8-KRegulation FDExhibits & Filings

Mondelez International, Inc. 8-K Report, Regulation FD Disclosure (Jul 9, 2020)

Filed July 9, 2020For Securities:MDLZ

Summary

Mondelez International, Inc. (MDLZ) filed an 8-K on July 9, 2020, to disclose supplemental financial information related to two significant events. First, the company adopted a new accounting principle for its investment in JDE Peet's N.V. following an exchange of ownership. This change involves accounting for its share of JDE Peet's earnings on a one-quarter lag basis, which has been applied retrospectively to historical financial results. Second, the company participated in a secondary offering of Keurig Dr Pepper Inc. (KDP) shares, resulting in a partial divestiture. This divestiture will impact the company's non-GAAP financial results for Adjusted EPS going forward, as the earnings from the divested portion of the KDP investment will be excluded. These adjustments primarily affect the reporting of equity method investment net earnings, net earnings, and earnings per share (EPS), both on a GAAP and non-GAAP (Adjusted EPS) basis. The company emphasizes that these changes do not impact previously reported consolidated net revenues, gross profit, or operating income, nor do they affect non-GAAP measures like Organic Net Revenue, Adjusted Gross Profit, or Adjusted Operating Income. The filing provides recast financial information for prior periods to reflect these changes, allowing investors to analyze the retrospective impact.

Key Highlights

  • 1Adoption of a new accounting principle for JDE Peet's investment, recognizing earnings on a one-quarter lag basis, applied retrospectively.
  • 2Exchange of ownership in Jacobs Douwe Egberts (JDE) for an equity interest in JDE Peet's N.V., resulting in a 22.9% stake.
  • 3Sale of approximately 9.7 million JDE Peet's shares for gross proceeds of €304 million ($343 million) in an offering.
  • 4Participation in a secondary offering of Keurig Dr Pepper Inc. (KDP) shares, selling 6.8 million shares for $185 million.
  • 5Reduced ownership in KDP by 0.5% to 13.1%, leading to exclusion of divested portion's earnings from future non-GAAP Adjusted EPS.
  • 6Recasting of historical financial results for equity method investment net earnings, net earnings, and EPS (GAAP and non-GAAP) to reflect these transactions.
  • 7Confirmation that changes do not impact reported net revenues, gross profit, operating income, or non-GAAP Organic Net Revenue, Adjusted Gross Profit, and Adjusted Operating Income.

Frequently Asked Questions

This 8-K filing is to provide supplemental financial information regarding the retrospective impact of two key events: a change in accounting principle for the JDE Peet's investment and a partial divestiture of the Keurig Dr Pepper (KDP) investment. These events necessitated a recasting of historical financial results, particularly for equity method investment earnings and EPS.

Mondelez has changed its accounting principle to recognize its share of JDE Peet's historical and ongoing earnings on a one-quarter lag basis. This means the company will report its share of JDE Peet's results one quarter after JDE Peet's publicly reports them. This change has been applied retrospectively, meaning prior periods' financial statements have been restated to reflect this new accounting method.

Mondelez sold a portion of its KDP shares, reducing its ownership. While its U.S. GAAP results will continue to reflect the divested operations up to the sale date, the company will now exclude the earnings from this divested portion of the KDP investment from its non-GAAP financial results for Adjusted EPS going forward and for all historical periods presented. This is considered a partial divestiture for non-GAAP reporting purposes.

No, the filing explicitly states that these changes do not affect Mondelez's previously reported consolidated net revenues, gross profit, or operating income. They also do not impact non-GAAP financial results for Organic Net Revenue, Adjusted Gross Profit, or Adjusted Operating Income. The adjustments primarily concern the reporting of equity method investment earnings and EPS.