Summary
Mondelēz International, Inc. (MDLZ) filed an 8-K on October 8, 2020, to disclose the retrospective impact of its partial sale of JDE Peet’s N.V. ordinary shares on May 29, 2020. The company sold approximately 11.1 million shares, reducing its equity interest from 26.5% to 22.9%. This reduction is being treated as a divestiture for non-GAAP financial reporting purposes. The primary impact of this change is to the company's Adjusted Earnings Per Share (Adjusted EPS) calculations. Mondelēz will remove the equity method investment net earnings related to this partial sale from its historical non-GAAP financial results. This change will be applied retrospectively to all periods presented, including 2018, 2019, and the first three quarters of 2020. The company's U.S. GAAP reported financial results remain unchanged.
Key Highlights
- 1Mondelēz International reduced its ownership in JDE Peet’s from 26.5% to 22.9% through a sale of shares on May 29, 2020, receiving €350 million ($394 million) in proceeds.
- 2The company is treating this reduction in ownership as a divestiture for non-GAAP financial reporting.
- 3This change will impact the calculation of Adjusted EPS, with the equity method investment net earnings related to the sold shares being removed from historical non-GAAP results.
- 4The retrospective application of this accounting change affects reported non-GAAP financial results for 2018, 2019, and all quarters of 2020.
- 5U.S. GAAP reported financial results and other non-GAAP measures (Organic Net Revenue, Adjusted Gross Profit, Adjusted Operating Income) are not affected by this change.
- 6A pre-tax gain of $121 million was recorded in Q2 2020 from the sale, alongside a $261 million tax expense.
- 7The company's accounting principle for reporting JDE Peet's results was updated to a one-quarter lag basis, applied retrospectively.