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What changed in Kraft Heinz's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Kraft Heinz's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+335 added−324 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-16)

Top changes in Kraft Heinz's 2023 10-K

335 paragraphs added · 324 removed · 252 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

45 edited+15 added−16 removed26 unchanged
Biggest changeFurther, each platform is assigned a role within our business to help inform our resource allocation and investment decisions, which are made at the reportable segment level. These roles include: Grow, Energize, and Stabilize. The role of a platform may also vary by reportable segment and market.
Biggest changeThe platforms are modular and configurable by reportable segment and market and help us to manage and organize our business effectively by providing insight into our various product categories and brands. Further, each platform is assigned a role within our business to help inform our resource allocation and investment decisions, which are made at the reportable segment level.
We drive growth through development opportunities, career ownership, and autonomy and recognize and reward outstanding performance at every level, creating a true spirit of meritocracy. We strive to channel our employees’ passion, curiosity, and attitude to make an impact on our future and our legacy by leading as learners, acting as owners, and being change agents.
We drive growth through accountability, development opportunities, career ownership, and autonomy and recognize and reward outstanding performance at every level, creating a true spirit of meritocracy. We strive to channel our employees’ passion, curiosity, and attitude to make an impact on our future and our legacy by leading as learners, acting as owners, and being change agents.
Research and Development Our research and development efforts focus on achieving the following four objectives: • product innovations, renovations, and new technologies to meet changing consumer needs, support our environmental and sustainability goals, and drive growth; • world-class and uncompromising food safety, quality, and consistency; • superior, customer-preferred product and package performance; and • continuous process, product, and supply chain optimization.
Research and Development Our research and development efforts focus on achieving the following four objectives: • product innovations, renovations, and new technologies to meet changing consumer needs, support our environmental and sustainability goals, and drive growth; • world-class and uncompromising food safety, quality, and consistency; • superior, consumer-preferred product and package performance; and • continuous process, product, and supply chain optimization.
Our Board of Directors (“Board”), through the Human Capital and Compensation Committee, oversees our human resources strategy, key policies, and our 2025 diversity, inclusion, and belonging aspirations. Engagement and Retention: We are committed to attracting, developing, and retaining diverse, world-class talent and creating an engaging and inclusive culture that embodies our Purpose, Vision, and Values.
Our Board of Directors (“Board”), through the Human Capital and Compensation Committee, oversees our human resources strategy, key policies, and our 2025 diversity, inclusion, and belonging aspirations. Engagement and Inclusion: We are committed to attracting, developing, and retaining diverse, world-class talent and creating an engaging and inclusive culture that embodies our Purpose, Vision, and Values.
Significant trademarks by segment based on net sales in 2022 were: Majority Owned and Licensed Trademarks North America Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Capri Sun*, Maxwell House, Ore-Ida, Kool-Aid, Jell-O International Heinz, ABC, Master, Kraft, Quero, Golden Circle, Wattie’s, Plasmon, Pudliszki *Used under license. We sell certain products under brands we license from third parties.
Significant trademarks by segment based on net sales in 2023 were: Majority Owned and Licensed Trademarks North America Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Ore-Ida, Capri Sun*, Maxwell House, Kool-Aid, Jell-O International Heinz, ABC, Master, Quero, Kraft, Golden Circle, Wattie’s, Pudliszki, Plasmon *Used under license. We sell certain products under brands we license from third parties.
Our products are also sold online through various e-commerce platforms and retailers. 2 We have key customers in different regions around the world.
Our products are also sold online through various e-commerce platforms and retailers. We have key customers in different regions around the world.
We report more detailed information regarding our programs and initiatives related to our people and human capital management in our Environmental Social Governance Report (“ESG Report”). Our 2022 ESG Report, which provides our progress through 2021, is available on our website at www.kraftheinzcompany.com/esg .
We report more detailed information regarding our programs and initiatives related to our people and human capital management in our Environmental Social Governance Report (“ESG Report”). Our 2023 ESG Report, which provides our progress through 2022, is available on our website at www.kraftheinzcompany.com/esg .
To help us evaluate how effective our safety efforts are in lowering incidents rates, we use a Total Recordable Incident Rate (“TRIR”). TRIR is a medical incident rate based on the U.S. Occupational Safety and Health Administration (OSHA) record-keeping criteria (injuries per 200,000 hours). Our TRIR globally was 0.53 in 2022 and 0.62 in 2021.
To help us evaluate how effective our safety efforts are in lowering incidents rates, we use a Total Recordable Incident Rate (“TRIR”). TRIR is a medical incident rate based on the U.S. Occupational Safety and Health Administration (OSHA) record-keeping criteria (injuries per 200,000 hours). Our TRIR globally was 0.53 in 2023 and 2022.
Andre Maciel, Executive Vice President and Global Chief Financial Officer 48 Executive Vice President and Global Chief Financial Officer (since March 2022); Senior Vice President, U.S. Chief Financial Officer, and Head of Digital Transformation (September 2019 to March 2022); Managing Director, Continental Europe (January 2019 to August 2019); Chief Financial Officer, U.S. (2017 to January 2019); and Head of U.S.
Andre Maciel, Executive Vice President and Global Chief Financial Officer 49 Executive Vice President and Global Chief Financial Officer (since March 2022); Senior Vice President, U.S. Chief Financial Officer, and Head of Digital Transformation (September 2019 to March 2022); Managing Director, Continental Europe (January to August 2019); Chief Financial Officer, U.S. (2017 to January 2019); and Head of U.S.
In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including Kraft Heinz, that are electronically filed with the SEC. 6
In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including Kraft Heinz, that are electronically filed with the SEC. 7
Item 1. Business. General We are driving transformation at The Kraft Heinz Company (Nasdaq: KHC), inspired by our Purpose, Let’s Make Life Delicious . Consumers are at the center of everything we do. With 2022 net sales of approximately $26 billion, we are committed to growing our iconic and emerging food and beverage brands on a global scale.
Item 1. Business. General We are driving transformation at The Kraft Heinz Company (Nasdaq: KHC), inspired by our Purpose, Let’s Make Life Delicious . Consumers are at the center of everything we do. With 2023 net sales of approximately $27 billion, we are committed to growing our iconic and emerging food and beverage brands on a global scale.
Net Sales by Platform: Net sales by platform as a percentage of consolidated net sales for the periods presented were: December 31, 2022 December 25, 2021 December 26, 2020 Taste Elevation 31 % 28 % 26 % Fast Fresh Meals 23 % 25 % 26 % Easy Meals Made Better 20 % 19 % 19 % Real Food Snacking 5 % 7 % 9 % Flavorful Hydration 8 % 7 % 6 % Easy Indulgent Desserts 4 % 4 % 4 % Other 9 % 10 % 10 % Net Sales by Product Category: The product categories that contributed 10% or more to consolidated net sales in any of the periods presented were: December 31, 2022 December 25, 2021 December 26, 2020 Condiments and sauces 31 % 28 % 26 % Cheese and dairy 15 % 19 % 20 % Ambient foods 12 % 11 % 11 % Frozen and chilled foods 11 % 10 % 10 % Meats and seafood 10 % 10 % 10 % Seasonality Although crops constituting certain of our raw food ingredients are harvested on a seasonal basis, the majority of our products are produced throughout the year.
Net Sales by Platform: Net sales by platform as a percentage of consolidated net sales for the periods presented were: December 30, 2023 December 31, 2022 December 25, 2021 Taste Elevation 34 % 31 % 28 % Fast Fresh Meals 22 % 23 % 25 % Easy Meals Made Better 20 % 20 % 19 % Real Food Snacking 5 % 5 % 7 % Flavorful Hydration 7 % 8 % 7 % Easy Indulgent Desserts 4 % 4 % 4 % Other 8 % 9 % 10 % Net Sales by Product Category: The product categories that contributed 10% or more to consolidated net sales in any of the periods presented were: December 30, 2023 December 31, 2022 December 25, 2021 Condiments and sauces 34 % 31 % 28 % Cheese and dairy 14 % 15 % 19 % Ambient foods 11 % 12 % 11 % Frozen and chilled foods 11 % 11 % 10 % Meats and seafood 9 % 10 % 10 % Seasonality Although crops constituting certain of our raw food ingredients are harvested on a seasonal basis, the majority of our products are produced throughout the year.
We are involved in a number of active proceedings in the United States under CERCLA (and other state actions under similar legislation) related to certain closed, inactive, or divested operations for which we retain liability. As of December 31, 2022, we had accrued an amount we deemed appropriate for environmental remediation.
We are involved in a number of active proceedings in the United States under CERCLA (and other state actions under similar legislation) related to certain closed, inactive, or divested operations for which we retain liability. As of December 30, 2023, we had accrued an amount we deemed appropriate for environmental remediation.
In 2022, the five largest customers in our North America segment accounted for approximately 46% of North America segment net sales and the five largest customers in our International segment accounted for approximately 14% of International segment net sales.
In 2023, the five largest customers in our North America segment accounted for approximately 46% of North America segment net sales and the five largest customers in our International segment accounted for approximately 14% of International segment net sales.
The information on our website is not, and shall not be deemed to be, a part of this Annual Report on Form 10-K or incorporated into any other filings we make with the SEC.
Available Information Our website address is www.kraftheinzcompany.com . The information on our website is not, and shall not be deemed to be, a part of this Annual Report on Form 10-K or incorporated into any other filings we make with the SEC.
Raw Materials and Packaging: We manufacture (and contract for the manufacture of) our products from a wide variety of raw materials. We purchase and use large quantities of commodities, including dairy products, meat products, soybean and vegetable oils, tomatoes, coffee beans, sugar and other sweeteners, other fruits and vegetables, corn products, wheat products, and potatoes, to manufacture our products.
Raw Materials and Packaging: We manufacture (and contract for the manufacture of) our products from a wide variety of raw materials. We purchase and use large quantities of commodities, including dairy products, meat products, tomato products, soybean and vegetable oils, sugar and other sweeteners, coffee beans, wheat and processed grains, eggs, and other fruits and vegetables to manufacture our products.
Rashida La Lande, Executive Vice President, Global General Counsel, and Chief Sustainability and Corporate Affairs Officer 49 Executive Vice President, Global General Counsel, and Chief Sustainability and Corporate Affairs Officer (since December 2021); Corporate Secretary (since January 2018 to May 2022); Head of ESG (formerly CSR) and Government Affairs (October 2018 to December 2021); and Senior Vice President and Global General Counsel (January 2018 to December 2021).
Rashida La Lande, Executive Vice President and Chief Legal and Corporate Affairs Officer 50 Executive Vice President and Chief Legal and Corporate Affairs Officer (since December 2023); Executive Vice President, Global General Counsel, and Chief Sustainability and Corporate Affairs Officer (December 2021 to December 2023); Corporate Secretary (2018 to May 2022); Senior Vice President, Global General Counsel and Head of ESG (formerly CSR) and Government Affairs (2018 to December 2021); and Senior Vice President and Global General Counsel (2018).
Our largest customer, Walmart Inc., represented approximately 21% of our net sales in 2022 and approximately 22% of our net sales in each of 2021 and 2020. Both of our segments have sales to Walmart Inc. We manage our sales portfolio through six consumer-driven product platforms.
Our largest customer, Walmart Inc., represented approximately 21% of our net sales in 2023 and 2022, and approximately 22% of our net sales in 2021. Both of our segments have sales to Walmart Inc. As of December 30, 2023, we manage our sales portfolio through six consumer-driven product platforms.
We establish and administer company-wide policies and processes to protect the health, safety, and security of our employees, subcontractors, and all those who visit our facilities, and to comply with applicable regulations. We review and monitor our performance closely to drive continuous improvement.
Wellbeing and Safety: Our employees’ health, safety, and wellbeing are a top priority. We establish and administer company-wide policies and processes to protect the health, safety, and security of our employees, subcontractors, and all those who visit our facilities, and to comply with applicable regulations. We review and monitor our performance closely to drive improvement.
A platform is a lens created for the portfolio based on a grouping of real consumer needs and includes the following for Kraft Heinz: Taste Elevation, Fast Fresh Meals, Easy Meals Made Better, Real Food Snacking, Flavorful Hydration, and Easy Indulgent Desserts. The platforms are modular and configurable by reportable segment and market.
A platform is a lens created for the portfolio based on a grouping of real consumer needs and includes the following for Kraft Heinz: Taste Elevation, Fast Fresh Meals, Easy Meals Made Better, Real Food Snacking, Flavorful Hydration, and Easy Indulgent Desserts.
We operate on a 52- or 53-week fiscal year ending on the last Saturday in December in each calendar year. Unless the context requires otherwise, references to years and quarters contained herein pertain to our fiscal years and fiscal quarters.
Heinz Company changed its name to Kraft Heinz Foods Company (“KHFC”). We operate on a 52- or 53-week fiscal year ending on the last Saturday in December in each calendar year. Unless the context requires otherwise, references to years and quarters contained herein pertain to our fiscal years and fiscal quarters.
In 2022, brands used under licenses from third parties included Capri Sun packaged drink pouches for sale in the United States. We also grant certain licenses to third parties to use our intellectual property rights in select jurisdictions.
In 2023, brands used under licenses from third parties included Capri Sun packaged drink pouches for sale in our North America segment. We also grant certain licenses to third parties to use our intellectual property rights in select jurisdictions.
Sales Sales and Customers: Our products are sold through our own sales organizations and through independent brokers, agents, and distributors to chain, wholesale, cooperative, and independent grocery accounts; convenience, value, and club stores; pharmacies and drug stores; mass merchants; foodservice distributors; and institutions, including hotels, restaurants, bakeries, hospitals, health care facilities, and government agencies.
Improving our market position or introducing new products requires substantial advertising and promotional expenditures. 2 Sales Sales and Customers: Our products are sold through our own sales organizations and through independent brokers, agents, and distributors to chain, wholesale, cooperative, and independent grocery accounts; convenience, value, and club stores; pharmacies and drug stores; mass merchants; foodservice distributors; and institutions, including hotels, restaurants, bakeries, hospitals, health care facilities, and government agencies.
Melissa Werneck, Executive Vice President and Global Chief People Officer 50 Executive Vice President (since December 2021) and Global Chief People Officer (since 2016); and Head of Global Human Resources, Performance and Information Technology (2015 to 2016).
Global Operations Vice President (2017 to 2019) at AB InBev. Melissa Werneck, Executive Vice President and Global Chief People Officer 51 Executive Vice President and Global Chief People Officer (since December 2021); Global Chief People Officer (2016 to December 2021); and Head of Global Human Resources, Performance and Information Technology (2015 to 2016).
Executive Vice President and President, Campbell Snacks (May 2019 to February 2020), President, Campbell Snacks (March 2018 to May 2019), and President, Pepperidge Farm (2015 to March 2018) at Campbell Soup Company, a food and beverage company.
Zone President (February 2020 to December 2021). Executive Vice President and President, Campbell Snacks (May 2019 to February 2020), and President, Campbell Snacks (March 2018 to May 2019) at Campbell Soup Company (“Campbell”), a food and beverage company.
The information on our website, including our ESG Report, is not, and shall not be deemed to be, a part of this Annual Report on Form 10-K or incorporated into any other filings we make with the Securities and Exchange Commission (“SEC”). 5 Information about our Executive Officers The following are our executive officers as of February 11, 2023: Name and Title Age Business Experience in the Past Five Years Miguel Patricio, Chief Executive Officer and Chair of the Board 56 Chief Executive Officer (since June 2019); Chair of the Board (since May 2022); Director (May 2021 to May 2022); and U.S.
The information on our website, including our ESG Report, is not, and shall not be deemed to be, a part of this Annual Report on Form 10-K or incorporated into any other filings we make with the Securities and Exchange Commission (“SEC”). 6 Information about our Executive Officers The following are our executive officers as of February 10, 2024: Name and Title Age Business Experience in the Past Five Years Carlos Abrams-Rivera, Chief Executive Officer and Director 56 Chief Executive Officer (since December 2023); President Kraft Heinz (August to December 2023); Executive Vice President and President, North America (December 2021 to August 2023); and U.S.
We compete on the basis of product innovation, price, product quality, nutritional value, service, taste, convenience, brand recognition and loyalty, effectiveness of marketing and distribution, promotional activity, and the ability to identify and satisfy changing consumer preferences. Improving our market position or introducing new products requires substantial advertising and promotional expenditures.
We compete on the basis of product innovation, price, product quality, nutritional value, service, taste, convenience, brand recognition and loyalty, effectiveness of marketing and distribution, promotional activity, and the ability to identify and satisfy changing consumer preferences.
Rewards and Compensation: Our Total Rewards strategy is designed to provide an array of meaningful and flexible programs for our diverse workforce. Total Rewards includes compensation elements of salary and wages and incentives, healthcare, savings and insurance plans, wellbeing plans, employee recognition programs, and other voluntary elected benefits. We aim for global consistency while respecting local market practices.
Total Rewards includes compensation elements of salary and wages and incentives, healthcare, savings and insurance plans, wellbeing plans, employee recognition programs, and other voluntary elected benefits. We aim for global consistency while respecting local market practices and employee preferences.
Flávio Barros Torres, Executive Vice President and Global Chief Supply Chain Officer 54 Executive Vice President and Global Chief Supply Chain Officer (since December 2021); and Head of Global Operations (January 2020 to December 2021). Vice President Supply Global (2017 to 2019) at AB InBev.
Smucker Company, a food and beverage company. Senior Vice President, Sales (2017 to April 2020) at Campbell. Flávio Barros Torres, Executive Vice President and Global Chief Supply Chain Officer 54 Executive Vice President and Global Chief Supply Chain Officer (since December 2021); and Head of Global Operations (January 2020 to December 2021).
As of December 31, 2022, Kraft Heinz had approximately 37,000 employees globally. Driven by our Value We champion great people , we support our employees’ health, safety, and professional development and reward outstanding performance at every level.
As of December 30, 2023, Kraft Heinz had approximately 36,000 employees globally. Driven by our Value We champion great people , we support our employees’ health, safety, and professional development and reward outstanding performance at every level. Our rewards strategies (compensation, benefits, recognition, and wellbeing) aim to help our employees help themselves to LiveWell.
Ethics and Transparency: The Kraft Heinz Ethics Helpline is available to our partners, suppliers, customers, and consumers to ask questions or report potential violations of various policies and ethical guidelines, including our Code of Conduct, Supplier Guiding Principles, and Global Human Rights Policy.
The plans are designed to be market competitive and data-driven to promote our high-performance and results-oriented growth culture and realize our Purpose to Make Life Delicious for employees and their families. 5 Ethics and Transparency: The Kraft Heinz Ethics Helpline is available to our partners, suppliers, customers, and consumers to ask questions or report potential violations of various policies and ethical guidelines, including our Code of Conduct, Supplier Guiding Principles, and Global Human Rights Policy.
Partner (2007 to January 2018) at Gibson, Dunn & Crutcher LLP, a global law firm. Marcos Eloi Lima, Executive Vice President and Global Chief Procurement Officer 45 Executive Vice President (since December 2021) and Chief Procurement Officer (since October 2019); and Advisor in the area of procurement (July 2019 to October 2019).
Marcos Eloi Lima, Executive Vice President and Global Chief Procurement and Sustainability Officer 46 Executive Vice President and Global Chief Procurement and Sustainability Officer (since December 2023); Executive Vice President and Global Chief Procurement Officer (December 2021 to December 2023); Chief Procurement Officer (October 2019 to December 2023); and Advisor in the area of procurement (July to October 2019).
As of December 31, 2022: • 41% of employees in management positions globally identified as women; • 28% of salaried employees in the U.S. identified as people of color; • 40% of our Executive Leadership Team identified as women; and • 80% of our Executive Leadership Team identified as people of color.
As of December 30, 2023: • 43% of employees in global management positions identified as women; • 29% of salaried employees in the U.S. identified as people of color; • 33% of our Executive Leadership Team identified as women; and • 78% of our Executive Leadership Team identified as people of color.
It also provides governance and oversight of reporting on diversity efforts and initiatives. The Council is comprised of executive leaders and members of the Board.
It also provides governance and oversight of reporting on diversity efforts and initiatives. The Council is comprised of executive leaders and members of the Board. We have 2025 diversity, equity, inclusion, and belonging (“DEI&B”) aspirations that have shaped some of our guiding principles.
In 2021, we shared our 2025 diversity, inclusion, and belonging aspirations, which include that 50% of our global management positions be filled by women and 30% of our salaried U.S. employee population identify as people of color.
Our long-term ambition is to have demographic parity in the countries in which we operate and to be recognized as a top quartile company in inclusion. Our aspirations include that 50% of our global management positions be filled by women and 30% of our salaried U.S. employee population identify as people of color.
Our 2022 fiscal year was a 53-week period that ended on December 31, 2022, our 2021 fiscal year was a 52-week period that ended on December 25, 2021, and our 2020 fiscal year was a 52-week period that ended on December 26, 2020. Reportable Segments: In the second quarter of 2022, our internal reporting and reportable segments changed.
Our 2023 fiscal year was a 52-week period that ended on December 30, 2023, our 2022 fiscal year was a 53-week period that ended on December 31, 2022, and our 2021 fiscal year was a 52-week period that ended on December 25, 2021.
Resources Trademarks and Intellectual Property: Our trademarks are material to our business and are among our most valuable assets. Depending on the country, trademarks generally remain valid for as long as they are in use or their registration status is maintained. Trademark registrations generally are for renewable, fixed terms.
Depending on the country, trademarks generally remain valid for as long as they are in use or their registration status is maintained.
Our procurement teams monitor worldwide supply and cost trends so we can obtain ingredients and packaging needed for production at competitive prices. Although the prices of our principal raw materials can be expected to fluctuate, we believe there will be an adequate supply of the raw materials we use and that they are generally available from numerous sources.
Although the prices of our principal raw materials can be expected to fluctuate, we believe there will be an adequate supply of the raw materials we use and that they are generally available from numerous sources. We use a range of hedging techniques in an effort to limit the impact of price fluctuations on many of our principal raw materials.
We actively monitor changes to commodity costs so that we can seek to mitigate the effect through pricing and other operational measures.
However, we do not fully hedge against changes in commodity prices, and our hedging strategies may not protect us from increases in specific raw material costs. We actively monitor changes to commodity costs so that we can seek to mitigate the effect through pricing and other operational measures.
Diversity, Equity, Inclusion, and Belonging: We live our Value of We demand diversity by focusing on three strategic areas: hiring and growing talent from diverse backgrounds and perspectives, developing inclusive leaders, and tracking and reporting our progress. Our Global Inclusion Council has been established to create strategic accountability for results.
We live our Value of We demand diversity by focusing on three strategic areas: hiring and growing talent from diverse backgrounds and perspectives, developing inclusive leaders, and tracking and reporting our progress. Our Business Resource Groups (BRGs) are employee-led, multi-functional groups based upon shared common interests.
Zone President (July 2019 to February 2020). Chief of Special Global Projects–Marketing (January 2019 to June 2019) and Chief Marketing Officer (2012 to December 2018) at Anheuser-Busch InBev SA/NV (“AB InBev”), a multinational drink and brewing holdings company.
Vice President Procurement & Sustainability Middle Americas Zone (2016 to July 2019) at Anheuser-Busch InBev SA/NV (“AB InBev”), a multinational drink and brewing holdings company.
In addition, our Business Resource Groups (BRGs) offer learning and development opportunities and create a network of support for employees. • Developing Inclusive Leaders through an interactive learning experience for managers on interrupting bias in our Organizational People Review process and their role in creating an inclusive environment. • Tracking and Reporting Our Progress year over year through oversight by the Kraft Heinz Global Inclusion Council.
As we progress on our 2025 aspirations, we are focused on: • Hiring, Investing in, and Growing Talent from Diverse Backgrounds and Perspectives through expanded recruiting partnerships with Historically Black Colleges and Universities, diverse professional organizations, and training in our hiring process to reduce bias and promote equal employment opportunities. • Developing Inclusive Leaders through an interactive learning experience for managers on interrupting bias in our Organizational People Review process and their role in creating an inclusive environment. • Tracking and Reporting Our Progress year over year through oversight by the Kraft Heinz Global Inclusion Council.
The results, and comments are reviewed by the Board, senior leadership, managers, and human resources to help determine where changes are needed to support our people and teams. 4 Wellbeing and Safety: Our employees’ health, safety, and wellbeing are a top priority.
The results and comments are reviewed by the Board, senior leadership, managers, and human resources to help determine where changes are needed to support our people and teams. 4 Diversity, inclusion, and belonging are key drivers for engagement. For us, it also means having our diverse consumer base represented in our workforce and included in relevant business decisions.
Our compensation, benefits, recognition, and LiveWell programs are designed to attract and engage highly skilled talent, meet individual and family needs, and inspire, celebrate, and engage our people and teams through active listening channels.
LiveWell represents our total rewards offerings that are designed to attract and engage highly skilled talent, meet individual and family needs, and inspire, celebrate, and engage our people and teams through enhanced interactions in moments that matter in an environment where employees feel productive, trusted, and empowered.
In 2022, we continued to experience higher commodity costs and supply chain costs, including procurement, logistics, and manufacturing costs, largely due to inflationary pressures. We expect these costs to continue to increase and inflation to remain elevated through 2023.
In 2023, we continued to experience higher commodity costs and supply chain costs, including manufacturing, procurement, and logistics costs largely due to inflationary pressures concentrated in the first half of the year. Our procurement teams monitor worldwide supply and cost trends so we can obtain ingredients and packaging needed for production at competitive prices.
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Heinz Company changed its name to Kraft Heinz Foods Company. Before the consummation of the 2015 Merger, Heinz was controlled by Berkshire Hathaway Inc. (“Berkshire Hathaway”) and 3G Global Food Holdings, LP (“3G Global Food Holdings” and, together with its affiliates, “3G Capital”), following their acquisition of H. J. Heinz Company on June 7, 2013 (the “2013 Heinz Acquisition”).
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Reportable Segments: We manage and report our operating results through two reportable segments defined by geographic region: North America and International. During the fourth quarter of 2023, certain organizational changes were announced that are expected to impact our future internal reporting and reportable segments.
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We combined our United States and Canada zones to form the North America zone as a result of previously announced organizational changes, which are intended to advance and support our long-term growth plans by streamlining and synergizing our United States and Canada businesses.
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We expect to divide our International segment into three operating segments — Europe and Pacific Developed Markets (“EPDM” or “International Developed Markets”), West and East Emerging Markets (“WEEM”), and Asia Emerging Markets (“AEM”) — in order to enable enhanced focus on the different strategies required for each of these regions as part of our long-term strategic plan.
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Subsequently, we manage and report our operating results through two reportable segments defined by geographic region: North America and International. We have reflected this change in all historical periods presented. See Note 20, Segment Reporting , in Item 8, Financial Statements and Supplementary Data , for our geographic financial information by segment.
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As a result of these changes, we expect to have two reportable segments: North America and International Developed Markets. We anticipate that our remaining operating segments, consisting of WEEM and AEM, will be combined and disclosed as Emerging Markets. We expect that the change to our reportable segments will be effective in the first quarter of 2024.
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We use a range of hedging techniques in an effort to limit the impact of price fluctuations on many of our principal raw materials. However, we do not fully hedge against changes in commodity prices, and our hedging strategies may not protect us from increases in specific raw material costs.
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See Note 20, Segment Reporting , in Item 8, Financial Statements and Supplementary Data , for our geographic financial information by segment. Resources Trademarks and Intellectual Property: Our trademarks are material to our business and are among our most valuable assets.
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The platform approach helps us to manage our business efficiently, including the oversight of our various product categories and brands, and transforms the way we plan for our growth.
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These roles include: Grow, Energize, and Stabilize. The role of a platform may also vary by reportable segment and market. We are currently evaluating our existing platforms and roles and anticipate changes to align with our future growth strategy.
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Our global LiveWell program addresses physical, emotional, financial, and social health and wellbeing. We champion the LiveWell program’s holistic approach to wellbeing with enhanced programs, including healthcare benefits, disability, and employee assistance initiatives.
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They help foster an engaged and inclusive environment where all talent grows and thrives, create a network of support for employees, and serve as a resource for the organization on topics related to their focus area. Our Global Inclusion Council has been established to create strategic accountability for results.
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As we work to meet our 2025 aspirations, we are focused on: • Hiring and Growing Talent from Diverse Backgrounds and Perspectives through expanded recruiting partnerships with Historically Black Colleges and Universities and training and leveraging artificial intelligence in our hiring process to reduce bias.
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Our DEI&B efforts have continued to be expanded as part of our multi-year strategy. Each day, we are working to create a healthier, more equitable global workplace and world.
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Learning and Development: Through Kraft Heinz Ownerversity, we provide learning and development offerings to employees via live and virtual learning experiences. These offerings enable employees to execute with excellence in their roles, accelerate their learning curves, and grow great careers through continuous learning.
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Our global LiveWell program focuses on four wellbeing elements — physical, emotional, financial, and social health — and provides specific programs and resources to support our employees and their families within each of these areas.
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With Ownerversity’s targeted platforms, employees can focus on timely and topical development areas including leadership, management excellence, functional capabilities, and diversity, equity, inclusion, and belonging. In 2022, our global women’s accelerator program, The WE Network, won a Brandon Hall Gold Award for Best Advance in Leadership Development for Women.
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Learning and Development: Through Kraft Heinz Ownerversity, we provide learning opportunities for each of our employees, designed to inspire and grow talent within Kraft Heinz while developing employees’ capabilities to help them navigate their career journey.
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The plans are designed to be market competitive and data-driven to promote our high-performance and results-oriented culture and realize our Purpose to Make Life Delicious for employees and their families.
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Our learning and development offerings are created to enable employees to live our Value We dare to do better every day and own their personal learning and development. We believe this empowers employees to execute with excellence in their current role, accelerate their learning curve, and grow a great career.
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Commercial Finance (2015 to 2017). Carlos Abrams-Rivera, Executive Vice President and President, North America 55 Executive Vice President and President, North America (since December 2021); and U.S. Zone President (February 2020 to December 2021).
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Through Ownerversity, employees have access to custom Kraft Heinz training, learning and development materials, and external content libraries and articles. Rewards and Compensation: Our Total Rewards philosophy is to provide a meaningful and flexible spectrum of programs that equitably support our diverse workforce and their families.
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Kathy Krenger, Senior Vice President and Global Chief Communications Officer 55 Senior Vice President (since December 2021) and Global Chief Communications Officer (since July 2021). Senior Vice President, Global Communications (2017 to July 2021) at Hyatt Hotels Corporation, a global hospitality company.
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Commercial Finance (2015 to 2017). Diana Frost, Global Chief Growth Officer 41 Global Chief Growth Officer (since December 2023); Chief Growth Officer, North America (August to December 2023); Head of North America Disruption and Canada Chief Marketing Officer (January to August 2022); and Chief Growth Officer, Canada (September 2020 to December 2021).
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Vice President Procurement & Sustainability Middle Americas Zone (2016 to July 2019) at AB InBev.
Added
Head of Portfolio Transformation, Mars Wrigley (January 2019 to September 2020) at Mars, Incorporated, a multinational confections company.
Removed
Rafael Oliveira, Executive Vice President and President, International Markets 48 Executive Vice President and President, International Markets (since December 2021); International Zone President (July 2019 to December 2021); Zone President of EMEA (2016 to June 2019); Managing Director of Kraft Heinz UK & Ireland (2016 to 2016); and President of Kraft Heinz Australia, New Zealand, and Papua New Guinea (2014 to 2016).
Added
Pedro Navio, Executive Vice President and President, North America 43 Executive Vice President and President, North America (since December 2023); President – Taste, Meals, and Away From Home (March 2022 to December 2023); President, Latin America (November 2019 to February 2022); and President, Brazil (2017 to November 2019).
Removed
Yang Xu Senior Vice President, Global Head of Corporate Development; Global Treasurer 43 Senior Vice President, Global Head of Corporate Development, and Global Treasurer (since March 2022); Global Head of Treasury and M&A (April 2021 to March 2022); and Senior Vice President, Global Treasurer, and Head of Global Business Excellence (July 2020 to April 2021).
Added
Cory Onell, Executive Vice President and Chief Omnichannel Sales and Asian Emerging Markets Officer 50 Executive Vice President and Chief Omnichannel Sales and Asian Emerging Markets Officer (since December 2023) and Chief Sales Officer, U.S. (August 2020 to December 2023). Senior Vice President and Head of U.S. Retail Sales (April to July 2020) at The J. M.
Removed
Senior Director, Corporate Treasury and Risk Management at Whirlpool Corporation, a major home appliance company (2016 to April 2018). Available Information Our website address is www.kraftheinzcompany.com .

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

74 edited+32 added−12 removed152 unchanged
Biggest changeIncreasing concern over climate change may adversely impact demand for our products, or increase our operating costs, due to changes in consumer preferences that cause consumers to switch away from products or ingredients considered to have a high climate change impact. 9 Increased natural disasters and decreased agricultural productivity in certain regions of the world as a result of changing weather patterns may limit the availability or increase the cost of natural resources and commodities, including dairy products, meat products, soybean and vegetable oils, tomatoes, coffee beans, sugar and other sweeteners, other fruits and vegetables, corn products, wheat products, and potatoes, to manufacture our products, and could further decrease food security for communities around the world.
Biggest changeIncreased natural disasters and decreased agricultural productivity in certain regions of the world as a result of changing weather patterns may limit the availability or increase the cost of natural resources and commodities, including dairy products, meat products, tomato products, soybean and vegetable oils, sugar and other sweeteners, coffee beans, wheat and processed grains, eggs, and other fruits and vegetables to manufacture our products, and could further decrease food security for communities around the world.
We hold assets, incur liabilities, earn revenue, and pay expenses in a variety of currencies other than the U.S. dollar, primarily the Canadian dollar, euro, British pound sterling, Australian dollar, Brazilian real, Chinese renminbi, Indonesian rupiah, Russian ruble, and New Zealand dollar.
We hold assets, incur liabilities, earn revenue, and pay expenses in a variety of currencies other than the U.S. dollar, primarily the Canadian dollar, euro, British pound sterling, Brazilian real, Australian dollar, Chinese renminbi, Indonesian rupiah, New Zealand dollar, and Russian ruble.
Our existing debt, together with any incurrence of additional indebtedness, could have important consequences, including, but not limited to: • increasing our vulnerability to general adverse economic and industry conditions; • limiting our ability to obtain additional financing for working capital, capital expenditures, research and development, debt service requirements, acquisitions, and general corporate or other purposes; • resulting in a downgrade to our credit rating, which could adversely affect our cost of funds, including our commercial paper programs, liquidity, and access to capital markets; • restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; • limiting our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our competitors who are not as highly leveraged; • making it more difficult for us to make payments on our existing indebtedness; • requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, payments of dividends, capital expenditures, and future business opportunities; • exposing us to risks related to fluctuations in foreign currency, as we earn profits in a variety of foreign currencies and the majority of our debt is denominated in U.S. dollars; and • in the case of any additional indebtedness, exacerbating the risks associated with our substantial financial leverage.
Our existing debt, together with any incurrence of additional indebtedness, could have important consequences, including, but not limited to: • increasing our vulnerability to general adverse economic and industry conditions; • limiting our ability to obtain additional financing for working capital, capital expenditures, research and development, debt service requirements, acquisitions, and general corporate or other purposes; 14 • resulting in a downgrade to our credit rating, which could adversely affect our cost of funds, including our commercial paper programs, liquidity, and access to capital markets; • restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; • limiting our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our competitors who are not as highly leveraged; • making it more difficult for us to make payments on our existing indebtedness; • requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, payments of dividends, capital expenditures, and future business opportunities; • exposing us to risks related to fluctuations in foreign currency, as we earn profits in a variety of foreign currencies and the majority of our debt is denominated in U.S. dollars; and • in the case of any additional indebtedness, exacerbating the risks associated with our substantial financial leverage.
If our information technology systems suffer severe damage, disruption, or shutdown, by unintentional or malicious actions of employees or contractors or by cyberattacks, and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience business disruptions, reputational damage, transaction 18 errors, processing inefficiencies, the leakage of confidential information, and the loss of customers and sales, causing our product sales, financial condition, and operating results to be adversely affected and the reporting of our financial results to be delayed.
If our information technology systems suffer severe damage, disruption, or shutdown, by unintentional or malicious actions of employees or contractors or by cyberattacks, and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience business disruptions, reputational damage, transaction errors, processing inefficiencies, the leakage of confidential information, and the loss of customers and sales, causing our product sales, financial condition, and operating results to be adversely affected and the reporting of our financial results to be delayed.
If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, income tax rates, foreign currency exchange rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units or brands might become impaired in the future, which could negatively affect our operating results or net worth.
If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units or brands might become impaired in the future, which could negatively affect our operating results or net worth.
The effects of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business and results of operations. Finally, we might fail to effectively address increased attention from the media, stockholders, activists, and other stakeholders on climate change and related environmental sustainability matters.
The effects of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business and results of operations. 11 Finally, we might fail to effectively address increased attention from the media, stockholders, activists, and other stakeholders on climate change and related environmental sustainability matters.
Furthermore, 8 existing or increased legal or regulatory restrictions on our advertising, consumer promotions, and marketing, or our response to those restrictions, could limit our efforts to maintain, extend, and expand our brands. In addition, our success in maintaining, extending, and expanding our brand image depends on our ability to adapt to a rapidly changing media environment.
Furthermore, existing or increased legal or regulatory restrictions on our advertising, consumer promotions, and marketing, or our response to those restrictions, could limit our efforts to maintain, extend, and expand our brands. In addition, our success in maintaining, extending, and expanding our brand image depends on our ability to adapt to a rapidly changing media environment.
We use commodity futures, options, and swaps to economically hedge the price of certain input costs, including dairy products, vegetable oils, coffee beans, wheat products, corn products, sugar, meat products, and cocoa products. We recognize gains and losses based on changes in the values of these commodity derivatives.
We use commodity futures, options, and swaps to economically hedge the price of certain input costs, including dairy products, vegetable oils, corn, coffee beans, wheat products, meat products, sugar cane, and cocoa beans. We recognize gains and losses based on changes in the values of these commodity derivatives.
Accordingly, changes in the values of our commodity derivatives may cause volatility in our gross profit and net income. 15 Regulatory Risks Our compliance with laws and regulations, and related legal claims or regulatory enforcement actions, could expose us to significant liabilities and damage our reputation.
Accordingly, changes in the values of our commodity derivatives may cause volatility in our gross profit and net income. Regulatory Risks Our compliance with laws and regulations, and related legal claims or regulatory enforcement actions, could expose us to significant liabilities and damage our reputation.
In addition, claims about the health impacts of consumption of our products, or ingredients, components, or substances present or allegedly present in those products or packaging, have resulted in, and could in the future result in, us being subject to regulations, fines, lawsuits, or taxes that could adversely impact our business.
In addition, claims about the health impacts of consumption of our products, or ingredients, components, or substances 17 present or allegedly present in those products or packaging, have resulted in, and could in the future result in, us being subject to regulations, fines, lawsuits, or taxes that could adversely impact our business.
Continued negative perceptions and failure to satisfy consumer preferences could materially and adversely affect our product sales, financial condition, and operating results. 7 In addition, our growth depends on our successful development, introduction, and marketing of innovative new products and line extensions.
Continued negative perceptions and failure to satisfy consumer preferences could materially and adversely affect our product sales, financial condition, and operating results. In addition, our growth depends on our successful development, introduction, and marketing of innovative new products and line extensions.
As a result, factors associated with our international operations, including changes in foreign currency exchange rates, could significantly affect our results of operations and financial condition. 14 Commodity, energy, and other input prices are volatile and could negatively affect our consolidated operating results.
As a result, factors associated with our international operations, including changes in foreign currency exchange rates, could significantly affect our results of operations and financial condition. Commodity, energy, and other input prices are volatile and could negatively affect our consolidated operating results.
Our debt instruments contain customary representations, warranties, and covenants, including a financial covenant in our senior unsecured revolving credit facility (the “Senior Credit Facility”) to maintain a minimum shareholders’ equity (excluding accumulated other comprehensive income/(losses)).
Our debt instruments contain customary representations, warranties, and covenants, including a financial covenant in our senior unsecured revolving credit facility (the “Senior Credit Facility”) to maintain a minimum shareholders’ equity balance (excluding accumulated other comprehensive income/(losses)).
These risks, which can vary substantially by market, are described in many of the risk factors discussed in this section, and also include: • compliance with U.S. laws affecting operations outside of the United States, including anti-bribery and corruption laws such as the FCPA; • changes in the mix of earnings in countries with differing statutory tax rates, the valuation of deferred tax assets and liabilities, tax laws or their interpretations, or tax audit implications; • the imposition of increased or new tariffs, quotas, trade barriers, or similar restrictions on our sales or imports, trade agreements, regulations, taxes, or policies that might negatively affect our sales or costs; • foreign currency devaluations or fluctuations in foreign currency values, including risks arising from the significant and rapid fluctuations in foreign currency exchange markets and the decisions made and positions taken to hedge such volatility; • compliance with antitrust and competition laws, data privacy laws, human rights laws, and a variety of other local, national, and multi-national regulations and laws in multiple jurisdictions; • discriminatory or conflicting fiscal policies in or across foreign jurisdictions; 11 • changes in capital controls, including foreign currency exchange controls, governmental foreign currency policies, or other limits on our ability to import raw materials or finished product into various countries or repatriate cash from outside the United States; • challenges associated with cross-border product distribution, including economic sanctions, export controls, and labor restrictions; • changes in local regulations and laws, the uncertainty of enforcement of remedies in foreign jurisdictions, and foreign ownership restrictions and the potential for nationalization or expropriation of property or other resources; • risks and costs associated with political and economic instability, military conflict, corruption, anti-American sentiment, and social and ethnic unrest in the countries in which we operate; • the risks of operating in developing or emerging markets in which there are significant uncertainties regarding the interpretation, application, and enforceability of laws and regulations and the enforceability of contract rights and intellectual property rights; • changing labor conditions and difficulties in staffing our operations; • greater risk of uncollectible accounts or trade receivables and longer collection cycles; and • design, implementation, and use of effective control environment processes across our various operations and employee base.
These risks, which can vary substantially by market, are described in many of the risk factors discussed in this section, and also include: • compliance with U.S. laws affecting operations outside of the United States, including anti-bribery and corruption laws such as the FCPA; • changes in the mix of earnings in countries with differing statutory tax rates, the valuation of deferred tax assets and liabilities, tax laws or their interpretations, or tax audit implications; • the imposition of increased or new tariffs, quotas, trade barriers, or similar restrictions on our sales or imports (including those that may affect our sourcing operations and the availability of raw materials and commodities), trade agreements, regulations, taxes, or policies that might negatively affect our sales or costs; • foreign currency devaluations or fluctuations in foreign currency values, including risks arising from the significant and rapid fluctuations in foreign currency exchange markets and the decisions made and positions taken to hedge such volatility; • compliance with antitrust and competition laws, data privacy laws, human rights laws, and a variety of other local, national, and multi-national regulations and laws in multiple jurisdictions; • discriminatory or conflicting fiscal policies in or across foreign jurisdictions; • changes in capital controls, including foreign currency exchange controls, governmental foreign currency policies, or other limits on our ability to import raw materials or finished product into various countries or repatriate cash from outside the United States; • challenges associated with cross-border product distribution, including economic sanctions, export controls, and labor restrictions; • changes in local regulations and laws, the uncertainty of enforcement of remedies in foreign jurisdictions, and foreign ownership restrictions and the potential for nationalization or expropriation of property or other resources; • risks and costs associated with political and economic instability, military conflict, corruption, anti-American sentiment, and social and ethnic unrest in the countries in which we operate; • the risks of operating in developing or emerging markets in which there are significant uncertainties regarding the interpretation, application, and enforceability of laws and regulations and the enforceability of contract rights and intellectual property rights; • changing labor conditions and difficulties in staffing our operations; • greater risk of uncollectible accounts or trade receivables and longer collection cycles; and • design, implementation, and use of effective control environment processes across our various operations and employee base.
Changes in financial and capital markets, including market disruptions, limited liquidity, and interest rate volatility, may increase the cost of financing as well as the risks of refinancing maturing debt. Additionally, some of our customers, suppliers, and counterparties are highly leveraged.
Changes in financial and capital markets, including market disruptions, instability in financial institutions, limited liquidity, and interest rate volatility, may increase the cost of financing as well as the risks of refinancing maturing debt. Additionally, some of our customers, suppliers, and counterparties are highly leveraged.
Although we believe our tax estimates are reasonable, the final determination of tax audits, including transfer pricing matters, and any related litigation could be materially different from our historical income tax provisions and accruals. For example, we are currently under examination by the Internal Revenue Service (“IRS”) for income taxes for the years 2018 and 2019.
Although we believe our tax estimates are reasonable, the final determination of tax audits, including transfer pricing matters, and any related litigation could be materially different from our historical income tax provisions and accruals. For example, we are currently under examination for income taxes by the Internal Revenue Service (“IRS”) for the years 2018 through 2022.
Factors that are hard to predict or beyond our control, such as weather or other geological events or natural disasters, including hurricanes, earthquakes, floods, tsunamis, or wild fires (whether as a result of climate change or otherwise), raw material shortages, fires or explosions, political unrest, geopolitical conflicts (including the ongoing conflict between Russia and Ukraine), terrorism, civil strife, acts of war, public corruption, expropriation, generalized labor unrest or labor shortages, or pandemics (including 17 COVID-19), could damage or disrupt our operations or the operations of our customers, suppliers, vendors, co-manufacturers, distributors, or regulators.
Factors that are hard to predict or beyond our control, such as weather or other geological events or natural disasters, including hurricanes, earthquakes, floods, tsunamis, or wild fires (whether as a result of climate change or otherwise), raw material shortages, fires or explosions, political unrest, geopolitical conflicts (including the ongoing conflicts between Russia and Ukraine and in the Middle East), terrorism, civil strife, acts of war, public corruption, expropriation, generalized labor unrest or labor shortages, or pandemics (including COVID-19), could damage or disrupt our operations or the operations of our customers, suppliers, vendors, co-manufacturers, distributors, or regulators.
We must leverage our brand value to compete against private label products. In nearly all of our product categories, we compete with branded products as well as private label products, which are typically sold at lower prices. Our products must provide higher value or quality to consumers than alternatives, particularly during periods of economic uncertainty or weakness or inflation.
In nearly all of our product categories, we compete with branded products as well as private label products, which are typically sold at lower prices. Our products must provide higher value or quality to consumers than alternatives, particularly during periods of economic uncertainty or weakness or inflation.
These pressures have restricted, and may in the future continue to restrict, our ability to increase prices in response to commodity and other cost increases, including those related to inflationary pressures.
These pressures have restricted, and may in the future continue to restrict, our ability to increase prices and maintain those price increases in response to commodity and other cost increases, including those related to inflationary pressures.
Although we do not have operations in Ukraine, and our business in Russia generated approximately 1% of our consolidated net sales for the year ended December 31, 2022, the military conflict between Russia and Ukraine has caused, and could continue to cause, negative impacts on our business and the global economy.
Although we do not have operations in Ukraine, and our business in Russia generated approximately 1% of our consolidated net sales for the year ended December 30, 2023, the military conflict between Russia and Ukraine has caused, and could continue to cause, negative impacts on our business and the global economy.
Our success depends on our ability to predict, identify, and interpret the tastes and dietary habits of consumers and to offer products that appeal to consumer preferences, including with respect to health and wellness.
Our success depends on our ability to predict, identify, and interpret the tastes and dietary habits of consumers. We must continue to offer products that appeal to consumer preferences, including with respect to health and wellness.
For example, risks related to our ability to find appropriate buyers, execute transactions on favorable terms, separate divested business operations with minimal impact to our remaining operations, and effectively manage any transitional service arrangements. Further, our divestiture activities have in the past required, and may in the future require, us to recognize impairment charges.
For example, risks related to our ability to find appropriate buyers, obtain applicable regulatory and governmental approvals, execute transactions on favorable terms, separate divested business operations with minimal impact to our remaining operations, and effectively manage any transitional service arrangements. Further, our divestiture activities have in the past required, and may in the future require, us to recognize impairment charges.
These factors include, but are not limited to: • natural disasters, labor strikes, or other disruptions at any of our facilities or our suppliers’ or distributors’ facilities may impair or delay the delivery of our products; and • illness of our workforce, or the workforce of third parties with which we do business, due to influenza or pandemics, could disrupt production of our products in one or more of our manufacturing facilities, or cause our suppliers, vendors, distributors, or third-party manufacturers to fail to meet their obligations to us.
These factors include, but are not limited to: • natural disasters, labor strikes, or other disruptions at any of our facilities or our suppliers’ or distributors’ facilities may impair or delay the delivery of our products; and • illness of our workforce, or the workforce of third parties with which we do business, due to influenza or pandemics, could disrupt production of our products in one or more of our manufacturing facilities, or cause our suppliers, vendors, distributors, or third-party manufacturers to fail to meet their obligations to us. 19 These or other disruptions may require additional resources to restore our supply chain or distribution network.
Moreover, adverse publicity about legal or regulatory action against us, our quality and safety, our environmental or social impacts, our other environmental, social, human capital, or governance practices, our products becoming unavailable to consumers, or our suppliers and, in some cases, our competitors, could damage our reputation and brand image, undermine our customers’ or consumers’ confidence, and reduce demand for our products, even if the regulatory or legal action is unfounded or not material to our operations.
Moreover, adverse publicity about legal or regulatory action against us, our quality and safety, our environmental or social impacts, our other environmental, social, human capital, or governance practices or positions, our products becoming unavailable to consumers, or our suppliers (including as a result of human rights issues) and, in some cases, our competitors, could damage our reputation and brand image, undermine our customers’ or consumers’ confidence, and reduce demand for our products, even if the regulatory or legal action is unfounded or not material to our operations.
Employee turnover, changes in the availability of our workers, and labor shortages in our supply chain have resulted in, and could continue to result in, increased costs and have, and could again, impact our ability to meet consumer demand, both of which could negatively affect our financial condition, results of operations, or cash flows. 19 Changes in tax laws and interpretations could adversely affect our business.
Employee turnover, changes in the availability of our workers, and labor shortages in our supply chain have resulted in, and could continue to result in, increased costs and have, and could again, impact our ability to meet consumer demand, both of which could negatively affect our financial condition, results of operations, or cash flows.
Accordingly, realization of any gain on shares of our common stock may depend on the appreciation of the price of our common stock, which may not occur. General Risk Factors Disruptions in the global economy caused by geopolitical conflicts, including the ongoing conflict between Russia and Ukraine, could adversely affect our business, financial condition and results of operations.
Accordingly, realization of any gain on shares of our common stock may depend on the appreciation of the price of our common stock, which may not occur. General Risk Factors Disruptions in the global economy caused by geopolitical conflicts could adversely affect our business, financial condition, and results of operations.
Our processes and controls for reporting sustainability and other matters across our operations and supply chain are evolving along with multiple disparate standards for identifying, measuring, and reporting sustainability metrics, including sustainability-related disclosures that may be required by the SEC and European and other regulators, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
Our processes and controls for reporting sustainability and other matters across our operations and supply chain are evolving along with multiple disparate standards for identifying, measuring, and reporting sustainability metrics, including sustainability-related disclosures that may be required by the SEC, European Union, and other foreign, federal, state, and local regulatory and legislative bodies, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
Approximately 30% of our 2022 net sales were generated outside of the United States. As a result, we are subject to risks inherent in global operations.
Approximately 31% of our 2023 net sales were generated outside of the United States. As a result, we are subject to risks inherent in global operations.
The effects of current geopolitical conflicts, including the conflict between Russia and Ukraine, as well as potential future geopolitical tensions, could heighten many of our known risks described in this Item 1A, Risk Factors .
The effects of current geopolitical conflicts, including the conflicts between Russia and Ukraine and in the Middle East and rising tensions between China and Taiwan, as well as potential future geopolitical tensions, could heighten many of our known risks described in this Item 1A, Risk Factors .
We recognize these gains and losses in cost of products sold in our consolidated statements of income to the extent we utilize the underlying input in our manufacturing process. We recognize the unrealized gains and losses on these commodity derivatives in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results.
We recognize these gains and losses in cost of products sold in our consolidated statements of income. We recognize the unrealized gains and losses on these commodity derivatives in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results.
Various laws and regulations govern our practices including, but not limited to, those related to advertising and marketing, product claims and labeling, food production, environmental matters (including climate change), intellectual property, consumer protection and product liability, commercial disputes, trade and export controls, anti-trust, data privacy, labor and employment, workplace health and safety, and tax.
Various laws and regulations govern our practices including, but not limited to, those related to advertising and marketing, product claims and labeling, food production, environmental matters (including climate change), packaging and waste management (including packaging containing PFAS), intellectual property, consumer protection and product liability, commercial disputes, trade and export controls, anti-trust, data privacy, labor and employment, workplace health and safety, forced labor, such as the UFLPA, and tax.
A decrease in these credit ratings could limit our access to capital markets and increase our borrowing costs, which could materially and adversely affect our financial condition and operating results. In February 2020, Moody’s Investor Services, Inc.
A decrease in these credit ratings could limit our access to capital markets and increase our borrowing costs, which could materially and adversely affect our financial condition and operating results.
As of December 31, 2022, registrable shares represented approximately 34.5% of all outstanding shares of our common stock. Although the registrable shares are subject to certain holdback and suspension periods, the registrable shares are not subject to a “lock-up” or similar restriction under the registration rights agreement.
As of December 30, 2023, registrable shares represented approximately 26.7% of all outstanding shares of our common stock. Although the registrable shares are subject to certain holdback and suspension periods, the registrable shares are not subject to a “lock-up” or similar restriction under the registration rights agreement.
Kraft Heinz, 3G Global Food Holdings, and Berkshire Hathaway entered into a registration rights agreement requiring us to register for resale under the Securities Act all registrable shares held by 3G Capital and Berkshire Hathaway, which represents all shares of our common stock held by Berkshire Hathaway and 3G Capital as of the date of the closing of the 2015 Merger.
Kraft Heinz and Berkshire Hathaway are party to a registration rights agreement requiring us to register for resale under the Securities Act all registrable shares held by Berkshire Hathaway, which represents all shares of our common stock held by Berkshire Hathaway as of the date of the closing of the 2015 Merger.
We purchase and use large quantities of commodities, including dairy products, meat products, soybean and vegetable oils, tomatoes, coffee beans, sugar and other sweeteners, other fruits and vegetables, corn products, wheat products, and potatoes, to manufacture our products.
We purchase and use large quantities of commodities, including dairy products, meat products, tomato products, soybean and vegetable oils, sugar and other sweeteners, coffee beans, wheat and processed grains, eggs, and other fruits and vegetables to manufacture our products.
Prices for commodities, energy, and other supplies are volatile and can fluctuate due to conditions that are difficult to predict, including global competition for resources, inflationary pressure, foreign currency fluctuations, severe weather, natural disasters, global climate change, water risk, pandemics, crop failures, crop shortages due to plant disease or insect and other pest infestation, consumer, industrial, or investment demand, and changes in governmental regulation and trade, tariffs, alternative energy, including increased demand for biofuels, and agricultural programs.
Prices for commodities, energy, and other supplies are volatile and can fluctuate due to conditions that are difficult to predict, including global competition for resources, inflationary pressure, foreign currency fluctuations, geopolitical conditions or conflicts 16 (including the ongoing conflicts between Russia and Ukraine and in the Middle East and rising tensions between China and Taiwan), cybersecurity incidents, severe weather, natural disasters, global climate change, water risk, pandemics, crop failures, crop shortages due to plant disease or insect and other pest infestation, consumer, industrial, or investment demand, and changes in governmental regulation and trade, tariffs, alternative energy, including increased demand for biofuels, and agricultural programs.
Other factors impacting our operations in the United States and in international locations where we do business include changes in laws, export and import restrictions, foreign currency exchange rates, foreign currency devaluation, cash repatriation restrictions, recessionary conditions, foreign ownership restrictions, nationalization, the impact of hyperinflationary environments, terrorist acts, political unrest, and military conflict.
Other factors impacting our operations in the United States and in international locations where we do business include changes in laws, export and import restrictions, foreign currency exchange rates, foreign currency devaluation, cash repatriation restrictions, recessionary conditions, governmental subsidies provided to our consumers, foreign ownership restrictions, nationalization, the impact of hyperinflationary environments, a potential U.S. federal government shutdown, terrorist acts, political unrest, and military conflict.
Inflationary pressures, shortages in the labor market, increased employee turnover, and changes in the availability of our workers could increase labor costs, which could have a material adverse effect on our consolidated operating results or financial condition.
Our results could be adversely impacted as a result of increased pension, labor, and people-related expenses. Inflationary pressures, shortages in the labor market, increased employee turnover, and changes in the availability of our workers could increase labor costs, which could have a material adverse effect on our consolidated operating results or financial condition.
Berkshire Hathaway has the ability to exert influence over us and significant influence over matters requiring stockholder approval. 12 As of December 31, 2022, Berkshire Hathaway owns approximately 26.6% of our common stock. Three members of our Board are officers and/or directors of Berkshire Hathaway or its affiliates.
Berkshire Hathaway Inc. has the ability to exert influence over us and significant influence over matters requiring stockholder approval. As of December 30, 2023, Berkshire Hathaway Inc. (“ Berkshire Hathaway” ) owns approximately 26.7% of our common stock. Three members of our Board are officers and/or directors of Berkshire Hathaway or its affiliates.
Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products and brands. We consider our intellectual property rights, particularly and most notably our trademarks, but also our patents, trade secrets, trade dress, copyrights, and licensing agreements, to be a significant and valuable aspect of our business.
We consider our intellectual property rights, particularly and most notably our trademarks, but also our patents, trade secrets, trade dress, copyrights, and licensing agreements, to be a significant and valuable aspect of our business.
Reporting units with 20% or less fair value over carrying amount had an aggregate goodwill carrying amount after impairment of $16.4 billion as of the Q3 2022 Annual Impairment Test and included Taste, Meals, and Away from Home (TMA), Canada and North America Coffee (CNAC), and Continental Europe.
Reporting units with 10% or less fair value over carrying amount had an aggregate goodwill carrying amount after impairment of $17.6 billion as of the 2023 annual impairment test and included Taste, Meals, and Away from Home (“TMA”), Northern Europe, Continental Europe, and Canada and North America Coffee (“CNAC”).
Adverse attention about these types of concerns, whether or not valid, may damage our reputation, discourage consumers from buying our products, or cause production and delivery disruptions that could negatively impact our net sales and financial condition.
Adverse attention about these types of concerns, whether or not valid, may damage our reputation, discourage consumers from buying our products, or cause production and delivery disruptions that could negatively impact our net sales and financial condition. 10 We may also suffer losses if our products or operations violate applicable laws or regulations or if our products cause injury, illness, or death.
Retail consolidation also increases the risk that adverse changes in our customers’ business operations or financial performance may have a corresponding adverse effect on us, which could be material.
Retail consolidation and increasing retailer power could materially and adversely affect our product sales, financial condition, and operating results. Retail consolidation also increases the risk that adverse changes in our customers’ business operations or financial performance may have a corresponding adverse effect on us, which could be material.
If we fail to achieve, or are perceived to have failed or been delayed in achieving, or improperly report on our progress toward achieving these goals and commitments, it could negatively affect consumer preference for our products or investor confidence in our stock, as well as expose us to government enforcement actions and private litigation. 10 Business Risks We may not successfully identify, complete, or realize the benefits from strategic acquisitions, divestitures, alliances, joint ventures, or investments.
If we fail to achieve, or are perceived to have failed or been delayed in achieving, or improperly report on our progress toward achieving these goals and commitments, it could negatively affect consumer preference for our products or investor confidence in our stock, as well as expose us to government enforcement actions and private litigation.
We may also face difficulties integrating new business operations with our current sourcing, distribution, information technology systems, and other operations. Additionally, we may not successfully complete any planned strategic initiatives, including achieving any previously announced productivity efficiencies and financial targets, any new business may not be profitable or meet our expectations, or any divestiture may not be completed without disruption.
Additionally, we may not successfully complete any planned strategic initiatives, including achieving any previously announced productivity efficiencies and financial targets, any new business may not be profitable or meet our 12 expectations, or any divestiture may not be completed without disruption.
A significant product liability or other legal judgment or a related regulatory enforcement action against us, or a significant product recall, may materially and adversely affect our reputation and profitability.
In addition, our marketing could face claims of false or deceptive advertising or other criticism. A significant product liability or other legal judgment or a related regulatory enforcement action against us, or a significant product recall, may materially and adversely affect our reputation and profitability.
In addition, the financial condition of such customers, suppliers, and other significant contractual counterparties are affected in large part by conditions and events that are beyond our control. Significant deteriorations in the financial conditions of significant customers or suppliers, or in other business relationships, could materially and adversely affect our product sales, financial condition, and operating results.
In addition, the financial condition of such customers, suppliers, and other significant contractual counterparties are affected in large part by conditions and events that are beyond our control.
We are subject to income and other taxes in the United States and in numerous foreign jurisdictions. Our domestic and foreign tax liabilities are dependent on the jurisdictions in which profits are determined to be earned and taxed. Additionally, the amount of taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we operate.
Changes in tax laws and interpretations could adversely affect our business. We are subject to income and other taxes in the United States and in numerous foreign jurisdictions. Our domestic and foreign tax liabilities are dependent on the jurisdictions in which profits are determined to be earned and taxed.
We intend to vigorously contest the position taken by the IRS; however, the ultimate outcome of this matter is uncertain, and if we are required to pay the IRS additional U.S. taxes, interest, and potential penalties, our results of operations and cash flows could be materially affected.
We strongly disagree with the IRS’s positions, believe that our tax positions are well documented and properly supported, and intend to vigorously contest the positions taken by the IRS and pursue all available administrative and judicial remedies; however, the ultimate outcome of this matter is uncertain, and if we are required to pay the IRS additional U.S. taxes, interest, and potential penalties, our results of operations and cash flows could be materially affected.
Reporting units with between 20-50% fair value over carrying amount had an aggregate goodwill carrying amount of $14.5 billion as of the Q3 2022 Annual Impairment Test and included Fresh, Beverages, and Desserts (FBD), Northern Europe, Asia, and Latin America (LATAM).
Reporting units with 10-20% fair value over carrying amount had an aggregate goodwill carrying amount of $12.5 billion as of the 2023 annual impairment test and included Fresh, Beverages, and Desserts (“FBD”) and Latin America (“LATAM”).
A number of factors influence our effective tax rate, including changes in tax laws and treaties as well as the interpretation of existing laws and rules.
Additionally, the amount of taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we operate. A number of factors influence our effective tax rate, including changes in tax laws and treaties as well as the interpretation of existing laws and rules.
If we fail to expand our product offerings successfully across product categories or platforms, or if we do not rapidly develop products in faster-growing or more profitable categories, demand for our products could decrease, which could materially and adversely affect our product sales, financial condition, and operating results.
If we fail to expand our product offerings successfully across product categories or platforms, or if we do not rapidly develop products in faster-growing or more profitable categories, demand for our products could decrease, which could materially and adversely affect our product sales, financial condition, and operating results. 8 Prolonged negative perceptions concerning the health, environmental, or social implications of certain food and beverage products, ingredients, or packaging materials could influence consumer preferences and acceptance of our products and marketing programs.
We seek to maintain, extend, and expand our brand image through marketing investments, including advertising and consumer promotions, and product innovation. Negative perceptions of food and beverage marketing could adversely affect our brand image or lead to stricter regulations and scrutiny of our marketing practices.
Negative perceptions of food and beverage marketing could adversely affect our brand image or lead to stricter regulations and scrutiny of our marketing practices.
Brands with 20% or less fair value over carrying amount had an aggregate carrying amount after impairment of $16.6 billion as of the Q3 2022 Annual Impairment Test and included Kraft , Oscar Mayer , Miracle Whip , Ore-Ida , Maxwell House , Cool Whip , Jet Puffed , and Plasmon .
After the 2023 annual impairment test and after reclassifying two indefinite-lived intangible asset brands to definite-lived trademarks, our indefinite-lived brands with 10% or less fair value over carrying amount had an aggregate carrying amount of $16.2 billion as of the 2023 annual impairment test and included Kraft , Oscar Mayer , Velveeta , Maxwell House , Cool Whip , and Jet Puffed.
The aggregate carrying amount of brands with fair value over carrying amount between 20-50% was $2.5 billion as of the Q3 2022 Annual Impairment Test.
Brands with 10-20% fair value over carrying amount had an aggregate carrying amount of $2.4 billion as of the 2023 annual impairment test and included Miracle Whip and Ore-Ida . The aggregate carrying amount of brands with fair value over carrying amount between 20-50% was $4.2 billion as of the 2023 annual impairment test.
The California Consumer Privacy Act (“CCPA”) and the California Privacy Rights Act (“CPRA”), which became effective in January 2023 and amended the CCPA, among other things, impose additional requirements with respect to disclosure and deletion of personal information of California residents.
The California Consumer Privacy Act (“CCPA”) and the California Privacy Rights Act (“CPRA”), which amended the CCPA, among other things, impose additional requirements with respect to disclosure and deletion of personal information of California residents. The CCPA and CPRA provide civil penalties for violations, as well as a private right of action for data breaches.
We must also be able to respond successfully to technological advances by and intellectual property rights of our competitors, and failure to do so could compromise our competitive position and impact our product sales, financial condition, and operating results. Changes in the retail landscape or the loss of key retail customers could adversely affect our financial performance.
We must also be able to respond successfully to technological advances (including artificial intelligence, machine learning, and augmented reality, which may become critical in interpreting consumer preferences in the future) by and intellectual property rights of our competitors, and failure to do so could compromise our competitive position and impact our product sales, financial condition, and operating results.
Governments in the United States, Canada, United Kingdom, and European Union have each imposed export controls and economic sanctions on certain industry sectors and parties in Russia.
Governments in the United States, Canada, United Kingdom, and European Union have each imposed export controls and economic sanctions on certain industry sectors and parties in Russia. Further, the Russian government has placed restrictions on the transfer of funds to and from Russian entities, making it more difficult to operate in Russia.
Reporting units and brands that have 20% or less excess fair value over carrying amount as of the annual impairment test we performed as of June 26, 2022 (the “Q3 2022 Annual Impairment Test”) have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future.
If the carrying amount of a reporting unit or brand exceeds its estimated fair value, we record an impairment loss based on the difference between fair value and carrying amount, in the case of reporting units, not to exceed the associated carrying amount of goodwill. 15 Reporting units and brands that have 20% or less excess fair value over carrying amount as of the 2023 annual impairment test we performed as of July 2, 2023 have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future.
In 2022, we continued to experience higher commodity costs and supply chain costs, including procurement, logistics, and manufacturing costs, largely due to inflationary pressures. We expect these costs to continue to increase and inflation to remain elevated through 2023.
In 2023, we continued to experience higher commodity costs and supply chain costs, including manufacturing, procurement, and logistics costs largely due to inflationary pressures concentrated in the first half of the year.
If this occurs, we would be in default under our debt instruments and unable to access our Senior Credit Facility.
If this occurs, we would be in default under our debt instruments and unable to access our Senior Credit Facility. In addition, certain creditors could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation.
It is not currently possible to accurately determine the potential comprehensive impact of these or future changes, but these changes could have a material impact on our effective tax rate, financial condition, and business. Significant judgment, knowledge, and experience are required in determining our worldwide provision for income taxes.
Many countries have enacted or begun the process of enacting laws based on the two-pillar plan proposals. It is not currently possible to accurately determine the potential comprehensive impact of these or future changes, but these changes could have a material impact on our effective tax rate, financial condition, and business.
Therefore, if any assumptions, estimates, or market factors change in the future, these amounts are also susceptible to impairments. Our net sales and net income may be exposed to foreign exchange rate fluctuations. We derive a substantial portion of our net sales from international markets.
Our net sales and net income may be exposed to foreign exchange rate fluctuations. We derive a substantial portion of our net sales from international markets.
The proposals aim to ensure a fairer distribution of profits among countries and impose a floor on tax competition through the introduction of a global minimum tax.
Additionally, the Organization for Economic Co-operation and Development (OECD), a global coalition of member countries, proposed a two-pillar plan to reform international taxation. The proposals aim to ensure a fairer distribution of profits among countries and impose a floor on tax competition through the introduction of a 21 global minimum tax.
As of December 31, 2022, we maintain 11 reporting units, seven of which comprise our goodwill balance. Our indefinite-lived intangible asset balance primarily consists of a number of individual brands .
Additional impairments of the carrying amounts of goodwill or other indefinite-lived intangible assets could negatively affect our financial condition and results of operations. As of December 30, 2023, we maintain 11 reporting units, seven of which comprise our goodwill balance. Our indefinite-lived intangible asset balance primarily consists of a number of individual brands .
Additionally, we expect that there could be a difference between the timing of when we take pricing actions and the impact of those beneficial actions on our results of operations. Failure to effectively assess, timely change, and properly set pricing, promotions, or trade incentives may negatively impact our ability to achieve our objectives.
We expect that there could be a difference between the timing of when we take pricing actions and the impact of those beneficial actions on our results of operations. Additionally, the pricing actions we take have, in some instances, negatively impacted, and could continue to negatively impact, our market share.
In addition, we might fail to appropriately target our marketing efforts, anticipate consumer preferences, or invest sufficiently in maintaining, extending, and expanding our brand image. If we do not maintain, extend, and expand our reputation or brand image, then our product sales, financial condition, and operating results could be materially and adversely affected.
If we do not maintain, extend, and expand our reputation or brand image, then our product sales, financial condition, and operating results could be materially and adversely affected. We must leverage our brand value to compete against private label products.
Geopolitical tensions or conflicts, such as the conflict between Russia and Ukraine, may further heighten the risk of cybersecurity attacks.
Geopolitical tensions or conflicts, and the rapid evolution and increased adoption of artificial intelligence technologies may further heighten the risk of cybersecurity attacks.
Maintaining, extending, and expanding our reputation and brand image are essential to our business success. We have many iconic brands with long-standing consumer recognition across the globe. Our success depends on our ability to maintain brand image for our existing products, extend our brands to new platforms, and expand our brand image with new product offerings.
Our success depends on our ability to maintain brand image for our existing products, extend our brands to new platforms, and expand our brand image with new product offerings. We seek to maintain, extend, and expand our brand image through marketing investments, including advertising and consumer promotions, and product innovation.
GDPR, CCPA, CPRA, and other privacy and data protection laws may increase our costs of compliance and risks of non-compliance, which could result in substantial penalties. Our results could be adversely impacted as a result of increased pension, labor, and people-related expenses.
Similar legislation in other states imposes transparency and other obligations with respect to personal data of their respective residents and provide residents with similar rights. GDPR, CCPA, CPRA, and other privacy and data protection laws may increase our costs of compliance and risks of non-compliance, which could result in substantial penalties.
As of the date of this filing, our long-term debt is rated BBB- by S&P, BBB by Fitch and Baa3 by Moody’s, with a positive outlook from S&P and a stable outlook from Fitch and Moody’s. 16 Registered Securities Risks Sales of our common stock in the public market could cause volatility in the price of our common stock or cause the share price to fall.
Registered Securities Risks Sales of our common stock in the public market could cause volatility in the price of our common stock or cause the share price to fall.
Retail customers, such as supermarkets, warehouse clubs, and food distributors in our major markets, may continue to consolidate, resulting in fewer but larger customers for our business across various channels. These larger customers may seek to leverage their positions to improve their profitability by demanding improved efficiency, lower pricing, more favorable terms, increased promotional programs, or specifically tailored product offerings.
Changes in the retail landscape or the loss of key retail customers could adversely affect our financial performance. Retail customers, such as supermarkets, warehouse clubs, and food distributors in our major markets, may continue to consolidate, resulting in fewer but larger customers for our business across various channels.
In addition, larger retailers have scale to develop supply chains that permit them to operate with reduced inventories or to develop and market their own private label products. Retail consolidation and increasing retailer power could materially and adversely affect our product sales, financial condition, and operating results.
These larger customers may seek to leverage their positions to improve their profitability by demanding improved efficiency, lower pricing, more favorable terms, increased promotional programs, or specifically tailored product offerings. In addition, larger retailers have scale to develop supply chains that permit them to operate with reduced inventories or to develop and market their own private label products.
Although the remaining brands, with a carrying value of $19.4 billion, have more than 50% excess fair value over carrying amount as of the Q3 2022 Annual Impairment Test, these amounts are also associated with the 2013 Heinz Acquisition and the 2015 Merger and were initially recorded at the time of acquisition on our consolidated balance sheet at their estimated acquisition date fair values.
Although the remaining brands, with a carrying amount of $15.7 billion, have more than 50% excess fair value over carrying amount as of the 2023 annual impairment test, these amounts are also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.
Removed
Prolonged negative perceptions concerning the health, environmental, or social implications of certain food and beverage products, ingredients, or packaging materials could influence consumer preferences and acceptance of our products and marketing programs.
Added
Failure to effectively assess, timely change, and properly set pricing, promotions, or trade incentives may negatively impact our ability to achieve our objectives. In addition, in order to remain competitive, we rely on our ability to secure new retailers and maintain or add shelf space for our products.
Removed
We may also suffer losses if our products or operations violate applicable laws or regulations or if our products cause injury, illness, or death. In addition, our marketing could face claims of false or deceptive advertising or other criticism.
Added
If we are unable to secure sufficient and attractive shelf space, adequate product visibility, and attractive pricing for our products with retailers, our products may be disadvantaged against our competitors.
Removed
In addition, certain creditors could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation. 13 Additional impairments of the carrying amounts of goodwill or other indefinite-lived intangible assets could negatively affect our financial condition and results of operations.
Added
Even if we obtain preferred product visibility and shelf space, our new and existing products may fail to achieve the sales expectations set by retailers, which may cause these retailers to remove our products from their shelves.

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Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−1 removed1 unchanged
Biggest changeWe also enter into co-manufacturing arrangements with third parties if we determine it is advantageous to outsource the production of any of our products. In 2022, we transferred ownership of our facility in Ontario, Oregon as part of a long-term third-party manufacturing agreement in our North America segment.
Biggest changeWe also enter into co-manufacturing arrangements with third parties if we determine it is advantageous to outsource the production of any of our products. In 2023, we ceased operations of our facility in Irvine, California in our North America segment and two manufacturing facilities in China within our International segment as part of our planned restructuring activities.
Our manufacturing and processing facilities count by segment as of December 31, 2022 was: Owned Leased North America 32 3 International 40 3 20 We maintain all of our manufacturing and processing facilities in good condition and believe they are suitable and are adequate for our present needs.
Our manufacturing and processing facilities count by segment as of December 30, 2023 was: Owned Leased North America 32 2 International 38 3 We maintain all of our manufacturing and processing facilities in good condition and believe they are suitable and are adequate for our present needs.
We manufacture our products in our network of manufacturing and processing facilities located throughout the world. As of December 31, 2022, we operated 78 manufacturing and processing facilities. We own 72 and lease six of these facilities.
We manufacture our products in our network of manufacturing and processing facilities located throughout the world. As of December 30, 2023, we operated 75 manufacturing and processing facilities. We own 70 and lease five of these facilities.
See Note 4, Acquisitions and Divestitures , in Item 8, Financial Statements and Supplementary Data , for additional information on our acquisitions and divestitures.
See Note 5, Restructuring Activities , in Item 8, Financial Statements and Supplementary Data , for additional information on our exit and disposal costs.
Removed
Additionally, we divested certain assets and operations associated with our business-to-business powdered cheese business in our North America segment, including, among other things, a manufacturing facility in Albany, Minnesota. We also acquired one owned manufacturing facility in our International segment.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+2 added−3 removed0 unchanged
Biggest changeIssuer Purchases of Equity Securities During the Three Months Ended December 31, 2022 Our share repurchase activity in the three months ended December 31, 2022 was: Total Number of Shares Purchased (a) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 9/25/2022 — 10/29/2022 2,779,689 $ 34.99 — $ — 10/30/2022 — 11/26/2022 433,574 37.73 — — 11/27/2022 — 12/31/2022 97,208 40.23 — — Total 3,310,471 — (a) Includes (1) shares repurchased to offset the dilutive effect of the exercise of stock options using option exercise proceeds and the vesting restricted stock units (“RSUs”) and performance share units (“PSUs”) and (2) shares withheld for tax liabilities associated with the vesting of RSUs and PSUs.
Biggest changeKraft Heinz S&P 500 S&P Consumer Staples Food and Soft Drink Products December 28, 2018 $ 100.00 $ 100.00 $ 100.00 December 27, 2019 76.72 132.97 128.43 December 24, 2020 89.80 154.78 135.53 December 23, 2021 94.37 200.34 153.96 December 30, 2022 113.64 165.48 170.15 December 29, 2023 107.91 208.99 161.89 The above performance graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act. 25 Issuer Purchases of Equity Securities During the Three Months Ended December 30, 2023 Our share repurchase activity in the three months ended December 30, 2023 was: Total Number of Shares Purchased (a) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) 10/01/2023 — 11/04/2023 143,353 $ 33.74 — $ — 11/05/2022 — 12/02/2023 2,139,192 35.12 2,135,574 2,925 12/03/2023 — 12/30/2023 6,153,670 36.60 6,149,491 2,700 Total 8,436,215 8,285,065 (a) Includes (1) shares purchased pursuant to the share repurchase program described in (b) below, (2) shares repurchased to offset the dilutive effect of the exercise of stock options using option exercise proceeds and the vesting restricted stock units (“RSUs”) and performance share units (“PSUs”), and (3) shares withheld for tax liabilities associated with the vesting of RSUs and PSUs.
Companies included in the S&P Consumer Staples Food and Soft Drink Products index change periodically and are presented on the basis of the index as it is comprised on December 31, 2022.
Companies included in the S&P Consumer Staples Food and Soft Drink Products index change periodically and are presented on the basis of the index as it is comprised on December 30, 2023.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is listed on The Nasdaq Stock Market LLC (Nasdaq) under the ticker symbol “KHC.” At February 11, 2023, there were approximately 40,000 holders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is listed on The Nasdaq Stock Market LLC (Nasdaq) under the ticker symbol “KHC.” At February 10, 2024, there were approximately 37,627 holders of record of our common stock.
Comparison of Cumulative Total Return The following graph compares the cumulative total return on our common stock with the cumulative total return of the S&P 500 Index and the S&P Consumer Staples Food and Soft Drink Products, which we consider to be our peer group.
See Equity and Dividends in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , for a discussion of cash dividends declared on our common stock. 24 Comparison of Cumulative Total Return The following graph compares the cumulative total return on our common stock with the cumulative total return of the S&P 500 Index and the S&P Consumer Staples Food and Soft Drink Products, which we consider to be our peer group.
This graph covers the five-year period from December 29, 2017 (the last trading day of our fiscal year 2017) through December 30, 2022 (the last trading day of our fiscal year 2022).
This graph covers the five-year period from December 28, 2018 (the last trading day of our fiscal year 2018) through December 29, 2023 (the last trading day of our fiscal year 2023). The graph shows total shareholder return assuming $100 was invested on December 28, 2018 and the dividends were reinvested on a daily basis.
Removed
See Equity and Dividends in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , for a discussion of cash dividends declared on our common stock.
Added
(b) On November 27, 2023, the Company announced that the Board of Directors approved a share repurchase program authorizing the Company to purchase up to $3.0 billion of the Company’s common stock through December 26, 2026. The Company is not obligated to repurchase any specific number of shares and the program may be modified, suspended, or discontinued at any time.
Removed
The graph shows total shareholder return assuming $100 was invested on December 29, 2017 and the dividends were reinvested on a daily basis. 21 Kraft Heinz S&P 500 S&P Consumer Staples Food and Soft Drink Products December 29, 2017 $ 100.00 $ 100.00 $ 100.00 December 28, 2018 58.45 94.80 96.69 December 27, 2019 44.85 126.06 124.43 December 24, 2020 52.49 146.73 131.03 December 23, 2021 55.16 189.93 148.98 December 30, 2022 66.43 156.88 164.32 The above performance graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act.
Added
Under the program, shares may be repurchased in open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act, privately negotiated transactions, transactions structured through investment banking institutions, or other means. Item 6. [Reserved]. 26
Removed
(b) We do not have any publicly-announced share repurchase plans or programs. Item 6. [Reserved]. 22

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

4 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. [Reserved]. 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 23 Overview 23 Consolidated Results of Operations 24 Results of Operations by Segment 27 Liquidity and Capital Resources 29 Commodity Trends 34 Critical Accounting Estimates 34 New Accounting Pronouncements 38 Contingencies 38 Non-GAAP Financial Measures 38 Item 7A.
Biggest changeItem 6. [Reserved]. 26 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 27 Overview 27 Consolidated Results of Operations 28 Results of Operations by Segment 30 Liquidity and Capital Resources 32 Commodity Trends 37 Critical Accounting Estimates 37 New Accounting Pronouncements 41 Contingencies 41 Non-GAAP Financial Measures 41 Item 7A.
Postemployment Benefits 78 Note 12. Financial Instruments 88 Note 13. Accumulated Other Comprehensive Income/(Losses) 93 Note 14. Financing Arrangements 95 Note 15. Commitments and Contingencies 96 Note 16. Debt 97 Note 17. Leases 102 Note 18. Capital Stock 104 Note 19. Earnings Per Share 104 Note 20. Segment Reporting 105 Note 21. Other Financial Data 107
Postemployment Benefits 78 Note 12. Financial Instruments 88 Note 13. Accumulated Other Comprehensive Income/(Losses) 93 Note 14. Financing Arrangements 95 Note 15. Commitments and Contingencies 96 Note 16. Debt 98 Note 17. Leases 102 Note 18. Capital Stock 103 Note 19. Earnings Per Share 104 Note 20. Segment Reporting 105 Note 21. Other Financial Data 107
Quantitative and Qualitative Disclosures about Market Risk. 43 Item 8. Financial Statements and Supplementary Data. 44 Report of Independent Registered Public Accounting Firm 44 Consolidated Statements of Income 47 Consolidated Statements of Comprehensive Income 48 Consolidated Balance Sheets 49 Consolidated Statements of Equity 50 Consolidated Statements of Cash Flows 51 Notes to Consolidated Financial Statements 52 Note 1.
Quantitative and Qualitative Disclosures about Market Risk. 45 Item 8. Financial Statements and Supplementary Data. 46 Report of Independent Registered Public Accounting Firm 46 Consolidated Statements of Income 49 Consolidated Statements of Comprehensive Income 50 Consolidated Balance Sheets 51 Consolidated Statements of Equity 52 Consolidated Statements of Cash Flows 53 Notes to Consolidated Financial Statements 54 Note 1.
Basis of Presentation 52 Note 2. Significant Accounting Policies 53 Note 3. New Accounting Standards 57 Note 4. Acquisitions and Divestitures 58 Note 5. Restructuring Activities 63 Note 6. Inventories 65 Note 7. Property, Plant and Equipment 65 Note 8. Goodwill and Intangible Assets 65 Note 9. Income Taxes 71 Note 10. Employees’ Stock Incentive Plans 74 Note 11.
Basis of Presentation 54 Note 2. Significant Accounting Policies 55 Note 3. New Accounting Standards 59 Note 4. Acquisitions and Divestitures 60 Note 5. Restructuring Activities 65 Note 6. Inventories 66 Note 7. Property, Plant and Equipment 66 Note 8. Goodwill and Intangible Assets 67 Note 9. Income Taxes 72 Note 10. Employees’ Stock Incentive Plans 75 Note 11.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

118 edited+33 added−40 removed57 unchanged
Biggest changeAdjusted EPS is defined as diluted EPS excluding, when they occur, the impacts of restructuring activities, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, losses/(gains) on the sale of a business, other losses/(gains) related to acquisitions and divestitures (e.g., tax and hedging impacts), nonmonetary currency devaluation (e.g., remeasurement gains and losses), debt prepayment and extinguishment (benefit)/costs, and certain significant discrete income tax items (e.g., U.S. and non-U.S. tax reform), and including, when they occur, adjustments to reflect preferred stock dividend payments on an accrual basis. 39 The Kraft Heinz Company Reconciliation of Net Sales to Organic Net Sales (dollars in millions) (Unaudited) Net Sales Currency Acquisitions and Divestitures 53rd Week Organic Net Sales Price Volume/Mix 2022 North America $ 20,340 $ (67) $ — $ 357 $ 20,050 International 6,145 (430) 279 97 6,199 Kraft Heinz $ 26,485 $ (497) $ 279 $ 454 $ 26,249 2021 North America $ 20,351 $ — $ 1,990 $ — $ 18,361 International 5,691 26 109 — 5,556 Kraft Heinz $ 26,042 $ 26 $ 2,099 $ — $ 23,917 Year-over-year growth rates North America (0.1) % (0.4) pp (10.8) pp 1.9 pp 9.2 % 13.0 pp (3.8) pp International 8.0 % (8.1) pp 2.8 pp 1.7 pp 11.6 % 13.5 pp (1.9) pp Kraft Heinz 1.7 % (2.0) pp (8.0) pp 1.9 pp 9.8 % 13.2 pp (3.4) pp 40 The Kraft Heinz Company Reconciliation of Net Income/(Loss) to Adjusted EBITDA (in millions) (Unaudited) December 31, 2022 December 25, 2021 Net income/(loss) $ 2,368 $ 1,024 Interest expense 921 2,047 Other expense/(income) (253) (295) Provision for/(benefit from) income taxes 598 684 Operating income/(loss) 3,634 3,460 Depreciation and amortization (excluding restructuring activities) 922 910 Divestiture-related license income (56) (4) Restructuring activities 74 84 Deal costs 9 11 Unrealized losses/(gains) on commodity hedges 63 17 Impairment losses 999 1,634 Certain non-ordinary course legal and regulatory matters 210 62 Equity award compensation expense 148 197 Adjusted EBITDA $ 6,003 $ 6,371 41 The Kraft Heinz Company Reconciliation of Diluted EPS to Adjusted EPS (Unaudited) December 31, 2022 December 25, 2021 Diluted EPS $ 1.91 $ 0.82 Restructuring activities (a) 0.05 0.05 Unrealized losses/(gains) on commodity hedges (b) 0.04 0.01 Impairment losses (c) 0.70 1.07 Certain non-ordinary course legal and regulatory matters (d) 0.13 0.05 Losses/(gains) on sale of business (e) (0.01) 0.15 Other losses/(gains) related to acquisitions and divestitures (f) (0.02) — Nonmonetary currency devaluation (g) 0.01 — Debt prepayment and extinguishment (benefit)/costs (h) (0.03) 0.59 Certain significant discrete income tax items (i) — 0.19 Adjusted EPS $ 2.78 $ 2.93 (a) Gross expenses/(income) included in restructuring activities were expenses of $74 million ($56 million after-tax) in 2022 and $84 million ($64 million after-tax) in 2021 and were recorded in the following income statement line items: • Cost of products sold included expenses of $27 million in 2022 and $13 million in 2021; • SG&A included expenses of $47 million in 2022 and $70 million in 2021; and • Other expense/(income) included expenses of $1 million in 2021.
Biggest changeAdjusted EPS is defined as diluted EPS excluding, when they occur, the impacts of restructuring activities, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, losses/(gains) on the sale of a business, other losses/(gains) related to acquisitions and divestitures (e.g., tax and hedging impacts), nonmonetary currency devaluation (e.g., remeasurement gains and losses), debt prepayment and extinguishment (benefit)/costs, and certain significant discrete income tax items (e.g., U.S. and non-U.S. tax reform), and including, when they occur, adjustments to reflect preferred stock dividend payments on an accrual basis. 41 The Kraft Heinz Company Reconciliation of Net Sales to Organic Net Sales (dollars in millions) (Unaudited) Net Sales Currency Acquisitions and Divestitures 53rd Week Organic Net Sales Price Volume/Mix 2023 North America $ 20,126 $ (65) $ — $ — $ 20,191 International 6,514 (103) 34 — 6,583 Kraft Heinz $ 26,640 $ (168) $ 34 $ — $ 26,774 2022 North America $ 20,340 $ — $ — $ 357 $ 19,983 International 6,145 82 60 97 5,906 Kraft Heinz $ 26,485 $ 82 $ 60 $ 454 $ 25,889 Year-over-year growth rates North America (1.0) % (0.3) pp 0.0 pp (1.7) pp 1.0 % 7.5 pp (6.5) pp International 6.0 % (3.2) pp (0.5) pp (1.8) pp 11.5 % 13.6 pp (2.1) pp Kraft Heinz 0.6 % (0.9) pp (0.1) pp (1.8) pp 3.4 % 8.9 pp (5.5) pp 42 The Kraft Heinz Company Reconciliation of Net Income/(Loss) to Adjusted EBITDA (in millions) (Unaudited) December 30, 2023 December 31, 2022 Net income/(loss) $ 2,846 $ 2,368 Interest expense 912 921 Other expense/(income) 27 (253) Provision for/(benefit from) income taxes 787 598 Operating income/(loss) 4,572 3,634 Depreciation and amortization (excluding restructuring activities) 923 922 Divestiture-related license income (54) (56) Restructuring activities 60 74 Deal costs — 9 Unrealized losses/(gains) on commodity hedges 1 63 Impairment losses 662 999 Certain non-ordinary course legal and regulatory matters 2 210 Equity award compensation expense 141 148 Adjusted EBITDA $ 6,307 $ 6,003 43 The Kraft Heinz Company Reconciliation of Diluted EPS to Adjusted EPS (Unaudited) December 30, 2023 December 31, 2022 Diluted EPS $ 2.31 $ 1.91 Restructuring activities (a) 0.16 0.05 Unrealized losses/(gains) on commodity hedges (b) — 0.04 Impairment losses (c) 0.50 0.70 Certain non-ordinary course legal and regulatory matters (d) — 0.13 Losses/(gains) on sale of business (e) — (0.01) Other losses/(gains) related to acquisitions and divestitures (f) — (0.02) Nonmonetary currency devaluation (g) 0.02 0.01 Debt prepayment and extinguishment (benefit)/costs (h) — (0.03) Certain significant discrete income tax items (i) (0.01) — Adjusted EPS $ 2.98 $ 2.78 (a) Gross expenses/(income) included in restructuring activities were expenses of $225 million ($193 million after-tax) in 2023 and $74 million ($56 million after-tax) in 2022 and were recorded in the following income statement line items: • Cost of products sold included expenses of $57 million in 2023 and $27 million in 2022; • SG&A included expenses of $3 million in 2023 and $47 million in 2022; and • Other expense/(income) included expenses of $165 million in 2023.
See the Non-GAAP Financial Measures section at the end of this item.
See the Non-GAAP Financial Measures section at the end of this item.
See the Non-GAAP Financial Measures section at the end of this item.
See the Non-GAAP Financial Measures section at the end of this item.
If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, income tax rates, foreign currency exchange rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units or brands might become impaired in the future.
If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units or brands might become impaired in the future.
The resolution of tax reserves and changes in valuation allowances could be material to our results of operations for any period but is not expected to be material to our financial position. New Accounting Pronouncements See Note 3, New Accounting Standards , in Item 8, Financial Statements and Supplementary Data , for a discussion of new accounting pronouncements.
The resolution of tax reserves and changes in valuation allowances could be material to our results of operations for any period but is not expected to be material to our financial position. 40 New Accounting Pronouncements See Note 3, New Accounting Standards , in Item 8, Financial Statements and Supplementary Data , for a discussion of new accounting pronouncements.
We model these discount rates using a portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the plans. Changes in our discount rates were primarily the result of changes in bond yields year-over-year. Our 2023 expected return on plan assets will be 6.3% (net of applicable taxes) for our postretirement plans.
We model these discount rates using a portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the plans. Changes in our discount rates were primarily the result of changes in bond yields year-over-year. Our 2024 expected return on plan assets will be 6.3% (net of applicable taxes) for our postretirement plans.
While we do not anticipate further changes in the 2023 assumptions for our U.S. and non-U.S. pension and postretirement benefit plans, as a sensitivity measure, a 100-basis-point change in our discount rate or a 100-basis-point change in the expected rate of return on plan assets would have the following effects, increase/(decrease) in cost (in millions): U.S. Plans Non-U.S.
While we do not anticipate further changes in the 2024 assumptions for our U.S. and non-U.S. pension and postretirement benefit plans, as a sensitivity measure, a 100-basis-point change in our discount rate or a 100-basis-point change in the expected rate of return on plan assets would have the following effects, increase/(decrease) in cost (in millions): U.S. Plans Non-U.S.
We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product category growth rates, management’s plans, and guideline companies. 35 We utilize the excess earnings method under the income approach to estimate the fair value of certain of our largest brands.
We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product category growth rates, management’s plans, and guideline companies. 38 We utilize the excess earnings method under the income approach to estimate the fair value of certain of our largest brands.
Beyond 2023, we are unable to reliably estimate the timing of contributions to our pension or postretirement plans. Our actual contributions and plans may change due to many factors, including changes in tax, employee benefit, or other laws and regulations, tax deductibility, significant differences between expected and actual pension or postretirement asset performance or interest rates, or other factors.
Beyond 2024, we are unable to reliably estimate the timing of contributions to our pension or postretirement plans. Our actual contributions and plans may change due to many factors, including changes in tax, employee benefit, or other laws and regulations, tax deductibility, significant differences between expected and actual pension or postretirement asset performance or interest rates, or other factors.
However, there has been, and we expect that there could continue to be, a difference between the timing of when these beneficial actions impact our results of operations and when the cost inflation is incurred. Additionally, the pricing actions we take have, in some instances, negatively impacted, and could continue to negatively impact, our market share.
However, there has been, and we expect that there could continue to be, a difference between the timing of when these beneficial actions impact our results of operations and when the cost inflation is incurred. Additionally, the pricing actions we have taken have, in some instances, negatively impacted, and could continue to negatively impact, our market share.
Some of the more significant assumptions inherent in estimating the fair values include the estimated future annual net cash flows for each brand (including net sales, cost of products sold, and SG&A), contributory asset charges, income tax considerations, long-term growth rates, a discount rate that reflects the level of risk associated with the future earnings attributable to the brand, and management’s intent to invest in the brand indefinitely.
Some of the more significant assumptions inherent in estimating the fair values include the estimated future annual net cash flows for each brand (including net sales, cost of products sold, and SG&A), contributory asset charges, income tax considerations, long-term growth rates, a discount rate that reflects the level of risk associated with the future earnings attributable to the brand, management’s intent to invest in the brand indefinitely, and other market factors.
Some of the more significant assumptions inherent in estimating the fair values include the estimated future annual net cash flows for each reporting unit (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, long-term growth rates, and a discount rate that appropriately reflects the risks inherent in each future cash flow stream.
Some of the more significant assumptions inherent in estimating the fair values include the estimated future annual net cash flows for each reporting unit (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, long-term growth rates, a discount rate that appropriately reflects the risks inherent in each future cash flow stream, and other market factors.
Supplemental Guarantor Information: The Kraft Heinz Company (as the “Parent Guarantor”) fully and unconditionally guarantees all the senior unsecured registered notes (collectively, the “KHFC Senior Notes”) issued by Kraft Heinz Foods Company (“KHFC”), our 100% owned operating subsidiary (the “Guarantee”). See Note 16, Debt , in Item 8, Financial Statements and Supplementary Data , for additional descriptions of these guarantees.
Supplemental Guarantor Information: The Kraft Heinz Company (as the “Parent Guarantor”) fully and unconditionally guarantees all the senior unsecured registered notes (collectively, the “KHFC Senior Notes”) issued by KHFC, our 100% owned operating subsidiary (the “Guarantee”). See Note 16, Debt , in Item 8, Financial Statements and Supplementary Data , for additional descriptions of these guarantees.
Certain other long-term liabilities related to income taxes, insurance accruals, and other accruals included on the consolidated balance sheet are excluded from the above table as we are unable to estimate the timing of payments for these items. Pension plan contributions were $11 million in 2022. We estimate that 2023 pension plan contributions will be approximately $11 million.
Certain other long-term liabilities related to income taxes, insurance accruals, and other accruals included on the consolidated balance sheet are excluded from the above table as we are unable to estimate the timing of payments for these items. Pension plan contributions were $11 million in 2023. We estimate that 2024 pension plan contributions will be approximately $10 million.
(f) Gross expenses/(income) included in other losses/(gains) related to acquisitions and divestitures were income of $38 million ($29 million after-tax) in 2022 and were recorded in other expense/(income). (g) Gross expenses included in nonmonetary currency devaluation were $17 million ($17 million after-tax) in 2022 and were recorded in other expense/(income).
(f) Gross expenses/(income) included in other losses/(gains) related to acquisitions and divestitures were income of $38 million ($29 million after-tax) in 2022 and were recorded in other expense/(income). (g) Gross expenses included in nonmonetary currency devaluation were $28 million ($28 million after-tax) in 2023 and $17 million ($17 million after-tax) in 2022 and were recorded in other expense/(income).
Any actuarial gains and losses in excess of the corridor are then amortized over an appropriate term based on whether the plan is active or inactive. For our postretirement benefit plans, our 2023 health care cost trend rate assumption will be 6.6%.
Any actuarial gains and losses in excess of the corridor are then amortized over an appropriate term based on whether the plan is active or inactive. For our postretirement benefit plans, our 2024 health care cost trend rate assumption will be 6.2%.
Accordingly, these and other reporting units and brands that have 20% or less excess fair value over carrying amount as of the Q3 2022 Annual Impairment Test have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future.
Accordingly, these and other reporting units and brands that have 20% or less excess fair value over carrying amount as of the 2023 annual impairment test have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future.
Our 2023 expected rate of return on plan assets will be 6.6% for our U.S. pension plans and 5.1% for our non-U.S. pension plans. We determine our expected rate of return on plan assets from the plan assets’ historical long-term investment performance, current and future asset allocation, and estimates of future long-term returns by asset class.
Our 2024 expected rate of return on plan assets will be 6.6% for our U.S. pension plans and 5.6% for our non-U.S. pension plans. We determine our expected rate of return on plan assets from the plan assets’ historical long-term investment performance, current and future asset allocation, and estimates of future long-term returns by asset class.
Organic Net Sales increased 11.6% to $6.2 billion in 2022 compared to $5.6 billion in 2021, driven by higher pricing (13.5 pp), which more than offset unfavorable volume/mix (1.9 pp). Higher pricing included increases across markets primarily to mitigate rising input costs.
Organic Net Sales increased 11.5% to $6.6 billion in 2023 compared to $5.9 billion in 2022, driven by higher pricing (13.6 pp), which more than offset unfavorable volume/mix (2.1 pp). Higher pricing included increases across markets primarily to mitigate higher input costs.
Postretirement benefit plan contributions were $12 million in 2022. We estimate that 2023 postretirement benefit plan contributions will be approximately $12 million. Estimated future contributions take into consideration current economic conditions, which at this time are expected to have minimal impact on expected contributions for 2023.
Postretirement benefit plan contributions were $11 million in 2023. We estimate that 2024 postretirement benefit plan contributions will be approximately $12 million. Estimated future contributions take into consideration current economic conditions, which at this time are expected to have minimal impact on expected contributions for 2024.
If we had changed the assumptions used to estimate the fair value of our reporting units and brands with 20% or less excess fair value over carrying amount, as of the Q3 2022 Annual Impairment Test for each of these reporting units and brands, these isolated changes, which are reasonably possible to occur, would have led to the following increase/(decrease) in the aggregate fair value of these reporting units and brands (in billions): Discount Rate Long-Term Growth Rate Royalty Rate 50-Basis-Point 25-Basis-Point 100-Basis-Point Increase Decrease Increase Decrease Increase Decrease Reporting units $ (2.8) $ 3.4 $ 1.4 $ (1.3) Brands (excess earnings method) (1.2) 1.4 0.5 (0.5) Brands (relief from royalty method) (0.1) 0.2 0.1 (0.1) $ 0.2 $ (0.2) 36 Definite-lived intangible assets are amortized on a straight-line basis over the estimated periods benefited.
If we had changed the assumptions used to estimate the fair value of our reporting units and brands with 20% or less excess fair value over carrying amount, as of the 2023 annual impairment test for each of these reporting units and brands, these isolated changes, which are reasonably possible to occur, would have led to the following increase/(decrease) in the aggregate fair value of these reporting units and brands (in billions): Discount Rate Long-Term Growth Rate Royalty Rate 50-Basis-Point 25-Basis-Point 100-Basis-Point Increase Decrease Increase Decrease Increase Decrease Reporting units $ (4.9) $ 5.7 $ 2.4 $ (2.2) Brands (excess earnings method) (1.1) 1.3 0.5 (0.4) Brands (relief from royalty method) (0.2) 0.3 0.1 (0.1) $ 0.3 $ (0.3) Definite-lived intangible assets are amortized on a straight-line basis over the estimated periods benefited.
Our current payment terms with our suppliers, which we deem to be commercially reasonable, generally range from 0 to 200 days. We also maintain agreements with third party administrators that allow participating suppliers to track payment obligations from us, and, at the sole discretion of the supplier, sell one or more of those payment obligations to participating financial institutions.
Our current payment terms with our suppliers, which we deem to be commercially reasonable, generally range from zero to 220 days. We also maintain agreements with third-party administrators that allow participating suppliers to track payment obligations from us, and, at the sole discretion of the supplier, sell one or more of those payment obligations to participating financial institutions.
We established this rate based upon our most recent experience as well as our expectation for health care trend rates going forward. We anticipate the weighted average assumed ultimate trend rate will be 4.8%. The year in which the ultimate trend rate is reached varies by plan, ranging between the years 2023 and 2030.
We established this rate based upon our most recent experience as well as our expectation for health care trend rates going forward. We anticipate the weighted average assumed ultimate trend rate will be 4.8%. The year in which the ultimate trend rate is reached varies by plan, ranging between the years 2026 and 2035.
Our reporting units and brands that were impaired were written down to their respective fair values resulting in zero excess fair value over carrying amount as of the applicable impairment test dates.
Our reporting units and brands that were impaired in 2023, 2022, and 2021 were written down to their respective fair values resulting in zero excess fair value over carrying amount as of the applicable impairment test dates.
Our credit agreement contains customary representations, warranties, and covenants that are typical for these types of facilities and could, upon the occurrence of certain events of default, restrict our ability to access our Senior Credit Facility. We were in compliance with all financial covenants as of December 31, 2022.
Our Credit Agreement contains customary representations, warranties, and covenants that are typical for these types of facilities and could, upon the occurrence of certain events of default, restrict our ability to access our Senior Credit Facility. We were in compliance with all financial covenants as of December 30, 2023.
Segment Adjusted EBITDA is defined as net income/(loss) from continuing operations before interest expense, other expense/(income), provision for/(benefit from) income taxes, and depreciation and amortization (excluding restructuring activities); in addition to these adjustments, we exclude, when they occur, the impacts of divestiture-related license income (e.g., income related to the sale of licenses in connection with the Cheese Transaction), restructuring activities, deal costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results), impairment losses, certain non-ordinary course legal and regulatory matters, and equity award compensation expense (excluding restructuring activities).
Segment Adjusted EBITDA is defined as net income/(loss) from continuing operations before interest expense, other expense/(income), provision for/(benefit from) income taxes, and depreciation and amortization (excluding restructuring activities); in addition to these adjustments, we exclude, when they occur, the impacts of divestiture-related license income, restructuring activities, deal costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results), impairment losses, certain non-ordinary course legal and regulatory matters, and equity award compensation expense (excluding restructuring activities).
The discount rates, long-term growth rates, and royalty rates used to estimate the fair values of our reporting units and our brands with 20% or less excess fair value over carrying amount, as well as the goodwill or brand carrying amounts, as of the Q3 2022 Annual Impairment Test for each reporting unit or brand, were as follows: Goodwill or Brand Carrying Amount (in billions) Discount Rate Long-Term Growth Rate Royalty Rate Minimum Maximum Minimum Maximum Minimum Maximum Reporting units $ 16.4 7.0 % 8.0 % 1.5 % 2.0 % Brands (excess earnings method) 14.9 7.7 % 7.8 % 1.0 % 1.5 % Brands (relief from royalty method) 1.7 7.5 % 8.5 % 0.5 % 2.0 % 4.0 % 20.0 % Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based on the facts and circumstances present at each annual and interim impairment test date.
The discount rates, long-term growth rates, and royalty rates used to estimate the fair values of our reporting units and our brands with 20% or less excess fair value over carrying amount, as well as the goodwill or brand carrying amounts, as of the 2023 annual impairment test for each reporting unit or brand, were as follows: Goodwill or Brand Carrying Amount (in billions) Discount Rate Long-Term Growth Rate Royalty Rate Minimum Maximum Minimum Maximum Minimum Maximum Reporting units $ 30.1 7.8 % 10.8 % 1.5 % 2.5 % Brands (excess earnings method) 14.9 8.3 % 8.6 % 1.0 % 1.9 % Brands (relief from royalty method) 3.7 8.3 % 8.6 % 0.5 % 2.0 % 6.0 % 20.0 % Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based on the facts and circumstances present at each annual and interim impairment test date.
See Item 7, Management’s Discussions and Analysis of Financial Condition and Results of Operations , in our Annual Report on Form 10-K for the year ended December 25, 2021 for a detailed discussion of our financial condition and results of operations for 2021 compared to 2020.
See Item 7, Management’s Discussions and Analysis of Financial Condition and Results of Operations , in our Annual Report on Form 10-K for the year ended December 31, 2022 for a detailed discussion of our financial condition and results of operations for 2022 compared to 2021.
See below for discussion and analysis of our financial condition and results of operations for 2022 compared to 2021.
See below for discussion and analysis of our financial condition and results of operations for 2023 compared to 2022.
Plans 100-Basis-Point 100-Basis-Point Increase Decrease Increase Decrease Effect of change in discount rate on pension costs $ 8 $ (11) $ (3) $ 4 Effect of change in expected rate of return on plan assets on pension costs (30) 30 (17) 17 Effect of change in discount rate on postretirement costs — — (1) 1 Effect of change in expected rate of return on plan assets on postretirement costs (8) 8 — — 37 Income Taxes: We compute our annual tax rate based on the statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we earn income.
Plans 100-Basis-Point 100-Basis-Point Increase Decrease Increase Decrease Effect of change in discount rate on pension costs $ 9 $ (11) $ (3) $ 3 Effect of change in expected rate of return on plan assets on pension costs (30) 30 (15) 15 Effect of change in discount rate on postretirement costs — — (1) 1 Effect of change in expected rate of return on plan assets on postretirement costs (9) 9 — — Income Taxes: We compute our annual tax rate based on the statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we earn income.
The amount of unrecognized deferred tax liabilities for local country withholding taxes that would be owed, if repatriated, related to our 2018 through 2022 accumulated earnings of certain international subsidiaries is approximately $50 million. Our undistributed historic earnings in foreign subsidiaries through December 31, 2017 are currently not considered to be indefinitely reinvested.
The amount of unrecognized deferred tax liabilities for local country withholding taxes that would be owed, if repatriated, related to our 2018 through 2023 accumulated earnings of certain international subsidiaries is approximately $60 million. Our undistributed historical earnings in foreign subsidiaries through December 31, 2017 are currently not considered to be indefinitely reinvested.
These non-GAAP financial measures assist management in comparing our performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our underlying operations.
Results of Operations We disclose in this report certain non-GAAP financial measures. These non-GAAP financial measures assist management in comparing our performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our underlying operations.
Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $38.6 billion as of December 31, 2022. 34 We test our reporting units and brands for impairment annually as of the first day of our third quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit or brand is less than its carrying amount.
Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $38.5 billion as of December 30, 2023. 37 We test our reporting units and brands for impairment annually as of the first day of our third quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit or brand is less than its carrying amount.
As such, estimated pension and postretirement plan contributions for 2023 have been excluded from the above table. At December 31, 2022, the amount of net unrecognized tax benefits for uncertain tax positions, including an accrual of related interest and penalties along with positions only impacting the timing of tax benefits, was approximately $555 million.
As such, estimated pension and postretirement plan contributions for 2024 have been excluded from the above table. At December 30, 2023, the amount of net unrecognized tax benefits for uncertain tax positions, including an accrual of related interest and penalties along with positions only impacting the timing of tax benefits, was approximately $543 million.
Segment Adjusted EBITDA is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operations.
Segment Adjusted EBITDA is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operations. Management also uses Segment Adjusted EBITDA to allocate resources.
Changes in the fair value of our plan assets result in net actuarial gains or losses. These net actuarial gains and losses are deferred into accumulated other comprehensive income/(losses) and amortized within other expense/(income) in future periods using the corridor approach. The corridor is 10% of the greater of the market-related value of the plan’s asset or projected benefit obligation.
These net actuarial gains and losses are deferred into accumulated other comprehensive income/(losses) and amortized within other expense/(income) in future periods using the corridor approach. The corridor is 10% of the greater of the market-related value of the plan’s asset or projected benefit obligation.
(d) Gross expenses included in certain non-ordinary course legal and regulatory matters were $210 million ($161 million after-tax) in 2022 and $62 million ($62 million after-tax) in 2021 and were recorded in SG&A. The 2022 expenses relate to an accrual in connection with the previously disclosed securities class action lawsuit.
(d) Gross expenses included in certain non-ordinary course legal and regulatory matters were $2 million ($2 million after-tax) in 2023 and $210 million ($161 million after-tax) in 2022 and were recorded in SG&A. The 2022 expenses related to an accrual in connection with the previously disclosed securities class action lawsuit.
Our four remaining reporting units had no goodwill carrying amount at the time of the Q3 2022 Annual Impairment Test.
Our four remaining reporting units had no goodwill carrying amount at the time of the 2023 annual impairment test.
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. Our 2023 discount rate assumption will be 5.5% for service cost and 5.4% for interest cost for our postretirement plans.
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. Our 2024 discount rate assumption will be 5.2% for service cost and 5.1% for interest cost for our postretirement plans.
(b) Gross expenses/(income) included in unrealized losses/(gains) on commodity hedges were expenses of $63 million ($48 million after-tax) in 2022 and $17 million ($13 million after-tax) in 2021 and were recorded in cost of products sold.
(b) Gross expenses/(income) included in unrealized losses/(gains) on commodity hedges were expenses of $1 million ($1 million after-tax) in 2023 and $63 million ($48 million after-tax) in 2022 and were recorded in cost of products sold.
Cash Held by International Subsidiaries: Of the $1.0 billion cash and cash equivalents on our consolidated balance sheet at December 31, 2022, $707 million was held by international subsidiaries. Subsequent to January 1, 2018, we consider the unremitted earnings of certain international subsidiaries that impose local country taxes on dividends to be indefinitely reinvested.
Cash Held by International Subsidiaries: Of the $1.4 billion cash and cash equivalents on our consolidated balance sheet at December 30, 2023, $980 million was held by international subsidiaries. Subsequent to January 1, 2018, we consider the unremitted earnings of certain international subsidiaries that impose local country taxes on dividends to be indefinitely reinvested.
Organic Net Sales increased 9.8% to $26.2 billion in 2022 compared to $23.9 billion in 2021, primarily driven by higher pricing (13.2 pp), which more than offset unfavorable volume/mix (3.4 pp). Pricing was higher in both segments, while volume/mix was unfavorable in both segments.
Organic Net Sales increased 3.4% to $26.8 billion in 2023 compared to $25.9 billion in 2022, primarily driven by higher pricing (8.9 pp), which more than offset unfavorable volume/mix (5.5 pp). Pricing was higher in both segments, while volume/mix was unfavorable in both segments.
(b) Represents long-term lending due from and long-term borrowings due to non-guarantor subsidiaries. 33 Commodity Trends We purchase and use large quantities of commodities, including dairy products, meat products, soybean and vegetable oils, tomatoes, coffee beans, sugar and other sweeteners, other fruits and vegetables, corn products, wheat products, and potatoes, to manufacture our products.
(b) Represents long-term lending due from and long-term borrowings due to non-guarantor subsidiaries. 36 Commodity Trends We purchase and use large quantities of commodities, including dairy products, meat products, tomato products, soybean and vegetable oils, sugar and other sweeteners, coffee beans, wheat and processed grains, eggs, and other fruits and vegetables to manufacture our products.
We review and adjust these estimates at least quarterly based on actual experience and other information. Advertising expenses are recorded in selling, general and administrative expenses (“SG&A”). For interim reporting purposes, we charge advertising to operations as a percentage of estimated full year sales activity and marketing costs.
We review and adjust these estimates at least quarterly based on actual experience and other information. Advertising expenses are recorded in SG&A. For interim reporting purposes, we charge advertising to operations as a percentage of estimated full year sales activity and marketing costs. We then review and adjust these estimates each quarter based on actual experience and other information.
The Guarantee is the Parent Guarantor’s senior unsecured obligation and is: (i) pari passu in right of payment with all of the Parent Guarantor’s existing and future senior indebtedness; (ii) senior in right of payment to all of the Parent Guarantor’s future subordinated indebtedness; (iii) effectively subordinated to all of the Parent Guarantor’s existing and future secured indebtedness to the extent of the value of the assets secured by that indebtedness; and (iv) effectively subordinated to all existing and future indebtedness and other liabilities of the Parent Guarantor’s subsidiaries.
The Guarantee is the Parent Guarantor’s senior unsecured obligation and is: (i) pari passu in right of payment with all of the Parent Guarantor’s existing and future senior indebtedness; (ii) senior in right of payment to all of the Parent Guarantor’s future subordinated indebtedness; (iii) effectively subordinated to all of the Parent Guarantor’s existing and future secured indebtedness to the extent of the value of the assets secured by that indebtedness; and (iv) effectively subordinated to all existing and future indebtedness and other liabilities of the Parent Guarantor’s subsidiaries. 35 The KHFC Senior Notes are obligations exclusively of KHFC and the Parent Guarantor and not of any of the Parent Guarantor’s other subsidiaries.
The Parent Guarantor’s other subsidiaries are separate legal entities that have no obligation to pay any amounts due under the KHFC 32 Senior Notes or to make any funds available therefor, whether by dividends, loans, or other payments.
Substantially all of the Parent Guarantor’s operations are conducted through its subsidiaries. The Parent Guarantor’s other subsidiaries are separate legal entities that have no obligation to pay any amounts due under the KHFC Senior Notes or to make any funds available therefor, whether by dividends, loans, or other payments.
This impact was partially offset by the impact of certain unfavorable items, primarily non-deductible goodwill impairments, the impact of the federal tax on global intangible low-taxed income (“GILTI”), and the establishment of uncertain tax positions and valuation allowance reserves.
This impact was partially offset by the impact of certain unfavorable items, primarily non-deductible goodwill impairments, the impact of the federal tax on GILTI, and the establishment of uncertain tax positions and valuation allowance reserves.
Our reporting units that have less than 1% excess fair value over carrying amount as of the Q3 2022 Annual Impairment Test are considered at a heightened risk of future impairments and include our CNAC and Continental Europe reporting units, which had an aggregate goodwill carrying amount after impairment of $2.4 billion.
Our reporting units that have less than 5% excess fair value over carrying amount as of the 2023 annual impairment test are considered at a heightened risk of future impairments and include our TMA, Continental Europe, and CNAC reporting units, which had an aggregate goodwill carrying amount of $15.9 billion.
Fiscal Year 2022 Compared to Fiscal Year 2021: Net sales increased 8.0% to $6.1 billion in 2022 compared to $5.7 billion in 2021, including the favorable impacts of acquisitions and divestitures (2.8 pp) and a 53rd week of shipments (1.7 pp) and the unfavorable impact of foreign currency (8.1 pp).
Fiscal Year 2023 Compared to Fiscal Year 2022: Net sales increased 6.0% to $6.5 billion in 2023 compared to $6.1 billion in 2022, including the unfavorable impacts of foreign currency (3.2 pp), lapping a 53rd week of shipments in the prior period (1.8 pp), and acquisitions and divestitures (0.5 pp).
Net Cash Provided by/Used for Financing Activities: Net cash used for financing activities was $3.7 billion for the year ended December 31, 2022 compared to $9.3 billion for the year ended December 25, 2021.
Net Cash Provided by/Used for Financing Activities: Net cash used for financing activities was $2.7 billion for the year ended December 30, 2023 compared to $3.7 billion for the year ended December 31, 2022.
(c) Gross impairment losses included the following: • Goodwill impairment losses of $444 million ($444 million after-tax) in 2022 and $318 million ($318 million after-tax) in 2021, which were recorded in SG&A; • Intangible asset impairment losses of $469 million ($358 million after-tax) in 2022 and $1.3 billion ($1.0 billion after-tax) in 2021, which were recorded in SG&A; and • Property, plant and equipment asset impairment losses of $86 million ($65 million after-tax) in 2022, which were recorded in cost of products sold.
(c) Gross impairment losses included the following: • Goodwill impairment losses of $510 million ($510 million after-tax) in 2023 and $444 million ($444 million after-tax) in 2022, which were recorded in SG&A; • Intangible asset impairment losses of $152 million ($116 million after-tax) in 2023 and $469 million ($358 million after-tax) in 2022, which were recorded in SG&A; and • Property, plant and equipment asset impairment losses of $86 million ($65 million after-tax) in 2022, which were recorded in cost of products sold.
See Note 4, Acquisitions and Divestitures , in Item 8, Financial Statements and Supplementary Data , for additional information. Conflict Between Russia and Ukraine: For the year ended December 31, 2022, approximately 1% of consolidated net sales, net income/(loss), and Adjusted EBITDA were generated from our business in Russia.
See Note 20, Segment Reporting , in Item 8, Financial Statements and Supplementary Data , for our financial information by segment. Conflict Between Russia and Ukraine: For the years ended December 30, 2023 and December 31, 2022, approximately 1% of consolidated net sales, net income/(loss), and Adjusted EBITDA were generated from our business in Russia.
Drivers of the changes in net sales and Organic Net Sales were: Net Sales Currency Acquisitions and Divestitures 53rd Week Organic Net Sales Price Volume/Mix 2022 Compared to 2021 North America (0.1) % (0.4) pp (10.8) pp 1.9 pp 9.2 % 13.0 pp (3.8) pp International 8.0 % (8.1) pp 2.8 pp 1.7 pp 11.6 % 13.5 pp (1.9) pp Kraft Heinz 1.7 % (2.0) pp (8.0) pp 1.9 pp 9.8 % 13.2 pp (3.4) pp 27 Adjusted EBITDA: December 31, 2022 December 25, 2021 (in millions) Segment Adjusted EBITDA: North America $ 5,284 $ 5,576 International 1,017 1,066 General corporate expenses (298) (271) Depreciation and amortization (excluding restructuring activities) (922) (910) Divestiture-related license income 56 4 Restructuring activities (74) (84) Deal costs (9) (11) Unrealized gains/(losses) on commodity hedges (63) (17) Impairment losses (999) (1,634) Certain non-ordinary course legal and regulatory matters (210) (62) Equity award compensation expense (148) (197) Operating income/(loss) 3,634 3,460 Interest expense 921 2,047 Other expense/(income) (253) (295) Income/(loss) before income taxes $ 2,966 $ 1,708 North America: 2022 Compared to 2021 December 31, 2022 December 25, 2021 % Change (in millions) Net sales $ 20,340 $ 20,351 (0.1) % Organic Net Sales (a) 20,050 18,361 9.2 % Segment Adjusted EBITDA 5,284 5,576 (5.2) % (a) Organic Net Sales is a non-GAAP financial measure.
Drivers of the changes in net sales and Organic Net Sales were: Net Sales Currency Acquisitions and Divestitures 53rd Week Organic Net Sales Price Volume/Mix 2023 Compared to 2022 North America (1.0) % (0.3) pp 0.0 pp (1.7) pp 1.0 % 7.5 pp (6.5) pp International 6.0 % (3.2) pp (0.5) pp (1.8) pp 11.5 % 13.6 pp (2.1) pp Kraft Heinz 0.6 % (0.9) pp (0.1) pp (1.8) pp 3.4 % 8.9 pp (5.5) pp Adjusted EBITDA: December 30, 2023 December 31, 2022 (in millions) Segment Adjusted EBITDA: North America $ 5,603 $ 5,284 International 1,094 1,017 General corporate expenses (390) (298) Depreciation and amortization (excluding restructuring activities) (923) (922) Divestiture-related license income 54 56 Restructuring activities (60) (74) Deal costs — (9) Unrealized gains/(losses) on commodity hedges (1) (63) Impairment losses (662) (999) Certain non-ordinary course legal and regulatory matters (2) (210) Equity award compensation expense (141) (148) Operating income/(loss) 4,572 3,634 Interest expense 912 921 Other expense/(income) 27 (253) Income/(loss) before income taxes $ 3,633 $ 2,966 31 North America: 2023 Compared to 2022 December 30, 2023 December 31, 2022 % Change (in millions) Net sales $ 20,126 $ 20,340 (1.0) % Organic Net Sales (a) 20,191 19,983 1.0 % Segment Adjusted EBITDA 5,603 5,284 6.0 % (a) Organic Net Sales is a non-GAAP financial measure.
The deferred tax liability relates to local withholding taxes that will be owed when this cash is distributed. Trade Payables Programs: In order to manage our cash flow and related liquidity, we work with our suppliers to optimize our terms and conditions, which include the extension of payment terms.
Our deferred tax liability associated with these undistributed historical earnings was insignificant at December 30, 2023 and December 31, 2022, and relates to local withholding taxes that will be owed when this cash is distributed. 33 Trade Payables Programs: In order to manage our cash flow and related liquidity, we work with our suppliers to optimize our terms and conditions, which include the extension of payment terms.
December 31, 2022 December 25, 2021 $ Change % Change Diluted EPS $ 1.91 $ 0.82 $ 1.09 132.9 % Restructuring activities 0.05 0.05 — Unrealized losses/(gains) on commodity hedges 0.04 0.01 0.03 Impairment losses 0.70 1.07 (0.37) Certain non-ordinary course legal and regulatory matters 0.13 0.05 0.08 Losses/(gains) on sale of business (0.01) 0.15 (0.16) Other losses/(gains) related to acquisitions and divestitures (0.02) — (0.02) Nonmonetary currency devaluation 0.01 — 0.01 Debt prepayment and extinguishment (benefit)/costs (0.03) 0.59 (0.62) Certain significant discrete income tax items — 0.19 (0.19) Adjusted EPS (b) $ 2.78 $ 2.93 $ (0.15) (5.1) % Key drivers of change in Adjusted EPS (a) : Results of operations $ 0.01 Results of divested operations (0.26) 53rd week 0.06 Interest expense 0.13 Other expense/(income) (0.03) Effective tax rate (0.06) $ (0.15) (a) Adjusted EPS is a non-GAAP financial measure.
December 30, 2023 December 31, 2022 $ Change % Change Diluted EPS $ 2.31 $ 1.91 $ 0.40 20.9 % Restructuring activities 0.16 0.05 0.11 Unrealized losses/(gains) on commodity hedges — 0.04 (0.04) Impairment losses 0.50 0.70 (0.20) Certain non-ordinary course legal and regulatory matters — 0.13 (0.13) Losses/(gains) on sale of business — (0.01) 0.01 Other losses/(gains) related to acquisitions and divestitures — (0.02) 0.02 Nonmonetary currency devaluation 0.02 0.01 0.01 Debt prepayment and extinguishment (benefit)/costs — (0.03) 0.03 Certain significant discrete income tax items (0.01) — (0.01) Adjusted EPS (a) $ 2.98 $ 2.78 $ 0.20 7.2 % Key drivers of change in Adjusted EPS (a) : Results of operations $ 0.27 53rd week (0.06) Interest expense 0.03 Other expense/(income) (0.03) Effective tax rate (0.01) $ 0.20 (a) Adjusted EPS is a non-GAAP financial measure.
Reporting units with 20% or less fair value over carrying amount had an aggregate goodwill carrying amount after impairment of $16.4 billion as of the Q3 2022 Annual Impairment Test and included Taste, Meals, and Away from Home (TMA), Canada and North America Coffee (CNAC), and Continental Europe.
Reporting units with 10% or less fair value over carrying amount had an aggregate goodwill carrying amount after impairment of $17.6 billion as of the 2023 annual impairment test and included Taste, Meals, and Away from Home, Northern Europe, Continental Europe, and Canada and North America Coffee.
While these costs have a negative impact on our results of operations, we are currently taking measures to mitigate, and expect to continue to take measures to mitigate, the impact of this inflation through pricing actions and efficiency gains.
While these costs have a negative impact on our results of operations, we have taken measures to mitigate the impact of this inflation through pricing actions, efficiency gains, and hedging strategies.
Our brands that have less than 5% excess fair value over carrying amount as of the Q3 2022 Annual Impairment Test are considered at a heightened risk of future impairments and include our Kraft , Ore-Ida , Jet Puffed , and Plasmon brands, which had an aggregate carrying amount of $11.3 billion.
Our brands that have less than 5% excess fair value over carrying amount as of the 2023 annual impairment test are considered at a heightened risk of future impairments and include our Kraft , Velveeta , Maxwell House , Cool Whip , and Jet Puffed brands, which had an aggregate carrying amount of $13.5 billion.
Our 2023 discount rate assumption will be 5.7% for service cost and 5.5% for interest cost for our U.S. pension plans and 5.3% for service cost and 5.0% for interest cost for our non-U.S. pension plans.
Our 2024 discount rate assumption will be 5.4% for service cost and 5.2% for interest cost for our U.S. pension plans and 5.1% for service cost and 4.7% for interest cost for our non-U.S. pension plans.
We have no economic interest in a supplier’s decision to enter into these agreements and no direct financial relationship with the financial institutions. Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. Supplier participation in these agreements is voluntary.
We have no economic interest in a supplier’s decision to enter into these agreements and no direct financial relationship with the financial institutions related to these programs. We did not pledge any assets in connection with our trade payable programs. Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted.
Net Cash Provided by/Used for Investing Activities: Net cash used for investing activities was $1.1 billion for the year ended December 31, 2022 compared to net cash provided by investing activities of $4.0 billion for the year ended December 25, 2021.
Net Cash Provided by/Used for Investing Activities: Net cash used for investing activities was $916 million for the year ended December 30, 2023 compared to net cash used for investing activities of $1.1 billion for the year ended December 31, 2022.
Long-Term Debt: Our long-term debt, including the current portion, was $20.1 billion at December 31, 2022 and $21.8 billion at December 25, 2021.
Long-Term Debt: Our long-term debt, including the current portion, was $20.0 billion at December 30, 2023 and $20.1 billion at December 31, 2022.
Net Income/(Loss): December 31, 2022 December 25, 2021 % Change (in millions) Operating income/(loss) $ 3,634 $ 3,460 5.0 % Net income/(loss) 2,368 1,024 131.3 % Net income/(loss) attributable to common shareholders 2,363 1,012 133.4 % Adjusted EBITDA (a) 6,003 6,371 (5.8) % (a) Adjusted EBITDA is a non-GAAP financial measure.
Net Income/(Loss): December 30, 2023 December 31, 2022 % Change (in millions) Operating income/(loss) $ 4,572 $ 3,634 25.8 % Net income/(loss) 2,846 2,368 20.2 % Net income/(loss) attributable to common shareholders 2,855 2,363 20.8 % Adjusted EBITDA (a) 6,307 6,003 5.1 % (a) Adjusted EBITDA is a non-GAAP financial measure.
We calculate the impact of currency on net sales by holding exchange rates constant at the previous year’s exchange rate, with the exception of highly inflationary subsidiaries, for which we calculate the previous year’s results using the current year’s exchange rate. 38 Adjusted EBITDA is defined as net income/(loss) from continuing operations before interest expense, other expense/(income), provision for/(benefit from) income taxes, and depreciation and amortization (excluding restructuring activities); in addition to these adjustments, we exclude, when they occur, the impacts of divestiture-related license income (e.g., income related to the sale of licenses in connection with the Cheese Transaction), restructuring activities, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, and equity award compensation expense (excluding restructuring activities).
Adjusted EBITDA is defined as net income/(loss) from continuing operations before interest expense, other expense/(income), provision for/(benefit from) income taxes, and depreciation and amortization (excluding restructuring activities); in addition to these adjustments, we exclude, when they occur, the impacts of divestiture-related license income, restructuring activities, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, and equity award compensation expense (excluding restructuring activities).
Consolidated Results of Operations Summary of Results: December 31, 2022 December 25, 2021 % Change (in millions, except per share data) Net sales $ 26,485 $ 26,042 1.7 % Operating income/(loss) 3,634 3,460 5.0 % Net income/(loss) 2,368 1,024 131.3 % Net income/(loss) attributable to common shareholders 2,363 1,012 133.4 % Diluted EPS 1.91 0.82 132.9 % Net Sales: December 31, 2022 December 25, 2021 % Change (in millions) Net sales $ 26,485 $ 26,042 1.7 % Organic Net Sales (a) 26,249 23,917 9.8 % (a) Organic Net Sales is a non-GAAP financial measure.
Consolidated Results of Operations Summary of Results: December 30, 2023 December 31, 2022 % Change (in millions, except per share data) Net sales $ 26,640 $ 26,485 0.6 % Operating income/(loss) 4,572 3,634 25.8 % Net income/(loss) 2,846 2,368 20.2 % Net income/(loss) attributable to common shareholders 2,855 2,363 20.8 % Diluted EPS 2.31 1.91 20.9 % Net Sales: December 30, 2023 December 31, 2022 % Change (in millions) Net sales $ 26,640 $ 26,485 0.6 % Organic Net Sales (a) 26,774 25,889 3.4 % (a) Organic Net Sales is a non-GAAP financial measure.
Additionally, in the first quarter of 2023, our Board declared a cash dividend of $0.40 per share of common stock, which is payable on March 31, 2023 to stockholders of record on March 10, 2023.
Equity and Dividends: We paid dividends on our common stock of $2.0 billion in 2023, 2022, and 2021. Additionally, in the first quarter of 2024, our Board declared a cash dividend of $0.40 per share of common stock, which is payable on March 29, 2024 to stockholders of record on March 8, 2024.
Reporting units with between 20-50% fair value over carrying amount had an aggregate goodwill carrying amount of $14.5 billion as of the Q3 2022 Annual Impairment Test and included Fresh, Beverages, and Desserts (FBD), Northern Europe, Asia, and Latin America (LATAM).
Reporting units with 10-20% fair value over carrying amount had an aggregate goodwill carrying amount of $12.5 billion as of the 2023 annual impairment test and included Fresh, Beverages, and Desserts and LATAM.
No amounts were drawn on our Senior Credit Facility at December 31, 2022, our previous credit facility (the “Previous Senior Credit Facility”) at December 25, 2021, or on either the Senior Credit Facility or Previous Senior Credit Facility during the years ended December 31, 2022 and December 25, 2021.
No amounts were drawn on our Senior Credit Facility during the years ended December 30, 2023 or December 31, 2022, or on the Previous Senior Credit Facility during the year ended December 31, 2022.
(b) Amounts represent the expected cash payments of our finance leases, including expected cash payments of interest expense. (c) Operating leases represent the minimum rental commitments under non-cancellable operating leases net of sublease income.
Interest on variable rate long-term debt is calculated based on interest rates at December 30, 2023. (b) Amounts represent the expected cash payments of our finance leases, including expected cash payments of interest expense. (c) Operating leases represent the minimum rental commitments under non-cancellable operating leases net of sublease income.
Segment Adjusted EBITDA decreased 4.6% to $1.0 billion in 2022 compared to $1.1 billion in 2021, primarily due to higher supply chain costs, reflecting inflationary pressure in procurement, logistics, and manufacturing costs; higher commodity costs, including in packaging and energy; the unfavorable impact of foreign currency (7.2 pp); and unfavorable volume/mix, which more than offset higher pricing, efficiency gains, and the favorable impact of a 53rd week of shipments (1.6 pp).
Adjusted EBITDA increased 5.1% to $6.3 billion in 2023 compared to $6.0 billion in 2022, primarily due to higher pricing and efficiency gains, which more than offset higher commodity costs, including the impact of realized gains and losses on commodity hedges; higher supply chain costs, reflecting inflationary pressure in manufacturing, procurement, and logistics; unfavorable volume/mix; increased SG&A, particularly in advertising expenses; the decrease from lapping a 53rd week of shipments in the prior period (2.1 pp); and the unfavorable impact of foreign currency (0.9 pp).
We had 2022 capital expenditures of $916 million compared to 2021 capital expenditures of $905 million. We expect 2023 capital expenditures to be approximately $1.1 billion, primarily driven by capital investments for capacity expansion, maintenance, cost improvement and innovation projects, and technology.
We had 2023 capital expenditures of $1.0 billion compared to 2022 capital expenditures of $916 million. We expect 2024 capital expenditures to be approximately $1.1 billion, primarily driven by capital investments focused on generating growth, including capacity expansion, cost improvement, digital, and automation projects, as well as capital investments in maintenance and technology.
Net income/(loss) increased 131.3% to $2.4 billion in 2022 compared to $1.0 billion in 2021. This increase was driven by lower interest expense, the operating income/(loss) factors discussed above, and lower tax expense, which more than offset unfavorable changes in other expense/(income). • Interest expense was $921 million in 2022 compared to $2.0 billion in 2021.
This increase was driven by the operating income/(loss) factors discussed above and lower interest expense, which more than offset unfavorable changes in other expense/(income) and higher tax expense. • Interest expense was $912 million in 2023 compared to $921 million in 2022. • Our effective tax rate was 21.7% in 2023 compared to 20.2% in 2022.
See the Non-GAAP Financial Measures section at the end of this item. 24 Fiscal Year 2022 Compared to Fiscal Year 2021: Net sales increased 1.7% to $26.5 billion in 2022 compared to $26.0 billion in 2021, including the unfavorable impacts of acquisitions and divestitures (8.0 pp) and foreign currency (2.0 pp) and the favorable impact of a 53rd week of shipments (1.9 pp).
See the Non-GAAP Financial Measures section at the end of this item. Fiscal Year 2023 Compared to Fiscal Year 2022: Net sales decreased 1.0% to $20.1 billion in 2023 compared to $20.3 billion in 2022, including the decrease from lapping a 53rd week of shipments in the prior period (1.7 pp) and the unfavorable impacts of foreign currency (0.3 pp).
Summarized Statement of Income For the Year Ended December 31, 2022 Net sales $ 17,329 Gross profit (a) 5,775 Goodwill impairment losses — Intercompany service fees and other recharges 3,829 Operating income/(loss) 1,089 Equity in earnings/(losses) of subsidiaries 2,114 Net income/(loss) 2,363 Net income/(loss) attributable to common shareholders 2,363 (a) In 2022, the Obligor Group recorded $398 million of net sales to the non-guarantor subsidiaries and $38 million of purchases from the non-guarantor subsidiaries.
Summarized Statement of Income For the Year Ended December 30, 2023 Net sales $ 17,350 Gross profit (a) 6,307 Intercompany service fees and other recharges 4,355 Operating income/(loss) 1,117 Equity in earnings/(losses) of subsidiaries 2,611 Net income/(loss) 2,855 Net income/(loss) attributable to common shareholders 2,855 (a) In 2023, the Obligor Group recorded $449 million of net sales to the non-guarantor subsidiaries and $45 million of purchases from the non-guarantor subsidiaries.
We recorded advertising expenses of $945 million in 2022, $1,039 million in 2021, and $1,070 million in 2020. We also incur market research costs, which are recorded in SG&A but are excluded from advertising expenses. Goodwill and Intangible Assets: As of December 31, 2022, we maintain 11 reporting units, seven of which comprise our goodwill balance.
We also incur market research costs, which are recorded in SG&A but are excluded from advertising expenses. Goodwill and Intangible Assets: As of December 30, 2023, we maintain 11 reporting units, seven of which comprise our goodwill balance. These seven reporting units had an aggregate goodwill carrying amount of $30.5 billion at December 30, 2023.
This decrease was primarily driven by proceeds from the Nuts Transaction and Cheese Transaction in 2021, as well as payments for the Just Spices Acquisition and Hemmer Acquisition in 2022. These impacts were partially offset by increased proceeds from the settlement of net investment hedges and proceeds from the Powdered Cheese Transaction in 2022.
This change was primarily driven by payments for the Just Spices Acquisition and Hemmer Acquisition in 2022, partially offset by higher proceeds from the settlement of net investment hedges in the prior year period, proceeds from the Powdered Cheese Transaction in 2022, and higher capital expenditures in the current year period.
We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product category growth rates, management’s plans, and guideline companies. As detailed in Note 4, Acquisitions and Divestitures , in Item 8, Financial Statements and Supplementary Data , the Cheese Transaction closed in the fourth quarter of 2021.
We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product category growth rates, management’s plans, and guideline companies.
(h) Gross expenses/(income) included in debt prepayment and extinguishment (benefit)/costs were income of $38 million ($35 million after-tax) in 2022 and expenses of $917 million ($728 million after-tax) in 2021 and were recorded in interest expense. (i) Certain significant discrete income tax items were an expense of $235 million in 2021.
(h) Gross expenses/(income) included in debt prepayment and extinguishment (benefit)/costs were income of $38 million ($35 million after-tax) in 2022 and were recorded in interest expense. (i) Certain significant discrete income tax items were a benefit of $17 million in 2023. The benefit represents the reversal of uncertain tax position reserves related to the U.S.
Summarized Balance Sheets December 31, 2022 ASSETS Current assets $ 4,218 Current assets due from affiliates (a) 1,788 Non-current assets 5,445 Goodwill 8,823 Intangible assets, net 2,102 Non-current assets due from affiliates (b) 195 LIABILITIES Current liabilities $ 4,915 Current liabilities due to affiliates (a) 1,791 Non-current liabilities 21,372 Non-current liabilities due to affiliates (b) 591 (a) Represents receivables and short-term lending due from and payables and short-term lending due to non-guarantor subsidiaries.
Summarized Balance Sheets December 30, 2023 ASSETS Current assets $ 4,347 Current assets due from affiliates (a) 529 Non-current assets 5,665 Goodwill 8,823 Intangible assets, net 1,993 Non-current assets due from affiliates (b) 16 LIABILITIES Current liabilities $ 4,461 Current liabilities due to affiliates (a) 2,055 Non-current liabilities 21,429 Non-current liabilities due to affiliates (b) 500 (a) Represents receivables and short-term lending due from and payables and short-term lending due to non-guarantor subsidiaries.
Impairment losses on definite-lived intangible assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal. See Note 8, Goodwill and Intangible Assets , in Item 8, Financial Statements and Supplementary Data , for our impairment testing results.
Impairment losses on definite-lived intangible assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeEffect of Hypothetical 10% Fluctuation in Market Prices: The potential gain or loss on the fair value of our outstanding commodity contracts, foreign exchange contracts, and cross-currency swap contracts, assuming a hypothetical 10% fluctuation in commodity prices and foreign currency exchange rates, would have been (in millions): December 31, 2022 December 25, 2021 Commodity contracts $ 94 $ 56 Foreign currency contracts 71 130 Cross-currency swap contracts 211 318 It should be noted that any change in the fair value of our derivative contracts, real or hypothetical, would be significantly offset by an inverse change in the value of the underlying hedged items.
Biggest changeEffect of Hypothetical 10% Fluctuation in Market Prices: The potential gain or loss on the fair value of our outstanding commodity contracts, foreign exchange contracts, and cross-currency swap contracts, assuming a hypothetical 10% fluctuation in commodity prices and foreign currency exchange rates, would have been (in millions): December 30, 2023 December 31, 2022 Commodity contracts $ 77 $ 94 Foreign currency contracts 37 71 Cross-currency swap contracts 115 211 It should be noted that any change in the fair value of our derivative contracts, real or hypothetical, would be significantly offset by an inverse change in the value of the underlying hedged items.
Changes in our portfolio of financial instruments are a function of our results of operations, debt repayments and debt issuances, market effects on debt and foreign currency, and our acquisition and divestiture activities. 43
Changes in our portfolio of financial instruments are a function of our results of operations, debt repayments and debt issuances, market effects on debt and foreign currency, and our acquisition and divestiture activities.
Added
Effect of Hypothetical 1% Fluctuation in EURIBOR: Based on our current variable rate debt balance as of December 30, 2023, a hypothetical 1% increase in EURIBOR would have an insignificant impact on our annual interest expense. 45

Other KHC 10-K year-over-year comparisons