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Mondelez: Mondelēz International Reports Q1 Results

The following excerpt is from the company's SEC filing.

and Reaffirms 2016 Outlook

Diluted EPS was $0.35, up 84%; Adjusted EPS

was $0.48, up 31% on a constant-currency basis

Operating Income margin was 11.2%, up 80 basis points; Adjusted Operating Income

Net revenues decreased 16.8%; Organic Net Revenue

grew 2.1%

Mark Clouse, Chief Commercial Officer, to leave company to become CEO of a North American publicly traded food company

DEERFIELD, Ill. April 27, 2016 Mondelēz International, Inc. (NASDAQ: MDLZ) today reported its first quarter 2016 results, with strong Adjusted Operating Income margin expansion and Adjusted EPS growth on a constant currency basis, as well as solid Organic Net Revenue growth.

Weve had a good start to the year, said Irene Rosenfeld, Chairman and CEO. We significantly expanded margins by continuing to reduce supply chain and overhead costs. In addition, we delivered improved volume/mix in developed markets, while effectively managing through the volatile operating environment in emerging markets. As a result, were confident in our ability to deliver our 2016 outlook that we shared in February.

On a reported basis, net revenues were $6.5 billion, down 16.8 percent, driven by a negative 9.4 percentage point impact from the coffee transaction and a 7.2 percentage point headwind from currency. Operating income was $722 million, down 11.0 percent. Diluted EPS was $0.35, up $0.16.

$ in millions

Reported

Net Revenues

Organic Net Revenue Growth

Q1 2016

Vol/Mix

Pricing

Latin America

Asia Pacific

Eastern Europe, Middle East & Africa

Emerging Markets

Developed Markets

Power Brands

Organic Net Revenue increased 2.1 percent, as the company increased volume/mix in developed markets and raised prices to recover currency-driven input cost inflation in inflationary markets. Power Brands

grew 3.8 percent. Organic Net Revenue from emerging markets

was up 3.6 percent and developed markets

increased 1.3 percent.

Operating Income and Diluted EPS

(Rpt Fx)

(Cst Fx)

Gross Profit

Gross Profit Margin

Operating Income Margin

Net Earnings

Adjusted Gross Profit

margin was 39.7 percent, up 170 basis points. Strong net productivity drove the improvement, partially offset by a 50 basis point reduction from mark-to-market adjustments associated with commodity and currency hedging.

Adjusted Operating Income margin expanded 240 basis points to 15.1 percent. The company continued to reduce overhead costs and increased advertising and consumer support as a percent of revenue.

Adjusted EPS grew 30.8 percent on a constant-currency basis, driven primarily by Adjusted Operating Income improvement.

Share Repurchases

In the first quarter, the company repurchased nearly $1.2 billion of its common stock at an average price of $41.04 per share.

The company reaffirmed its outlook for 2016, as described below.

Metric

Full Year 2016 Outlook

Revenue Growth

At least 2%

15% to 16%

Double-digit growth on a constant currency basis

Free Cash Flow

excluding items

At least $1.4 billion

In addition, the company reduced its estimate of the negative impact of foreign exchange translation on 2016 net revenue growth to approximately 3 percentage points

(from approximately 6 percentage points) and on Adjusted EPS to approximately $0.05

(from approximately $0.13).

Mark Clouse to Leave Company

Mondelēz International also announced today that Mark Clouse, Chief Commercial Officer (CCO), will leave the company to become CEO of a North American publicly traded food company starting in late May. In his 20 years with the company, Clouse has managed a number of regional and global businesses and served as Chief Growth Officer prior to his appointment as CCO at the beginning of 2016.

Were proud of and grateful for Marks significant contributions to our company over the last two decades, said Rosenfeld. Hes a seasoned executive and natural leader who has built our brands and businesses, while always demonstrating a deep passion for developing others. Mark has proven hes ready for this exciting next step in his career and we wish him and his family all the best.

The company does not plan to appoint a new CCO.

Conference Call

Mondelēz International will host a conference call for investors with accompanying slides to review its results at 10 a.m. ET today. Investors and analysts may participate via phone by calling 1-800-322-9079 from the United States and 1-973-582-2717 from other locations. Access to a live audio webcast with accompanying slides and a replay of the event will be available at

www.mondelezinternational.com/Investor

. The company will be live tweeting from the event at

About Mondelēz International

Mondelēz International, Inc. (NASDAQ: MDLZ) is a global snacking powerhouse, with 2015 net revenues of approximately $30 billion. Creating delicious moments of joy in 165 countries, Mondelēz International is a world leader in biscuits, chocolate, gum, candy and powdered beverages, with billion-dollar brands such as

Nabisco

biscuits;

Cadbury,

Cadbury Dairy Milk

chocolate; and

Trident

gum. Mondelēz International is a proud member of the Standard and Poors 500, NASDAQ 100 and Dow Jones Sustainability Index. Visit

or follow us on Twitter at

End Notes

Organic Net Revenue, Adjusted Operating Income, Adjusted EPS, Adjusted Gross Profit and Free Cash Flow excluding items are non-GAAP financial measures. Please see discussion of non-GAAP financial measures at the end of this press release for more information.

Power Brands include some of the companys largest global and regional brands, such as

Chips Ahoy!

Ritz, TUC/Club Social

belVita

Cadbury Dairy Milk, Milka

gum;

Halls

candy; and

powdered beverages.

Emerging markets consist of the Latin America and Eastern Europe, Middle East and Africa regions in their entirety; the Asia Pacific region, excluding Australia, New Zealand and Japan; and the following countries from the Europe region: Poland, Czech Republic, Slovak Republic, Hungary, Bulgaria, Romania, the Baltics and the East Adriatic countries.

Developed markets include the entire North America region, the Europe region excluding the countries included in the emerging markets definition, and Australia, New Zealand and Japan from the Asia Pacific region.

Net earnings attributable to Mondelēz International.

Currency estimate is based on published rates from Oanda on April 22, 2016.

Forward-Looking Statements

This press release contains a number of forward-looking statements. Words, and variations of words, such as will, expect, may, estimate, deliver, outlook and similar expressions are intended to identify the companys forward-looking statements, including, but not limited to, statements about: the companys future performance, including its future revenue growth, earnings per share, margins and cash flow; currency and the effect of foreign exchange translation on the companys results of operations; the economic, regulatory and business environment and the companys operations in Venezuela; the costs of, timing of expenditures under and completion of the companys restructuring program; pension liabilities related to the coffee business transactions; and the companys outlook, including 2016 Organic Net Revenue growth, Adjusted Operating Income margin, Adjusted EPS and Free Cash Flow excluding items. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the companys control, which could cause the companys actual results to differ materially from those indicated in the companys forward-looking statements. Such factors include, but are not limited to, risks from operating globally including in emerging markets; changes in currency exchange rates, controls and restrictions; continued volatility of commodity and other input costs; weakness in economic conditions; weakness in consumer spending; pricing actions; unanticipated disruptions to the companys business; competition; the restructuring program and the companys other transformation initiatives not yielding the anticipated benefits; changes in the assumptions on which the restructuring program is based; and tax law changes. Please also see the companys risk factors, as they may be amended from time to time, set forth in its filings with the SEC, including the companys most recently filed Annual Report on Form 10-K. Mondelēz International disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation.

Mondelēz International, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Financial Measures

(Unaudited)

The company reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP or referred to herein as Reported). However, management believes that certain non-GAAP financial measures should be considered when assessing the companys ongoing performance to provide more complete information on the factors and trends affecting the companys business. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the companys performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the companys Reported results prepared in accordance with GAAP. In addition, the non-GAAP measures the company uses may differ from non-GAAP measures used by other companies. Because GAAP financial measures on a forward-looking basis are neither accessible nor deemed to be significantly different from the non-GAAP financial measures, and reconciling information is not available without unreasonable effort, the company has not provided that information with regard to the non-GAAP financial measures in the companys outlook.

DEFINITIONS OF THE COMPANYS NON-GAAP FINANCIAL MEASURES

The companys non-GAAP financial measures and corresponding metrics reflect how the company evaluates its operating results currently and provide improved comparability of operating results. As new events or circumstances arise, these definitions could change over time:

Organic Net Revenue is defined as net revenues excluding the impacts of acquisitions, divestitures

; the historical global coffee business

; the historical Venezuelan operations; accounting calendar changes; and currency rate fluctuations. The company also evaluates Organic Net Revenue growth from emerging markets and its Power Brands.

Adjusted Gross Profit is defined as gross profit excluding the 2012-2014 Restructuring Program; the 2014-2018 Restructuring Program; the Integration Program and other acquisition integration costs; incremental costs associated with the JDE coffee business transactions; the operating results of divestitures

; the historical coffee business operating results

; and the historical Venezuelan operating results. The company also evaluates growth in the companys Adjusted Gross Profit on a constant currency basis.

Adjusted Operating Income and Adjusted Segment Operating Income are defined as operating income (or segment operating income) excluding the impacts of Spin-Off Costs; the 2012-2014 Restructuring Program; the 2014-2018 Restructuring Program; the Integration Program and other acquisition integration costs; the Venezuela remeasurement and deconsolidation losses and historical operating results; impairment charges related to goodwill and intangible assets; divestiture

or acquisition gain or losses and related costs; the JDE

coffee business transactions

gain and net incremental costs; the operating results of divestitures

; the historical global coffee business operating results

; and equity method investment earnings historically reported within operating income

. The company also evaluates growth in the companys Adjusted Operating Income and Adjusted Segment Operating Income on a constant currency basis.

Adjusted EPS is defined as diluted EPS attributable to Mondelēz International from continuing operations excluding the impacts of Spin-Off Costs; the 2012-2014 Restructuring Program; the 2014-2018 Restructuring Program; the Integration Program and other acquisition integration costs; the Venezuela remeasurement and deconsolidation losses and historical operating results; losses on debt extinguishment and related expenses; impairment charges related to goodwill and intangible assets; gains or losses on interest rate swaps no longer designated as accounting cash flow hedges due to changed financing and hedging plans; divestiture

or acquisition gain or losses and related costs; the JDE coffee business transactions

gain, transaction hedging gains or losses and net incremental costs; gain on the equity method investment exchange; and net earnings from divestitures

. In addition, the company has adjusted its equity method investment earnings for its proportionate share of unusual or infrequent items, such as acquisition and divestiture-related costs and restructuring program costs, recorded by the companys JDE and Keurig equity method investees. The company also evaluates growth in the companys Adjusted EPS on a constant currency basis.

Free Cash Flow excluding items is defined as Free Cash Flow (net cash provided by operating activities less capital expenditures) excluding cash payments associated with accrued interest and other related fees due to the companys completion of a $2.5 billion cash tender offer on March 20, 2015.

Divestitures include businesses under sale agreements for which the company has cleared significant sale-related conditions such that the pending sale is probable as of the end of the reporting period and exits of major product lines under a sale or licensing agreement. See (2) below.

In connection with the JDE coffee business transactions that closed on July 2, 2015, because the company exchanged its coffee interests for similarly-sized coffee interests in JDE at the time of the transaction, the company has deconsolidated and not included its historical global coffee business results within divestitures in its non-GAAP financial measures. The company continues to have an ongoing interest in the coffee business. Beginning in the third quarter of 2015, the company has included the after-tax earnings of JDE, Keurig and of its historical coffee business results within continuing results of operations. For Adjusted EPS, the company has included these earnings in equity method investment earnings and has deconsolidated its historical coffee business results from Organic Net Revenue, Adjusted Gross Profit and Adjusted Operating Income to facilitate comparisons of past and future coffee operating results.

Historically, the company has recorded income from equity method investments within its operating income as these investments operated as extensions of the companys base business. Beginning in the third quarter of 2015, the company began to record the earnings from its equity method investments in after-tax equity method investment earnings outside of operating income following the deconsolidation of its coffee business. In periods prior to July 2,

2015, the company has reclassified the equity method earnings from Adjusted Operating Income to after-tax equity method investment earnings within Adjusted EPS to be consistent with the deconsolidation of its coffee business results on July 2 and in order to evaluate its operating results on a consistent basis.

See the attached schedules for supplemental financial data and corresponding reconciliations of the non-GAAP financial measures referred to above to the most comparable GAAP financial measures for the three months ended March 31, 2016 and 2015.

SEGMENT OPERATING INCOME

The company uses segment operating income to evaluate segment performance and allocate resources. The company believes it is appropriate to disclose this measure to help investors analyze segment performance and trends. Segment operating income excludes unrealized gains and losses on hedging activities (which are a component of cost of sales), general corporate expenses (which are a component of selling, general and administrative expenses), amortization of intangibles, gains and losses on divestitures or acquisitions, gain on the JDE coffee business transactions, loss on the deconsolidation of Venezuela and acquisition-related costs (which are a component of selling, general and administrative expenses) in all periods presented. The company excludes these items from segment operating income in order to provide better transparency of its segment operating results. Furthermore, the company centrally manages interest and other expense, net. Accordingly, the company does not present these items by segment because they are excluded from the segment profitability measure that management reviews.

ITEMS IMPACTING COMPARABILITY OF OPERATING RESULTS

The following information is provided to give qualitative and quantitative information related to items impacting comparability of operating results. The company determines which items to consider as items impacting comparability based on how management views the companys business; makes financial, operating and planning decisions; and evaluates the companys ongoing performance. In addition, the company discloses the impact of changes in currency exchange rates on the companys financial results in order to reflect results on a constant currency basis.

On April 23, 2015, the company completed the divestiture of its 50 percent interest in a Japanese coffee joint venture to its joint venture partner, which generated cash proceeds of 27 billion Japanese yen ($225 million as of April 23, 2015) and a pre-tax gain of $13 million (after-tax loss of $9 million). The company contributed to Jacobs Douwe Egberts (JDE) the net cash proceeds from the sale of the interest. The company did not divest any businesses during the three months ended March 31, 2016.

Acquisitions and acquisition-related costs

On July 15, 2015, the company acquired an 80 percent interest in a biscuit operation in Vietnam, which is now a subsidiary within its Asia Pacific segment. The acquisition added incremental net revenues, on a constant currency basis, of $38 million for the three months ended March 31, 2016.

On February 16, 2015, the company also acquired a U.S. snacking company (Enjoy Life Foods) within its North America segment. The acquisition added incremental net revenues of $5 million for the three months ended March 31, 2016.

The company recorded acquisition-related costs of $1 million during the three months ended March 31, 2015. These acquisition-related costs were recorded in selling, general and administrative expenses.

Accounting calendar change

In connection with moving toward a common consolidation date across the company, in the first quarter of 2015, the company changed the consolidation date for the North America segment from the last Saturday of each period to the last calendar day of each period. As a result of this change, each of the companys operating subsidiaries now reports results as of the last calendar day of the period. The change had a favorable impact on net revenues of $38 million for the three months ended March 31, 2015.

Acquisition integration costs

Within the companys Asia Pacific segment, in connection with the July 2015 acquisition of a biscuit operation in Vietnam, the company recorded integration costs of $4 million for the three months ended March 31, 2016. The company recorded these acquisition integration costs in selling, general and administrative expenses.

2012-2014 Restructuring Program

In 2012, the companys Board of Directors approved $1.5 billion of restructuring and related implementation costs (2012-2014 Restructuring Program) reflecting primarily severance, asset disposals and other manufacturing-related one-time costs. The primary objective of the restructuring and implementation activities was to ensure that Mondelēz International and Kraft Foods Group were each set up to operate efficiently and execute on their respective business strategies upon separation in the Spin-Off and in the future. Of the $1.5 billion of 2012-2014 Restructuring Program costs, the company retained approximately $925 million and Kraft Foods Group retained the balance of the program. Through the end of 2014, the company incurred total restructuring and related implementation charges of $899 million, and completed incurring planned charges on the 2012-2014 Restructuring Program. The company recorded reversals to the restructuring charges of $2 million in the three months ended March 31, 2015 related to accruals no longer required. These charges were related to asset write-downs (including accelerated depreciation and asset impairments), severance and other related costs.

Effective as of the close of the 2015 fiscal year, the company concluded that it no longer met the accounting criteria for consolidation of its Venezuela subsidiaries due to a loss of control over its Venezuelan operations and an other-than-temporary lack of currency exchangeability. As of the close of the 2015 fiscal year, the company deconsolidated and changed to the cost method of accounting for its Venezuelan operations. The company recorded a $778 million pre-tax loss on December 31, 2015 as it reduced the value of its cost method investment in Venezuela and all Venezuelan receivables held by its other subsidiaries to realizable fair value, resulting in full impairment. The recorded loss also included historical cumulative translation adjustments related to the companys Venezuelan operations that the company had previously recorded in accumulated other comprehensive losses within equity.

Beginning in 2016, the company no longer includes net revenues, earnings or net assets of its Venezuelan subsidiaries within its consolidated financial statements. Under the cost method of accounting, earnings are only recognized to the extent cash is received. Given the current and ongoing difficult economic, regulatory and business environment in Venezuela, there continues to be significant uncertainty related to the companys operations in Venezuela, and the company expects these conditions will continue for the foreseeable future. The company will monitor the extent of its ability to control its Venezuelan operations and the liquidity and availability of U.S. dollars at different rates, as the current situation in Venezuela may change over time and lead to consolidation at a future date.

The company recorded no earnings or other financial results from its Venezuelan subsidiaries during the three months ended March 31, 2016. For three months ended March 31, 2015, the operating results of its Venezuela operations were included in the companys condensed consolidated statements of earnings. During this time, the company recognized an $11 million currency-related remeasurement loss resulting from a devaluation of the Venezuela bolivar exchange rates the company historically used to source U.S. dollars for purchases of imported raw materials, packaging and other goods and services.

Reclassification of historical Venezuela net revenues, operating income and net earnings

The company removed its historical operating results for its Venezuelan subsidiaries from its historical Organic Net Revenue, Adjusted Gross Profit, Adjusted Operating Income and Adjusted EPS to facilitate comparisons of past and future operating results and net earnings.

Loss on debt extinguishment and related costs

On March 20, 2015, the company completed a cash tender offer and retired $2.5 billion of its outstanding high coupon long-term debt. The company recorded, within interest and other expense, net, a pre-tax loss on debt extinguishment and related expenses of $713 million during the three months ended March 31, 2015, for the amount paid in excess of the carrying value of the debt and from recognizing in earnings the related unamortized discounts, deferred financing costs and deferred cash flow hedges.

2014-2018 Restructuring Program

On May 6, 2014, the companys Board of Directors approved a $3.5 billion restructuring program, comprised of approximately $2.5 billion in cash costs and $1 billion in non-cash costs (2014-2018 Restructuring Program), and up to $2.2 billion of capital expenditures. The primary objective of the 2014-2018 Restructuring Program is to reduce the companys operating cost structure in both supply chain and overhead costs. The program is intended primarily to cover severance as well as asset disposals and other manufacturing-related one-time costs. The company expects to incur the majority of the programs charges in 2016 and to complete the program by year-end 2018.

Restructuring costs

The company recorded restructuring charges of $139 million in the three months ended March 31, 2016 and $163 million in the three months ended March 31, 2015 within asset impairment and exit costs. These charges were for asset write-downs (including accelerated depreciation and asset impairments), severance and other related costs.

Implementation costs

Implementation costs are directly attributable to restructuring activities; however, they do not qualify for special accounting treatment as exit or disposal activities. The company recorded implementation costs of $98 million in the three months ended March 31, 2016 and $61 million in the three months ended March 31, 2015. These costs primarily relate to reorganizing the companys operations and facilities in connection with its 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 the companys information systems. The company recorded these costs within cost of sales and general corporate expense within selling, general and administrative expenses.

On July 2, 2015, the company completed transactions to combine the companys wholly owned coffee businesses (including the companys coffee portfolio in France) with those of D.E Master Blenders 1753 B.V. (DEMB) to create a new company, JDE. Following the exchange of a portion of the companys investment in JDE for an interest in Keurig Green Mountain Inc. (Keurig) in March 2016, the company

now holds a 26.5% equity interest in JDE. The remaining 73.5% interest in JDE is held by a subsidiary of Acorn Holdings B.V., (AHBV, owner of DEMB prior to July 2, 2015). In connection with the contribution of the companys global coffee businesses to JDE, the company recorded a pre-tax gain of $6.8 billion (or $6.6 billion after-taxes) in the third quarter of 2015. The company also recorded approximately $1.0 billion of net gains related to hedging the expected cash proceeds from the transaction as described further below.

The consideration the company received consisted of 3.8 billion of cash ($4.2 billion as of July 2, 2015), a 43.5% equity interest in JDE (prior to the decrease in ownership due to the Keurig transaction) and $794 million in receivables (related to sales price adjustments and tax formation cost payments). During the third quarter of 2015, the company also recorded $283 million of cash and receivables related to the reimbursement of costs that the company incurred in separating its coffee businesses. The cash and equity consideration the company received at closing reflects that the company retained its interest in a Korea-based joint venture, Dongsuh Foods Corporation. During the second quarter of 2015, the company also completed the sale of its interest in a Japanese coffee joint venture, Ajinomoto General Foods, Inc. (AGF). In lieu of contributing its interest in the AGF joint venture to JDE, the company contributed the net cash proceeds from the sale, and the transaction did not change the consideration received for the companys global coffee businesses.

During the fourth quarter of 2015, the company and JDE concluded negotiations of a sales price adjustment and completed the valuation of the companys investment in JDE. Primarily related to the negotiated resolution of the sales price adjustment in the fourth quarter, the company recorded a $313 million reduction in the pre-tax gain on the coffee transaction, reducing the $7.1 billion estimated gain in the third quarter to the $6.8 billion final gain for 2015. As part of the companys sales price negotiations, the company retained the right to collect future cash payments if certain estimated pension liabilities come in over an agreed amount in the future. As such, the company may recognize additional income related to this negotiated term in the future.

In connection with the expected receipt of cash in euros at the time of closing, the company entered into a number of consecutive currency exchange forward contracts in 2014 and 2015 to lock in an equivalent expected value in U.S. dollars as of the date the coffee business transactions were first announced in May 2014. Cumulatively, the company realized aggregate net gains and received cash of approximately $1.0 billion on these hedging contracts that increased the cash the company received in connection with the coffee business transactions, from $4.2 billion in cash consideration received to $5.2 billion. In connection with these currency contracts, the company recognized a net gain of $551 million in the three months ended March 31, 2015 within interest and other expense, net.

The company also incurred incremental expenses related to readying its coffee businesses for the transactions that totaled $28 million in the three months ended March 31, 2015. These expenses were recorded within selling, general and administrative expenses of primarily the companys Europe and EEMEA segments and within general corporate expenses.

Gain on equity method investment exchange

On March 3, 2016, a subsidiary of AHBV completed the $13.9 billion acquisition of all of the outstanding common stock of Keurig through a merger transaction. On March 7, 2016, the company exchanged with a subsidiary of AHBV a portion of the companys equity interest in JDE with a carrying value of 1.7 billion (approximately $2.0 billion as of March 7, 2016) for an interest in Keurig with a fair value of $2.0 billion based on the merger consideration per share for Keurig. The company recorded the difference between the fair value of Keurig and its basis in JDE shares as a $43 million gain on equity method investment exchange in March 2016. Following the exchange, the companys ownership interest in JDE is 26.5% and its interest in Keurig is 24.2%. The company accounts for its investments in JDE and Keurig under the equity method and recognizes its share of their earnings within equity method investment earnings and its share of their dividends within the companys cash flows.

Reclassification of historical coffee business net revenues, operating income and net earnings

The company removed its historical coffee business operating results from its historical Organic Net Revenue, Adjusted Gross Profit and Adjusted Operating Income and reclassified historical coffee business after-tax earnings to equity method investment earnings to facilitate comparisons of past and future operating results and net earnings.

Reclassification of equity method investment earnings

Historically, the company recorded income from equity method investments within operating income as these investments operated as extensions of its base business. Beginning in the third quarter of 2015, to align with the accounting for JDE earnings, the company began reclassifying the earnings from its equity method investments from operating income to after-tax equity method investment earnings outside of segment operating income. For the companys historical Adjusted Operating Income results, the company has reclassified the equity method investment earnings from Adjusted Operating Income to equity method investment earnings in all historical periods presented.

Equity method investee adjustments

The company adjusts its equity method investment earnings for its proportionate share of unusual or infrequent items, such as acquisition and divestiture-related costs and restructuring program costs, recorded by the companys JDE and Keurig equity method investees.

Loss related to interest rate swaps

The company recognized pre-tax losses of $97 million in the three months ended March 31, 2016, and $34 million in the three months ended March 31, 2015, within interest and other expense, net related to certain U.S. dollar interest rate swaps that the company no longer designated as accounting cash flow hedges due to a change in financing and hedging plans.

Constant currency

Management evaluates the operating performance of the company and its international subsidiaries on a constant currency basis. The company determines its constant currency operating results by dividing or multiplying, as appropriate, the current period local currency operating results by the currency exchange rates used to translate the companys financial statements in the comparable prior year period to determine what the current period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior year period.

Schedule 1

Condensed Consolidated Statements of Earnings

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

For the Three Months Ended

% Change

Fav / (Unfav)

Cost of sales

Gross profit

Gross profit margin

Selling, general and administrative expenses

Asset impairment and exit costs

Amortization of intangibles

Operating income margin

Interest and other expense, net

Earnings before income taxes

Provision for income taxes

Effective tax rate

Equity method investment net earnings

Noncontrolling interest

(125.0

Per share data:

Basic earnings per share attributable to Mondelēz International

Diluted earnings per share attributable to Mondelēz International

Average shares outstanding:

Schedule 2

Condensed Consolidated Balance Sheets

(in millions of U.S. dollars) (Unaudited)

December 31,

ASSETS

Cash and cash equivalents

Trade receivables

Other receivables

Inventories, net

Other current assets

Total current assets

Property, plant and equipment, net

Goodwill

20,977

20,664

Intangible assets, net

19,094

18,768

Prepaid pension assets

Deferred income taxes

Equity method investments

Other assets

TOTAL ASSETS

63,975

62,843

LIABILITIES

Short-term borrowings

Current portion of long-term debt

Accounts payable

Accrued marketing

Accrued employment costs

Other current liabilities

Total current liabilities

13,178

10,922

Long-term debt

13,800

14,557

Accrued pension costs

Accrued postretirement health care costs

Other liabilities

TOTAL LIABILITIES

36,113

34,743

EQUITY

Common Stock

Additional paid-in capital

31,714

31,760

Retained earnings

20,970

20,700

Accumulated other comprehensive losses

(9,381

(9,986

Treasury stock

(15,533

(14,462

Total Mondelēz International Shareholders Equity

27,770

28,012

TOTAL EQUITY

27,862

28,100

TOTAL LIABILITIES AND EQUITY

Incr/(Decr)

Total Debt

17,399

15,398

Net Debt

18,737

17,268

Net debt is defined as total debt, which includes short-term borrowings, current portion of long-term debt and long-term debt, less cash and cash equivalents.

Schedule 3

Condensed Consolidated Statements of Cash Flows

(in millions of U.S. dollars)

Ended March 31,

CASH PROVIDED BY / (USED IN) OPERATING ACTIVITIES

Adjustments to reconcile net earnings to operating cash flows:

Depreciation and amortization

Stock-based compensation expense

Deferred income tax (benefit) / provision

Asset impairments

Loss on early extinguishment of debt

JDE coffee business transactions currency-related net gains

Income from equity method investments

Distributions from equity method investments

Other non-cash items, net

Change in assets and liabilities, net of acquisitions and divestitures:

Receivables, net

Change in pension and postretirement assets and liabilities, net

Net cash used in operating activities

CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES

Capital expenditures

Proceeds from JDE coffee business transactions currency hedge settlements

Acquisitions, net of cash received

Proceeds from sale of property, plant and equipment and other

Net cash (used in) / provided by investing activities

CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES

Issuances of commercial paper, maturities greater than 90 days

Repayments of commercial paper, maturities greater than 90 days

Net (repayments) / issuances of other short-term borrowings

Long-term debt proceeds

Long-term debt repaid

(1,755

(4,085

Repurchase of Common Stock

(1,187

(1,500

Dividends paid

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Cash and cash equivalents:

(Decrease) / increase

Balance at beginning of period

Balance at end of period

Schedule 4a

Reconciliation of GAAP to Non-GAAP Measures

Net Revenues

(in millions of U.S. dollars) (Unaudited)

Latin America

Asia Pacific

North America

For the Three Months Ended March 31, 2016

Reported (GAAP)

Organic (Non-GAAP)

For the Three Months Ended March 31, 2015

Historical Venezuelan operations

Historical coffee business

% Change

Schedule 4b

Net Revenues - Brands and Markets

Non-Power

Historical Coffee Business

Schedule 5

Gross Profit / Operating Income

(in millions of U.S. dollars) (Unaudited)

2014-2018 Restructuring Program costs

Intangible asset impairment charges

Costs associated with the JDE coffee business transactions

Rounding

Adjusted (Non-GAAP)

Adjusted @ Constant FX (Non-GAAP)

Remeasurement of net monetary assets in Venezuela

Acquisition-related costs

% Change - Reported (GAAP)

% Change - Adjusted (Non-GAAP)

% Change - Adjusted @ Constant FX (Non-GAAP)

Schedule 6

and other

Method

Investment

Exchange

Non-controlling

Income / (costs) associated with the JDE coffee business transactions

Loss related to interest rate swaps

Equity method investee acquisition-related and other adjustments

Diluted Average Shares Outstanding

Reclassification of net earnings from historical coffee business

Divestiture-related costs

Net earnings from Venezuelan subsidiaries

Net earnings from divestitures

Loss on debt extinguishment and related expenses

Schedule 7

For the Three Months Ended March 31,

$ Change

Diluted EPS attributable to Mondelēz International (GAAP)

Net earnings from Venezuelan subsidiaries

Adjusted EPS (Non-GAAP)

Impact of unfavorable currency

Adjusted EPS @ Constant FX (Non-GAAP)

Adjusted EPS @ Constant FX - Key Drivers

Increase in operations

Decrease in operations from historical coffee business and equity method investments

Change in unrealized gains/(losses) on hedging activities

Impact of accounting calendar change

Lower interest and other expense, net

Changes in shares outstanding

Changes in income taxes

Schedule 8

Segment Data

Unrealized

G/(L) on

Hedging

Activities

Corporate

Expenses

Amortization of

Intangibles

Other Items

Reported%

Reported pp change

Adjusted%

Adjusted pp change

Other Items

Operating income from divestitures

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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