What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-16 compared with 2022-02-17 · 499 added, 584 removed, 1781 unchanged (38% of the section changed)

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As described in Notes 2 and 8 to the consolidated financial statements, the Company’s consolidated goodwill balance was $30.8 billion as of December 31, 2022.

Management tests reporting units for impairment annually as of the first day of the second quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Historically, management tested reporting units for impairment annually as of the first day of the second quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Beginning in the third quarter of 2022 and for subsequent annual periods, management voluntarily changed the annual impairment assessment date to the first day of the third quarter.

Reporting units are tested for impairment by comparing the estimated fair value of each reporting unit with its carrying amount.

If the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is recorded based on the difference between the fair value and carrying amount, not to exceed the associated carrying amount of goodwill.

Management recognized non-cash impairment losses of $318 million for the year ended December 25, 2021.

Management recognized non-cash goodwill impairment losses of $444 million for the year ended December 31, 2022.

Management utilizes the discounted cash flow method under the income approach to estimate the fair value of reporting units.

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As described in Notes 2 and 8 to the consolidated financial statements, the Company’s consolidated indefinite-lived intangible assets balance, which consists primarily of individual brands, was $38.6 billion as of December 31, 2022.

Management tests brands for impairment annually as of the first day of the second quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a brand is less than its carrying amount.

Historically, management tested brands for impairment annually as of the first day of the second quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a brand is less than its carrying amount.

Beginning in the third quarter of 2022 and for subsequent annual periods, management voluntarily changed the annual impairment assessment date to the first day of the third quarter.

Brands are tested for impairment by comparing the estimated fair value of each brand with its carrying amount.

If the carrying amount of a brand exceeds its estimated fair value, an impairment loss is recorded based on the difference between the fair value and carrying amount.

Management recognized non-cash impairment losses of $1.3 billion for the year ended December 25, 2021.

Management recognized non-cash indefinite-lived intangible asset impairment losses of $462 million for the year ended December 31, 2022.

As disclosed by management, management utilizes either an excess earnings method or relief from royalty method to estimate the fair value of its brands.

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Net actuarial gains/(losses) arising during the period ( 386 ) 232 ( 27 )

Prior service credits/(costs) arising during the period — — 1

Net postemployment benefit losses/(gains) reclassified to net income/(loss) ( 8 ) ( 26 ) ( 118 )

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Other current liabilities 2,194 1,944

Liabilities held for sale — 17

Total current liabilities 9,028 9,064

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Net income/(loss) excluding redeemable noncontrolling interest — — 356 — — 15 371

Other comprehensive income/(loss) — — — ( 79 ) — 7 ( 72 )

Other comprehensive income/(loss) excluding redeemable noncontrolling interest — — — ( 81 ) — 3 ( 78 )

Dividends declared-common stock ($ 1.60 per share)

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— — — — — ( 4 ) ( 4 )

Cumulative effect of accounting standards adopted in the period — — ( 136 ) 136 — — —

Exercise of stock options, issuance of other stock awards, and other — 241 10 — ( 73 ) — 178

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Net income/(loss) excluding redeemable noncontrolling interest — — 1,012 — — 12 1,024

Other comprehensive income/(loss) — — — ( 81 ) — 3 ( 78 )

Other comprehensive income/(loss) excluding redeemable noncontrolling interest — — — 143 — 6 149

Dividends declared-common stock ($ 1.60 per share)

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Net income/(loss) excluding redeemable noncontrolling interest — — 2,363 — — 9 2,372

Other comprehensive income/(loss) — — — 143 — 6 149

Other comprehensive income/(loss) excluding redeemable noncontrolling interest — — — ( 986 ) — ( 4 ) ( 990 )

Dividends declared-common stock ($ 1.60 per share)

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Proceeds from sale of license — 1,587 —

Loss on extinguishment of debt 917 124 98

Loss/(gain) on extinguishment of debt ( 38 ) 917 124

Other items, net 7 ( 187 ) ( 54 )

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Settlement of net investment hedges 208 ( 28 ) 25

Proceeds from sale of business, net of cash disposed 5,014 — 1,875

Proceeds from sale of business, net of cash disposed and working capital adjustments 88 5,014 —

Other investing activities, net 10 31 49

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Proceeds from issuance of long-term debt — — 3,500

Debt prepayment and extinguishment costs ( 924 ) ( 116 ) ( 99 )

Debt prepayment and extinguishment benefit/(costs) 10 ( 924 ) ( 116 )

Proceeds from revolving credit facility — — 4,000

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Before the consummation of the 2015 Merger, Heinz was controlled by Berkshire Hathaway Inc.

and 3G Global Food Holdings, LP (together, the “Sponsors”), following their acquisition of H.

and 3G Global Food Holdings, LP, following their acquisition of H.

Heinz Company on June 7, 2013 (the “2013 Heinz Acquisition”).

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Unless the context requires otherwise, references to years and quarters contained herein pertain to our fiscal years and fiscal quarters.

Our 2021 fiscal year was a 52-week period that ended on December 25, 2021, the 2020 fiscal year was a 52-week period that ended on December 26, 2020, and the 2019 fiscal year was a 52-week period that ended on December 28, 2019.

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.

Principles of Consolidation

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Reportable Segments

We manage and report our operating results through three reportable segments defined by geographic region:

United States, International, and Canada.

During the fourth quarter of 2021, certain organizational changes were announced that will impact our future internal reporting and reportable segments.

As a result of these changes, we plan to combine our United States and Canada zones to form the North America zone, and expect to have two reportable segments, North America and International.

We expect that any change to our reportable segments will be effective in the second quarter of 2022.

Considerations Related to COVID-19

The ongoing spread of COVID-19 throughout the United States and internationally, as well as measures implemented by governmental authorities and private businesses in an attempt to minimize transmission of the virus (including social distancing mandates, shelter-in-place orders, vaccine mandates, and business restrictions and shutdowns) and consumer responses to such measures and the pandemic have had and continue to have negative and positive implications for portions of our business.

Though many areas have relaxed restrictions, varying levels remain throughout the world, are continuously evolving, and may be increased, including as a result of further outbreaks, resurgences, or the emergence of new variants.

In the preparation of these financial statements and related disclosures we have assessed the impact that COVID-19 has had on our estimates, assumptions, forecasts, and accounting policies and made additional disclosures, as necessary.

As COVID-19 and its impacts are unprecedented and ever evolving, future events and effects related to the pandemic cannot be determined with precision and actual results could significantly differ from estimates or forecasts.

See Note 9, Goodwill and Intangible Assets , and Note 17, Debt , for further discussion of COVID-19 considerations.

In the second quarter of 2022, our internal reporting and reportable segments changed.

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.

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.

Use of Estimates

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We made reclassifications and adjustments to certain previously reported financial information to conform to our current period presentation.

In the first quarter of 2021, we reclassified certain balances, which were previously reported in prepaid expenses, to inventories on our consolidated balance sheets.

Certain financial statement line items in our consolidated balance sheet at December 26, 2020 and our consolidated statement of cash flows for the years ended December 26, 2020 and December 28, 2019 were adjusted, as necessary, to reflect these reclassifications.

See Note 7, Inventories , for additional information.

Held for Sale

At December 25, 2021, we classified certain assets and liabilities as held for sale in our consolidated balance sheet, including inventory in our International segment and certain manufacturing equipment and land use rights across the globe.

At December 26, 2020, we classified certain assets and liabilities as held for sale in our consolidated balance sheet, primarily relating to the divestiture of certain of our cheese businesses, a business in our International segment, and certain manufacturing equipment and land use rights across the globe.

See Note 4, Acquisitions and Divestitures , for additional information.

At December 31, 2022, we classified certain assets as held for sale in our consolidated balance sheet, primarily relating to land use rights across the globe.

At December 25, 2021, we classified certain assets as held for sale in our consolidated balance sheet, including inventory in our International segment and certain manufacturing equipment and land use rights across the globe.

Cash , Cash Equivalents , and Restricted Cash

Cash equivalents include term deposits with banks, money market funds, and all highly liquid investments with original maturities of three months or less.

The fair value of cash equivalents approximates the carrying amount.

Cash and cash equivalents that are legally restricted as to withdrawal or usage are classified in other current assets or other non-current assets, as applicable, on the consolidated balance sheets.

Restricted cash recorded in other non-current assets was $ 1 million at December 31, 2022 and $ 1 million at December 25, 2021.

Total cash, cash equivalents, and restricted cash was $ 1,041 million at December 31, 2022 and $ 3,446 million at December 25, 2021.

Significant Accounting Policies

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We then review and adjust these estimates each quarter based on actual experience and other information.

In 2021, we updated our definition of advertising expenses to reflect a more comprehensive view of costs that promote our brands to create or stimulate a desire to buy our products.

Our definition of advertising expenses now includes advertising production costs, in-store advertising costs, agency fees, brand promotions and events, and sponsorships, in addition to costs to obtain advertising in television, radio, print, digital, and social channels.

We have reflected these changes in all historical periods presented.

Our definition of advertising expenses includes advertising production costs, in-store advertising costs, agency fees, brand promotions and events, and sponsorships, in addition to costs to obtain advertising in television, radio, print, digital, and social channels.

We recorded advertising expenses of $ 945 million in 2022, $ 1,039 million in 2021, and $ 1,070 million in 2020.

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When we have an accumulated deficit, dividends are recorded as a reduction of additional paid-in capital.

Cash and Cash Equivalents:

Cash equivalents include term deposits with banks, money market funds, and all highly liquid investments with original maturities of three months or less.

The fair value of cash equivalents approximates the carrying amount.

Cash and cash equivalents that are legally restricted as to withdrawal or usage is classified in other current assets or other non-current assets, as applicable, on the consolidated balance sheets.

Inventories are stated at the lower of cost or net realizable value.

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Deferred implementation costs for hosted cloud computing service arrangements are stated at historical cost and amortized on a straight-line basis over the term of the hosting arrangement that the implementation costs relate to.

Deferred implementation costs for these arrangements are included in prepaid expenses and amortized to SG&A.

Deferred implementation costs to be amortized during the next 12 months for these arrangements are included in prepaid expenses and amortized to SG&A.

All remaining amounts to be amortized are included in other non-current assets.

The corresponding cash flows related to these arrangements will be reported within operating activities.

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Goodwill and Intangible Assets :

We maintain 14 reporting units, nine of which comprise our goodwill balance.

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.

We test our reporting units and brands for impairment annually as of the first day of our second 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.

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.

Such events and circumstances could include a sustained decrease in our market capitalization, increased competition or unexpected loss of market share, increased input costs beyond projections, disposals of significant brands or components of our business, unexpected business disruptions (for example due to a natural disaster, pandemic, or loss of a customer, supplier, or other significant business relationship), unexpected significant declines in operating results, significant adverse changes in the markets in which we operate, changes in income tax rates, changes in interest rates, or changes in management strategy.

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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.

See Note 8, Goodwill and Intangible Assets , in Item 8, Financial Statements and Supplementary Data , for a discussion of the timing of the annual impairment test.

Definite-lived intangible assets are amortized on a straight-line basis over the estimated periods benefited.

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See Note 8, Goodwill and Intangible Assets , for additional information.

We determine whether a contract is or contains a lease at contract inception based on the presence of identified assets and our right to obtain substantially all the economic benefit from or to direct the use of such assets.

When we determine a lease exists, we record a right-of-use (“ROU”) asset and corresponding lease liability on our consolidated balance sheet.

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Lease liabilities are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term.

As the discount rate implicit in the lease is not readily determinable in most of our leases, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

As the discount rate implicit in the lease is not readily determinable in most of our leases, we use our incremental borrowing rate (dependent on tenor and currency and adjusted to reflect collateralization) based on the information available at the lease commencement date in determining the present value of lease payments.

Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

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We are exposed to price risk related to forecasted purchases of certain commodities that we primarily use as raw materials.

We enter into commodity purchase contracts primarily for vegetable oils, corn products, sugar, coffee beans, wheat products, meat products, dairy products, and cocoa products.

We enter into commodity purchase contracts primarily for dairy products, vegetable oils, coffee beans, wheat products, corn products, sugar, meat products, and cocoa products.

These commodity purchase contracts generally are not subject to the accounting requirements for derivative instruments and hedging activities under the normal purchases and normal sales exception.

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Certain non-monetary assets and liabilities are recorded at the applicable historical exchange rates.

We apply highly inflationary accounting to the results of our subsidiaries in Venezuela and Argentina, which resulted in insignificant nonmonetary currency devaluation losses in other expense/(income) in 2021, 2020, and 2019.

The net monetary assets of each of our subsidiaries in Venezuela and Argentina were insignificant at December 25, 2021.

Our results of operations in both Venezuela and Argentina reflect those of controlled subsidiaries.

We applied highly inflationary accounting to the results of our subsidiaries in Turkey, Venezuela, and Argentina which resulted in insignificant nonmonetary currency devaluation losses in other expense/(income) in the periods presented.

The net monetary assets of each of our subsidiaries in Turkey, Venezuela, and Argentina were insignificant at December 31, 2022.

Our results of operations in Turkey, Venezuela, and Argentina reflect those of controlled subsidiaries.

New Accounting Standards

Accounting Standards Adopted in the Current Year

Simplifying the Accounting for Income Taxes:

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12 to simplify the accounting in Accounting Standards Codification (“ASC”) 740, Income Taxes .

This guidance removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences.

This guidance also clarifies and simplifies other areas of ASC 740.

Certain amendments in this update must be applied on a prospective basis, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption.

This ASU became effective in the first quarter of 2021.

The adoption of this ASU did not impact our financial statements or the related disclosures.

Accounting Standards Not Yet Adopted

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers:

In October 2021, the FASB issued ASU 2021-08 to amend the accounting for contract assets and contract liabilities acquired in a business combination under ASC 805, Business Combinations .

In October 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-08 to amend the accounting for contract assets and contract liabilities acquired in a business combination under Accounting Standards Codification (“ASC”) 805, Business Combinations .

The guidance requires entities engaged in a business combination to recognize and measure contract assets acquired and contract liabilities assumed in accordance with ASC 606, Revenue from Contracts with Customers , rather than at fair value on the acquisition date.

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While the impact of these amendments is dependent on the nature of any future transactions, we currently do not expect this ASU to have a significant impact on our financial statements and related disclosures.

Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting:

In March 2020, the FASB issued ASU 2020-04 to provide temporary optional expedients and exceptions to the U.S.

GAAP guidance for accounting for contracts, hedging relationships, and other transactions affected by the transition from discontinued reference rates, such as the London Interbank Offered Rate (LIBOR), to alternative reference rates.

The new accounting requirements can be applied from March 12, 2020 through December 31, 2022.

While we currently do not expect this new guidance to have a significant impact on our financial statements or related disclosures, we continue to evaluate our contracts and the optional expedients provided by the new standard.

Supplier Finance Programs (Topic 405-50) - Disclosure of Supplier Finance Program Obligations:

In September 2022, the FASB issued ASU 2022-04 to add disclosure requirements relative to supplier financing programs under ASC 405, Liabilities .

The guidance requires entities that maintain supplier financing programs to provide information in their financial statements about their use of supplier finance programs and their effect on the entity’s working capital, liquidity, and cash flows.

Specifically, the amendment requires entities to disclose the key terms of their programs, amounts outstanding, balance sheet presentation, and a rollforward of amounts outstanding during the annual period.

Only the amount outstanding at the end of the period is required to be disclosed in interim periods.

The ASU will be effective beginning in the first quarter of 2023, except for the rollforward requirement, which is effective in fiscal year 2024.

Early adoption is permitted.

While we currently disclose the amounts outstanding on our existing trade payables programs, we are reviewing the provisions of this new pronouncement but do not expect this ASU to have a significant impact on our financial statements and related disclosures.

Acquisitions and Divestitures

Assan Foods Acquisition:

On October 1, 2021 (the “Assan Foods Acquisition Date”), we acquired all of the outstanding equity interests in Assan Gıda Sanayi ve Ticaret A.Ş.

(“Assan Foods”), a condiments and sauces manufacturer based in Turkey, from third parties Kibar Holding Anonim Şirketi and a holder of registered shares of Assan Foods (the “Assan Foods Acquisition”).

The Assan Foods Acquisition was accounted for under the acquisition method of accounting for business combinations.

Total consideration related to the Assan Foods Acquisition was approximately $ 79 million, including cash consideration of $ 70 million and contingent consideration of approximately $ 9 million.

We utilized fair values at the Assan Foods Acquisition Date to allocate the total consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed.

The purchase price allocation for the Assan Foods Acquisition is preliminary and subject to adjustment.

The fair value estimates of the assets acquired are subject to adjustment during the measurement period (up to one year from the Assan Foods Acquisition Date).

The primary areas of accounting for the Assan Foods Acquisition that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired, residual goodwill, and any related tax impact.

Hemmer Acquisition:

On March 31, 2022 (the “Hemmer Acquisition Date”), we acquired a majority of the outstanding equity interests of Companhia Hemmer Indústria e Comércio (“Hemmer”), a Brazilian food and beverage manufacturing company focused on the condiments and sauces category, from certain third-party shareholders (the “Hemmer Acquisition”).

The Hemmer Acquisition was accounted for under the acquisition method of accounting for business combinations.

Total cash consideration related to the Hemmer Acquisition was approximately 1.3 billion Brazilian reais (approximately $ 279 million at the Hemmer Acquisition Date).

A noncontrolling interest was recognized at fair value, which was determined to be the noncontrolling interest’s proportionate share of the acquiree’s identifiable net assets, as of the Hemmer Acquisition Date.

As of the Hemmer Acquisition Date, we acquired 94 % of the outstanding shares of Hemmer.

In the third quarter of 2022, we completed the redemption of the remaining outstanding shares and own 100 % of the controlling interest in Hemmer.

We entered into foreign exchange derivative contracts to economically hedge the foreign currency exposure related to the cash consideration for the Hemmer Acquisition.

See Note 12, Financial Instruments , for additional information.

We utilized fair values at the Hemmer Acquisition Date to allocate the total consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed.

The fair value estimates of the assets acquired are subject to adjustment during the measurement period (up to one year from the Hemmer Acquisition Date).

The primary areas of accounting for the Hemmer Acquisition that are not yet finalized relate to the fair value of certain tangible net assets acquired, residual goodwill, and any related tax impact.

The fair values of these net assets acquired are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques.

While we believe that such preliminary estimates provide a reasonable basis for estimating the fair value of assets acquired and liabilities assumed, we will evaluate any additional information prior to finalization of the fair value.

During the measurement period, we will adjust preliminary valuations assigned to assets and liabilities if new information is obtained about facts and circumstances that existed as of the Assan Foods Acquisition Date, that, if known, would have resulted in revised values for these items as of that date.

During the measurement period, we will adjust preliminary valuations assigned to assets and liabilities if new information is obtained about facts and circumstances that existed as of the Hemmer Acquisition Date, that, if known, would have resulted in revised values for these items as of that date.

The impact of all changes, if any, that do not qualify as measurement period adjustments will be included in current period earnings.

The preliminary purchase price allocation to assets acquired and liabilities assumed in the Assan Foods Acquisition was (in millions):

The preliminary purchase price allocation to assets acquired and liabilities assumed in the Hemmer Acquisition was (in millions):

Initial Allocation (a)

Adjustments Updated Allocation

Cash $ 1 $ — $ 1

Trade receivables 13 — 13

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Property, plant and equipment, net 14 — 14

Identifiable intangible assets 122 — 122

Other non-current assets 13 4 17

Short-term debt ( 9 ) — ( 9 )

Current portion of long-term debt ( 5 )

Trade payables ( 11 ) — ( 11 )

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Long-term debt ( 11 ) — ( 11 )

Other non-current liabilities ( 44 ) — ( 44 )

Net assets acquired 76 4 80

Noncontrolling interest ( 16 ) — ( 16 )

Goodwill on acquisition 219 ( 4 ) 215

Total consideration $ 279 $ — $ 279

The Assan Foods Acquisition preliminarily resulted in $ 64 million of non tax deductible goodwill relating principally to additional capacity that the Assan Foods manufacturing facilities will provide for our brands in the EMEA East region.

This goodwill was assigned to the EMEA East reporting unit within our International segment.

(a) As reported in Note 4, Acquisitions and Divestitures , to our condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the three months ended June 25, 2022.

The Hemmer Acquisition preliminarily resulted in $ 219 million of non-tax deductible goodwill relating principally to Hemmer’s long-term experience and large presence operating in emerging markets.

In the fourth quarter of 2022, a portion of the goodwill became tax deductible following the merger of Hemmer into our existing legal entity structure.

This goodwill was assigned to the Latin America (“LATAM”) reporting unit within our International segment.

In the fourth quarter of 2022, certain insignificant measurement period adjustments were made to the initial allocation, and the preliminary amount of goodwill was adjusted to $ 215 million.

See Note 8, Goodwill and Intangible Assets , for additional information.

We used carrying values as of the Assan Foods Acquisition Date to value certain current and non-current assets and liabilities, as we determined that they represented the fair value of those items at such date.

In the fourth quarter of 2021, we extinguished approximately $ 29 million of the short- and long-term debt assumed as a part of the Assan Foods Acquisition, resulting in approximately $ 1 million of long-term debt remaining related to the Assan Foods Acquisition at December 25, 2021.

The loss on extinguishment related to the repayment of this debt was insignificant.

Cash payments related to debt extinguishment are classified as cash outflows from financing activities on the consolidated statements of cash flows.

The preliminary purchase price allocation to identifiable intangible assets acquired in the Hemmer Acquisition was:

(in millions of dollars) Weighted Average Life

Definite-lived trademarks $ 101 13

Customer-related assets 21 15

We valued trademarks using the relief from royalty method and customer-related assets using the distributor method.

Some of the more significant assumptions inherent in developing the valuations included the estimated annual net cash flows for each definite-lived intangible asset (including net sales, cost of products sold, selling and marketing costs, and working capital/contributory asset charges), the discount rate that appropriately reflects the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, and competitive trends, as well as other factors.

We determined 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 market comparables.

We used carrying values as of the Hemmer Acquisition Date to value certain current and non-current assets and liabilities, as we determined that they represented the fair value of those items at such date.

Just Spices Acquisition:

In December 2021, we entered into a definitive agreement with certain third-party shareholders of Just Spices GmbH (“Just Spices”) to acquire 85 % of the shares of Just Spices (the “Just Spices Acquisition”).

Just Spices is a German-based company focused on direct-to-consumer sales of premium spice blends.

The Just Spices Acquisition closed in January 2022 for cash consideration of approximately 214 million euros (approximately $ 243 million at December 25, 2021).

The initial accounting for the transaction is incomplete as of the date of this Annual Report on Form 10-K, as the information necessary to complete such evaluation is in the process of being obtained and more thoroughly evaluated.

We have not yet determined the purchase price allocation, including the fair value of the acquired assets and assumed liabilities.

Hemmer Acquisition:

In September 2021, we entered into a definitive agreement with certain third-party shareholders of Companhia Hemmer Indústria e Comércio (“Hemmer”) to acquire a majority of the outstanding equity interests of Hemmer for cash consideration of approximately 1.2 billion Brazilian reais (approximately $ 211 million at December 25, 2021) (the “Hemmer Acquisition”).

Hemmer is a Brazilian food and beverage manufacturing company focused on the condiments and sauces category.

The Hemmer Acquisition is expected to close in the first half of 2022, subject to customary closing conditions, including regulatory approvals.

Primal Acquisition:

On January 3, 2019 (the “Primal Acquisition Date”), we acquired 100 % of the outstanding equity interests in Primal Nutrition, LLC (“Primal Nutrition”) (the “Primal Acquisition”), a better-for-you brand primarily focused on condiments, sauces, and dressings, with growing product lines in healthy snacks and other categories.

The Primal Kitchen brand holds leading positions in the e-commerce and natural channels.

The Primal Acquisition was accounted for under the acquisition method of accounting for business combinations.

The total cash consideration paid for Primal Nutrition was $ 201 million.

We utilized estimated fair values at the Primal Acquisition Date to allocate the total consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed.

Such allocation for the Primal Acquisition was final as of September 28, 2019.

The final purchase price allocation to assets acquired and liabilities assumed in the Primal Acquisition was (in millions):

On January 18, 2022 (the “Just Spices Acquisition Date”), we acquired 85 % of the shares of Just Spices GmbH (“Just Spices”), a German-based company focused on direct-to-consumer sales of premium spice blends, from certain third-party shareholders (the “Just Spices Acquisition”).

The Just Spices Acquisition was accounted for under the acquisition method of accounting for business combinations.

Total cash consideration related to the Just Spices Acquisition was approximately 214 million euros (approximately $ 243 million at the Just Spices Acquisition Date).

Under the terms of certain transaction agreements, Just Spices’ other equity holders each have a put option to require us to purchase the remaining equity interests beginning three years after the Just Spices Acquisition Date.

If the put option is not exercised, we have a call option to acquire the remaining equity interests of Just Spices.

Considering the contractual terms related to the noncontrolling interest, it is classified as redeemable noncontrolling interest on our consolidated balance sheet.

Subsequent to the Just Spices Acquisition, the redeemable noncontrolling interest is measured at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the contractually defined redemption value and its carrying amount adjusted for the net income/(loss) attributable to the noncontrolling interest.

We utilized fair values at the Just Spices Acquisition Date to allocate the total consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed.

The purchase price allocation for the Just Spices Acquisition was final as of December 31, 2022.

The final purchase price allocation to assets acquired and liabilities assumed in the Just Spices Acquisition was (in millions):

Initial Allocation (a)

Adjustments Final Allocation

Cash $ 2 $ — $ 2

Trade receivables 4 — 4

Inventories 7 — 7

Other current assets 9 — 9

Property, plant and equipment, net 1 — 1

Identifiable intangible assets 172 — 172

Current liabilities ( 6 )

Other non-current assets — 7 7

Trade payables ( 10 ) — ( 10 )

Other current liabilities ( 12 ) — ( 12 )

Other non-current liabilities ( 54 ) — ( 54 )

Net assets acquired 119 7 126

Redeemable noncontrolling interest ( 43 ) 4 ( 39 )

Goodwill on acquisition 167 ( 11 ) 156

Total consideration $ 243 $ — $ 243

The Primal Acquisition resulted in $ 124 million of tax deductible goodwill relating principally to planned expansion of the Primal Kitchen brand into new channels and categories.

This goodwill was allocated to the United States segment.

The purchase price allocation to identifiable intangible assets acquired in the Primal Acquisition was:

(a) As reported in Note 4, Acquisitions and Divestitures , to our condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the three months ended March 26, 2022.

The Just Spices Acquisition preliminarily resulted in $ 167 million of non-tax deductible goodwill relating principally to Just Spices’ social media presence.

This goodwill was assigned to the Continental Europe reporting unit within our International segment.

In the second quarter of 2022, certain insignificant measurement period adjustments were made to the initial allocation, and the preliminary amount of goodwill was adjusted to $ 163 million.

We did not record any measurement period adjustments in the third quarter of 2022.

In the fourth quarter of 2022, additional insignificant measurement period adjustments were made to the initial allocation, and the final amount of goodwill was adjusted to $ 156 million.

In the fourth quarter of 2022, we finalized the purchase accounting for the Just Spices Acquisition.

See Note 8, Goodwill and Intangible Assets , for additional information.

The purchase price allocation to identifiable intangible assets acquired in the Just Spices Acquisition was:

(in millions of dollars) Weighted Average Life

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We used carrying values as of the Primal Acquisition Date to value certain current and non-current assets and liabilities, as we determined that they represented the fair value of those items at the Primal Acquisition Date.

We used carrying values as of the Just Spices Acquisition Date to value certain current and non-current assets and liabilities, as we determined that they represented the fair value of those items at such date.

Assan Foods Acquisition:

On October 1, 2021 (the “Assan Foods Acquisition Date”), we acquired all of the outstanding equity interests in Assan Gıda Sanayi ve Ticaret A.Ş.

The Assan Foods Acquisition was accounted for under the acquisition method of accounting for business combinations.

Total consideration related to the Assan Foods Acquisition was approximately $ 79 million, including cash consideration of $ 70 million and contingent consideration of approximately $ 9 million.

We utilized fair values at the Assan Foods Acquisition Date to allocate the total consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed.

The purchase price allocation for the Assan Foods Acquisition was final as of September 24, 2022.

The final purchase price allocation to assets acquired and liabilities assumed in the Assan Foods Acquisition was (in millions):

Final Allocation

Trade receivables 24

Inventories 26

Other current assets 2

Property, plant and equipment, net 12

Identifiable intangible assets 16

Other non-current assets 5

Short-term debt ( 21 )

Current portion of long-term debt ( 5 )

Trade payables ( 25 )

Other current liabilities ( 2 )

Long-term debt ( 4 )

Other non-current liabilities ( 4 )

Net assets acquired 28

Goodwill on acquisition 51

Total consideration $ 79

In the fourth quarter of 2021, the Assan Foods Acquisition preliminarily resulted in $ 64 million of non-tax deductible goodwill relating principally to additional capacity that the Assan Foods manufacturing facilities will provide for our brands in the EMEA East region.

This goodwill was assigned to the EMEA East reporting unit within our International segment.

Following the measurement period adjustments made in the first quarter of 2022, the preliminary amount of goodwill was adjusted to $ 51 million as of March 26, 2022.

In the second and third quarters of 2022, we did not record any measurement period adjustments.

In the third quarter of 2022, we finalized the purchase accounting for the Assan Foods Acquisition.

See Note 8, Goodwill and Intangible Assets , for additional information.

The purchase price allocation to identifiable intangible assets acquired in the Assan Foods Acquisition was:

(in millions of dollars) Weighted Average Life

Definite-lived trademarks $ 13 10

Customer-related assets 3 10

We valued trademarks using the relief from royalty method and customer-related assets using the distributor method.

The loss on extinguishment related to the repayment of this debt was insignificant.

Cash payments related to debt extinguishment are classified as cash outflows from financing activities on the consolidated statements of cash flows.

Other Acquisitions:

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(“BR Spices”), a manufacturer of spices and other seasonings in Brazil, for an insignificant amount of cash consideration (the “BR Spices Acquisition”).

At December 25, 2021, redeemable noncontrolling interest on our consolidated balance sheet relates to BR Spices.

The noncontrolling interest associated with BR Spices is included in redeemable noncontrolling interest on our consolidated balance sheet at December 31, 2022 and December 25, 2021.

Related to our acquisitions, we incurred insignificant deal costs in 2022 and 2021.

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There were no deal costs related to acquisitions in 2020.

Powdered Cheese Transaction:

In August 2022, we entered into a definitive agreement with a third party, Kerry Group, to sell our business-to-business powdered cheese business (the “Powdered Cheese Transaction”).

The net assets transferred in the Powdered Cheese Transaction include, among other things, the Albany, Minnesota manufacturing facility (collectively, the “Powdered Cheese Disposal Group”).

The Powdered Cheese Transaction closed in the fourth quarter of 2022 for total consideration of approximately $ 108 million.

As a result of the Powered Cheese Transaction closing, we recognized a pre-tax gain on sale of business of approximately $ 26 million.

Cheese Transaction:

In September 2020, we entered into a definitive agreement with a third party, an affiliate of Groupe Lactalis (“Lactalis”), to sell certain assets in our global cheese business, as well as to license certain trademarks, for total consideration of approximately $ 3.3 billion, including approximately $ 3.2 billion of cash consideration and approximately $ 141 million related to a perpetual license for the Cracker Barrel brand that Lactalis granted to us for certain products (the “Cheese Transaction”).

The Cheese Transaction closed on November 29, 2021 (the “Cheese Transaction Closing Date”) and had two primary components.

The Cheese Transaction had two primary components.

The first component related to the perpetual licenses for the Kraft and Velveeta brands that we granted to Lactalis for certain cheese products (the “ Kraft and Velveeta Licenses”), along with a three-year transitional license that we granted to Lactalis for the Philadelphia brand (the “ Philadelphia License” and collectively, the “Cheese Divestiture Licenses”).

The second component related to the net assets transferred to Lactalis (the “Cheese Disposal Group”).

The Cheese Transaction closed on November 29, 2021 (the “Cheese Transaction Closing Date”).

Of the $ 3.3 billion total consideration, approximately $ 1.6 billion was attributed to the Cheese Divestiture Licenses based on the estimated fair value of the licensed portion of each brand.

Lactalis received the rights to the Kraft and Velveeta brands in association with the manufacturing, distribution, marketing, and sale of certain cheese products in certain countries.

Lactalis also received the rights to certain know-how in manufacturing the authorized cheese products.

Additionally, Lactalis received the rights to use the Philadelphia brand logo on certain Kraft shredded cheese products as the sale of such products are wound down.

As of the Cheese Transaction Closing Date, the license income is recognized as a reduction to SG&A, as it does not constitute our ongoing major or central operations.

The license income related to the Kraft and Velveeta Licenses will be recognized over approximately 30 years.

The license income related to the Philadelphia License will be recognized over approximately three years .

In 2021, we recognized an insignificant amount of license income related to the Cheese Divestiture Licenses.

On an annual basis, we expect to recognize license income of approximately $ 55 million related to the Cheese Divestiture Licenses, which will be classified as divestiture-related license income.

The remaining $ 1.75 billion of consideration was attributed to the Cheese Disposal Group.

The net assets in the Cheese Disposal Group were associated with our natural, grated, cultured, and specialty cheese businesses in the U.S., our grated cheese business in Canada, and our grated, processed, and natural cheese businesses outside the U.S.

The Cheese Disposal Group included our global intellectual property rights to several brands, including, among others, Cracker Barrel , Breakstone’s , Knudsen , Athenos , Polly-O , and Hoffman’s , along with the Cheez Whiz brand in the majority of the countries outside of the U.S.

The Cheese Disposal Group also included certain inventories, three manufacturing facilities and one distribution center in the U.S., and certain other manufacturing equipment.

Included in the consideration attributed to the Cheese Disposal Group was the perpetual license that Lactalis granted to us for the Cracker Barrel brand for certain products, including macaroni and cheese.

Following the closing of the Cheese Transaction, we recognized the Cracker Barrel license as a definite-lived intangible asset on our consolidated balance sheet, which will be amortized over 30 years.

The total consideration for the Cheese Transaction included approximately $ 141 million, as noted above, which was the estimated fair value of the licensed portion of the Cracker Barrel brand as of the Cheese Transaction Closing Date.

In the third quarter of 2020, we determined that the Cheese Disposal Group met the held for sale criteria.

Accordingly, we presented the assets and liabilities of the Cheese Disposal Group as held for sale on the consolidated balance sheet at December 26, 2020.

As of September 15, 2020, the date the Cheese Disposal Group was determined to be held for sale, we tested the individual assets included within the Cheese Disposal Group for impairment.

The net assets of the Cheese Disposal Group had an aggregate carrying amount above their then-current $ 1.78 billion estimated fair value.

We determined that the goodwill within the Cheese Disposal Group was partially impaired.

Accordingly, we recorded a non-cash impairment loss of $ 300 million, which was recognized in SG&A, in the third quarter of 2020.

As of the Cheese Transaction Closing Date, the license income related to the Kraft and Velveeta Licenses will be recognized over approximately 30 years and the license income related to the Philadelphia License will be recognized over approximately three years .

Related to the Cheese Divestiture Licenses, we recognized approximately $ 56 million of license income in 2022 and an insignificant amount of license income in 2021, which was recorded as a reduction to SG&A and classified as divestiture-related license income.

Additionally, at December 31, 2022, we have recorded approximately $ 1.5 billion in long-term deferred income and $ 56 million in other current liabilities on the consolidated balance sheet related to the Cheese Divestiture Licenses.

In the first quarter of 2022, we reimbursed Lactalis approximately $ 20 million following a final inventory count performed after the Cheese Transaction closed.

This amount reflects the difference between the estimated and actual value of inventory transferred, which was primarily driven by seasonal fluctuations in finished goods.

The payment to Lactalis was recognized in our consolidated statement of cash flows for the year ended December 31, 2022 as a cash outflow from investing activities in proceeds from sale of business, net of cash disposed and working capital adjustments.

In the second quarter of 2021, we assessed the fair value less costs to sell of the net assets of the Cheese Disposal Group and recorded an estimated pre-tax loss on sale of business of approximately $ 27 million, which was recognized in other expense/(income).

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In the fourth quarter of 2021, at the time the licensed rights were granted, we reassessed the remaining fair value of the retained portions of the Kraft and Velveeta brands and recorded a non-cash intangible asset impairment loss related to the Kraft brand of approximately $ 1.24 billion, which was recognized in SG&A.

See Note 9, Goodwill and Intangible Assets , for additional information.

We utilized the excess earnings method under the income approach to estimate the fair value of the licensed portion of the Kraft brand and the relief from royalty method under the income approach to estimate the fair value of the licensed portions of the Velveeta brand and the Cracker Barrel brand.

Some of the more significant assumptions inherent in estimating these fair values include the estimated future annual net sales and net cash flows for each brand, contributory asset charges, royalty rates (as a percentage of net sales that would hypothetically be charged by a licensor of the brand to an unrelated licensee), income tax considerations, long-term growth rates, and a discount rate that reflects the level of risk associated with the future earnings attributable to each brand.

We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product category growth rates, and guideline companies.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors.

See Note 9, Goodwill and Intangible Assets , for additional information on the underlying assumptions and sensitivities.

The Cheese Transaction is not considered a strategic shift that will have a major effect on our operations or financial results;

therefore, it was not reported as discontinued operations.

See Note 4, Acquisitions and Divestitures , to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 25, 2021 for additional information related to the Cheese Transaction.

Nuts Transaction:

In February 2021, we entered into a definitive agreement with a third party, Hormel Foods Corporation (“Hormel”), to sell certain assets in our global nuts business for total consideration of approximately $ 3.4 billion (the “Nuts Transaction”).

The net assets transferred in the Nuts Transaction included, among other things, our intellectual property rights to the Planters brand and to the Corn Nuts brand, three manufacturing facilities in the U.S., and the associated inventories (collectively, the “Nuts Disposal Group”).

In February 2021, we entered into a definitive agreement with a third party, Hormel Foods Corporation, to sell certain assets in our global nuts business for total consideration of approximately $ 3.4 billion (the “Nuts Transaction”).

The net assets transferred in the Nuts Transaction included, among other things, our intellectual property rights to the Planters brand and to the Corn Nuts brand, three manufacturing facilities in the United States, and the associated inventories (collectively, the “Nuts Disposal Group”).

As of February 10, 2021, the date the Nuts Disposal Group was determined to be held for sale, we tested the individual assets included within the Nuts Disposal Group for impairment.

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The Nuts Transaction closed in the second quarter of 2021.

As a result of the Nuts Transaction closing, we recognized an incremental pre-tax loss on sale of business of $ 17 million in other expense/(income) in the second quarter of 2021.

As a result of the Nuts Transaction closing, we recognized an incremental pre-tax loss on sale of business of $ 17 million in other expense/(income) on our consolidated statement of income in the second quarter of 2021.

In the third and fourth quarters of 2021, we recorded insignificant adjustments to our estimated costs to sell, which resulted in an insignificant pre-tax gain on sale of business that was recognized in other expense/(income).

In 2021, the total pre-tax loss on sale of business for the Nuts Transaction was $ 34 million, all of which was recognized in other expense/(income) on our consolidated statement of income.

The Nuts Transaction is not considered a strategic shift that will have a major effect on our operations or financial results;

therefore, it was not reported as discontinued operations.

Other Potential Dispositions:

In the fourth quarter of 2019, we determined a business in our International segment was held for sale and recorded an estimated pre-tax loss on sale of business of $ 71 million within other expense/(income).

In the third quarter of 2021, we exhausted negotiations with our most recently identified buyer for this business.

As of September 25, 2021, we determined that the related disposal group no longer met the held for sale criteria as there was no longer an active plan to sell and the sale was not probable within the next year.

Accordingly, we reclassified the disposal group as held and used and remeasured the disposal group, which resulted in a $ 75 million pre-tax gain recorded in other expense/(income) in the third quarter of 2021.

Consistent with the presentation of the pre-tax loss recorded in the fourth quarter of 2019, this gain was included in loss/(gain) on sale of business within other expense/(income) on our consolidated statement of income.

The difference between the initial loss on sale of business and the gain resulting from remeasurement of the disposal group was due to foreign currency fluctuations.

In the first quarter of 2020, we had deemed a separate business in our International segment held for sale and recorded an estimated pre-tax loss on sale of business of $ 3 million within other expense/(income).

In the fourth quarter of 2020, we deemed this business no longer held for sale and reversed the corresponding pre-tax loss.

The related assets and liabilities were no longer classified as held for sale on our consolidated balance sheet at December 26, 2020.

Heinz India Transaction:

In October 2018, we entered into a definitive agreement with two third-parties, Zydus Wellness Limited and Cadila Healthcare Limited (collectively, the “Buyers”), to sell 100 % of our equity interests in Heinz India Private Limited (“Heinz India”) for approximately 46 billion Indian rupees (approximately $ 655 million at the Heinz India Closing Date (defined below)) (the “Heinz India Transaction”).

In connection with the Heinz India Transaction, we transferred to the Buyers, among other assets and operations, our global intellectual property rights to several brands, including Complan , Glucon-D , Nycil , and Sampriti .

Our core brands (i.e., Heinz and Kraft ) were not transferred.

The Heinz India Transaction closed on January 30, 2019 (the “Heinz India Closing Date”).

Related to the Heinz India Transaction, we recognized a pre-tax gain on sale of business in other expense/(income) of $ 249 million in 2019.

The components of the pre-tax gain recognized in 2019 were as follows (in millions):

Proceeds $ 655

Less investment in Heinz India ( 355 )

Recognition of tax indemnification ( 48 )

Pre-tax gain on sale of Heinz India $ 249

In connection with the Heinz India Transaction, we agreed to indemnify the Buyers from and against any tax losses for any taxable period prior to the Heinz India Closing Date, including taxes for which we are liable as a result of any transaction that occurred on or before such date.

To determine the fair value of our tax indemnity we made various assumptions, including the range of potential dates the tax matters will be resolved, the range of potential future cash flows, the probabilities associated with potential resolution dates and potential future cash flows, and the discount rate.

We recorded tax indemnity liabilities related to the Heinz India Transaction totaling approximately $ 48 million, including $ 18 million in other current liabilities and $ 30 million in other non-current liabilities on our consolidated balance sheet as of the Heinz India Closing Date.

We also recorded a corresponding $ 48 million reduction of the pre-tax gain on the Heinz India Transaction within other expense/(income) in our consolidated statement of income in the first quarter of 2019.

Future changes to the fair value of these tax indemnity liabilities will continue to impact other expense/(income) throughout the life of the exposures as a component of the gain on sale of business for the Heinz India Transaction.

The other component of the pre-tax gain on the sale of Heinz India in the table above primarily related to losses on net investment hedges of our investment in Heinz India, which were settled in the first quarter of 2019, and were partially offset by a local India tax recovery in the third quarter of 2019.

In 2020, we recognized an insignificant pre-tax loss on sale of business primarily related to certain adjustments to the tax indemnity liabilities.

In 2021, we recognized an insignificant pre-tax gain on sale of business related to certain adjustments to the tax indemnity liabilities.

These pre-tax losses/(gains) on sale of business were recognized within other expense/(income) on our consolidated statement of income.

Canada Natural Cheese Transaction:

In November 2018, we entered into a definitive agreement with a third-party, Parmalat SpA (“Parmalat”), to sell certain assets in our natural cheese business in Canada for approximately 1.6 billion Canadian dollars (approximately $ 1.2 billion at the Canada Natural Cheese Closing Date (defined below)) (the “Canada Natural Cheese Transaction”).

In connection with the Canada Natural Cheese Transaction, we transferred certain assets to Parmalat, including the intellectual property rights to Cracker Barrel in Canada and P’Tit Quebec globally.

The Canada Natural Cheese Transaction closed on July 2, 2019 (the “Canada Natural Cheese Closing Date”).

Related to the Canada Natural Cheese Transaction, we recognized a pre-tax gain of $ 242 million, which was included in other expense/(income) in 2019.

The components of the pre-tax gain were as follows (in millions):

Proceeds $ 1,236

Less carrying value of Canada Natural Cheese net assets ( 995 )

Pre-tax gain resulting from Canada Natural Cheese Transaction $ 242

Related to our divestitures, we incurred insignificant deal costs in 2022, 2021, and 2020.

We incurred deal costs of $ 17 million in 2019.

We recognized these deal costs in SG&A.

Held for Sale

Our assets and liabilities held for sale, by major class, were (in millions):

December 25, 2021 December 26, 2020

Cash and cash equivalents $ — $ 33

Inventories 5 385

Property, plant and equipment, net 5 257

Goodwill (net of impairment of $ 300 at December 26, 2020 )

Intangible assets, net 1 873

Total assets held for sale $ 11 $ 1,863

Total liabilities held for sale $ — $ 17

The balances held for sale at December 25, 2021 included inventory in our International segment related to the Cheese Transaction and certain manufacturing equipment and land use rights across the globe.

The balances held for sale at December 26, 2020 primarily related to the Cheese Transaction, a business in our International segment, and certain manufacturing equipment and land use rights across the globe.

We recorded non-cash goodwill impairment losses of $ 300 million in the third quarter of 2020 related to the Cheese Transaction.

As a result, goodwill held for sale in the table above is presented net of cumulative goodwill impairment losses of $ 300 million at December 26, 2020.

Restructuring Activities

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These include severance and employee benefit costs and other exit costs.

Severance and employee benefit costs primarily relate to cash severance, non-cash severance, including accelerated equity award compensation expense, and pension and other termination benefits.

Severance and employee benefit costs primarily relate to cash severance, non-cash severance, and pension and other termination benefits.

Other exit costs primarily relate to lease and contract terminations.

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Restructuring Activities:

We have restructuring programs globally, which are focused primarily on workforce reduction and factory closure and consolidation.

We have restructuring programs globally, which are focused primarily on reducing our overall cost structure and streamlining our organizational design.

In 2022, we eliminated approximately 575 positions related to these programs.

As of December 31, 2022, we expect to eliminate approximately 560 additional positions in 2023, primarily outside of the United States and Canada.

In 2021, restructuring activities resulted in expenses of $ 84 million and included $ 34 million of severance and employee benefit costs and $ 50 million of other implementation costs.

Restructuring activities resulted in income of $ 2 million in 2020 and expenses of $ 108 million in 2019.

In 2022, restructuring activities resulted in expenses of $ 74 million and included $ 34 million of severance and employee benefit costs, $ 12 million of asset-related costs, and $ 28 million of other implementation costs.

Restructuring activities resulted in expenses of $ 84 million in 2021 and income of $ 2 million in 2020.

Our net liability balance for restructuring project costs that qualify as exit and disposal costs under U.S.

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Balance at December 31, 2022 $ 28 $ 11 $ 39

We expect the majority of the liability for severance and employee benefit costs as of December 25, 2021 to be paid by the end of 2022.

We expect the liability for severance and employee benefit costs as of December 31, 2022 to be paid by the end of 2023.

The liability for other exit costs primarily relates to lease obligations.

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Asset-related costs - Cost of products sold 12 — 13

Asset-related costs - SG&A — — 8

Other costs - Cost of products sold 14 1 ( 33 )

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We do not include our restructuring activities within Segment Adjusted EBITDA (as defined in Note 20, Segment Reporting ).

The pre-tax impact of allocating such expenses to our segments would have been (in millions):

The pre-tax impact of allocating such expenses/(income) to our segments would have been (in millions):

December 31, 2022 December 25, 2021 December 26, 2020

United States $ 9 $ ( 10 ) $ 37

North America $ 40 $ 15 $ 4

International 25 22 ( 15 )

Canada 6 14 18

General corporate expenses 9 47 9

$ 74 $ 84 $ ( 2 )

Restricted Cash

The following table provides a reconciliation of cash and cash equivalents, as reported on our consolidated balance sheets, to cash, cash equivalents, and restricted cash, as reported on our consolidated statements of cash flows (in millions):

December 25, 2021 December 26, 2020

Cash and cash equivalents $ 3,445 $ 3,417

Restricted cash included in other non-current assets 1 1

Cash, cash equivalents, and restricted cash $ 3,446 $ 3,418

At December 26, 2020, cash and cash equivalents excluded amounts classified as held for sale.

See Note 4, Acquisitions and Divestitures , for additional information.

Inventories consisted of the following (in millions):

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Inventories $ 3,651 $ 2,729

At December 25, 2021 and December 26, 2020, inventories excluded amounts classified as held for sale.

See Note 4, Acquisitions and Divestitures , for additional information.

In the first quarter of 2021, we reclassified certain balances from prepaid expenses to inventories on our consolidated balance sheets.

See Note 1, Basis of Presentation , for additional information.

At December 25, 2021, inventories excluded amounts classified as held for sale.

Property, Plant and Equipment

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Buildings and improvements 2,536 2,508

Equipment and other 6,957 6,914

Equipment, software and other 7,055 6,957

Construction in progress 1,161 1,002

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At December 31, 2022 and December 25, 2021, property, plant and equipment, net, excluded amounts classified as held for sale.

See Note 4, Acquisitions and Divestitures , for additional information.

Depreciation expense was $ 672 million in 2022, $ 671 million in 2021, and $ 705 million in 2020.

Goodwill and Intangible Assets

Historically, we have tested our reporting units and brands for impairment annually as of the first day of our second 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 discussed in further detail below, we performed an annual test as of March 27, 2022, the first day of our second quarter (the “Q2 2022 Annual Impairment Test”).

Beginning in the third quarter of 2022 and for subsequent annual periods, we voluntarily changed the annual impairment assessment date to the first day of our third quarter and performed an additional annual impairment test as of June 26, 2022 (the “Q3 2022 Annual Impairment Test”).

We believe this measurement date, which represents a change in the method of applying an accounting principle, better aligns with the timing of our strategic business planning process and financial forecasts, which are key components of the annual impairment tests and are typically completed in the third quarter of our fiscal year.

Changes in the carrying amount of goodwill, by segment, were (in millions):

United States International Canada Total

North America International Total

Balance at December 26, 2020 $ 29,929 $ 3,160 $ 33,089

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Balance at December 25, 2021 $ 28,242 $ 3,054 $ 31,296

Impairment losses ( 455 ) — ( 455 )

Acquisitions — 386 386

Measurement period adjustments — ( 18 ) ( 18 )

Divestitures ( 37 ) — ( 37 )

Translation adjustments and other ( 65 ) ( 274 ) ( 339 )

Balance at December 31, 2022 $ 27,685 $ 3,148 $ 30,833

In the first quarter of 2022, we closed the Just Spices Acquisition in our International segment, which resulted in preliminary goodwill of $ 167 million.

Additionally, we recorded measurement period adjustments, primarily related to the Assan Foods Acquisition that impacted goodwill.

The Assan Foods Acquisition closed in the fourth quarter of 2021 and is in our International segment.

These measurement period adjustments resulted in a net decrease to goodwill on acquisitions of approximately $ 15 million in the first quarter of 2022.

However, as each of the affected reporting units (EMEA East and LATAM in our International segment) had no goodwill balance remaining, we recorded a reduction of the $ 53 million non-cash impairment loss recorded to SG&A in the fourth quarter of 2021 that fully impaired the goodwill related to the associated acquisitions and their respective reporting units.

The impairment reduction of $ 11 million, which reflects the measurement period adjustment of $ 15 million adjusted for the impact of foreign currency, was recorded in SG&A in our International segment in the first quarter of 2022.

Following these measurement period adjustments, there was no goodwill in the EMEA East or Latin America reporting units.

See Note 9, Goodwill and Intangible Assets , to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 25, 2021 for additional information related to the impairment losses recorded in the fourth quarter of 2021.

See Note 4, Acquisitions and Divestitures , for additional information related to these transactions and the related financial statement impacts.

In the second quarter of 2022, we closed the Hemmer Acquisition in our International segment, which resulted in preliminary goodwill of $ 219 million .

Additionally, we recorded insignificant measurement period adjustments related to the Just Spices Acquisition that impacted goodwill.

These measurement period adjustments resulted in a decrease to goodwill on acquisitions of approximately $ 4 million in the second quarter of 2022.

In the fourth quarter of 2022, we divested goodwill of approximately $ 37 million related to the Powdered Cheese Transaction.

Additionally, we recorded measurement period adjustments related to the Just Spices Acquisition and Hemmer Acquisition that impacted goodwill.

These measurement period adjustments were recorded in our International segment and resulted in a decrease to goodwill on acquisition of approximately $ 11 million in the fourth quarter of 2022.

At December 26, 2020, goodwill excluded amounts classified as held for sale related to the Cheese Transaction, which closed in the fourth quarter of 2021.

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2022 Goodwill Impairment Testing

As described in Note 1, Basis of Presentation , in the second quarter of 2022, our internal reporting and reportable segments changed.

We combined our United States and Canada zones to form the North America zone.

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.

The reorganization of our internal reporting and reportable segments changed the composition of certain of our reporting units wherein certain of our existing United States reporting units (primarily Enhancers, Specialty, and Away From Home (“ESA”);

Kids, Snacks, and Beverages (“KSB”);

Meal Foundations and Coffee (“MFC”);

and Puerto Rico) and our existing Canada reporting units (Canada Retail and Canada Foodservice) have been reorganized into the following new North America reporting units:

Taste, Meals, and Away From Home (“TMA”);

Fresh, Beverages, and Desserts (“FBD”);

Canada and North America Coffee (“CNAC”);

and Other North America.

As a result of this reorganization, we reassigned assets and liabilities to the applicable reporting units and allocated goodwill using the relative fair value approach.

We performed an interim impairment test (or transition test) on the affected reporting units on both a pre- and post-reorganization basis.

We performed our pre-reorganization impairment test as of March 27, 2022, which was our first day of the second quarter of 2022.

There were six reporting units affected by the reassignment of assets and liabilities that maintained a goodwill balance as of our pre-reorganization impairment test date.

These reporting units were ESA, KSB, MFC, Puerto Rico, Canada Retail, and Canada Foodservice.

One other reporting unit did not have a goodwill balance as of our pre-reorganization impairment test date.

As part of our pre-reorganization impairment test, we utilized the discounted cash flow method under the income approach to estimate the fair values as of March 27, 2022 for the six reporting units noted above.

As a result of our pre-reorganization impairment test, we recognized a non-cash impairment loss of approximately $ 235 million in SG&A in our North America segment in the second quarter of 2022.

This included a $ 221 million impairment loss related to our Canada Retail reporting unit, which had a goodwill carrying amount of approximately $ 1.2 billion after impairment, and a $ 14 million impairment loss related to our Puerto Rico reporting unit, which represented all of the goodwill associated with the Puerto Rico reporting unit.

The impairment of our Canada Retail reporting unit was primarily driven by an increase in the discount rate, which was impacted by higher interest rates and other market inputs, as well as a revised downward outlook for operating margin.

The impairment of our Puerto Rico reporting unit was primarily driven by a revised downward outlook for operating margin.

The other four reporting units for which no impairment charge was required were as follows:

ESA, which had a goodwill carrying amount of approximately $ 11.4 billion;

KSB, which had a goodwill carrying amount of approximately $ 9.3 billion;

MFC, which had a goodwill carrying amount of approximately $ 6.0 billion;

and Canada Foodservice, which had a goodwill carrying amount of approximately $ 158 million.

We performed our post-reorganization impairment test in conjunction with our Q2 2022 Annual Impairment Test and tested the new North America reporting units (TMA, FBD, CNAC, and Other North America) along with the reporting units in our International segment.

The new North America reporting units’ goodwill carrying amounts for the post-reorganization and Q2 2022 Annual Impairment Test reflected the pre-reorganization test results, including impairments recorded.

We tested our reporting units for impairment as of the first day of our second quarter, which was March 27, 2022 for our Q2 2022 Annual Impairment Test.

In performing this test, we incorporated information that was known through the date of filing of our Quarterly Report on Form 10-Q for the period ended June 25, 2022.

We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units.

As a result of our Q2 2022 Annual Impairment Test, we determined that the fair value of each of the reporting units tested was in excess of its carrying amount.

We performed our Q3 2022 Annual Impairment Test as of June 26, 2022, which was our first day of the third quarter of 2022.

In performing this test, we incorporated information that was known through the date of filing of our Quarterly Report on Form 10-Q for the period ended September 24, 2022.

We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units.

As a result of our Q3 2022 Annual Impairment Test, we recognized a non-cash impairment loss of approximately $ 220 million in SG&A in our North America segment related to our CNAC reporting unit.

The impairment of our CNAC reporting unit was primarily driven by reduced revenue growth assumptions and negative macroeconomic factors, including increased interest rates and foreign currency exchange rates for the Canadian dollar relative to the U.S.

As of December 31, 2022, we maintain 11 reporting units, seven of which comprise our goodwill balance.

These seven reporting units had an aggregate goodwill carrying amount of $ 30.8 billion at December 31, 2022.

As of the Q3 2022 Annual Impairment Test, our reporting units with 20 % or less fair value over carrying amount had an aggregate goodwill carrying amount after impairment of $ 16.4 billion and included TMA, CNAC, and Continental Europe;

and our reporting units with between 20 %- 50 % fair value over carrying amount had an aggregate goodwill carrying amount of $ 14.5 billion and included FBD, Northern Europe, Asia, and LATAM.

Accumulated impairment losses to goodwill were $ 11.3 billion as of December 31, 2022 and $ 10.9 billion at December 25, 2021.

2021 Goodwill Impairment Testing

In the first quarter of 2021, we announced the Nuts Transaction and determined that the Nuts Disposal Group was held for sale.

Accordingly, based on a relative fair value allocation, we reclassified $ 1.7 billion of goodwill to assets held for sale, which included a portion of goodwill from four of our reporting units.

The Nuts Transaction primarily affected our Kids, Snacks, and Beverages (“KSB”) reporting unit but also affected, to a lesser extent, our Enhancers, Specialty, and Away From Home (“ESA”), Canada Foodservice, and Puerto Rico reporting units.

The Nuts Transaction primarily affected our KSB reporting unit but also affected, to a lesser extent, our ESA, Canada Foodservice, and Puerto Rico reporting units.

These reporting units were evaluated for impairment prior to their representative inclusion in the Nuts Disposal Group as well as on a post-reclassification basis.

The fair value of all reporting units was determined to be in excess of their carrying amounts in both scenarios and, therefore, no impairment was recorded.

We test our reporting units for impairment annually as of the first day of our second quarter, which was March 28, 2021 for our 2021 annual impairment test.

In performing this test, we incorporated information that was known through the date of filing of our Quarterly Report on Form 10-Q for the period ended June 26, 2021.

We performed our 2021 annual impairment test as of March 28, 2021, which was the first day of our second quarter in 2021.

We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units.

As a result of our 2021 annual impairment test, we recognized a non-cash impairment loss of approximately $ 35 million in SG&A in the second quarter of 2021 related to our Puerto Rico reporting unit within our United States segment.

With the update of our five-year operating plan in the second quarter of 2021, we established a revised downward outlook for net sales for this reporting unit.

After the impairment, the goodwill carrying amount of the Puerto Rico reporting unit is approximately $ 14 million.

See Note 9, Goodwill and Intangible Assets , to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 25, 2021 for additional information on this impairment loss.

In the fourth quarter of 2021, we completed the Assan Foods Acquisition and the BR Spices Acquisition, both in our International segment.

We assigned the goodwill related to the Assan Foods Acquisition to our EMEA East reporting unit and the goodwill related to the BR Spices Acquisition to our Latin America (“LATAM”) reporting unit.

We assigned the goodwill related to the Assan Foods Acquisition to our EMEA East reporting unit and the goodwill related to the BR Spices Acquisition to our LATAM reporting unit.

Prior to these acquisitions, the EMEA East and LATAM reporting units had no goodwill carrying amounts due to previous impairments.

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As a result, we recognized a non-cash impairment loss of $ 53 million in SG&A in our International segment, which represented all of the goodwill of the EMEA East and LATAM reporting units.

As of December 25, 2021, we maintain 14 reporting units, nine of which comprise our goodwill balance.

These nine reporting units had an aggregate goodwill carrying amount of $ 31.3 billion at December 25, 2021.

As of their latest 2021 impairment testing date, six reporting units had 20 % or less fair value over carrying amount and an aggregate goodwill carrying amount of $ 28.3 billion, two reporting units had between 20 - 50 % fair value over carrying amount and a goodwill carrying amount of $ 2.2 billion, and one reporting unit had over 50 % fair value over carrying amount and a goodwill carrying amount of $ 961 million.

We test our reporting units for impairment annually as of the first day of our second quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Accumulated impairment losses to goodwill were $ 10.9 billion at December 25, 2021 and $ 10.5 billion at December 26, 2020.

2020 Goodwill Impairment Testing

As previously disclosed, in the first quarter of 2020, following changes to our internal reporting and reportable segments, the composition of certain of our reporting units changed, and we performed an interim impairment test (or transition test) on the affected reporting units on both a pre- and post-reorganization basis.

In the first quarter of 2020, following changes to our internal reporting and reportable segments, the composition of certain of our reporting units changed, and we performed an interim impairment test (or transition test) on the affected reporting units on both a pre- and post-reorganization basis.

We performed our pre-reorganization impairment test as of December 29, 2019, which was our first day of 2020.

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There were six reporting units in scope for our post-reorganization impairment test:

Northern Europe, Continental Europe, Asia, Australia, New Zealand, and Japan (“ANJ”), Latin America (“LATAM”), and Puerto Rico.

Northern Europe, Continental Europe, Asia, Australia, New Zealand, and Japan (“ANJ”), LATAM, and Puerto Rico.

As a result of our post-reorganization impairment test, we recognized a non-cash impairment loss of $ 226 million in SG&A in the first quarter of 2020 related to two reporting units contained within our International segment, including $ 83 million related to our ANJ reporting unit and $ 143 million related to our LATAM reporting unit, which represented all of the goodwill associated with these reporting units.

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Foodservice, Canada Retail, Canada Foodservice, and EMEA East reporting units.

As a result, we recognized a non-cash impairment loss of $ 1.8 billion in SG&A in the second quarter of 2020, which included an $ 815 million impairment loss in our Canada Retail reporting unit within our Canada segment, a $ 655 million impairment loss in our U.S.

Foodservice reporting unit within our United States segment, a $ 205 million impairment loss in our Canada Foodservice reporting unit within our Canada segment, and a $ 142 million impairment loss in our EMEA East reporting unit within our International segment.

As a result, we recognized a non-cash impairment loss of $ 1.8 billion in SG&A in the second quarter of 2020, which included an $ 815 million impairment loss in our Canada Retail reporting unit within our North America segment, a $ 655 million impairment loss in our U.S.

Foodservice reporting unit within our North America segment, a $ 205 million impairment loss in our Canada Foodservice reporting unit within our North America segment, and a $ 142 million impairment loss in our EMEA East reporting unit within our International segment.

These impairments were primarily due to the completion of our enterprise strategy and five-year operating plan in the second quarter of 2020.

As previously disclosed, in the third quarter of 2020, following changes to our United States zone reporting structure, the composition of certain of our reporting units changed and we performed an interim impairment test (or transition test) on the affected reporting units on both a pre- and post-reorganization basis.

In the third quarter of 2020, following changes to our zone reporting structure, the composition of certain of our reporting units changed and we performed an interim impairment test (or transition test) on the affected reporting units on both a pre- and post-reorganization basis.

We performed our pre-reorganization impairment test as of June 28, 2020, which was our first day of the third quarter of 2020.

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There were three reporting units in scope for our post-reorganization impairment test:

ESA, KSB, and Meal Foundations and Coffee (“MFC”).

ESA, KSB, and MFC.

These reporting units, which were tested as part of this post-reorganization impairment test, each had excess fair value over carrying amount as of June 28, 2020.

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See Note 4, Acquisitions and Divestitures , for additional information on the Cheese Transaction and its financial statement impacts.

2019 Goodwill Impairment Testing

In connection with the preparation of our first quarter 2019 financial statements, we concluded that it was more likely than not that the fair values of three of our pre-reorganization reporting units (EMEA East, Brazil and Latin America Exports) were below their carrying amounts.

As such we performed an interim impairment test on these reporting units as of March 30, 2019.

As a result of our interim impairment test, we recognized a non-cash impairment loss of $ 620 million in SG&A in the first quarter of 2019.

We recorded a $ 286 million impairment loss in our EMEA East reporting unit, a $ 205 million impairment loss in our Brazil reporting unit, and a $ 129 million impairment loss in our Latin America Exports reporting unit.

The impairment of the Brazil reporting unit represented all of the goodwill of that reporting unit.

We determined the factors contributing to the impairment loss were the result of circumstances that arose during the first quarter of 2019.

These reporting units were part of our International segment as discussed above.

We performed our 2019 annual impairment test as of March 31, 2019, which was the first day of our second quarter in 2019.

We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units.

Through the performance of the 2019 annual impairment test, we identified an impairment related to the U.S.

Refrigerated reporting unit (one of our pre-reorganization reporting units).

As a result, we recognized a non-cash impairment loss of $ 118 million in SG&A in the second quarter of 2019 within our United States segment.

This impairment was primarily due to an increase in the discount rate used for fair value estimation.

In the fourth quarter of 2019, in connection with the preparation of our year-end financial statements, we determined that it was more likely than not that the fair values of three of our pre-reorganization reporting units (Australia and New Zealand, Latin America Exports, and Northeast Asia) were below their carrying amounts.

As such, we performed an interim impairment test on these reporting units as of December 28, 2019.

As a result of our interim impairment test, we recognized a non-cash impairment loss of $ 453 million in SG&A in the fourth quarter of 2019.

We recognized a $ 357 million non-cash impairment loss in our Australia and New Zealand reporting unit and a $ 96 million non-cash impairment loss in our Latin America Exports reporting unit.

The impairment of the Australia and New Zealand reporting unit represented all of the goodwill of that reporting unit.

We determined the factors contributing to the impairment loss were the result of circumstances that arose during the fourth quarter of 2019.

These reporting units were part of our International segment as discussed above.

We concluded that an impairment charge was not required for our Northeast Asia reporting unit.

Additional Goodwill Considerations

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These assumptions and estimates include estimated future annual net cash flows, income tax rates, discount rates, growth rates, and other market factors.

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 any factors that could be affected by COVID-19, 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 might become impaired in the future.

Our current expectations also include certain assumptions that could be negatively impacted if we are unable to meet our pricing expectations in relation to inflation.

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 might become impaired in the future.

Additionally, any decisions to divest certain non-strategic assets has led, and could in the future lead, to goodwill impairments.

As discussed in Note 1, Basis of Presentation , during the fourth quarter of 2021, certain organizational changes were announced that will impact our future internal reporting and reportable segments.

As a result of these changes, we plan to combine our United States and Canada zones to form the North America zone, and expect to have two reportable segments, North America and International.

We expect that any change to our reportable segments would be effective in the second quarter of 2022.

These changes are also expected to affect our reporting unit structure and will require an interim impairment test (or transition test) in the second quarter of 2022.

In 2020 and 2021, the COVID-19 pandemic has produced a short-term beneficial financial impact to our consolidated results.

Retail sales have increased compared to pre-pandemic periods due to higher than anticipated consumer demand for our products.

The foodservice channel, however, has experienced a negative impact from prolonged social distancing mandates limiting access to and capacity at away-from-home establishments for a longer period of time than was expected when they were originally put in place.

Our Canada Foodservice reporting unit is the most exposed of our reporting units to the long-term impacts to away-from-home establishments as it is our only standalone foodservice reporting unit.

While our other reporting units have varying levels of exposure to the foodservice channel, they also have exposure to the retail channel, which offsets some of the risk associated with the potential long-term impacts of shifts in net sales between retail and away-from-home establishments.

Our Canada Foodservice reporting unit was impaired during our 2020 annual impairment test, reflecting our best estimate at that time of the future outlook and risks of this business.

The Canada Foodservice reporting unit maintains an aggregate goodwill carrying amount of approximately $ 154 million as of December 25, 2021.

A number of factors could result in further future impairments of our foodservice (or away-from-home) businesses, including but not limited to:

mandates around closures of dining rooms in restaurants, distancing of people within establishments resulting in fewer customers, the total number of restaurant closures, changes in consumer preferences or regulatory requirements over product formats (e.g., table top packaging vs.

single serve packaging), and consumer trends of dining-in versus dining-out.

Given the evolving nature of, and uncertainty driven by, the COVID-19 pandemic, we will continue to evaluate the impact on our reporting units as adverse changes to these assumptions could result in future impairments.

Our reporting units 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.

Accordingly, these and other reporting units that have 20 % or less excess fair value over carrying amount as of their latest 2021 impairment testing date have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future.

Although the remaining reporting units have more than 20 % excess fair value over carrying amount as of their latest 2021 impairment testing date, these amounts are also primarily associated with the 2013 Heinz Acquisition and the 2015 Merger and are recorded on our consolidated balance sheet at their estimated acquisition date fair values.

Our reporting units 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.

Although the remaining reporting units have more than 20 % 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.

Therefore, if any assumptions, estimates, or market factors change in the future, these amounts are also susceptible to impairments.

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Divestitures ( 1,487 )

Translation adjustments ( 54 )

Translation adjustments and other ( 54 )

Balance at December 25, 2021 $ 39,419

At December 26, 2020, indefinite-lived intangible assets excluded amounts classified as held for sale related to the Cheese Transaction, which closed in the fourth quarter of 2021.

Indefinite-lived intangible asset amounts included in divestitures in the table above represent amounts previously reclassified to assets held for sale related to the Planters trademark in connection with the Nuts Transaction, which closed in the second quarter of 2021.

See Note 4, Acquisitions and Divestitures , for additional information on the Cheese Transaction and the Nuts Transaction.

Impairment losses ( 462 )

Translation adjustments and other ( 405 )

Balance at December 31, 2022 $ 38,552

2022 Indefinite-Lived Intangible Asset Impairment Testing

We performed our Q2 2022 Annual Impairment Test as of March 27, 2022, which was the first day of our second quarter in 2022.

As a result of our Q2 2022 Annual Impairment Test, we recognized a non-cash impairment loss of $ 395 million in SG&A in our North America segment in the second quarter of 2022 related to four brands, Maxwell House , Miracle Whip , Jet Puffed , and Classico.

We utilized the relief from royalty method under the income approach to estimate the fair values of the Maxwell House, Jet Puffed , and Classico brands and the excess earnings method under the income approach to estimate the fair value of the Miracle Whip brand.

The impairments of the Maxwell House, Jet Puffed , and Classico brands were primarily due to downward revisions in expected future operating margins as well as an increase in the discount rate, which was impacted by higher interest rates and other market inputs.

The impairment of the Miracle Whip brand was primarily due to an increase in the discount rate as well as downward revisions in expected future operating margins due to changes in expectations for commodity input costs, including soybean oil.

These brands had an aggregate carrying amount of $ 3.2 billion prior to these impairments and $ 2.8 billion after these impairments.

We performed our Q3 2022 Annual Impairment Test as of June 26, 2022, which was our first day of the third quarter of 2022.

As a result of our Q3 2022 Annual Impairment Test we recognized a non-cash impairment loss of $ 67 million in SG&A in the third quarter of 2022 related to two brands, Jet Puffed and Plasmon .

We utilized the relief from royalty method under the income approach to estimate the fair values and recorded non-cash impairment losses of $ 50 million in our North America segment and $ 17 million in our International segment, consistent with ownership of the trademarks.

The impairment of these brands was primarily due to reduced revenue growth assumptions.

After the impairments, the aggregate carrying amount of these brands was $ 204 million.

Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $ 38.6 billion at December 31, 2022.

As of the Q3 2022 Annual Impairment Test, brands with 20 % or less fair value over carrying amount had an aggregate carrying amount after impairment of $ 16.6 billion, brands with between 20 %- 50 % fair value over carrying amount had an aggregate carrying amount of $ 2.5 billion, and brands that had over 50 % fair value over carrying amount had an aggregate carrying amount of $ 19.4 billion.

2021 Indefinite-Lived Intangible Asset Impairment Testing

We performed our 2021 annual impairment test as of March 28, 2021, which was the first day of our second quarter in 2021.

As a result of our 2021 annual impairment test, we recognized a non-cash impairment loss of $ 69 million in SG&A in the second quarter of 2021 related to two brands, Plasmon and Maxwell House .

We recorded non-cash impairment losses of $ 45 million in our International segment related to Plasmon and $ 24 million in our United States segment related to Maxwell House , consistent with the ownership of the trademarks.

We utilized the relief from royalty method under the income approach to estimate the fair values and recorded non-cash impairment losses of $ 45 million in our International segment related to Plasmon and $ 24 million in our North America segment related to Maxwell House , consistent with the ownership of the trademarks.

The impairment of the Plasmon brand was largely due to downward revised revenue expectations for infant nutrition in Italy.

The impairment of the Maxwell House brand was primarily due to downward revised revenue expectations for mainstream coffee in the U.S.

These brands had an aggregate carrying amount of $ 822 million prior to this impairment and $ 753 million after this impairment.

In the fourth quarter of 2021, following the monetization of the licensed portions of the Kraft and Velveeta brands in connection with the closing of the Cheese Transaction, we performed an interim impairment test on these brands as of November 29, 2021, the Cheese Transaction Closing Date.

In the fourth quarter of 2021, following the monetization of the licensed portions of the Kraft and Velveeta brands in connection with the closing of the Cheese Transaction, we performed an interim impairment test and utilized the excess earnings method under the income approach to estimate the fair value on these brands as of November 29, 2021, the Cheese Transaction Closing Date.

While the Velveeta brand had a fair value in excess of its carrying amount, the Kraft brand had a fair value below its carrying amount.

Accordingly, we recorded a non-cash impairment loss of $ 1.2 billion in SG&A in the fourth quarter of 2021 related to the Kraft brand.

We recognized this impairment loss in our United States segment, consistent with the ownership of the Kraft trademark.

Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $ 39.4 billion at December 25, 2021.

As of their latest 2021 impairment testing date, brands with 20 % or less fair value over carrying amount had an aggregate carrying amount after impairment of $ 21.3 billion, brands with between 20 - 50 % fair value over carrying amount had an aggregate carrying amount of $ 6.5 billion, and brands that had over 50 % fair value over carrying amount had an aggregate carrying amount of $ 11.8 billion.

We test our brands for impairment annually as of the first day of our second quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a brand is less than its carrying amount.

2020 Indefinite-Lived Intangible Asset Impairment Testing

We performed our 2020 annual impairment test as of March 29, 2020, which was the first day of our second quarter in 2020.

As a result of our 2020 annual impairment test, we recognized a non-cash impairment loss of $ 1.1 billion in SG&A in the second quarter of 2020 primarily related to nine brands ( Oscar Mayer , Maxwell House , Velveeta , Cool Whip , Plasmon , ABC , Classico , Wattie’s , and Planters ), which included impairment losses of $ 949 million in our United States segment, $ 100 million in our International segment, and $ 7 million in our Canada segment, consistent with the ownership of the trademarks.

We recognized a $ 626 million impairment loss related to the Oscar Mayer brand, a $ 140 million impairment loss related to the Maxwell House brand, and a $ 290 million impairment loss primarily related to seven other brands ( Velveeta , Cool Whip , Plasmon , ABC , Classico , Wattie’s , and Planters ).

We recognized this impairment loss in our North America segment, consistent with the ownership of the Kraft trademark.

2020 Indefinite-Lived Intangible Asset Impairment Testing

We performed our 2020 annual impairment test as of March 29, 2020, which was the first day of our second quarter in 2020.

As a result of our 2019 annual impairment test, we recognized a non-cash impairment loss of $ 474 million in SG&A in the second quarter of 2019 primarily related to six brands ( Miracle Whip , Velveeta , Lunchables , Maxwell House , Philadelphia, and Cool Whip) .

This impairment loss was recorded in our United States segment, consistent with the ownership of the trademarks.

The impairment for these brands was largely due to an increase in the discount rate assumptions used for the fair value estimations.

These brands had an aggregate carrying value of $ 13.5 billion prior to this impairment and $ 13.0 billion after this impairment.

In the fourth quarter of 2019, in connection with the preparation of our year-end financial statements, we determined that it was more likely than not that the fair values of two of our brands, Maxwell House and Wattie’s , were below their carrying amounts.

As a result, we performed an interim impairment test on these brands as of December 28, 2019.

While we determined that the Wattie’s brand was not impaired, we recognized a non-cash impairment loss of $ 213 million in SG&A in our United States segment, consistent with the ownership of the Maxwell House trademark, in the fourth quarter of 2019.

We determined the factors contributing to the impairment loss were the result of circumstances that arose during the fourth quarter of 2019.

As a result of our 2020 annual impairment test, we recognized a non-cash impairment loss of $ 1.1 billion in SG&A in the second quarter of 2020 primarily related to nine brands ( Oscar Mayer , Maxwell House , Velveeta , Cool Whip , Plasmon , ABC , Classico , Wattie’s , and Planters ), which included impairment losses of $ 956 million in our North America segment and $ 100 million in our International segment, consistent with the ownership of the trademarks.

We utilized the excess earnings method and the relief from royalty method under the income approach to estimate the fair values and recognized a $ 626 million impairment loss related to the Oscar Mayer brand, a $ 140 million impairment loss related to the Maxwell House brand, and a $ 290 million impairment loss primarily related to seven other brands ( Velveeta , Cool Whip , Plasmon , ABC , Classico , Wattie’s , and Planters ).

Additional Indefinite-Lived Intangible Asset Considerations

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These assumptions and estimates include estimated future annual net cash flows, income tax considerations, discount rates, growth rates, royalty rates, contributory asset charges, and other market factors.

Our current expectations also include certain assumptions that could be negatively impacted if we are unable to meet our pricing expectations in relation to inflation.

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 brands might become impaired in the future.

Additionally, any decisions to divest certain non-strategic assets has led, and could in the future lead, to intangible asset impairments.

As we consider the ongoing impact of the COVID-19 pandemic with regard to our indefinite-lived intangible assets, a number of factors could have a future adverse impact on our brands, including changes in consumer and consumption trends in both the short and long term, the extent of government mandates to shelter in place, total number of restaurant closures, economic declines, and reductions in consumer discretionary income.

We have seen an increase in our retail business, as compared to pre-pandemic levels, in the short term that has more than offset declines in our foodservice business over the same period.

Our brands are generally common across both the retail and foodservice businesses and the fair value of our brands are subject to a similar mix of positive and negative factors.

Given the evolving nature and uncertainty driven by the COVID-19 pandemic, we will continue to evaluate the impact on our brands.

Our 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.

Accordingly, these and other individual brands that have 20 % or less excess fair value over carrying amount as of their latest 2021 impairment testing date have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future.

Although the remaining brands have more than 20 % excess fair value over carrying amount as of their latest 2021 impairment testing date, these amounts are also associated with the 2013 Heinz Acquisition and the 2015 Merger and are recorded on our consolidated balance sheet at their estimated acquisition date fair values.

Accordingly, these and other individual 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.

Although the remaining brands have more than 20 % 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.

Therefore, if any assumptions, estimates, or market factors change in the future, these amounts are also susceptible to impairments.

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$ 5,926 $ ( 1,829 ) $ 4,097 $ 5,725 $ ( 1,602 ) $ 4,123

At December 25, 2021 and December 26, 2020, definite-lived intangible assets excluded amounts classified as held for sale.

See Note 4, Acquisitions and Divestitures , for additional information on amounts held for sale.

At December 25, 2021, definite-lived intangible assets excluded amounts classified as held for sale.

Amortization expense for definite-lived intangible assets was $ 261 million in 2022, $ 239 million in 2021, and $ 264 million in 2020.

Aside from amortization expense, the decrease in definite-lived intangible assets from December 26, 2020 to December 25, 2021 primarily reflects the assets sold in connection with the Nuts Transaction, including certain customer-related assets with a net carrying value of $ 133 million and the Corn Nuts trademark with a net carrying value of $ 25 million, the impact of foreign currency, and $ 9 million of non-cash impairment losses related to a trademark in our International segment.

These impacts were partially offset by $ 143 million of additions primarily related to the Cracker Barrel license in connection with the Cheese Transaction and $ 14 million related to assets reclassified as held and used.

See Note 4, Acquisitions and Divestitures , for additional information on the Nuts Transaction and the Cheese Transaction.

The impairment of definite-lived intangible assets in the second quarter of 2021 related to a trademark that had a net carrying value that was deemed not to be recoverable.

This $ 9 million non-cash impairment loss was recognized in SG&A.

We estimate that amortization expense related to definite-lived intangible assets will be approximately $ 240 million in 2022 and 2023 and $ 230 million in each of the following three years.

Aside from amortization expense, the change in definite-lived intangible assets from December 25, 2021 to December 31, 2022 primarily reflects $ 315 million of additions, which are largely related to the Hemmer Acquisition, the Just Spices Acquisition, and the Assan Foods Acquisition, the impact of foreign currency, and $ 7 million of non-cash impairment losses related to two trademarks in our International segment.

See Note 4, Acquisitions and Divestitures , for additional information on these acquisitions.

The impairment of definite-lived intangible assets in the third quarter of 2022 relates to two trademarks that had a net carrying value that was deemed not to be recoverable.

In the second quarter of 2021, we recorded $ 9 million of non-cash impairment losses to SG&A related to a trademark in our International segment that had a net carrying value that was deemed not to be recoverable.

We estimate that amortization expense related to definite-lived intangible assets will be approximately $ 260 million in 2023 and $ 250 million in each of the following four years.

Provision for/(Benefit from) Income Taxes:

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We record tax benefits related to the exercise of stock options and other equity instruments within our tax provision.

Accordingly, we recognized a tax benefit in our consolidated statements of income of $ 8 million in 2021, $ 4 million in 2020, and $ 12 million in 2019 related to tax benefits upon the exercise of stock options and other equity instruments.

Accordingly, we recognized an insignificant tax benefit in our consolidated statements of income in each of 2022, 2021, and 2020 related to tax benefits upon the exercise of stock options and other equity instruments.

Effective Tax Rate:

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Deferred tax effect of tax law changes ( 0.9 ) % 9.8 % ( 2.1 ) %

Deferred tax adjustments ( 1.1 ) % 0.3 % 2.8 %

Other ( 0.5 ) % ( 1.2 ) % 1.7 %

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Our 2022 effective tax rate was an expense of 20.2 % on pre-tax income.

Our effective tax rate was unfavorably impacted by rate reconciling items, primarily the tax impacts related to acquisitions and divestitures, which mainly reflect the impacts of the Nuts Transaction and Cheese Transaction, partially offset by current year capital losses;

Our effective tax rate was impacted by the favorable geographic mix of pre-tax income in various non-U.S.

jurisdictions and certain favorable items, primarily the decrease in deferred tax liabilities due to the merger of certain foreign entities, the revaluation of deferred tax balances due to changes in state tax laws, and changes in estimates of certain 2021 U.S.

income and deductions.

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.

Our 2021 effective tax rate was an expense of 40.1 % on pre-tax income.

the revaluation of our deferred tax balances due to changes in international and state tax rates, mainly an increase in U.K.

the impact of the federal tax on global intangible low-taxed income (“GILTI”);

the impact of the federal tax on GILTI;

and non-deductible goodwill impairments.

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jurisdictions and the favorable impact of establishing certain deferred tax assets for state tax deductions.

Our 2019 effective tax rate was an expense of 27.4 % on pre-tax income.

Our effective tax rate was unfavorably impacted by rate reconciling items, primarily related to non-deductible goodwill impairments, the impact of the federal tax on GILTI, an increase in uncertain tax position reserves, the establishment of certain state valuation allowance reserves, and the tax impacts from the Heinz India Transaction and Canada Natural Cheese Transaction.

These impacts were partially offset by the reversal of certain withholding tax obligations and changes in estimates of certain 2018 U.S.

income and deductions.

See Note 8, Goodwill and Intangible Assets , for additional information related to our impairment losses.

See Note 4, Acquisitions and Divestitures , for additional information on the Nuts Transaction, Cheese Transaction, Heinz India Transaction, and Canada Natural Cheese Transaction.

See Note 4, Acquisitions and Divestitures , for additional information on our acquisitions and divestitures.

Deferred Income Tax Assets and Liabilities:

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Property, plant and equipment, net 680 748

Right-of-use assets 131 110

Other 408 455

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Deferred income tax assets:

Benefit plans ( 84 ) ( 177 )

Other employee benefits ( 111 ) ( 119 )

Deferred income ( 356 ) ( 369 )

Lease liabilities ( 139 ) ( 115 )

Other ( 693 ) ( 621 )

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Net deferred income tax liabilities $ 10,001 $ 10,402

At December 26, 2020, deferred income tax liabilities excluded amounts classified as held for sale.

See Note 4, Acquisitions and Divestitures , for additional information.

The decrease in net deferred income tax liabilities from December 26, 2020 to December 25, 2021 was primarily driven by a decrease in deferred income tax liabilities due to the disposition of intangible assets in connection with the Nuts Transaction and the Cheese Transaction and intangible asset impairment losses in 2021 as well as an increase in deferred income tax assets related to deferred income from the Cheese Divestiture Licenses.

See Note 4, Acquisitions and Divestitures , for additional information related to the Nuts Transaction and Cheese Transaction and their financial statement impacts.

The 2021 deferred income tax assets and liabilities reflected in the above table have been adjusted principally to reflect deferred taxes on the gross up of the operating lease right-of-use assets and the operating lease liabilities under ASU 2016-02, Leases (Topic 842) .

This update had the effect of increasing both the total deferred income tax assets and the deferred income tax liabilities by $ 210 million for the year ended December 25, 2021.

These adjustments have no net impact on the net deferred income tax liabilities or on the consolidated financial statements and we do not believe they are material to the annual consolidated financial statements.

The decrease in net deferred income tax liabilities from December 25, 2021 to December 31, 2022 was primarily driven by intangible asset impairment losses in 2022.

See Note 8, Goodwill and Intangible Assets , for additional information on the impairment losses.

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These losses expire between 2023 and 2042.

At December 31, 2022, tax credit carryforwards totaled $ 55 million, which included state tax credits of $ 22 million, foreign credits of $ 18 million, and U.S.

foreign tax credits of $ 15 million.

Uncertain Tax Positions:

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We include interest and penalties related to uncertain tax positions in our tax provision.

Our provision for/(benefit from) income taxes included a $ 9 million expense in 2021 and a $ 10 million expense in 2020 related to interest and penalties.

The expense related to interest and penalties in 2019 was insignificant.

Our provision for/(benefit from) income taxes included a $ 20 million expense in 2022, a $ 9 million expense in 2021, and a $ 10 million expense in 2020 related to interest and penalties.

Accrued interest and penalties were $ 100 million as of December 31, 2022 and $ 81 million as of December 25, 2021.

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Tax Examinations:

In the normal course of business, we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Brazil, Canada, Italy, the Netherlands, the United Kingdom, and the United States.

As of December 25, 2021, we have substantially concluded all national income tax matters through 2019 for the Netherlands, through 2016 for the United States, through 2016 for Australia, through 2012 for the United Kingdom and Canada, through 2014 for Italy, and through 2006 for Brazil.

We are currently under examination for income taxes by the IRS for the years 2018 and 2019.

We are continuing to respond to Information Document Requests.

We have received a draft economist report and expect to receive a Notice of Proposed Adjustment relating to transfer pricing with our foreign subsidiaries asserting that our U.S.

taxable income should have been higher in 2018 and 2019, which would result in additional U.S.

tax expense for 2018 and 2019 plus interest and potential penalties.

We strongly disagree with the IRS’s suggested position, believe that our tax positions are properly supported, and intend to vigorously contest the position taken by the IRS and pursue all available administrative and judicial remedies.

We continue to maintain our operating model and believe our income tax reserves are appropriate for all open tax years and that final adjudication of this matter will not have a material impact on our results of operations and cash flows.

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.

In the normal course of business, we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as Brazil, Canada, Italy, the Netherlands, the United Kingdom, and the United States.

As of December 31, 2022, we have substantially concluded all national income tax matters through 2020 for the Netherlands, through 2017 for the United States, through 2014 for Italy, through 2013 for the United Kingdom and Canada, and through 2013, with the exception of 2007 and 2008 which are under litigation, for Brazil.

We have substantially concluded all U.S.

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Cash Held by International Subsidiaries:

Related to our undistributed historic earnings that are currently not considered to be indefinitely reinvested, we had recorded a deferred tax liability of approximately $ 10 million on approximately $ 135 million of historic earnings at December 25, 2021 and a deferred tax liability of approximately $ 20 million on approximately $ 300 million of historic earnings at December 26, 2020.

Our undistributed historic earnings in foreign subsidiaries through December 31, 2017 are currently not considered to be indefinitely reinvested.

Related to these undistributed historic earnings, we had recorded a deferred tax liability of approximately $ 10 million on approximately $ 90 million of historic earnings at December 31, 2022 and a deferred tax liability of approximately $ 10 million on approximately $ 135 million of historic earnings at December 25, 2021.

The deferred tax liability relates to local withholding taxes that will be owed when this cash is distributed.

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cash requirements.

The amount of unrecognized deferred tax liabilities for local country withholding taxes that would be owed related to our 2018 through 2021 accumulated earnings of certain international subsidiaries is approximately $ 50 million.

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.

Divestitures:

In the second half of 2021, we paid approximately $ 700 million of cash taxes related to the Nuts Transaction.

In the first half of 2022, we expect to pay cash taxes of approximately $ 620 million related to the Cheese Transaction.

Related to the Cheese Transaction, we paid cash taxes of approximately $ 620 million in the second quarter of 2022.

Related to the Nuts Transaction, we paid cash taxes of approximately $ 700 million in the second half of 2021.

On August 16, 2022, the Inflation Reduction Act was signed into law in the United States.

We are currently evaluating the law and do not expect the Inflation Reduction Act to have a significant impact on our financial statements, including our annual estimated effective tax rate.

Employees’ Stock Incentive Plans

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The risk-free interest rate represented the constant maturity U.S.

Treasury rate in effect at the grant date, with a remaining term equal to the expected life of the options.

The expected life is the period over which our employees are expected to hold their options.

Due to the lack of historical data, we calculated expected life using the weighted average vesting period and the contractual term of the options.

Treasury rate in effect at the grant date, with a remaining term equal to the expected term of the options.

The expected term is the period over which our employees are expected to hold their options.

Due to the lack of historical data, we calculated expected term using the weighted average vesting period and the contractual term of the options.

We estimated volatility using a blended volatility approach of term-matched historical volatility from our daily stock prices and weighted average implied volatility.

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We adjust the expense based on the likelihood of future achievement of performance metrics.

In 2019, in addition to the performance-based PSUs granted, we granted PSUs to our Chief Executive Officer that are tied to market-based conditions.

The grant date fair value of these PSUs was determined based on a Monte Carlo simulation model.

A discount was applied to the Monte Carlo valuation to reflect the lack of marketability during a mandatory post-vest holding period of three years .

For our PSUs that are tied to market-based conditions, the grant date fair value was determined based on a Monte Carlo simulation model, which takes into account expected volatility and dividend yield, among other things.

The related compensation expense is recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided.

The number of PSUs that ultimately vest is based on achievement of the market-based components.

The final award is based on the achievement of market-based components and service-based vesting conditions and may equal 0% to 150% of the target grant amount, based on achievement of the market-based conditions.

In 2019, we granted PSUs to our Chief Executive Officer that were tied to market-based conditions.

The vesting date for these awards occurred without the performance conditions having been met and the PSUs were forfeited.

The weighted average grant date fair value per share of our PSUs granted during the year was $ 34.45 in 2022, $ 35.03 in 2021, and $ 28.50 in 2020.

Our expected dividend yield was 4.41 % in 2022, 4.63 % in 2021, and 5.10 % in 2020.

For our PSUs that are tied to market-based conditions, our expected volatility was 32.92 % in 2022 and 38.90 % in 2021.

Our PSU activity and related information was:

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Outstanding at December 31, 2022 4,018,654 32.15

The aggregate fair value of PSUs that vested during the period was $ 69 million in 2021.

No PSUs vested in 2020 or 2019.

The aggregate fair value of PSUs that vested during the period was $ 58 million in 2022 and $ 69 million in 2021.

No PSUs vested in 2020.

Total Equity Awards

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( 988 ) ( 125 ) ( 632 ) ( 35 )

Plan amendments — — — 5

Currency — — ( 191 ) ( 28 )

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( 176 ) ( 180 ) ( 46 ) ( 2 )

Curtailments ( 1 ) — — —

Special/contractual termination benefits — 3 — 1

Other — — — —

Benefit obligation at end of year 2,653 3,852 1,326 2,224

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( 176 ) ( 180 ) ( 46 ) ( 2 )

Other — — — ( 3 )

Fair value of plan assets at end of year 3,113 4,445 1,709 2,910

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(a) Actuarial losses/(gains) were primarily due to a change in the discount rate assumption utilized in measuring plan obligations.

(b) Settlements represent $ 182 million in lump sum payments in 2021 and the full settlement of pension benefit obligations of $ 509 million through the purchase of a group annuity contract and an additional $ 162 million in lump sum payments in 2020.

(b) Settlements represent lump sum payments of $ 222 million in 2022 and $ 182 million in 2021.

The accumulated benefit obligation, which represents benefits earned to the measurement date, was $ 2.6 billion at December 31, 2022 and $ 3.8 billion at December 25, 2021 for the U.S.

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The combined U.S.

pension plans resulted in net pension assets of $ 1.3 billion at December 25, 2021 and $ 1.1 billion at December 26, 2020.

pension plans resulted in net pension assets of $ 843 million at December 31, 2022 and $ 1.3 billion at December 25, 2021.

We recognized these amounts on our consolidated balance sheets as follows (in millions):

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Settlements ( 1 ) ( 11 ) ( 24 ) 15 1 —

Curtailments — — — — — —

Special/contractual termination benefits — 3 — — 1 —

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Equity securities 10 % 16 % 3 % 21 %

Alternative investments, including real assets and other fixed income 16 % — % 10 % — %

Cash and cash equivalents 2 % 1 % 19 % 9 %

Real estate — % — % — % 1 %

Certain insurance contracts — % — % 16 % 17 %

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plans is designed to align our pension assets with our projected benefit obligation to reduce volatility.

In 2021, we targeted an investment of approximately 85 % of our U.S.

plan assets in fixed-income securities and approximately 15 % in return-seeking assets, primarily equity securities.

Beginning in 2022, we are targeting an investment of approximately 75 % of our U.S.

We target an investment of approximately 75 % of our U.S.

plan assets in fixed-income securities, approximately 15 % in alternatives, primarily real assets and diversified credit, and approximately 10 % in return-seeking assets, primarily equity securities.

Prior to 2022, we targeted an investment of approximately 85 % of our U.S.

plan assets in fixed-income securities and approximately 15 % in return-seeking assets, primarily equity securities.

For pension plans outside the United States, our investment strategy is subject to local regulations and the asset/liability profiles of the plans in each individual country.

In aggregate, the long-term asset allocation targets of our non-U.S.

plans are broadly characterized as a mix of approximately 83 % fixed-income securities and certain insurance contracts, and approximately 17 % in return-seeking assets, primarily equity securities.

plans are broadly characterized as a mix of approximately 83 % fixed-income securities and certain insurance contracts, approximately 8 % in alternatives, primarily multi-asset credit, and approximately 9 % in return-seeking assets, primarily equity securities.

The fair value of pension plan assets at December 31, 2022 was determined using the following fair value measurements (in millions):

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As such, the direct investments are classified as Level 1.

Beginning in 2022, all equity exposure is provided through pooled funds valued at net asset value.

Cash and Cash Equivalents.

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The fair value of these investments measured at net asset value is excluded from the fair value hierarchy.

Investments in the collective trusts can be redeemed on each business day based upon the applicable net asset value per unit.

Investments in the international large/mid cap equity collective trust can be redeemed on the last business day of each month and at least one business day during the month.

Investments in the collective trusts can be redeemed daily, monthly, or quarterly based upon the applicable net asset value per unit and the terms of the specific trust agreements.

The mutual fund investments are not traded on an exchange, and a majority of these funds are held in a separate account managed by a fixed income manager.

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Real estate $ 6 $ — $ 2 $ ( 5 ) $ ( 3 ) $ — $ —

Corporate bonds and other fixed-income securities 1 — — — — ( 1 ) —

Certain insurance contracts 488 — — ( 198 ) ( 15 ) — 275

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Actuarial losses/(gains) (a)

( 205 ) ( 121 )

Plan amendments (b)

( 2 ) ( 116 )

Currency ( 6 ) 1

Curtailments — ( 3 )

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Investments in the collective trusts can be redeemed on each business day based upon the applicable net asset value per unit.

Investments in the international large/mid cap equity collective trust can be redeemed on the last business day of each month and at least one business day during the month.

The mutual fund investments are not traded on an exchange.

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Net actuarial gains/(losses) arising during the period - Postretirement Benefits ( 44 ) 267 29

Prior service credits/(costs) arising during the period - Postretirement Benefits — — 1

( 512 ) 306 ( 26 )

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Amortization of unrecognized losses/(gains) - Postretirement Benefits ( 15 ) ( 16 ) ( 14 )

Amortization of prior service costs/(credits) - Pension Benefits 1 — —

Amortization of prior service costs/(credits) - Postretirement Benefits ( 15 ) ( 8 ) ( 122 )

Net settlement and curtailment losses/(gains) - Pension Benefits 15 ( 11 ) ( 24 )

Net settlement and curtailment losses/(gains) - Postretirement Benefits — — ( 1 )

Other losses/(gains) on postemployment benefits — — 1

( 13 ) ( 32 ) ( 158 )

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(a) At December 25, 2021, the fair value of our derivative assets was recorded in other current assets ($ 31 million) and other non-current assets ($ 8 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($ 33 million) and other non-current liabilities ($ 4 million).

(b) At December 26, 2020, the fair value of our derivative assets was recorded in other non-current assets, and the fair value of our derivative liabilities was recorded in other current liabilities ($ 41 million) and other non-current liabilities ($ 292 million).

(b) At December 25, 2021, the fair value of our derivative assets was recorded in other current assets ($ 74 million) and other non-current assets ($ 173 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($ 42 million) and other non-current liabilities ($ 170 million).

(c) At December 25, 2021, the fair value of our derivative assets was recorded in other current assets and the fair value of derivative liabilities was recorded in other current liabilities.

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If the derivative financial instruments had been netted on the consolidated balance sheets, the asset and liability positions each would have been reduced by $ 222 million at December 31, 2022 and $ 155 million at December 25, 2021.

We had collected collateral related to commodity derivative margin requirements of $ 12 million at December 25, 2021 and $ 25 million at December 26, 2020, which were included in other current liabilities on our consolidated balance sheets.

At December 31, 2022 we had posted collateral of $ 43 million related to commodity derivative margin requirements, which was included in prepaid expenses on our consolidated balance sheet.

At December 25, 2021, we had collected collateral related to commodity derivative margin requirements of $ 12 million, which was included in other current liabilities on our consolidated balance sheet.

Level 1 financial assets and liabilities consist of commodity future and options contracts and are valued using quoted prices in active markets for identical assets and liabilities.

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• Non-derivative foreign denominated debt with principal amounts of € 650 million and £ 400 million;

• Cross-currency contracts with notional amounts of £ 677 million ($ 900 million), C$ 1.4 billion ($ 1.1 billion), € 1.9 billion ($ 2.1 billion), and ¥ 9.6 billion ($ 85 million);

• Foreign exchange contracts denominated in Chinese renminbi with an aggregate notional amount of $ 119 million.

• Cross-currency contracts with notional amounts of C$ 1.4 billion ($ 1.0 billion), € 1.9 billion ($ 2.1 billion), JPY 9.6 billion ($ 67 million), and CNH 500 million ($ 68 million).

We periodically use non-derivative instruments such as non-U.S.

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dollar assets or liabilities, including intercompany loans, to hedge the exposure of changes in underlying foreign currency denominated subsidiary net assets, and they are designated as net investment hedges.

At December 25, 2021, we had Chinese renminbi intercompany loans with an aggregate notional amount of $ 418 million designated as net investment hedges.

At December 31, 2022, our intercompany loans designated as net investment hedges were insignificant.

The component of the gains and losses on our net investment in these designated foreign operations, driven by changes in foreign exchange rates, are economically offset by fair value movements on the effective portion of our cross-currency contracts and foreign exchange contracts and remeasurements of our foreign denominated debt.

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Cash Flow Hedge Coverage:

At December 25, 2021, we had entered into foreign exchange contracts designated as cash flow hedges for periods not exceeding the next two years and into cross-currency contracts designated as cash flow hedges for periods not exceeding the next seven years .

At December 31, 2022, we had entered into foreign exchange contracts designated as cash flow hedges for periods not exceeding the next two years and into cross-currency contracts designated as cash flow hedges for periods not exceeding the next six years .

Deferred Hedging Gains and Losses on Cash Flow Hedges:

Based on our valuation at December 25, 2021 and assuming market rates remain constant through contract maturities, we expect transfers to net income/(loss) of unrealized losses on foreign currency cash flow hedges and interest rate cash flow hedges during the next 12 months to each be insignificant.

Additionally, we expect transfers to net income/(loss) of unrealized gains on cross-currency cash flow hedges during the next 12 months to be insignificant.

Based on our valuation at December 31, 2022 and assuming market rates remain constant through contract maturities, we expect transfers to net income/(loss) of unrealized gains during the next 12 months on foreign currency cash flow hedges to be approximately $ 26 million and on cross-currency cash flow hedges to be insignificant.

Additionally, we expect transfers to net income/(loss) of unrealized losses on interest rate cash flow hedges during the next 12 months to be insignificant.

Concentration of Credit Risk:

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Gains and losses are recorded in net income/(loss) as a component of cost of products sold for our commodity contracts and other expense/(income) for our cross currency and foreign exchange contracts.

Divestiture Hedging:

We entered into foreign exchange derivative contracts to economically hedge the foreign currency exposure related to the Heinz India Transaction.

These derivative contracts settled in the first quarter of 2019 resulting in a gain of $ 5 million, including a gain of $ 6 million recorded within other expense/(income) and a loss of $ 1 million recorded within interest expense.

These losses are classified as other losses/(gains) related to acquisitions and divestitures.

Additionally, we entered into foreign exchange contracts which were designated as net investment hedges related to our investment in Heinz India.

In 2019, these net investment hedges settled at a loss of $ 6 million.

This loss was subsequently reclassified from accumulated other comprehensive income/(losses) to other expense/(income) in our condensed consolidated statement of income in the first quarter of 2019 when the Heinz India Transaction closed.

These losses are classified as losses/(gains) on the sale of a business.

See Note 4, Acquisitions and Divestitures , for additional information related to the Heinz India Transaction.

Acquisition Hedging:

We entered into foreign exchange derivative contracts to economically hedge the foreign currency exposure related to the cash consideration for the Hemmer Acquisition.

These derivative contracts settled in our second quarter of 2022.

The related derivative gains were $ 38 million for the year ended December 31, 2022, and were recorded within other expense/(income).

These gains are classified as other losses/(gains) related to acquisitions and divestitures.

The related cash flows were classified as cash inflows from investing activities on the consolidated statement of cash flows.

See Note 4, Acquisitions and Divestitures , for additional information related to the Hemmer Acquisition.

Derivative Impact on the Statements of Comprehensive Income:

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Foreign exchange contracts 1 1 — SG&A

Foreign exchange contracts — — ( 23 ) Other expense/(income)

Cross-currency contracts ( 132 ) ( 119 ) 221 Other expense/(income)

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December 31, 2022 December 25, 2021

Net sales Cost of products sold SG&A Interest expense Other expense/ (income) Cost of products sold Interest expense Other expense/ (income)

Cost of products sold SG&A Interest expense Other expense/ (income) Net sales Cost of products sold SG&A Interest expense Other expense/ (income)

Total amounts presented in the consolidated statements of income in which the following effects were recorded $ 18,363 $ 4,488 $ 921 $ ( 253 ) $ 26,042 $ 17,360 $ 5,222 $ 2,047 $ ( 295 )

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Net investment hedges:

Foreign exchange contracts — — — — — — — —

Foreign exchange contracts (excluded component) — — ( 1 ) — — — — 2 —

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Foreign exchange contracts $ 19 $ — $ —

Foreign exchange contracts (excluded component) — — —

Interest rate contracts — ( 2 ) —

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Net investment hedges:

Foreign exchange contracts — — ( 6 )

Foreign exchange contracts (excluded component) — ( 2 ) —

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Foreign exchange contracts — — ( 15 )

Cross-currency contracts — — 11

Total gains/(losses) recognized in statements of income $ ( 50 ) $ 10 $ 154

Non-Derivative Impact on Statements of Comprehensive Income:

Related to our non-derivative foreign-denominated debt instruments designated as net investment hedges, we recognized pre-tax gains of $ 75 million in 2021, pre-tax losses of $ 57 million in 2020, and pre-tax gains of $ 52 million in 2019.

Related to our non-derivative foreign-denominated debt instruments designated as net investment hedges, we recognized pre-tax gains of $ 111 million in 2022, pre-tax gains of $ 75 million in 2021, and pre-tax losses of $ 57 million in 2020.

These amounts were recognized in other comprehensive income/(loss).

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Net actuarial gains/(losses) arising during the period — ( 27 ) — ( 27 )

Prior service credits/(costs) arising during the period — 1 — 1

Net postemployment benefit losses/(gains) reclassified to net income/(loss) — ( 118 ) — ( 118 )

Cumulative effect of accounting standards adopted in the period (a)

Total other comprehensive income/(loss) 12 ( 145 ) 52 ( 81 )

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Balance at December 31, 2022 $ ( 2,845 ) $ ( 30 ) $ 65 $ ( 2,810 )

(a) In the first quarter of 2019, we adopted ASU 2018-02 related to reclassifying tax effects stranded in accumulated other comprehensive income/(losses).

See Note 3, New Accounting Standards , in our Annual Report on Form 10-K for the year ended December 28, 2019 for additional information.

The gross amount and related tax benefit/(expense) recorded in, and associated with, each component of other comprehensive income/(loss) were as follows (in millions):

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Net actuarial gains/(losses) arising during the period ( 512 ) 126 ( 386 ) 308 ( 76 ) 232 ( 30 ) 3 ( 27 )

Prior service credits/(costs) arising during the period — — — — — — 1 — 1

Net postemployment benefit losses/(gains) reclassified to net income/(loss) ( 13 ) 5 ( 8 ) ( 32 ) 6 ( 26 ) ( 158 ) 40 ( 118 )

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Foreign exchange contracts (a)

$ — $ — $ 6 Other expense/(income)

Foreign exchange contracts (b)

$ 1 $ ( 2 ) $ 2 Interest expense

Cross-currency contracts (b)

Cross-currency contracts (a)

( 37 ) ( 36 ) ( 25 ) Interest expense

Losses/(gains) on cash flow hedges:

Foreign exchange contracts (c)

Foreign exchange contracts (b)

— 1 — Net sales

Foreign exchange contracts (c)

Foreign exchange contracts (b)

9 49 ( 19 ) Cost of products sold

Foreign exchange contracts (c)

Foreign exchange contracts (b)

( 2 ) 1 — SG&A

Foreign exchange contracts (b)

— — — Other expense/(income)

Cross-currency contracts (c)

Cross-currency contracts (b)

24 64 ( 169 ) Other expense/(income)

Cross-currency contracts (c)

Cross-currency contracts (b)

28 22 11 Interest expense

Interest rate contracts (d)

Interest rate contracts (c)

1 1 2 Interest expense

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Losses/(gains) on postemployment benefits:

Amortization of unrecognized losses/(gains) (e)

Amortization of unrecognized losses/(gains) (d)

$ ( 14 ) $ ( 13 ) $ ( 12 )

Amortization of prior service costs/(credits) (e)

Amortization of prior service costs/(credits) (d)

( 14 ) ( 8 ) ( 122 )

Settlement and curtailment losses/(gains) (e)

Settlement and curtailment losses/(gains) (d)

15 ( 11 ) ( 24 )

Other losses/(gains) on postemployment benefits — — 1

Losses/(gains) on postemployment benefits before income taxes ( 13 ) ( 32 ) ( 158 )

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Losses/(gains) on postemployment benefits $ ( 8 ) $ ( 26 ) $ ( 118 )

(a) Represents the reclassification of hedge losses/(gains) resulting from the complete or substantially complete liquidation of our investment in the underlying foreign operations.

(b) Represents recognition of the excluded component in net income/(loss).

(d) Represents amortization of realized hedge losses that were deferred into accumulated other comprehensive income/(losses) through the maturity of the related long-term debt instruments.

(e) These components are included in the computation of net periodic postemployment benefit costs.

(a) Represents recognition of the excluded component in net income/(loss).

(b) Includes amortization of the excluded component and the effective portion of the related hedges.

(c) Represents amortization of realized hedge losses that were deferred into accumulated other comprehensive income/(losses) through the maturity of the related long-term debt instruments.

(d) These components are included in the computation of net periodic postemployment benefit costs.

See Note 11, Postemployment Benefits , for additional information.

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We account for the transfer of receivables as a true sale at the point control is transferred through derecognition of the receivable on our consolidated balance sheet.

Receivables sold under this accounts receivable factoring program were approximately $ 50 million during 2020.

No receivables were sold under this accounts receivable factoring program during 2021, and there were no amounts outstanding as of December 25, 2021 or December 26, 2020.

Receivables sold under this accounts receivable factoring program were approximately $ 197 million during 2022, with an insignificant amount outstanding as of December 31, 2022.

The incremental costs of factoring receivables under this arrangement were insignificant for the year ended December 31, 2022.

No receivables were sold under this accounts receivable factoring program during 2021, and there were no amounts outstanding as of December 25, 2021.

The proceeds from the sales of receivables are included in cash from operating activities in the consolidated statement of cash flows.

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The consolidated amended class action complaint, which was filed on August 14, 2020 and also names 3G Capital, Inc.

and several of its subsidiaries and affiliates (“3G Entities”) as defendants, asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, based on allegedly materially false or misleading statements and omissions in public statements, press releases, investor presentations, earnings calls, Company documents, and Securities and Exchange Commission (“SEC”) filings regarding the Company’s business, financial results, and internal controls, and further alleges the 3G Entities engaged in insider trading and misappropriated the Company’s material, non-public information.

The plaintiffs seek damages in an unspecified amount, attorneys’ fees, and other relief.

The Company filed a motion to dismiss the consolidated amended class action complaint, which motion the court denied in an order dated August 11, 2021.

In addition, our Employee Benefits Administration Board and certain of The Kraft Heinz Company’s current and former officers and employees are currently defendants in an Employee Retirement Income Security Act (“ERISA”) class action lawsuit, Osborne v.

Employee Benefits Administration Board of Kraft Heinz, et al.

, which is pending in the United States District Court for the Northern District of Illinois.

Plaintiffs in the lawsuit purport to represent a class of current and former employees who were participants in and beneficiaries of various retirement plans which were co-invested in a commingled investment fund known as the Kraft Foods Savings Plan Master Trust (the “Master Trust”) during the period of May 4, 2017 through February 21, 2019.

An amended complaint was filed on June 28, 2019.

The amended complaint alleges violations of Section 502 of ERISA based on alleged breaches of obligations as fiduciaries subject to ERISA by allowing the Master Trust to continue investing in our common stock, and alleges additional breaches of fiduciary duties by current and former officers for their purported failure to monitor Master Trust fiduciaries.

The plaintiffs seek damages in an unspecified amount, attorneys’ fees, and other relief.

The Company filed a motion to dismiss the amended complaint, which motion the court granted in an order dated August 23, 2021, before entering judgment in favor of the Company on September 14, 2021.

The plaintiffs filed a notice of appeal on October 13, 2021.

The parties subsequently filed a stipulation of voluntary dismissal with prejudice on December 7, 2021, and the appellate court dismissed the appeal with prejudice on that same date.

and several of its subsidiaries and affiliates (the “3G Entities”) as defendants, asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, based on allegedly materially false or misleading statements and omissions in public statements, press releases, investor presentations, earnings calls, Company documents, and SEC filings regarding the Company’s business, financial results, and internal controls, and further alleges the 3G Entities engaged in insider trading and misappropriated the Company’s material, non-public information.

In February 2023, the parties to the litigation reached a preliminary settlement agreement.

Based upon our current estimate for the ultimate resolution of this matter, in the fourth quarter of 2022, we recorded a net expense of $ 210 million within SG&A in our consolidated statements of income.

This expense contemplates the Company’s estimated liability after insurance recoveries and contributions from other defendants.

The Company’s estimated liability and the insurance recoveries are reflected in current liabilities and current assets on the consolidated balance sheet at December 31, 2022.

While it is possible that the ultimate amount of our liability in connection with this settlement could be different than the amount accrued, we believe that any difference between that ultimate liability and the amount already accrued will not have a material impact on our financial condition, results of operations, or cash flows.

Any eventual final settlement agreement will be subject to approval by the United States District Court for the Northern District of Illinois.

Certain of The Kraft Heinz Company’s current and former officers and directors and the 3G Entities are also named as defendants in a stockholder derivative action, In re Kraft Heinz Shareholder Derivative Litigation , which had been previously consolidated in the United States District Court for the Western District of Pennsylvania, and is now pending in the United States District Court for the Northern District of Illinois.

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The plaintiffs seek damages in an unspecified amount, attorneys’ fees, and other relief.

Certain of The Kraft Heinz Company’s current and former officers and directors and the 3G Entities are also named as defendants in a consolidated stockholder derivative action, In re Kraft Heinz Company Derivative Litigation , which was filed in the Delaware Court of Chancery.

The consolidated amended complaint, which was filed on April 27, 2020, alleges state law claims, contending that the 3G Entities were controlling stockholders who owed fiduciary duties to the Company, and that they breached those duties by allegedly engaging in insider trading and misappropriating the Company’s material, non-public information.

The complaint further alleges that certain of The Kraft Heinz Company’s current and former officers and directors breached their fiduciary duties to the Company by purportedly making materially misleading statements and omissions regarding the Company’s financial performance and the impairment of its goodwill and intangible assets, and by supposedly approving or allowing the 3G Entities’ alleged insider trading.

The complaint seeks relief against the defendants in the form of damages, disgorgement of all profits obtained from the alleged insider trading, contribution and indemnification, and an award of attorneys’ fees and costs.

The defendants filed a motion to dismiss the consolidated amended complaint, which motion the court granted in an order dated December 15, 2021.

The plaintiffs filed a notice of appeal on January 13, 2022.

Certain of The Kraft Heinz Company’s current and former officers and directors and the 3G Entities were also named as defendants in a consolidated stockholder derivative action, In re Kraft Heinz Company Derivative Litigation , which was filed in the Delaware Court of Chancery.

The consolidated amended complaint, which was filed on April 27, 2020, alleged state law claims, contending that the 3G Entities were controlling stockholders who owed fiduciary duties to the Company, and that they breached those duties by allegedly engaging in insider trading and misappropriating the Company’s material, non-public information.

The complaint further alleged that certain of The Kraft Heinz Company’s current and former officers and directors breached their fiduciary duties to the Company by purportedly making materially misleading statements and omissions regarding the Company’s financial performance and the impairment of its goodwill and intangible assets, and by supposedly approving or allowing the 3G Entities’ alleged insider trading.

The complaint sought relief against the defendants in the form of damages, disgorgement of all profits obtained from the alleged insider trading, contribution and indemnification, and an award of attorneys’ fees and costs.

The defendants filed a motion to dismiss the consolidated amended complaint, which motion the Delaware Chancery Court granted in an order dated December 15, 2021.

The plaintiffs filed a notice of appeal on January 13, 2022, and the Delaware Supreme Court affirmed the trial court’s dismissal with prejudice of the consolidated amended complaint in an order dated August 1, 2022.

Certain of The Kraft Heinz Company’s current and former officers and directors and the 3G Entities are named as defendants in an additional stockholder derivative action, Datnoff, et al.

Behring, et al.

, which was filed on May 6, 2022 in the Delaware Court of Chancery.

The complaint alleges state law claims and contends that the Company’s Board of Directors wrongfully refused plaintiffs’ demands to pursue legal action against the named defendants.

Specifically, the complaint alleges that certain of the Company’s current and former officers and directors breached their fiduciary duties to the Company by purportedly making materially misleading statements and omissions regarding the Company’s financial performance and the impairment of its goodwill and intangible assets.

The complaint further alleges that the 3G Entities and certain of the Company’s current and former officers and directors breached their fiduciary duties by engaging in insider trading and misappropriating the Company’s material, non-public information, or aided and abetted such alleged breaches of fiduciary duty.

The complaint seeks relief against the defendants, principally in the form of damages, disgorgement of all profits obtained from the alleged insider trading, contribution and indemnification, and an award of attorneys’ fees and costs.

We intend to vigorously defend against these lawsuits;

however, we cannot reasonably estimate the potential range of loss, if any, due to the early stage of these proceedings.

United States Government Investigations:

2021 United States Government Settlement:

On September 3, 2021, The Kraft Heinz Company reached a settlement with the SEC, concluding and resolving in its entirety the previously disclosed SEC investigation.

Under the terms of the settlement, we, without admitting or denying the findings in the administrative order issued by the SEC, agreed to pay a civil penalty of $ 62 million and to cease and desist from violations of specified provisions of the federal securities laws and rules promulgated thereunder.

We recorded an accrual for the full amount of the penalty in the second quarter of 2021, which was reflected in other current liabilities in our condensed consolidated balance sheet at June 26, 2021 and in SG&A in our condensed consolidated statements of income, and paid the penalty in the third quarter of 2021.

As previously disclosed, the United States Attorney’s Office for the Northern District of Illinois (“USAO”) had been reviewing the matter.

We have not received any contact from the USAO within the past two years.

We recognized the full amount of the penalty in the second quarter of 2021 in SG&A, and paid the penalty in the third quarter of 2021.

Other Commitments and Contingencies

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Total $ 1,811

Redeemable Noncontrolling Interest:

In 2016, we entered into a joint venture with a minority partner to manufacture, package, market, and distribute food products.

We controlled the operations and included this business in our consolidated results.

Our minority partner had put options that, if it chose to exercise, would require us to purchase portions of its equity interest at a future date.

The minority partner’s put options were reflected on our consolidated balance sheets as a redeemable noncontrolling interest.

We previously accreted the redeemable noncontrolling interest to its estimated redemption value over the term of the put options.

During 2020, we issued a notice of termination to our minority partner, indicating our intent to dissolve and liquidate the joint venture as provided for within our agreement.

The joint venture was dissolved in December 2020.

As a result of this dissolution, we recognized a pre-tax loss of approximately $ 26 million in other expense/(income) for the year ended December 26, 2020 .

We may from time to time seek to retire or purchase our outstanding debt through redemptions, tender offers, cash purchases, prepayments, refinancing, exchange offers, open market or privately negotiated transactions, Rule 10b5-1 plans, or otherwise.

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Borrowing Arrangements:

On July 6, 2015, together with Kraft Heinz Foods Company (“KHFC”), our 100% owned operating subsidiary, we entered into a credit agreement (as amended, the “Credit Agreement”), which provided an initial senior unsecured revolving commitment in the aggregate amount of $ 4.0 billion (as amended, the “Senior Credit Facility”).

In June 2018, we entered into an agreement effective on July 6, 2018 to extend the maturity date of our Senior Credit Facility from July 6, 2021 to July 6, 2023 and to provide a $ 400 million euro equivalent swing line facility, which is available under the initial revolving commitment of $ 4.0 billion, for short-term loans denominated in euros on a same-day basis.

In March 2020, we entered into an extension letter agreement (the “2020 Extension Agreement”), which extends the maturity date of $ 3.9 billion under the Senior Credit Facility from July 6, 2023 to July 6, 2024.

The revolving commitments of each lender that did not agree to the 2020 Extension Agreement continue to terminate on July 6, 2023.

On October 9, 2020, we entered into a commitment increase amendment (the “Amendment”) to the Credit Agreement, which provides for incremental revolving commitments by two additional lenders in the amount of $ 50 million each, or $ 100 million in aggregate.

Following the execution of the Amendment, the Senior Credit Facility provides for a revolving commitment of $ 4.1 billion through July 6, 2023 and $ 4.0 billion through July 6, 2024.

On April 9, 2021, we entered into another extension letter agreement (the “2021 Extension Agreement”), which extends the maturity date of $ 4.0 billion under the Senior Credit Facility from July 6, 2024 to July 6, 2025.

In the first quarter of 2020, as a precautionary measure to preserve financial flexibility in light of the uncertainty in the global economy resulting from the COVID-19 pandemic, we borrowed $ 4.0 billion under our Senior Credit Facility.

We repaid the full $ 4.0 billion during the second quarter of 2020.

No amounts were drawn on our Senior Credit Facility at December 25, 2021, at December 26, 2020, or during the years ended December 25, 2021 and December 28, 2019.

The Credit Agreement includes a $ 1.0 billion sub-limit for borrowings in alternative currencies (i.e., euro, British pound sterling, Canadian dollars, or other lawful currencies readily available and freely transferable and convertible into U.S.

dollars), as well as a letter of credit sub-facility of up to $ 300 million.

Subject to certain conditions, we may increase the amount of revolving commitments and/or add tranches of term loans in a combined aggregate amount of up to $ 900 million.

Any committed borrowings under the Senior Credit Facility bear interest at a variable annual rate based on LIBOR/EURIBOR/CDOR loans or an alternate base rate/Canadian prime rate, in each case subject to an applicable margin based upon the long-term senior unsecured, non-credit enhanced debt rating assigned to us.

The borrowings under the Senior Credit Facility have interest rates based on, at our election, base rate, LIBOR, EURIBOR, CDOR, or Canadian prime rate plus a spread ranging from 87.5 to 175 basis points for LIBOR, EURIBOR, and CDOR loans, and 0 to 75 basis points for base rate or Canadian prime rate loans.

The Senior Credit Facility contains 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.

In July 2022, together with Kraft Heinz Foods Company (“KHFC”), our 100% owned operating subsidiary, we entered into a new credit agreement (the “Credit Agreement”), which provides for a five-year senior unsecured revolving credit facility in an aggregate amount of $ 4.0 billion (the “Senior Credit Facility”) that will mature on July 8, 2027 and replaced our then-existing credit facility (the “Previous Senior Credit Facility”).

See Note 17, Debt , to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 25, 2021 for additional information on the Previous Senior Credit Facility.

The Credit Agreement includes a $ 1.0 billion sublimit for borrowings in Canadian dollars, euro, or British pound sterling, as well as a swingline sub-facility of up to $ 400 million, and a letter of credit sub-facility of up to $ 300 million.

Additionally, and subject to certain conditions, we may increase the amount of revolving commitments and/or add tranches of term loans in a combined aggregate amount of up to $ 1.0 billion.

Borrowings under the Senior Credit Facility will bear interest at the rates specified in the Credit Agreement, which vary based on the type of borrowing and certain other customary conditions.

The 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.

The Credit Agreement requires us to maintain a minimum shareholders’ equity (excluding accumulated other comprehensive income/(losses)) of at least $ 35 billion.

We were in compliance with this covenant as of December 25, 2021.

The obligations under the Credit Agreement are guaranteed by KHFC and The Kraft Heinz Company in the case of indebtedness and other liabilities of any subsidiary borrower.

In March 2020, together with KHFC, we entered into an uncommitted revolving credit line agreement, which provides for borrowings up to $ 300 million.

Each borrowing under this uncommitted revolving credit line agreement is due within six months of the disbursement date.

In March 2021, we amended the uncommitted revolving credit line agreement to extend the final maturity date of the agreement from June 9, 2021 to June 9, 2022.

As of December 25, 2021, no amounts had been drawn on this facility.

We have historically obtained funding through our U.S.

and European commercial paper programs.

We had no commercial paper outstanding at December 25, 2021, at December 26, 2020, or during the years ended December 25, 2021 or December 26, 2020.

We repaid the full $ 4.0 billion during the second quarter of 2020.

No amounts were drawn on our Senior Credit Facility at December 31, 2022, on our 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.

Long-Term Debt:

The following table summarizes our long-term debt obligations.

Maturity Dates Interest Rates (b)

Maturity Dates (b)

Interest Rates (b)

Carrying Values

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Senior debt has greater seniority than subordinated debt.

(b) Floating interest rates are stated as of December 25, 2021.

(b) Maturity dates and interest rates presented are for the outstanding long-term debt obligations at December 31, 2022.

(d) The 6.250 % Pound Sterling Senior Secured Notes due February 18, 2030 (the “2030 Notes”) were issued by H.J.

(d) The 6.250 % Pound Sterling Senior Notes due February 18, 2030 (the “2030 Notes”) were issued by H.J.

Heinz Finance UK Plc.

Kraft Heinz and KHFC fully and unconditionally guarantee the 2030 Notes.

The 2030 Notes now rank pari passu in right of payment with all of our existing and future senior obligations.

The 2030 Notes rank pari passu in right of payment with all of our existing and future senior obligations.

Kraft Heinz became guarantor of the 2030 Notes in connection with the 2015 Merger.

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Our long-term debt contains customary representations, covenants, and events of default.

We were in compliance with all such covenants at December 25, 2021.

At December 26, 2020, our long-term debt excluded amounts classified as held for sale.

See Note 4, Acquisitions and Divestitures , for additional information.

We were in compliance with all such covenants as of December 31, 2022.

Long-term Debt Transactions:

The table below summarizes our aggregate principal amount of long-term debt outstanding, excluding financing leases, before and after our current year debt transactions, specifically tender offers, debt redemptions, open-market debt repurchases, and debt repayments (in millions):

Aggregate Principal Amount Outstanding as of December 26, 2020 Tender Offers Open Market Debt Repurchases Debt Redemptions Debt Repayments Aggregate Principal Amount Outstanding as of December 25, 2021

3.500 % senior notes due June 2022 (c)

$ 631 $ 250 $ — $ — $ — $ 381

4.000 % senior notes due June 2023 (e)

447 — — 447 — —

3.950 % senior notes due July 2025 (a)(g)

1,609 812 — 797 — —

3.000 % senior notes due June 2026 (a)(d)

2,000 88 36 — — 1,876

6.375 % senior notes due July 2028 (b)

235 17 — — — 218

4.625 % senior notes due January 2029 (b)(c)(d)(f)(h)

1,100 701 30 — — 369

3.750 % senior notes due April 2030 (b)(d)

1,000 254 3 — — 743

4.250 % senior notes due March 2031 (c)

1,350 966 — — — 384

6.750 % senior notes due March 2032 (b)(c)

437 132 — — — 305

5.000 % senior notes due July 2035 (b)(c)(d)(f)(h)

1,000 285 29 — — 686

6.875 % senior notes due January 2039 (b)(d)(f)(h)

878 29 38 — — 811

7.125 % senior notes due August 2039 (b)(d)(h)

931 51 21 — — 859

4.625 % senior notes due October 2039 (b)(f)(h)

500 101 1 — — 398

6.500 % senior notes due February 2040 (b)(d)(f)(h)

788 39 43 — — 706

5.000 % senior notes due June 2042 (b)(d)(f)(h)

The table below summarizes our aggregate principal amount of long-term debt outstanding, excluding financing leases, before and after our current year debt transactions, specifically open-market debt repurchases and debt repayments (in millions):

Aggregate Principal Amount Outstanding as of December 25, 2021 Open Market Debt Repurchases Debt Repayments Aggregate Principal Amount Outstanding as of December 31, 2022

6.375 % senior notes due July 2028 (a)(b)

$ 218 $ 14 $ — $ 204

5.200 % senior notes due July 2045 (d)(f)(h)

4.625 % senior notes due January 2029 (b)(c)

5.000 % senior notes due July 2035 (a)(b)(c)

6.875 % senior notes due January 2039 (a)(b)(c)

7.125 % senior notes due August 2039 (a)(b)(c)

4.625 % senior notes due October 2039 (a)(c)

6.500 % senior notes due February 2040 (a)(b)

706 133 — 573

4.375 % senior notes due June 2046 (d)(f)(h)

5.000 % senior notes due June 2042 (a)(b)(c)

1,532 109 — 1,423

Floating rate senior notes due February 2021 (i)

5.200 % senior notes due July 2045 (a)(b)(c)

1,811 197 — 1,614

3.125 % senior notes due September 2021 (i)

4.875 % senior notes due October 2049 (b)(c)

1,500 50 — 1,450

Other long-term debt (j)

5.500 % senior notes due June 2050 (b)(c)

2.850 % senior notes due March 2022 (d)

3.500 % senior notes due June 2022 (d)

Floating rate senior notes due August 2022 (d)

Other long-term debt (e)

11,079 — — 10,849

Total $ 21,471 $ 755 $ 702 $ 19,784

(a) Included in the Q1 2021 Tender Offer (defined below).

(b) Included in the Q2 2021 Tender Offers (defined below).

(d) Included in the Q2 2021 Repurchases (defined below).

(e) Included in the Q2 2021 Debt Redemption (defined below).

(f) Included in the Q3 2021 Repurchases (defined below).

(g) Included in the Q3 2021 Debt Redemption (defined below).

(h) Included in the Q4 2021 Repurchases (defined below).

(i) Repaid at maturity.

(j) Represents the aggregate principal amount of all of our long-term debt obligations, excluding finance leases, that were not impacted by current year debt transactions.

(a) Included in the Q2 2022 Repurchases (defined below).

(b) Included in the Q3 2022 Repurchases (defined below).

(d) Repaid at maturity.

(e) Represents the aggregate principal amount of all of our long-term debt obligations, excluding finance leases, that were not impacted by current year debt transactions.

Foreign-denominated long-term debt is reflected at the foreign currency exchange rate in effect at each period end.

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Thereafter 14,666

Open Market Debt Repurchases:

2022 Open Market Debt Repurchases

In 2022, we repurchased approximately $ 755 million of certain of our senior notes under Rule 10b5-1 plans, including $ 268 million in the second quarter of 2022 (the “Q2 2022 Repurchases”), $ 180 million in the third quarter of 2022 (the “Q3 2022 Repurchases”), and $ 307 million in the fourth quarter of 2022 (the “Q4 2022 Repurchases” and, together with the Q2 2022 Repurchases and the Q3 2022 Repurchases, the “2022 Repurchases”).

Refer to the table above for which senior notes had amounts extinguished as part of the 2022 Repurchases.

In connection with the 2022 Repurchases, we recognized a net gain on extinguishment of debt of approximately $ 38 million within interest expense on the consolidated statement of income for the year ended December 31, 2022, which included a net gain of $ 9 million in the second quarter of 2022 related to the Q2 2022 Repurchases, a net gain of $ 3 million in the third quarter of 2022 related to the Q3 2022 Repurchases, and a net gain of $ 26 million in the fourth quarter related to the Q4 2022 Repurchases.

This gain primarily reflects the write-off of unamortized premiums and a net discount associated with the 2022 Repurchases.

Related to the 2022 Repurchases, we recognized a debt prepayment and extinguishment benefit of $ 10 million on the consolidated statement of cash flows for the year ended December 31, 2022, which reflect the $ 38 million net gain on extinguishment of debt adjusted for the non-cash write-off of unamortized premiums of $ 33 million, unamortized debt issuance costs of $ 3 million, and unamortized discounts of $ 2 million.

2021 Open Market Debt Repurchases

In 2021, we repurchased approximately $ 738 million of certain of our senior notes under Rule 10b5-1 plans, including $ 207 million in the second quarter of 2021 (the “Q2 2021 Repurchases”), $ 221 million in the third quarter of 2021 (the “Q3 2021 Repurchases”), and $ 310 million in the fourth quarter of 2021 (the “Q4 2021 Repurchases” and, together with the Q2 2021 Repurchases and the Q3 2021 Repurchases, the “2021 Repurchases”).

See Note 17, Debt , to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 25, 2021 for additional information on the 2021 Repurchases.

These losses primarily reflect the payment of premiums associated with the repurchases as well as the write-off of unamortized debt issuance costs, premiums, and discounts.

Related to the 2021 Repurchases, we recognized debt prepayment and extinguishment costs of $ 162 million on the consolidated statement of cash flows for the year ended December 25, 2021, which reflect the $ 152 million loss on extinguishment of debt adjusted for the non-cash write-off of unamortized premiums of $ 15 million, unamortized discounts of $ 2 million, and unamortized debt issuance costs of $ 3 million.

Tender Offers:

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The aggregate principal amount of senior notes validly tendered and accepted was approximately $ 900 million.

Refer to the table above for the amount extinguished by senior note in the Q1 2021 Tender Offer.

In June 2021, KHFC commenced cash tender offers to purchase up to the maximum combined aggregate purchase price of $ 2.8 billion, including principal and premium but excluding accrued and unpaid interest, of its 5.000 % senior notes due June 2042, 5.000 % senior notes due July 2035, 4.625 % senior notes due January 2029, 4.625 % senior notes due October 2039, 3.750 % senior notes due April 2030, 6.500 % senior notes due February 2040, 6.375 % senior notes due July 2028, 6.750 % senior notes due March 2032, 6.875 % senior notes due January 2039, and 7.125 % senior notes due August 2039 (the “Q2 2021 Tender Offers”), listed in order of priority.

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The aggregate principal amount of senior notes validly tendered and accepted was approximately $ 1.4 billion.

Refer to the table above for the amount extinguished by senior note in the Q2 2021 Tender Offers.

In November 2021, KHFC commenced a cash tender offer to purchase up to the maximum combined aggregate purchase price of $ 2.0 billion, including principal and premium but excluding accrued and unpaid interest (the “Q4 2021 Maximum Tender Amount”), of its 3.500 % senior notes due June 2022, 4.625 % senior notes due January 2029, 4.250 % senior notes due March 2031, 6.750 % senior notes due March 2032, 5.000 % senior notes due July 2035, 6.500 % senior notes due February 2040, 5.000 % senior notes due June 2042, 5.200 % senior notes due July 2045, 6.875 % senior notes due January 2039, 7.125 % senior notes due August 2039, 5.500 % senior notes due June 2050, and 4.875 % senior notes due October 2049 (the “Q4 2021 Tender Offer” and, together with the Q1 2021 Tender Offer and the Q2 2021 Tender Offers, the “2021 Tender Offers”), listed in order of priority.

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The aggregate principal amount of senior notes validly tendered and accepted was approximately $ 1.7 billion.

Refer to the table above for the amount extinguished by senior note in the Q4 2021 Tender Offers.

Related to the 2021 Tender Offers, we recognized a loss on extinguishment of debt of $ 636 million within interest expense on the consolidated statement of income for the year ended December 25, 2021, which included a loss of $ 106 million in the first quarter of 2021 related to the Q1 2021 Tender Offer, a loss of $ 256 million in the second quarter of 2021 related to the Q2 2021 Tender Offers, and a loss of $ 274 million in the fourth quarter of 2021 related to the Q4 2021 Tender Offer.

See Note 17, Debt , to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 25, 2021 for additional information on the 2021 Tender Offers.

These losses primarily reflect the payment of early tender premiums and fees associated with the 2021 Tender Offers as well as the write-off of unamortized premiums, debt issuance costs, and discounts.

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Related to the 2020 Tender Offer, we recognized debt prepayment and extinguishment costs of $ 68 million on the consolidated statement of cash flows for the year ended December 26, 2020, which reflect the $ 71 million loss on extinguishment of debt adjusted for the non-cash write-off of unamortized premiums of $ 1 million, unamortized debt issuance costs of $ 3 million, and unamortized discounts of $ 1 million.

2019 Tender Offer

In September 2019, KHFC commenced an offer to purchase for cash any and all of its outstanding 5.375 % senior notes due February 2020 (the “First 2019 Tender Offer”).

The First 2019 Tender Offer expired on September 9, 2019 with a settlement date of September 10, 2019.

Additionally, on September 11, 2019, KHFC commenced an offer to purchase for cash up to the maximum combined aggregate purchase price of $ 2.5 billion, excluding accrued and unpaid interest, of its outstanding 3.500 % senior notes due June 2022, 3.500 % senior notes due July 2022, 4.000 % senior notes due June 2023, and 4.875 % second lien senior secured notes due February 2025 (the “2025 Notes”) (the “Second 2019 Tender Offer” and, together with the First 2019 Tender Offer, the “2019 Tender Offers”).

The Second 2019 Tender Offer settled on September 26, 2019.

The aggregate principal amounts of senior notes validly tendered pursuant to the 2019 Tender Offers was $ 2.7 billion and the aggregate principal amount of 2025 Notes validly tendered pursuant to the 2019 Tender Offers was $ 224 million.

In connection with the 2019 Tender Offers, we recognized a loss on extinguishment of debt of $ 88 million within interest expense on the consolidated statement of income for the year ended December 28, 2019.

This loss primarily reflects the payment of early tender premiums and fees associated with the 2019 Tender Offers as well as the write-off of unamortized debt premiums, issuance costs, and discounts.

Related to the 2019 Tender Offers, we recognized debt prepayment and extinguishment costs of $ 91 million on the consolidated statement of cash flows for the year ended December 28, 2019, which reflect the $ 88 million loss on extinguishment of debt adjusted for the non-cash write-off of unamortized premiums of $ 10 million, unamortized debt issuance costs of $ 5 million, and unamortized discounts of $ 2 million.

Open Market Debt Repurchases:

Refer to the table above to see which senior notes had amounts extinguished as part of the 2021 Repurchases.

In connection with the 2021 Repurchases, we recognized a loss on extinguishment of debt of approximately $ 152 million within interest expense on the consolidated statement of income for the year ended December 25, 2021, which included a loss of $ 28 million in the second quarter of 2021 related to the Q2 2021 Repurchases, a loss of $ 52 million in the third quarter of 2021 related to the Q3 2021 Repurchases, and a loss of $ 72 million in the fourth quarter of 2021 related to the Q4 2021 Repurchases.

These losses primarily reflect the payment of premiums associated with the repurchases as well as the write-off of unamortized debt issuance costs, premiums, and discounts.

Debt Redemptions:

3 unchanged sentences

In June 2021, KHFC issued a notice of redemption of all of its 3.950 % senior notes due July 2025, effective July 14, 2021 (the “Q3 2021 Debt Redemption” and, together with the Q2 2021 Debt Redemption, the “2021 Debt Redemptions”).

Prior to the redemption, approximately $ 797 million aggregate principal amount was outstanding.

In connection with the 2021 Debt Redemptions, we recognized a loss on extinguishment of debt of $ 129 million within interest expense on the consolidated statement of income for the year ended December 25, 2021, which included a loss of $ 34 million in the second quarter of 2021 related to the Q2 2021 Debt Redemption and a loss of $ 95 million in the third quarter of 2021 related to the Q3 2021 Debt Redemption.

Prior to the Q3 2021 Redemption, approximately $ 797 million aggregate principal amount was outstanding.

These losses primarily reflect the payment of premiums and fees associated with the redemptions as well as the write-off of unamortized debt issuance costs.

1 unchanged sentence

2020 Debt Redemptions

Concurrently with the commencement of the 2020 Tender Offer, KHFC issued a notice of conditional redemption of all of its $ 300 million outstanding aggregate principal amount of 3.375 % senior notes due June 2021 and $ 976 million outstanding aggregate principal amount of its 2025 Notes (the “First 2020 Debt Redemptions”).

Concurrently with the commencement of the 2020 Tender Offer, KHFC issued a notice of conditional redemption of all of its $ 300 million outstanding aggregate principal amount of 3.375 % senior notes due June 2021 and $ 976 million outstanding aggregate principal amount of its 4.875 % second lien senior secured notes due February 2025 (the “First 2020 Debt Redemptions”).

The First 2020 Debt Redemptions were effective and completed in the second quarter of 2020.

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Related to the 2020 Debt Redemptions, we recognized debt prepayment and extinguishment costs of $ 48 million on the consolidated statement of cash flows for the year ended December 26, 2020, which reflect the $ 53 million loss on extinguishment of debt adjusted for the non-cash write-off of unamortized debt issuance costs of $ 5 million.

2019 Debt Redemptions

In September 2019, concurrently with the commencement of the First 2019 Tender Offer, we issued a notice of redemption by Kraft Heinz Canada ULC, our 100% owned subsidiary, of all of its 2.700 % Canadian dollar senior notes due July 2020, of which 300 million Canadian dollar aggregate principal amount was outstanding, and a notice of partial redemption by KHFC of $ 800 million of its 2.800 % senior notes due July 2020, of which $ 1.5 billion aggregate principal amount was outstanding (the “First 2019 Debt Redemptions”).

The effective date of the First 2019 Debt Redemptions was October 3, 2019.

Concurrently with the commencement of the Second 2019 Tender Offer, we issued a notice of partial redemption providing for the redemption of $ 500 million aggregate principal amount of KHFC’s remaining 2.800 % senior notes due July 2020 (the “Second 2019 Debt Redemption” and, together with the First 2019 Debt Redemptions, the “2019 Debt Redemptions”).

The effective date of the Second 2019 Debt Redemption was October 11, 2019.

Following the 2019 Debt Redemptions, KHFC’s 2.800 % senior notes due July 2020 had $ 200 million aggregate principal amount outstanding.

In connection with the 2019 Debt Redemptions, we recognized a loss on extinguishment of debt of $ 10 million within interest expense on the consolidated statement of income for the year ended December 28, 2019.

This loss primarily reflects the payment of premiums and fees associated with the redemptions as well as the write-off of unamortized debt issuance costs.

Related to the 2019 Debt Redemptions, we recognized debt prepayment and extinguishment costs of $ 8 million on the consolidated statement of cash flows for the year ended December 28, 2019, which reflect the $ 10 million loss on extinguishment of debt adjusted for the non-cash write-off of unamortized debt issuance costs of $ 2 million.

Debt Issuances:

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We used the proceeds from the 2020 Notes to fund the 2020 Tender Offer and First 2020 Debt Redemptions and to pay fees and expenses in connection therewith.

2019 Debt Issuances

In September 2019, KHFC issued $ 1,000 million aggregate principal amount of 3.750 % senior notes due April 2030, $ 500 million aggregate principal amount of 4.625 % senior notes due October 2039, and $ 1,500 million aggregate principal amount of 4.875 % senior notes due October 2049 (collectively, the “2019 Notes”).

The 2019 Notes are fully and unconditionally guaranteed by The Kraft Heinz Company as to payment of principal, premium, and interest on a senior unsecured basis.

We used the proceeds from the 2019 Notes to fund the Second 2019 Tender Offer and to pay fees and expenses in connection therewith and to fund the Second 2019 Debt Redemption.

Debt Issuance Costs:

Debt issuance costs are reflected as a direct deduction of our long-term debt balance on the consolidated balance sheets.

We incurred debt issuance costs $ 31 million in 2020 and $ 25 million in 2019.

Debt issuance costs are reflected as a direct deduction of our current portion of long-term debt and long-term debt balances on the consolidated balance sheets.

We incurred an insignificant amount of debt issuance costs in 2022 and debt issuance costs of $ 31 million in 2020.

We did not incur any debt issuance costs in 2021.

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Debt Repayments:

In February 2021, we repaid $ 111 million aggregate principal amount of senior notes that matured in the period.

In March 2022, we repaid $ 6 million aggregate principal amount of senior notes that matured in the period.

In June 2022, we repaid $ 381 million aggregate principal amount of senior notes that matured in the period.

In August 2022, we repaid $ 315 million aggregate principal amount of floating rate senior notes that matured in the period.

In February 2021, we repaid $ 111 million aggregate principal amount of floating rate senior notes that matured in the period.

In September 2021, we repaid $ 34 million aggregate principal amount of senior notes that matured in the period.

1 unchanged sentence

In July 2020, we repaid $ 200 million aggregate principal amount of senior notes and 500 million Canadian dollars aggregate principal amount of senior notes that matured in the period.

In August 2019, we repaid $ 350 million aggregate principal amount of senior notes that matured in the period.

Fair Value of Debt:

41 unchanged sentences

The non-current portion of operating lease liabilities is included in other non-current liabilities , and the non-current portion of finance lease liabilities is included in long-term debt on our consolidated balance sheets.

At December 26, 2020, operating and finance lease ROU assets, the current portion of operating and finance lease liabilities, and the non-current portion of operating and finance lease liabilities excluded amounts classified as held for sale.

See Note 4, Acquisitions and Divestitures , for additional information.

Cash flows arising from lease transactions were (in millions):

14 unchanged sentences

Total lease liability $ 710 $ 119

At December 25, 2021, our operating and finance leases that had not yet commenced were approximately $ 202 million.

This balance is primarily composed of a 20-year lease for a warehouse facility with a future minimum lease commitment of approximately $ 109 million.

We expect to take control of the leased assets in 2022.

At December 31, 2022, our operating and finance leases that had not yet commenced were insignificant.

Capital Stock

26 unchanged sentences

Segment Reporting

We manage and report our operating results through three reportable segments defined by geographic region:

United States, International, and Canada.

In the second quarter of 2022, our internal reporting and reportable segments changed.

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.

Management evaluates segment performance based on several factors, including net sales and Segment Adjusted EBITDA.

3 unchanged sentences

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 uses Segment Adjusted EBITDA to evaluate segment performance and allocate resources.

Management also uses Segment Adjusted EBITDA to allocate resources.

Management does not use assets by segment to evaluate performance or allocate resources.

2 unchanged sentences

December 31, 2022 December 25, 2021 December 26, 2020

United States $ 18,604 $ 19,204 $ 17,844

North America $ 20,340 $ 20,351 $ 20,844

International 6,145 5,691 5,341

Canada 1,747 1,640 1,882

Total net sales $ 26,485 $ 26,042 $ 26,185

2 unchanged sentences

Segment Adjusted EBITDA:

United States $ 5,157 $ 5,557 $ 4,829

North America $ 5,284 $ 5,576 $ 5,946

International 1,017 1,066 1,058

Canada 419 389 487

General corporate expenses ( 298 ) ( 271 ) ( 335 )

6 unchanged sentences

Certain non-ordinary course legal and regulatory matters ( 210 ) ( 62 ) —

Equity award compensation expense (excluding restructuring activities) ( 197 ) ( 156 ) ( 46 )

Equity award compensation expense ( 148 ) ( 197 ) ( 156 )

Operating income/(loss) 3,634 3,460 2,128

5 unchanged sentences

Depreciation and amortization expense:

United States $ 542 $ 609 $ 609

North America $ 579 $ 580 $ 644

International 259 234 221

Canada 38 35 35

General corporate expenses 95 96 104

3 unchanged sentences

Capital expenditures:

United States $ 433 $ 318 $ 393

North America $ 513 $ 477 $ 347

International 331 348 212

Canada 44 29 27

General corporate expenses 72 80 37

10 unchanged sentences

Total net sales $ 26,485 $ 26,042 $ 26,185

In 2021, following the divestiture of certain of our global cheese businesses, we reorganized certain products within our platforms to reflect how we plan to manage our business going forward, including the role assigned to these products and platforms within our business.

We have reflected these changes in all historical periods presented.

Net sales by product category were (in millions):

13 unchanged sentences

Concentration of Risk:

Our largest customer, Walmart Inc., represented approximately 22 % of our net sales in both 2021 and 2020 and approximately 21 % of our net sales in 2019.

All of our segments have sales to Walmart Inc.

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.

Geographic Financial Information:

16 unchanged sentences

At December 31, 2022 and December 25, 2021, long-lived assets by geography excluded amounts classified as held for sale.

See Note 4, Acquisitions and Divestitures, for additional information.

Other Financial Data

20 unchanged sentences

Other expense/(income) was $ 253 million of income in 2022 compared to $ 295 million of income in 2021.

This change was primarily driven by a $ 79 million decrease in net pension and postretirement non-service benefits and a $ 25 million net gain on sales of businesses in 2022 compared to a $ 44 million net gain on sales of businesses in 2021.

These impacts were partially offset by a $ 50 million net loss on derivative activities in 2022 compared to an $ 86 million net loss on derivative activities in 2021 and a $ 12 million increase in interest income as compared to the prior year period.

Other expense/(income) was $ 295 million of income in 2021 compared to $ 296 million of income in 2020.

This change was primarily driven by an $ 86 million net loss on derivative activities in 2021 compared to a $ 154 million net gain on derivative activities in 2020 and a $ 115 million decrease in non-cash amortization of postemployment benefit plans prior service credits as compared to the prior year period.

These impacts were partially offset by a $ 101 million net foreign exchange gain in 2021 compared to a $ 162 million net foreign exchange loss in 2020, a $ 44 million net gain on sales of businesses in 2021 compared to a $ 2 million net loss on sales of businesses in 2020, and a $ 26 million loss on the dissolution of a joint venture in 2020.

Other expense/(income) was $ 296 million of income in 2020 compared to $ 952 million of income in 2019.

This change was primarily driven by a $ 2 million net loss on sales of businesses in 2020 compared to a $ 420 million net gain on sale of business in 2019, a $ 184 million decrease in non-cash amortization of postemployment benefit plans prior service credits as compared to the prior year period, a $ 162 million net foreign exchange loss in 2020 compared to a $ 10 million net foreign exchange loss in 2019, and a $ 26 million loss on the dissolution of a joint venture in 2020.

These impacts were partially offset by a $ 154 million net gain on derivative activities in 2020 compared to a $ 39 million net gain on derivative activities in 2019.

See Note 16, Commitments and Contingencies , for additional information related to our dissolved joint venture.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data