6 billion of capital expenditures. On September 6, 2018, our Board of Directors approved an extension of the restructuring program through 2022, an increase of $1.3 billion in the program charges and an increase of $700 million in capital expenditures. On October 21, 2021, our Board of Directors approved an extension of the restructuring program through 2023. 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 related 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 years ended December 31, 2022 and 2021 was:


	Severance and related costs		Asset Write-downs and Other (1)		Total
	(in millions)
Liability Balance, January 1, 2021	$	304	$	—	$	304
Charges (2)	86		68		154
Cash spent (3)	(160)		—		(160)
Non-cash settlements/adjustments (4)	(5)		(68)		(73)
Currency	(14)		—		(14)
Liability Balance, December 31, 2021	$	211	$	—	$	211
Charges (2)	31		5		36
Cash spent (3)	(69)				(69)
Non-cash settlements/adjustments (4)	(3)		(5)		(8)
Currency	(6)				(6)
Liability balance, December 31, 2022 (5)	$	164	$	—	$	164

(1)Includes gains as a result of assets sold which are included in the restructuring program.

(2)We recorded restructuring charges of $36 million in 2022, $154 million in 2021 and $156 million in 2020 within asset impairment and exit costs and benefit plan non-service income.

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(3)We spent $69 million in 2022 and $160 million in 2021 in cash severance and related costs.

(4)In 2022, we recognized non-cash asset write-downs (including accelerated depreciation and other non-cash adjustments, including any gains on sale of assets, primarily real estate, included in the restructuring program totaling $8 million. In 2021, we recognized non-cash asset write-downs (including accelerated depreciation and asset impairments), non-cash pension settlement losses and other non-cash adjustments, partially offset by gains on sale of assets, primarily real estate, included in the restructuring program totaling $73 million.

(5)At December 31, 2022, $126 million of our net restructuring liability was recorded within other current liabilities and $38 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 $87 million in 2022, $167 million in 2021 and $207 million in 2020. We recorded these costs within cost of sales and general corporate expense within selling, general and administrative expenses.

Restructuring and Implementation Costs in Operating Income:

During 2022, 2021 and 2020, 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 Year Ended December 31, 2022
Restructuring Costs	$	(6)	$	13	$	16	$	12	$	1	$	36
Implementation Costs	7		6		25		37		12		87
Total	$	1	$	19	$	41	$	49	$	13	$	123
For the Year Ended December 31, 2021
Restructuring Costs	$	7	$	(17)	$	4	$	153	$	7	$	154
Implementation Costs	9		10		33		97		18		167
Total	$	16	$	(7)	$	37	$	250	$	25	$	321
For the Year Ended December 31, 2020
Restructuring Costs	$	30	$	23	$	67	$	23	$	13	$	156
Implementation Costs	18		23		63		72		31		207
Total	$	48	$	46	$	130	$	95	$	44	$	363
Total Project (Inception to Date)
Restructuring Costs	$	548	$	554	$	1,163	$	657	$	150	$	3,072
Implementation Costs	303		245		569		590		368		2,075
Total	$	851	$	799	$	1,732	$	1,247	$	518	$	5,147

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Note 9. Debt and Borrowing Arrangements

Short-Term Borrowings:

Our short-term borrowings and related weighted-average interest rates consisted of:


	As of December 31,
	2022				2021
	Amount Outstanding		Weighted- Average Rate		Amount Outstanding		Weighted- Average Rate
	(in millions)				(in millions)
Commercial paper	$	2,209	4.7	%	$	192	0.2	%
Bank loans	90		9.1	%	24		8.6	%
Total short-term borrowings	$	2,299			$	216

Our uncommitted credit lines and committed credit lines available as of December 31, 2022 and December 31, 2021 include:


	As of December 31,
	2022				2021
	Facility Amount		Borrowed Amount		Facility Amount		Borrowed Amount
	(in millions)
Uncommitted credit facilities	$	1,335	$	90	$	1,367	$	24
Credit facility expiry (1) (2):
February 23, 2022	—		—		2,500		—
February 22, 2023	2,500		—		—		—
March 11, 2023 (3)	2,000		—		—		—
February 27, 2024	—		—		4,500		—
July 29, 2025 (4)	2,000		2,000		—		—
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 pensions and other retirement plans. At December 31, 2022, we complied with this covenant as our shareholders' equity, as defined by the covenant, was $37.8 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)Capitalizable financing costs are classified in long-term other assets and were immaterial for all periods presented.

(3)On July 11, 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 eighteen months after the funding date of the applicable loan(s).

(4)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. On July 29, 2022, we drew down $2.0 billion in term loans, due July 29, 2025, bearing interest at a variable annual rate based on SOFR plus an applicable margin.

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Long-Term Debt:

Our long-term debt consisted of (interest rates are as of December 31, 2022):


	As of December 31,
	2022 (1)		2021
	(in millions)
U.S. dollar notes and term loans, 0.750% to 7.000% (weighted-average effective rate 2.998%), due through 2050	$	11,275	$	9,280
Euro notes, 0.000% to 2.375% (weighted-average effective rate 0.712%), due through 2041	7,666		8,134
Pound sterling notes, 3.875% to 4.500% (weighted-average effective rate 4.151%), due through 2045	316		354
Swiss franc notes, 0.615% to 1.125% (weighted-average effective rate 1.011%), due through 2025	638		811
Canadian dollar notes, 3.250% (effective rate 3.377%), due through 2025	442		473
Finance leases and other	297		244
Total	20,634		19,296
Less current portion of long-term debt	(383)		(1,746)
Long-term debt	$	20,251	$	17,550

(1) Amounts are shown net of unamortized premiums, discounts and bank fees of $(149) million and imputed interest on finance leases of $(28) million, were (in millions):

Over the next five years, aggregate principal maturities, including finance leases, of our term loans and long-term debt were (in millions):


2023						2024						2025						2026						2027						Thereafter						Total
$393						$2,041						$3,970						$1,149						$1,567						$11,691						$20,811

Tenders Offers:

During 2022, we completed a tender offer in cash and redeemed $987 million of long term U.S. dollar-denominated notes for the following amounts (in millions):


Interest Rate	Tender Date	Maturity Date	Amount Repurchased
3.625%	March 2022	February 2026	$130
4.125%	March 2022	May 2028	$211
2.750%	March 2022	April 2030	$500
6.500%	March 2022	November 2031	$17
7.000%	March 2022	August 2037	$10
6.875%	March 2022	February 2038	$21
6.875%	March 2022	January 2039	$8
6.500%	March 2022	February 2040	$36
4.625%	March 2022	May 2048	$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.

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Debt Redemptions:

During 2022, we completed an early redemption of 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

During 2021 we completed an early redemption of euro and U.S. dollar denominated notes for the following amounts (in millions):


Interest Rate	Redemption Date	Maturity Date	Amount Redeemed	USD Equivalent
2.000%	September 2021	October 2021	$1,500	$1,500
3M LIBOR + 0.700%	September 2021	October 2022	$500	$500
3M LIBOR + 0.800%	September 2021	October 2024	$500	$500
1.000%	March 2021	March 2022	€500	$587
1.625%	March 2021	January 2023	€700	$821
2.125%	March 2021	April 2023	$500	$500
4.000%	March 2021	February 2024	$492	$492

We recorded an extinguishment loss of $137 million within interest and other expense, net related to $110 million paid in excess of carrying value of the debt and from recognizing unamortized discounts and deferred financing in earnings and $27 million foreign currency derivative loss related to the redemption at the time of the debt extinguishment. The cash payments related to the redemption were classified as cash outflows from financing activities in the consolidated statement of cash flows.

Debt Repayments:

During 2022, we repaid the following notes (in millions):


Interest Rate	Maturity Date	Amount	USD Equivalent
2.125%	September 2022 (1)	$500	$500
0.650%	July 2022	Fr.150	$156
Various	Various (2)	€381	$431

(1)Repaid by Mondelez International Holdings Netherlands B.V. ("MIHN"), a wholly owned Dutch subsidiary of Mondelēz International, Inc.

(2)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 twelve months ended December 31, 2022.

During 2021, we repaid the following notes or term loans (in millions):


Interest Rate	Maturity Date	Amount	USD Equivalent
0.625%	December 2021	Fr.300	$327
2.375%	January 2021	€679	827

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Debt Issuances:

During 2022, we issued the following notes (in millions):


Issuance Date	Interest Rate	Maturity Date	Gross Proceeds (1)	Gross Proceeds USD Equivalent
September 2022 (2)	4.250%	September 2025	$500	$500
March 2022	2.125%	March 2024	$500	$500
March 2022	2.625%	March 2027	$750	$750
March 2022	3.000%	March 2032	$750	$750

During 2021, we issued the following notes (in millions):


Issuance Date	Interest Rate	Maturity Date	Gross Proceeds (1)	Gross Proceeds USD Equivalent
September 2021 (2)	0.750%	September 2024	$500	$500
September 2021 (2)	1.250%	September 2026	$350	$350
September 2021 (2) (3)	0.000%	September 2024	€300	$352
September 2021 (2) (4)	0.250%	September 2029	€650	$769
September 2021 (2) (4)	0.625%	September 2032	€650	$769
September 2021 (2) (4)	1.250%	September 2041	€700	$828
March 2021	0.250%	March 2028	€750	$896
March 2021	0.750%	March 2033	€600	$717
March 2021	1.375%	March 2041	€650	$777

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

(2)Notes issued by Mondelez International Holdings Netherlands B.V. (“MIHN”), a wholly owned Dutch subsidiary of Mondelēz International, Inc.

(3)Issuance of exchangeable bonds that were issued at 102% of their principal amount and are redeemable for cash or existing ordinary shares of JDE Peet's at our option (see Note 7, Equity Method Investments). Bondholders have an option to redeem bonds before maturity subject to exchange periods. We have identified our option to settle in either cash or existing ordinary shares of JDE Peet's as an embedded derivative that is bifurcated and accounted for separately from the bond. See Note 10, Financial Instruments.

(4)Issuance of green bonds where we have committed to allocate an amount equal to the €1.97 billion total net proceeds from the offering over time to eligible projects that align with our sustainability priorities in the areas of building a thriving ingredient supply chain and reducing our environmental impact.

Fair Value of Our Debt:

The fair value of our short-term borrowings reflects current market interest rates and approximates the amounts we have recorded on our consolidated balance sheets. The fair value of our term loans was determined using quoted prices for similar instruments in markets that are not active (Level 2 valuation data) 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 December 31,
	2022		2021
	(in millions)
Fair Value	$	20,217	$	20,249
Carrying Value	$	22,933	$	19,512

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Interest and Other Expense, net:

Interest and other expense, net within our results of continuing operations consisted of:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Interest expense, debt	$	428	$	365	$	423
Loss on debt extinguishment and related expenses	129		137		185
Loss related to interest rate swaps	—		—		103
Other income, net	(134)		(55)		(103)
Interest and other expense, net	$	423	$	447	$	608

Note 10. Financial Instruments

Fair Value of Derivative Instruments:

Derivative instruments were recorded at fair value in the consolidated balance sheets as follows:


	As of December 31,
	2022				2021
	Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
	(in millions)
Derivatives designated as accounting hedges:
Interest rate contracts	$	132	$	35	$	27	$	17
Net investment hedge derivative contracts (1)	265		241		117		45
	$	397	$	276	$	144	$	62
Derivatives not designated as accounting hedges:
Currency exchange contracts	$	185	$	103	$	156	$	40
Commodity contracts	200		247		387		137
Interest rate contracts	8		—		—		—
Equity method investment contracts (2)	—		3		—		3
	$	393	$	353	$	543	$	180
Total fair value	$	790	$	629	$	687	$	242

(1)Net investment hedge contracts consist of cross-currency interest rate swaps and forward contracts. 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 9, 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 9, Debt and Borrowing Arrangements.

Derivatives designated as accounting hedges above 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 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.

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The fair values (asset/(liability)) of our derivative instruments were determined using:


	As of December 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	$	82	$	—	$	82	$	—
Commodity contracts	(47)		(35)		(12)		—
Interest rate contracts	105		—		105		—
Net investment hedge contracts	24		—		24		—
Equity method investment contracts	(3)		—		(3)		—
Total derivatives	$	161	$	(35)	$	196	$	—


	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 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.

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Derivative Volume:

The gross notional values of our derivative instruments were:


	Notional Amount
	As of December 31,
	2022		2021
	(in millions)
Currency exchange contracts:
Intercompany loans and forecasted interest payments	$	2,085	$	1,891
Forecasted transactions	5,470		4,831
Commodity contracts	12,131		9,694
Interest rate contracts	4,147		1,850
Net investment hedges:
Net investment hedge derivative contracts	7,319		3,915
Non-U.S. dollar debt designated as net investment hedges
Euro notes	3,410		3,622
British pound sterling notes	—		356
Swiss franc notes	638		811
Canadian dollar notes	443		475

Cash Flow Hedges:

Cash flow hedge activity, net of taxes, within accumulated other comprehensive earnings/(losses) included:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Accumulated (loss)/gain at beginning of period	$	(148)	$	(161)	$	(213)
Transfer of realized (gains)/losses in fair value to earnings	(39)		(155)		161
Unrealized gain/(loss) in fair value	153		168		(109)
Accumulated (loss)/gain at end of period	$	(34)	$	(148)	$	(161)

After-tax gains/(losses) reclassified from accumulated other comprehensive earnings/(losses) into net earnings were:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Currency exchange contracts - forecasted transactions	$	(8)	$	—	$	—
Interest rate contracts	$	47	$	155	$	(161)
Total	$	39	$	155	$	(161)

After-tax gains/(losses) recognized in other comprehensive earnings/(losses) were:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Currency exchange contracts – forecasted transactions	$	8	$	—	$	(2)
Interest rate contracts	145		168		(107)
Total	$	153	$	168	$	(109)

Cash flow hedge ineffectiveness was immaterial for all periods presented.

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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 $7 million (net of taxes) for interest rate cash flow hedges to earnings during the next 12 months.

Cash Flow Hedge Coverage:

As of December 31, 2022, our longest dated cash flow hedges were interest rate swaps that hedge forecasted interest rate payments over the next 3 years, 8 months.

Hedges of Net Investments in International Operations:

Net investment hedge (“NIH”) derivative contracts:

We enter into cross-currency interest rate swaps and forwards to hedge certain investments in our non-U.S. operations against movements in exchange rates. As of December 31, 2022, the aggregate notional value of these NIH derivative contracts was $7.3 billion and their impact on other comprehensive earnings and net earnings during the years presented below were as follows:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
After-tax gain/(loss) on NIH contracts(1)	$	396	$	63	$	(221)

(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 consolidated statement of cash flows.


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Amounts excluded from the assessment of hedge effectiveness(1)	$	116	$	75	$	117

(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.

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 Years Ended December 31,
	2022		2021		2020
	(in millions)
Euro notes	$	162	$	211	$	(251)
British pound sterling notes	45		3		(8)
Swiss franc notes	13		29		(82)
Canadian notes	25		(3)		(7)

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Economic Hedges:

Pre-tax gains/(losses) recorded in net earnings for economic hedges were:


	For the Years Ended December 31,						Recognized in Earnings
	2022		2021		2020
	(in millions)
Currency exchange contracts:
Intercompany loans and forecasted interest payments	$	(14)	$	57	$	(70)	Interest and other expense, net
Forecasted transactions	117		80		41		Cost of sales
Forecasted transactions	17		(1)		(4)		Interest and other expense, net
Forecasted transactions	(1)		—		(1)		Selling, general and administrative expenses
Commodity contracts	157		385		4		Cost of sales
Equity method investment contracts	—		2		—		Gain on equity method investment contracts
Total	$	276	$	523	$	(30)

Fair Value of Contingent Consideration

The following is a summary of our contingent consideration liability activity:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Liability at the beginning of the period	$	159	$	55	$	14
Contingent consideration arising from acquisitions	440		145		17
Changes in fair value	44		(41)		24
Currency	(1)		—		—
Liability at the end of the period	$	642	$	159	$	55

Contingent consideration was recorded at fair value in the condensed consolidated balance sheets as follows:


	As of December 31, 2022
	Total Fair Value of Liability		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in millions)
Clif Bar (1)	$	452	$	—	$	—	$	452
Other (2)	190		—		—		190
Total contingent consideration	$	642	$	—	$	—	$	642

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	As of December 31, 2021
	Total Fair Value of Liability		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in millions)
Other (2)	$	159	$	—	$	—	$	159
Total contingent consideration	$	159	$	—	$	—	$	159

(1)In connection with the Clif Bar acquisition, we entered into a contingent consideration arrangement that may require us to pay additional consideration to the sellers for achieving certain net revenue, gross profit and EBITDA targets in 2025 and 2026 that exceed our base financial projections for the business implied in the upfront purchase price. The other contingent consideration liabilities are recorded at fair value with $452 million classified as long term liabilities at December 31, 2022. The estimated fair value of the contingent consideration obligation at the acquisition date was determined using a Monte Carlo simulation and recorded in other liabilities. Significant assumptions used in assessing the fair value of the liability include financial projections for net revenue, gross profit, and EBITDA, as well as discount and volatility rates. Fair value adjustments are primarily recorded in selling, general and administrative expenses in the condensed consolidated statement of earnings. Refer to Note 2, Acquisitions and Divestitures for additional information.

(2)The other contingent consideration liabilities are recorded at fair value, with $102 million classified as other current liabilities at December 31, 2022 and $88 million and $159 million classified as long term liabilities at December 31, 2022 and December 31, 2021. The estimated fair value of this contingent consideration was determined using a Monte Carlo valuation model based on Level 3 inputs, including management's latest estimate of forecasted future results. Other key assumptions included discount rate and volatility. Fair value adjustments are recorded in selling, general and administrative expenses in the condensed consolidated statement of earnings. Refer to Note 2, Acquisitions and Divestitures for additional information.

Note 11. Benefit Plans

Pension Plans

Obligations and Funded Status:

The projected benefit obligations, plan assets and funded status of our pension plans were:


	U.S. Plans				Non-U.S. Plans
	2022		2021		2022		2021
	(in millions)
Projected benefit obligation at January 1	$	1,729	$	1,887	$	10,821	$	11,658
Service cost	5		6		88		137
Interest cost	51		42		172		130
Benefits paid	(39)		(31)		(461)		(533)
Settlements paid	(71)		(113)		—		—
Actuarial (gains)/losses	(482)		(63)		(2,844)		(269)
Acquisitions	—		—		18		—
Currency	—		—		(957)		(308)
Other	—		1		41		6
Projected benefit obligation at December 31	1,193		1,729		6,878		10,821
Fair value of plan assets at January 1	1,826		1,959		11,021		10,972
Actual return on plan assets	(455)		1		(2,388)		548
Contributions	4		10		211		292
Benefits paid	(39)		(31)		(461)		(533)
Settlements paid	(71)		(113)		—		—
Currency	—		—		(992)		(258)
Other	—		—		(2)		—
Fair value of plan assets at December 31	1,265		1,826		7,389		11,021
Net pension assets at December 31	$	72	$	97	$	511	$	200

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The accumulated benefit obligation, which represents benefits earned to the measurement date, for U.S. pension plans was $1.2 billion at December 31, 2022 and $1.7 billion at December 31, 2021. The accumulated benefit obligation for non-U.S. pension plans was $6.8 billion at December 31, 2022 and $10.7 billion at December 31, 2021.

The actuarial (gain) loss for all pension plans in 2022 and 2021 was primarily related to a change in the discount rate used to measure the benefit obligations of those plans.

The combined U.S. and non-U.S. pension plans resulted in a net pension asset of $583 million at December 31, 2022 and a net pension asset of $297 million at December 31, 2021. We recognized these amounts in our consolidated balance sheets as follows:


	As of December 31,
	2022		2021
	(in millions)
Prepaid pension assets	$	1,016	$	1,009
Other current liabilities	(30)		(31)
Accrued pension costs	(403)		(681)
	$	583	$	297

Certain of our U.S. and non-U.S. plans are underfunded with accumulated benefit obligations in excess of plan assets. For these plans, the projected benefit obligations, accumulated benefit obligations and the fair value of plan assets were:


	U.S. Plans				Non-U.S. Plans
	As of December 31,				As of December 31,
	2022		2021		2022		2021
	(in millions)
Projected benefit obligation	$	31	$	42	$	531	$	1,889
Accumulated benefit obligation	31		42		492		1,805
Fair value of plan assets	2		3		135		1,223

We used the following weighted-average assumptions to determine our benefit obligations under the pension plans:


	U.S. Plans				Non-U.S. Plans
	As of December 31,				As of December 31,
	2022		2021		2022		2021
Discount rate	5.55	%	3.01	%	4.51	%	1.73	%
Expected rate of return on plan assets	6.25	%	4.50	%	5.41	%	3.44	%
Rate of compensation increase	4.00	%	4.00	%	3.22	%	2.83	%

Year-end discount rates for our U.S., Canadian, Eurozone and U.K. plans were developed from a model portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the benefit obligations. Year-end discount rates for our remaining non-U.S. plans were developed from local bond indices that match local benefit obligations as closely as possible. Changes in our discount rates were primarily the result of changes in bond yields year-over-year. We determine our expected rate of return on plan assets from the plan assets’ historical long-term investment performance, current asset allocation and estimates of future long-term returns by asset class.

For the periods presented, we measure service and interest costs by applying the specific spot rates along a yield curve used to measure plan obligations to the plans’ liability cash flows. We believe this approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve.

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Components of Net Periodic Pension Cost:

Net periodic pension cost consisted of the following:


	U.S. Plans						Non-U.S. Plans
	For the Years Ended December 31,						For the Years Ended December 31,
	2022		2021		2020		2022		2021		2020
	(in millions)
Service cost	$	5	$	6	$	6	$	88	$	137	$	121
Interest cost	51		42		49		172		130		149
Expected return on plan assets	(79)		(72)		(77)		(353)		(419)		(400)
Amortization:
Net loss/(gain)	6		17		17		57		130		118
Prior service cost/(benefit)	1		1		1		(2)		(6)		(7)
Curtailment expense/(credit) (1)	—		—		—		8		(17)		—
Settlement losses and other expenses	14		19		18		2		3		4
Net periodic pension cost	$	(2)	$	13	$	14	$	(28)	$	(42)	$	(15)

(1)During the third quarter of 2021, we terminated our Defined Benefit Pension Scheme in Nigeria. During the second quarter of 2021, we made a decision to freeze our Defined Benefit Pension Scheme in the United Kingdom. As a result, we recognized curtailment credits of ($17 million) in 2021 recorded within benefit plan non-service income. In connection with the United Kingdom plan freeze, we also incurred incentive payment charges and other expenses of $48 million in 2021 included in operating income.

For the U.S. plans, we determine the expected return on plan assets component of net periodic benefit cost using a calculated market return value that recognizes the cost over a four-year period. For our non-U.S. plans, we utilize a similar approach with varying cost recognition periods for some plans, and with others, we determine the expected return on plan assets based on asset fair values as of the measurement date.

We used the following weighted-average assumptions to determine our net periodic pension cost:


	U.S. Plans						Non-U.S. Plans
	For the Years Ended December 31,						For the Years Ended December 31,
	2022		2021		2020		2022		2021		2020
Discount rate	3.01	%	2.73	%	3.44	%	1.74	%	1.33	%	1.74	%
Expected rate of return on plan assets	4.50	%	4.50	%	5.00	%	3.44	%	3.90	%	4.20	%
Rate of compensation increase	4.00	%	4.00	%	4.00	%	2.84	%	3.16	%	3.17	%

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Plan Assets:

The fair value of pension plan assets was determined using the following fair value measurements:


	As of December 31, 2022
Asset Category	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in millions)
U.S. equity securities	$	3	$	3	$	—	$	—
Non-U.S. equity securities	1		1		—		—
Pooled funds - equity securities	960		906		54		—
Total equity securities	964		910		54		—
Government bonds	2,495		48		2,447		—
Pooled funds - fixed-income securities	560		453		107		—
Corporate bonds and other fixed-income securities	2,296		144		612		1,540
Total fixed-income securities	5,351		645		3,166		1,540
Real estate	221		152		—		69
Private equity	4		—		—		4
Cash	4		3		—		1
Other	102		97		5		—
Total assets in the fair value hierarchy	$	6,646	$	1,807	$	3,225	$	1,614
Investments measured at net asset value	1,892
Total investments at fair value	$	8,538


	As of December 31, 2021
Asset Category	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in millions)
U.S. equity securities	$	4	$	4	$	—	$	—
Non-U.S. equity securities	3		3		—		—
Pooled funds - equity securities	1,545		1,084		461		—
Total equity securities	1,552		1,091		461		—
Government bonds	3,777		56		3,721		—
Pooled funds - fixed-income securities	648		449		199		—
Corporate bonds and other fixed-income securities	3,943		139		1,415		2,389
Total fixed-income securities	8,368		644		5,335		2,389
Real estate	251		179		—		72
Private equity	4		—		—		4
Cash	5		4		—		1
Other	162		157		5		—
Total assets in the fair value hierarchy	$	10,342	$	2,075	$	5,801	$	2,466
Investments measured at net asset value	2,382
Total investments at fair value	$	12,724

We excluded plan assets of $117 million at December 31, 2022 and $124 million at December 31, 2021 from the above tables related to certain insurance contracts as they are reported at contract value, in accordance with authoritative guidance.

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Fair value measurements

Level 1 – includes primarily U.S and non-U.S. equity securities and government bonds valued using quoted prices in active markets.
Level 2 – includes primarily pooled funds, including assets in real estate pooled funds, valued using net asset values of participation units held in common collective trusts, as reported by the managers of the trusts and as supported by the unit prices of actual purchase and sale transactions. Level 2 plan assets also include corporate bonds and other fixed-income securities, valued using independent observable market inputs, such as matrix pricing, yield curves and indices.
Level 3 – includes investments valued using unobservable inputs that reflect the plans’ assumptions that market participants would use in pricing the assets, based on the best information available.
Fair value estimates for pooled funds are calculated by the investment advisor when reliable quotations or pricing services are not readily available for certain underlying securities. The estimated value is based on either cost or last sale price for most of the securities valued in this fashion.
Fair value estimates for private equity investments are calculated by the general partners using the market approach to estimate the fair value of private investments. The market approach utilizes prices and other relevant information generated by market transactions, type of security, degree of liquidity, restrictions on the disposition, latest round of financing data, company financial statements, relevant valuation multiples and discounted cash flow analyses.
Fair value estimates for private debt placements are calculated using standardized valuation methods, including but not limited to income-based techniques such as discounted cash flow projections or market-based techniques utilizing public and private transaction multiples as comparables.
Fair value estimates for real estate investments are calculated by investment managers using the present value of future cash flows expected to be received from the investments, based on valuation methodologies such as appraisals, local market conditions, and current and projected operating performance.
Fair value estimates for fixed-income securities that are buy-in annuity policies are calculated on a replacement policy value basis by discounting the projected cash flows of the plan members using a discount rate based on risk-free rates and adjustments for estimated levels of insurer pricing.
Net asset value – primarily includes equity funds, fixed income funds, real estate funds, hedge funds and private equity investments for which net asset values are normally used.

Changes in our Level 3 plan assets, which are recorded in other comprehensive earnings/(losses), included:


Asset Category	January 1, 2022 Balance		Net Realized and Unrealized Gains/ (Losses)		Net Purchases, Issuances and Settlements		Net Transfers Into/(Out of) Level 3		Currency Impact		December 31, 2022 Balance
	(in millions)


Corporate bond and other fixed-income securities	$	2,387	$	(450)	$	(148)	$	—	$	(249)	$	1,540
Real estate	74		3		(1)		—		(6)		70
Private equity and other	5		—		—		—		(1)		4
Total Level 3 investments	$	2,466	$	(447)	$	(149)	$	—	$	(256)	$	1,614

Asset Category	January 1, 2021 Balance		Net Realized and Unrealized Gains/ (Losses)		Net Purchases, Issuances and Settlements		Net Transfers Into/(Out of) Level 3		Currency Impact		December 31, 2021 Balance
	(in millions)


Corporate bond and other fixed-income securities	$	1,791	$	(178)	$	784	$	—	$	(10)	$	2,387
Real estate	70		7		1		—		(4)		74
Private equity and other	4		1		—		—		—		5
Total Level 3 investments	$	1,865	$	(170)	$	785	$	—	$	(14)	$	2,466

The decrease in level 3 pension plan investments during 2022 was related to rising bond yields, benefits paid and currency impact. The increase in Level 3 pension plan investments during 2021 was primarily due to purchases of corporate bond, annuity contracts and other fixed income securities.

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The percentage of fair value of pension plan assets was:


	U.S. Plans		Non-U.S. Plans
	As of December 31,		As of December 31,
Asset Category	2022	2021	2022	2021
Equity securities	15%	15%	16%	17%
Fixed-income securities	85%	85%	63%	62%
Real estate	—	—	3%	3%

Buy-in annuity policies	—	—	17%	17%
Cash	—	—	1%	1%
Total	100%	100%	100%	100%

For our U.S. plans, our investment strategy is to reduce our funded status risk in part through appropriate asset allocation within our plan assets. We attempt to maintain our target asset allocation by rebalancing between asset classes as we make monthly benefit payments. The strategy involves using indexed U.S. equity and international equity securities and actively managed U.S. investment grade fixed-income securities (which constitute 95% or more of fixed-income securities) with smaller allocations to high yield fixed-income securities.

For our non-U.S. plans, the investment strategy is subject to local regulations and the asset/liability profiles of the plans in each individual country. In aggregate, the asset allocation targets of our non-U.S. plans are broadly characterized as a mix of approximately 15% equity securities, 61% fixed-income securities, 20% buy-in annuity policies and 4% real estate.

Employer Contributions:

In 2022, we contributed $4 million to our U.S. pension plans and $190 million to our non-U.S. pension plans. In addition, employees contributed $21 million to our non-U.S. plans. We make contributions to our pension plans in accordance with local funding arrangements and statutory minimum funding requirements. Discretionary contributions are made to the extent that they are tax deductible and do not generate an excise tax liability. In 2023, we estimate that our pension contributions will be $6 million to our U.S. plans and $119 million to our non-U.S. plans based on current tax laws. 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.

Future Benefit Payments:

The estimated future benefit payments from our pension plans at December 31, 2022 were (in millions):


	2023	2024	2025	2026	2027	2028-2032
U.S. Plans	$147	$89	$92	$91	$90	$442
Non-U.S. Plans	404	395	401	414	419	2,157

Multiemployer Pension Plans:

In accordance with obligations we have under collective bargaining agreements, we made contributions to multiemployer pension plans for continuing participation and these amounts were not material. Our contributions are based on our contribution rates under our collective bargaining agreements, the number of our eligible employees and fund surcharges.

On July 11, 2019, we received an undiscounted withdrawal liability assessment from the Fund totaling $526 million requiring pro-rata monthly payments over 20 years. We began making monthly payments during the third quarter of 2019. Within selling, general and administrative expenses, we recorded a $35 million ($26 million net of tax) adjustment related to the discounted withdrawal liability. Within interest and other expense, net, we recorded accreted interest of $11 million in 2022, $11 million in 2021 and $11 million in 2020. As of December 31, 2022, the remaining discounted withdrawal liability was $344 million, with $15 million recorded in other current liabilities and $329 million recorded in long-term other liabilities.

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Other Costs:

We sponsor and contribute to employee defined contribution plans. These plans cover eligible salaried, non-union and union employees. Our contributions and costs are determined by the matching of employee contributions, as defined by the plans. Amounts charged to expense in continuing operations for defined contribution plans totaled $66 million in 2022, $73 million in 2021 and $83 million in 2020.

Postretirement Benefit Plans

Obligations:

Our postretirement health care plans are not funded. The changes in and the amount of the accrued benefit obligation were:


	As of December 31,
	2022		2021
	(in millions)
Accrued benefit obligation at January 1	$	317	$	361
Service cost	2		4
Interest cost	9		8
Benefits paid	(15)		(15)
Plan amendments	—		(1)
Currency	(5)		(1)
Actuarial losses/(gains)	(75)		(39)
Accrued benefit obligation at December 31	$	233	$	317

The current portion of our accrued postretirement benefit obligation of $16 million at December 31, 2022 and $16 million at December 31, 2021 was included in other current liabilities.

The actuarial (gain) for all postretirement plans in 2021 and 2022 was driven by gains related to assumption changes partially offset by losses related to a change in the discount rate used to measure the benefit obligations of those plans.

We used the following weighted-average assumptions to determine our postretirement benefit obligations:


	U.S. Plans				Non-U.S. Plans
	As of December 31,				As of December 31,
	2022		2021		2022		2021
Discount rate	5.53	%	2.96	%	6.07	%	3.81	%
Health care cost trend rate assumed for next year	7.00	%	5.50	%	5.98	%	5.72	%
Ultimate trend rate	5.00	%	5.00	%	4.70	%	4.47	%
Year that the rate reaches the ultimate trend rate	2031		2024		2040		2040

Year-end discount rates for our U.S., Canadian and U.K. plans were developed from a model portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the benefit obligations. Year-end discount rates for our remaining non-U.S. plans were developed from local bond indices that match local benefit obligations as closely as possible. Changes in our discount rates were primarily the result of changes in bond yields year-over-year. Our expected health care cost trend rate is based on historical costs.

For the periods presented, we measure service and interest costs for other postretirement benefits by applying the specific spot rates along a yield curve used to measure plan obligations to the plans’ liability cash flows. We believe this approach provides a good measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve.

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Components of Net Periodic Postretirement Health Care Costs:

Net periodic postretirement health care costs consisted of the following:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Service cost	$	2	$	4	$	5
Interest cost	9		8		12
Amortization:
Net loss/(gain)	1		2		7
Prior service credit	—		—		(30)
Net periodic postretirement health care costs/(benefit)	$	12	$	14	$	(6)

We used the following weighted-average assumptions to determine our net periodic postretirement health care cost:


	U.S. Plans			Non-U.S. Plans
	For the Years Ended December 31,			For the Years Ended December 31,
	2022	2021	2020	2022	2021	2020
Discount rate	2.96%	2.68%	3.41%	3.81%	3.35%	3.86%
Health care cost trend rate	5.50%	5.75%	6.00%	5.72%	5.66%	5.42%

Future Benefit Payments:

Our estimated future benefit payments for our postretirement health care plans at December 31, 2022 were (in millions):


	2023	2024	2025	2026	2027	2028-2032
U.S. Plans	$11	$12	$11	$11	$11	$49
Non-U.S. Plans	4	5	5	5	5	28

Other Costs:

We made contributions to multiemployer medical plans totaling $17 million in 2022, $19 million in 2021 and $20 million in 2020. These plans provide medical benefits to active employees and retirees under certain collective bargaining agreements.

Postemployment Benefit Plans

Obligations:

Our postemployment plans are not funded. The changes in and the amount of the accrued benefit obligation at December 31, 2022 and 2021 were:


	As of December 31,
	2022		2021
	(in millions)
Accrued benefit obligation at January 1	$	56	$	65
Service cost	4		6
Interest cost	2		3
Benefits paid	(14)		(12)
Actuarial losses/(gains)	(1)		(6)
Accrued benefit obligation at December 31	$	47	$	56

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The accrued benefit obligation was determined using a weighted-average discount rate of 6.3% in 2022 and 4.3% in 2021, an assumed weighted-average ultimate annual turnover rate of 0.4% in 2022 and 2021, assumed compensation cost increases of 4.0% in 2022 and 2021 and assumed benefits as defined in the respective plans.

Postemployment costs arising from actions that offer employees benefits in excess of those specified in the respective plans are charged to expense when incurred.

Components of Net Periodic Postemployment Costs:

Net periodic postemployment costs consisted of the following:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Service cost	$	4	$	6	$	6
Interest cost	2		3		3
Amortization of net gains	(6)		(4)		(2)
Net periodic postemployment costs	$	—	$	5	$	7

As of December 31, 2022, the estimated net gain for the postemployment benefit plans that we expect to amortize from accumulated other comprehensive earnings/(losses) into net periodic postemployment costs during 2023 is approximately $3 million.

Note 12. Stock Plans

Under our Amended and Restated 2005 Performance Incentive Plan (the “2005 Plan”), we are authorized through May 21, 2024 to issue a maximum of 243.7 million shares of our Class A common stock (“Common Stock”) to employees and non-employee directors. As of December 31, 2022, there were 45.5 million shares available to be granted under the 2005 Plan.

Stock Options:

We recorded compensation expense related to stock options held by our employees of $20 million in 2022, $23 million in 2021 and $28 million in 2020 in our results from continuing operations. The deferred tax benefit recorded related to this compensation expense was $3 million in 2022, $4 million in 2021 and $5 million in 2020. The unamortized compensation expense related to our employee stock options was $21 million at December 31, 2022 and is expected to be recognized over a weighted-average period of 1.6 years.

Our weighted-average Black-Scholes Model fair value assumptions were:


	Risk-Free Interest Rate	Expected Life	Expected Volatility	Expected Dividend Yield	Fair Value at Grant Date
2022	1.87%	5 years	22.05%	2.13%	$11.24
2021	0.57%	5 years	23.45%	2.20%	$9.08
2020	1.34%	5 years	19.64%	2.06%	$8.61

The risk-free interest rate represents the constant maturity U.S. government treasuries rate with a remaining term equal to the expected life of the options. The expected life is the period over which our employees are expected to hold their options. Volatility reflects historical movements in our stock price for a period commensurate with the expected life of the options. The dividend yield reflects the dividend yield in place at the time of the historical grants.

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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, 2020	33,855,948	$	36.19		$	640	million
Annual grant to eligible employees	2,280,440	59.04
Additional options issued	136,360	49.48
Total options granted	2,416,800	58.50
Options exercised (1)	(7,847,964)	30.55			$	205	million
Options cancelled	(672,890)	44.94
Balance at December 31, 2020	27,751,894	39.51			$	527	million
Annual grant to eligible employees	2,412,710	56.13
Additional options issued	160,640	58.17
Total options granted	2,573,350	56.26
Options exercised (1)	(6,249,330)	33.68			$	169	million
Options cancelled	(572,155)	49.65
Balance at December 31, 2021	23,503,759	42.65			$	556	million
Annual grant to eligible employees	2,180,540	64.65
Additional options issued	63,490	64.39
Total options granted	2,244,030	64.64
Options exercised (1)	(4,780,086)	35.96			$	142	million
Options cancelled	(477,453)	55.89
Balance at December 31, 2022	20,490,250	46.31		5 years	$	417	million
Exercisable at December 31, 2022	16,350,018	42.62		4 years	$	393	million

(1)Cash received from options exercised was $158 million in 2022, $206 million in 2021 and $236 million in 2020. The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the option exercises totaled $22 million in 2022, $24 million in 2021 and $27 million in 2020.

Deferred Stock Units, Performance Share Units and Other Stock-Based Awards:

We recorded compensation expense related to DSUs, PSUs and other stock-based awards of $100 million in 2022, $98 million in 2021 and $98 million in 2020 in our results from continuing operations. The deferred tax benefit recorded related to this compensation expense was $17 million in 2022, $16 million in 2021 and $15 million in 2020. The unamortized compensation expense related to our DSUs, PSUs and other stock-based awards was $113 million at December 31, 2022 and is expected to be recognized over a weighted-average period of 0.9 years.

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Our PSU, DSU and other stock-based award activity is reflected below:


	Number of Shares	Grant Date	Weighted-Average Fair Value Per Share (4)		Weighted-Average Aggregate Fair Value (3)
Balance at January 1, 2020	5,661,945		$	46.90
Annual grant to eligible employees:		Feb. 20, 2020
Performance share units	825,230		65.83
Deferred stock units	545,550		59.04
Additional shares granted (1)	390,730	Various	56.90
Total shares granted	1,761,510		61.75		$	109	million
Vested (2) (3)	(2,051,054)		42.87		$	88	million
Forfeited (2)	(475,411)		48.24
Balance at December 31, 2020	4,896,990		53.80
Annual grant to eligible employees:		Feb. 18, 2021
Performance share units	903,250		59.35
Deferred stock units	550,090		56.13
Additional shares granted (1)	1,163,644	Various	53.76
Total shares granted	2,616,984		56.19		$	147	million
Vested (2) (3)	(2,459,427)		49.59		$	122	million
Forfeited (2)	(386,501)		57.52
Balance at December 31, 2021	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)	836,117	Various	59.37
Total shares granted	2,147,797		61.55		$	132	million
Vested (2) (3)	(1,925,556)		54.13		$	104	million
Forfeited (2)	(438,613)		60.68
Balance at December 31, 2022	4,451,674		60.12

(1)Includes PSUs and DSUs.

(2)Includes PSUs, DSUs and other stock-based awards.

(3)The actual tax benefit realized and recorded in the provision for income taxes for the tax deductions from the shares vested totaled $5 million in 2022, $6 million in 2021 and $5 million in 2020.

(4)The grant date fair value of PSUs is determined based on the Monte Carlo simulation model for the market-based total shareholder return component and the closing market price of the Company’s stock on the grant date for performance-based components. The Monte Carlo simulation model incorporates the probability of achieving the total shareholder return market condition. Compensation expense is recognized using the grant date fair values regardless of whether the market condition is achieved, so long as the requisite service has been provided.

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Note 13. Capital Stock

Our amended and restated articles of incorporation authorize 5.0 billion shares of Common Stock and 500 million shares of preferred stock. There were no preferred shares issued and outstanding at December 31, 2022, 2021 and 2020. Shares of Common Stock issued, in treasury and outstanding were:


	Shares Issued	Treasury Shares	Shares Outstanding
Balance at January 1, 2020	1,996,537,778	(561,531,524)	1,435,006,254
Shares repurchased	—	(25,071,845)	(25,071,845)
Exercise of stock options and issuance of other stock awards	—	9,239,812	9,239,812
Balance at December 31, 2020	1,996,537,778	(577,363,557)	1,419,174,221
Shares repurchased	—	(35,384,366)	(35,384,366)
Exercise of stock options and issuance of other stock awards	—	7,840,684	7,840,684
Balance at December 31, 2021	1,996,537,778	(604,907,239)	1,391,630,539
Shares repurchased	—	(31,556,510)	(31,556,510)
Exercise of stock options and issuance of other stock awards	—	5,817,062	5,817,062
Balance at December 31, 2022	1,996,537,778	(630,646,687)	1,365,891,091

Stock plan awards to employees and non-employee directors are issued from treasury shares. At December 31, 2022, 70.4 million shares of Common Stock held in treasury were reserved for stock options and other stock awards.

Share Repurchase Program:

Between 2013 and 2020, our Board of Directors authorized the repurchase of a total of $23.7 billion of our Common Stock 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 twelve months ended December 31, 2022, we repurchased approximately 31.6 million shares of Common Stock at an average cost of $63.41 per share, or an aggregate cost of approximately $2.0 billion, all of which was paid during the period. All share repurchases were funded through available cash and commercial paper issuances. Our Board of Directors approved a new program authorizing the repurchase of up to $6.0 billion of our Common Stock through December 31, 2025. This authorization, effective January 1, 2023, replaces our current share repurchase program.

Note 14. Commitments and Contingencies

Legal Proceedings:

We routinely are involved in various pending or threatened legal proceedings, claims, disputes, regulatory matters and governmental inquiries, inspections or investigations arising in the ordinary course of or incidental to our business, including those noted below in this section. We record provisions in the consolidated financial statements for pending legal matters when we determine that an unfavorable outcome is probable, and the amount of the loss can be reasonably estimated. For matters we have not provided for that are reasonably possible to result in an unfavorable outcome, management is unable to estimate the possible loss or range of loss or such amounts have been determined to be immaterial. At present we believe that the ultimate outcome of these legal proceedings and regulatory and governmental matters, individually and in the aggregate, will not materially harm our financial position, results of operations or cash flows. However, legal proceedings and regulatory and governmental matters are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could involve substantial fines, civil or criminal penalties, and other expenditures. In addition, in matters for which conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices or requiring other equitable remedies. An unfavorable outcome might result in a material adverse impact on our business, results of operations or financial position.

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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 alleged 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 sought 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 May 13, 2022, the District Court approved a settlement agreement between the CFTC and Mondelēz Global. The terms of the settlement, which are available in the District Court’s docket, had an immaterial impact on our financial position, results of operations and cash flows and did not include an admission by Mondelēz Global. Several class action complaints also were filed against 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 United States District Court for the Northern District of Illinois as case number 15-cv-2937, Harry Ploss et al. v. Kraft Foods Group, Inc. and Mondelēz Global LLC. On January 3, 2020, the District Court granted plaintiffs' request to certify a class. It is not possible to predict the outcome of these matters; however, based on our Separation and Distribution Agreement with Kraft Foods Group dated as of September 27, 2012, we expect to bear any monetary penalties or other payments in connection with the class action. Although the CFTC action and the class action complaints involve the same alleged conduct, the resolution of the CFTC matter may not be dispositive as to the outcome of the class action.

As previously disclosed, in November 2019, the European Commission informed us that it initiated an investigation into our alleged infringement of European Union competition law through certain practices allegedly restricting cross-border trade within the European Economic Area. On January 28, 2021, the European Commission announced it had taken the next procedural step in its investigation and opened formal proceedings. We have been cooperating with the investigation and in the fourth quarter of 2022 discussions with the European Commission progressed in an effort to reach a negotiated, proportionate resolution to this matter. In view of the developments in this period, within other current liabilities in the consolidated balance sheets as of December 31, 2022 and selling, general and administrative expenses in the consolidated statement of earnings for 2022, we have determined to record an accrual in accordance with U.S. GAAP of €300 million ($318 million) as an estimate of the possible cost to resolve this matter. It is not possible to predict if our discussions will result in a negotiated resolution, or result in a negotiated resolution in a higher amount, or when we will have clarity on the ultimate outcome of these discussions. If our discussions do not result in a negotiated resolution, we expect that the European Commission will pursue proceedings against the Company, including the imposition of a fine, and we would defend against any allegations made in such proceedings. There is a possibility that the final liability could be materially higher than the amount accrued. However, due to the inherent uncertainty of the discussions and possible outcomes, any possible loss or range of loss different from the amount accrued is not reasonably estimable at this time.

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 December 31, 2022, we had no material third-party guarantees recorded on our consolidated balance sheets.

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 15. Reclassifications from Accumulated Other Comprehensive Income

The following table summarizes the changes in the 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/(gains) of $21 million in 2022, $(44) million in 2021 and $285 million in 2020.


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Currency Translation Adjustments:
Balance at beginning of period	$	(9,097)	$	(8,655)	$	(8,320)
Currency translation adjustments	(659)		(481)		(398)
Reclassification to earnings related to:
Equity method investment transactions (1)	—		—		29
Tax (expense)/benefit	(66)		23		47
Other comprehensive earnings/(losses)	(725)		(458)		(322)
Less: other comprehensive (earnings)/loss attributable to noncontrolling interests	14		16		(13)
Balance at end of period	(9,808)		(9,097)		(8,655)
Pension and Other Benefit Plans:
Balance at beginning of period	$	(1,379)	$	(1,874)	$	(1,721)
Net actuarial gain/(loss) arising during period	149		398		(187)
Tax (expense)/benefit on net actuarial gain/(loss)	(37)		(80)		38
Losses/(gains) reclassified into net earnings:
Amortization of experience losses and prior service costs (2)	57		140		104
Settlement losses and other expenses (1)	16		22		22
Curtailment credit (2)	8		(17)		—
Tax (benefit) on reclassifications (3)	(21)		(34)		(31)
Currency impact	102		66		(99)
Other comprehensive earnings/(losses)	274		495		(153)
Balance at end of period	(1,105)		(1,379)		(1,874)
Derivative Cash Flow Hedges:
Balance at beginning of period	$	(148)	$	(161)	$	(213)
Net derivative gains/(losses)	160		163		(132)
Tax (expense)/benefit on net derivative gain/(loss)	(13)		—		27
Losses/(gains) reclassified into net earnings:
Currency exchange contracts (4)	8		—		—
Interest rate contracts (1) (4)	(30)		(152)		189
Tax (benefit) on reclassifications (3)	(17)		(3)		(28)
Currency impact	6		5		(4)
Other comprehensive earnings/(losses)	114		13		52
Balance at end of period	(34)		(148)		(161)
Accumulated other comprehensive income attributable to Mondelēz International:
Balance at beginning of period	$	(10,624)	$	(10,690)	$	(10,254)
Total other comprehensive earnings/(losses)	(337)		50		(423)
Less: other comprehensive (earnings)/loss attributable to noncontrolling interests	14		16		(13)
Other comprehensive earnings/(losses) attributable to Mondelēz International	(323)		66		(436)
Balance at end of period	$	(10,947)	$	(10,624)	$	(10,690)

(1)Includes equity method investment transactions recorded within gain/(loss) on equity method investment transactions.

(2)These reclassified losses are included in net periodic benefit costs disclosed in Note 11, Benefit Plans.

(3)Taxes reclassified to earnings are recorded within the provision for income taxes.

(4)These reclassified losses are recorded within interest and other expense, net.

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Note 16. Income Taxes

Earnings/(losses) from continuing operations before income taxes and the provision for income taxes consisted of:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Earnings/(losses) from continuing operations before income taxes:
United States	$	463	$	519	$	514
Outside United States	2,765		3,850		2,869
	$	3,228	$	4,369	$	3,383
Provision for income taxes:
United States federal:
Current	$	187	$	297	$	440
Deferred	(17)		(31)		(82)
	170		266		358
State and local:
Current	78		89		98
Deferred	2		9		(7)
	80		98		91
Total United States	250		364		449

Outside United States:
Current	642		599		756
Deferred	(27)		227		19
Total outside United States	615		826		775

Total provision for income taxes	$	865	$	1,190	$	1,224

The effective income tax rate on pre-tax earnings differed from the U.S. federal statutory rate as follows:


	For the Years Ended December 31,
	2022	2021	2020
U.S. federal statutory rate	21.0%	21.0%	21.0%
Increase/(decrease) resulting from:
State and local income taxes, net of federal tax benefit	1.6%	1.1%	1.6%
Tax impacts from our foreign operations	2.0%	(1.6)%	1.1%
Changes in judgment on realizability of deferred tax assets	(1.1)%	0.1%	(2.2)%
Reversal of other tax accruals no longer required	(1.4)%	(0.5)%	(0.8)%
Tax accrual on investment in KDP (including tax impact of share sales)	0.5%	4.7%	6.7%
Excess tax benefits from equity compensation	(0.8)%	(0.7)%	(1.0)%
Tax legislation	0.5%	2.3%	1.0%
Business sales (including tax impact from JDE Peet's transaction)	0.1%	—%	7.4%

Foreign tax provisions under TCJA (GILTI, FDII and BEAT) (1)	0.1%	0.8%	1.1%
Non-deductible expenses, including buyout of Clif Bar ESOP and European Commission legal matter	4.1%	0.1%	0.1%
Other	0.2%	(0.1)%	0.2%
Effective tax rate	26.8%	27.2%	36.2%

(1)The Tax Cuts and Jobs Act of 2017 (“TCJA”) established the Global Intangible Low-Tax Income (“GILTI”) provision, which taxes U.S. allocated expenses and certain income from foreign operations; the Foreign-Derived Intangible Income (“FDII”) provision, which allows a

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deduction against certain types of U.S. taxable income resulting in a lower effective U.S. tax rate on such income; and the Base Erosion Anti-abuse Tax (“BEAT”), which is a minimum tax based on cross-border service payments by U.S. entities.

Our 2022 effective tax rate of 26.8% was higher due to the buyout of the Clif Bar ESOP that was recorded to earnings before income taxes and the European Commission legal matter, for which there is no associated income tax benefits. Excluding these impacts, our effective tax rate was 22.6%, which reflects unfavorable provisions from the U.S. tax code and the establishment of a valuation allowance related to a deferred tax asset arising from the 2022 Ukraine loss, largely offset by favorable impacts from the mix of pre-tax income in various non-U.S. jurisdictions. The 22.6% includes a favorable discrete net tax benefit of $96 million, driven by a $72 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 $51 million net benefit from the Chipita acquisition, partially offset by $17 million expense from tax law changes in various jurisdictions.

Our 2021 effective tax rate of 27.2% was higher due to the $187 million net tax expense incurred in connection with the KDP share sales during the second and third quarters. Excluding this impact, our effective tax rate was 23.0%, which reflects unfavorable provisions from the 2017 U.S. tax reform and taxes on earnings from equity method investments (these earnings are reported separately on our consolidated statements of earnings and not within earnings before income taxes), largely offset by favorable impacts from the mix of pre-tax income in various non-U.S. jurisdictions. The 23.0% includes a discrete net tax benefit of $2 million, primarily driven by a $47 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 $44 million benefit from two U.S. tax returns amended to reflect new guidance from the U.S. Treasury Department, offset by $100 million net tax expense from the increase of our deferred tax liabilities resulting from enacted tax legislation (mainly in the United Kingdom).

Our 2020 effective tax rate of 36.2% was higher due to the $452 million net tax expense incurred in connection with the JDE Peet's transaction and four KDP share sales that occurred during 2020 (the related gains were reported as gains on equity method investments). Excluding these impacts, our effective tax rate was 22.8%, which reflects unfavorable provisions from U.S. tax reform and taxes on earnings from equity method investments (these earnings are reported separately on our consolidated statements of earnings and not within earnings before income taxes), largely offset by favorable impacts from the mix of pre-tax income in various non-U.S. jurisdictions and discrete net tax benefits of $119 million. The discrete net benefits were primarily driven by the $70 million net benefit from the release of the China valuation allowance and a $50 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.

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Tax effects of temporary differences that gave rise to deferred income tax assets and liabilities consisted of:


	As of December 31,
	2022		2021
	(in millions)
Deferred income tax assets:
Accrued postretirement and postemployment benefits	$	83	$	114
Other employee benefits	156		150
Accrued expenses	649		454
Loss carryforwards	664		685
Tax credit carryforwards	786		786
Other	481		468
Total deferred income tax assets	2,819		2,657
Valuation allowance	(1,257)		(1,280)
Net deferred income tax assets	$	1,562	$	1,377
Deferred income tax liabilities:
Intangible assets, including impact from Swiss tax reform	$	(3,279)	$	(3,214)
Property, plant and equipment	(708)		(638)
Accrued pension costs	(57)		23
Other	(482)		(451)
Total deferred income tax liabilities	(4,526)		(4,280)
Net deferred income tax liabilities	$	(2,964)	$	(2,903)

Our significant valuation allowances are in the U.S. and Switzerland. The U.S. valuation allowance mainly relates to excess foreign tax credits generated by the deemed repatriation under U.S. tax reform while the Swiss valuation allowance brings the allowed step-up of intangible assets recorded under Swiss tax reform to the amount more likely than not to be realized. Our total valuation allowance was $1,280 million as of January 1, 2022 and $1,257 million as of December 31, 2022. The $23 million net change consisted of $79 million additions less $102 million reductions.

At December 31, 2022, the Company has tax-effected loss carryforwards of $664 million, of which $34 million will expire at various dates between 2023 and 2042 and the remaining $630 million can be carried forward indefinitely.

As of December 31, 2022, the company is indefinitely reinvested in unremitted earnings of approximately $4.4 billion, of which approximately $1.2 billion has already been subject to U.S. tax but would incur approximately $90 million of local costs if repatriated, which has not been recognized in our financial statements. It is not practicable to quantify the total U.S. tax impact from all our indefinitely reinvested earnings. Future tax law changes or changes in the needs of our non-U.S. subsidiaries could require us to recognize deferred tax liabilities on a portion, or all, of our accumulated earnings that are currently indefinitely reinvested.

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The changes in our unrecognized tax benefits were:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
January 1	$	446	$	442	$	426
Increases from positions taken during prior periods	16		31		35
Decreases from positions taken during prior periods	(9)		(21)		(17)
Increases from positions taken during the current period	48		47		48
Decreases relating to settlements with taxing authorities	(54)		(13)		(27)
Reductions resulting from the lapse of the applicable statute of limitations	(22)		(26)		(29)
Currency/other	(1)		(14)		6
December 31	$	424	$	446	$	442

As of January 1, 2022, our unrecognized tax benefits were $446 million. If we had recognized all of these benefits, the net impact on our income tax provision would have been $372 million. Our unrecognized tax benefits were $424 million at December 31, 2022, and if we had recognized all of these benefits, the net impact on our income tax provision would have been $352 million. Within the next 12 months, our unrecognized tax benefits could increase by approximately $40 million due to unfavorable audit developments or decrease by approximately $70 million due to audit settlements and the expiration of statutes of limitations in various jurisdictions. We include accrued interest and penalties related to uncertain tax positions in our tax provision. We had accrued interest and penalties of $173 million as of January 1, 2022 and $162 million as of December 31, 2022. Our 2022 provision for income taxes included $1 million expense for interest and penalties.

In connection with the 2017 enacted U.S. tax reform, we recorded a $1.3 billion transition tax liability that is payable in installments through 2026. As of December 31, 2022, the remaining liability was approximately $570 million.

Our income tax filings are regularly examined by federal, state and non-U.S. tax authorities. U.S. federal, state and non-U.S. jurisdictions have statutes of limitations generally ranging from three to five years; however, these statutes are often extended by mutual agreement with the tax authorities. The earliest year still open to examination by U.S. federal and state tax authorities is 2016 and years still open to examination by non-U.S. tax authorities in major jurisdictions include (earliest open tax year in parentheses): India (2005), Switzerland (2018), China (2012), the United Kingdom (2015), and Greece (2017).

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Note 17. Earnings per Share

Basic and diluted earnings per share (“EPS”) were calculated as follows:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions, except per share data)
Net earnings	$	2,726	$	4,314	$	3,569
Noncontrolling interest earnings	(9)		(14)		(14)
Net earnings attributable to Mondelēz International	$	2,717	$	4,300	$	3,555
Weighted-average shares for basic EPS	1,378		1,403		1,431
Plus incremental shares from assumed conversions of stock options and long-term incentive plan shares	7		10		10
Weighted-average shares for diluted EPS	1,385		1,413		1,441
Basic earnings per share attributable to Mondelēz International	$	1.97	$	3.06	$	2.48
Diluted earnings per share attributable to Mondelēz International	$	1.96	$	3.04	$	2.47

We exclude antidilutive Mondelēz International stock options and long-term incentive plan shares from our calculation of weighted-average shares for diluted EPS, which are 3.0 million for the year ended December 31, 2022, 3.1 million for the year ended December 31, 2021 and 3.6 million for the year ended December 31, 2020.

Note 18. Segment Reporting

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

We manage our global business and report operating results through geographic units. We manage our operations by region to leverage regional operating scale, manage different and changing business environments more effectively and pursue growth opportunities as they arise across our key markets. Our regional management teams have responsibility for the business, product categories and financial results in the regions.

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 intangible assets, gains and losses on divestitures and acquisitions 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.

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Our segment net revenues and earnings, reflecting our current segment structure for all periods presented, were:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Net revenues:
Latin America	$	3,629	$	2,797	$	2,477
AMEA	6,767		6,465		5,740
Europe	11,420		11,156		10,207
North America	9,680		8,302		8,157
Net revenues	$	31,496	$	28,720	$	26,581





Earnings before income taxes:
Operating income:
Latin America	$	388	$	261	$	189
AMEA	929		1,054		821
Europe	1,481		2,092		1,775
North America	1,769		1,371		1,587
Unrealized gains/(losses) on hedging activities (mark-to-market impacts)	(326)		279		16
General corporate expenses	(245)		(253)		(326)
Amortization of intangible assets	(132)		(134)		(194)
Gain on acquisition	—		8		—
Acquisition-related costs	(330)		(25)		(15)
Operating income	3,534		4,653		3,853
Benefit plan non-service income	117		163		138
Interest and other expense, net	(423)		(447)		(608)
Earnings before income taxes	$	3,228	$	4,369	$	3,383

Items impacting our segment operating results are discussed in Note 1, Summary of Significant Accounting Policies, Note 2, Acquisitions and Divestitures, Note 4, Property, Plant and Equipment, Note 6, Goodwill and Intangible Assets, Note 8, Restructuring Program, and Note 14, Commitments and Contingencies. Also see Note 9, Debt and Borrowing Arrangements, and Note 10, Financial Instruments, for more information on our interest and other expense, net for each period.

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Total assets, depreciation expense and capital expenditures by segment, reflecting our current segment structure for all periods presented, were:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Total assets:
Latin America (1)	$	6,164	$	4,106	$	4,181
AMEA (1)	9,882		10,386		9,997
Europe (1)	22,713		20,927		21,442
North America (1)	26,603		23,321		23,297
Equity method investments	4,879		5,289		6,036
Unallocated assets and adjustments (2)	920		3,063		2,857
Total assets	$	71,161	$	67,092	$	67,810

(1)Segment assets do not reflect outstanding intercompany asset balances that have been eliminated at a segment level.

(2)Unallocated assets consist primarily of cash and cash equivalents, deferred income taxes, centrally held property, plant and equipment, prepaid pension assets and derivative financial instrument balances. Final adjustments for jurisdictional netting of deferred tax assets and liabilities is done at a consolidated level.


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Depreciation expense (1):
Latin America	$	117	$	105	$	101
AMEA	169		173		159
Europe	256		257		238
North America	148		148		154
Total depreciation expense	$	690	$	683	$	652

(1)Includes depreciation expense related to owned property, plant and equipment. Does not include amortization of intangible assets or leased assets. Refer to the consolidated statement of cash flows for total depreciation and amortization expenses.


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Capital expenditures:
Latin America	$	113	$	165	$	219
AMEA	229		208		177
Europe	355		409		295
North America	209		183		172
Total capital expenditures	$	906	$	965	$	863

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Geographic data for net revenues (recognized in the countries where products are sold from) and long-lived assets, excluding deferred taxes, goodwill, intangible assets and equity method investments, were:


	For the Years Ended December 31,
	2022		2021		2020
	(in millions)
Net revenues:
United States	$	8,315	$	7,146	$	7,130
Other	23,181		21,574		19,451
Total net revenues	$	31,496	$	28,720	$	26,581


	As of December 31,
	2022		2021		2020
	(in millions)
Long-lived assets:
United States	$	2,740	$	1,851	$	1,956
United Kingdom	932		1,125		888
Other	8,886		7,675		7,784
Total long-lived assets	$	12,558	$	10,651	$	10,628

Net revenues by product category, reflecting our current segment structure for all periods presented, were:


	For the Year Ended December 31, 2022
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits & Baked Snacks	$	1,013	$	2,515	$	3,818	$	8,262	$	15,608
Chocolate	1,003		2,520		5,646		317		9,486
Gum & Candy	840		780		691		1,101		3,412
Beverages	409		572		119		—		1,100
Cheese & Grocery	364		380		1,146		—		1,890
Total net revenues	$	3,629	$	6,767	$	11,420	$	9,680	$	31,496


	For the Year Ended December 31, 2021 (1)
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits & Baked Snacks	$	799	$	2,254	$	3,354	$	7,145	$	13,552
Chocolate	758		2,395		5,836		282		9,271
Gum & Candy	567		816		614		875		2,872
Beverages	359		550		126		—		1,035
Cheese & Grocery	314		450		1,226		—		1,990
Total net revenues	$	2,797	$	6,465	$	11,156	$	8,302	$	28,720

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	For the Year Ended December 31, 2020 (1)
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits & Baked Snacks	$	669	$	2,045	$	3,058	$	7,024	$	12,796
Chocolate	609		2,019		5,268		253		8,149
Gum & Candy	474		696		612		880		2,662
Beverages	403		544		102		—		1,049
Cheese & Grocery	322		436		1,167		—		1,925
Total net revenues	$	2,477	$	5,740	$	10,207	$	8,157	$	26,581

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

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