What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-15 compared with 2023-02-16 · 363 added, 445 removed, 1835 unchanged (31% of the section changed)

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment Assessments

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.

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.

Goodwill Impairment Assessments for Certain Reporting Units

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s goodwill balance was $30.5 billion as of December 30, 2023.

Management tests reporting units for impairment annually as of the first day of the third 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.

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

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As disclosed by management, management’s cash flow projections included significant assumptions related to net sales, cost of products sold, selling, general, and administrative costs (SG&A), depreciation and amortization, working capital, capital expenditures, income tax rates, discount rates, long-term growth rates, and other market factors.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments is a critical audit matter are (i) the significant judgment by management when developing the fair value of the reporting units;

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments for certain reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value of the reporting units;

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These procedures also included, among others (i) testing management’s process for developing the fair value of the reporting units;

(ii) evaluating the appropriateness of the discounted cash flow method;

(ii) evaluating the appropriateness of the discounted cash flow method used by management;

(iii) testing the completeness and accuracy of underlying data used in the method;

and (iv) evaluating the significant assumptions related to net sales, cost of products sold, SG&A, discount rates and long-term growth rates.

and (iv) evaluating the reasonableness of the significant assumptions used by management related to net sales, cost of products sold, SG&A, discount rates and long-term growth rates.

Evaluating management’s assumptions related to net sales, cost of products sold, SG&A, discount rates and long-term growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit;

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and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of (i) the Company’s discounted cash flow method and (ii) the discount rate and long-term growth rate assumptions.

Indefinite-Lived Intangible Assets Impairment Assessments

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.

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.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s discounted cash flow method and (ii) the reasonableness of the discount rate and long-term growth rate assumptions.

Impairment Assessments for Certain Indefinite-Lived Intangible Assets

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s indefinite-lived intangible assets balance, which consists primarily of individual brands, was $38.5 billion as of December 30, 2023, a majority of which relates to indefinite-lived intangible assets valued using the excess earnings method.

Management tests brands for impairment annually as of the first day of the third 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.

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

Management recognized non-cash indefinite-lived intangible asset impairment losses of $152 million for the year ended December 30, 2023, a portion of which relates to indefinite-lived intangible assets valued using the excess earnings method.

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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Using the relief from royalty method, management’s cash flow projections included significant assumptions related to net sales, royalty rates, income tax considerations, long-term growth rates, discount rates, and other market factors.

The principal considerations for our determination that performing procedures relating to the indefinite-lived intangible assets impairment assessment is a critical audit matter are (i) the significant judgment by management when developing the fair value of the brands;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to net sales, cost of products sold, SG&A, long-term growth rates and discount rates for the excess earnings method and net sales, royalty rates, long-term growth rates and discount rates for the relief from royalty method;

The principal considerations for our determination that performing procedures relating to the impairment assessments for certain indefinite-lived intangible assets is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the brands;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

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These procedures included testing the effectiveness of controls relating to management’s indefinite-lived intangible assets impairment assessment, including controls over the valuation of the Company’s indefinite-lived intangible assets.

These procedures also included, among others (i) testing management’s process for developing the fair value of the brands;

(ii) evaluating the appropriateness of the excess earnings and relief from royalty methods;

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the brands;

(ii) evaluating the appropriateness of the excess earnings method used by management;

(iii) testing the completeness and accuracy of underlying data used in the methods;

and (iv) evaluating the significant assumptions used by management related to net sales, cost of products sold, SG&A, long-term growth rates and discount rates for the excess earnings method and net sales, royalty rates, long-term growth rates and discount rates for the relief from royalty method.

Evaluating management’s assumptions related to net sales, cost of products sold, SG&A, long-term growth rates and discount rates for the excess earnings method and net sales, royalty rates, long-term growth rates and discount rates for the relief from royalty method involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the individual brands;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to net sales, cost of products sold, SG&A, long-term growth rates and discount rates for the excess earnings method.

Evaluating management’s assumptions related to net sales, cost of products sold, SG&A, long-term growth rates and discount rates for the excess earnings method involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the individual brands;

(ii) the consistency with external market and industry data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of (i) the Company’s excess earnings and relief from royalty methods and (ii) the royalty rate for the relief from royalty method and long-term growth rate and discount rate assumptions for the excess earnings method and relief from royalty method.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s excess earnings method and (ii) the reasonableness of the long-term growth rate and discount rate assumptions for the excess earnings method.

/s/ PricewaterhouseCoopers LLP

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Comprehensive income/(loss) attributable to noncontrolling interest

( 7 ) ( 2 ) 18

Comprehensive income/(loss) attributable to common shareholders $ 3,061 $ 1,377 $ 1,155

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Interest payable 258 264

Income taxes payable 136 541

Other current liabilities 1,781 2,330

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— — — — — ( 8 ) ( 8 )

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

Exercise of stock options, issuance of other stock awards, repurchase of common stock, and other — 262 — — ( 243 ) — 19

Balance at December 25, 2021 12 53,379 ( 1,682 ) ( 1,824 ) ( 587 ) 150 49,448

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— — — — — ( 7 ) ( 7 )

Exercise of stock options, issuance of other stock awards, and other — 262 — — ( 243 ) — 19

Exercise of stock options, issuance of other stock awards, repurchase of common stock, and other — 234 1 — ( 260 ) 4 ( 21 )

Balance at December 31, 2022 12 51,834 489 ( 2,810 ) ( 847 ) 152 48,830

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— — ( 1,977 ) — — — ( 1,977 )

Dividends declared-noncontrolling interest ($ 100.30 per share)

— — — — — ( 7 ) ( 7 )

Exercise of stock options, issuance of other stock awards, and other — 234 1 — ( 260 ) 4 ( 21 )

Exercise of stock options, issuance of other stock awards, repurchase of common stock, and other — 203 — — ( 439 ) 9 ( 227 )

Balance at December 30, 2023 $ 12 $ 52,037 $ 1,367 $ ( 2,604 ) $ ( 1,286 ) $ 162 $ 49,688

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

Proceeds from revolving credit facility — — 4,000

Repayments of revolving credit facility — — ( 4,000 )

Proceeds from issuance of commercial paper 150 228 —

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Dividends paid ( 1,965 ) ( 1,960 ) ( 1,959 )

Repurchases of common stock ( 455 ) ( 280 ) ( 271 )

Other financing activities, net ( 67 ) ( 19 ) 12

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At the closing of the 2015 Merger, Heinz was renamed The Kraft Heinz Company.

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

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

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

We operate on a 52- or 53-week fiscal year ending on the last Saturday in December in each calendar year.

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Reportable Segments

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:

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.

During the fourth quarter of 2023, certain organizational changes were announced that are expected to impact our future internal reporting and reportable segments.

We expect to divide our International segment into three operating segments — Europe and Pacific Developed Markets (“EPDM” or “International Developed Markets”), West and East Emerging Markets (“WEEM”), and Asia Emerging Markets (“AEM”) — in order to enable enhanced focus on the different strategies required for each of these regions as part of our long-term strategic plan.

As a result of these changes, we expect to have two reportable segments:

North America and International Developed Markets.

We anticipate that our remaining operating segments, consisting of WEEM and AEM, will be combined and disclosed as Emerging Markets.

We expect that the change to our reportable segments will be effective in the first quarter of 2024.

Use of Estimates

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Reclassifications

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

We made reclassifications and adjustments to certain previously reported financial information to conform to our current period presentation, including certain updates to our fair value of pension and postretirement benefit plan assets tables to expand and clarify our asset categories.

We have reflected these changes in all historical periods presented and these updates have no net impact on the total plan assets at fair value or leveling disclosed.

See Note 11, Postemployment Benefits , for additional information.

Held for Sale

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.

At December 30, 2023 and 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.

Cash , Cash Equivalents , and Restricted Cash

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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.

Restricted cash recorded in other current assets was $ 3 million at December 30, 2023 and restricted cash recorded in other non-current assets was $ 1 million at December 30, 2023 and $ 1 million at December 31, 2022.

Total cash, cash equivalents, and restricted cash was $ 1,404 million at December 30, 2023 and $ 1,041 million at December 31, 2022.

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Dividends are recorded as a reduction to retained earnings.

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

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

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

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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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Variable lease payments that do not depend on an index or rate are excluded from lease payments in the measurement of the ROU asset and lease liability and are recognized as expense in the period in which the payment occurs.

Our lease agreements do not include significant restrictions or covenants, and residual value guarantees are generally not included within our leases.

Our lease agreements typically do not include significant restrictions or covenants, and residual value guarantees are generally not included within our leases.

See Note 17, Leases , for additional information.

Financial Instruments:

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We also designate certain derivatives and non-derivatives as net investment hedges to hedge the net assets of certain foreign subsidiaries which are exposed to volatility in foreign currency exchange rates.

Changes in the value of these derivatives and remeasurements of our non-derivatives designated as net investment hedges are calculated each period using the spot method, with changes reported in foreign currency translation adjustment within accumulated other comprehensive income/(losses).

Changes in the value of these derivatives and remeasurements of our non-derivatives designated as net investment hedges are calculated each period using the spot method, with changes reported in foreign currency translation adjustments within accumulated other comprehensive income/(losses).

Such amounts will remain in accumulated other comprehensive income/(losses) until the complete or substantially complete liquidation of our investment in the underlying foreign operations.

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Cash flows related to the settlement of derivative instruments designated as net investment hedges of foreign operations are classified in the consolidated statements of cash flows within investing activities.

All other cash flows related to derivative instruments are classified in the same line item as the cash flows of the related hedged item, which is generally within operating activities.

All other cash flows related to derivative instruments are classified in the same line item as the cash flows of the related hedged item, which can be within operating, investing, or financing activities.

To qualify for hedge accounting, a specified level of hedging effectiveness between the hedging instrument and the item being hedged must be achieved at inception and maintained throughout the hedged period.

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Once realized, the gains and losses are included within the applicable segment operating results.

See Note 12, Financial Instruments , for additional information.

Our designated and undesignated derivative contracts include:

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We have numerous investments in our foreign subsidiaries, the net assets of which are exposed to volatility in foreign currency exchange rates.

We manage this risk by utilizing derivative and non-derivative instruments, including cross-currency swap contracts, foreign exchange contracts, and certain foreign denominated debt designated as net investment hedges.

We manage this risk by utilizing derivative and non-derivative instruments, including cross-currency swap contracts, foreign exchange contracts, and certain foreign currency denominated debt designated as net investment hedges.

We exclude the interest accruals and any off-market values on cross-currency swap contracts and the forward points on foreign exchange forward contracts from the assessment and measurement of hedge effectiveness.

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We use various financial instruments to mitigate our exposure to changes in exchange rates from third-party and intercompany actual and forecasted transactions.

Our principal foreign currency exposures that are hedged include the euro, British pound sterling, and Canadian dollar.

Our principal foreign currency exposures that are hedged include the euro, Canadian dollar, and British pound sterling.

These instruments include cross-currency swap contracts and foreign exchange forward and option contracts.

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• Interest rate cash flow hedges.

From time to time, we have used derivative instruments, including interest rate swaps, as part of our interest rate risk management strategy.

We have primarily used interest rate swaps to hedge the variability of interest payment cash flows on a portion of our future debt obligations.

From time to time, we have used derivative instruments, including interest rate swaps and treasury locks, as part of our interest rate risk management strategy.

We have primarily used interest rate swaps and treasury locks to hedge the variability of interest payment cash flows on a portion of our future debt obligations.

• Commodity derivatives.

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 dairy products, vegetable oils, coffee beans, wheat products, corn products, sugar, meat products, and cocoa products.

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

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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We also occasionally use futures to economically cross hedge a commodity exposure.

See Note 12, Financial Instruments , for additional information.

Translation of Foreign Currencies:

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

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.

We applied highly inflationary accounting to the results of our subsidiaries in Turkey, Venezuela, and Argentina which resulted in nonmonetary currency devaluation losses in other expense/(income) of $ 28 million as of December 30, 2023, $ 17 million as of December 31, 2022, and an insignificant amount as of December 25, 2021.

The net monetary assets of each of our subsidiaries in Turkey, Venezuela, and Argentina were insignificant at December 30, 2023.

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New Accounting Standards

Accounting Standards Not Yet Adopted

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

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.

The amendments also apply to other contracts such as contract liabilities arising from nonfinancial assets under ASC 610-20, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets .

The ASU will be effective beginning in the first quarter of 2023.

Early adoption is permitted, including in an interim period.

We currently expect to adopt ASU 2021-08 in the first quarter of 2023 on a prospective basis.

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.

Accounting Standards Adopted in the Current Year

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 .

In September 2022, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2022-04 to add disclosure requirements relative to supplier financing programs under Accounting Standards Codification (“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.

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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.

We adopted this ASU when it became effective in the first quarter of 2023, except for the rollforward requirement, which is effective in 2024.

The adoption of this ASU did not have a significant impact on our financial statements and related disclosures.

Accounting Standards Not Yet Adopted

Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures:

In November 2023, the FASB issued ASU 2023-07 to improve segment disclosure requirements under ASC 280, Segment Reporting, through enhancing disclosures about significant segment expenses.

The guidance requires entities to provide significant segment expenses that are regularly provided to the chief operating decision maker and other segment expenses included in each reported measure of segment profitability.

The ASU also enhances interim segment reporting requirements by aligning interim disclosures with information that must be disclosed annually in accordance with ASC 280.

The ASU will be effective beginning in 2024 for annual disclosures, and in 2025 for interim disclosures.

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.

The new guidance must be applied retrospectively to all prior periods presented in the financial statements, with the significant segment expense and other segment item amounts disclosed based on categories identified in the period of adoption.

We are still evaluating the impacts this ASU will have on our financial statements and related disclosures.

Income Taxes (Topic 740) – Improvements to Income Tax Disclosures:

In December 2023, the FASB issued ASU 2023-09 to improve income tax disclosure requirements under ASC 740, Income Taxes .

The guidance requires entities to provide disaggregated information about a reporting entity’s effective tax rate reconciliation and about income taxes paid.

The ASU will be effective for annual periods beginning after December 15, 2024 and will impact our 2025 annual filing.

The guidance will be applied on a prospective basis with the option to apply the standard retrospectively.

Early adoption is permitted.

We are still evaluating the impacts this ASU will have on our financial statements and related disclosures.

Acquisitions and Divestitures

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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 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 Hemmer Acquisition was (in millions):

Initial Allocation (a)

Adjustments Updated Allocation

Cash $ 1 $ — $ 1

The purchase price allocation for the Hemmer Acquisition was final as of the first quarter of 2023.

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

Final Allocation

Trade receivables 13

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Total consideration $ 279

(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.

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

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.

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

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

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

(in millions of dollars) Weighted Average Life

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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.

In the third quarter of 2023, we completed the redemption of an additional 5 % of the outstanding shares and own 90 % of the controlling interest in Just Spices as of December 30, 2023.

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 purchase price allocation for the Just Spices Acquisition was final as of the fourth quarter of 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

Final Allocation

Trade receivables 4

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Total consideration $ 243

(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.

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

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:

The final 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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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 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.

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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 purchase price allocation for the Assan Foods Acquisition was final as of the third quarter of 2022.

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

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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.

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.

In 2022, certain insignificant measurement period adjustments were made to the initial allocation, and the final amount of goodwill was adjusted to $ 51 million.

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.

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.

Other Acquisitions:

In the fourth quarter of 2021, we acquired a majority stake in BR Spices Indústria e Comércio de Alimentos Ltda.

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

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 2023, 2022 and 2021.

We recognized these deal costs in SG&A.

There were no deal costs related to acquisitions in 2020.

Potential Dispositions:

In 2023, we entered into agreements to sell two separate businesses within our International segment.

For the twelve months ended December 30, 2023, the two businesses collectively generated approximately 1 % of net sales and an insignificant amount of Segment Adjusted EBITDA for our International segment, and an insignificant amount of consolidated net sales and operating income/(loss).

As of December 30, 2023, the expected timing for when each of these transactions would close remained uncertain, and therefore the related assets and liabilities were classified as held and used on the consolidated balance sheet at December 30, 2023.

We anticipate the collective pre-tax loss on sale of businesses to be approximately $ 100 million, of which approximately $ 60 million relates to the release of accumulated foreign currency translation losses.

On February 5, 2024, we closed on one of the two transactions and finalized the sale of 100 % of the equity interests in our Papua New Guinea subsidiary, Hugo Canning Company Ltd.

The estimated pre-tax loss on sale for this business is approximately $ 80 million, of which approximately $ 40 million relates to the release of accumulated foreign currency translation losses.

Powdered Cheese Transaction:

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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.

The Powdered Cheese Transaction closed in the fourth quarter of 2022 for total cash 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 in other expense/(income) on our consolidated statement of income.

Cheese Transaction:

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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.

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.

Related to the Cheese Divestiture Licenses, we recognized license income of approximately $ 54 million in 2023, $ 56 million 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 30, 2023, we have recorded approximately $ 1.4 billion in long-term deferred income and $ 55 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).

Following the closing of the Cheese Transaction in the fourth quarter of 2021, we recognized an incremental pre-tax gain on sale of business of $ 27 million in other expense/(income).

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

In 2021, the total gain/loss on sale of business related to the Cheese Transaction was insignificant.

Additional considerations related to the Cheese Transaction included the treatment of the Cheese Divestiture Licenses upon closing of the transaction.

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 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:

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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.

The net assets of the Nuts Disposal Group had an aggregate carrying amount above their $ 3.4 billion estimated fair value.

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

As a result, we recorded a non-cash goodwill impairment loss of $ 230 million, which was recognized in SG&A, in the first quarter of 2021.

Additionally, we recorded an estimated pre-tax loss on sale of business of $ 19 million in the first quarter of 2021 primarily related to estimated costs to sell, which was recognized in other expense/(income).

In 2021, we determined that the goodwill within the Nuts Disposal Group was partially impaired.

As a result, we recorded a non-cash goodwill impairment loss of $ 230 million, which was recognized in SG&A.

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) 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.

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

Related to our divestitures, we incurred insignificant deal costs in 2023, 2022, and 2021.

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We also incur expenses that are an integral component of, and directly attributable to, our restructuring activities, which do not qualify as exit and disposal costs under U.S.

These include asset-related costs and other implementation costs.

These include asset-related costs and other restructuring costs.

Asset-related costs primarily relate to accelerated depreciation and asset impairment charges.

Other implementation costs primarily relate to start-up costs of new facilities, professional fees, asset relocation costs, costs to exit facilities, and costs associated with restructuring benefit plans.

Other restructuring costs primarily relate to start-up costs of new facilities, professional fees, asset relocation costs, costs to exit facilities, and costs associated with restructuring benefit plans.

Employee severance and other termination benefit packages are primarily determined based on established benefit arrangements, local statutory requirements, and historical benefit practices.

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Restructuring Activities:

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 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.

We have restructuring programs globally, which are focused primarily on streamlining our organizational design.

We eliminated approximately 690 positions in 2023 and 575 positions in 2022 related to these programs.

As of December 30, 2023, we expect to eliminate approximately 200 additional positions in 2024.

In 2023, restructuring activities resulted in expenses of $ 225 million and included $ 21 million of severance and employee benefit costs, $ 41 million of asset-related costs, $ 156 million of other restructuring costs, and $ 7 million of other exit costs.

Other restructuring costs included non-cash charges related to the settlement of one of our U.K.

defined benefit pension plans in 2023.

See Note 11, Postemployment Benefits , for additional information.

Restructuring activities resulted in expenses of $ 74 million in 2022 and $ 84 million in 2021.

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

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Cash payments ( 23 ) ( 2 ) ( 25 )

Non-cash utilization ( 3 ) ( 2 ) ( 5 )

Balance at December 30, 2023 $ 23 $ 14 $ 37

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

We expect the majority of the liability for severance and employee benefit costs as of December 30, 2023 to be paid by the second quarter of 2024.

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

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Asset-related costs - Cost of products sold 42 12 —

Asset-related costs - SG&A ( 1 ) — —

Other costs - Cost of products sold 6 14 1

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Work in process 338 334

Finished product 2,077 1,682

Finished products 2,029 2,077

Inventories $ 3,614 $ 3,651

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

Property, Plant and Equipment

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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):

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Acquisitions — 386 386

Measurement period adjustments — ( 18 ) ( 18 )

Divestitures ( 37 ) — ( 37 )

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Impairment losses ( 452 ) ( 58 ) ( 510 )

Acquisitions — 386 386

Measurement period adjustments — ( 18 ) ( 18 )

Divestitures ( 37 ) — ( 37 )

Translation adjustments and other 15 121 136

Balance at December 30, 2023 $ 27,248 $ 3,211 $ 30,459

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.

In 2023, we recorded non-cash goodwill impairment losses of $ 452 million within our North America segment and $ 58 million within our International segment as a result of our 2023 goodwill impairment testing discussed below.

The remaining impact to goodwill in 2023 primarily related to translation adjustments.

In 2022, we recorded non-cash goodwill impairment losses of $ 455 million within our North America segment as a result of our 2022 goodwill impairment testing discussed below.

We recorded $ 386 million of additional goodwill in association with the Just Spices Acquisition and the Hemmer Acquisition within our International segment.

In addition, we recorded measurement period adjustments related to the Just Spices Acquisition, the Hemmer Acquisition, and the Assan Acquisition that cumulatively reduced goodwill by $ 18 million in our International segment.

Further, we recorded a $ 37 million reduction of goodwill within our North America segment related to the Powdered Cheese Transaction.

The remaining impact to goodwill in 2022 primarily related to translation adjustments.

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.

Additionally, the 2021 amounts included in divestitures in the table above represent the goodwill that was previously reclassified to assets held for sale and tested and determined to be partially impaired in connection with the Nuts Transaction.

The resulting impairment loss of $ 230 million was recognized in the first quarter of 2021.

The Nuts Transaction closed in the second quarter of 2021.

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

2023 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 2023 annual impairment test as of July 2, 2023, which was the first day of our third quarter of 2023.

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 30, 2023.

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 2023 annual impairment test, we recognized a non-cash goodwill impairment loss of approximately $ 510 million in SG&A, which included a $ 452 million impairment loss in our Canada and North America Coffee (“CNAC”) reporting unit within our North America segment and a $ 58 million impairment loss in our Continental Europe reporting unit within our International segment.

These impairments were primarily driven by an increase in the discount rate, which was impacted by higher interest rates, a decline in market capitalization, and other market inputs.

After these impairments, the goodwill carrying amount of our CNAC reporting unit is approximately $ 909 million and the goodwill carrying amount of our Continental Europe reporting unit is approximately $ 958 million.

As of our 2023 annual impairment test, our reporting units with 20 % or less fair value over carrying amount had an aggregate goodwill carrying amount of $ 30.1 billion and included Taste, Meals, and Away From Home (“TMA”), Fresh, Beverages, and Desserts (“FBD”), Northern Europe, Continental Europe, CNAC, and LATAM.

Our Asia reporting unit had between 20 - 50 % fair value over carrying amount with an aggregate goodwill carrying amount of $ 309 million as of our 2023 annual impairment test date.

As of December 30, 2023, we maintain 11 reporting units, seven of which comprise our goodwill balance.

These seven reporting units had an aggregate goodwill carrying amount of $ 30.5 billion at December 30, 2023.

Accumulated impairment losses to goodwill were $ 11.8 billion as of December 30, 2023 and $ 11.3 billion at December 31, 2022.

2022 Goodwill Impairment Testing

We historically 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”).

In the second quarter of 2022, we changed our reporting and reportable segments and combined our United States and Canada zones to form the North America zone.

As a result of these changes, the composition of certain 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 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.

These reporting units were Enhancers, Specialty, and Away From Home (“ESA”);

Kids, Snacks, and Beverages (“KSB”);

Meal Foundations and Coffee (“MFC”);

Canada Retail;

and Canada Foodservice.

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

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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.

This included a $ 221 million impairment loss related to our Canada Retail reporting unit, and a $ 14 million impairment loss related to our 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.

The remaining reporting units tested as part of our pre-reorganization impairment test each had excess fair value over carrying amount as of March 27, 2022.

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.

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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.

In performing this test, we incorporated information that was known through the date of filing 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.

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

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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

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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 2021 amounts included in divestitures in the table above represent the $ 230 million of goodwill that was impaired in connection with the Nuts Transaction that closed in 2021.

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.

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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.

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 LATAM reporting unit.

In the fourth quarter of 2021, we completed the Assan Foods Acquisition and the acquisition of BR Spices Indústria e Comércio de Alimentos Ltda.

(“BR Spices”), 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 acquisition of BR Spices 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.

2020 Goodwill Impairment Testing

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.

There were no impairment losses resulting from our pre-reorganization impairment test.

We performed our post-reorganization impairment test as of December 29, 2019.

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

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.

The remaining reporting units tested as part of our post-reorganization impairment test each had excess fair value over carrying amount as of December 29, 2019.

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

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 2020 annual impairment test, we identified impairments related to our U.S.

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 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.

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.

There were no impairment losses resulting from this pre-reorganization impairment test.

We performed our post-reorganization impairment test as of June 28, 2020.

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

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.

Additionally, in the third quarter of 2020, we announced the Cheese Transaction and determined that the Cheese Disposal Group was held for sale.

Accordingly, based on a relative fair value allocation, we reclassified $ 580 million of goodwill to assets held for sale, which included a portion of goodwill from seven of our reporting units.

Following the reclassification of a portion of goodwill from our reporting units, we determined that a triggering event had occurred for the remaining portion of each of the impacted reporting units, and we tested each for impairment as of September 15, 2020, the triggering event date.

The triggering event impairment test did not result in an impairment of the remaining portion of any impacted reporting units.

In the third quarter of 2020, we recorded a non-cash impairment loss of $ 300 million in SG&A, which was related to the Cheese Disposal Group’s goodwill.

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

Additional Goodwill Considerations

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Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions.

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

These assumptions and estimates include estimated future annual net cash flows (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, discount rates, growth rates, 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 reporting units might become impaired in the future.

If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units 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.

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.

Our reporting units that were impaired in 2023, 2022, and 2021 were written down to their respective fair values resulting in zero excess fair value over carrying amount as of the applicable impairment test dates.

Accordingly, our reporting units that have 20 % or less excess fair value over carrying amount as of our 2023 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 unit has more than 20 % excess fair value over carrying amount as of our 2023 annual impairment test, this amount is also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.

During the fourth quarter of 2023, certain organizational changes were announced that are expected to impact our future internal reporting and reportable segments.

We expect to divide our International segment into three operating segments — Europe and Pacific Developed Markets (International Developed Markets), West and East Emerging Markets (WEEM), and Asia Emerging Markets (AEM) — in order to enable enhanced focus on the different strategies required for each of these regions as part of our long-term strategic plan.

As a result of these changes, we expect to have two reportable segments:

North America and International Developed Markets.

We anticipate that our remaining operating segments, consisting of WEEM and AEM, will be combined and disclosed as Emerging Markets.

We expect that the change to our reportable segments will be effective in the first quarter of 2024.

We will continue to evaluate for possible goodwill impairment triggering events that this reorganization may cause as a result of the potential changes to our existing reporting unit composition.

Indefinite-lived intangible assets:

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Impairment losses ( 152 )

Transfers to definite-lived intangible assets ( 73 )

Translation adjustments and other 175

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2023 Indefinite-Lived Intangible Asset Impairment Testing

Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $ 38.5 billion at December 30, 2023.

As a result of our 2023 annual impairment test as of July 2, 2023, we recognized non-cash intangible asset impairment losses of $ 152 million in SG&A in the third quarter of 2023 related to Maxwell House, Cool Whip, and two other brands.

We utilized the relief from royalty method under the income approach to estimate the fair values and recorded non-cash impairment losses of $ 139 million in our North America segment and $ 13 million in our International segment, consistent with ownership of the trademarks.

The impairment of these four brands was primarily due to an increase in the discount rate, which was impacted by higher interest rates, a decline in market capitalization, and other market inputs, as well as sustained expectations of declining revenue growth in future years, and decreased margin expectations.

After these impairments, the aggregate carrying amount of these brands was $ 942 million.

As of our 2023 annual impairment test, brands with 20 % or less fair value over carrying amount had an aggregate carrying amount after impairment of $ 18.7 billion, brands with between 20 - 50 % fair value over carrying amount had an aggregate carrying amount of $ 4.2 billion, and brands that had over 50 % fair value over carrying amount had an aggregate carrying amount of $ 15.7 billion.

As part of our 2023 annual impairment test, we reclassified two indefinite-lived intangible assets to definite-lived intangible assets related to trademarks in our International segment that had a history of impairment and expectations of limited capital investment.

After the fair value assessment of these brands as part of our 2023 annual impairment test, we transferred $ 73 million from indefinite-lived intangible assets to definite-lived trademarks as of July 2, 2023 and recognized six months of amortization expense as of December 30, 2023.

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.

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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.

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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

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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 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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Estimating the fair value of individual brands requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions.

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.

These assumptions and estimates include estimated future annual net cash flows (including net sales, cost of products sold, and SG&A), 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.

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

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 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.

Our brands that were impaired in 2023, 2022, and 2021 were written down to their respective fair values resulting in zero excess fair value over carrying amount as of the applicable impairment test dates.

Accordingly, these and other individual brands that have 20 % or less excess fair value over carrying amount as of our 2023 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 our 2023 annual impairment test, these amounts are also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.

Definite-lived intangible assets:

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$ 6,035 $ ( 2,089 ) $ 3,946 $ 5,926 $ ( 1,829 ) $ 4,097

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

Amortization expense for definite-lived intangible assets was $ 251 million in 2023, $ 261 million in 2022, and $ 239 million in 2021.

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.

Aside from amortization expense, the change in definite-lived intangible assets from December 31, 2022 to December 30, 2023 primarily reflects the transfer of $ 73 million from indefinite-lived intangible assets to definite-lived intangible assets related to the trademarks in our International segment and the impact of foreign currency

In the third quarter of 2022, we recorded $ 7 million of non-cash intangible asset impairment losses to SG&A related to two trademarks in our International segment that had net carrying values that were 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.

We estimate that amortization expense related to definite-lived intangible assets will be approximately $ 260 million in 2024 and for the following three years and $ 250 million in 2028.

Provision for/(Benefit from) Income Taxes:

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Total provision for/(benefit from) income taxes $ 787 $ 598 $ 684

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

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.

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

Accordingly, we recognized an insignificant tax expense in our consolidated statements of income in 2023 and an insignificant tax benefit in both 2022 and 2021 related to the exercise of stock options and other equity instruments.

Effective Tax Rate:

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(Losses)/gains related to acquisitions and divestitures — % 0.3 % 12.9 %

Movement of valuation allowance reserves 0.8 % 0.1 % ( 0.4 ) %

Deferred tax effect of tax law changes 0.1 % ( 0.9 ) % 9.8 %

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Our 2023 effective tax rate was an expense of 21.7 % on pre-tax income.

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

jurisdictions.

These impacts were partially offset by the impact of certain unfavorable rate reconciling items, primarily non-deductible goodwill impairments and the impact of the federal tax on global intangible low-taxed income (“GILTI”).

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

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

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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.

This impact was partially offset by the impact of certain unfavorable items, primarily non-deductible goodwill impairments, the impact of the federal tax on GILTI, and the establishment of uncertain tax positions and valuation allowance reserves.

The 2023 and 2022 year-over-year increase in the effective tax rate was due primarily to the decrease in deferred tax liabilities due to the merger of certain foreign entities and the revaluation of deferred tax balances due to changes in state tax laws in the prior year versus the current year.

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

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jurisdictions.

Our 2020 effective tax rate was an expense of 65.0 % 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, and the revaluation of our deferred tax balances due to changes in international tax laws.

These impacts were partially offset by a more favorable geographic mix of pre-tax income in various non-U.S.

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

The 2022 and 2021 year-over-year decrease in the effective tax rate was due primarily to the tax impacts related to acquisitions and divestitures, which mainly reflect the impacts of the Nuts Transaction and Cheese Transaction, partially offset by 2021 capital losses, and the revaluation of our deferred tax balances due to changes in international and state tax rates, mainly an increase in U.K.

tax rates in the prior year versus the current year.

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

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Net deferred income tax liabilities $ 10,040 $ 10,001

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.

At December 31, 2022, foreign operating loss carryforwards totaled $ 621 million.

The increase in net deferred income tax liabilities from December 31, 2022 to December 30, 2023 was primarily driven by a legal settlement in 2023 resulting in the removal of the corresponding deferred tax asset.

See Note 15, Commitments and Contingencies , for additional information on the legal settlement.

As of December 30, 2023, foreign operating loss carryforwards totaled $ 810 million.

Of that amount, $ 59 million expire between 2024 and 2043;

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These losses expire between 2024 and 2043.

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.

As of December 30, 2023, tax credit carryforwards totaled $ 43 million, which primarily include state tax credits of $ 20 million, and $ 23 million in other tax credits.

Uncertain Tax Positions:

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If we had recognized all of these benefits, the impact on our effective tax rate would have been $ 412 million.

It is reasonably possible that our unrecognized tax benefits will decrease by as much as $ 3 million in the next 12 months primarily due to the progression of federal, state, and foreign audits in process.

It is reasonably possible that our unrecognized tax benefits will decrease by as much as $ 82 million in the next 12 months primarily due to the progression of foreign audits in process.

Our unrecognized tax benefits for uncertain tax positions are included in income taxes payable and other non-current liabilities on our consolidated balance sheets.

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Balance at the end of the period $ 443 $ 455 $ 441

Our unrecognized tax benefits decreased during 2023 mainly related to audit settlements with federal, state, and foreign taxing authorities and statute of limitations expirations partially offset by a net increase for tax positions related to the current and prior years in the U.S.

and certain state and foreign jurisdictions.

Our unrecognized tax benefits increased during 2022 and 2021 mainly as a result of a net increase for tax positions related to the current and prior years in the U.S.

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Tax Examinations:

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.

We are currently under examination for income taxes by the Internal Revenue Service (“IRS”) for the years 2018 through 2022.

In the third quarter of 2023, we received two Notices of Proposed Adjustment (the “NOPAs”) relating to transfer pricing with our foreign subsidiaries.

The NOPAs propose an increase to our U.S.

taxable income that could result in additional U.S.

federal income tax expense and liability of approximately $ 200 million for 2018 and approximately $ 210 million for 2019, excluding interest, and assert penalties of approximately $ 85 million for each of 2018 and 2019.

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

Therefore, we have not recorded any reserves related to this issue.

We continue to maintain the same operating model and transfer pricing methodology with our foreign subsidiaries that was in place for the years 2018 and 2019, and the IRS began its audit of 2020, 2021, and 2022 during the first quarter of 2024.

We 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.

taxes, interest, and/or 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.

As of December 30, 2023, we have substantially concluded all national income tax matters through 2021 for the Netherlands, through 2017 for the United States, through 2015 for Canada, through 2014 for Italy, through 2012 for the United Kingdom, 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:

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.

Subsequent to January 1, 2018, we consider the unremitted earnings of certain international subsidiaries that impose local country taxes on dividends to be indefinitely reinvested.

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The amount of unrecognized deferred tax liabilities for local country withholding taxes that would be owed, if repatriated, related to our 2018 through 2023 accumulated earnings of certain international subsidiaries is approximately $ 60 million.

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

Our deferred tax liability associated with these undistributed historical earnings was insignificant at December 30, 2023 and December 31, 2022, and relates to local withholding taxes that will be owed when this cash is distributed.

Divestitures:

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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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Heinz Holding Corporation 2013 Omnibus Incentive Plan, Kraft Foods Group, Inc.

2012 Performance Incentive Plan, or any other equity plans other than the 2020 Omnibus Plan.

2012 Performance Incentive Plan (“2012 Performance Incentive Plan”), or any other equity plans other than the 2020 Omnibus Plan.

2016 Omnibus Incentive Plan:

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Kraft 2012 Performance Incentive Plan:

Prior to the 2015 Merger, Kraft issued equity-based awards, including stock options and RSUs, under the Kraft Foods Group, Inc.

2012 Performance Incentive Plan (“2012 Performance Incentive Plan”).

Prior to the 2015 Merger, Kraft issued equity-based awards, including stock options and RSUs, under the 2012 Performance Incentive Plan.

As a result of the 2015 Merger, each outstanding Kraft stock option was converted into an option to purchase a number of shares of our common stock based upon an option adjustment ratio, and each outstanding Kraft RSU was converted into one Kraft Heinz RSU.

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Cash received from options exercised was $ 43 million in 2023, $ 57 million in 2022, and $ 53 million in 2021.

The tax benefit realized from stock options exercised was $ 8 million in 2022, $ 12 million in 2021, and $ 16 million in 2020.

The tax benefit realized from stock options exercised were insignificant in 2023, 2022, and 2021.

Our unvested stock options and related information was:

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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 $ 33.33 in 2023, $ 34.45 in 2022, and $ 35.03 in 2021.

Our expected dividend yield was 3.95 % in 2023, 4.41 % in 2022, and 4.63 % in 2021.

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

For our PSUs that are tied to market-based conditions, our expected volatility was 24.48 % in 2023 and 32.92 % in 2022 and 38.90 % in 2021.

Our PSU activity and related information was:

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Outstanding at December 30, 2023 4,855,432 33.65

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.

The aggregate fair value of PSUs that vested during the period was $ 33 million in 2023, $ 58 million in 2022, and $ 69 million in 2021.

Total Equity Awards

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After-tax compensation cost $ 109 $ 114 $ 154

Unrecognized compensation cost related to unvested equity awards was $ 209 million at December 31, 2022 and is expected to be recognized over a weighted average period of 2 years.

Unrecognized compensation cost related to unvested equity awards was $ 222 million at December 30, 2023 and is expected to be recognized over a weighted average period of two years .

Postemployment Benefits

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Pension Plans

In 2023, we settled one of our U.K.

defined benefit pension plans, which resulted in pre-tax losses of $ 162 million, including settlement charges of $ 146 million and $ 16 million in other related costs, which were recorded in other expense/income.

Additionally, the settlement of this plan impacted the projected benefit obligation, accumulated benefit obligation, and fair value of plan assets associated with our non-U.S.

pension plans.

At December 30, 2023, we had a net surplus asset of approximately $ 27 million remaining in the related trust that is reflected in the fair value of plan assets for non-U.S.

plans at December 30, 2023.

Obligations and Funded Status:

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113 ( 988 ) 105 ( 632 )

Plan amendments 6 — 7 —

Currency — — 61 ( 191 )

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— ( 176 ) ( 282 ) ( 46 )

Other — — ( 16 ) —

Fair value of plan assets at end of year 3,139 3,113 1,528 1,709

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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 lump sum payments of $ 222 million in 2022 and $ 182 million in 2021.

(b) Settlements represent the settlement of our pension benefit obligation of $ 282 million for one of our U.K.

pension plans in 2023 and lump sum payments of $ 222 million in 2022.

The accumulated benefit obligation, which represents benefits earned to the measurement date, was $ 2.7 billion at December 30, 2023 and $ 2.6 billion at December 31, 2022 for the U.S.

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The combined U.S.

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

pension plans resulted in net pension assets of $ 776 million at December 30, 2023 and $ 843 million at December 31, 2022.

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

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Net pension asset/(liability) recognized $ 776 $ 843

We expect a return of net surplus assets of approximately $ 27 million in 2024 related to our U.K.

pension plan settlement.

For certain of our U.S.

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Special/contractual termination benefits — — 3 2 — 1

Other — — — 16 — —

Net pension cost/(benefit) $ ( 52 ) $ ( 72 ) $ ( 99 ) $ 162 $ ( 2 ) $ ( 44 )

We present all non-service cost components of net pension cost/(benefit) within other expense/(income) on our consolidated statements of income.

In 2023, we recognized settlement charges of $ 146 million and other related costs of $ 16 million related to the settlement of one of our U.K.

defined benefit pension plans, which resulted in pre-tax losses of $162 million within other expense/(income).

In 2021, we recognized special/contractual termination benefits for our U.S plans related to the Nuts Transaction, including a loss of $ 3 million.

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Total fixed-income securities 3,017 387 2,630 —

Equity securities — — — —

Cash and cash equivalents 46 46 — —

Real estate — — — —

Other 3 — 3 —

Certain insurance contracts 27 — — 27

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Total fixed-income securities 2,668 371 2,297 —

Equity securities 171 171 — —

Cash and cash equivalents 327 327 — —

Real estate 6 — — 6

Other ( 2 ) — ( 2 ) —

Certain insurance contracts 275 — — 275

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These securities consist of direct investments in publicly traded U.S.

fixed interest obligations (principally debentures).

Such investments are valued using quoted prices in active markets.

These securities are included in Level 1.

fixed interest obligations (principally debentures) and non-U.S.

government bonds, including any related repurchases agreements.

government bonds are valued using quoted prices in active markets and are included in Level 1.

government bonds are generally valued using observable inputs and are included in Level 2.

Additionally, repurchase agreements related to the non-U.S.

government bonds are valued at the contract price plus accrued interest and are included in Level 2.

Corporate Bonds and Other Fixed-Income Securities.

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As such, these securities are included in Level 2.

Any securities that are in default are included in Level 3.

Equity Securities.

These securities consist of direct investments in the stock of publicly traded companies.

Such investments are valued based on the closing price reported in an active market on which the individual securities are traded.

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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Other cash equivalents that are not traded on an active exchange, such as bank deposits, are classified as Level 2.

These holdings consist of real estate investments and are generally classified as Level 3.

This consists of derivative financial instruments including foreign currency forward contracts, futures contracts, options contracts, interest rate swaps, inflation swaps and credit default swaps.

Derivative financial instruments are valued based on observable market transactions or prices and classified as Level 2.

Certain Insurance Contracts.

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Investments Measured at Net Asset Value .

This category consists of pooled funds, short-term investments, and partnership/corporate feeder interests.

This category consists of pooled funds, short-term investments, and corporate feeder interests.

• Pooled funds.

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The investment objective of the money market fund is to provide the highest possible level of current income while still maintaining liquidity and preserving capital.

• Partnership/corporate feeder interests.

Fair value estimates of the equity partnership are based on their net asset values, as reported by the manager of the partnership.

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

Investments in the equity partnership may be redeemed once per month upon 10 days’ prior written notice to the General Partner, subject to the discretion of the General Partner.

The investment objective of the equity partnership is to seek capital appreciation by investing primarily in equity securities.

• Corporate feeder interests.

The fair values of the corporate feeder are based upon the net asset values of the equity master fund in which it invests.

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Asset Category December 31, 2022 Additions Net Realized Gain/(Loss) Net Unrealized Gain/(Loss) Net Purchases, Issuances and Settlements Transfers Into/(Out of) Level 3 December 30, 2023

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

Certain insurance contracts $ 275 $ — $ 45 $ 2 $ ( 295 ) $ — $ 27

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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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( 19 ) ( 205 )

Plan amendments (b)

( 2 ) ( 116 )

Plan amendments — ( 2 )

Currency 2 ( 6 )

Curtailments — ( 3 )

Benefit obligation at end of year 683 733

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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) Driven primarily by a 2021 plan amendment that changed the benefit structure for a subset of the retiree population.

We recognized the net postretirement benefit asset/(liability) on our consolidated balance sheets as follows (in millions):

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This gain is recorded in other expense/(income) as a component of our pre-tax loss/(gain) on sale of business on the consolidated statement of income for the year ended December 25, 2021.

The amortization of prior service credits was primarily driven by plan amendments in 2015 and 2016.

We estimate that amortization of prior service credits will be insignificant in each of the next five years.

We used the following weighted average assumptions to determine our net postretirement benefit plans cost for the years ended:

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Equity securities 137 137 — —

Cash and cash equivalents 1 1 — —

Fair value excluding investments measured at net asset value 673 220 453 —

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These securities consist of direct investments in publicly traded U.S.

fixed interest obligations (principally debentures).

Such investments are valued using quoted prices in active markets.

These securities are included in Level 1.

fixed interest obligations (principally debentures) and non-U.S.

government bonds.

government bonds are valued using quoted prices in active markets and are included in Level 1.

government bonds are generally valued using observable inputs and are included in Level 2.

Corporate Bonds and Other Fixed-Income Securities.

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

Cash and Cash Equivalents.

This consists of direct cash holdings and institutional short-term investment vehicles.

Direct cash holdings are valued based on cost, which approximates fair value and are classified as Level 1.

Certain institutional short-term investment vehicles are valued daily and are classified as Level 1.

Other cash equivalents that are not traded on an active exchange, such as bank deposits, are classified as Level 2.

Investments Measured at Net Asset Value .

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(b) At December 30, 2023, the fair value of our derivative assets was recorded in other current assets ($ 37 million) and other non-current assets ($ 103 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($ 31 million) and other non-current liabilities ($ 134 million).

(c) At December 31, 2022, 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.

(c) At December 30, 2023, 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 ($ 64 million) and other non-current liabilities ($ 2 million).

December 31, 2022

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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 $ 130 million at December 30, 2023 and $ 222 million at December 31, 2022.

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.

We had posted collateral related to commodity derivative margin requirements of $ 41 million at December 30, 2023 and $ 43 million at December 31, 2022, which were included in prepaid expenses on our consolidated balance sheets.

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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At December 30, 2023, we had the following items designated as net investment hedges:

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

• Non-derivative foreign currency denominated debt with principal amounts of € 100 million and £ 400 million;

• Cross-currency contracts with notional amounts of C$ 1.4 billion ($ 1.0 billion), € 2.3 billion ($ 2.5 billion), and JPY 9.6 billion ($ 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 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.

At December 30, 2023, we had euro intercompany loans with an aggregate notional amount of $ 800 million designed as net investment hedges.

Interest Rate Hedging:

From time to time we have had derivatives designated as interest rate hedges, including interest rate swaps.

We no longer have any outstanding interest rate swaps.

From time to time we have had derivatives designated as interest rate hedges, including interest rate swaps and treasury locks.

We no longer have any outstanding interest rate swaps or treasury locks.

We continue to amortize the realized hedge losses that were deferred into accumulated other comprehensive income/(losses) into interest expense through the original maturity of the related long-term debt instruments.

Cash Flow Hedge Coverage:

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 .

At December 30, 2023, we had entered into foreign exchange contracts designated as cash flow hedges for periods not exceeding the next 25 months and into cross-currency contracts designated as cash flow hedges for periods not exceeding the next 53 months.

Deferred Hedging Gains and Losses on Cash Flow Hedges:

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.

Based on our valuation at December 30, 2023 and assuming market rates remain constant through contract maturities, we expect transfers to net income/(loss) of the existing losses reported in accumulated other comprehensive income/(losses) during the next 12 months on foreign currency cash flow hedges, cross-currency cash flow hedges, and interest rate cash flow hedges to be insignificant.

Concentration of Credit Risk:

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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).

The related derivative gains were $ 38 million, and were recorded within other expense/(income).

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

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Foreign exchange contracts ( 1 ) 1 1 SG&A

Foreign exchange contracts ( 22 ) — — Other expense/(income)

Foreign exchange contracts (excluded component) 2 — — Other expense/(income)

Cross-currency contracts 83 ( 132 ) ( 119 ) Other expense/(income)

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Cross-currency contracts ( 26 ) ( 28 ) ( 22 ) Interest expense

Interest rate contracts ( 3 ) — — Interest expense

Net investment hedges:

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December 30, 2023 December 31, 2022

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

Total amounts presented in the consolidated statements of income in which the following effects were recorded $ 17,714 $ 912 $ 27 $ 18,363 $ 4,488 $ 921 $ ( 253 )

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December 25, 2021

Cost of products sold 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 $ 26,042 $ 17,360 $ 5,222 $ 2,047 $ ( 295 )

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Foreign exchange contracts $ ( 1 ) $ ( 46 ) $ ( 1 ) $ — $ —

Interest rate contracts — ( 2 ) —

Foreign exchange contracts (excluded component) — ( 3 ) — — —

Cross-currency contracts — — — ( 23 ) ( 91 )

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Foreign exchange contracts — — — — ( 31 )

Cross-currency contracts — — — — 9

Total gains/(losses) recognized in statements of income $ ( 1 ) $ 109 $ ( 1 ) $ 15 $ ( 86 )

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 $ 111 million in 2022, pre-tax gains of $ 75 million in 2021, and pre-tax losses of $ 57 million in 2020.

Related to our non-derivative foreign currency denominated debt instruments designated as net investment hedges, we recognized pre-tax losses of $ 39 million in 2023, pre-tax gains of $ 111 million in 2022, and pre-tax gains of $ 75 million in 2021.

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

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Foreign Currency Translation Adjustments Net Postemployment Benefit Plan Adjustments Net Cash Flow Hedge Adjustments Total

Balance as of December 28, 2019 $ ( 2,230 ) $ 303 $ 41 $ ( 1,886 )

Balance at December 26, 2020 $ ( 2,218 ) $ 158 $ 93 $ ( 1,967 )

Foreign currency translation adjustments ( 242 ) — — ( 242 )

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Net postemployment benefit losses/(gains) reclassified to net income/(loss) — 115 — 115

Other activity 22 — ( 22 ) —

Total other comprehensive income/(loss) 211 45 ( 50 ) 206

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Financing Arrangements

Product Financing Arrangements:

We enter into various product financing arrangements to facilitate supply from our vendors.

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We have concluded that our obligations to our suppliers, including amounts due and scheduled payment terms, are impacted by their participation in the program and therefore we classify amounts outstanding within other current liabilities on our consolidated balance sheets.

We had approximately $ 87 million at December 31, 2022 and approximately $ 215 million at December 25, 2021 on our consolidated balance sheets related to these arrangements.

We had an insignificant amount at December 30, 2023 and approximately $ 87 million at December 31, 2022 on our consolidated balance sheets related to these arrangements.

Transfers of Financial Assets:

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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 $ 863 million during 2023, with no amounts outstanding as of December 30, 2023.

The incremental costs of factoring receivables under this arrangement were insignificant for the year ended December 30, 2023.

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.

No receivables were sold under this accounts receivable factoring program during 2021.

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

Trade Payables Programs:

In order to manage our cash flow and related liquidity, we work with our suppliers to optimize our terms and conditions, which include the extension of payment terms.

Our current payment terms with our suppliers, which we deem to be commercially reasonable, generally range from 0 to 220 days.

We also maintain agreements with third-party administrators that allow participating suppliers to track payment obligations from us, and, at the sole discretion of the supplier, sell one or more of those payment obligations to participating financial institutions.

We have no economic interest in a supplier’s decision to enter into these agreements and no direct financial relationship with the financial institutions related to these programs.

We pledged no assets in connection with our trade payable programs.

Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted.

All amounts due to participating suppliers are paid to the third party on the original invoice due dates, regardless of whether a particular invoice was sold.

Supplier participation in these agreements is voluntary.

We estimate that the amounts outstanding under these programs were $ 0.8 billion at December 30, 2023 and $ 1.1 billion at December 31, 2022.

The amounts were included in trade payables on our consolidated balance sheets.

Commitments and Contingencies

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Class Actions and Stockholder Derivative Actions:

The Kraft Heinz Company and certain of our current and former officers and directors are currently defendants in a consolidated securities class action lawsuit pending in the United States District Court for the Northern District of Illinois, Union Asset Management Holding AG, et al.

The Kraft Heinz Company and certain of our current and former officers and directors were defendants in a consolidated securities class action lawsuit pending in the United States District Court for the Northern District of Illinois, Union Asset Management Holding AG, et al.

The Kraft Heinz Company, et al.

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 (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.

The court appointed lead plaintiffs and plaintiffs’ counsel on October 21, 2021, and lead plaintiffs filed a consolidated amended complaint on November 22, 2021.

The consolidated amended complaint asserts state law claims for alleged breaches of fiduciary duties and unjust enrichment, as well as federal claims for contribution for alleged violations of Sections 10(b) and 21D of the Exchange Act and Rule 10b-5 promulgated thereunder, based on allegedly materially false or misleading statements and omissions in public statements and SEC filings, and for implementing cost cutting measures that allegedly damaged the Company.

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

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

and several of its subsidiaries and affiliates (the “3G Entities”) as defendants, asserted 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 alleged 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 class settlement agreement.

Related to that agreement, we recorded a net expense of $ 210 million within SG&A in our consolidated statements of income for the fourth quarter of 2022, representative of the Company’s then-estimated liability after insurance recoveries and contributions from other defendants.

The Company’s then-estimated liability and the insurance recoveries are reflected in current liabilities and current assets on the condensed consolidated balance sheets at December 31, 2022.

In the third quarter of 2023, we paid our remaining liability after insurance recoveries.

On September 12, 2023, the United States District Court for the Northern District of Illinois issued a Judgment Approving Class Action Settlement, wherein it granted final approval of the class settlement and dismissed the lawsuit with prejudice.

Certain of The Kraft Heinz Company’s current and former officers and directors and the 3G Entities are named as defendants in two stockholder derivative actions pending in the Delaware Court of Chancery, Datnoff, et al.

Behring, et al.

, which was filed on May 6, 2022, and Felicetti, et al.

Behring, et al.

, which was filed on March 6, 2023.

The complaints allege state law claims and contend that The Kraft Heinz Company’s Board of Directors wrongfully refused plaintiffs’ demands to pursue legal action against the named defendants.

Specifically, the complaints allege 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 complaints further allege 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 complaints seek 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 the proceedings.

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.

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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.

One of the plaintiffs in said dismissed derivative litigation subsequently filed a new complaint, Erste Asset Management v.

, against certain current and former officers and directors of The Kraft Heinz Company on November 28, 2023 in the Delaware Court of Chancery, seeking to reinstate the plaintiff’s previously-dismissed claims and recover attorneys’ fees and costs incurred in the dismissed litigation on the basis of alleged newly discovered evidence.

Specifically, the plaintiff alleges the 3G Entities caused the Company to make false and misleading public disclosures regarding the independence of two directors of The Kraft Heinz Company, one of whose independence plaintiff contends formed a basis for the court’s prior dismissal of the consolidated amended complaint.

We intend to vigorously defend against this lawsuit;

however, we cannot reasonably estimate the potential range of loss, if any, due to the early stage of the proceedings.

2021 United States Government Settlement:

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Borrowing Arrangements:

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.

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”) and replaced our then-existing credit facility (the “Previous Senior Credit Facility”).

On July 21, 2023, we entered into an agreement to extend the maturity date of our Senior Credit Facility from July 8, 2027 to July 8, 2028.

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.

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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 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 Previous 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 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.

No amounts were drawn on our Senior Credit Facility at December 30, 2023 or December 31, 2022.

No amounts were drawn on our Senior Credit Facility during the years ended December 30, 2023 or December 31, 2022, or on the Previous Senior Credit Facility during the years ended December 31, 2022 and December 25, 2021.

From time to time, we obtain funding through our commercial paper programs.

We had no commercial paper outstanding at December 30, 2023 or at December 31, 2022.

Under our US commercial paper program, the maximum amount of commercial paper outstanding was $ 150 million and $ 198 million during the years ended December 30, 2023 and December 31, 2022.

Long-Term Debt:

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(b) Maturity dates and interest rates presented are for the outstanding long-term debt obligations at December 30, 2023.

Floating interest rates stated are as of December 30, 2023.

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Our long-term debt contains customary representations, covenants, and events of default.

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 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

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

5.000 % senior notes due June 2042 (a)(b)(c)

1,532 109 — 1,423

5.200 % senior notes due July 2045 (a)(b)(c)

1,811 197 — 1,614

4.875 % senior notes due October 2049 (b)(c)

1,500 50 — 1,450

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 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.

We were in compliance with all financial covenants as of December 30, 2023.

At December 30, 2023, aggregate principal maturities of our long-term debt excluding finance leases were (in millions):

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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.

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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.

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.

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The aggregate principal amount of senior notes validly tendered and accepted was approximately $ 1.7 billion.

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.

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.

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Related to the 2021 Tender Offers, we recognized debt prepayment and extinguishment costs of $ 636 million on the consolidated statement of cash flows for the year ended December 25, 2021, which reflects the $ 636 million loss on extinguishment of debt adjusted for the non-cash write-off of unamortized premiums of $ 24 million, unamortized debt issuance costs of $ 17 million, and unamortized discounts of $ 7 million.

2020 Tender Offer

In May 2020, KHFC commenced a cash tender offer to purchase up to the maximum combined aggregate purchase price of $ 2.2 billion, excluding accrued and unpaid interest (the “2020 Maximum Tender Amount”), of its outstanding floating rate senior notes due February 2021, 3.500 % senior notes due June 2022, 3.500 % senior notes due July 2022, floating rate senior notes due August 2022, 4.000 % senior notes due June 2023, 3.950 % senior notes due July 2025, and 3.000 % senior notes due June 2026 (the “2020 Tender Offer”), listed in order of priority.

As a result of the 2020 Tender Offer, KHFC extinguished approximately $ 2.1 billion aggregate principal amounts of senior notes in the second quarter of 2020.

None of the 3.000 % senior notes due June 2026 were tendered based on the aggregate principal amount of senior notes validly tendered exceeding the 2020 Maximum Tender Amount.

See Note 18, Debt , to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 26, 2020 for additional information on the 2020 Tender Offer.

In connection with the 2020 Tender Offer, we recognized a loss on extinguishment of debt of $ 71 million within interest expense on the consolidated statement of income for the year ended December 26, 2020.

This loss primarily reflects the payment of early tender premiums and fees associated with the 2020 Tender Offer as well as the write-off of unamortized debt issuance costs, premiums, and discounts.

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.

Debt Redemptions:

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Related to the 2021 Debt Redemptions, we recognized debt prepayment and extinguishment costs of $ 126 million on the consolidated statement of cash flows for the year ended December 25, 2021, which reflect the $ 129 million loss on extinguishment of debt adjusted for the non-cash write-off of unamortized debt issuance costs of $ 3 million.

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.

In September 2020, KHFC issued a notice of redemption of all of its 3.500 % senior notes due July 2022, of which $ 302 million aggregate principal amount was outstanding (the “Second 2020 Debt Redemption” and, together with the First 2020 Debt Redemption, the “2020 Debt Redemptions”).

The effective date of the Second 2020 Debt Redemption was October 24, 2020.

In connection with the 2020 Debt Redemptions, we recognized a loss on extinguishment of debt of $ 53 million within interest expense on the consolidated statement of income for the year ended December 26, 2020.

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 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.

Debt Issuances:

2023 Debt Issuances

In May 2020, KHFC issued $ 1,350 million aggregate principal amount of 3.875 % senior notes due May 2027, $ 1,350 million aggregate principal amount of 4.250 % senior notes due March 2031, and $ 800 million aggregate principal amount of 5.500 % senior notes due June 2050 (collectively, the “2020 Notes”).

The 2020 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 2020 Notes to fund the 2020 Tender Offer and First 2020 Debt Redemptions and to pay fees and expenses in connection therewith.

In May 2023, KHFC issued 600 million euro aggregate principal amount of floating rate senior notes due May 2025 (the “2023 Notes”).

The 2023 Notes are fully and unconditionally guaranteed by The Kraft Heinz Company as to payment of principal and interest on a senior unsecured basis.

We used the proceeds from the 2023 Notes for general corporate purposes, including to partially fund the repayment of our 750 million euro senior notes that matured in June 2023.

Debt Issuance Costs:

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 incurred an insignificant amount of debt issuance costs in 2023 and 2022.

We did not incur any debt issuance costs in 2021.

Unamortized debt issuance costs were $ 81 million at December 30, 2023 and $ 88 million at December 31, 2022.

Amortization of debt issuance costs was $ 11 million in 2022, $ 12 million in 2021, and $ 11 million in 2020.

Amortization of debt issuance costs was $ 11 million in 2023 and 2022, and $ 12 million in 2021.

Debt Premium:

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Debt Repayments:

In June 2023, we repaid 750 million euro 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.

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In September 2021, we repaid $ 34 million aggregate principal amount of senior notes that matured in the period.

In February 2020, we repaid $ 405 million aggregate principal amount of senior notes that matured in the period.

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.

Fair Value of Debt:

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therefore, it is excluded from our future minimum lease payments and is not a component of our ROU assets or lease liabilities.

Losses/(gains) on sales and leaseback transactions, net, were insignificant for 2022 and 2021.

We had no losses/(gains) on sale and leaseback transactions in 2023.

Losses/(gains) on sales and leaseback transactions, net, were insignificant for 2022 and 2021.

Supplemental balance sheet information related to our leases was (in millions, except lease term and discount rate):

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Total lease liability $ 617 $ 145

At December 31, 2022, our operating and finance leases that had not yet commenced were insignificant.

At December 30, 2023, our operating and finance leases that had not yet commenced were approximately $194 million.

This balance is primarily composed of a non-cancellable synthetic lease with a future minimum lease commitment of approximately $157 million.

See below for discussion of our synthetic lease arrangement.

Synthetic Lease Arrangements:

In June 2023, we entered into a non-cancellable synthetic lease for a distribution facility, for which we are the construction agent, with an estimated construction cost of approximately $ 400 million.

The lease will commence upon completion of construction of the facility which is expected to be in the later part of 2025.

The term of the lease is five years after commencement.

At the end of the lease term, we will be required to either purchase the facility or, in the event that option is not elected, to remarket the facility.

Upon lease commencement, the lease classification, right-of-use asset, and lease liability will be determined and recorded.

The lease arrangement contains a residual value guarantee of approximately 85 % of the total construction cost.

The construction agreement and lease contain covenants that are consistent with our Senior Credit Facility as disclosed in Note 16, Debt.

Capital Stock

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Balance at December 26, 2020 1,228 ( 5 ) 1,223

Exercise of stock options, issuance of other stock awards, and other 4 ( 2 ) 2

Exercise of stock options, issuance of other stock awards, repurchase of common stock, and other 7 ( 6 ) 1

Balance at December 25, 2021 1,235 ( 11 ) 1,224

Exercise of stock options, issuance of other stock awards, and other 7 ( 6 ) 1

Exercise of stock options, issuance of other stock awards, repurchase of common stock, and other 8 ( 7 ) 1

Balance at December 31, 2022 1,243 ( 18 ) 1,225

Exercise of stock options, issuance of other stock awards, and other 8 ( 7 ) 1

Exercise of stock options, issuance of other stock awards, repurchase of common stock, and other 6 ( 13 ) ( 7 )

Balance at December 30, 2023 1,249 ( 31 ) 1,218

Share Repurchase Program

On November 27, 2023, we announced that the Board approved a share repurchase program authorizing the Company to purchase up to $ 3.0 billion, exclusive of fees, of the Company’s common stock through December 26, 2026.

We are not obligated to repurchase any specific number of shares and the program may be modified, suspended, or discontinued at any time.

Under the program, shares may be repurchased in open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act, privately negotiated transactions, transactions structured through investment banking institutions, or other means.

As of December 30, 2023, we had remaining authorization under the share repurchase program of approximately $ 2.7 billion.

The share repurchase program is in addition to our share repurchases to offset the dilutive effect of equity-based compensation.

Earnings Per Share

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Segment Reporting

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:

As of December 30, 2023, 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.

During the fourth quarter of 2023, certain organizational changes were announced that are expected to impact our future internal reporting and reportable segments.

As a result of these changes, we expect to have two reportable segments:

North America and International Developed Markets.

We anticipate that our remaining operating segments, consisting of WEEM and AEM, will be combined and disclosed as Emerging Markets.

We expect that the change to our reportable segments will be effective in the first quarter of 2024.

Management evaluates segment performance based on several factors, including net sales and Segment Adjusted EBITDA.

Segment Adjusted EBITDA is defined as net income/(loss) from continuing operations before interest expense, other expense/(income), provision for/(benefit from) income taxes, and depreciation and amortization (excluding restructuring activities);

in addition to these adjustments, we exclude, when they occur, the impacts of divestiture-related license income (e.g., income related to the sale of licenses in connection with the Cheese Transaction), restructuring activities, deal costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized;

in addition to these adjustments, we exclude, when they occur, the impacts of divestiture-related license income, restructuring activities, deal costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized;

once realized, the gains and losses are recorded in the applicable segment’s operating results), impairment losses, certain non-ordinary course legal and regulatory matters, and equity award compensation expense (excluding restructuring activities).

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Concentration of Risk:

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.

Our largest customer, Walmart Inc., represented approximately 21 % of our net sales in 2023 and 2022, and approximately 22 % of our net sales in 2021.

Both of our segments have sales to Walmart Inc.

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We present all non-service cost components of net pension cost/(benefit) and net postretirement cost/(benefit) within other expense/(income) on our consolidated statements of income.

See Note 11, Postemployment Benefits , for additional information on these components, including any curtailments and settlements, as well as information on our prior service credit amortization.

See Note 11, Postemployment Benefits , for additional information on these components, including any curtailments and settlements, as well as information on our prior service costs/(credits) amortization.

See Note 4, Acquisitions and Divestitures , for additional information related to our loss/(gain) on sale of business.

See Note 12, Financial Instruments , for information related to our derivative impacts.

Other expense/(income) was $ 27 million of expense in 2023 compared to $ 253 million of income in 2022.

This change was primarily driven by a $ 67 million net pension and postretirement non-service costs in 2023 compared to a $ 135 million net pension and postretirement non-service benefit in 2022, a $ 73 million net foreign exchange loss in 2023 compared to a $ 106 million net foreign exchange gain in 2022, and a $21 million decrease in gain on sale of businesses.

These impacts were partially offset by a $ 59 million net gain on derivative activities in 2023 compared to a $ 50 million net loss on derivative activities in 2022, and a $ 13 million increase in interest income as compared to the prior year period.

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.

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