Equity Method Investments

12 Months Ended

Dec. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

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”).

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


	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.