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Item 1A. Risk Factors

2026-02-12 compared with 2025-02-13 · 152 added, 116 removed, 319 unchanged (46% of the section changed)

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Our business is subject to various risks and uncertainties.

In addition to the risks described elsewhere in this Annual Report on Form 10-K, any of the risks and uncertainties described below could materially adversely affect our business, financial condition, and results of operations and should be considered when evaluating Kraft Heinz.

In addition to the risks described elsewhere in this Annual Report on

Form 10-K, any of the risks and uncertainties described below could materially adversely affect our business, financial condition, and results of operations and should be considered when evaluating Kraft Heinz.

Although the risks are organized and described separately, many of the risks are interrelated.

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These pressures have restricted, and may in the future continue to restrict, our ability to increase prices and maintain those price increases in response to commodity and other cost increases, including those related to inflationary pressures.

Additionally, the pricing actions we take have, in some instances, negatively impacted, and could continue to negatively impact, our market share and require us to reduce, or further reduce, the prices of certain of our products.

Furthermore, our competitors may attempt to gain market share by offering products at prices at or below those typically offered by our company, which may require us to increase spending on advertising and promotions and/or reduce prices.

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We must continue to offer products that appeal to consumers, including with respect to their health and wellness preferences and changing consumption patterns, such as those potentially associated with weight-loss drugs.

If we do not offer products that appeal to consumers, our sales and market share will decrease, which could materially and adversely affect our product sales, financial condition, and operating results.

If we do not offer products that appeal to consumers, our sales and market share will decrease, which could materially and adversely affect our financial condition, and operating results.

Further, changing consumer preferences relating to the healthiness or desirability of ingredients, components, or substances present or allegedly present in our products or packaging could negatively impact our product sales, financial condition, and operating results if we are unsuccessful in our efforts to satisfy consumer preferences.

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In addition, because of our varied consumer base, we must offer an array of products that satisfies a broad spectrum of consumer preferences.

If we fail to expand our product offerings successfully across product categories or platforms, or if we do not rapidly develop products in faster-growing or more profitable categories, demand for our products could decrease, which could materially and adversely affect our product sales, financial condition, and operating results.

Prolonged negative perceptions concerning the health, environmental, or social implications of certain food and beverage products, ingredients, or packaging materials could influence consumer preferences and acceptance of our products and marketing programs.

If we fail to expand our product offerings successfully across product

categories or platforms, or if we do not rapidly develop products in faster-growing or more profitable categories, demand for our products could decrease, which could materially and adversely affect our product sales, financial condition, and operating results.

Prolonged negative perceptions concerning the health, environmental, or social implications of certain food and beverage products, ingredients, additives, preservatives or packaging materials could influence consumer preferences and acceptance of our products and marketing programs.

Our ability to refine the ingredient and nutrition profiles of and packaging for our products as well as to maintain focus on ethical sourcing and supply chain management opportunities to address evolving consumer preferences are important to our growth.

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Retail consolidation and increasing retailer power could materially and adversely affect our product sales, financial condition, and operating results.

Retail consolidation also increases the risk that adverse changes in our customers’ business operations or financial performance may have a corresponding adverse effect on us, which could be material.

For example, if our customers cannot access sufficient funds or financing, then they may delay, decrease, or cancel purchases of our products, or delay or fail to pay us for previous purchases, which could materially and adversely affect our product sales, financial condition, and operating results.

In addition, technology-based systems, which give consumers the ability to shop through e-commerce websites and mobile commerce applications, are also significantly altering the retail landscape in many of our markets.

If we are unable to adjust to

developments in these changing landscapes, we may be disadvantaged in key channels and with certain consumers, which could materially and adversely affect our product sales, financial condition, and operating results.

If we are unable to adjust to developments in these changing landscapes, we may be disadvantaged in key channels and with certain consumers, which could materially and adversely affect our product sales, financial condition, and operating results.

Changes in our relationships with significant customers or suppliers, or in other business relationships, could adversely impact us.

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We have many iconic brands with long-standing consumer recognition across the globe.

Our success depends on our ability to maintain brand image for our existing products, extend our brands to new platforms, and expand our brand image with new product offerings.

Our success depends on our ability to maintain brand image for our existing products, extend our brands to new platforms, and expand our brand image with new

product offerings.

We seek to maintain, extend, and expand our brand image through marketing investments, including advertising and consumer promotions, and product innovation.

Negative perceptions of food and beverage marketing could adversely affect our brand image or lead to stricter regulations and scrutiny of our marketing practices.

Moreover, adverse publicity about legal or regulatory action against us, our quality and safety, our environmental or social impacts, our other environmental, social, human capital, or governance practices or positions, our products becoming unavailable to consumers, or our suppliers (including as a result of human rights issues) and, in some cases, our competitors, could damage our reputation and brand image, undermine our customers’ or consumers’ confidence, and reduce demand for our products, even if the regulatory or legal action is unfounded or not material to our operations.

In 2025, we announced our commitment to remove Food, Drug & Cosmetic (“FD&C”) colors from our U.S.

portfolio by the end of 2027.

If we fail to achieve, or are perceived to have failed or been delayed in achieving, or improperly report on our progress toward achieving this goal, it could negatively affect our reputation or brand image.

Moreover, adverse publicity about legal or regulatory action against us, our quality and safety, our environmental or social impacts, human capital and governance practices or positions, our products becoming unavailable to consumers, or our suppliers (including as a result of human rights issues) and, in some cases, our competitors, could damage our reputation and brand image, undermine our customers’ or consumers’ confidence, and reduce demand for our products, even if the regulatory or legal action is unfounded or not material to our operations.

Furthermore, existing or increased legal or regulatory restrictions on our advertising, consumer promotions, and marketing, or our response to those restrictions, could limit our efforts to maintain, extend, and expand our brands.

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Negative posts or comments about us, our brands or our products, or our suppliers and, in some cases, our competitors, on social or digital media, whether or not valid, could seriously damage our brands and reputation.

In addition, we might fail to appropriately target our marketing efforts, anticipate consumer preferences, or invest sufficiently in maintaining, extending, and expanding our brand image.

In addition, we might fail to appropriately target our marketing efforts, anticipate consumer preferences, or invest sufficiently in maintaining and expanding our brand image.

Placement of our advertisements in social and digital media may also result in damage to our brands if the media itself experiences negative publicity.

If we do not maintain, extend, and expand our reputation or brand image, then our product sales, financial condition, and operating results could be materially and adversely affected.

If we do not maintain and expand our reputation or brand image, then our product sales, financial condition, and operating results could be materially and adversely affected.

We must leverage our brand value to compete against private label products.

In nearly all of our product categories, we compete with branded products as well as private label products, which are typically sold at lower prices.

Our products must provide higher value or quality to consumers than alternatives, particularly during periods of economic uncertainty or weakness or inflation.

Our products must provide higher value or quality to consumers than alternatives, particularly during periods of economic uncertainty.

Consumers may not buy our products if relative differences in value or quality between our products and private label products change in favor of competitors’ products or if consumers perceive such a change.

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In addition, our marketing could face claims of false or deceptive advertising or other criticism.

A significant product liability or other legal judgment or a related regulatory enforcement action against us, or a significant product recall, may materially and adversely affect our reputation and profitability.

A significant

product liability or other legal judgment or a related regulatory enforcement action against us, or a significant product recall, may materially and adversely affect our reputation and profitability.

Moreover, even if a product liability or fraud claim is unsuccessful, has no merit, or is not pursued to conclusion, the negative publicity surrounding assertions against our products or processes could materially and adversely affect our product sales, financial condition, and operating results.

Climate change and legal or regulatory responses may have a long-term adverse impact on our business and results of operations.

Global average temperatures are gradually increasing due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere, which is projected to contribute to significant changes in weather patterns around the globe, an increase in the frequency and severity of natural disasters, and changes in agricultural productivity.

Increasing concern over climate change may adversely impact demand for our products, or increase our operating costs, due to changes in consumer preferences that cause consumers to switch away from products or ingredients considered to have a high climate change impact.

Increased natural disasters and decreased agricultural productivity in certain regions of the world as a result of changing weather patterns may limit the availability or increase the cost of natural resources and commodities, including dairy products, meat products, tomato products, sugar and other sweeteners, soybean and vegetable oils, coffee beans, wheat and processed grains, eggs, and other fruits and vegetables to manufacture our products, and could further decrease food security for communities around the world.

Climate change, and its environmental impacts, could also affect our ability, and our suppliers’ ability, to procure necessary commodities at costs and in quantities we currently experience and may require us to increase costs or make additional unplanned capital expenditures.

Changes in environmental conditions and responsive legislation or regulation may have a long-term adverse impact on our business and results of operations.

The gradual increase in global average temperatures is projected to contribute to significant changes in weather patterns in the regions where we and our suppliers operate, including an increase in the frequency and severity of natural disasters, and changes in agricultural productivity.

Increased natural disasters and decreased agricultural productivity in such regions may limit the availability or increase the cost of the natural resources and commodities used in the production of our products.

Changing or severe weather and environmental conditions could also affect our ability, and our suppliers’ ability, to procure necessary commodities at costs and in quantities we currently experience and may require us to increase costs or make additional unplanned capital expenditures.

Further, an increase in the frequency and severity of natural disasters could result in disruptions for us, our customers, suppliers, vendors, co-manufacturers, and distributors and impact our employees’ abilities to commute or work from home effectively.

These disruptions could make it more difficult and costly for us to deliver our products, obtain raw materials or other supplies through our supply chain, maintain or resume operations, or perform other critical corporate functions, could reduce customer demand for our products, and could increase the cost of insurance.

Additionally, there is an increased focus by foreign, federal, state, and local regulatory and legislative bodies regarding environmental policies relating to climate change, regulating greenhouse gas emissions (including carbon pricing or a carbon tax), energy policies, disclosure obligations, and sustainability.

Increased energy or compliance costs and expenses due to the impacts of climate change, as well as additional legal or regulatory requirements regarding climate change designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions on the environment could be costly and may cause disruptions in, or an increase in the costs associated with, the running of our manufacturing and processing facilities and our business, as well as increase distribution and supply chain costs.

Additionally, there is a heightened focus by foreign, federal, state, and local regulatory and legislative bodies regarding environmental policies relating to a changing environment, including as a result of climate change, such as regulating greenhouse gas emissions (including carbon pricing or a carbon tax), energy policies, and disclosure obligations.

Increased energy or compliance costs and expenses due to, and additional legal or regulatory requirements regarding, changing environmental conditions and climate change could be costly and may cause disruptions in, or an increase in the costs associated with, the running of our manufacturing and processing facilities and our business, as well as increase distribution and supply chain costs.

Moreover, compliance with any such legal or regulatory requirements may require us to make significant changes to our business operations and long-term operating plans, which will likely incur substantial time, attention, and costs.

Even if we make changes to align ourselves with such legal or regulatory

requirements, we may still be subject to significant penalties if such laws and regulations are interpreted and applied in a manner inconsistent with our practices.

The effects of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business and results of operations.

Finally, we might fail to effectively address increased attention from the media, stockholders, activists, and other stakeholders on climate change and related environmental sustainability matters.

Such failure, or the perception that we have failed to act responsibly with respect to such matters or to effectively respond to new or additional regulatory requirements regarding climate change, whether or not valid, could result in adverse publicity and negatively affect our business and reputation.

Concurrently, there also exists “anti-ESG” sentiments among certain stakeholders, and we may face negative publicity, lawsuits, and other adverse impacts to our business from these stakeholders in response to our sustainability initiatives.

From time to time we establish and publicly announce environmental, social, and governance goals, commitments, and aspirations, including to reduce our impact on the environment.

Our ability to achieve any stated goal, target, or objective is subject to numerous factors and conditions, many of which are outside of our control.

Even if we make changes to align ourselves with such legal or regulatory requirements, we may still be subject to significant penalties if such laws and regulations are interpreted and applied in a manner inconsistent with our practices.

The effects of a changing environment and responsive legal or regulatory initiatives could have a long-term adverse impact on our business and results of operations.

Finally, we might face increasing scrutiny from the media, stockholders, activists, customers, enforcement authorities and other stakeholders who have conflicting views on climate change and other sustainability-related matters.

Our published activities, progress, objectives, and priorities on these topics may not satisfy all of our stakeholders and could result in adverse publicity or legal liability and negatively affect consumer preferences for our products, investor confidence in our stock, and our business and reputation.

Additionally, we may become the target of litigation, investigations, or other proceedings initiated by government authorities or private actors alleging that our activities or positions related to sustainability-related matters are anti-competitive, discriminatory or otherwise unlawful.

From time to time we establish and publicly announce sustainability-related goals, commitments, and aspirations, including to reduce our impact on the environment.

Our ability to achieve any stated goal or objective is subject to numerous factors and conditions, many of which are outside of our control.

Examples of such factors include evolving regulatory requirements affecting sustainability standards or disclosures or imposing different requirements, the pace of changes in technology, the availability of requisite financing, and the availability of suppliers that can meet our sustainability and other standards.

Furthermore, standards for tracking and reporting such matters continue to evolve.

Our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or differ from those of others.

Methodologies for reporting this data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations, and other changes in circumstances.

Our processes and controls for reporting sustainability and other matters across our operations and supply chain are evolving along with multiple disparate standards for identifying, measuring, and reporting sustainability metrics, including sustainability-related disclosures that may be required by the SEC, European Union, and other foreign, federal, state, and local regulatory and legislative bodies (including, but not limited to, the European Union’s Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive and the state of California’s new climate change disclosure requirements), and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.

If we fail to achieve, or are perceived to have failed or been delayed in achieving, or improperly report on our progress toward achieving these goals and commitments, it could negatively affect consumer preference for our products or investor confidence in our stock, as well as expose us to government enforcement actions and private litigation.

Furthermore, standards for tracking and reporting, as well as our processes and controls for reporting sustainability and other matters across our organization continue to evolve.

Sustainability-related disclosures that may be required by the European Union and other foreign, federal, state, and local regulatory and legislative bodies (including, but not limited to, the European Union’s Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive and the state of California’s climate disclosure requirements), may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.

Business Risks

The Separation is subject to various risks and uncertainties, involves significant time, expense, and resources and may be further delayed or we may decide to cease work related to the Separation entirely.

On September 2, 2025, we announced our intention to separate our company into two independent publicly traded companies through a tax-free spin-off.

On February 11, 2026, we announced that the Board has decided to pause work related to the Separation.

If work related to the Separation is resumed, the Separation would be subject to the satisfaction of customary conditions, including final approval by the Board, receipt of favorable tax opinions of our U.S.

tax advisors with respect to the tax-free nature of the Separation, and the effectiveness of appropriate filings with the U.S.

Securities and Exchange

The failure to satisfy any of the required conditions could further delay the completion of the Separation or prevent it from occurring at all.

The Separation is complex in nature, and unanticipated developments or changes, including changes in the law, macroeconomic environment, regulatory and political conditions and competitive conditions of our markets, the need both to receive regulatory approvals or clearances and to satisfy the requirements to effectuate a generally tax-free transaction, the uncertainty of the financial markets and challenges in executing the Separation, could further delay or prevent the completion of the Separation or cause the Separation to occur on terms or conditions that are different or less favorable than expected.

Any changes to the Separation or further delay in completing the Separation could cause us not to realize some or all of the expected benefits, or realize them on a different timeline than currently expected.

Further, our Board could decide, either because of a failure of conditions or because of market or other factors, to further delay or abandon the Separation.

No assurance can be given as to whether and when the Separation will occur.

Whether or not we complete the Separation, our ongoing business may be adversely affected and we may be subject to certain risks and consequences if we pursue the Separation, including the following:

• The process of completing the Separation will be time-consuming and involve significant additional costs and expenses, which may not yield a discernible benefit if the Separation is not completed, and pausing efforts on the Separation could lead to higher execution costs and expenses, if we resume efforts to pursue the Separation, than we would have otherwise incurred without such pause.

• Executing the Separation will require significant time and attention from our senior management and employees, which may divert management’s attention from operating and growing our business and could adversely affect our business, financial condition, results of operations, or cash flows.

• We may also experience increased difficulties in attracting, retaining, and motivating employees during the pendency of the Separation and following completion of the Separation, which could harm our businesses.

• The assumptions underlying expectations regarding the integration process, including with respect to the Separation may prove to be faulty and/or inaccurate.

• Some of our customers or suppliers may delay or defer decisions or may end their relationships with us.

• We may experience negative reactions from the financial markets if we fail to complete the Separation or fail to complete it on a timely basis.

• The announcement of the Separation, and any changes regarding the timing of the Separation, may create greater volatility in the trading price of our shares and potentially cause market prices to decline.

Any of the above factors could cause the Separation (or the failure to execute the Separation) to have a material adverse effect on our business, financial condition, results of operations, or cash flows.

The Separation if completed, may not achieve the anticipated benefits and will expose us to new risks.

We may not realize the anticipated strategic, financial, operational, or other benefits from the Separation if completed.

We cannot predict with certainty when the benefits expected from the Separation will occur or the extent to which they will be achieved.

If the Separation is completed, our operational and financial profile will change and we will face new risks.

As independent, publicly traded companies, the newly created companies will each be smaller, less-diversified companies and may be more vulnerable to changing market conditions.

There is no assurance that following the Separation each separated company will be successful.

The announcement and/or completion of the Separation, as well as any delays relating to the completion of the Separation, may cause uncertainty for or disruptions with our customers, partners, suppliers, and employees, which may negatively impact these relationships or our operations.

In addition, we will incur one-time costs and ongoing costs in connection with, or as a result of, the Separation, including costs of operating as independent, publicly-traded companies that the two businesses will no longer be able to share.

Those costs may exceed our estimates or could negate some of the benefits we expect to realize.

Further, our future effective tax rate, which is impacted by a number of factors including changes in the valuation of our deferred tax assets and liabilities, changes in geographic mix of income, changes in expenses not deductible for tax, and changes in available tax credits, may be negatively impacted for each separated company due to deviations in these factors from our current estimates, such as changes to our current assessments of the realization of existing deferred tax assets.

If we do not realize the intended benefits or if our costs exceed our estimates, the separated businesses could suffer a material adverse effect on their respective business, financial condition, results of operations, or cash flows.

The Separation if completed, may adversely impact our ability to access the capital markets and our cost of capital.

The Separation may have the effect of, among other things:

• Requiring us to dedicate significant cash flow to our debt, including, without limitation, the payment of principal and interest, payment of costs associated with the refinancing, repayment, redemption, repurchase, defeasance, discharge or exchange of the Company’s outstanding debt, and payment of costs associated with the Separation, which will

reduce funds we have available for other purposes.

• Exposing us to interest rate risk at the time of refinancing outstanding debt or on the portion of our debt obligations that are issued at variable rates.

• Increasing the borrowing costs associated with the re-allocation or taking on of new debt.

• Although we expect to maintain investment grade ratings, resulting in downgrades of our credit ratings leading to increased borrowing costs to the Company.

Our primary sources of liquidity to finance operations, including stock repurchases and dividends on our common stock, is cash generated by our businesses and access to the debt capital markets.

Further, in connection with the Separation, we may repay, redeem, repurchase, defease, discharge or exchange some or all of our senior notes, of which there are approximately $20.9 billion aggregate principal amount outstanding, with maturities in years starting in 2026 through 2050.

If our ability to continue to raise money in the debt capital markets is impaired, or if there is a significant increase in the cost of debt, there could be an adverse effect on our liquidity.

If we are unable to generate sufficient cash flow or maintain access to adequate external financing, it could impact our current operations, activities under our current and future stock buyback programs, and our growth opportunities, which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

If the Separation and/or certain related transactions do not qualify as transactions that are generally tax-free for U.S.

federal income tax purposes, we and our stockholders could be subject to significant tax liabilities.

Notwithstanding that we intend to structure the Separation to generally be a tax-free transaction, there is no assurance that the spin-off and/or certain related transactions will qualify for this treatment.

If the spin-off and/or certain related transactions are completed and are ultimately determined to be taxable, we and our stockholders could be subject to significant U.S.

federal income taxes.

Following the Separation, the price of shares of the Company’s common stock may fluctuate significantly.

The Company cannot predict the effect of the Separation on the trading price of shares of its common stock, and the market value of shares of its common stock may be less than, equal to or greater than the market value of shares of its common stock prior to the Separation.

In addition, the price of the Company’s common stock may be more volatile around the time of the Separation.

We may not successfully identify, complete, or realize the benefits from strategic acquisitions, divestitures, alliances, joint ventures, or investments.

From time to time, we have evaluated and may continue to evaluate acquisition candidates, alliances, joint ventures, or investments that may strategically fit our business objectives, and, as a result of some of these evaluations, we have acquired businesses or assets that we deem to be a strategic fit.

We have also divested and may consider divesting businesses that do not meet our strategic objectives or growth or profitability targets.

From time to time, we have evaluated and may continue to evaluate acquisition candidates, divestiture opportunities, alliances, joint ventures, or investments that may strategically fit our business objectives.

These activities may present financial managerial, and operational risks including, but not limited to, diversion of management’s attention from existing core businesses;

difficulties in integrating, or inability to successfully integrate, acquired businesses, including integrating or separating personnel and financial and other systems;

inability to effectively and immediately implement control environment processes across a diverse employee population;

adverse effects on existing or acquired customer and supplier business relationships;

and potential disputes with buyers, sellers, or partners.

Activities in such areas are regulated by numerous antitrust and competition laws in the United States, Canada, the European Union, the United Kingdom, and elsewhere.

Further, such activities in certain areas are regulated by numerous antitrust and competition laws in the United States, Canada, the European Union, the United Kingdom, and elsewhere.

We have in the past and may in the future be required to obtain approval of these transactions by competition authorities or to satisfy other legal requirements, and we may be unable to obtain such approvals or satisfy such requirements, each of which may result in additional costs, time delays, or our inability to complete such transactions, which could materially and adversely affect our financial condition and operating results.

To the extent we undertake acquisitions, alliances, joint ventures, investments, or other developments in new geographies or categories, we may face additional risks related to such developments.

For example, risks related to foreign operations are discussed below under the risk factor titled “ Our international operations subject us to additional risks and costs and may cause our profitability to decline.

To the extent we undertake divestitures, we may face additional risks related to such activities.

To the extent we undertake acquisitions, alliances, joint ventures, or investments we may face difficulties integrating, or be unable to integrate, the new business operations within our current sourcing, distribution, information technology systems, and control environment.

Additionally, we may face risks related to the integration of personnel.

Further, for these activities which occur in foreign jurisdiction, we may be subject to additional risks as discussed below under the risk factor titled “ Our international operations subject us to additional risks and costs and may cause our profitability to decline.

To the extent we pursue divestiture opportunities, we may face additional risks related to such activities.

For example, risks related to our ability to find appropriate buyers, obtain applicable regulatory and governmental approvals, execute transactions on favorable terms, separate divested business operations with minimal impact to our remaining operations, and effectively manage any transitional service arrangements.

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Any of these factors could materially and adversely affect our financial condition and operating results.

We may not be able to successfully execute our strategic initiatives.

We plan to continue to conduct strategic initiatives in various markets.

Consumer demands, behaviors, tastes, and purchasing trends may differ in these markets and, as a result, our sales strategies may not be successful and our product sales may not meet expectations, or the margins on those sales may be less than currently anticipated.

We may also face difficulties integrating new business operations with our current sourcing, distribution, information technology systems, and other operations.

Additionally, we may not successfully complete any planned strategic initiatives, including achieving any previously announced productivity efficiencies and financial targets, any new business may not be profitable or meet our expectations, or any divestiture may not be completed without disruption.

Any of these challenges could hinder our success in new markets or new distribution channels, which could adversely affect our results of operations and financial condition.

We may not successfully complete any planned strategic initiatives, including achieving any previously announced productivity efficiencies and financial targets, any new business may not be profitable or meet our expectations, or any divestiture may not be completed without disruption.

Any of these challenges could hinder our success in new markets or new distribution

channels, and could adversely affect our results of operations and financial condition.

Our international operations subject us to additional risks and costs and may cause our profitability to decline.

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Any of these factors could materially and adversely affect our product sales, financial condition, and results of operations.

Additionally, forced labor concerns have rapidly become a global area of interest, and have resulted in, and are expected to continue to result in, new regulations in the markets in which we operate.

For example, the Uyghur Forced Labor Prevention Act (“UFLPA”) prohibits the import of articles, merchandise, apparel, and goods mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region (“Xinjiang”) of the People's Republic of China, or by entities identified by the U.S.

government on the UFLPA Entity List.

As a result of the UFLPA, materials and products we import into the United States could be held by U.S.

Customs and Border Protection based on a suspicion that inputs used in such materials or products originated from Xinjiang or that they may have been produced by Chinese suppliers alleged to participate in forced labor, pending our provision of satisfactory evidence to the contrary.

Among other consequences, such an outcome could result in negative publicity that harms our brands and reputation and could result in a delay or our complete inability to import such materials or products, which could result in inventory shortages and greater supply chain compliance costs.

Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products and brands.

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We may be unaware of intellectual property rights of others that may cover some of our technology, brands, or products.

Any litigation regarding patents or other intellectual property could be costly and time-consuming and could divert the attention of our management and key personnel from our business operations.

litigation regarding patents or other intellectual property could be costly and time-consuming and could divert the attention of our management and key personnel from our business operations.

Third-party claims of intellectual property infringement might also require us to enter into costly license agreements.

We also may be subject to significant damages or injunctions against development and sale of certain products.

We may be unable to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes, or improve our competitiveness.

We have implemented a number of initiatives, including development of an operations center and strategic long-term collaboration with suppliers, that we believe are important to position our business for future success and growth.

We have evaluated and continue to evaluate changes to our organizational structure and operations to enable us to reduce costs, simplify or improve processes, and improve our competitiveness.

We may be unable to realize the anticipated benefits from prior or future initiatives to reduce fixed costs, simplify or improve processes, or improve our competitiveness.

We have evaluated and implemented a number of strategic initiatives with the intention of enabling us to reduce costs, improve productivity, and improve our competitiveness.

Our future success may depend upon our ability to realize the benefits of these or other cost-saving initiatives.

In addition, certain of our initiatives may lead to increased costs in other aspects of our business such as increased conversion, outsourcing, or distribution costs.

We must accurately predict costs and be efficient in executing any plans to achieve cost savings and operate efficiently in the highly competitive food and beverage industry, particularly in an environment of increased competition.

To capitalize on our efforts, we must carefully evaluate investments in our business and execute in those areas with the most potential return on investment.

If we are unable to realize the anticipated benefits from any cost-saving efforts, we could be cost disadvantaged in the marketplace, and our competitiveness, production, profitability, financial condition, and operating results could be adversely affected.

We must accurately predict anticipated costs and be efficient in executing any plans to achieve these initiatives.

To capitalize on our efforts, we must carefully evaluate investments in our business and execute in those areas with the most potential return on investment, and operate efficiently in the highly competitive food and beverage industry, particularly in an environment of increased competition.

If we are unable to realize the anticipated benefits from these efforts, we could be cost disadvantaged in the marketplace, and our competitiveness, production, profitability, financial condition, and operating results could be adversely affected.

Berkshire Hathaway Inc.

has the ability to exert influence over us and significant influence over matters requiring stockholder approval.

As of December 28, 2024, Berkshire Hathaway In c.

As of January 16, 2026, Berkshire Hathaway Inc.

(“Berkshire Hathaway”) owns approximately 27.5% of our common stock.

Two members of our Board are officers and/or directors of Berkshire Hathaway or its affiliates.

As a result, Berkshire Hathaway has the potential to exercise influence over management and Board decisions, including those affecting our capital structure, such as the issuance of additional capital stock, the incurrence of additional indebtedness, the implementation of stock repurchase programs, and the declaration and amount of dividends.

Berkshire Hathaway also has influence over any action requiring the approval of the holders of our common stock, including adopting any amendments to our charter, electing directors, and approving mergers or sales of substantially all of our capital stock or assets.

As a result, Berkshire Hathaway has influence over any action requiring the approval of the holders of our common stock, including adopting any amendments to our charter, electing directors, and approving mergers or sales of substantially all of our capital stock or assets.

In addition, Berkshire Hathaway is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us.

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• making it more difficult for us to make payments on our existing indebtedness;

• requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, payments of dividends, capital expenditures, and future business opportunities;

• exposing us to risks related to fluctuations in foreign currency, as we earn profits in a variety of foreign currencies and the majority of our debt is denominated in U.S.

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Any inability to generate sufficient cash flow or to refinance our indebtedness on favorable terms could have a material adverse effect on our financial condition.

Our debt instruments contain customary representations, warranties, and covenants, including a financial covenant in our senior unsecured revolving credit facility (the “Senior Credit Facility”) to maintain a minimum shareholders’ equity balance (excluding accumulated other comprehensive income/(losses)).

Our debt instruments contain customary representations, warranties, and covenants, including a financial covenant in our senior

unsecured revolving credit facility (the “Senior Credit Facility”) to maintain a minimum shareholders’ equity balance (excluding accumulated other comprehensive income/(losses)).

The creditors who hold our debt could accelerate amounts due in the event that we default, which could potentially trigger a default or acceleration of the maturity of our other debt.

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Additional impairments of the carrying amounts of goodwill or other indefinite-lived intangible assets could negatively affect our financial condition and results of operations.

As of December 28, 2024, we maintain 12 reporting units, eight of which comprise our goodwill balance.

As of December 27, 2025, we maintain 10 reporting units globally, six of which comprise our goodwill balance.

Our indefinite-lived intangible asset balance primarily consists of a number of individual brands .

As of December 27, 2025 , we had goodwill and intangible assets with a total carrying amount of $59.7 billion .

In 2025 , we recorded non-cash goodwill impairment losses of $9.3 billion related to these assets.

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

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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.

Reporting units and brands that have 20% or less excess fair value over carrying amount as of the 2024 annual impairment test performed as of June 30, 2024 have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future.

Reporting units and brands that have 20% or less excess fair value over carrying amount as of the 2025 annual impairment test performed as of June 29, 2025 had an aggregate carrying value of $37.2 billion as of the date of 2025 annual impairment test.

These reporting units and brands have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future.

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

Estimating the fair value of individual reporting units and 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 (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, discount rates, long-term growth rates, royalty rates, contributory asset charges, and other market factors.

If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units or brands might become impaired in the future, which could negatively affect our operating results or net worth.

Estimating the fair value of individual reporting units and brands requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions, and to consider the market multiples of certain peer and guideline companies.

These assumptions and estimates include estimated future annual cash flows (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, discount rates, long-term growth rates, royalty rates, contributory asset charges, and other market factors.

If current expectations of future growth rates and margins are not met, if market factors outside of our control change;

such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units or brands might become impaired in the future, which could negatively affect our operating results or net worth.

Furthermore, changes in reporting units, including as a result of integrating a new acquisition into an existing reporting unit that has a fair value below carrying amount of goodwill, have led, and could in the future lead, to an impairment of goodwill.

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

Reporting units with 10% or less fair value over carrying amount, including reporting units that were impaired as part of the 2024 annual impairment test, resulting in zero excess fair value over carrying value, had an aggregate goodwill carrying amount after impairment of $22.4 billion as of the 2024 annual impairment test and included Taste Elevation, Ready Meals and Snacking (“TMS”), Away from Home & Kraft Heinz Ingredients (“AFH”), Meat & Cheese (“MC”), Canada and North America Coffee (“CNAC”), and Continental Europe.

Our Northern Europe reporting unit had 10-20% fair value over carrying amount with an aggregate goodwill carrying amount of $1.7 billion as of the 2024 annual impairment test.

Our Hydration & Desserts (“HD”) and Asia reporting units had between 20-50% fair value over carrying amount with an aggregate goodwill carrying amount of $4.6 billion as of the 2024 annual impairment test.

Our reporting units that have less than 5% excess fair value over carrying amount as of the 2024 annual impairment test are considered at a heightened risk of future impairments and include our TMS, Continental Europe, and AFH reporting units, which had an aggregate goodwill carrying amount of $19.0 billion.

Our four remaining reporting units had no goodwill carrying amount at the time of the 2024 annual impairment test.

Our indefinite-lived brands with 10% or less fair value over carrying amount, comprised entirely of brands that were impaired within 2024, resulting in zero excess fair value over carrying amount, had an aggregate carrying amount of $2.6 billion as of the latest test for each brand and included Oscar Mayer, Lunchables, Claussen , and Wattie’s.

Brands with 10-20% fair value over carrying amount had an aggregate carrying amount of $14.2 billion as of the latest test for each brand and included Kraft, Velveeta, A1, and Bagel Bites .

The aggregate carrying amount of brands with fair value over carrying amount between 20-50% was $2.8 billion as of the latest test for each brand.

Although the remaining brands, with a carrying amount of $16.9 billion, have more than 50% excess fair value over carrying amount as of the latest test for each brand, these amounts are also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.

Our brands that have less than 5% excess fair value over carrying amount as of the latest test for each brand are considered at a heightened risk of future impairments and include our Oscar Mayer, Lunchables, Claussen, and Wattie’s brands, which had an aggregate carrying amount of $2.6 billion.

Additionally, any decisions to divest certain non-strategic assets could lead to future goodwill or intangible asset impairments.

See Note 9, Goodwill and Intangible Assets in Item 8, Financial Statements and Supplementary Data and Critical Accounting Estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , for additional information on our goodwill and intangible assets.

Our net sales and net income may be exposed to foreign exchange rate fluctuations.

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We hold assets, incur liabilities, earn revenue, and pay expenses in a variety of currencies other than the U.S.

dollar, primarily the Canadian dollar, euro, British pound sterling, Australian dollar, Brazilian real, Chinese renminbi, Indonesian rupiah, New Zealand dollar, and Russian ruble.

dollar, primarily the Canadian dollar, euro, British pound sterling, Australian dollar, Brazilian real, Chinese renminbi, Russian ruble, Indonesian rupiah, and New Zealand dollar.

Since our consolidated financial statements are reported in U.S.

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However, these hedging strategies may not be successful, and any of our unhedged foreign exchange exposures will continue to be subject to market fluctuations.

In addition, in certain circumstances, we may incur costs in one currency related to services or products for which we are paid in a different currency.

In addition, in certain circumstances, we may incur costs in one currency related to services or products for which

we are paid in a different currency.

As a result, factors associated with our international operations, including changes in foreign currency exchange rates, could significantly affect our results of operations and financial condition.

Commodity, energy, and other input prices are volatile and could negatively affect our consolidated operating results.

We purchase and use large quantities of commodities, including dairy products, meat products, tomato products, sugar and other sweeteners, soybean and vegetable oils, coffee beans, wheat and processed grains, eggs, and other fruits and vegetables to manufacture our products.

In addition, we purchase and use significant quantities of plastics, cardboard, resin, glass, and metal to package our products, and we use other inputs, such as electricity, natural gas, and water, to operate our facilities.

We purchase and use large quantities of commodities, including dairy products, meat products, sugar and other sweeteners, coffee, tomato products, soybean and vegetable oils, eggs, other fruits and vegetables, and wheat and processed grains to manufacture our products.

In addition, we purchase and use significant quantities of plastics, resin, cardboard, glass, paper and metal to package our products, and we use other inputs, such as electricity, natural gas, and water, to operate our facilities.

We are also exposed to changes in oil prices, including diesel fuel, which influence both our packaging and transportation costs.

for commodities, energy, and other supplies are volatile and can fluctuate due to conditions that are difficult to predict, including global competition for resources, inflationary pressure, foreign currency fluctuations, geopolitical conditions or conflicts, cybersecurity incidents, severe weather, natural disasters, global climate change, water risk, pandemics, crop failures, crop shortages due to plant disease or insect and other pest infestation, consumer, industrial, or investment demand, and changes in governmental regulation and trade, tariffs, alternative energy, including increased demand for biofuels, and agricultural programs.

Prices for commodities, energy, and other supplies are volatile and can fluctuate due to conditions that are difficult to predict, particularly due to inflationary pressures, due in part to changes in governmental regulation, including the recent tariff and trade policy actions taken by the United States and foreign governments.

Further, we have experienced, and may continue to experience, input cost volatility due global competition for resources, foreign currency fluctuations, geopolitical conditions or conflicts, cybersecurity incidents, severe weather, natural disasters, global climate change, water risk, pandemics, crop failures, crop shortages due to plant disease or insect and other pest infestation, changes in consumer demand, alternative energy initiatives, including increased demand for biofuels, and agricultural programs.

Additionally, we may be unable to maintain favorable arrangements with respect to the costs of procuring raw materials, packaging, services, and transporting products, which could result in increased expenses and negatively affect our operations.

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If we are not successful in our hedging activities, or if we are unable to price our products to cover increased costs, then commodity and other input price volatility or increases could materially and adversely affect our financial condition and operating results.

In 2024, we experienced moderate inflation in our supply chain costs compared to the prior year period, which we expect to continue through 2025.

While inflationary pressures within procurement, manufacturing, and logistics costs had a negative impact on our results of operations, we experienced increased stability of these costs as compared to the prior year period.

In 2025, we experienced increased inflationary pressures in our supply chain costs compared to the prior year period, due in part to the tariff and trade policy actions taken by the United States and foreign governments during the year.

We expect these inflationary trends to moderate through 2026, although there continues to be significant uncertainty.

Although we take measures to mitigate the impact of this inflation through pricing actions and efficiency initiatives, if these measures are not effective our financial condition, operating results, and cash flows could be materially adversely affected.

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As a large, global food and beverage company, we operate in a highly regulated environment with constantly evolving legal and regulatory frameworks.

Various laws and regulations govern our practices including, but not limited to, those related to advertising and marketing, product claims and labeling, food production and nutritional requirements, environmental matters (including climate change), packaging and waste management (including packaging containing PFAS), intellectual property, consumer protection and product liability, commercial disputes, trade and export controls, anti-trust, data privacy, labor and employment, workplace health and safety, forced labor, such as the UFLPA, and tax.

consumer protection and product liability, commercial disputes, trade and export controls, anti-trust, data privacy, labor and employment, workplace health and safety, forced labor, and tax.

As a consequence, we face a heightened risk of legal claims and regulatory enforcement actions in the ordinary course of business.

In addition, the imposition of new laws, changes in laws or regulatory requirements or changing interpretations thereof, and differing or competing regulations and standards across the markets where our products are made, manufactured, distributed, and sold have in the past and could continue to result in higher compliance costs, capital expenditures, and higher production costs, adversely impacting our product sales, financial condition, and results of operations.

In addition, claims about the health impacts of consumption of our products, or ingredients, components, or substances present or allegedly present in those products or packaging, including in connection with the development, manufacture, and marketing of our products, have resulted in, and could in the future result

in, us being subject to regulations, fines, lawsuits, or taxes, or may cause us to change the way in which we operate which could adversely impact our profitability, financial condition, or operating results.

In addition, claims about the health impacts of consumption of our products, or ingredients, additives, preservatives, components, or substances present or allegedly present in those products or packaging, including in connection with the development, manufacture, and marketing of our products, have resulted in, and could in the future result in, us being subject to regulations, fines, lawsuits (including but not limited to pending litigation alleging that certain of our products are “ultra-processed” and consuming them causes adverse health impacts, allegations with which we strongly disagree), or taxes, or may cause us to change the way in which we operate which could adversely impact our profitability, financial condition, or operating results.

As a result of any such legal claims or regulatory enforcement actions, we could be subject to monetary judgments, settlements, and civil and criminal actions, including fines, injunctions, product recalls, penalties, disgorgement of profits, or activity restrictions, which could materially and adversely affect our reputation, product sales, financial condition, results of operations, and cash flows.

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A decrease in these credit ratings could limit our access to capital markets and increase our borrowing costs, which could materially and adversely affect our financial condition and operating results.

As of the date of this filing, our long-term debt is rated BBB by S&P Global Ratings and Fitch Ratings and Baa2 by Moody’s Investor Services, Inc., with a stable outlook from all three ratings agencies.

As of the date of this filing, our long-term debt is rated BBB with a stable outlook from S&P Global Ratings, BBB with a rating watch negative outlook from Fitch Ratings, and Baa2 with ratings under review for downgrade from Moody’s Investor Services, Inc.

Registered Securities Risks

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Kraft Heinz and Berkshire Hathaway are party to a registration rights agreement requiring us to register for resale under the Securities Act all registrable shares held by Berkshire Hathaway, which represents all shares of our common stock held by Berkshire Hathaway as of the date of the closing of the 2015 Merger.

As of December 28, 2024, registrable shares represented approximately 27.2% of all outstanding shares of our common stock.

Although the registrable shares are subject to certain holdback and suspension periods, the registrable shares are not subject to a “lock-up” or similar restriction under the registration rights agreement.

As of January 16, 2026, registrable shares represented approximately 27.5% of all outstanding shares of our common stock.

Although the registrable shares are subject to certain

holdback and suspension periods, the registrable shares are not subject to a “lock-up” or similar restriction under the registration rights agreement.

Accordingly, offers and sales of a large number of registrable shares may be made pursuant to an effective registration statement under the Securities Act in accordance with the terms of the registration rights agreement.

Sales of our common stock by Berkshire Hathaway to other persons would likely result in an increase in the number of shares being traded in the public market and may increase the volatility of the price of our common stock.

Pursuant to the registration rights agreement, on January 20, 2026, we filed a prospectus supplement with the SEC to register for resale up to 325,442,152 shares of our common stock held by Berkshire Hathaway.

The filing of the prospectus supplement was made solely to register these shares for resale, does not itself constitute a sale of any shares, and does not necessarily mean that Berkshire Hathaway will sell any or all of the registered shares.

If any of these registered shares are sold, we will not receive any proceeds from those sales.

Because the registered shares represent a significant portion of the outstanding shares of our common stock, any future sales by Berkshire Hathaway could materially increase the number of shares being traded in the public market and may materially increase the volatility of, and cause a decrease in, the price of our common stock.

In addition, the filing of the prospectus supplement and the perception of future sales by Berkshire Hathaway have already contributed to increased volatility of our common stock and could continue to affect the volatility of our common stock in the future.

Our share repurchase program may not be fully consummated and the anticipated enhanced long-term stockholder value may not be realized, and share repurchases could increase the volatility of the price of our stock.

In November 2023, the Board authorized the Company to repurchase up to $3.0 billion, exclusive of fees, of our outstanding common stock through December 26, 2026.

December 28, 2024, we had remaining authorization under the share repurchase program of approximately $1.9 billion.

Our repurchase program does not obligate us to repurchase any specific dollar amount

or to acquire any specific number of shares.

As of December 27, 2025, we had remaining authorization under the share repurchase program of approximately $1.5 billion.

Our repurchase program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.

The timing and amount of any repurchases, if any, will depend on factors such as our historical and expected business performance and cash and liquidity positions, the price of our stock, economic and market conditions, and corporate and regulatory requirements.

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Governments in the United States, Canada, United Kingdom, and European Union have each imposed export controls and economic sanctions on certain industry sectors and parties in Russia.

Further, the Russian government has placed restrictions on the transfer of funds to and from Russian entities, making it more difficult to operate in Russia.

Further, the Russian government has placed restrictions on the transfer of funds to and from Russian entities, making it more difficult to operate in Russia and to repatriate cash to other jurisdictions from our Russian business, which had a cash and cash equivalents balance equal to approximately $140 million as of December 27, 2025.

Failure to comply with applicable sanctions and measures could subject us to regulatory penalties, temporary or permanent loss of assets, or our ability to conduct business operations in Russia.

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The effects of current geopolitical conflicts as well as potential future geopolitical tensions, could heighten many of our known risks described in this Item 1A, Risk Factors .

Unanticipated business disruptions and natural events in the locations in which we or our customers, suppliers, distributors, or regulators operate could adversely affect our ability to provide products to our customers or our results of operations.

Unanticipated business disruptions and natural events in the locations in which we or our customers, suppliers, distributors,

or regulators operate could adversely affect our ability to provide products to our customers or our results of operations.

We have a complex network of suppliers, owned and leased manufacturing locations, co-manufacturing locations, distribution networks, and information systems that support our ability to consistently provide our products to our customers.

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Economic and financial uncertainties in our international markets, changes to major international trade arrangements, and the imposition of increased or new tariffs by the U.S.

federal government or by certain foreign governments could negatively impact our operations and sales.

federal government, as well as retaliatory tariffs by certain foreign governments have negatively impacted, and could continue to negatively impact our operations and sales.

Other factors impacting our operations in the United States and in international locations where we do business include changes in laws, export and import restrictions, foreign currency exchange rates, foreign currency devaluation, cash repatriation restrictions, recessionary conditions, governmental subsidies provided to our consumers such as the Supplemental Nutrition Assistance Program (“SNAP”) in the U.S., foreign ownership restrictions, nationalization, the impact of hyperinflationary environments, a potential U.S.

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Unplanned turnover, failure to attract and develop personnel with key emerging capabilities or failure to develop adequate succession plans for leadership positions, including the Chief Executive Officer position, could deplete our institutional knowledge base and erode our competitiveness.

Additionally, the Separation, including any failure to adequately address the plans for leadership positions for the two independent companies post-Separation, may cause us to experience increased difficulties in attracting, retaining, and motivating employees during the pendency of the Separation and following completion of the Separation, and harm our businesses.

Further, equity-based compensation is a key component of our compensation program and essential for attracting and retaining qualified personnel.

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Any such loss, failure, or limitation could adversely affect our product sales, financial condition, and operating results.

We are significantly dependent on information technology, and we may be unable to protect our information systems against service interruption, misappropriation of data, or breaches of security.

We are significantly dependent on information technology, and we may be unable to protect our information systems against

service interruption, misappropriation of data, or breaches of security.

We rely on information technology networks and systems, including the Internet, to process, transmit, and store electronic and financial information, to manage a variety of business processes and activities, and to comply with regulatory, legal, and tax requirements.

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Moreover, these threats are constantly evolving, thereby making it more difficult to successfully defend against them or to implement adequate preventative measures.

We may not have the

current capability to detect certain vulnerabilities, which may allow those vulnerabilities to persist in our systems over long periods of time.

We may not have the current capability to detect certain vulnerabilities, which may allow those vulnerabilities to persist in our systems over long periods of time.

Additionally, it may take considerable time for us to investigate and evaluate the full impact of incidents, particularly for sophisticated attacks.

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Our labor costs include the cost of providing employee benefits in the United States, Canada, and other foreign jurisdictions, including pension, health and welfare, and severance benefits.

Any declines in market returns could adversely impact the funding of pension plans, the assets of which are invested in a diversified portfolio of equity and fixed-income securities and other investments.

Any declines in market returns could adversely impact the funding of pension plans, the assets of which are invested in a diversified portfolio of equity and fixed-income

securities and other investments.

Additionally, the annual costs of benefits vary with increased costs of health care and the outcome of collectively bargained wage and benefit agreements.

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A number of factors influence our effective tax rate, including changes in tax laws and treaties as well as the interpretation of existing laws and rules.

Federal, state, and local governments and administrative bodies within the United States, which represents the

majority of our operations, and other foreign jurisdictions have implemented, or are considering, a variety of broad tax, trade, and other regulatory reforms that may impact us.

Additionally, the Organization for Economic Co-operation and Development (OECD), a global coalition of member countries, proposed a two-pillar plan that aims to ensure a fairer distribution of profits among countries and impose a floor on tax competition through the introduction of a global minimum tax of 15%.

Many countries have enacted or begun the process of enacting laws based on the two-pillar plan proposals.

As the legislation becomes effective in countries in which we do business, our taxes could increase and negatively impact our provision for income taxes.

See Overview in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , for a discussion of our estimated cash tax rate impact on results of operations.

Federal, state, and local governments and administrative bodies within the United States, which represents the majority of our operations, and other foreign jurisdictions have implemented, or are considering, a variety of broad tax, trade, and other regulatory reforms that may impact us.

Significant judgment, knowledge, and experience are required in determining our worldwide provision for income taxes.

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For example, 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.

In 2023, we received two Notices of Proposed Adjustment (the “NOPAs”) relating to transfer pricing with our foreign subsidiaries for the years 2018 and 2019.

The NOPAs propose an increase to our U.S.

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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.

In 2025, we received two NOPAs for the years 2020 through 2022 that could result in additional U.S.

federal income tax expense and liability of approximately $200 million for 2020, $210 million for 2021, and $200 million for 2022, excluding interest and assert penalties of approximately $85 million for each of the years of 2020, 2021, and 2022.

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;

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taxes, interest, and potential penalties, our results of operations and cash flows could be materially affected.

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 continue to maintain the same operating model and transfer pricing methodology with our foreign subsidiaries that was in place for the years 2018 through 2022.

Economic and political pressures to increase tax revenue in various jurisdictions may make resolving tax disputes more difficult.

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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 1A. Risk Factors