What is the main reason for this 8-K filing?

The filing is to inform investors about a change in accounting for Mondelēz's investment in Keurig Dr Pepper (KDP) due to a reduction in its ownership stake. This change affects how the company reports its non-GAAP financial results, specifically Adjusted EPS.

How does the sale of KDP shares impact Mondelēz's financial reporting?

The sale reduced Mondelēz's ownership below 5%, requiring a change from equity method accounting to marketable securities accounting for the KDP investment. This means that starting Q1 2023, earnings from the remaining KDP stake will not be reported as equity method investment earnings in the company's non-GAAP figures. Historical non-GAAP results have been restated to reflect this change, removing KDP equity earnings for better comparability.

Will this change affect Mondelēz's reported U.S. GAAP earnings?

No, the change specifically impacts Mondelēz's non-GAAP financial measures, such as Adjusted EPS. The company's U.S. GAAP financial results, which do include equity method investment earnings from KDP, will not be altered by this accounting change.

What was the financial impact of selling the KDP shares?

Mondelēz received approximately $1.0 billion in proceeds from the sale of KDP shares and recorded a gain of approximately $500 million in the first quarter of 2023.

MDLZ 8-K: Regulation FD

Summary

Mondelēz International, Inc. (MDLZ) has filed an 8-K report to disclose a change in its accounting for its investment in Keurig Dr Pepper Inc. (KDP) following the sale of a portion of its shares on March 2, 2023. The company reduced its KDP ownership from 5.3% to 3.2%, receiving approximately $1.0 billion in proceeds and recognizing a gain of approximately $500 million in Q1 2023. This reduction in ownership below the 5.0% threshold necessitates a change in accounting from the equity method to accounting for marketable securities. This change will impact Mondelēz's non-GAAP financial reporting, specifically Adjusted EPS, starting from the first quarter of 2023. The company will no longer record equity method investment earnings from its remaining KDP stake and will treat historical equity method earnings from both the sold and remaining shares as a divestiture. Consequently, Mondelēz has recast its historical non-GAAP financial results to remove these equity method investment earnings from Adjusted EPS for all prior periods presented, aiming to provide investors with better comparability and transparency in evaluating the company's core operating performance.

Key Highlights

1Mondelēz sold approximately 2.1% of its Keurig Dr Pepper (KDP) shares on March 2, 2023, for $1.0 billion, recognizing a $500 million gain in Q1 2023.
2Ownership of KDP has decreased from 5.3% to 3.2%, falling below the 5.0% threshold.
3This ownership change triggers a shift in accounting for the KDP investment from the equity method to marketable securities.
4Starting Q1 2023, KDP equity method investment earnings will no longer be included in Mondelēz's non-GAAP financial results.
5Historical non-GAAP financial results, particularly Adjusted EPS, have been recast to exclude KDP equity method earnings for all periods presented.
6U.S. GAAP financial results remain unchanged and will continue to include equity method earnings from KDP.
7The recasting aims to enhance comparability and transparency in assessing underlying operational trends.

Mondelez International, Inc. 8-K Report, Regulation FD Disclosure (Apr 11, 2023)

Summary

Key Highlights

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