x
|
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
(State or other jurisdiction of incorporation or organization)
|
|
46-2078182
(I.R.S. Employer Identification No.)
|
One PPG Place, Pittsburgh, Pennsylvania
(Address of Principal Executive Offices)
|
|
15222
(Zip Code)
|
Title of each class
|
|
Name of exchange on which registered
|
Common stock, $0.01 par value
|
|
The NASDAQ Stock Market LLC
|
Large accelerated filer
x
|
Accelerated filer
o
|
|
Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
o
|
|
•
|
our Russia business moved from the Rest of World segment to the Europe segment;
|
•
|
management of our Global Procurement Office moved from one of our European subsidiaries to our global headquarters, which resulted in moving the related costs from the Europe segment to general corporate expenses; and
|
•
|
certain historical Kraft export businesses moved from our United States segment to our Rest of World and Europe segments.
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|||
Condiments and sauces
|
26
|
%
|
|
32
|
%
|
|
50
|
%
|
Cheese and dairy
|
21
|
%
|
|
15
|
%
|
|
—
|
%
|
Ambient meals
|
9
|
%
|
|
10
|
%
|
|
14
|
%
|
Frozen and chilled meals
|
8
|
%
|
|
12
|
%
|
|
18
|
%
|
Meats and seafood
|
10
|
%
|
|
8
|
%
|
|
2
|
%
|
Infant and nutrition
|
3
|
%
|
|
5
|
%
|
|
10
|
%
|
|
|
Majority Owned and Licensed Trademarks
|
United States
|
|
Kraft, Oscar Mayer, Heinz, Planters, Velveeta, Philadelphia, Lunchables, Maxwell House, Capri Sun*, Ore-Ida, Kool-Aid, Jell-O
|
Canada
|
|
Kraft, Heinz, Cracker Barrel, Philadelphia, Maxwell House, P’Tit Cheese, Tassimo*
|
Europe
|
|
Heinz, Plasmon, Pudliszki, Honig, HP, Benedicta, Weight Watchers*
|
Rest of World
|
|
Heinz, ABC, Master, Quero, Golden Circle, Wattie's, Kraft, Complan, Glucon D
|
•
|
growth through product improvements and renovations, new products, and line extensions,
|
•
|
uncompromising product safety and quality,
|
•
|
superior customer satisfaction, and
|
•
|
cost reduction.
|
Name
|
|
Age
|
|
Title
|
Bernardo Hees
|
|
47
|
|
Chief Executive Officer
|
Paulo Basilio
|
|
42
|
|
Executive Vice President and Chief Financial Officer
|
Emin Mammadov
|
|
40
|
|
President, Global Foodservice
|
Raphael Oliveira
|
|
42
|
|
Zone President of Europe
|
Eduardo Pelleissone
|
|
43
|
|
Executive Vice President of Global Operations
|
Carlos Piani
|
|
43
|
|
Zone President of Canada
|
Marcos Romaneiro
|
|
33
|
|
Zone President of AMEA
|
Francisco Sa
|
|
51
|
|
Zone President of Latin America
|
James Savina
|
|
43
|
|
Senior Vice President, Global General Counsel and Corporate Secretary
|
George Zoghbi
|
|
50
|
|
Chief Operating Officer of U.S. Commercial business
|
•
|
compliance with U.S. laws affecting operations outside of the United States, including anti-bribery laws such as the FCPA;
|
•
|
changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws or their interpretation, or tax audit implications;
|
•
|
the imposition of increased or new tariffs, quotas, trade barriers or similar restrictions on our sales or regulations, taxes or policies that might negatively affect our sales;
|
•
|
currency devaluations or fluctuations in currency values;
|
•
|
compliance with antitrust and competition laws, data privacy laws, and a variety of other local, national and multi-national regulations and laws in multiple jurisdictions;
|
•
|
discriminatory or conflicting fiscal policies in or across foreign jurisdictions;
|
•
|
changes in capital controls, including currency exchange controls, government currency policies or other limits on our ability to import raw materials or finished product into various countries or repatriate cash from outside the United States;
|
•
|
changes in local regulations and laws, the uncertainty of enforcement of remedies in foreign jurisdictions, and foreign ownership restrictions and the potential for nationalization or expropriation of property or other resources;
|
•
|
risks and costs associated with political and economic instability, corruption, anti-American sentiment and social and ethnic unrest in the countries in which we operate;
|
•
|
the risks of operating in developing or emerging markets in which there are significant uncertainties regarding the interpretation, application and enforceability of laws and regulations and the enforceability of contract rights and intellectual property rights;
|
•
|
risks arising from the significant and rapid fluctuations in currency exchange markets and the decisions and positions that we take to hedge such volatility;
|
•
|
changing labor conditions and difficulties in staffing our operations;
|
•
|
greater risk of uncollectible accounts and longer collection cycles; and
|
•
|
design, implementation and use of effective control environment processes across our diverse operations and employee base.
|
•
|
combining the companies’ operations and corporate functions;
|
•
|
combining the businesses of Kraft and Heinz and meeting the capital requirements of the combined company in a manner that permits us to achieve the cost savings anticipated to result from the 2015 Merger, the failure of which could result in the material anticipated benefits of the 2015 Merger not being realized in the time frame currently anticipated, or at all;
|
•
|
integrating the companies’ technologies;
|
•
|
integrating and unifying the offerings and services available to historical Kraft and Heinz customers;
|
•
|
identifying and eliminating redundant and underperforming functions and assets;
|
•
|
harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;
|
•
|
integrating the companies’ financial reporting and internal control systems, including our ability to maintain compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, and the rules promulgated thereunder by the SEC;
|
•
|
maintaining existing agreements with customers, distributors, providers and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers and vendors;
|
•
|
addressing possible differences in business backgrounds, corporate cultures and management philosophies;
|
•
|
integrating and consolidating the companies’ administrative and information technology infrastructure and computer systems;
|
•
|
coordinating distribution and marketing efforts;
|
•
|
managing the movement of certain positions to different locations; and
|
•
|
coordinating geographically dispersed organizations.
|
•
|
limit our ability to obtain additional financing for working capital, capital expenditures, research and development, debt service requirements, acquisitions and general corporate or other purposes;
|
•
|
result in a downgrade to our credit rating;
|
•
|
restrict us from making strategic acquisitions or cause us to make non-strategic divestitures;
|
•
|
limit our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our competitors who are not as highly leveraged;
|
•
|
increase our vulnerability to general economic and industry conditions;
|
•
|
make it more difficult for us to make payments on our existing indebtedness;
|
•
|
require a substantial portion of cash flows 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, capital expenditures and future business opportunities; and
|
•
|
in the case of any additional indebtedness, exacerbate the risks associated with our substantial financial leverage.
|
|
|
Owned
|
|
Leased
|
United States
|
|
43
|
|
2
|
Canada
|
|
3
|
|
—
|
Europe
|
|
11
|
|
—
|
Rest of World
|
|
26
|
|
2
|
|
2016 Quarters
|
|
2015 Quarters
|
||||||||||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||||||
Market price-high
|
$
|
79.16
|
|
|
$
|
89.40
|
|
|
$
|
90.54
|
|
|
$
|
90.15
|
|
|
NA
|
|
NA
|
|
$
|
81.20
|
|
|
$
|
79.94
|
|
Market price-low
|
$
|
68.18
|
|
|
$
|
76.64
|
|
|
$
|
84.25
|
|
|
$
|
79.69
|
|
|
NA
|
|
NA
|
|
$
|
61.42
|
|
|
$
|
68.65
|
|
Dividends declared
|
$
|
0.575
|
|
|
$
|
0.575
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
NA
|
|
NA
|
|
$
|
0.55
|
|
|
$
|
1.15
|
|
|
Kraft Heinz
|
|
S&P 500
|
|
S&P Consumer Staples Food Products
|
July 6, 2015
|
$100.00
|
|
$100.00
|
|
$100.00
|
December 31, 2015
|
$102.07
|
|
$99.85
|
|
$106.15
|
December 30, 2016
|
$125.99
|
|
$111.79
|
|
$115.17
|
|
|
Total Number
of Shares
(a)
|
|
Average Price
Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plan or Program
|
|
Dollar Value of Shares that May Yet be Purchased Under the Plan or Program
|
||||||
10/3/2016 - 11/6/2016
|
|
541,110
|
|
|
$
|
88.82
|
|
|
—
|
|
|
|
||
11/7/2016 - 12/4/2016
|
|
459,117
|
|
|
83.16
|
|
|
—
|
|
|
|
|||
12/5/2016 - 12/31/2016
|
|
455,602
|
|
|
84.64
|
|
|
—
|
|
|
$
|
—
|
|
|
For the Three Months Ended December 31, 2016
|
|
1,455,829
|
|
|
|
|
—
|
|
|
|
(a)
|
Includes the following types of share repurchase activity, when they occur: (1) shares repurchased in connection with the exercise of stock options (including periodic repurchases using accumulated option exercise proceeds), (2) shares tendered by individuals who used shares to pay the related taxes for grants of restricted stock units (“RSUs”) that vested, and (3) shares repurchased related to employee benefit programs (including our annual bonus swap program).
|
•
|
The consolidated financial statements for the year ended December 31, 2016 (a 52 week period, including a full year of Kraft Heinz results);
|
•
|
The consolidated financial statements for the year ended January 3, 2016 (a 53 week period, including a full year of Heinz results and post-2015 Merger results of Kraft);
|
•
|
The consolidated financial statements for the year ended December 28, 2014 (a 52 week period, including a full year of Heinz results); and
|
▪
|
The creation of Hawk on February 8, 2013 and the activity from February 8, 2013 to June 7, 2013, which related primarily to the issuance of debt and recognition of associated issuance costs and interest expense; and
|
▪
|
All activity subsequent to the 2013 Merger. Therefore, the 2013 Successor Period includes 29 weeks of operating activity (June 8, 2013 to December 29, 2013). We indicate in the selected financial data table the weeks of operating activities in this period.
|
•
|
The consolidated financial statements of H. J. Heinz Company prior to the 2013 Merger on June 7, 2013, which includes the period from April 29, 2013 through June 7, 2013 (the “2013 Predecessor Period”); this represents six weeks of activity from April 29, 2013 through the 2013 Merger;
|
•
|
The consolidated financial statements of H. J. Heinz Company for the fiscal year from April 30, 2012 to April 28, 2013 (“Fiscal 2013”); and
|
•
|
The consolidated financial statements of H. J. Heinz Company for the fiscal year from April 28, 2011 to April 29, 2012 (“Fiscal 2012”).
|
|
Successor
|
|
Predecessor
(H. J. Heinz Company)
|
||||||||||||||||||||||||
|
December 31,
2016 (52 weeks) (a) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
February 8 - December 29, 2013
(29 weeks)
|
|
April 29 - June 7,
2013 (6 weeks) |
|
April 28, 2013
(52 weeks)
|
|
April 29,
2012
(52 1/2 weeks)
(e)
|
||||||||||||||
|
(in millions, except per share data)
|
||||||||||||||||||||||||||
Period Ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net sales
(b)(d)
|
$
|
26,487
|
|
|
$
|
18,338
|
|
|
$
|
10,922
|
|
|
$
|
6,240
|
|
|
$
|
1,113
|
|
|
$
|
11,529
|
|
|
$
|
11,508
|
|
Income/(loss) from continuing operations
(b)
|
3,642
|
|
|
647
|
|
|
672
|
|
|
(66
|
)
|
|
(191
|
)
|
|
1,102
|
|
|
992
|
|
|||||||
Income/(loss) from continuing operations attributable to common shareholders
(b)
|
3,452
|
|
|
(266
|
)
|
|
(63
|
)
|
|
(1,118
|
)
|
|
(194
|
)
|
|
1,088
|
|
|
974
|
|
|||||||
Income/(loss) from continuing operations per common share
(b)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic
|
2.84
|
|
|
(0.34
|
)
|
|
(0.17
|
)
|
|
(2.97
|
)
|
|
(0.60
|
)
|
|
3.39
|
|
|
3.03
|
|
|||||||
Diluted
|
2.81
|
|
|
(0.34
|
)
|
|
(0.17
|
)
|
|
(2.97
|
)
|
|
(0.60
|
)
|
|
3.37
|
|
|
3.01
|
|
|||||||
As of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total assets
(d)
|
120,480
|
|
|
122,973
|
|
|
36,571
|
|
|
38,681
|
|
|
NA
|
|
|
12,920
|
|
|
11,960
|
|
|||||||
Long-term debt
(c)(d)
|
29,713
|
|
|
25,151
|
|
|
13,358
|
|
|
14,326
|
|
|
NA
|
|
|
3,830
|
|
|
4,757
|
|
|||||||
Redeemable preferred stock
|
—
|
|
|
8,320
|
|
|
8,320
|
|
|
8,320
|
|
|
NA
|
|
|
—
|
|
|
—
|
|
|||||||
Cash dividends per common share
|
2.35
|
|
|
1.70
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.06
|
|
|
1.92
|
|
(a)
|
On December 9, 2016, our Board of Directors approved a change to our fiscal year end from Sunday to Saturday. Effective December 31, 2016, we operate on a 52 or 53-week fiscal year ending on the last Saturday in December in each calendar year. In prior years, we operated on a 52 or 53-week fiscal year ending the Sunday closest to December 31. As a result, we occasionally have a 53rd week in a fiscal year. Our year ended January 3, 2016 includes a 53rd week of activity.
See Note 1,
Background and Basis of Presentation
, to the consolidated financial statements for additional information.
|
(b)
|
Amounts exclude the operating results as well as any associated impairment charges and losses on sale related to the Company's Shanghai LongFong Foods business in China and U.S. Foodservice frozen desserts business, which were divested in Fiscal 2013.
|
(c)
|
Amounts include interest rate swap hedge accounting adjustments of $123 million at April 28, 2013 and $128 million at April 29, 2012. There were no interest rate swaps requiring such hedge accounting adjustments at December 31, 2016, January 3, 2016, December 28, 2014, or December 29, 2013. Additionally, amounts exclude the current portion of long-term debt.
|
(d)
|
The increases in net sales, total assets, and long-term debt from December 28, 2014 to January 3, 2016 reflect the impact of the 2015 Merger. See Note 2,
Merger and Acquisition
, to the consolidated financial statements for additional information.
|
(e)
|
On March 14, 2012, H. J. Heinz Company’s board of directors authorized a change in fiscal year end from the Wednesday nearest April 30 to the Sunday nearest April 30. This change resulted in a 52 1/2-week-long Fiscal 2012.
|
•
|
our Russia business moved from the Rest of World segment to the Europe segment;
|
•
|
management of our Global Procurement Office moved from one of our European subsidiaries to our global headquarters, which resulted in moving the related costs from the Europe segment to general corporate expenses; and
|
•
|
certain historical Kraft export businesses moved from our United States segment to our Rest of World and Europe segments.
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
% Change
|
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
% Change
|
||||||||||
|
(in millions, except per share data)
|
|
|
|
(in millions, except per share data)
|
|
|
||||||||||||||
Net sales
|
$
|
26,487
|
|
|
$
|
18,338
|
|
|
44.4
|
%
|
|
$
|
18,338
|
|
|
$
|
10,922
|
|
|
67.9
|
%
|
Operating income
|
6,142
|
|
|
2,639
|
|
|
132.7
|
%
|
|
2,639
|
|
|
1,568
|
|
|
68.3
|
%
|
||||
Net income/(loss) attributable to common shareholders
|
3,452
|
|
|
(266
|
)
|
|
nm
|
|
|
(266
|
)
|
|
(63
|
)
|
|
nm
|
|
||||
Diluted earnings/(loss) per share
|
2.81
|
|
|
(0.34
|
)
|
|
nm
|
|
|
(0.34
|
)
|
|
(0.17
|
)
|
|
nm
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
% Change
|
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
% Change
|
||||||||||
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Net sales
|
$
|
26,487
|
|
|
$
|
18,338
|
|
|
44.4
|
%
|
|
$
|
18,338
|
|
|
$
|
10,922
|
|
|
67.9
|
%
|
Pro forma net sales
(a)
|
26,487
|
|
|
27,447
|
|
|
(3.5
|
)%
|
|
27,447
|
|
|
29,122
|
|
|
(5.8
|
)%
|
||||
Organic Net Sales
(b)
|
26,817
|
|
|
26,728
|
|
|
0.3
|
%
|
|
28,286
|
|
|
28,741
|
|
|
(1.6
|
)%
|
(a)
|
There were no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
at the end of this item.
|
(b)
|
Organic Net Sales is a non-GAAP financial measure. See the
Non-GAAP Financial Measures
section at the end of this item.
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
% Change
|
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
% Change
|
||||||||||
|
(in millions, except per share data)
|
|
|
|
(in millions, except per share data)
|
|
|
||||||||||||||
Operating income
|
$
|
6,142
|
|
|
$
|
2,639
|
|
|
132.7
|
%
|
|
$
|
2,639
|
|
|
$
|
1,568
|
|
|
68.3
|
%
|
Net income/(loss) attributable to common shareholders
|
3,452
|
|
|
(266
|
)
|
|
nm
|
|
|
(266
|
)
|
|
(63
|
)
|
|
nm
|
|
||||
Adjusted EBITDA
(a)
|
7,778
|
|
|
6,739
|
|
|
15.4
|
%
|
|
6,739
|
|
|
6,526
|
|
|
3.3
|
%
|
(a)
|
Adjusted EBITDA is a non-GAAP financial measure. See the
Non-GAAP Financial Measures
section at the end of this item.
|
•
|
Savings from the Integration Program and other restructuring activities and favorable pricing net of key commodity costs in United States and Canada.
|
•
|
Non-cash costs of $347 million relating to the fair value adjustment of Kraft’s inventory in purchase accounting in the prior period.
|
•
|
Series A Preferred Stock dividend cash distributions decreased to
$180 million
in 2016 compared to
$900 million
in 2015. This decrease was primarily due to the redemption of the Series A Preferred Stock on June 7, 2016. In addition, due to the December 8, 2015 common stock dividend declaration, we were required to accelerate payment of the March 7, 2016 preferred dividend to December 8, 2015. This resulted in one Series A Preferred Stock dividend payment in the current period compared to five in the prior period.
|
•
|
Other expense/(income), net improved to income of
$15 million
in 2016, compared to expense of
$305 million
in 2015. The decrease was primarily due to a $234 million nonmonetary currency devaluation loss related to our Venezuelan subsidiary in the prior period and call premiums of $105 million related to our 2015 debt refinancing activities.
|
•
|
Interest expense decreased to
$1.1 billion
in 2016 compared to
$1.3 billion
in 2015. This decrease was primarily due to a $236 million write-off of debt issuance costs related to 2015 debt refinancing activities and a $227 million loss released from accumulated other comprehensive income/(losses) due to the early termination of certain interest rate swaps in the prior period as well as lower interest rates following our debt refinancing in connection with the 2015 Merger. These were partially offset by the assumption of $8.6 billion aggregate principal amount of Kraft’s long-term debt obligations in the 2015 Merger, the issuance of new long-term debt in conjunction with the redemption of our Series A Preferred Stock, and new borrowings under our commercial paper program. See Note 11,
Debt
, and Note 12,
Capital Stock
, to the consolidated financial statements for additional information.
|
•
|
The effective tax rate was
27.5%
in 2016, compared to
36.2%
in 2015. The change in effective tax rate was primarily driven by higher earnings repatriation charges and the nondeductible nonmonetary currency devaluation loss related to our Venezuelan subsidiary in the prior period, partially offset by lower tax benefits associated with taxes on income of foreign subsidiaries, tax exempt income, and deferred tax effects of statutory rate changes in the current period. See Note 7,
Income Taxes
, to the consolidated financial statements for a discussion of effective tax rates.
|
•
|
United States Segment Adjusted EBITDA growth was primarily driven by savings from the Integration Program and favorable pricing net of key commodity costs, partially offset by volume/mix declines and the impact of a 53rd week of shipments (approximately 1.5 pp) in the prior period.
|
•
|
Canada Segment Adjusted EBITDA growth was primarily driven by savings from the Integration Program and favorable pricing net of key commodity costs, partially offset by higher input costs in local currency, unfavorable impact of foreign currency (4.4 pp), and a 53rd week of shipments (approximately 1.5 pp) in the prior period.
|
•
|
Europe Segment Adjusted EBITDA decreased primarily due to unfavorable impact of foreign currency (6.5 pp), lower pricing, impact of a 53rd week of shipments (approximately 1.0 pp) in the prior period as well as an increase in marketing investments, partially offset by savings in manufacturing costs.
|
•
|
Rest of World Segment Adjusted EBITDA decreased due to unfavorable impact of foreign currency (17.4 pp), increased marketing investments, and a 53rd week of shipments (approximately 1.0 pp) in the prior period, partially offset by organic sales growth.
|
•
|
Integration Program and other restructuring expenses, merger costs, and depreciation and amortization expense that were higher in 2015 than 2014.
|
•
|
Non-cash costs of $347 million relating to the fair value adjustment of Kraft’s inventory in purchase accounting in 2015.
|
•
|
Unfavorable impact from foreign currency of $284 million.
|
•
|
Nonmonetary currency devaluation loss of $49 million related to the write-down of inventory for our Venezuelan subsidiary in 2015.
|
•
|
Interest expense increased to
$1.3 billion
in 2015 compared to
$686 million
in 2014. This increase was primarily due to a $236 million write-off of debt issuance costs related to 2015 debt refinancing activities and a $227 million loss released from accumulated other comprehensive income/(losses) due to the early termination of certain interest rate swap contracts. The remaining increase was due to the assumption of $8.6 billion aggregate principal amount of Kraft’s long-term debt obligations in the 2015 Merger, partially offset by interest savings following our 2015 debt refinancing activities.
|
•
|
Other expense/(income), net increased to
$305 million
in 2015 compared to
$79 million
in 2014. This increase was primarily due to a $234 million nonmonetary currency devaluation loss related to our Venezuelan subsidiary and call premiums of $105 million related to our 2015 debt refinancing activities, compared to currency losses of $99 million in the prior year.
|
•
|
Series A Preferred Stock dividend cash distributions increased to
$900 million
in 2015 compared to
$720 million
in 2014. Due to the December 8, 2015 common stock dividend declaration, we were required to accelerate payment of the Series A Preferred Stock dividend from March 7, 2016 to December 8, 2015. Accordingly, there were two cash distributions for Series A Preferred Stock during the fourth quarter of 2015. This resulted in five Series A Preferred Stock dividend payments in 2015 compared to four payments in 2014.
|
•
|
The effective tax rate was
36.2%
in 2015 compared to
16.3%
in 2014, primarily driven by higher earnings repatriation charges and the nondeductible nonmonetary currency devaluation loss related to our Venezuelan subsidiary in 2015, partially offset by increased benefits from statutory tax rate changes. See Note 7,
Income Taxes
, to the consolidated financial statements for a discussion of effective tax rates.
|
•
|
United States Segment Adjusted EBITDA growth was primarily driven by favorable pricing net of key commodity costs, savings from the Integration Program and other restructuring activities, and the favorable impact of a 53rd week of shipments (approximately 1.0 pp), partially offset by unfavorable volume/mix.
|
•
|
Rest of World Segment Adjusted EBITDA growth was primarily driven by savings from restructuring activities and other ongoing productivity efforts as well as the favorable impact of a 53rd week of shipments (approximately 1.0 pp), partially offset by the unfavorable impact of foreign currency (27.6 pp) and higher local input costs.
|
•
|
Canada Segment Adjusted EBITDA decreased primarily due to the unfavorable impact of foreign currency (14.6 pp), unfavorable volume/mix, and higher input costs in local currency, partially offset by savings from the Integration Program and other restructuring activities, lower marketing spending, and the favorable impact of a 53rd week of shipments (approximately 1.0 pp).
|
•
|
Europe Segment Adjusted EBITDA decreased primarily due to unfavorable impact of foreign currency (15.0 pp) and increased marketing investments partially offset by lower input costs, savings from restructuring activities and other ongoing productivity efforts, favorable product mix and the favorable impact of a 53rd week of shipments (approximately 1.0 pp).
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
% Change
|
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
% Change
|
||||||
|
(in millions, except per share data)
|
|
|
|
(in millions, except per share data)
|
|
|
||||||||||
Diluted EPS
|
2.81
|
|
|
(0.34
|
)
|
|
nm
|
|
|
(0.34
|
)
|
|
(0.17
|
)
|
|
nm
|
|
Adjusted EPS
(a)
|
3.33
|
|
|
2.19
|
|
|
52.1
|
%
|
|
2.19
|
|
|
1.98
|
|
|
10.6
|
%
|
(a)
|
Adjusted EPS is a non-GAAP financial measure. See the
Non-GAAP Financial Measures
section at the end of this item.
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
$ Change
|
|
% Change
|
|||||||
Diluted EPS
|
$
|
2.81
|
|
|
$
|
(0.34
|
)
|
|
$
|
3.15
|
|
|
nm
|
|
Pro forma adjustments
(a)
|
—
|
|
|
1.04
|
|
|
(1.04
|
)
|
|
|
||||
Pro forma diluted EPS
|
2.81
|
|
|
0.70
|
|
|
2.11
|
|
|
301.4
|
%
|
|||
Integration and restructuring expenses
|
0.57
|
|
|
0.61
|
|
|
(0.04
|
)
|
|
|
||||
Merger costs
|
0.02
|
|
|
0.49
|
|
|
(0.47
|
)
|
|
|
||||
Unrealized losses/(gains) on commodity hedges
|
(0.02
|
)
|
|
(0.02
|
)
|
|
—
|
|
|
|
||||
Impairment losses
|
0.03
|
|
|
0.03
|
|
|
—
|
|
|
|
||||
Losses/(gains) on sale of business
|
—
|
|
|
(0.01
|
)
|
|
0.01
|
|
|
|
||||
Nonmonetary currency devaluation
|
0.02
|
|
|
0.24
|
|
|
(0.22
|
)
|
|
|
||||
Preferred dividend adjustment
|
(0.10
|
)
|
|
0.15
|
|
|
(0.25
|
)
|
|
|
||||
Adjusted EPS
(b)
|
$
|
3.33
|
|
|
$
|
2.19
|
|
|
$
|
1.14
|
|
|
52.1
|
%
|
|
|
|
|
|
|
|
|
|||||||
Key drivers of change in Adjusted EPS
(b)
:
|
|
|
|
|
|
|
|
|||||||
Results of operations
|
|
|
|
|
$
|
0.77
|
|
|
|
|||||
Change in preferred dividends
|
|
|
|
|
0.34
|
|
|
|
||||||
Change in interest expense
|
|
|
|
|
(0.04
|
)
|
|
|
||||||
Change in other expense/(income), net
|
|
|
|
|
(0.03
|
)
|
|
|
||||||
53rd week of shipments
|
|
|
|
|
(0.03
|
)
|
|
|
||||||
Change in effective tax rate and other
|
|
|
|
|
0.13
|
|
|
|
||||||
|
|
|
|
|
$
|
1.14
|
|
|
|
(a)
|
There were no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
at the end of this item.
|
(b)
|
Adjusted EPS is a non-GAAP financial measure. See the
Non-GAAP Financial Measures
section at the end of this item.
|
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
$ Change
|
|
% Change
|
|||||||
Diluted EPS
|
$
|
(0.34
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.17
|
)
|
|
nm
|
|
Pro forma adjustments
(a)
|
1.04
|
|
|
1.48
|
|
|
(0.44
|
)
|
|
|
||||
Pro forma diluted EPS
|
0.70
|
|
|
1.31
|
|
|
(0.61
|
)
|
|
(46.6
|
)%
|
|||
Integration and restructuring expenses
|
0.61
|
|
|
0.47
|
|
|
0.14
|
|
|
|
||||
Merger costs
|
0.49
|
|
|
0.04
|
|
|
0.45
|
|
|
|
||||
Unrealized losses/(gains) on commodity hedges
|
(0.02
|
)
|
|
0.05
|
|
|
(0.07
|
)
|
|
|
||||
Impairment losses
|
0.03
|
|
|
0.11
|
|
|
(0.08
|
)
|
|
|
||||
Losses/(gains) on sale of business
|
(0.01
|
)
|
|
—
|
|
|
(0.01
|
)
|
|
|
||||
Nonmonetary currency devaluation
|
0.24
|
|
|
—
|
|
|
0.24
|
|
|
|
||||
Preferred dividend adjustment
|
0.15
|
|
|
—
|
|
|
0.15
|
|
|
|
||||
Adjusted EPS
(b)
|
$
|
2.19
|
|
|
$
|
1.98
|
|
|
$
|
0.21
|
|
|
10.6
|
%
|
|
|
|
|
|
|
|
|
|||||||
Key drivers of change in Adjusted EPS
(b)
:
|
|
|
|
|
|
|
|
|||||||
Results of operations
|
|
|
|
|
0.21
|
|
|
|
||||||
Change in other expense/(income), net
|
|
|
|
|
0.07
|
|
|
|
||||||
Change in interest expense
|
|
|
|
|
0.03
|
|
|
|
||||||
53rd week of shipments
|
|
|
|
|
0.03
|
|
|
|
||||||
Change in effective tax rate and other
|
|
|
|
|
(0.13
|
)
|
|
|
||||||
|
|
|
|
|
$
|
0.21
|
|
|
|
(a)
|
There were no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
at the end of this item.
|
(b)
|
Adjusted EPS is a non-GAAP financial measure. See the
Non-GAAP Financial Measures
section at the end of this item.
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
|
(in millions)
|
||||||||||
Net sales:
|
|
|
|
|
|
||||||
United States
|
$
|
18,641
|
|
|
$
|
10,943
|
|
|
$
|
3,615
|
|
Canada
|
2,309
|
|
|
1,437
|
|
|
631
|
|
|||
Europe
|
2,366
|
|
|
2,656
|
|
|
3,233
|
|
|||
Rest of World
|
3,171
|
|
|
3,302
|
|
|
3,443
|
|
|||
Total net sales
|
$
|
26,487
|
|
|
$
|
18,338
|
|
|
$
|
10,922
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
|
(in millions)
|
||||||||||
Pro forma net sales
(a)
:
|
|
|
|
|
|
||||||
United States
|
$
|
18,641
|
|
|
$
|
18,932
|
|
|
$
|
19,346
|
|
Canada
|
2,309
|
|
|
2,386
|
|
|
2,811
|
|
|||
Europe
|
2,366
|
|
|
2,657
|
|
|
3,233
|
|
|||
Rest of World
|
3,171
|
|
|
3,472
|
|
|
3,732
|
|
|||
Total pro forma net sales
|
$
|
26,487
|
|
|
$
|
27,447
|
|
|
$
|
29,122
|
|
(a)
|
There were no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
at the end of this item.
|
|
2016 Compared to 2015
|
|
2015 Compared to 2014
|
||||||||||||
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||||
|
(in millions)
|
||||||||||||||
Organic Net Sales
(a)
:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
18,641
|
|
|
$
|
18,699
|
|
|
$
|
18,699
|
|
|
$
|
19,346
|
|
Canada
|
2,393
|
|
|
2,359
|
|
|
2,733
|
|
|
2,811
|
|
||||
Europe
|
2,520
|
|
|
2,588
|
|
|
3,022
|
|
|
3,126
|
|
||||
Rest of World
|
3,263
|
|
|
3,082
|
|
|
3,832
|
|
|
3,458
|
|
||||
Total Organic Net Sales
|
$
|
26,817
|
|
|
$
|
26,728
|
|
|
$
|
28,286
|
|
|
$
|
28,741
|
|
(a)
|
Organic Net Sales is a non-GAAP financial measure. See the
Non-GAAP Financial Measures
section at the end of this item.
|
|
Pro Forma Net Sales
(a)
|
|
Impact of Currency
|
|
Impact of Divestitures
|
|
Impact of 53rd Week
|
|
Organic Net Sales
|
|
Price
|
|
Volume/Mix
|
|||||||
2016 Compared to 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
United States
|
(1.5
|
)%
|
|
0.0
|
pp
|
|
0.0
|
pp
|
|
(1.2
|
) pp
|
|
(0.3
|
)%
|
|
0.2
|
pp
|
|
(0.5
|
) pp
|
Canada
|
(3.2
|
)%
|
|
(3.5
|
) pp
|
|
0.0
|
pp
|
|
(1.1
|
) pp
|
|
1.4
|
%
|
|
0.6
|
pp
|
|
0.8
|
pp
|
Europe
|
(11.0
|
)%
|
|
(5.8
|
) pp
|
|
(1.6
|
) pp
|
|
(1.0
|
) pp
|
|
(2.6
|
)%
|
|
(2.5
|
) pp
|
|
(0.1
|
) pp
|
Rest of World
|
(8.7
|
)%
|
|
(13.2
|
) pp
|
|
0.0
|
pp
|
|
(1.4
|
) pp
|
|
5.9
|
%
|
|
3.2
|
pp
|
|
2.7
|
pp
|
Kraft Heinz
|
(3.5
|
)%
|
|
(2.5
|
) pp
|
|
(0.1
|
) pp
|
|
(1.2
|
) pp
|
|
0.3
|
%
|
|
0.3
|
pp
|
|
0.0
|
pp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
2015 Compared to 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
United States
|
(2.1
|
)%
|
|
0.0
|
pp
|
|
0.0
|
pp
|
|
1.2
|
pp
|
|
(3.3
|
)%
|
|
0.0
|
pp
|
|
(3.3
|
) pp
|
Canada
|
(15.1
|
)%
|
|
(13.4
|
) pp
|
|
0.0
|
pp
|
|
1.1
|
pp
|
|
(2.8
|
)%
|
|
2.2
|
pp
|
|
(5.0
|
) pp
|
Europe
|
(17.8
|
)%
|
|
(13.6
|
) pp
|
|
(1.9
|
) pp
|
|
1.0
|
pp
|
|
(3.3
|
)%
|
|
1.6
|
pp
|
|
(4.9
|
) pp
|
Rest of World
|
(7.0
|
)%
|
|
(19.1
|
) pp
|
|
0.0
|
pp
|
|
1.3
|
pp
|
|
10.8
|
%
|
|
5.2
|
pp
|
|
5.6
|
pp
|
Kraft Heinz
|
(5.8
|
)%
|
|
(5.2
|
) pp
|
|
(0.2
|
) pp
|
|
1.2
|
pp
|
|
(1.6
|
)%
|
|
1.0
|
pp
|
|
(2.6
|
) pp
|
(a)
|
There were no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
at the end of this item.
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
|
(in millions)
|
||||||||||
Segment Adjusted EBITDA:
|
|
|
|
|
|
||||||
United States
|
$
|
5,862
|
|
|
$
|
4,690
|
|
|
$
|
4,421
|
|
Canada
|
642
|
|
|
541
|
|
|
615
|
|
|||
Europe
|
781
|
|
|
938
|
|
|
939
|
|
|||
Rest of World
|
657
|
|
|
742
|
|
|
732
|
|
|||
General corporate expenses
|
(164
|
)
|
|
(172
|
)
|
|
(181
|
)
|
|||
Depreciation and amortization (excluding integration and restructuring expenses)
|
(536
|
)
|
|
(779
|
)
|
|
(924
|
)
|
|||
Integration and restructuring expenses
|
(1,012
|
)
|
|
(1,117
|
)
|
|
(743
|
)
|
|||
Merger costs
|
(30
|
)
|
|
(194
|
)
|
|
(68
|
)
|
|||
Amortization of inventory step-up
|
—
|
|
|
(347
|
)
|
|
—
|
|
|||
Unrealized gains/(losses) on commodity hedges
|
38
|
|
|
41
|
|
|
(79
|
)
|
|||
Impairment losses
|
(53
|
)
|
|
(58
|
)
|
|
(221
|
)
|
|||
Gains/(losses) on sale of business
|
—
|
|
|
21
|
|
|
—
|
|
|||
Nonmonetary currency devaluation
|
(4
|
)
|
|
(57
|
)
|
|
—
|
|
|||
Equity award compensation expense (excluding integration and restructuring expenses)
|
(39
|
)
|
|
(61
|
)
|
|
(108
|
)
|
|||
Other pro forma adjustments
|
—
|
|
|
(1,549
|
)
|
|
(2,815
|
)
|
|||
Operating income
|
6,142
|
|
|
2,639
|
|
|
1,568
|
|
|||
Interest expense
|
1,134
|
|
|
1,321
|
|
|
686
|
|
|||
Other expense/(income), net
|
(15
|
)
|
|
305
|
|
|
79
|
|
|||
Income/(loss) before income taxes
|
$
|
5,023
|
|
|
$
|
1,013
|
|
|
$
|
803
|
|
|
2016 Compared to 2015
|
|
2015 Compared to 2014
|
||||||||||||||||||
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
% Change
|
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
% Change
|
||||||||||
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Net sales
|
$
|
18,641
|
|
|
$
|
10,943
|
|
|
70.3
|
%
|
|
$
|
10,943
|
|
|
$
|
3,615
|
|
|
202.7
|
%
|
Pro forma net sales
(a)
|
18,641
|
|
|
18,932
|
|
|
(1.5
|
)%
|
|
18,932
|
|
|
19,346
|
|
|
(2.1
|
)%
|
||||
Organic Net Sales
(b)
|
18,641
|
|
|
18,699
|
|
|
(0.3
|
)%
|
|
18,699
|
|
|
19,346
|
|
|
(3.3
|
)%
|
||||
Segment Adjusted EBITDA
|
5,862
|
|
|
4,690
|
|
|
25.0
|
%
|
|
4,690
|
|
|
4,421
|
|
|
6.1
|
%
|
(a)
|
There were no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
at the end of this item.
|
(b)
|
Organic Net Sales is a non-GAAP financial measure. See the
Non-GAAP Financial Measures
section at the end of this item.
|
|
2016 Compared to 2015
|
|
2015 Compared to 2014
|
||||||||||||||||||
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
% Change
|
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
% Change
|
||||||||||
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Net sales
|
$
|
2,309
|
|
|
$
|
1,437
|
|
|
60.7
|
%
|
|
$
|
1,437
|
|
|
$
|
631
|
|
|
127.7
|
%
|
Pro forma net sales
(a)
|
2,309
|
|
|
2,386
|
|
|
(3.2
|
)%
|
|
2,386
|
|
|
2,811
|
|
|
(15.1
|
)%
|
||||
Organic Net Sales
(b)
|
2,393
|
|
|
2,359
|
|
|
1.4
|
%
|
|
2,733
|
|
|
2,811
|
|
|
(2.8
|
)%
|
||||
Segment Adjusted EBITDA
|
642
|
|
|
541
|
|
|
18.7
|
%
|
|
541
|
|
|
615
|
|
|
(12.0
|
)%
|
(a)
|
There were no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
at the end of this item.
|
(b)
|
Organic Net Sales is a non-GAAP financial measure. See the
Non-GAAP Financial Measures
section at the end of this item.
|
|
2016 Compared to 2015
|
|
2015 Compared to 2014
|
||||||||||||||||||
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
% Change
|
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
% Change
|
||||||||||
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Net sales
|
$
|
2,366
|
|
|
$
|
2,656
|
|
|
(10.9
|
)%
|
|
$
|
2,656
|
|
|
$
|
3,233
|
|
|
(17.8
|
)%
|
Pro forma net sales
(a)
|
2,366
|
|
|
2,657
|
|
|
(11.0
|
)%
|
|
2,657
|
|
|
3,233
|
|
|
(17.8
|
)%
|
||||
Organic Net Sales
(b)
|
2,520
|
|
|
2,588
|
|
|
(2.6
|
)%
|
|
3,022
|
|
|
3,126
|
|
|
(3.3
|
)%
|
||||
Segment Adjusted EBITDA
|
781
|
|
|
938
|
|
|
(16.7
|
)%
|
|
938
|
|
|
939
|
|
|
(0.1
|
)%
|
(a)
|
There were no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
at the end of this item.
|
(b)
|
Organic Net Sales is a non-GAAP financial measure. See the
Non-GAAP Financial Measures
section at the end of this item.
|
|
2016 Compared to 2015
|
|
2015 Compared to 2014
|
||||||||||||||||||
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
% Change
|
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
% Change
|
||||||||||
|
(in millions)
|
|
|
|
(in millions)
|
|
|
||||||||||||||
Net sales
|
$
|
3,171
|
|
|
$
|
3,302
|
|
|
(4.0
|
)%
|
|
$
|
3,302
|
|
|
$
|
3,443
|
|
|
(4.1
|
)%
|
Pro forma net sales
(a)
|
3,171
|
|
|
3,472
|
|
|
(8.7
|
)%
|
|
3,472
|
|
|
3,732
|
|
|
(7.0
|
)%
|
||||
Organic Net Sales
(b)
|
3,263
|
|
|
3,082
|
|
|
5.9
|
%
|
|
3,832
|
|
|
3,458
|
|
|
10.8
|
%
|
||||
Segment Adjusted EBITDA
|
657
|
|
|
742
|
|
|
(11.5
|
)%
|
|
742
|
|
|
732
|
|
|
1.4
|
%
|
(a)
|
There were no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
at the end of this item.
|
(b)
|
Organic Net Sales is a non-GAAP financial measure. See the
Non-GAAP Financial Measures
section at the end of this item.
|
|
One-Percentage-Point
|
||||||
|
Increase
|
|
Decrease
|
||||
Effect on annual service and interest cost
|
$
|
6
|
|
|
$
|
(5
|
)
|
Effect on postretirement benefit obligation
|
74
|
|
|
(63
|
)
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
100-Basis-Point
|
|
100-Basis-Point
|
||||||||||||
|
Increase
|
|
Decrease
|
|
Increase
|
|
Decrease
|
||||||||
Effect of change in discount rate on pension costs
|
$
|
12
|
|
|
$
|
(13
|
)
|
|
$
|
7
|
|
|
$
|
(12
|
)
|
Effect of change in expected rate of return on plan assets on pension costs
|
(46
|
)
|
|
46
|
|
|
(37
|
)
|
|
37
|
|
||||
Effect of change in discount rate on postretirement costs
|
(1
|
)
|
|
(10
|
)
|
|
—
|
|
|
1
|
|
|
Payments Due
|
|||||||||||||
|
2017
|
|
2018-2019
|
|
2020-2021
|
|
2022 and Thereafter
|
|
Total
|
|||||
Long-term debt
(a)
|
3,251
|
|
|
5,015
|
|
|
5,138
|
|
|
36,872
|
|
|
50,276
|
|
Capital leases
(b)
|
27
|
|
|
18
|
|
|
19
|
|
|
58
|
|
|
122
|
|
Operating leases
(c)
|
94
|
|
|
169
|
|
|
104
|
|
|
107
|
|
|
474
|
|
Purchase obligations
(d)
|
1,861
|
|
|
1,039
|
|
|
377
|
|
|
366
|
|
|
3,643
|
|
Other long-term liabilities
(e)
|
187
|
|
|
322
|
|
|
287
|
|
|
597
|
|
|
1,393
|
|
Total
|
5,420
|
|
|
6,563
|
|
|
5,925
|
|
|
38,000
|
|
|
55,908
|
|
(a)
|
Amounts represent the expected cash payments of our long-term debt, including interest on variable and fixed rate long-term debt. Interest on variable rate long-term debt is calculated based on interest rates at December 31, 2016.
|
(b)
|
Amounts represent the expected cash payments of our capital leases, including expected cash payments of interest expense.
|
(c)
|
Operating leases represent the minimum rental commitments under non-cancelable operating leases.
|
(d)
|
We have purchase obligations for materials, supplies, property, plant and equipment, and co-packing, storage and distribution services based on projected needs to be utilized in the normal course of business. Other purchase obligations include commitments for marketing, advertising, capital expenditures, information technology, and professional services.
Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, and approximate timing of the transaction. A few of these obligations are long-term and are based on minimum purchase requirements. Certain purchase obligations contain variable pricing components, and, as a result, actual cash payments are expected to fluctuate based on changes in these variable components. Due to the proprietary nature of some of our materials and processes, certain supply contracts contain penalty provisions for early terminations. We do not believe that a material amount of penalties is reasonably likely to be incurred under these contracts based upon historical experience and current expectations. We exclude amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities from the table above.
|
(e)
|
Other long-term liabilities primarily consist of postretirement benefit commitments. Future benefit payments for our postretirement benefit plans through 2026 are expected to be
$1.3 billion
. We are unable to reliably estimate the timing of the payments beyond 2026. Certain long-term liabilities related to income taxes, insurance accruals, and other accruals included on the consolidated balance sheet are excluded from the above table as we are unable to estimate the timing of payments for these items.
|
•
|
Application of the acquisition method of accounting;
|
•
|
The issuance of Heinz common stock to the Sponsors in connection with the equity investments;
|
•
|
The pre-closing Heinz share conversion;
|
•
|
The exchange of one share of Kraft Heinz common stock for each share of Kraft common stock; and
|
•
|
Conformance of accounting policies.
|
|
January 3, 2016
|
|
December 28, 2014
|
||||
Net sales
|
$
|
27,447
|
|
|
$
|
29,122
|
|
Cost of products sold
|
18,299
|
|
|
20,146
|
|
||
Gross profit
|
9,148
|
|
|
8,976
|
|
||
Selling, general and administrative expenses
|
4,613
|
|
|
4,593
|
|
||
Operating income
|
4,535
|
|
|
4,383
|
|
||
Interest expense
|
1,528
|
|
|
1,113
|
|
||
Other expense/(income), net
|
289
|
|
|
57
|
|
||
Income/(loss) before income taxes
|
2,718
|
|
|
3,213
|
|
||
Provision for/(benefit from) income taxes
|
944
|
|
|
880
|
|
||
Net income/(loss)
|
1,774
|
|
|
2,333
|
|
||
Net income/(loss) attributable to noncontrolling interest
|
13
|
|
|
15
|
|
||
Net income/(loss) attributable to Kraft Heinz
|
1,761
|
|
|
2,318
|
|
||
Preferred dividends
|
900
|
|
|
720
|
|
||
Net income/(loss) attributable to common shareholders
|
$
|
861
|
|
|
$
|
1,598
|
|
|
|
|
|
||||
Basic common shares outstanding
|
1,202
|
|
|
1,192
|
|
||
Diluted common shares outstanding
|
1,222
|
|
|
1,222
|
|
||
|
|
|
|
||||
Per share data applicable to common shareholders:
|
|
|
|
||||
Basic earnings/(loss)
|
$
|
0.72
|
|
|
$
|
1.34
|
|
Diluted earnings/(loss)
|
0.70
|
|
|
1.31
|
|
|
Kraft Heinz
|
|
Historical Kraft
|
|
Pro Forma Adjustments
|
|
Pro Forma
|
||||||||
Net sales
|
$
|
18,338
|
|
|
$
|
9,109
|
|
|
$
|
—
|
|
|
$
|
27,447
|
|
Cost of products sold
|
12,577
|
|
|
6,103
|
|
|
(381
|
)
|
|
18,299
|
|
||||
Gross profit
|
5,761
|
|
|
3,006
|
|
|
381
|
|
|
9,148
|
|
||||
Selling, general and administrative expenses
|
3,122
|
|
|
1,532
|
|
|
(41
|
)
|
|
4,613
|
|
||||
Operating income
|
2,639
|
|
|
1,474
|
|
|
422
|
|
|
4,535
|
|
||||
Interest expense
|
1,321
|
|
|
247
|
|
|
(40
|
)
|
|
1,528
|
|
||||
Other expense/(income), net
|
305
|
|
|
(16
|
)
|
|
—
|
|
|
289
|
|
||||
Income/(loss) before income taxes
|
1,013
|
|
|
1,243
|
|
|
462
|
|
|
2,718
|
|
||||
Provision for/(benefit from) income taxes
|
366
|
|
|
400
|
|
|
178
|
|
|
944
|
|
||||
Net income/(loss)
|
647
|
|
|
843
|
|
|
284
|
|
|
1,774
|
|
||||
Net income/(loss) attributable to noncontrolling interest
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
||||
Net income/(loss) attributable to Kraft Heinz
|
634
|
|
|
843
|
|
|
284
|
|
|
1,761
|
|
||||
Preferred dividends
|
900
|
|
|
—
|
|
|
—
|
|
|
900
|
|
||||
Net income/(loss) attributable to common shareholders
|
$
|
(266
|
)
|
|
$
|
843
|
|
|
$
|
284
|
|
|
$
|
861
|
|
|
|
|
|
|
|
|
|
||||||||
Basic common shares outstanding
|
786
|
|
|
—
|
|
|
416
|
|
|
1,202
|
|
||||
Diluted common shares outstanding
|
786
|
|
|
—
|
|
|
436
|
|
|
1,222
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Per share data applicable to common shareholders:
|
|
|
|
|
|
|
|
||||||||
Basic earnings/(loss)
|
$
|
(0.34
|
)
|
|
$
|
—
|
|
|
$
|
1.06
|
|
|
$
|
0.72
|
|
Diluted earnings/(loss)
|
(0.34
|
)
|
|
—
|
|
|
1.04
|
|
|
0.70
|
|
|
Historical Heinz
|
|
Historical Kraft
|
|
Pro Forma Adjustments
|
|
Pro Forma
|
||||||||
Net sales
|
$
|
10,922
|
|
|
$
|
18,200
|
|
|
$
|
—
|
|
|
$
|
29,122
|
|
Cost of products sold
|
7,645
|
|
|
13,248
|
|
|
(747
|
)
|
|
20,146
|
|
||||
Gross profit
|
3,277
|
|
|
4,952
|
|
|
747
|
|
|
8,976
|
|
||||
Selling, general and administrative expenses
|
1,709
|
|
|
3,062
|
|
|
(178
|
)
|
|
4,593
|
|
||||
Operating income
|
1,568
|
|
|
1,890
|
|
|
925
|
|
|
4,383
|
|
||||
Interest expense
|
686
|
|
|
507
|
|
|
(80
|
)
|
|
1,113
|
|
||||
Other expense/(income), net
|
79
|
|
|
(22
|
)
|
|
—
|
|
|
57
|
|
||||
Income/(loss) before income taxes
|
803
|
|
|
1,405
|
|
|
1,005
|
|
|
3,213
|
|
||||
Provision for/(benefit from) income taxes
|
131
|
|
|
363
|
|
|
386
|
|
|
880
|
|
||||
Net income/(loss)
|
672
|
|
|
1,042
|
|
|
619
|
|
|
2,333
|
|
||||
Net income/(loss) attributable to noncontrolling interest
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||
Net income/(loss) attributable to Kraft Heinz
|
657
|
|
|
1,042
|
|
|
619
|
|
|
2,318
|
|
||||
Preferred dividends
|
720
|
|
|
—
|
|
|
—
|
|
|
720
|
|
||||
Net income/(loss) attributable to common shareholders
|
$
|
(63
|
)
|
|
$
|
1,042
|
|
|
$
|
619
|
|
|
$
|
1,598
|
|
|
|
|
|
|
|
|
|
||||||||
Basic common shares outstanding
|
377
|
|
|
593
|
|
|
222
|
|
|
1,192
|
|
||||
Diluted common shares outstanding
|
377
|
|
|
600
|
|
|
245
|
|
|
1,222
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Per share data applicable to common shareholders:
|
|
|
|
|
|
|
|
||||||||
Basic earnings/(loss)
|
$
|
(0.17
|
)
|
|
$
|
1.76
|
|
|
$
|
(0.25
|
)
|
|
$
|
1.34
|
|
Diluted earnings/(loss)
|
(0.17
|
)
|
|
1.74
|
|
|
(0.26
|
)
|
|
1.31
|
|
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||
Impact to cost of products sold:
|
|
|
|
||||
Postemployment benefit costs
(a)
|
$
|
(34
|
)
|
|
$
|
(747
|
)
|
Inventory step-up
(b)
|
(347
|
)
|
|
—
|
|
||
Impact to cost of products sold
|
$
|
(381
|
)
|
|
$
|
(747
|
)
|
|
|
|
|
||||
Impact to selling, general and administrative expenses:
|
|
|
|
||||
Depreciation and amortization
(c)
|
$
|
84
|
|
|
$
|
168
|
|
Compensation expense
(d)
|
31
|
|
|
68
|
|
||
Postemployment benefit costs
(a)
|
11
|
|
|
(414
|
)
|
||
Deal costs
(e)
|
(167
|
)
|
|
—
|
|
||
Impact to selling, general and administrative expenses
|
$
|
(41
|
)
|
|
$
|
(178
|
)
|
|
|
|
|
||||
Impact to interest expense:
|
|
|
|
||||
Interest expense
(f)
|
$
|
(40
|
)
|
|
$
|
(80
|
)
|
Impact to interest expense
|
$
|
(40
|
)
|
|
$
|
(80
|
)
|
(a)
|
Represents the change to align Kraft's accounting policy to our accounting policy for postemployment benefit plans. Kraft historically elected a mark-to-market accounting policy and recognized net actuarial gains or losses and changes in the fair value of plan assets immediately in earnings upon remeasurement. Our policy is to initially record such items in other comprehensive income/(loss). Also represents the elimination of Kraft’s historical amortization of postemployment benefit plan prior service credits.
|
(b)
|
Represents the elimination of nonrecurring non-cash costs related to the fair value adjustment of Kraft’s inventory. See Note 2,
Merger and Acquisition
, to the consolidated financial statements for additional information on the determination of fair values.
|
(c)
|
Represents incremental amortization resulting from the fair value adjustment of Kraft’s definite-lived intangible assets in connection with the 2015 Merger. The net change in depreciation expense resulting from the fair value adjustment of property, plant, and equipment was insignificant. See Note 2,
Merger and Acquisition
, to the consolidated financial statements for additional information on the determination of fair values.
|
(d)
|
Represents the incremental compensation expense due to the fair value remeasurement of certain of Kraft’s equity awards in connection with the 2015 Merger. See Note 8,
Employees’ Stock Incentive Plans
, to the consolidated financial statements for additional information on the conversion of Kraft’s equity awards in connection with the 2015 Merger.
|
(e)
|
Represents the elimination of non-recurring deal costs incurred in connection with the 2015 Merger.
|
(f)
|
Represents the incremental change in interest expense resulting from the fair value adjustment of Kraft’s long-term debt in connection with the 2015 Merger, including the elimination of the historical amortization of deferred financing fees and amortization of original issuance discount.
|
|
Pro Forma Net Sales
(a)
|
|
Impact of Currency
|
|
Impact of Divestitures
|
|
Impact of 53rd Week
|
|
Organic Net Sales
|
|
Price
|
|
Volume/Mix
|
||||||||||
2016 (52 weeks)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
United States
|
$
|
18,641
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,641
|
|
|
|
|
|
Canada
|
2,309
|
|
|
(84
|
)
|
|
—
|
|
|
—
|
|
|
2,393
|
|
|
|
|
|
|||||
Europe
|
2,366
|
|
|
(154
|
)
|
|
—
|
|
|
—
|
|
|
2,520
|
|
|
|
|
|
|||||
Rest of World
|
3,171
|
|
|
(92
|
)
|
|
—
|
|
|
—
|
|
|
3,263
|
|
|
|
|
|
|||||
|
$
|
26,487
|
|
|
$
|
(330
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2015 (53 weeks)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
United States
|
$
|
18,932
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
233
|
|
|
$
|
18,699
|
|
|
|
|
|
Canada
|
2,386
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
2,359
|
|
|
|
|
|
|||||
Europe
|
2,657
|
|
|
—
|
|
|
42
|
|
|
27
|
|
|
2,588
|
|
|
|
|
|
|||||
Rest of World
|
3,472
|
|
|
351
|
|
|
—
|
|
|
39
|
|
|
3,082
|
|
|
|
|
|
|||||
|
$
|
27,447
|
|
|
$
|
351
|
|
|
$
|
42
|
|
|
$
|
326
|
|
|
$
|
26,728
|
|
|
|
|
|
Year-over-year growth rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
United States
|
(1.5
|
)%
|
|
0.0
|
pp
|
|
0.0
|
pp
|
|
(1.2
|
) pp
|
|
(0.3
|
)%
|
|
0.2
|
pp
|
|
(0.5
|
) pp
|
Canada
|
(3.2
|
)%
|
|
(3.5
|
) pp
|
|
0.0
|
pp
|
|
(1.1
|
) pp
|
|
1.4
|
%
|
|
0.6
|
pp
|
|
0.8
|
pp
|
Europe
|
(11.0
|
)%
|
|
(5.8
|
) pp
|
|
(1.6
|
) pp
|
|
(1.0
|
) pp
|
|
(2.6
|
)%
|
|
(2.5
|
) pp
|
|
(0.1
|
) pp
|
Rest of World
|
(8.7
|
)%
|
|
(13.2
|
) pp
|
|
0.0
|
pp
|
|
(1.4
|
) pp
|
|
5.9
|
%
|
|
3.2
|
pp
|
|
2.7
|
pp
|
Kraft Heinz
|
(3.5
|
)%
|
|
(2.5
|
) pp
|
|
(0.1
|
) pp
|
|
(1.2
|
) pp
|
|
0.3
|
%
|
|
0.3
|
pp
|
|
0.0
|
pp
|
(a)
|
There were no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
at the end of this item.
|
|
Pro Forma Net Sales
(a)
|
|
Impact of Currency
|
|
Impact of Divestitures
|
|
Impact of 53rd Week
|
|
Organic Net Sales
|
|
Price
|
|
Volume/Mix
|
||||||||||
2015 (53 weeks)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
United States
|
$
|
18,932
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
233
|
|
|
$
|
18,699
|
|
|
|
|
|
Canada
|
2,386
|
|
|
(378
|
)
|
|
—
|
|
|
31
|
|
|
2,733
|
|
|
|
|
|
|||||
Europe
|
2,657
|
|
|
(439
|
)
|
|
42
|
|
|
32
|
|
|
3,022
|
|
|
|
|
|
|||||
Rest of World
|
3,472
|
|
|
(404
|
)
|
|
—
|
|
|
44
|
|
|
3,832
|
|
|
|
|
|
|||||
|
$
|
27,447
|
|
|
$
|
(1,221
|
)
|
|
$
|
42
|
|
|
$
|
340
|
|
|
$
|
28,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2014 (52 weeks)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
United States
|
$
|
19,346
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,346
|
|
|
|
|
|
Canada
|
2,811
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,811
|
|
|
|
|
|
|||||
Europe
|
3,233
|
|
|
—
|
|
|
107
|
|
|
—
|
|
|
3,126
|
|
|
|
|
|
|||||
Rest of World
|
3,732
|
|
|
274
|
|
|
—
|
|
|
—
|
|
|
3,458
|
|
|
|
|
|
|||||
|
$
|
29,122
|
|
|
$
|
274
|
|
|
$
|
107
|
|
|
$
|
—
|
|
|
$
|
28,741
|
|
|
|
|
|
Year-over-year growth rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
United States
|
(2.1
|
)%
|
|
0.0
|
pp
|
|
0.0
|
pp
|
|
1.2
|
pp
|
|
(3.3
|
)%
|
|
0.0
|
pp
|
|
(3.3
|
) pp
|
Canada
|
(15.1
|
)%
|
|
(13.4
|
) pp
|
|
0.0
|
pp
|
|
1.1
|
pp
|
|
(2.8
|
)%
|
|
2.2
|
pp
|
|
(5.0
|
) pp
|
Europe
|
(17.8
|
)%
|
|
(13.6
|
) pp
|
|
(1.9
|
) pp
|
|
1.0
|
pp
|
|
(3.3
|
)%
|
|
1.6
|
pp
|
|
(4.9
|
) pp
|
Rest of World
|
(7.0
|
)%
|
|
(19.1
|
) pp
|
|
0.0
|
pp
|
|
1.3
|
pp
|
|
10.8
|
%
|
|
5.2
|
pp
|
|
5.6
|
pp
|
Kraft Heinz
|
(5.8
|
)%
|
|
(5.2
|
) pp
|
|
(0.2
|
) pp
|
|
1.2
|
pp
|
|
(1.6
|
)%
|
|
1.0
|
pp
|
|
(2.6
|
) pp
|
(a)
|
See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
within this item.
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Pro forma net income/(loss)
(a)
|
$
|
3,642
|
|
|
$
|
1,774
|
|
|
$
|
2,333
|
|
Interest expense
|
1,134
|
|
|
1,528
|
|
|
1,113
|
|
|||
Other expense/(income), net
|
(15
|
)
|
|
289
|
|
|
57
|
|
|||
Provision for/(benefit from) income taxes
|
1,381
|
|
|
944
|
|
|
880
|
|
|||
Operating income
|
6,142
|
|
|
4,535
|
|
|
4,383
|
|
|||
Depreciation and amortization (excluding integration and restructuring expenses)
|
536
|
|
|
779
|
|
|
924
|
|
|||
Integration and restructuring expenses
|
1,012
|
|
|
1,117
|
|
|
743
|
|
|||
Merger costs
|
30
|
|
|
194
|
|
|
68
|
|
|||
Unrealized losses/(gains) on commodity hedges
|
(38
|
)
|
|
(41
|
)
|
|
79
|
|
|||
Impairment losses
|
53
|
|
|
58
|
|
|
221
|
|
|||
Losses/(gains) on sale of business
|
—
|
|
|
(21
|
)
|
|
—
|
|
|||
Nonmonetary currency devaluation
|
4
|
|
|
57
|
|
|
—
|
|
|||
Equity award compensation expense (excluding integration and restructuring expenses)
|
39
|
|
|
61
|
|
|
108
|
|
|||
Adjusted EBITDA
|
$
|
7,778
|
|
|
$
|
6,739
|
|
|
$
|
6,526
|
|
(a)
|
There were no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
at the end of this item.
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Pro forma diluted EPS
(a)
|
$
|
2.81
|
|
|
$
|
0.70
|
|
|
$
|
1.31
|
|
Integration and restructuring expenses
(b)(c)
|
0.57
|
|
|
0.61
|
|
|
0.47
|
|
|||
Merger costs
(b)(d)
|
0.02
|
|
|
0.49
|
|
|
0.04
|
|
|||
Unrealized losses/(gains) on commodity hedges
(b)(e)
|
(0.02
|
)
|
|
(0.02
|
)
|
|
0.05
|
|
|||
Impairment losses
(b)(e)
|
0.03
|
|
|
0.03
|
|
|
0.11
|
|
|||
Losses/(gains) on sale of business
(b)(e)
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|||
Nonmonetary currency devaluation
(b)(f)
|
0.02
|
|
|
0.24
|
|
|
—
|
|
|||
Preferred dividend adjustment
(g)
|
(0.10
|
)
|
|
0.15
|
|
|
—
|
|
|||
Adjusted EPS
|
$
|
3.33
|
|
|
$
|
2.19
|
|
|
$
|
1.98
|
|
(a)
|
There were no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. See the
Supplemental Unaudited Pro Forma Condensed Combined Financial Information
at the end of this item.
|
(b)
|
Income tax expense associated with these items is based on applicable jurisdictional tax rates and deductibility assessment of individual items.
|
(c)
|
Integration and restructuring expenses include the following gross expenses:
|
•
|
Expenses recorded in cost of products sold were $711 million in 2016, $479 million in 2015, and $535 million in 2014;
|
•
|
Expenses recorded in SG&A were $301 million in 2016, $638 million in 2015, and $208 million in 2014; and,
|
•
|
Expenses recorded in other expense/(income), net, were $23 million in 2014 (there were no such expenses in 2016 or 2015).
|
(d)
|
Merger costs include the following gross expenses:
|
•
|
Expenses recorded in cost of products sold were $2 million in 2016 and $6 million in 2015 (there were no such expenses in 2014);
|
•
|
Expenses recorded in SG&A were $28 million in 2016, $188 million in 2015, and $68 million in 2014;
|
•
|
Expenses recorded in interest expense were $466 million in 2015 (there were no such expenses in 2016 or 2014); and,
|
•
|
Expenses recorded in other expense/(income), net, were $144 million in 2015 (there were no such expenses in 2016 or 2014).
|
(e)
|
Refer to the reconciliation of pro forma net income/(loss) to Adjusted EBITDA for the related gross expenses.
|
(f)
|
Nonmonetary currency devaluation includes the following gross expenses/(income):
|
•
|
Expenses recorded in cost of products sold of $4 million in 2016 and $57 million in 2015 (there were no such expenses in 2014) and
|
•
|
Expenses recorded in other expense/(income), net, of $24 million in 2016 and $234 million in 2015 (there were no such expenses in 2014).
|
(g)
|
For Adjusted EPS, we present the impact of the Series A Preferred Stock dividend payments on an accrual basis. Accordingly, we included adjustments to EPS to exclude $180 million of Series A Preferred Stock dividends from the fourth quarter of 2015 (to reflect the March 7, 2016 Series A Preferred Stock dividend that was paid in December 2015), to include such $180 million Series A Preferred Stock dividend payment in the first quarter of 2016, and to exclude $51 million of Series A Preferred Stock dividends from the second quarter of 2016 (to reflect that it was redeemed on June 7, 2016).
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
||||
Commodity contracts
|
$
|
39
|
|
|
$
|
54
|
|
Foreign currency contracts
|
179
|
|
|
194
|
|
||
Cross-currency swap contracts
|
306
|
|
|
447
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Net sales
|
$
|
26,487
|
|
|
$
|
18,338
|
|
|
$
|
10,922
|
|
Cost of products sold
|
16,901
|
|
|
12,577
|
|
|
7,645
|
|
|||
Gross profit
|
9,586
|
|
|
5,761
|
|
|
3,277
|
|
|||
Selling, general and administrative expenses
|
3,444
|
|
|
3,122
|
|
|
1,709
|
|
|||
Operating income
|
6,142
|
|
|
2,639
|
|
|
1,568
|
|
|||
Interest expense
|
1,134
|
|
|
1,321
|
|
|
686
|
|
|||
Other expense/(income), net
|
(15
|
)
|
|
305
|
|
|
79
|
|
|||
Income/(loss) before income taxes
|
5,023
|
|
|
1,013
|
|
|
803
|
|
|||
Provision for/(benefit from) income taxes
|
1,381
|
|
|
366
|
|
|
131
|
|
|||
Net income/(loss)
|
3,642
|
|
|
647
|
|
|
672
|
|
|||
Net income/(loss) attributable to noncontrolling interest
|
10
|
|
|
13
|
|
|
15
|
|
|||
Net income/(loss) attributable to Kraft Heinz
|
3,632
|
|
|
634
|
|
|
657
|
|
|||
Preferred dividends
|
180
|
|
|
900
|
|
|
720
|
|
|||
Net income/(loss) attributable to common shareholders
|
$
|
3,452
|
|
|
$
|
(266
|
)
|
|
$
|
(63
|
)
|
Per share data applicable to common shareholders:
|
|
|
|
|
|
||||||
Basic earnings/(loss)
|
$
|
2.84
|
|
|
$
|
(0.34
|
)
|
|
$
|
(0.17
|
)
|
Diluted earnings/(loss)
|
2.81
|
|
|
(0.34
|
)
|
|
(0.17
|
)
|
|||
Dividends declared
|
2.35
|
|
|
1.70
|
|
|
—
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Net income/(loss)
|
$
|
3,642
|
|
|
$
|
647
|
|
|
$
|
672
|
|
Other comprehensive income/(loss), net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(986
|
)
|
|
(1,604
|
)
|
|
(939
|
)
|
|||
Net deferred gains/(losses) on net investment hedges
|
226
|
|
|
506
|
|
|
336
|
|
|||
Net actuarial gains/(losses) arising during the period
|
(40
|
)
|
|
23
|
|
|
(34
|
)
|
|||
Prior service credits/(costs) arising during the period
|
97
|
|
|
923
|
|
|
—
|
|
|||
Reclassification of net postemployment benefit losses/(gains)
|
(207
|
)
|
|
(85
|
)
|
|
(7
|
)
|
|||
Net deferred gains/(losses) on cash flow hedges
|
46
|
|
|
(6
|
)
|
|
(173
|
)
|
|||
Net deferred losses/(gains) on cash flow hedges reclassified to net income
|
(87
|
)
|
|
120
|
|
|
4
|
|
|||
Total other comprehensive income/(loss)
|
(951
|
)
|
|
(123
|
)
|
|
(813
|
)
|
|||
Total comprehensive income/(loss)
|
2,691
|
|
|
524
|
|
|
(141
|
)
|
|||
Comprehensive income/(loss) attributable to noncontrolling interest
|
16
|
|
|
(13
|
)
|
|
8
|
|
|||
Comprehensive income/(loss) attributable to Kraft Heinz
|
$
|
2,675
|
|
|
$
|
537
|
|
|
$
|
(149
|
)
|
|
December 31, 2016
|
|
January 3, 2016
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,204
|
|
|
$
|
4,837
|
|
Trade receivables (net of allowances of $20 at December 31, 2016 and $32 at January 3, 2016)
|
769
|
|
|
871
|
|
||
Sold receivables
|
129
|
|
|
583
|
|
||
Inventories
|
2,684
|
|
|
2,618
|
|
||
Other current assets
|
967
|
|
|
871
|
|
||
Total current assets
|
8,753
|
|
|
9,780
|
|
||
Property, plant and equipment, net
|
6,688
|
|
|
6,524
|
|
||
Goodwill
|
44,125
|
|
|
43,051
|
|
||
Intangible assets, net
|
59,297
|
|
|
62,120
|
|
||
Other assets
|
1,617
|
|
|
1,498
|
|
||
TOTAL ASSETS
|
$
|
120,480
|
|
|
$
|
122,973
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Commercial paper and other short-term debt
|
$
|
645
|
|
|
$
|
4
|
|
Current portion of long-term debt
|
2,046
|
|
|
79
|
|
||
Trade payables
|
3,996
|
|
|
2,844
|
|
||
Accrued marketing
|
749
|
|
|
856
|
|
||
Accrued postemployment costs
|
157
|
|
|
328
|
|
||
Income taxes payable
|
255
|
|
|
417
|
|
||
Interest payable
|
415
|
|
|
401
|
|
||
Dividends payable
|
39
|
|
|
762
|
|
||
Other current liabilities
|
1,199
|
|
|
1,241
|
|
||
Total current liabilities
|
9,501
|
|
|
6,932
|
|
||
Long-term debt
|
29,713
|
|
|
25,151
|
|
||
Deferred income taxes
|
20,848
|
|
|
21,497
|
|
||
Accrued postemployment costs
|
2,038
|
|
|
2,405
|
|
||
Other liabilities
|
806
|
|
|
752
|
|
||
TOTAL LIABILITIES
|
62,906
|
|
|
56,737
|
|
||
Commitments and Contingencies (Note 16)
|
|
|
|
||||
Redeemable noncontrolling interest
|
—
|
|
|
23
|
|
||
9.00% cumulative compounding preferred stock, Series A, no shares authorized and issued at December 31, 2016 and 80,000 authorized and issued shares at January 3, 2016, $0.01 par value
|
—
|
|
|
8,320
|
|
||
Equity:
|
|
|
|
||||
Common stock, $0.01 par value (5,000,000,000 shares authorized; 1,218,947,088 shares issued and 1,216,475,740 shares outstanding at December 31, 2016; 1,214,391,614 shares issued and 1,213,978,752
shares outstanding at January 3, 2016)
|
12
|
|
|
12
|
|
||
Additional paid-in capital
|
58,593
|
|
|
58,375
|
|
||
Retained earnings/(deficit)
|
588
|
|
|
—
|
|
||
Accumulated other comprehensive income/(losses)
|
(1,628
|
)
|
|
(671
|
)
|
||
Treasury stock, at cost
|
(207
|
)
|
|
(31
|
)
|
||
Total shareholders' equity
|
57,358
|
|
|
57,685
|
|
||
Noncontrolling interest
|
216
|
|
|
208
|
|
||
TOTAL EQUITY
|
57,574
|
|
|
57,893
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
120,480
|
|
|
$
|
122,973
|
|
|
Common Stock
|
|
Warrants
|
|
Additional Paid-in Capital
|
|
Retained Earnings/ (Deficit)
|
|
Accumulated Other Comprehensive Income/(Losses)
|
|
Treasury Stock
|
|
Noncontrolling Interest
|
|
Total Equity
|
||||||||||||||||
Balance at December 29, 2013
|
$
|
4
|
|
|
$
|
367
|
|
|
$
|
7,450
|
|
|
$
|
(77
|
)
|
|
$
|
232
|
|
|
$
|
—
|
|
|
$
|
216
|
|
|
$
|
8,192
|
|
Net income/(loss) excluding redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
657
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
671
|
|
||||||||
Other comprehensive income/(loss) excluding redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(806
|
)
|
|
—
|
|
|
(4
|
)
|
|
(810
|
)
|
||||||||
Dividends declared-Series A Preferred Stock
|
—
|
|
|
—
|
|
|
(142
|
)
|
|
(578
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(720
|
)
|
||||||||
Dividends declared-noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
||||||||
Exercise of stock options, issuance of other stock awards, and other
|
—
|
|
|
—
|
|
|
12
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||||||
Balance at December 28, 2014
|
4
|
|
|
367
|
|
|
7,320
|
|
|
—
|
|
|
(574
|
)
|
|
—
|
|
|
219
|
|
|
7,336
|
|
||||||||
Net income/(loss) excluding redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
634
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
647
|
|
||||||||
Other comprehensive income/(loss) excluding redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
(18
|
)
|
|
(115
|
)
|
||||||||
Dividends declared-Series A Preferred Stock
|
—
|
|
|
—
|
|
|
(360
|
)
|
|
(540
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(900
|
)
|
||||||||
Dividends declared-common stock
|
—
|
|
|
—
|
|
|
(1,972
|
)
|
|
(92
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,064
|
)
|
||||||||
Dividends declared-noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||||||
Exercise of warrants
|
—
|
|
|
(367
|
)
|
|
367
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Issuance of common stock to Sponsors
|
2
|
|
|
—
|
|
|
9,998
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
||||||||
Acquisition of Kraft Foods Group, Inc.
|
6
|
|
|
—
|
|
|
42,849
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42,855
|
|
||||||||
Exercise of stock options, issuance of other stock awards, and other
|
—
|
|
|
—
|
|
|
173
|
|
|
(2
|
)
|
|
—
|
|
|
(31
|
)
|
|
—
|
|
|
140
|
|
||||||||
Balance at January 3, 2016
|
12
|
|
|
—
|
|
|
58,375
|
|
|
—
|
|
|
(671
|
)
|
|
(31
|
)
|
|
208
|
|
|
57,893
|
|
||||||||
Net income/(loss) excluding redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
3,632
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
3,642
|
|
||||||||
Other comprehensive income/(loss) excluding redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(957
|
)
|
|
—
|
|
|
6
|
|
|
(951
|
)
|
||||||||
Dividends declared-Series A Preferred Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(180
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(180
|
)
|
||||||||
Dividends declared-common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,862
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,862
|
)
|
||||||||
Dividends declared-noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
||||||||
Exercise of stock options, issuance of other stock awards, and other
|
—
|
|
|
—
|
|
|
218
|
|
|
(2
|
)
|
|
—
|
|
|
(176
|
)
|
|
—
|
|
|
40
|
|
||||||||
Balance at December 31, 2016
|
$
|
12
|
|
|
—
|
|
|
$
|
58,593
|
|
|
$
|
588
|
|
|
$
|
(1,628
|
)
|
|
$
|
(207
|
)
|
|
$
|
216
|
|
|
$
|
57,574
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income/(loss)
|
$
|
3,642
|
|
|
$
|
647
|
|
|
$
|
672
|
|
Adjustments to reconcile net income/(loss) to operating cash flows:
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
1,337
|
|
|
740
|
|
|
530
|
|
|||
Amortization of postretirement benefit plans prior service credits
|
(333
|
)
|
|
(112
|
)
|
|
(6
|
)
|
|||
Amortization of inventory step-up
|
—
|
|
|
347
|
|
|
—
|
|
|||
Equity award compensation expense
|
46
|
|
|
133
|
|
|
8
|
|
|||
Deferred income tax provision
|
(29
|
)
|
|
(317
|
)
|
|
(174
|
)
|
|||
Pension contributions
|
(344
|
)
|
|
(286
|
)
|
|
(102
|
)
|
|||
Impairment losses on indefinite-lived intangible assets
|
—
|
|
|
58
|
|
|
221
|
|
|||
Nonmonetary currency devaluation
|
24
|
|
|
234
|
|
|
—
|
|
|||
Write-off of debt issuance costs
|
—
|
|
|
236
|
|
|
—
|
|
|||
Other items, net
|
(134
|
)
|
|
120
|
|
|
194
|
|
|||
Changes in current assets and liabilities:
|
|
|
|
|
|
||||||
Trade receivables
|
80
|
|
|
838
|
|
|
144
|
|
|||
Sold receivables
|
454
|
|
|
(422
|
)
|
|
(129
|
)
|
|||
Inventories
|
(130
|
)
|
|
25
|
|
|
153
|
|
|||
Accounts payable
|
943
|
|
|
(119
|
)
|
|
562
|
|
|||
Other current assets
|
(42
|
)
|
|
114
|
|
|
(20
|
)
|
|||
Other current liabilities
|
(276
|
)
|
|
231
|
|
|
87
|
|
|||
Net cash provided by/(used for) operating activities
|
5,238
|
|
|
2,467
|
|
|
2,140
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Capital expenditures
|
(1,247
|
)
|
|
(648
|
)
|
|
(399
|
)
|
|||
Payments to acquire Kraft Foods Group, Inc., net of cash acquired
|
—
|
|
|
(9,468
|
)
|
|
—
|
|
|||
Proceeds from net investment hedges
|
91
|
|
|
488
|
|
|
—
|
|
|||
Other investing activities, net
|
43
|
|
|
(76
|
)
|
|
50
|
|
|||
Net cash provided by/(used for) investing activities
|
(1,113
|
)
|
|
(9,704
|
)
|
|
(349
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Repayments of long-term debt
|
(86
|
)
|
|
(12,314
|
)
|
|
(1,103
|
)
|
|||
Proceeds from issuance of long-term debt
|
6,981
|
|
|
14,834
|
|
|
—
|
|
|||
Debt issuance costs
|
(53
|
)
|
|
(98
|
)
|
|
—
|
|
|||
Proceeds from issuance of commercial paper
|
6,680
|
|
|
—
|
|
|
—
|
|
|||
Repayments of commercial paper
|
(6,043
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of common stock to Sponsors
|
—
|
|
|
10,000
|
|
|
—
|
|
|||
Dividends paid-Series A Preferred Stock
|
(180
|
)
|
|
(900
|
)
|
|
(720
|
)
|
|||
Dividends paid-common stock
|
(3,584
|
)
|
|
(1,302
|
)
|
|
—
|
|
|||
Redemption of Series A Preferred Stock
|
(8,320
|
)
|
|
—
|
|
|
—
|
|
|||
Other financing activities, net
|
(16
|
)
|
|
(37
|
)
|
|
3
|
|
|||
Net cash provided by/(used for) financing activities
|
(4,621
|
)
|
|
10,183
|
|
|
(1,820
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(137
|
)
|
|
(407
|
)
|
|
(132
|
)
|
|||
Cash and cash equivalents:
|
|
|
|
|
|
||||||
Net increase/(decrease)
|
(633
|
)
|
|
2,539
|
|
|
(161
|
)
|
|||
Balance at beginning of period
|
4,837
|
|
|
2,298
|
|
|
2,459
|
|
|||
Balance at end of period
|
$
|
4,204
|
|
|
$
|
4,837
|
|
|
$
|
2,298
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Cash paid during the period for:
|
|
|
|
|
|
||||||
Interest
|
$
|
1,176
|
|
|
$
|
704
|
|
|
$
|
620
|
|
Income taxes
|
1,619
|
|
|
577
|
|
|
86
|
|
Aggregate fair value of Kraft common stock
|
$
|
42,502
|
|
$16.50 per share special cash dividend
|
9,782
|
|
|
Fair value of replacement equity awards
|
353
|
|
|
Total consideration exchanged
|
$
|
52,637
|
|
Cash
|
$
|
314
|
|
Other current assets
|
3,423
|
|
|
Property, plant and equipment
|
4,179
|
|
|
Identifiable intangible assets
|
47,771
|
|
|
Other non-current assets
|
214
|
|
|
Trade and other payables
|
(3,026
|
)
|
|
Long-term debt
|
(9,286
|
)
|
|
Net postemployment benefits and other non-current liabilities
|
(4,739
|
)
|
|
Deferred income tax liabilities
|
(16,675
|
)
|
|
Net assets acquired
|
22,175
|
|
|
Goodwill on acquisition
|
30,462
|
|
|
Total consideration
|
52,637
|
|
|
Fair value of shares exchanged and equity awards
|
42,855
|
|
|
Total cash consideration paid to Kraft shareholders
|
9,782
|
|
|
Cash and cash equivalents of Kraft at the 2015 Merger Date
|
314
|
|
|
Acquisition of business, net of cash on hand
|
$
|
9,468
|
|
|
Fair Value
|
|
Weighted Average Life
|
||
|
(in millions of dollars)
|
|
(in years)
|
||
Indefinite-lived trademarks
|
$
|
43,104
|
|
|
|
Definite-lived trademarks
|
1,690
|
|
|
24
|
|
Customer-related assets
|
2,977
|
|
|
29
|
|
Total
|
$
|
47,771
|
|
|
|
|
For the Year Ended
|
||||||
|
January 3, 2016
|
|
December 28, 2014
|
||||
|
(in millions, except per share data)
|
||||||
Net sales
|
$
|
27,447
|
|
|
$
|
29,122
|
|
Net income
|
1,761
|
|
|
2,003
|
|
||
Basic earnings per share
|
0.72
|
|
|
1.08
|
|
||
Diluted earnings per share
|
0.70
|
|
|
1.05
|
|
•
|
Organization costs (
$400 million
) associated with our plans to streamline and simplify our operating structure, resulting in workforce reduction (primarily severance and employee benefit costs).
|
•
|
Footprint costs (
$1.2 billion
) associated with our plans to optimize our production and supply chain network, resulting in workforce reduction and facility closures and consolidations (primarily asset-related costs and severance and employee benefit costs).
|
•
|
Other costs (
$400 million
) incurred as a direct result of integration activities, including other exit costs (lease and contract terminations) and other implementation costs (professional services and other third-party fees).
|
|
Severance and Employee Benefit Costs
|
|
Other Exit Costs
(a)
|
|
Total
|
||||||
Balance at January 3, 2016
|
$
|
185
|
|
|
$
|
23
|
|
|
$
|
208
|
|
Charges
|
119
|
|
|
40
|
|
|
159
|
|
|||
Cash payments
|
(182
|
)
|
|
(53
|
)
|
|
(235
|
)
|
|||
Non-cash utilization
|
(23
|
)
|
|
—
|
|
|
(23
|
)
|
|||
Balance at December 31, 2016
|
$
|
99
|
|
|
$
|
10
|
|
|
$
|
109
|
|
|
Severance and Employee Benefit Costs
|
|
Other Exit Costs
(a)
|
|
Total
|
||||||
Balance at January 3, 2016
|
$
|
25
|
|
|
$
|
30
|
|
|
$
|
55
|
|
Charges
|
38
|
|
|
2
|
|
|
40
|
|
|||
Cash payments
|
(44
|
)
|
|
(7
|
)
|
|
(51
|
)
|
|||
Non-cash utilization
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||
Balance at December 31, 2016
|
$
|
12
|
|
|
$
|
25
|
|
|
$
|
37
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Severance and employee benefit costs - COGS
|
$
|
53
|
|
|
$
|
119
|
|
|
$
|
135
|
|
Severance and employee benefit costs - SG&A
|
104
|
|
|
519
|
|
|
67
|
|
|||
Asset-related costs - COGS
|
496
|
|
|
186
|
|
|
199
|
|
|||
Asset-related costs - SG&A
|
41
|
|
|
7
|
|
|
9
|
|
|||
Other exit costs - COGS
|
162
|
|
|
99
|
|
|
179
|
|
|||
Other exit costs - SG&A
|
156
|
|
|
93
|
|
|
48
|
|
|||
|
$
|
1,012
|
|
|
$
|
1,023
|
|
|
$
|
637
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
United States
|
$
|
759
|
|
|
$
|
790
|
|
|
$
|
227
|
|
Canada
|
45
|
|
|
47
|
|
|
101
|
|
|||
Europe
|
85
|
|
|
142
|
|
|
228
|
|
|||
Rest of World
|
6
|
|
|
12
|
|
|
58
|
|
|||
General corporate expenses
|
117
|
|
|
32
|
|
|
23
|
|
|||
|
$
|
1,012
|
|
|
$
|
1,023
|
|
|
$
|
637
|
|
|
December 31, 2016
|
|
January 3, 2016
|
||||
Packaging and ingredients
|
$
|
542
|
|
|
$
|
563
|
|
Work in process
|
388
|
|
|
393
|
|
||
Finished product
|
1,754
|
|
|
1,662
|
|
||
Inventories
|
$
|
2,684
|
|
|
$
|
2,618
|
|
|
December 31, 2016
|
|
January 3, 2016
|
||||
Land
|
$
|
264
|
|
|
$
|
297
|
|
Buildings and improvements
|
1,884
|
|
|
1,700
|
|
||
Equipment and other
|
4,770
|
|
|
4,432
|
|
||
Construction in progress
|
1,600
|
|
|
1,001
|
|
||
|
8,518
|
|
|
7,430
|
|
||
Accumulated depreciation
|
(1,830
|
)
|
|
(906
|
)
|
||
Property, plant and equipment, net
|
$
|
6,688
|
|
|
$
|
6,524
|
|
|
United States
|
|
Canada
|
|
Europe
|
|
Rest of World
|
|
Total
|
||||||||||
Balance at January 3, 2016
|
$
|
32,290
|
|
|
$
|
4,796
|
|
|
$
|
3,227
|
|
|
$
|
2,738
|
|
|
$
|
43,051
|
|
2015 Merger measurement period adjustments
|
1,433
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,433
|
|
|||||
Translation adjustments and other
|
(27
|
)
|
|
117
|
|
|
(449
|
)
|
|
—
|
|
|
(359
|
)
|
|||||
Balance at December 31, 2016
|
$
|
33,696
|
|
|
$
|
4,913
|
|
|
$
|
2,778
|
|
|
$
|
2,738
|
|
|
$
|
44,125
|
|
Balance at January 3, 2016
|
$
|
55,824
|
|
2015 Merger measurement period adjustments
|
(1,978
|
)
|
|
Translation adjustments
|
(539
|
)
|
|
Balance at December 31, 2016
|
$
|
53,307
|
|
|
December 31, 2016
|
|
January 3, 2016
|
||||||||||||||||||||
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Trademarks
|
$
|
2,337
|
|
|
$
|
(172
|
)
|
|
$
|
2,165
|
|
|
$
|
2,346
|
|
|
$
|
(70
|
)
|
|
$
|
2,276
|
|
Customer-related assets
|
4,184
|
|
|
(369
|
)
|
|
3,815
|
|
|
4,218
|
|
|
(209
|
)
|
|
4,009
|
|
||||||
Other
|
13
|
|
|
(3
|
)
|
|
10
|
|
|
15
|
|
|
(4
|
)
|
|
11
|
|
||||||
|
$
|
6,534
|
|
|
$
|
(544
|
)
|
|
$
|
5,990
|
|
|
$
|
6,579
|
|
|
$
|
(283
|
)
|
|
$
|
6,296
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Income/(loss) before income taxes:
|
|
|
|
|
|
||||||
United States
|
$
|
3,358
|
|
|
$
|
(13
|
)
|
|
$
|
(207
|
)
|
International
|
1,665
|
|
|
1,026
|
|
|
1,010
|
|
|||
Total
|
$
|
5,023
|
|
|
$
|
1,013
|
|
|
$
|
803
|
|
|
|
|
|
|
|
||||||
Provision for/(benefit from) income taxes:
|
|
|
|
|
|
||||||
Current:
|
|
|
|
|
|
||||||
U.S. federal
|
$
|
1,095
|
|
|
$
|
427
|
|
|
$
|
105
|
|
U.S. state and local
|
76
|
|
|
22
|
|
|
12
|
|
|||
International
|
239
|
|
|
234
|
|
|
188
|
|
|||
|
1,410
|
|
|
683
|
|
|
305
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
U.S. federal
|
31
|
|
|
(173
|
)
|
|
(159
|
)
|
|||
U.S. state and local
|
(60
|
)
|
|
(70
|
)
|
|
(14
|
)
|
|||
International
|
—
|
|
|
(74
|
)
|
|
(1
|
)
|
|||
|
(29
|
)
|
|
(317
|
)
|
|
(174
|
)
|
|||
Total provision for/(benefit from) income taxes
|
$
|
1,381
|
|
|
$
|
366
|
|
|
$
|
131
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|||
U.S. federal statutory tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increase/(decrease) resulting from:
|
|
|
|
|
|
|||
Tax on income of foreign subsidiaries
|
(3.6
|
)%
|
|
(11.8
|
)%
|
|
(8.3
|
)%
|
Changes in valuation allowances
|
—
|
%
|
|
1.4
|
%
|
|
(1.3
|
)%
|
Domestic manufacturing deduction
|
(1.9
|
)%
|
|
(2.9
|
)%
|
|
(2.8
|
)%
|
U.S. state and local income taxes, net of federal tax benefit
|
0.8
|
%
|
|
(0.6
|
)%
|
|
(0.9
|
)%
|
Earnings repatriation
|
0.4
|
%
|
|
21.9
|
%
|
|
8.0
|
%
|
Tax exempt income
|
(3.3
|
)%
|
|
(10.9
|
)%
|
|
(12.3
|
)%
|
Deferred tax effect of statutory tax rate changes
|
(2.0
|
)%
|
|
(10.4
|
)%
|
|
(0.8
|
)%
|
Audit settlements and changes in uncertain tax positions
|
1.8
|
%
|
|
6.2
|
%
|
|
2.2
|
%
|
Venezuela nondeductible devaluation loss
|
0.2
|
%
|
|
9.9
|
%
|
|
—
|
%
|
Venezuela inflation adjustment
|
—
|
%
|
|
(1.7
|
)%
|
|
(3.1
|
)%
|
Other
|
0.1
|
%
|
|
0.1
|
%
|
|
0.6
|
%
|
Effective tax rate
|
27.5
|
%
|
|
36.2
|
%
|
|
16.3
|
%
|
•
|
The 2016 tax year included a benefit related to the impact on deferred taxes of a 10 basis point reduction in the state tax rate and a 100 basis point statutory rate reduction in the United Kingdom.
|
•
|
The 2015 tax year included a benefit related to the impact on deferred taxes of a 200 basis point statutory rate reduction in the United Kingdom.
|
|
December 31, 2016
|
|
January 3, 2016
|
||||
Deferred income tax liabilities:
|
|
|
|
||||
Intangible assets, net
|
$
|
20,946
|
|
|
$
|
21,950
|
|
Property, plant and equipment
|
1,035
|
|
|
1,233
|
|
||
Other
|
532
|
|
|
495
|
|
||
Deferred income tax liabilities
|
22,513
|
|
|
23,678
|
|
||
Deferred income tax assets:
|
|
|
|
||||
Benefit plans
|
(1,025
|
)
|
|
(1,323
|
)
|
||
Other
|
(782
|
)
|
|
(1,011
|
)
|
||
Deferred income tax assets
|
(1,807
|
)
|
|
(2,334
|
)
|
||
Valuation allowance
|
89
|
|
|
83
|
|
||
Net deferred income tax liabilities
|
$
|
20,795
|
|
|
$
|
21,427
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Balance at the beginning of the period
|
$
|
353
|
|
|
$
|
71
|
|
|
$
|
53
|
|
Increases for tax positions of prior years
|
59
|
|
|
25
|
|
|
5
|
|
|||
Decreases for tax positions of prior years
|
(18
|
)
|
|
(9
|
)
|
|
(5
|
)
|
|||
Increases based on tax positions related to the current year
|
62
|
|
|
33
|
|
|
21
|
|
|||
Increases due to acquisitions of businesses
|
—
|
|
|
242
|
|
|
—
|
|
|||
Decreases due to settlements with taxing authorities
|
(62
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Decreases due to lapse of statute of limitations
|
(5
|
)
|
|
(9
|
)
|
|
(2
|
)
|
|||
Balance at the end of the period
|
$
|
389
|
|
|
$
|
353
|
|
|
$
|
71
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Risk-free interest rate
|
1.63
|
%
|
|
1.70
|
%
|
|
1.49
|
%
|
|||
Expected term
|
7.5 years
|
|
|
6.3 years
|
|
|
5 years
|
|
|||
Expected volatility
|
22.0
|
%
|
|
22.9
|
%
|
|
24.3
|
%
|
|||
Expected dividend yield
|
3.1
|
%
|
|
1.5
|
%
|
|
—
|
%
|
|||
Weighted average grant date fair value per share
|
$
|
12.48
|
|
|
$
|
9.60
|
|
|
$
|
5.53
|
|
|
January 3,
2016 (53 weeks) |
||
Risk-free interest rate
|
1.72
|
%
|
|
Expected volatility
|
20.10
|
%
|
|
Expected dividend yield
|
3.00
|
%
|
|
Weighted average fair value on conversion date
|
$
|
35.65
|
|
|
Number of Stock Options
|
|
Weighted Average Exercise Price
|
|
Aggregate Intrinsic Value
(in millions) |
|
Average Remaining Contractual Term
|
|||||
Outstanding at January 3, 2016
|
24,205,612
|
|
|
$
|
34.86
|
|
|
|
|
|
||
Granted
|
1,466,626
|
|
|
79.78
|
|
|
|
|
|
|||
Forfeited
|
(1,094,676
|
)
|
|
46.93
|
|
|
|
|
|
|||
Exercised
|
(4,017,422
|
)
|
|
35.02
|
|
|
|
|
|
|||
Outstanding at December 31, 2016
|
20,560,140
|
|
|
37.39
|
|
|
$
|
1,027
|
|
|
6 years
|
|
Exercisable at December 31, 2016
|
8,660,191
|
|
|
37.25
|
|
|
434
|
|
|
5 years
|
|
Number of Options
|
|
Weighted Average Grant Date Fair Value
(per share) |
|||
Unvested options at January 3, 2016
|
13,492,010
|
|
|
$
|
10.02
|
|
Granted
|
1,466,626
|
|
|
12.48
|
|
|
Vested
|
(2,010,210
|
)
|
|
21.24
|
|
|
Forfeited
|
(1,048,477
|
)
|
|
11.71
|
|
|
Unvested options at December 31, 2016
|
11,899,949
|
|
|
8.26
|
|
|
Number of Units
|
|
Weighted Average Grant Date Fair Value
(per share)
|
|||
RSUs at January 3, 2016
|
968,444
|
|
|
$
|
70.14
|
|
Granted
|
510,157
|
|
|
77.53
|
|
|
Forfeited
|
(149,831
|
)
|
|
75.29
|
|
|
Vested
|
(522,026
|
)
|
|
72.96
|
|
|
RSUs at December 31, 2016
|
806,744
|
|
|
71.95
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Pre-tax compensation cost
|
$
|
46
|
|
|
$
|
133
|
|
|
$
|
8
|
|
Tax benefit
|
(15
|
)
|
|
(48
|
)
|
|
(3
|
)
|
|||
After-tax compensation cost
|
$
|
31
|
|
|
$
|
85
|
|
|
$
|
5
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
December 31, 2016
|
|
January 3, 2016
|
|
December 31, 2016
|
|
January 3, 2016
|
||||||||
Benefit obligation at beginning of year
|
$
|
5,990
|
|
|
$
|
540
|
|
|
$
|
2,892
|
|
|
$
|
2,611
|
|
Service cost
|
13
|
|
|
45
|
|
|
25
|
|
|
26
|
|
||||
Interest cost
|
203
|
|
|
164
|
|
|
87
|
|
|
103
|
|
||||
Participants' contributions
|
—
|
|
|
—
|
|
|
3
|
|
|
2
|
|
||||
Benefits paid
|
(268
|
)
|
|
(167
|
)
|
|
(158
|
)
|
|
(138
|
)
|
||||
Actuarial losses/(gains)
|
195
|
|
|
(121
|
)
|
|
540
|
|
|
23
|
|
||||
Plan amendments
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
||||
Currency
|
—
|
|
|
—
|
|
|
(281
|
)
|
|
(300
|
)
|
||||
Settlements
|
(966
|
)
|
|
(977
|
)
|
|
(12
|
)
|
|
(655
|
)
|
||||
Curtailments
|
—
|
|
|
(148
|
)
|
|
—
|
|
|
(50
|
)
|
||||
Special/contractual termination benefits
|
—
|
|
|
4
|
|
|
3
|
|
|
6
|
|
||||
Assumption of Kraft's benefit obligations
|
—
|
|
|
6,645
|
|
|
—
|
|
|
1,264
|
|
||||
Other
|
(10
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
||||
Benefit obligation at end of year
|
5,157
|
|
|
5,990
|
|
|
3,099
|
|
|
2,892
|
|
||||
Fair value of plan assets at beginning of year
|
5,282
|
|
|
547
|
|
|
3,428
|
|
|
3,088
|
|
||||
Actual return on plan assets
|
435
|
|
|
(34
|
)
|
|
712
|
|
|
126
|
|
||||
Participants' contributions
|
—
|
|
|
—
|
|
|
3
|
|
|
2
|
|
||||
Employer contributions
|
311
|
|
|
227
|
|
|
33
|
|
|
59
|
|
||||
Benefits paid
|
(268
|
)
|
|
(167
|
)
|
|
(158
|
)
|
|
(138
|
)
|
||||
Currency
|
—
|
|
|
—
|
|
|
(378
|
)
|
|
(331
|
)
|
||||
Settlements
|
(966
|
)
|
|
(977
|
)
|
|
(12
|
)
|
|
(655
|
)
|
||||
Assumption of Kraft's plan assets
|
—
|
|
|
5,686
|
|
|
—
|
|
|
1,277
|
|
||||
Other
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
4,788
|
|
|
5,282
|
|
|
3,628
|
|
|
3,428
|
|
||||
Net pension liability/(asset) recognized at end of year
|
$
|
369
|
|
|
$
|
708
|
|
|
$
|
(529
|
)
|
|
$
|
(536
|
)
|
|
December 31, 2016
|
|
January 3, 2016
|
||||
Other assets (long-term assets)
|
$
|
641
|
|
|
$
|
616
|
|
Accrued postemployment costs (current liabilities)
|
(3
|
)
|
|
(172
|
)
|
||
Accrued postemployment costs (long-term liabilities)
|
(478
|
)
|
|
(616
|
)
|
||
Net pension asset/(liability) recognized
|
$
|
160
|
|
|
$
|
(172
|
)
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
December 31, 2016
|
|
January 3, 2016
|
|
December 31, 2016
|
|
January 3, 2016
|
||||||||
Projected benefit obligation
|
$
|
3,669
|
|
|
$
|
5,990
|
|
|
$
|
527
|
|
|
$
|
72
|
|
Accumulated benefit obligation
|
3,669
|
|
|
5,986
|
|
|
527
|
|
|
72
|
|
||||
Fair value of plan assets
|
3,282
|
|
|
5,282
|
|
|
437
|
|
|
15
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
|
December 31, 2016
|
|
January 3, 2016
|
|
December 31, 2016
|
|
January 3, 2016
|
||||||||
Projected benefit obligation
|
$
|
3,669
|
|
|
$
|
5,990
|
|
|
$
|
539
|
|
|
$
|
119
|
|
Accumulated benefit obligation
|
3,669
|
|
|
5,986
|
|
|
534
|
|
|
72
|
|
||||
Fair value of plan assets
|
3,282
|
|
|
5,282
|
|
|
445
|
|
|
43
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
|
December 31, 2016
|
|
January 3, 2016
|
|
December 31, 2016
|
|
January 3, 2016
|
||||
Discount rate
|
4.2
|
%
|
|
4.3
|
%
|
|
2.9
|
%
|
|
3.8
|
%
|
Rate of compensation increase
|
4.1
|
%
|
|
4.2
|
%
|
|
4.0
|
%
|
|
3.4
|
%
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||||||||
Service cost
|
$
|
13
|
|
|
$
|
45
|
|
|
$
|
4
|
|
|
$
|
25
|
|
|
$
|
26
|
|
|
$
|
25
|
|
Interest cost
|
203
|
|
|
164
|
|
|
29
|
|
|
87
|
|
|
103
|
|
|
107
|
|
||||||
Expected return on plan assets
|
(290
|
)
|
|
(179
|
)
|
|
(46
|
)
|
|
(182
|
)
|
|
(194
|
)
|
|
(169
|
)
|
||||||
Amortization of unrecognized losses/(gains)
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Settlements
|
23
|
|
|
102
|
|
|
10
|
|
|
2
|
|
|
17
|
|
|
—
|
|
||||||
Curtailments
|
—
|
|
|
(96
|
)
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
|
(6
|
)
|
||||||
Special/contractual termination benefits
|
—
|
|
|
4
|
|
|
—
|
|
|
3
|
|
|
6
|
|
|
8
|
|
||||||
Net pension cost/(benefit)
|
$
|
(51
|
)
|
|
$
|
43
|
|
|
$
|
(3
|
)
|
|
$
|
(65
|
)
|
|
$
|
(89
|
)
|
|
$
|
(35
|
)
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Discount rate - Service Cost
|
4.5
|
%
|
|
4.4
|
%
|
|
4.8
|
%
|
|
4.2
|
%
|
|
3.7
|
%
|
|
4.5
|
%
|
Discount rate - Interest Cost
|
3.5
|
%
|
|
4.4
|
%
|
|
4.8
|
%
|
|
3.3
|
%
|
|
3.7
|
%
|
|
4.5
|
%
|
Expected rate of return on plan assets
|
5.7
|
%
|
|
5.6
|
%
|
|
6.5
|
%
|
|
5.6
|
%
|
|
6.4
|
%
|
|
6.1
|
%
|
Rate of compensation increase
|
4.1
|
%
|
|
4.0
|
%
|
|
4.5
|
%
|
|
3.4
|
%
|
|
3.3
|
%
|
|
3.6
|
%
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
|
December 31, 2016
|
|
January 3, 2016
|
|
December 31, 2016
|
|
January 3, 2016
|
||||
Fixed-income securities
|
67
|
%
|
|
62
|
%
|
|
49
|
%
|
|
48
|
%
|
Equity securities
|
30
|
%
|
|
27
|
%
|
|
31
|
%
|
|
31
|
%
|
Real estate
|
—
|
%
|
|
5
|
%
|
|
7
|
%
|
|
9
|
%
|
Cash and cash equivalents
|
3
|
%
|
|
5
|
%
|
|
8
|
%
|
|
7
|
%
|
Certain insurance contracts
|
—
|
%
|
|
1
|
%
|
|
5
|
%
|
|
5
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Asset Category
|
Total Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant Other Observable Inputs
(Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
||||||||
Government bonds
|
$
|
484
|
|
|
$
|
410
|
|
|
$
|
74
|
|
|
$
|
—
|
|
Corporate bonds and other fixed-income securities
|
2,952
|
|
|
—
|
|
|
2,952
|
|
|
—
|
|
||||
Total fixed-income securities
|
3,436
|
|
|
410
|
|
|
3,026
|
|
|
—
|
|
||||
Equity securities
|
765
|
|
|
765
|
|
|
—
|
|
|
—
|
|
||||
Real estate
|
234
|
|
|
—
|
|
|
—
|
|
|
234
|
|
||||
Cash and cash equivalents
|
49
|
|
|
31
|
|
|
18
|
|
|
—
|
|
||||
Certain insurance contracts
|
189
|
|
|
—
|
|
|
—
|
|
|
189
|
|
||||
Fair value excluding investments measured at net asset value
|
4,673
|
|
|
1,206
|
|
|
3,044
|
|
|
423
|
|
||||
Investments measured at net asset value
|
3,743
|
|
|
|
|
|
|
|
|||||||
Total fair value
|
$
|
8,416
|
|
|
|
|
|
|
|
Asset Category
|
Total Fair Value
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant Other Observable Inputs
(Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
||||||||
Government bonds
|
$
|
671
|
|
|
$
|
671
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate bonds and other fixed-income securities
|
2,994
|
|
|
—
|
|
|
2,994
|
|
|
—
|
|
||||
Total fixed-income securities
|
3,665
|
|
|
671
|
|
|
2,994
|
|
|
—
|
|
||||
Equity securities
|
322
|
|
|
321
|
|
|
—
|
|
|
1
|
|
||||
Real estate
|
288
|
|
|
—
|
|
|
—
|
|
|
288
|
|
||||
Cash and cash equivalents
|
148
|
|
|
14
|
|
|
134
|
|
|
—
|
|
||||
Certain insurance contracts
|
236
|
|
|
—
|
|
|
—
|
|
|
236
|
|
||||
Fair value excluding investments measured at net asset value
|
4,659
|
|
|
1,006
|
|
|
3,128
|
|
|
525
|
|
||||
Investments measured at net asset value
|
4,051
|
|
|
|
|
|
|
|
|||||||
Total fair value
|
$
|
8,710
|
|
|
|
|
|
|
|
Asset Category
|
January 3, 2016
|
|
Net Realized Gain/(Loss)
|
|
Net Unrealized Gain/(Loss)
|
|
Net Purchases, Issuances and Settlements
|
|
Transfers Into/(Out of) Level 3
|
|
December 31, 2016
|
||||||||||||
Equity securities
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Real estate
|
288
|
|
|
6
|
|
|
(37
|
)
|
|
(23
|
)
|
|
—
|
|
|
234
|
|
||||||
Certain insurance contracts
|
236
|
|
|
—
|
|
|
13
|
|
|
(49
|
)
|
|
(11
|
)
|
|
189
|
|
||||||
Total Level 3 investments
|
$
|
525
|
|
|
$
|
6
|
|
|
$
|
(24
|
)
|
|
$
|
(73
|
)
|
|
$
|
(11
|
)
|
|
$
|
423
|
|
Asset Category
|
December 28, 2014
|
|
2015 Merger
|
|
Net Realized Gain/(Loss)
|
|
Net Unrealized Gain/(Loss)
|
|
Net Purchases, Issuances and Settlements
|
|
Transfers Into/(Out of) Level 3
|
|
January 3, 2016
|
||||||||||||||
Equity securities
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Real estate
|
307
|
|
|
—
|
|
|
4
|
|
|
11
|
|
|
(24
|
)
|
|
(10
|
)
|
|
288
|
|
|||||||
Certain insurance contracts
|
189
|
|
|
51
|
|
|
12
|
|
|
(14
|
)
|
|
(2
|
)
|
|
—
|
|
|
236
|
|
|||||||
Total Level 3 investments
|
$
|
496
|
|
|
$
|
52
|
|
|
$
|
16
|
|
|
$
|
(3
|
)
|
|
$
|
(26
|
)
|
|
$
|
(10
|
)
|
|
$
|
525
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||
2017
|
$
|
377
|
|
|
$
|
524
|
|
2018
|
322
|
|
|
794
|
|
||
2019
|
326
|
|
|
61
|
|
||
2020
|
321
|
|
|
62
|
|
||
2021
|
330
|
|
|
66
|
|
||
2022-2026
|
1,651
|
|
|
386
|
|
|
December 31, 2016
|
|
January 3, 2016
|
||||
Accrued benefit obligations at beginning of year
|
$
|
1,945
|
|
|
$
|
205
|
|
Service cost
|
11
|
|
|
13
|
|
||
Interest cost
|
51
|
|
|
56
|
|
||
Benefits paid
|
(150
|
)
|
|
(106
|
)
|
||
Actuarial losses/(gains)
|
5
|
|
|
(7
|
)
|
||
Plan amendments
|
(158
|
)
|
|
(1,507
|
)
|
||
Currency
|
6
|
|
|
(25
|
)
|
||
Curtailments
|
—
|
|
|
(55
|
)
|
||
Participant's contributions
|
—
|
|
|
—
|
|
||
Assumption of Kraft's benefit obligations
|
—
|
|
|
3,371
|
|
||
Other
|
4
|
|
|
—
|
|
||
Accrued benefit obligations at end of year
|
$
|
1,714
|
|
|
$
|
1,945
|
|
|
December 31, 2016
|
|
January 3, 2016
|
||
Discount rate
|
3.8
|
%
|
|
4.2
|
%
|
Health care cost trend rate assumed for next year
|
6.3
|
%
|
|
6.5
|
%
|
Ultimate trend rate
|
4.9
|
%
|
|
4.9
|
%
|
|
One-Percentage-Point
|
||||||
|
Increase
|
|
Decrease
|
||||
Effect on annual service and interest cost
|
$
|
6
|
|
|
$
|
(5
|
)
|
Effect on postretirement benefit obligation
|
74
|
|
|
(63
|
)
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Service cost
|
$
|
11
|
|
|
$
|
13
|
|
|
$
|
5
|
|
Interest cost
|
51
|
|
|
56
|
|
|
9
|
|
|||
Amortization of prior service costs/(credits)
|
(362
|
)
|
|
(112
|
)
|
|
(6
|
)
|
|||
Amortization of unrecognized losses/(gains)
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Curtailments
|
—
|
|
|
1
|
|
|
(7
|
)
|
|||
Net postretirement cost/(benefit)
|
$
|
(301
|
)
|
|
$
|
(42
|
)
|
|
$
|
1
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|||
Discount rate - Service Cost
|
4.3
|
%
|
|
4.2
|
%
|
|
4.3
|
%
|
Discount rate - Interest Cost
|
3.0
|
%
|
|
4.2
|
%
|
|
4.3
|
%
|
Health care cost trend rate
|
6.5
|
%
|
|
6.7
|
%
|
|
6.0
|
%
|
2017
|
$
|
154
|
|
2018
|
150
|
|
|
2019
|
144
|
|
|
2020
|
138
|
|
|
2021
|
132
|
|
|
2022-2026
|
570
|
|
|
Pension Benefits
|
|
Postretirement Benefits
|
|
Total
|
||||||||||||||||||
|
December 31, 2016
|
|
January 3, 2016
|
|
December 31, 2016
|
|
January 3, 2016
|
|
December 31, 2016
|
|
January 3, 2016
|
||||||||||||
Net actuarial gain/(loss)
|
$
|
(35
|
)
|
|
$
|
13
|
|
|
$
|
64
|
|
|
$
|
70
|
|
|
$
|
29
|
|
|
$
|
83
|
|
Prior service credit/(cost)
|
—
|
|
|
—
|
|
|
1,205
|
|
|
1,409
|
|
|
1,205
|
|
|
1,409
|
|
||||||
|
$
|
(35
|
)
|
|
$
|
13
|
|
|
$
|
1,269
|
|
|
$
|
1,479
|
|
|
$
|
1,234
|
|
|
$
|
1,492
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Net postemployment benefit gains/(losses) arising during the period:
|
|
|
|
|
|
||||||
Net actuarial gains/(losses) arising during the period - Pension Benefits
|
$
|
(73
|
)
|
|
$
|
3
|
|
|
$
|
(75
|
)
|
Net actuarial gains/(losses) arising during the period - Postretirement Benefits
|
(5
|
)
|
|
62
|
|
|
1
|
|
|||
Prior service credits/(costs) arising during the period - Pension Benefits
|
—
|
|
|
(7
|
)
|
|
—
|
|
|||
Prior service credits/(costs) arising during the period - Postretirement Benefits
|
158
|
|
|
1,507
|
|
|
—
|
|
|||
|
80
|
|
|
1,565
|
|
|
(74
|
)
|
|||
Tax benefit/(expense)
|
(23
|
)
|
|
(619
|
)
|
|
40
|
|
|||
|
$
|
57
|
|
|
$
|
946
|
|
|
$
|
(34
|
)
|
|
|
|
|
|
|
||||||
Reclassification of net postemployment benefit losses/(gains) to net income/(loss):
|
|
|
|
|
|
||||||
Amortization of unrecognized losses/(gains) - Pension Benefits
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
Amortization of unrecognized losses/(gains) - Postretirement Benefits
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization of prior service costs/(credits) - Pension Benefits
|
—
|
|
|
—
|
|
|
—
|
|
|||
Amortization of prior service costs/(credits) - Postretirement Benefits
|
(362
|
)
|
|
(112
|
)
|
|
(6
|
)
|
|||
Net settlement and curtailment losses/(gains) - Pension Benefits
|
25
|
|
|
(24
|
)
|
|
4
|
|
|||
Net settlement and curtailment losses/(gains) - Postretirement Benefits
|
—
|
|
|
1
|
|
|
(7
|
)
|
|||
|
(338
|
)
|
|
(132
|
)
|
|
(9
|
)
|
|||
Tax benefit/(expense)
|
131
|
|
|
47
|
|
|
2
|
|
|||
|
$
|
(207
|
)
|
|
$
|
(85
|
)
|
|
$
|
(7
|
)
|
|
Foreign Currency Translation Adjustments
|
|
Net Postemployment Benefit Plan Adjustments
|
|
Net Cash Flow Hedge Adjustments
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Balance as of December 29, 2013
|
$
|
22
|
|
|
$
|
102
|
|
|
$
|
108
|
|
|
$
|
232
|
|
Foreign currency translation adjustments
|
(932
|
)
|
|
—
|
|
|
—
|
|
|
(932
|
)
|
||||
Net deferred gains/(losses) on net investment hedges
|
336
|
|
|
—
|
|
|
—
|
|
|
336
|
|
||||
Net postemployment benefit gains/(losses) arising during the period
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
||||
Reclassification of net postemployment benefit losses/(gains)
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
||||
Net deferred gains/(losses) on cash flow hedges
|
—
|
|
|
—
|
|
|
(173
|
)
|
|
(173
|
)
|
||||
Net deferred losses/(gains) on cash flow hedges reclassified to net income
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
||||
Total other comprehensive income/(loss)
|
(596
|
)
|
|
(41
|
)
|
|
(169
|
)
|
|
(806
|
)
|
||||
Balance as of December 28, 2014
|
(574
|
)
|
|
61
|
|
|
(61
|
)
|
|
(574
|
)
|
||||
Foreign currency translation adjustments
|
(1,578
|
)
|
|
—
|
|
|
—
|
|
|
(1,578
|
)
|
||||
Net deferred gains/(losses) on net investment hedges
|
506
|
|
|
—
|
|
|
—
|
|
|
506
|
|
||||
Net postemployment benefit gains/(losses) arising during the period
|
—
|
|
|
946
|
|
|
—
|
|
|
946
|
|
||||
Reclassification of net postemployment benefit losses/(gains)
|
—
|
|
|
(85
|
)
|
|
—
|
|
|
(85
|
)
|
||||
Net deferred gains/(losses) on cash flow hedges
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||
Net deferred losses/(gains) on cash flow hedges reclassified to net income
|
—
|
|
|
—
|
|
|
120
|
|
|
120
|
|
||||
Total other comprehensive income/(loss)
|
(1,072
|
)
|
|
861
|
|
|
114
|
|
|
(97
|
)
|
||||
Balance as of January 3, 2016
|
(1,646
|
)
|
|
922
|
|
|
53
|
|
|
(671
|
)
|
||||
Foreign currency translation adjustments
|
(992
|
)
|
|
—
|
|
|
—
|
|
|
(992
|
)
|
||||
Net deferred gains/(losses) on net investment hedges
|
226
|
|
|
—
|
|
|
—
|
|
|
226
|
|
||||
Net postemployment benefit gains/(losses) arising during the period
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||
Reclassification of net postemployment benefit losses/(gains)
|
—
|
|
|
(207
|
)
|
|
—
|
|
|
(207
|
)
|
||||
Net deferred gains/(losses) on cash flow hedges
|
—
|
|
|
—
|
|
|
46
|
|
|
46
|
|
||||
Net deferred losses/(gains) on cash flow hedges reclassified to net income
|
—
|
|
|
—
|
|
|
(87
|
)
|
|
(87
|
)
|
||||
Total other comprehensive income/(loss)
|
(766
|
)
|
|
(150
|
)
|
|
(41
|
)
|
|
(957
|
)
|
||||
Balance as of December 31, 2016
|
$
|
(2,412
|
)
|
|
$
|
772
|
|
|
$
|
12
|
|
|
$
|
(1,628
|
)
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||||||||||||||||||||||||||
|
Before Tax Amount
|
|
Tax
|
|
Net of Tax Amount
|
|
Before Tax Amount
|
|
Tax
|
|
Net of Tax Amount
|
|
Before Tax Amount
|
|
Tax
|
|
Net of Tax Amount
|
||||||||||||||||||
Foreign currency translation adjustments
|
$
|
(992
|
)
|
|
$
|
—
|
|
|
$
|
(992
|
)
|
|
$
|
(1,578
|
)
|
|
$
|
—
|
|
|
$
|
(1,578
|
)
|
|
$
|
(932
|
)
|
|
$
|
—
|
|
|
$
|
(932
|
)
|
Net deferred gains/(losses) on net investment hedges
|
426
|
|
|
(200
|
)
|
|
226
|
|
|
801
|
|
|
(295
|
)
|
|
506
|
|
|
545
|
|
|
(209
|
)
|
|
336
|
|
|||||||||
Net actuarial gains/(losses) arising during the period
|
(78
|
)
|
|
38
|
|
|
(40
|
)
|
|
65
|
|
|
(42
|
)
|
|
23
|
|
|
(74
|
)
|
|
40
|
|
|
(34
|
)
|
|||||||||
Prior service credits/(costs) arising during the period
|
158
|
|
|
(61
|
)
|
|
97
|
|
|
1,500
|
|
|
(577
|
)
|
|
923
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Reclassification of net postemployment benefit losses/(gains)
|
(338
|
)
|
|
131
|
|
|
(207
|
)
|
|
(132
|
)
|
|
47
|
|
|
(85
|
)
|
|
(9
|
)
|
|
2
|
|
|
(7
|
)
|
|||||||||
Net deferred gains/(losses) on cash flow hedges
|
40
|
|
|
6
|
|
|
46
|
|
|
(38
|
)
|
|
32
|
|
|
(6
|
)
|
|
(268
|
)
|
|
95
|
|
|
(173
|
)
|
|||||||||
Net deferred losses/(gains) on cash flow hedges reclassified to net income
|
(81
|
)
|
|
(6
|
)
|
|
(87
|
)
|
|
195
|
|
|
(75
|
)
|
|
120
|
|
|
(5
|
)
|
|
9
|
|
|
4
|
|
Accumulated Other Comprehensive Income/(Losses) Component
|
|
Reclassified from Accumulated Other Comprehensive Income/(Losses)
|
|
Affected Line Item in the Statement Where Net Income is Presented
|
||||||||||
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
|
|
||||||
Losses/(gains) on cash flow hedges:
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
$
|
(6
|
)
|
|
$
|
2
|
|
|
$
|
1
|
|
|
Net sales
|
Foreign exchange contracts
|
|
(41
|
)
|
|
(45
|
)
|
|
(5
|
)
|
|
Cost of products sold
|
|||
Foreign exchange contracts
|
|
(38
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
Other expense/(income), net
|
|||
Interest rate contracts
|
|
4
|
|
|
239
|
|
|
—
|
|
|
Interest expense
|
|||
Losses/(gains) on cash flow hedges before income taxes
|
|
(81
|
)
|
|
195
|
|
|
(5
|
)
|
|
|
|||
Losses/(gains) on cash flow hedges income taxes
|
|
(6
|
)
|
|
(75
|
)
|
|
9
|
|
|
|
|||
Losses/(gains) on cash flow hedges
|
|
$
|
(87
|
)
|
|
$
|
120
|
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Losses/(gains) on postemployment benefits:
|
|
|
|
|
|
|
|
|
||||||
Amortization of unrecognized losses/(gains)
|
|
$
|
(1
|
)
|
|
$
|
3
|
|
|
$
|
—
|
|
|
(a)
|
Amortization of prior service costs/(credits)
|
|
(362
|
)
|
|
(112
|
)
|
|
(6
|
)
|
|
(a)
|
|||
Settlement and curtailments losses/(gains)
|
|
25
|
|
|
(23
|
)
|
|
(3
|
)
|
|
(a)
|
|||
Losses/(gains) on postemployment benefits before income taxes
|
|
(338
|
)
|
|
(132
|
)
|
|
(9
|
)
|
|
|
|||
Losses/(gains) on postemployment benefits income taxes
|
|
131
|
|
|
47
|
|
|
2
|
|
|
|
|||
Losses/(gains) on postemployment benefits
|
|
$
|
(207
|
)
|
|
$
|
(85
|
)
|
|
$
|
(7
|
)
|
|
|
(a)
|
These components are included in the computation of net periodic postemployment benefit costs. See Note 9,
Postemployment Benefits
, for additional information.
|
•
|
a
$4.0 billion
senior unsecured revolving credit facility (the “Revolving Credit Facility”), which matures on July 6, 2021; and
|
•
|
a
$600 million
senior unsecured loan facility (the “Term Loan Facility” and, together with the Revolving Credit Facility, the “Senior Credit Facilities”), which matures on July 6, 2022.
|
|
|
Priority
1
|
|
Maturity Dates
|
|
Interest Rates
2
|
|
Carrying Values
|
||||||
|
|
|
|
|
|
|
|
December 31, 2016
|
|
January 3, 2016
|
||||
|
|
|
|
|
|
|
|
(in millions)
|
||||||
U.S. dollar notes:
|
|
|
|
|
|
|
|
|
|
|
||||
2025 Notes
(a)
|
|
Senior Secured Notes
|
|
February 15, 2025
|
|
4.875%
|
|
$
|
1,191
|
|
|
$
|
1,190
|
|
Other U.S. dollar notes
(b)(c)(d)
|
|
Senior Notes
|
|
2017-2046
|
|
1.500% - 7.125%
|
|
25,761
|
|
|
20,957
|
|
||
Euro notes
(b)(c)
|
|
Senior Notes
|
|
2023-2028
|
|
1.500% - 2.250%
|
|
2,656
|
|
|
803
|
|
||
Canadian dollar notes
(b)
|
|
Senior Notes
|
|
2018-2020
|
|
1.697% - 2.700%
|
|
743
|
|
|
720
|
|
||
British pound sterling notes
(b)(d)
|
|
Senior Notes
|
|
2027-2030
|
|
4.125% - 6.250%
|
|
650
|
|
|
778
|
|
||
Term Loan Facility
|
|
Senior Unsecured Loan
|
|
July 6, 2022
|
|
2.114%
|
|
596
|
|
|
596
|
|
||
Other long-term debt
|
|
Various
|
|
2017-2035
|
|
0.500% - 5.800%
|
|
54
|
|
|
57
|
|
||
Capital lease obligations
|
|
|
|
|
|
|
|
108
|
|
|
129
|
|
||
Total long-term debt
|
|
|
|
|
|
|
|
31,759
|
|
|
25,230
|
|
||
Current portion of long-term debt
|
|
|
|
|
|
|
|
2,046
|
|
|
79
|
|
||
Long-term debt, excluding current portion
|
|
|
|
|
|
|
|
$
|
29,713
|
|
|
$
|
25,151
|
|
1
|
Priority of debt indicates the order which debt would be paid if all debt obligations were due on the same day. Senior secured debt takes priority over unsecured debt. Senior debt has greater seniority than subordinated debt.
|
2
|
Floating interest rates are stated as of December 31, 2016.
|
(a)
|
The
4.875%
Second Lien Senior Secured Notes due February 15, 2025 (the “2025 Notes”) are senior in right of payment of existing and future unsecured and subordinated indebtedness.
|
(b)
|
We fully and unconditionally guarantee these notes, which were issued by Kraft Heinz Foods Company.
|
(d)
|
Includes
£125 million
aggregate principal amount of
6.250%
Pound Sterling Notes due February 18, 2030 (the “2030 Notes”) previously issued by H.J. Heinz Finance UK Plc and guaranteed by Kraft Heinz Foods Company, which we became guarantor of in connection with the 2015 Merger.
|
2017
|
$
|
2,019
|
|
2018
|
2,685
|
|
|
2019
|
3
|
|
|
2020
|
2,999
|
|
|
2021
|
38
|
|
|
Thereafter
|
23,446
|
|
|
Shares Issued
|
|
Treasury Shares
|
|
Shares Outstanding
|
|||
Balance at December 29, 2013
|
376,832
|
|
|
—
|
|
|
376,832
|
|
Exercise of stock options, issuance of other stock awards, and other
|
178
|
|
|
—
|
|
|
178
|
|
Balance at December 28, 2014
|
377,010
|
|
|
—
|
|
|
377,010
|
|
Exercise of warrants
|
20,480
|
|
|
—
|
|
|
20,480
|
|
Issuance of common stock to Sponsors
|
221,666
|
|
|
—
|
|
|
221,666
|
|
Acquisition of Kraft Foods Group, Inc.
|
592,898
|
|
|
—
|
|
|
592,898
|
|
Exercise of stock options, issuance of other stock awards, and other
|
2,338
|
|
|
(413
|
)
|
|
1,925
|
|
Balance at January 3, 2016
|
1,214,392
|
|
|
(413
|
)
|
|
1,213,979
|
|
Exercise of stock options, issuance of other stock awards, and other
|
4,555
|
|
|
(2,058
|
)
|
|
2,497
|
|
Balance at December 31, 2016
|
1,218,947
|
|
|
(2,471
|
)
|
|
1,216,476
|
|
|
Notional Amount
|
||||||
|
December 31, 2016
|
|
January 3, 2016
|
||||
Commodity contracts
|
$
|
459
|
|
|
$
|
787
|
|
Foreign exchange contracts
|
2,997
|
|
|
3,458
|
|
||
Cross-currency contracts
|
3,173
|
|
|
4,328
|
|
|
December 31, 2016
|
||||||||||||||||||||||||||||||
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant Other Observable Inputs
(Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
|
Total Fair Value
|
||||||||||||||||||||||||
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
69
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
69
|
|
|
$
|
13
|
|
Cross-currency contracts
|
—
|
|
|
—
|
|
|
580
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
580
|
|
|
36
|
|
||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commodity contracts
|
28
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
7
|
|
||||||||
Foreign exchange contracts
|
—
|
|
|
—
|
|
|
35
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
30
|
|
||||||||
Cross-currency contracts
|
—
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
—
|
|
||||||||
Total fair value
|
$
|
28
|
|
|
$
|
7
|
|
|
$
|
728
|
|
|
$
|
79
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
756
|
|
|
$
|
86
|
|
|
January 3, 2016
|
||||||||||||||||||||||||||||||
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Total Fair Value
|
||||||||||||||||||||||||
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
46
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
46
|
|
|
$
|
6
|
|
Cross-currency contracts
|
—
|
|
|
—
|
|
|
605
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
605
|
|
|
—
|
|
||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commodity contracts
|
24
|
|
|
29
|
|
|
1
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
36
|
|
||||||||
Foreign exchange contracts
|
—
|
|
|
—
|
|
|
88
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|
13
|
|
||||||||
Cross-currency contracts
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
||||||||
Total fair value
|
$
|
24
|
|
|
$
|
29
|
|
|
$
|
787
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
811
|
|
|
$
|
55
|
|
Instrument
|
|
Notional
(local)
(in billions)
|
|
Notional
(USD)
(in billions)
|
|
Maturity
|
||||
Cross-currency swap
|
|
£
|
0.8
|
|
|
$
|
1.4
|
|
|
October 2019
|
Cross-currency swap
|
|
C$
|
1.8
|
|
|
1.6
|
|
|
December 2019
|
•
|
foreign currency contracts for periods not exceeding the next
12
months, and
|
•
|
cross-currency contracts for periods not exceeding the next
three
years.
|
•
|
commodity contracts for periods not exceeding the next
12
months,
|
•
|
foreign exchange contracts for periods not exceeding the next
12
months, and
|
•
|
cross-currency contracts for periods not exceeding the next
two
years.
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
||||||||||||||||||||||||||||
|
Commodity Contracts
|
|
Foreign Exchange
Contracts |
|
Cross-Currency Contracts
|
|
Interest Rate Contracts
|
|
Commodity Contracts
|
|
Foreign Exchange
Contracts |
|
Cross-Currency Contracts
|
|
Interest Rate
Contracts |
||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gains/(losses) recognized in other comprehensive income (effective portion)
|
$
|
—
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
73
|
|
|
$
|
—
|
|
|
$
|
(111
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net investment hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gains/(losses) recognized in other comprehensive income (effective portion)
|
—
|
|
|
45
|
|
|
147
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
736
|
|
|
—
|
|
||||||||
Total gains/(losses) recognized in other comprehensive income (effective portion)
|
$
|
—
|
|
|
$
|
93
|
|
|
$
|
147
|
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
73
|
|
|
$
|
736
|
|
|
$
|
(111
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash flow hedges reclassified to net income/(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Cost of products sold (effective portion)
|
—
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
—
|
|
||||||||
Other expense/(income), net
|
—
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(239
|
)
|
||||||||
|
—
|
|
|
85
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
44
|
|
|
—
|
|
|
(239
|
)
|
||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gains/(losses) on derivatives recognized in cost of products sold
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Gains/(losses) on derivatives recognized in other expense/(income), net
|
—
|
|
|
(63
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
92
|
|
|
53
|
|
|
8
|
|
||||||||
|
9
|
|
|
(63
|
)
|
|
(3
|
)
|
|
—
|
|
|
(57
|
)
|
|
92
|
|
|
53
|
|
|
8
|
|
||||||||
Total gains/(losses) recognized in statements of income
|
$
|
9
|
|
|
$
|
22
|
|
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
|
$
|
(57
|
)
|
|
$
|
136
|
|
|
$
|
53
|
|
|
$
|
(231
|
)
|
|
December 28,
2014 (52 weeks) |
||||||||||||||
|
Commodity Contracts
|
|
Foreign Exchange
Contracts |
|
Cross-Currency Contracts
|
|
Interest Rate Contracts
|
||||||||
|
(in millions)
|
||||||||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Gains/(losses) recognized in other comprehensive income (effective portion)
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
(289
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net investment hedges:
|
|
|
|
|
|
|
|
||||||||
Gains/(losses) recognized in other comprehensive income (effective portion)
|
—
|
|
|
—
|
|
|
545
|
|
|
—
|
|
||||
Total gains/(losses) recognized in other comprehensive income (effective portion)
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
545
|
|
|
$
|
(289
|
)
|
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges reclassified to net income/(loss):
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Cost of products sold (effective portion)
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
||||
Other expense/(income), net
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Gains/(losses) on derivatives recognized in cost of products sold
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Gains/(losses) on derivatives recognized in other expense/(income), net
|
—
|
|
|
151
|
|
|
—
|
|
|
—
|
|
||||
|
—
|
|
|
151
|
|
|
—
|
|
|
—
|
|
||||
Total gains/(losses) recognized in statements of income
|
$
|
—
|
|
|
$
|
156
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
the official exchange rate of BsF
10
per U.S. dollar available through the Sistema de Divisa Protegida (“DIPRO”), which is available for purchases and sales of essential items, including food products, and
|
•
|
an alternative exchange rate available through the Sistema de Divisa Complementaria (“DICOM”), which is available for all transactions not covered by DIPRO and is a free-floating exchange rate format.
|
2017
|
$
|
94
|
|
2018
|
92
|
|
|
2019
|
77
|
|
|
2020
|
61
|
|
|
2021
|
43
|
|
|
Thereafter
|
107
|
|
|
Total
|
$
|
474
|
|
2017
|
$
|
1,861
|
|
2018
|
670
|
|
|
2019
|
369
|
|
|
2020
|
252
|
|
|
2021
|
125
|
|
|
Thereafter
|
366
|
|
|
Total
|
$
|
3,643
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
|
(in millions, except per share amounts)
|
||||||||||
Basic Earnings Per Common Share:
|
|
|
|
|
|
||||||
Net income/(loss) attributable to common shareholders
|
$
|
3,452
|
|
|
$
|
(266
|
)
|
|
$
|
(63
|
)
|
Weighted average shares of common stock outstanding
|
1,217
|
|
|
786
|
|
|
377
|
|
|||
Net earnings/(loss)
|
$
|
2.84
|
|
|
$
|
(0.34
|
)
|
|
$
|
(0.17
|
)
|
Diluted Earnings Per Common Share:
|
|
|
|
|
|
||||||
Net income/(loss) attributable to common shareholders
|
$
|
3,452
|
|
|
$
|
(266
|
)
|
|
$
|
(63
|
)
|
Weighted average shares of common stock outstanding
|
1,217
|
|
|
786
|
|
|
377
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Equity awards
|
9
|
|
|
—
|
|
|
—
|
|
|||
Weighted average shares of common stock outstanding, including dilutive effect
|
1,226
|
|
|
786
|
|
|
377
|
|
|||
Net earnings/(loss)
|
$
|
2.81
|
|
|
$
|
(0.34
|
)
|
|
$
|
(0.17
|
)
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Net sales:
|
|
|
|
|
|
||||||
United States
|
$
|
18,641
|
|
|
$
|
10,943
|
|
|
$
|
3,615
|
|
Canada
|
2,309
|
|
|
1,437
|
|
|
631
|
|
|||
Europe
|
2,366
|
|
|
2,656
|
|
|
3,233
|
|
|||
Rest of World
|
3,171
|
|
|
3,302
|
|
|
3,443
|
|
|||
Total net sales
|
$
|
26,487
|
|
|
$
|
18,338
|
|
|
$
|
10,922
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
|
(in millions)
|
||||||||||
Segment Adjusted EBITDA:
|
|
|
|
|
|
||||||
United States
|
$
|
5,862
|
|
|
$
|
4,690
|
|
|
$
|
4,421
|
|
Canada
|
642
|
|
|
541
|
|
|
615
|
|
|||
Europe
|
781
|
|
|
938
|
|
|
939
|
|
|||
Rest of World
|
657
|
|
|
742
|
|
|
732
|
|
|||
General corporate expenses
|
(164
|
)
|
|
(172
|
)
|
|
(181
|
)
|
|||
Depreciation and amortization (excluding integration and restructuring expenses)
|
(536
|
)
|
|
(779
|
)
|
|
(924
|
)
|
|||
Integration and restructuring expenses
|
(1,012
|
)
|
|
(1,117
|
)
|
|
(743
|
)
|
|||
Merger costs
|
(30
|
)
|
|
(194
|
)
|
|
(68
|
)
|
|||
Amortization of inventory step-up
|
—
|
|
|
(347
|
)
|
|
—
|
|
|||
Unrealized gains/(losses) on commodity hedges
|
38
|
|
|
41
|
|
|
(79
|
)
|
|||
Impairment losses
|
(53
|
)
|
|
(58
|
)
|
|
(221
|
)
|
|||
Gains/(losses) on sale of business
|
—
|
|
|
21
|
|
|
—
|
|
|||
Nonmonetary currency devaluation
|
(4
|
)
|
|
(57
|
)
|
|
—
|
|
|||
Equity award compensation expense (excluding integration and restructuring expenses)
|
(39
|
)
|
|
(61
|
)
|
|
(108
|
)
|
|||
Other pro forma adjustments
|
—
|
|
|
(1,549
|
)
|
|
(2,815
|
)
|
|||
Operating income
|
6,142
|
|
|
2,639
|
|
|
1,568
|
|
|||
Interest expense
|
1,134
|
|
|
1,321
|
|
|
686
|
|
|||
Other expense/(income), net
|
(15
|
)
|
|
305
|
|
|
79
|
|
|||
Income/(loss) before income taxes
|
$
|
5,023
|
|
|
$
|
1,013
|
|
|
$
|
803
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Depreciation and amortization expense:
|
|
|
|
|
|
||||||
United States
|
$
|
966
|
|
|
$
|
484
|
|
|
$
|
191
|
|
Canada
|
56
|
|
|
36
|
|
|
83
|
|
|||
Europe
|
84
|
|
|
86
|
|
|
124
|
|
|||
Rest of World
|
87
|
|
|
85
|
|
|
100
|
|
|||
General corporate expenses
|
144
|
|
|
49
|
|
|
32
|
|
|||
Total depreciation and amortization expense
|
$
|
1,337
|
|
|
$
|
740
|
|
|
$
|
530
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Capital expenditures:
|
|
|
|
|
|
||||||
United States
|
$
|
843
|
|
|
$
|
377
|
|
|
$
|
146
|
|
Canada
|
30
|
|
|
19
|
|
|
2
|
|
|||
Europe
|
109
|
|
|
106
|
|
|
102
|
|
|||
Rest of World
|
102
|
|
|
99
|
|
|
86
|
|
|||
General corporate expenses
|
163
|
|
|
47
|
|
|
63
|
|
|||
Total capital expenditures
|
$
|
1,247
|
|
|
$
|
648
|
|
|
$
|
399
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Condiments and sauces
|
$
|
6,781
|
|
|
$
|
5,877
|
|
|
$
|
5,502
|
|
Cheese and dairy
|
5,661
|
|
|
2,795
|
|
|
—
|
|
|||
Ambient meals
|
2,283
|
|
|
1,859
|
|
|
1,543
|
|
|||
Frozen and chilled meals
|
2,251
|
|
|
2,179
|
|
|
1,975
|
|
|||
Meats and seafood
|
2,710
|
|
|
1,480
|
|
|
199
|
|
|||
Refreshment beverages
|
1,529
|
|
|
665
|
|
|
—
|
|
|||
Coffee
|
1,496
|
|
|
710
|
|
|
—
|
|
|||
Infant and nutrition
|
762
|
|
|
902
|
|
|
1,116
|
|
|||
Desserts, toppings and baking
|
980
|
|
|
521
|
|
|
—
|
|
|||
Nuts and salted snacks
|
1,051
|
|
|
562
|
|
|
—
|
|
|||
Other
|
983
|
|
|
788
|
|
|
587
|
|
|||
Total net sales
|
$
|
26,487
|
|
|
$
|
18,338
|
|
|
$
|
10,922
|
|
|
December 31,
2016 (52 weeks) |
|
January 3,
2016 (53 weeks) |
|
December 28,
2014 (52 weeks) |
||||||
Net sales:
|
|
|
|
|
|
||||||
United States
|
$
|
18,641
|
|
|
$
|
10,943
|
|
|
$
|
3,615
|
|
Canada
|
2,309
|
|
|
1,437
|
|
|
631
|
|
|||
United Kingdom
|
1,055
|
|
|
1,334
|
|
|
1,549
|
|
|||
Other
|
4,482
|
|
|
4,624
|
|
|
5,127
|
|
|||
Total net sales
|
$
|
26,487
|
|
|
$
|
18,338
|
|
|
$
|
10,922
|
|
|
December 31, 2016
|
|
January 3, 2016
|
||||
Long-lived assets:
|
|
|
|
||||
United States
|
$
|
92,243
|
|
|
$
|
92,881
|
|
United Kingdom
|
5,669
|
|
|
6,756
|
|
||
Canada
|
6,172
|
|
|
6,021
|
|
||
Other
|
6,026
|
|
|
6,037
|
|
||
Total long-lived assets
|
$
|
110,110
|
|
|
$
|
111,695
|
|
|
2016 Quarters
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in millions, except per share data)
|
||||||||||||||
Net sales
|
$
|
6,570
|
|
|
$
|
6,793
|
|
|
$
|
6,267
|
|
|
$
|
6,857
|
|
Gross profit
|
2,378
|
|
|
2,531
|
|
|
2,218
|
|
|
2,459
|
|
||||
Net income/(loss)
|
900
|
|
|
955
|
|
|
843
|
|
|
944
|
|
||||
Net income/(loss) attributable to Kraft Heinz
|
896
|
|
|
950
|
|
|
842
|
|
|
944
|
|
||||
Net income/(loss) attributable to common shareholders
|
896
|
|
|
770
|
|
|
842
|
|
|
944
|
|
||||
Per share data applicable to common shareholders:
|
|
|
|
|
|
|
|
||||||||
Basic earnings/(loss)
|
0.74
|
|
|
0.63
|
|
|
0.69
|
|
|
0.78
|
|
||||
Diluted earnings/(loss)
|
0.73
|
|
|
0.63
|
|
|
0.69
|
|
|
0.77
|
|
|
2015 Quarters
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in millions, except per share data)
|
||||||||||||||
Net sales
|
$
|
2,478
|
|
|
$
|
2,616
|
|
|
$
|
6,120
|
|
|
$
|
7,124
|
|
Gross profit
|
847
|
|
|
882
|
|
|
1,628
|
|
|
2,404
|
|
||||
Net income/(loss)
|
279
|
|
|
(160
|
)
|
|
(120
|
)
|
|
648
|
|
||||
Net income/(loss) attributable to Kraft Heinz
|
276
|
|
|
(164
|
)
|
|
(123
|
)
|
|
645
|
|
||||
Net income/(loss) attributable to common shareholders
|
96
|
|
|
(344
|
)
|
|
(303
|
)
|
|
285
|
|
||||
Per share data applicable to common shareholders:
|
|
|
|
|
|
|
|
||||||||
Basic earnings/(loss)
|
0.26
|
|
|
(0.91
|
)
|
|
(0.27
|
)
|
|
0.23
|
|
||||
Diluted earnings/(loss)
|
0.24
|
|
|
(0.91
|
)
|
|
(0.27
|
)
|
|
0.23
|
|
|
Parent Guarantor
|
|
Subsidiary Issuer
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
17,809
|
|
|
$
|
9,310
|
|
|
$
|
(632
|
)
|
|
$
|
26,487
|
|
Cost of products sold
|
—
|
|
|
11,156
|
|
|
6,377
|
|
|
(632
|
)
|
|
16,901
|
|
|||||
Gross profit
|
—
|
|
|
6,653
|
|
|
2,933
|
|
|
—
|
|
|
9,586
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
|
970
|
|
|
2,474
|
|
|
—
|
|
|
3,444
|
|
|||||
Intercompany service fees and other recharges
|
—
|
|
|
4,624
|
|
|
(4,624
|
)
|
|
—
|
|
|
—
|
|
|||||
Operating income
|
—
|
|
|
1,059
|
|
|
5,083
|
|
|
—
|
|
|
6,142
|
|
|||||
Interest expense
|
—
|
|
|
1,076
|
|
|
58
|
|
|
—
|
|
|
1,134
|
|
|||||
Other expense/(income), net
|
—
|
|
|
144
|
|
|
(159
|
)
|
|
—
|
|
|
(15
|
)
|
|||||
Income/(loss) before income taxes
|
—
|
|
|
(161
|
)
|
|
5,184
|
|
|
—
|
|
|
5,023
|
|
|||||
Provision for/(benefit from) income taxes
|
—
|
|
|
(372
|
)
|
|
1,753
|
|
|
—
|
|
|
1,381
|
|
|||||
Equity in earnings of subsidiaries
|
3,632
|
|
|
3,421
|
|
|
—
|
|
|
(7,053
|
)
|
|
—
|
|
|||||
Net income/(loss)
|
3,632
|
|
|
3,632
|
|
|
3,431
|
|
|
(7,053
|
)
|
|
3,642
|
|
|||||
Net income/(loss) attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||
Net income/(loss) excluding noncontrolling interest
|
$
|
3,632
|
|
|
$
|
3,632
|
|
|
$
|
3,421
|
|
|
$
|
(7,053
|
)
|
|
$
|
3,632
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income/(loss) excluding noncontrolling interest
|
$
|
2,675
|
|
|
$
|
2,675
|
|
|
$
|
5,717
|
|
|
$
|
(8,392
|
)
|
|
$
|
2,675
|
|
|
Parent Guarantor
|
|
Subsidiary Issuer
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
10,580
|
|
|
$
|
8,145
|
|
|
$
|
(387
|
)
|
|
$
|
18,338
|
|
Cost of products sold
|
—
|
|
|
7,298
|
|
|
5,666
|
|
|
(387
|
)
|
|
12,577
|
|
|||||
Gross profit
|
—
|
|
|
3,282
|
|
|
2,479
|
|
|
—
|
|
|
5,761
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
|
1,449
|
|
|
1,673
|
|
|
—
|
|
|
3,122
|
|
|||||
Intercompany service fees and other recharges
|
—
|
|
|
929
|
|
|
(929
|
)
|
|
—
|
|
|
—
|
|
|||||
Operating income
|
—
|
|
|
904
|
|
|
1,735
|
|
|
—
|
|
|
2,639
|
|
|||||
Interest expense
|
—
|
|
|
1,221
|
|
|
100
|
|
|
—
|
|
|
1,321
|
|
|||||
Other expense/(income), net
|
—
|
|
|
140
|
|
|
165
|
|
|
—
|
|
|
305
|
|
|||||
Income/(loss) before income taxes
|
—
|
|
|
(457
|
)
|
|
1,470
|
|
|
—
|
|
|
1,013
|
|
|||||
Provision for/(benefit from) income taxes
|
—
|
|
|
(192
|
)
|
|
558
|
|
|
—
|
|
|
366
|
|
|||||
Equity in earnings of subsidiaries
|
634
|
|
|
899
|
|
|
—
|
|
|
(1,533
|
)
|
|
—
|
|
|||||
Net income/(loss)
|
634
|
|
|
634
|
|
|
912
|
|
|
(1,533
|
)
|
|
647
|
|
|||||
Net income/(loss) attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|||||
Net income/(loss) excluding noncontrolling interest
|
$
|
634
|
|
|
$
|
634
|
|
|
$
|
899
|
|
|
$
|
(1,533
|
)
|
|
$
|
634
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income/(loss) excluding noncontrolling interest
|
$
|
537
|
|
|
$
|
537
|
|
|
$
|
(734
|
)
|
|
$
|
197
|
|
|
$
|
537
|
|
|
Parent Guarantor
|
|
Subsidiary Issuer
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
3,740
|
|
|
$
|
7,325
|
|
|
$
|
(143
|
)
|
|
$
|
10,922
|
|
Cost of products sold
|
—
|
|
|
2,663
|
|
|
5,125
|
|
|
(143
|
)
|
|
7,645
|
|
|||||
Gross profit
|
—
|
|
|
1,077
|
|
|
2,200
|
|
|
—
|
|
|
3,277
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
|
633
|
|
|
1,076
|
|
|
—
|
|
|
1,709
|
|
|||||
Intercompany service fees and other recharges
|
—
|
|
|
(23
|
)
|
|
23
|
|
|
—
|
|
|
—
|
|
|||||
Operating income
|
—
|
|
|
467
|
|
|
1,101
|
|
|
—
|
|
|
1,568
|
|
|||||
Interest expense
|
—
|
|
|
556
|
|
|
130
|
|
|
—
|
|
|
686
|
|
|||||
Other expense/(income), net
|
—
|
|
|
104
|
|
|
(25
|
)
|
|
—
|
|
|
79
|
|
|||||
Income/(loss) before income taxes
|
—
|
|
|
(193
|
)
|
|
996
|
|
|
—
|
|
|
803
|
|
|||||
Provision for/(benefit from) income taxes
|
—
|
|
|
(156
|
)
|
|
287
|
|
|
—
|
|
|
131
|
|
|||||
Equity in earnings of subsidiaries
|
657
|
|
|
694
|
|
|
—
|
|
|
(1,351
|
)
|
|
—
|
|
|||||
Net income/(loss)
|
657
|
|
|
657
|
|
|
709
|
|
|
(1,351
|
)
|
|
672
|
|
|||||
Net income/(loss) attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|||||
Net income/(loss) excluding noncontrolling interest
|
$
|
657
|
|
|
$
|
657
|
|
|
$
|
694
|
|
|
$
|
(1,351
|
)
|
|
$
|
657
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income/(loss) excluding noncontrolling interest
|
$
|
(149
|
)
|
|
$
|
(149
|
)
|
|
$
|
(180
|
)
|
|
$
|
329
|
|
|
$
|
(149
|
)
|
|
Parent Guarantor
|
|
Subsidiary Issuer
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
2,830
|
|
|
$
|
1,374
|
|
|
$
|
—
|
|
|
$
|
4,204
|
|
Trade receivables
|
—
|
|
|
12
|
|
|
757
|
|
|
—
|
|
|
769
|
|
|||||
Receivables due from affiliates
|
—
|
|
|
712
|
|
|
111
|
|
|
(823
|
)
|
|
—
|
|
|||||
Dividends due from affiliates
|
39
|
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|||||
Sold receivables
|
—
|
|
|
—
|
|
|
129
|
|
|
—
|
|
|
129
|
|
|||||
Inventories
|
—
|
|
|
1,759
|
|
|
925
|
|
|
—
|
|
|
2,684
|
|
|||||
Short-term lending due from affiliates
|
—
|
|
|
1,722
|
|
|
2,956
|
|
|
(4,678
|
)
|
|
—
|
|
|||||
Other current assets
|
—
|
|
|
2,229
|
|
|
447
|
|
|
(1,709
|
)
|
|
967
|
|
|||||
Total current assets
|
39
|
|
|
9,264
|
|
|
6,699
|
|
|
(7,249
|
)
|
|
8,753
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
4,447
|
|
|
2,241
|
|
|
—
|
|
|
6,688
|
|
|||||
Goodwill
|
—
|
|
|
11,067
|
|
|
33,058
|
|
|
—
|
|
|
44,125
|
|
|||||
Investments in subsidiaries
|
57,358
|
|
|
70,877
|
|
|
—
|
|
|
(128,235
|
)
|
|
—
|
|
|||||
Intangible assets, net
|
—
|
|
|
3,364
|
|
|
55,933
|
|
|
—
|
|
|
59,297
|
|
|||||
Long-term lending due from affiliates
|
—
|
|
|
1,700
|
|
|
2,000
|
|
|
(3,700
|
)
|
|
—
|
|
|||||
Other assets
|
—
|
|
|
501
|
|
|
1,116
|
|
|
—
|
|
|
1,617
|
|
|||||
TOTAL ASSETS
|
$
|
57,397
|
|
|
$
|
101,220
|
|
|
$
|
101,047
|
|
|
$
|
(139,184
|
)
|
|
$
|
120,480
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial paper and other short-term debt
|
$
|
—
|
|
|
$
|
642
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
645
|
|
Current portion of long-term debt
|
—
|
|
|
2,032
|
|
|
14
|
|
|
—
|
|
|
2,046
|
|
|||||
Short-term lending due to affiliates
|
—
|
|
|
2,956
|
|
|
1,722
|
|
|
(4,678
|
)
|
|
—
|
|
|||||
Trade payables
|
—
|
|
|
2,376
|
|
|
1,620
|
|
|
—
|
|
|
3,996
|
|
|||||
Payables due to affiliates
|
—
|
|
|
111
|
|
|
712
|
|
|
(823
|
)
|
|
—
|
|
|||||
Accrued marketing
|
—
|
|
|
277
|
|
|
472
|
|
|
—
|
|
|
749
|
|
|||||
Accrued postemployment costs
|
—
|
|
|
144
|
|
|
13
|
|
|
—
|
|
|
157
|
|
|||||
Income taxes payable
|
—
|
|
|
—
|
|
|
1,964
|
|
|
(1,709
|
)
|
|
255
|
|
|||||
Interest payable
|
—
|
|
|
401
|
|
|
14
|
|
|
—
|
|
|
415
|
|
|||||
Dividends payable
|
39
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|||||
Dividends due to affiliates
|
—
|
|
|
39
|
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|||||
Other current liabilities
|
—
|
|
|
588
|
|
|
611
|
|
|
—
|
|
|
1,199
|
|
|||||
Total current liabilities
|
39
|
|
|
9,566
|
|
|
7,145
|
|
|
(7,249
|
)
|
|
9,501
|
|
|||||
Long-term debt
|
—
|
|
|
28,736
|
|
|
977
|
|
|
—
|
|
|
29,713
|
|
|||||
Long-term borrowings due to affiliates
|
—
|
|
|
2,000
|
|
|
1,902
|
|
|
(3,902
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
—
|
|
|
1,382
|
|
|
19,466
|
|
|
—
|
|
|
20,848
|
|
|||||
Accrued postemployment costs
|
—
|
|
|
1,754
|
|
|
284
|
|
|
—
|
|
|
2,038
|
|
|||||
Other liabilities
|
—
|
|
|
424
|
|
|
382
|
|
|
—
|
|
|
806
|
|
|||||
TOTAL LIABILITIES
|
39
|
|
|
43,862
|
|
|
30,156
|
|
|
(11,151
|
)
|
|
62,906
|
|
|||||
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total shareholders’ equity
|
57,358
|
|
|
57,358
|
|
|
70,675
|
|
|
(128,033
|
)
|
|
57,358
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
216
|
|
|
—
|
|
|
216
|
|
|||||
TOTAL EQUITY
|
57,358
|
|
|
57,358
|
|
|
70,891
|
|
|
(128,033
|
)
|
|
57,574
|
|
|||||
TOTAL LIABILITIES AND EQUITY
|
$
|
57,397
|
|
|
$
|
101,220
|
|
|
$
|
101,047
|
|
|
$
|
(139,184
|
)
|
|
$
|
120,480
|
|
|
Parent Guarantor
|
|
Subsidiary Issuer
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
3,189
|
|
|
$
|
1,648
|
|
|
$
|
—
|
|
|
$
|
4,837
|
|
Trade receivables
|
—
|
|
|
62
|
|
|
809
|
|
|
—
|
|
|
871
|
|
|||||
Receivables due from affiliates
|
—
|
|
|
555
|
|
|
319
|
|
|
(874
|
)
|
|
—
|
|
|||||
Sold receivables
|
—
|
|
|
554
|
|
|
29
|
|
|
|
|
|
583
|
|
|||||
Inventories
|
—
|
|
|
1,741
|
|
|
877
|
|
|
—
|
|
|
2,618
|
|
|||||
Short-term lending due from affiliates
|
—
|
|
|
3,657
|
|
|
4,353
|
|
|
(8,010
|
)
|
|
—
|
|
|||||
Other current assets
|
—
|
|
|
645
|
|
|
443
|
|
|
(217
|
)
|
|
871
|
|
|||||
Total current assets
|
—
|
|
|
10,403
|
|
|
8,478
|
|
|
(9,101
|
)
|
|
9,780
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
4,518
|
|
|
2,006
|
|
|
—
|
|
|
6,524
|
|
|||||
Goodwill
|
—
|
|
|
10,976
|
|
|
32,075
|
|
|
—
|
|
|
43,051
|
|
|||||
Investments in subsidiaries
|
66,005
|
|
|
73,105
|
|
|
—
|
|
|
(139,110
|
)
|
|
—
|
|
|||||
Intangible assets, net
|
—
|
|
|
3,838
|
|
|
58,282
|
|
|
—
|
|
|
62,120
|
|
|||||
Long-term lending due from affiliates
|
—
|
|
|
1,700
|
|
|
2,000
|
|
|
(3,700
|
)
|
|
—
|
|
|||||
Other assets
|
—
|
|
|
534
|
|
|
964
|
|
|
—
|
|
|
1,498
|
|
|||||
TOTAL ASSETS
|
$
|
66,005
|
|
|
$
|
105,074
|
|
|
$
|
103,805
|
|
|
$
|
(151,911
|
)
|
|
$
|
122,973
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial paper and other short-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Current portion of long-term debt
|
—
|
|
|
65
|
|
|
14
|
|
|
—
|
|
|
79
|
|
|||||
Short-term lending due to affiliates
|
—
|
|
|
4,353
|
|
|
3,657
|
|
|
(8,010
|
)
|
|
—
|
|
|||||
Trade payables
|
—
|
|
|
1,612
|
|
|
1,232
|
|
|
—
|
|
|
2,844
|
|
|||||
Payables due to affiliates
|
—
|
|
|
319
|
|
|
555
|
|
|
(874
|
)
|
|
—
|
|
|||||
Accrued marketing
|
—
|
|
|
359
|
|
|
497
|
|
|
—
|
|
|
856
|
|
|||||
Accrued postemployment costs
|
—
|
|
|
316
|
|
|
12
|
|
|
—
|
|
|
328
|
|
|||||
Income taxes payable
|
—
|
|
|
71
|
|
|
563
|
|
|
(217
|
)
|
|
417
|
|
|||||
Interest payable
|
—
|
|
|
386
|
|
|
15
|
|
|
—
|
|
|
401
|
|
|||||
Dividends payable
|
—
|
|
|
762
|
|
|
—
|
|
|
—
|
|
|
762
|
|
|||||
Other current liabilities
|
—
|
|
|
988
|
|
|
253
|
|
|
—
|
|
|
1,241
|
|
|||||
Total current liabilities
|
—
|
|
|
9,231
|
|
|
6,802
|
|
|
(9,101
|
)
|
|
6,932
|
|
|||||
Long-term debt
|
—
|
|
|
24,143
|
|
|
1,008
|
|
|
—
|
|
|
25,151
|
|
|||||
Long-term borrowings due to affiliates
|
—
|
|
|
2,000
|
|
|
1,905
|
|
|
(3,905
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
—
|
|
|
1,278
|
|
|
20,219
|
|
|
—
|
|
|
21,497
|
|
|||||
Accrued postemployment costs
|
—
|
|
|
2,147
|
|
|
258
|
|
|
—
|
|
|
2,405
|
|
|||||
Other liabilities
|
—
|
|
|
270
|
|
|
482
|
|
|
—
|
|
|
752
|
|
|||||
TOTAL LIABILITIES
|
—
|
|
|
39,069
|
|
|
30,674
|
|
|
(13,006
|
)
|
|
56,737
|
|
|||||
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
|||||
9.00% cumulative compounding preferred stock, Series A
|
8,320
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,320
|
|
|||||
Total shareholders’ equity
|
57,685
|
|
|
66,005
|
|
|
72,900
|
|
|
(138,905
|
)
|
|
57,685
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
208
|
|
|
—
|
|
|
208
|
|
|||||
TOTAL EQUITY
|
57,685
|
|
|
66,005
|
|
|
73,108
|
|
|
(138,905
|
)
|
|
57,893
|
|
|||||
TOTAL LIABILITIES AND EQUITY
|
$
|
66,005
|
|
|
$
|
105,074
|
|
|
$
|
103,805
|
|
|
$
|
(151,911
|
)
|
|
$
|
122,973
|
|
|
Parent Guarantor
|
|
Subsidiary Issuer
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by/(used for) operating activities
|
$
|
3,097
|
|
|
$
|
4,369
|
|
|
$
|
884
|
|
|
$
|
(3,112
|
)
|
|
$
|
5,238
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
—
|
|
|
(923
|
)
|
|
(324
|
)
|
|
—
|
|
|
(1,247
|
)
|
|||||
Proceeds from net investment hedges
|
—
|
|
|
104
|
|
|
(13
|
)
|
|
—
|
|
|
91
|
|
|||||
Net proceeds from/(payments on) intercompany lending activities
|
—
|
|
|
690
|
|
|
37
|
|
|
(727
|
)
|
|
—
|
|
|||||
Additional investments in subsidiaries
|
55
|
|
|
(10
|
)
|
|
—
|
|
|
(45
|
)
|
|
—
|
|
|||||
Return of capital
|
8,987
|
|
|
—
|
|
|
—
|
|
|
(8,987
|
)
|
|
—
|
|
|||||
Other investing activities, net
|
—
|
|
|
49
|
|
|
(6
|
)
|
|
—
|
|
|
43
|
|
|||||
Net cash provided by/(used for) investing activities
|
9,042
|
|
|
(90
|
)
|
|
(306
|
)
|
|
(9,759
|
)
|
|
(1,113
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayments of long-term debt
|
—
|
|
|
(72
|
)
|
|
(14
|
)
|
|
—
|
|
|
(86
|
)
|
|||||
Proceeds from issuance of long-term debt
|
—
|
|
|
6,978
|
|
|
3
|
|
|
—
|
|
|
6,981
|
|
|||||
Debt issuance costs
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
—
|
|
|
(53
|
)
|
|||||
Proceeds from issuance of commercial paper
|
—
|
|
|
6,680
|
|
|
—
|
|
|
—
|
|
|
6,680
|
|
|||||
Repayments of commercial paper
|
—
|
|
|
(6,043
|
)
|
|
—
|
|
|
—
|
|
|
(6,043
|
)
|
|||||
Net proceeds from/(payments on) intercompany borrowing activities
|
—
|
|
|
(37
|
)
|
|
(690
|
)
|
|
727
|
|
|
—
|
|
|||||
Dividends paid-Series A Preferred Stock
|
(180
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(180
|
)
|
|||||
Dividends paid-common stock
|
(3,584
|
)
|
|
(3,764
|
)
|
|
(16
|
)
|
|
3,780
|
|
|
(3,584
|
)
|
|||||
Redemption of Series A Preferred Stock
|
(8,320
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,320
|
)
|
|||||
Other intercompany capital stock transactions
|
—
|
|
|
(8,374
|
)
|
|
10
|
|
|
8,364
|
|
|
—
|
|
|||||
Other financing activities, net
|
(55
|
)
|
|
47
|
|
|
(8
|
)
|
|
—
|
|
|
(16
|
)
|
|||||
Net cash provided by/(used for) financing activities
|
(12,139
|
)
|
|
(4,638
|
)
|
|
(715
|
)
|
|
12,871
|
|
|
(4,621
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(137
|
)
|
|
—
|
|
|
(137
|
)
|
|||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase/(decrease)
|
—
|
|
|
(359
|
)
|
|
(274
|
)
|
|
—
|
|
|
(633
|
)
|
|||||
Balance at beginning of period
|
—
|
|
|
3,189
|
|
|
1,648
|
|
|
—
|
|
|
4,837
|
|
|||||
Balance at end of period
|
$
|
—
|
|
|
$
|
2,830
|
|
|
$
|
1,374
|
|
|
$
|
—
|
|
|
$
|
4,204
|
|
|
Parent Guarantor
|
|
Subsidiary Issuer
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by/(used for) operating activities
|
$
|
632
|
|
|
$
|
1,227
|
|
|
$
|
1,395
|
|
|
$
|
(787
|
)
|
|
$
|
2,467
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
—
|
|
|
(400
|
)
|
|
(248
|
)
|
|
—
|
|
|
(648
|
)
|
|||||
Proceeds from net investment hedges
|
—
|
|
|
488
|
|
|
—
|
|
|
—
|
|
|
488
|
|
|||||
Net proceeds from/(payments on) intercompany lending activities
|
—
|
|
|
737
|
|
|
(721
|
)
|
|
(16
|
)
|
|
—
|
|
|||||
Payments to acquire Kraft Foods Group, Inc., net of cash acquired
|
—
|
|
|
(9,535
|
)
|
|
67
|
|
|
—
|
|
|
(9,468
|
)
|
|||||
Additional investments in subsidiaries
|
(10,000
|
)
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|||||
Return of capital
|
1,570
|
|
|
5
|
|
|
—
|
|
|
(1,575
|
)
|
|
—
|
|
|||||
Other investing activities, net
|
—
|
|
|
(66
|
)
|
|
(10
|
)
|
|
—
|
|
|
(76
|
)
|
|||||
Net cash provided by/(used for) investing activities
|
(8,430
|
)
|
|
(8,771
|
)
|
|
(912
|
)
|
|
8,409
|
|
|
(9,704
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayments of long-term debt
|
—
|
|
|
(12,284
|
)
|
|
(30
|
)
|
|
—
|
|
|
(12,314
|
)
|
|||||
Proceeds from issuance of long-term debt
|
—
|
|
|
14,032
|
|
|
802
|
|
|
—
|
|
|
14,834
|
|
|||||
Debt issuance costs
|
—
|
|
|
(94
|
)
|
|
(4
|
)
|
|
—
|
|
|
(98
|
)
|
|||||
Net proceeds from/(payments on) intercompany borrowing activities
|
—
|
|
|
721
|
|
|
(737
|
)
|
|
16
|
|
|
—
|
|
|||||
Proceeds from issuance of common stock to Sponsors
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|||||
Dividends paid-Series A Preferred Stock
|
(900
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(900
|
)
|
|||||
Dividends paid-common stock
|
(1,302
|
)
|
|
(2,202
|
)
|
|
(155
|
)
|
|
2,357
|
|
|
(1,302
|
)
|
|||||
Other intercompany capital stock transactions
|
—
|
|
|
10,000
|
|
|
(5
|
)
|
|
(9,995
|
)
|
|
—
|
|
|||||
Other financing activities, net
|
—
|
|
|
19
|
|
|
(56
|
)
|
|
—
|
|
|
(37
|
)
|
|||||
Net cash provided by/(used for) financing activities
|
7,798
|
|
|
10,192
|
|
|
(185
|
)
|
|
(7,622
|
)
|
|
10,183
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(407
|
)
|
|
—
|
|
|
(407
|
)
|
|||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase/(decrease)
|
—
|
|
|
2,648
|
|
|
(109
|
)
|
|
—
|
|
|
2,539
|
|
|||||
Balance at beginning of period
|
—
|
|
|
541
|
|
|
1,757
|
|
|
—
|
|
|
2,298
|
|
|||||
Balance at end of period
|
$
|
—
|
|
|
$
|
3,189
|
|
|
$
|
1,648
|
|
|
$
|
—
|
|
|
$
|
4,837
|
|
|
Parent Guarantor
|
|
Subsidiary Issuer
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by/(used for) operating activities
|
$
|
578
|
|
|
$
|
669
|
|
|
$
|
1,556
|
|
|
$
|
(663
|
)
|
|
$
|
2,140
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
—
|
|
|
(211
|
)
|
|
(188
|
)
|
|
—
|
|
|
(399
|
)
|
|||||
Net proceeds from/(payments on) intercompany lending activities
|
—
|
|
|
(802
|
)
|
|
(2,479
|
)
|
|
3,281
|
|
|
—
|
|
|||||
Return of capital
|
142
|
|
|
—
|
|
|
—
|
|
|
(142
|
)
|
|
—
|
|
|||||
Other investing activities, net
|
—
|
|
|
23
|
|
|
27
|
|
|
—
|
|
|
50
|
|
|||||
Net cash provided by/(used for) investing activities
|
142
|
|
|
(990
|
)
|
|
(2,640
|
)
|
|
3,139
|
|
|
(349
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayments of long-term debt
|
—
|
|
|
(1,096
|
)
|
|
(7
|
)
|
|
—
|
|
|
(1,103
|
)
|
|||||
Net proceeds from/(payments on) intercompany borrowing activities
|
—
|
|
|
2,479
|
|
|
802
|
|
|
(3,281
|
)
|
|
—
|
|
|||||
Dividends paid-Series A Preferred Stock
|
(720
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(720
|
)
|
|||||
Dividends paid-common stock
|
—
|
|
|
(720
|
)
|
|
(85
|
)
|
|
805
|
|
|
—
|
|
|||||
Other financing activities, net
|
—
|
|
|
12
|
|
|
(9
|
)
|
|
—
|
|
|
3
|
|
|||||
Net cash provided by/(used for) financing activities
|
(720
|
)
|
|
675
|
|
|
701
|
|
|
(2,476
|
)
|
|
(1,820
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(132
|
)
|
|
—
|
|
|
(132
|
)
|
|||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase/(decrease)
|
—
|
|
|
354
|
|
|
(515
|
)
|
|
—
|
|
|
(161
|
)
|
|||||
Balance at beginning of period
|
—
|
|
|
187
|
|
|
2,272
|
|
|
—
|
|
|
2,459
|
|
|||||
Balance at end of period
|
$
|
—
|
|
|
$
|
541
|
|
|
$
|
1,757
|
|
|
$
|
—
|
|
|
$
|
2,298
|
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles;
|
•
|
provide reasonable assurance that receipts and expenditures are being made only in accordance with management and director authorization; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(1)
|
|
Weighted average exercise price per share of outstanding options, warrants and rights
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
||||
Plan Category
|
(a)
|
|
(b)
|
|
(c)
|
||||
Equity compensation plans approved by security holders
|
21,374,026
|
|
|
$
|
37.39
|
|
|
51,175,265
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
21,374,026
|
|
|
|
|
51,175,265
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Statements of Income for the Years Ended December 31, 2016, January 3, 2016, and December 28, 2014
|
|
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2016, January 3, 2016, and December 28, 2014
|
|
Consolidated Balance Sheets at December 31, 2016 and January 3, 2016
|
|
Consolidated Statements of Equity for the Years Ended December 31, 2016, January 3, 2016, and December 28, 2014
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, January 3, 2016, and December 28, 2014
|
|
Notes to the Consolidated Financial Statements
|
|
Financial Statement Schedule - Valuation and Qualifying Accounts
|
S-1
|
Exhibit No.
|
|
Descriptions
|
2.1
|
|
Separation and Distribution Agreement between Mondelēz International, Inc. (formerly known as Kraft Foods Inc.) and Kraft Foods Group, Inc., dated as of September 27, 2012 (incorporated by reference to Exhibit 2.1 to Amendment No. 1 to Kraft Foods Group, Inc.’s Registration Statement on Form S-4 (File No. 333-184314), filed on October 26, 2012).+
|
2.2
|
|
Canadian Asset Transfer Agreement between Mondelēz Canada Inc. and Kraft Canada Inc., dated as of September 29, 2012 (incorporated by reference to Exhibit 2.2 to Amendment No. 2 to Kraft Foods Group, Inc.’s Registration Statement on Form S-4 (File No. 333-184314), filed on December 4, 2012).+
|
2.3
|
|
Master Ownership and License Agreement Regarding Patents, Trade Secrets and Related Intellectual Property between Kraft Foods Global Brands LLC, Kraft Foods Group Brands LLC, Kraft Foods UK Ltd. and Kraft Foods R&D Inc., dated as of October 1, 2012 (incorporated by reference to Exhibit 2.3 to Amendment No. 2 to Kraft Foods Group, Inc.’s Registration Statement on Form S-4 (File No. 333-184314), filed on December 4, 2012).+
|
2.4
|
|
Master Ownership and License Agreement Regarding Trademarks and Related Intellectual Property between Kraft Foods Global Brands LLC and Kraft Foods Group Brands LLC., dated as of September 27, 2012 (incorporated by reference to Exhibit 2.4 to Amendment No. 2 to Kraft Foods Group, Inc.’s Registration Statement on Form S-4 (File No. 333-184314), filed on December 4, 2012).+
|
2.5
|
|
Agreement and Plan of Merger, dated as of March 24, 2015, by and among H.J. Heinz Holding Corporation, Kite Merger Sub Corp., Kite Merger Sub LLC and Kraft Foods Group, Inc.(incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-4 (File No. 333-203364), filed on April 10, 2015).+
|
2.6
|
|
First Amendment to the Master Ownership and License Agreement Regarding Trademarks and Related Intellectual Property, by and between Intercontinental Great Brands LLC and Kraft Foods Group Brands LLC, effective as of July 15, 2013 (incorporated by reference to Exhibit 2.2 to Kraft Foods Group, Inc.’s Quarterly Report on Form 10-Q (File No. 1-35491), filed on April 28, 2015).
|
2.7
|
|
Second Amendment to the Master Ownership and License Agreement Regarding Trademarks and Related Intellectual Property, by and between Intercontinental Great Brands LLC and Kraft Foods Group Brands LLC, effective as of October 1, 2014 (incorporated by reference to Exhibit 2.3 to Kraft Foods Group, Inc.’s Quarterly Report on Form 10-Q (File No. 1-35491), filed on April 28, 2015).
|
3.1
|
|
Second Amended and Restated Certificate of Incorporation of H.J. Heinz Holding Corporation (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 2, 2015).
|
3.2
|
|
Amended and Restated Bylaws of The Kraft Heinz Company (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on December 9, 2016).
|
4.1
|
|
Amended and Restated Registration Rights Agreement, dated as of July 2, 2015, by and among the Company, 3G Global Food Holdings LP and Berkshire Hathaway Inc. (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 2, 2015).
|
4.2
|
|
Indenture dated as of July 1, 2015, governing debt securities by and among H. J. Heinz Company, as issuer, H.J. Heinz Holding Corporation, as guarantor, and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
4.3
|
|
First Supplemental Indenture dated as of July 1, 2015, governing the 2.000% Senior Notes due 2023, by and among H. J. Heinz Company, as issuer, H.J. Heinz Holding Corporation, as guarantor, Wells Fargo Bank, National Association, as trustee, and Société Générale Bank & Trust, as paying agent, security registrar, and transfer agent (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
4.4
|
|
Second Supplemental Indenture dated as of July 1, 2015, governing the 4.125% Senior Notes due 2027, by and among H. J. Heinz Company, as issuer, H.J. Heinz Holding Corporation, as guarantor, Wells Fargo Bank, National Association, as trustee, and Société Générale Bank & Trust, as paying agent, security registrar, and transfer agent (incorporated by reference to Exhibit 4.4 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
4.5
|
|
Third Supplemental Indenture dated as of July 2, 2015, governing the 1.60% Senior Notes due 2017, the 2.00% Senior Notes due 2018, the 2.80% Senior Notes due 2020, the 3.50% Senior Notes due 2022, the 3.95% Senior Notes due 2025, the 5.00% Senior Notes due 2035 and the 5.20% Senior Notes due 2045, by and among H. J. Heinz Company, as issuer, H.J. Heinz Holding Corporation, as guarantor, and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.6 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
4.6
|
|
Indenture dated as of July 6, 2015, governing debt securities by and among Kraft Canada Inc., as issuer, The Kraft Heinz Company and Kraft Heinz Foods Company, as guarantors, and Computershare Trust Company of Canada, as trustee (incorporated by reference to Exhibit 4.9 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
4.7
|
|
First Supplemental Indenture dated as of July 6, 2015, governing the Floating Rate Senior Notes due 2018, by and among Kraft Canada Inc., as issuer, The Kraft Heinz Company and Kraft Heinz Foods Company, as guarantors, and Computershare Trust Company of Canada, as trustee (incorporated by reference to Exhibit 4.10 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
4.8
|
|
Second Supplemental Indenture dated as of July 6, 2015, governing the Floating Rate Senior Notes due 2020, by and among Kraft Canada Inc., as issuer, The Kraft Heinz Company and Kraft Heinz Foods Company, as guarantors, and Computershare Trust Company of Canada, as trustee (incorporated by reference to Exhibit 4.12 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
4.9
|
|
Third Supplemental Indenture dated as of July 6, 2015, governing the 2.70% Senior Notes due 2020, by and among Kraft Canada Inc., as issuer, The Kraft Heinz Company and Kraft Heinz Foods Company, as guarantors, and Computershare Trust Company of Canada, as trustee (incorporated by reference to Exhibit 4.14 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
4.10
|
|
Form of the 2.70% Senior Notes due 2020 (included in Exhibit 4.16).
|
4.11
|
|
Guarantee Agreement dated as of July 6, 2015, by and among The Kraft Heinz Company and Kraft Heinz Foods Company, as guarantors, and Computershare Trust Company of Canada, as trustee (incorporated by reference to Exhibit 4.16 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
4.12
|
|
Indenture by and between Kraft Foods Group, Inc. and Deutsche Bank Trust Company Americas, as trustee, dated as of June 4, 2012 (incorporated by reference to Exhibit 10.4 to Kraft Foods Group, Inc.’s Registration Statement on Form 10 (File No. 1-35491), filed on June 21, 2012).
|
4.13
|
|
Supplemental Indenture No. 1 by and between Kraft Foods Group, Inc., Mondelēz International, Inc. (formerly known as Kraft Foods Inc.), as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated as of June 4, 2012 (incorporated by reference to Exhibit 10.5 to Kraft Foods Group, Inc.’s Registration Statement on Form 10 (File No. 1-35491), filed on June 21, 2012).
|
4.14
|
|
Supplemental Indenture No. 2 by and between Kraft Foods Group, Inc., Mondelēz International, Inc. (formerly known as Kraft Foods Inc.), as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated as of July 18, 2012 (incorporated by reference to Exhibit 10.27 to Kraft Foods Group, Inc.’s Registration Statement on Form 10 (File No. 1-35491), filed on August 6, 2012).
|
4.15
|
|
Supplemental Indenture No. 3 dated as of July 2, 2015, governing the 2.250% Notes due 2017, 6.125% Notes due 2018, 5.375% Notes due 2020, 3.500% Notes due 2022, 6.875% Notes due 2039, 6.500% Notes due 2040 and 5.000% Notes due 2042, by and among Kraft Foods Group, Inc., as issuer, H. J. Heinz Company, as successor, H.J. Heinz Holding Corporation, as parent guarantor, and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.17 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
4.16
|
|
Third Supplemental Indenture dated July 2, 2015, governing the 6.75% Debentures due 2032 and 7.125% Debentures due 2039 by and among H.J. Heinz Holding Corporation, H. J. Heinz Company and The Bank of New York Mellon (as successor trustee to Bank One, National Association) (incorporated by reference to Exhibit 4.18 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
4.17
|
|
Third Supplemental Indenture dated July 2, 2015, governing the 6.375% Debentures due 2028 by and among H.J. Heinz Holding Corporation, H. J. Heinz Company and The Bank of New York Mellon (as successor trustee to Bank One, National Association) (incorporated by reference to Exhibit 4.19 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
4.18
|
|
Indenture among H. J. Heinz Corporation II, H. J. Heinz Finance Company, and The Bank of New York Mellon (as successor trustee) dated as of July 6, 2001 governing the 6.75% Guaranteed Notes due 2032 and the 7.125% Guaranteed Notes due 2039 (incorporated herein by reference to Exhibit 4 to H. J. Heinz Company’s Annual Report on Form 10-K for the fiscal year ended May 1, 2002 (File No. 1-3385), filed on July 30, 2002).
|
4.19
|
|
Indenture among H. J. Heinz Company and MUFG Union Bank, N.A. (as successor trustee) dated as of July 15, 2008 governing the 2.000% Notes due 2016, the 3.125% Notes due 2021, the 1.50% Notes due 2017, and the 2.85% Notes due 2022 (incorporated herein by reference to Exhibit 4(d) to H. J. Heinz Company’s Annual Report on Form 10-K for the fiscal year ended April 29, 2009 (File No. 1-3385), filed on June 17, 2009).
|
4.20
|
|
Supplemental Indenture No. 4, dated as of November 11, 2015, to the Indenture, by and between Kraft Foods Group, Inc. and Deutsche Bank Trust Company Americas, as trustee, dated as of June 4, 2012.
|
4.21
|
|
Second Lien Security Agreement, dated as of June 7, 2013, by and among Hawk Acquisition Intermediate Corporation II, and certain of its subsidiaries, collectively, as the Initial Grantors, and Wells Fargo Bank, National Association, as Collateral Agent (incorporated by reference to Exhibit 10.6 to H. J. Heinz Company’s Current Report on Form 8-K (File No. 1-3385), dated June 13, 2013).
|
4.22
|
|
Second Lien Intellectual Property Security Agreement, dated June 7, 2013 by the persons listed on the signature pages thereof in favor of Wells Fargo Bank, National Association, as collateral agent for the Secured Parties (incorporated by reference to Exhibit 10.7 to H. J. Heinz Company’s Current Report on Form 8-K (File No. 1-3385), dated June 13, 2013).
|
4.23
|
|
Indenture dated as of January 30, 2015, by and among H. J. Heinz Corporation II, the Guarantors party hereto, Wells Fargo Bank, National Association, as Collateral Agent and MUFG Union Bank, N.A. as Trustee, relating to H. J. Heinz Corporation II’s $2,000,000,000 4.875% Second Lien Senior Secured Notes due 2025 (incorporated by reference to Exhibit 4.1 of H. J. Heinz Corporation II’s Current Report on Form 8-K (File No. 444-194441), dated February 5, 2015).
|
4.24
|
|
Indenture by and between H. J. Heinz Company (as successor issuer), and The Bank of New York Mellon (as successor trustee) dated as of July 15, 1992 (incorporated by reference to Exhibit 4(a) to H. J. Heinz Company’s Registration Statement on Form S-3 (File No. 333-48017), filed on March 16, 1998).
|
4.25
|
|
Fourth Supplemental Indenture, dated as of May 24, 2016, governing the 3.000% Senior Notes due 2026 and the 4.375% Senior Notes due 2046, by and among Kraft Heinz Foods Company, as issuer, The Kraft Heinz Company, as guarantor, and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on May 25, 2016).
|
4.26
|
|
Form of the 3.000% Senior Notes due 2026 and the 4.375% Senior Notes due 2046 included in Exhibit 4.26.
|
4.27
|
|
Fifth Supplemental Indenture, dated as of May 25, 2016, governing the 1.500% Senior Notes due 2024 and the 2.250% Senior Notes due 2028, by and among Kraft Heinz Foods Company, as issuer, The Kraft Heinz Company, as guarantor, and Deutsche Bank Trust Company Americas, as trustee, paying agent, security registrar, and transfer agent (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on May 25, 2016).
|
4.28
|
|
Form of the 1.500% Senior Notes due 2024 and the 2.250% Senior Notes due 2028 included in Exhibit 4.28.
|
10.1
|
|
Tax Sharing and Indemnity Agreement by and between Mondelēz International, Inc. (formerly known as Kraft Foods Inc.) and Kraft Foods Group, Inc., dated as of September 27, 2012 (incorporated by reference to Exhibit 10.3 to Amendment No. 1 to Kraft Foods Group, Inc.’s Registration Statement on Form S-4 (File No. 333-184314), filed on October 26, 2012).
|
10.2
|
|
Form of (Kraft Foods Group, Inc.) Global Stock Option Award Agreement (incorporated by reference to Exhibit 10.1 to Kraft Foods Group, Inc.’s Quarterly Report on Form 10-Q (File No. 333-35491), filed on May 2, 2014).++
|
10.3
|
|
Form of (Kraft Foods Group, Inc.) Global Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 to Kraft Foods Group, Inc.’s Quarterly Report on Form 10-Q (File No. 333-35491) filed on May 2, 2014).++
|
10.4
|
|
H. J. Heinz Holding Corporation 2013 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to Amendment No. 4 to H.J. Heinz Holding Corporation’s Registration Statement on Form S-4 (File No. 333-203364), filed on May 29, 2015).++
|
10.5
|
|
Amendment, effective July 2, 2015 to the H. J. Heinz Holding Corporation 2013 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K
for the fiscal year ended January 3, 2016 (File No. 1-37482), filed on March 3, 2016).++
|
10.6
|
|
Form of H. J. Heinz Holding Corporation 2013 Omnibus Incentive Plan Non-Qualified Stock Option Award Agreement (incorporated by reference to Exhibit 10.2 to Amendment No. 4 to H.J. Heinz Holding Corporation’s Registration Statement on Form S-4 (File No. 333-203364), filed on May 29, 2015).++
|
10.7
|
|
Kraft Foods Group, Inc. Deferred Compensation Plan For Non-Management Directors (incorporated by reference to Exhibit 4.3 to Kraft Foods Group, Inc.’s Registration Statement on Form S-8 (File No. 333-183867) filed on September 12, 2012).++
|
10.8
|
|
Kraft Foods Group, Inc. 2012 Performance Incentive Plan (incorporated by reference to Exhibit 4.3 to Kraft Foods Group, Inc.’s Registration Statement on Form S-8 (File No. 333-183868) filed on September 12, 2012). ++
|
10.9
|
|
Settlement Agreement, dated June 22, 2015, between Mondelēz International, Inc. and Kraft Foods Group, Inc. (incorporated by reference to Exhibit 10.1 of Kraft Foods Group, Inc.’s Current Report on Form 8-K (File No. 1-35491), filed on June 24, 2015).
|
10.10
|
|
Subscription Agreement, dated as of July 1, 2015, by and among H.J. Heinz Holding Corporation, 3G Global Food Holdings LP and Berkshire Hathaway Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 2, 2015).
|
10.11
|
|
Credit Agreement dated as of July 6, 2015, by and among Kraft Heinz Foods Company (formerly known as H. J. Heinz Company), The Kraft Heinz Company (formerly known as H.J. Heinz Holding Corporation), the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and JPMorgan Europe Limited, as London Agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).
|
10.12
|
|
First Amendment to Credit Agreement, entered into as of May 4, 2016, to the Credit Agreement dated as of July 6, 2015, by and among The Kraft Heinz Company, Kraft Heinz Foods Company, the banks, financial institutions and other institutional lenders party thereto, the issuing banks, JPMorgan Chase Bank, N.A., as Administrative Agent and J.P. Morgan Europe Limited, as London agent for the lenders (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on May 6, 2016).
|
10.13
|
|
Consulting Agreement, dated as of July 9, 2015, by and between The Kraft Heinz Company and John T. Cahill (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 1-37482), filed on November 6, 2015).++
|
10.14
|
|
The Kraft Heinz Company 2016 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-37482), filed on May 5, 2016).++
|
10.15
|
|
Form of The Kraft Heinz Company 2016 Omnibus Incentive Plan Non-Qualified Stock Option Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 1-37482), filed on May 5, 2016).++
|
10.16
|
|
Form of The Kraft Heinz Company 2016 Omnibus Incentive Plan Matching Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 1-37482), filed on May 5, 2016).++
|
10.17
|
|
Form of The Kraft Heinz Company 2016 Omnibus Incentive Plan Performance Share Award
Notice.++
|
10.18
|
|
Employment Agreement between The Kraft Heinz Company and George Zoghbi, dated as of December 16, 2016.++
|
21.1
|
|
List of subsidiaries of The Kraft Heinz Company
|
23.1
|
|
Consent of PricewaterhouseCoopers LLP
|
24.1
|
|
Power of Attorney
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a 14(a)/15d 14(a) of the Securities Exchange Act of 1934.
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a 14(a)/15d 14(a) of the Securities Exchange Act of 1934.
|
32.1
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.1
|
|
The following materials from The Kraft Heinz Company’s Annual Report on Form 10-K for the year ended December 31, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Statements of Equity, (iv) the Consolidated Balance Sheets, (v) the Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements, and (vii) document and entity information.
|
|
|
|
+
|
|
The Company agrees to furnish supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request.
|
++
|
|
Indicates a management contract or compensatory plan or arrangement.
|
|
|
The Kraft Heinz Company
|
|
Date:
|
February 23, 2017
|
|
|
|
|
By:
|
/s/ Paulo Basilio
|
|
|
|
Paulo Basilio
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Bernardo Hees
|
|
Chief Executive Officer
|
|
February 23, 2017
|
Bernardo Hees
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Paulo Basilio
|
|
Executive Vice President and Chief Financial Officer
|
|
February 23, 2017
|
Paulo Basilio
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Christopher R. Skinger
|
|
Global Controller
|
|
February 23, 2017
|
Christopher R. Skinger
|
|
(Principal Accounting Officer)
|
|
|
Alexandre Behring*
|
|
Chairman of the Board
|
|
|
|
John T. Cahill*
|
|
Vice Chairman of the Board
|
|
|
|
Gregory E. Abel*
|
|
Director
|
|
|
|
Warren E. Buffett*
|
|
Director
|
|
|
|
Tracy Britt Cool*
|
|
Director
|
|
|
|
Feroz Dewan*
|
|
Director
|
|
|
|
Jeanne P. Jackson*
|
|
Director
|
|
|
|
Jorge Paulo Lemann*
|
|
Director
|
|
|
|
Mackey J. McDonald*
|
|
Director
|
|
|
|
John C. Pope*
|
|
Director
|
|
|
|
Marcel Herrmann Telles*
|
|
Director
|
|
|
|
|
Additions
|
|
Deductions
|
|
|
||||||||||||
Description
|
|
Balance at Beginning of Period
|
|
Charged to Costs and Expenses
|
|
Charged to Other Accounts
(a)
|
|
Write-offs and Reclassifications
|
|
Balance at End of Period
|
||||||||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowances related to trade accounts receivable
|
|
$
|
32
|
|
|
$
|
6
|
|
|
$
|
(4
|
)
|
|
$
|
14
|
|
|
$
|
20
|
|
Allowances related to deferred taxes
|
|
83
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
89
|
|
|||||
|
|
$
|
115
|
|
|
$
|
12
|
|
|
$
|
(4
|
)
|
|
$
|
14
|
|
|
$
|
109
|
|
Year ended January 3, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowances related to trade accounts receivable
|
|
$
|
8
|
|
|
$
|
5
|
|
|
$
|
20
|
|
|
$
|
1
|
|
|
$
|
32
|
|
Allowances related to deferred taxes
|
|
64
|
|
|
10
|
|
|
12
|
|
|
3
|
|
|
83
|
|
|||||
|
|
$
|
72
|
|
|
$
|
15
|
|
|
$
|
32
|
|
|
$
|
4
|
|
|
$
|
115
|
|
Year ended December 28, 2014
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowances related to trade accounts receivable
|
|
$
|
1
|
|
|
$
|
9
|
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
8
|
|
|
Allowances related to deferred taxes
|
|
78
|
|
|
1
|
|
|
(15
|
)
|
|
—
|
|
|
$
|
64
|
|
||||
|
|
$
|
79
|
|
|
$
|
10
|
|
|
$
|
(16
|
)
|
|
$
|
1
|
|
|
$
|
72
|
|
(a)
|
Primarily relates to acquisitions and currency translation.
|
Vesting Date:
|
|
Performance Period:
|
|
1.
|
Grant of Performance Share Award.
|
2.
|
Definitions
. All capitalized terms used in this Agreement without definition shall have the meanings ascribed in the Omnibus Plan and the Notice. The following terms shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.
|
(a)
|
“Disability” means (i) a physical or mental condition entitling you to benefits under the long-term disability policy of the Company covering you or (ii) in the absence of any such policy, a physical or mental condition rendering you unable to perform your duties for the Company or any of its Subsidiaries or Affiliates for a period of six (6) consecutive months or longer; provided that if you are a party to an Employment Agreement at the time of termination of your Service and such Employment Agreement contains a different definition of “disability” (or any derivation thereof), the definition in such Employment Agreement shall control for purposes of this Agreement.
|
(b)
|
“Employment Agreement” means an individual written employment agreement between the Participant and the Company or any of its Affiliates, including an offer letter.
|
(c)
|
“Performance Share Award Share Payout” means an amount equal to the Payout or other calculation included in the Notice or Employment Agreement.
|
(d)
|
“Performance Share Award Target” shall mean the target number of Shares subject to this Performance Share Award set forth in the Notice or Employment Agreement.
|
(e)
|
“Qualified Performance-Based Compensation” means any compensation awarded to a Covered Employee that is intended to qualify as “qualified performance-based compensation” as described in Section 162(m)(4)(C) of the Code.
|
(f)
|
“Retirement” means a termination of Service by you on or after the later of (i) your 65th birthday and (ii) your completion of five (5) years of Service with the Company, its Subsidiaries or its Affiliates.
|
(g)
|
“Without Cause” means (i) a termination of your Service by the Company or its Subsidiaries or Affiliates other than for Cause (as defined in the Omnibus Plan) and other than due to your death, Disability or Retirement or (ii) (A) if you are a party to an Employment Agreement , (B) such Employment Agreement is in effect upon the date of your termination of Service and (C) such Employment Agreement defines “Good Reason”, then “Without Cause” shall also include resignation of your Service for “Good Reason” in accordance with such Employment Agreement .
|
(a)
|
Form and Time of Payment.
|
(i)
|
Vesting
. The Performance Share Award will vest on the “Vesting Date” set forth in the Notice provided that you remain employed by the Company or one of its Subsidiaries, except as otherwise set forth in the Omnibus Plan or this Award Agreement. Prior to the vesting and settlement of the Performance Share Award, you will not have any rights of a shareholder with respect to the Performance Share Award or the Shares subject thereto. No Shares will be delivered pursuant to the vesting of the Performance Share Award unless (i) you have complied with your obligations under this Award Agreement and the Omnibus Plan and (ii) the vesting of the Performance Share Award and the delivery of such Shares complies with applicable law. Until such time as the Shares are delivered to you (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), you will have no right to vote or receive dividends or any other rights as a shareholder with respect to such Shares, notwithstanding the vesting of the Performance Share Award.
|
(ii)
|
Performance Share Award Payment
. Subject to the terms of the Omnibus Plan and this Agreement, any Performance Share Award that becomes payable shall be made in whole Shares, which shall be issued in book-entry form, registered in the Participant’s name. In the event the Performance Share Award Share Payout is to be made in Shares results in less than a whole number of Shares, the
|
(iii)
|
Dividends
. Any cash dividend the Board declares with respect to the Shares during the Performance Period shall be treated in accordance with the Notice.
|
(iv)
|
Payment Timing
. Except as otherwise provided in Section 21 hereof or in the Notice, as applicable, (A) the Performance Share Award payment shall be made as soon as practicable following the Vesting Date, but in any event no later than March 15 of the taxable year following the end of the Performance Period and (B) a Performance Share Award that becomes payable under Section 3(b)(i), 3(b)(ii), or 3(b)(iii) shall be paid no later than 60 days after the Vesting Date.
|
(v)
|
Payout Upon Termination
. The Notice shall set forth the effect of termination upon the Performance Share Award. If you are terminated Without Cause or due to your resignation and, within the twelve (12) month period subsequent to such termination of your Service, the Company determines that your Service could have been terminated for Cause, subject to anything to the contrary that may be contained in the Notice at the time of termination of your Service, your Service will, at the election of the Company, be deemed to have been terminated for Cause for purposes of this Award Agreement and the Omnibus Plan, effective as of the date the events giving rise to Cause occurred and any consequences following from a termination for Cause shall be retroactively applied (including your obligation to repay gains that would not have been realized had your Service been terminated for Cause).
|
(b)
|
Conditions to Payment of Performance Share Award
. Notwithstanding any other provision of this Agreement:
|
(i)
|
The Performance Share Award shall not become payable to the Participant or his or her legal representative unless and until the Participant or his or her legal representative shall have satisfied all applicable withholding obligations for Tax-Related Items (as defined in Section 5 below), if any, in accordance with Section 5 hereof.
|
(ii)
|
The Company shall not be required to issue or deliver any Shares in payment of the Performance Share Award prior to the fulfillment of all of the following conditions: (A) the admission of the Shares to listing on all stock exchanges on which the Shares are then listed, (B) the completion of any registration or other qualification of the Shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission (the “Commission”) or other governmental regulatory body, which the Committee shall, in its sole and absolute discretion, deem necessary and advisable, or if the offering of the Shares is not so registered, a determination by the Company that the issuance of the Shares would be exempt from any such registration or qualification requirements, (C) the obtaining of any approval or other clearance from any state, federal or foreign governmental agency that the Committee shall, in its absolute discretion, determine to be necessary or advisable and (D) the lapse of any such reasonable period of time following the date the Performance Share Award becomes payable as the Committee may from time to time establish for reasons of administrative convenience, subject to compliance with Section 409A of the Code.
|
(c)
|
Committee Discretion
. Anything to the contrary in this Section 3 notwithstanding, the Committee may, in its sole discretion, provide for full or partial payment of the Performance Share Award upon termination of a Participant’s active employment for any reason prior to the completion of a Performance Period to which a Performance Share Award relates; provided that the Committee shall not exercise such discretion if doing so would cause other Performance Share Awards that are intended to qualify as Qualified Performance-Based Compensation not to qualify.
|
4.
|
Withholding Taxes
. Regardless of any action the Company or the Participant’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Omnibus Plan and legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by the Participant is and remains his or her responsibility and may exceed the amount actually withheld by the Company or the Employer. Furthermore, the Participant acknowledges that the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Performance Share Award, including, but not limited to, the grant, vesting, or payment of this Performance Share Award or the subsequent sale of Shares issued in payment of the Performance Share Award; and (b) do not commit to and are under no obligation to structure the terms of the grant of the Performance Share Award or any aspect of the Participant’s participation in the Omnibus Plan to reduce or eliminate his or her liability for Tax-Related Items or achieve any
|
5.
|
Nature of Grant
. By participating in the Omnibus Plan and in exchange for receiving the Performance Share Award, the Participant acknowledges, understands and agrees that:
|
7.
|
Nontransferability of Performance Share Award
. The Performance Share Award or the interests or rights therein may not be transferred in any manner other than by will or by the laws of descent and distribution, and may not be assigned, hypothecated or otherwise pledged and shall not be subject to execution, attachment or similar process.
|
24.
|
No Advice Regarding Performance Share Award
. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s acquisition or sale of any Shares issued in payment of the Performance Share Award. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors before taking any action related to the Performance Share Award.
|
1.
|
NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
During the course of Executive's Service, Executive will have access to Confidential Information. For purposes of this Agreement, "
Confidential Information
" means all data, information, ideas, concepts, discoveries, trade secrets, inventions (whether or not patentable or reduced to practice), innovations, improvements, know-how, developments, techniques, methods, processes, treatments, drawings, sketches, specifications, designs, plans, patterns, models, plans and strategies, and all other confidential or proprietary information or trade secrets in any form or medium (whether merely remembered or embodied in a tangible or intangible form or medium) whether now or hereafter existing, relating to or arising from the past, current or potential business, activities and/or operations of the Company, including, without limitation, any such information relating to or concerning finances, sales, marketing, advertising, transition, promotions, pricing, personnel, customers, suppliers, vendors, raw partners and/or competitors of the Company. Executive agrees that Executive shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of Executive's assigned duties and for the benefit of the Company, either during the period of Executive's Service or at any time thereafter, any Confidential Information or other confidential or
|
2.
|
NON-COMPETITION.
Executive acknowledges that (i) Executive performs services of a unique nature for the Company that are irreplaceable, and that Executive's performance of such services to a competing business will result in irreparable harm to the Company, (ii) Executive has had and will continue to have access to Confidential Information which, if disclosed, would unfairly and inappropriately assist in competition against the Company, (iii) in the course of Executive's employment by or service to a competitor, Executive would inevitably use or disclose such Confidential Information, (iv) the Company has substantial relationships with its customers and Executive has had and will continue to have access to these customers, (v) Executive has received and will receive specialized training from the Company, and (vi) Executive has generated and will continue to generate goodwill for the Company in the course of Executive's Service. Accordingly, during Executive's Service and for eighteen (18) months following a termination of Executive's Service for any reason (the "
Restricted Period
"), Executive will not engage in any business activities, directly or indirectly (whether as an employee, consultant, officer, director, partner, joint venturer, manager, member, principal, agent, or independent contractor, individually, in concert with others, or in any other manner) within the same line or lines of business for which the Executive performed services for the Company and in a capacity that is similar to the capacity in which the Executive was employed by the Company with any person or entity that competes with the Company in the consumer packaged food and beverage industry ("
Competitive Business
") anywhere within the same geographic territory(ies) for which the Executive performed services for the Company (the "
Restricted Territory
"). Notwithstanding the foregoing, nothing herein shall prohibit Executive from being a passive owner of not more than three percent (3%) of the equity securities of a publicly traded corporation engaged in a business that is in competition with the Company, so long as Executive has no active participation in the business of such corporation.
|
3.
|
NON-SOLICITATION.
During the Restricted Period, Executive agrees that Executive shall not, except in the furtherance of Executive's duties to the Company, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, solicit, aid, induce, assist in the solicitation of, or accept any business (other than on behalf of the Company) from, any customer or potential customer of the Company to purchase goods or services then sold by the Company from another person, firm, corporation or other entity or, directly or indirectly, in any way request, suggest or advise any such customer to withdraw or cancel any of their business or refuse to continue to do business with the Company. This restriction shall apply to customers or potential customers who, during the two (2) years immediately preceding the Executive's termination, had been assigned to the Executive by the Company, or with which the Executive had contact on behalf of the Company while an Executive of the Company, or about which the Executive had access to confidential information by virtue of Executive's employment with the Company.
|
4.
|
NON-INTERFERENCE
. During the Restricted Period, Executive agrees that Executive shall not, except in the furtherance of Executive's duties to the Company, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, (A) solicit, aid or induce any employee, representative or agent of the Company to leave such employment or retention or to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, representative or agent, or take any action to materially assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent, or (B) interfere, or aid or induce any other person or entity in interfering, with the relationship between the Company and its vendors, suppliers or customers. As used herein, the term "solicit, aid or induce" includes, but is not limited to, (i) initiating communications with a Company employee relating to possible employment, (ii) offering bonuses or other compensation to encourage a Company employee to terminate his or her employment with the Company and accept employment with any entity, (iii) recommending a Company employee to any entity, and (iv) aiding an entity in recruitment of a Company employee. An employee, representative or agent shall be deemed covered by this
Section 4
while so employed or retained and for a period of six (6) months thereafter.
|
5.
|
NON-DISPARAGEMENT.
Executive agrees not to make negative comments or otherwise disparage the Company or its officers, directors, employees, shareholders, agents or products or services. The foregoing shall not be violated by truthful statements made in (a) response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) or (b) the good faith performance of Executive's duties to the Company.
|
6.
|
INVENTIONS.
|
a.
|
Executive acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements, work products, developments, software, know-how, processes, techniques, methods, works of authorship and other work product ("
Inventions
"), whether patentable or unpatentable, (A) that are reduced to practice, created, invented, designed, developed, contributed to, or improved with the use of any Company resources and/or within the scope of Executive's work with the Company or that relate to the business, operations or actual or demonstrably anticipated research or development of the Company, and that are made or conceived by Executive, solely or jointly with others, during Executive's Service, or (B) suggested by any work that Executive performs in connection with the Company, either while performing Executive's duties with the Company or on Executive's own time, but only insofar as the Inventions are related to Executive's work as an employee or other service provider to the Company, shall belong exclusively to the Company (or its designee), whether or not patent or other applications for intellectual property protection are filed thereon. Executive will keep full and complete written records (the "
Records
"), in the manner prescribed by the Company, of all Inventions, and will promptly disclose all Inventions completely and in writing to the Company. The Records shall be the sole and exclusive property of the Company, and Executive will surrender them upon the termination of Service, or upon the Company's request. Executive irrevocably conveys, transfers and assigns to the Company the Inventions and all patents or other intellectual property rights that may issue thereon in any and all countries, whether during or subsequent to Executive's Service, together with the right to file, in Executive's name or in the name of the Company (or its designee), applications for patents and equivalent rights (the "
Applications
"). Executive will, at any time during and subsequent to Executive's Service, make such applications, sign such papers, take all rightful oaths, and perform all other acts as may be requested from time to time by the Company to perfect, record, enforce, protect, patent or register the Company's rights in the Inventions, all without additional compensation to Executive from the Company. Executive will also execute assignments to the Company (or its designee) of the Applications, and give the Company and its attorneys all reasonable assistance (including the giving of testimony) to obtain the Inventions for the Company's benefit, all without additional compensation to Executive from the Company, but entirely at the Company's expense.
|
b.
|
In addition, the Inventions will be deemed Work for Hire, as such term is defined under the copyright laws of the United States, on behalf of the Company and Executive agrees that the Company will be the sole owner of the Inventions, and all underlying rights therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity without any further obligations to Executive. If the Inventions, or any portion thereof, are deemed not to be Work for Hire, or the rights in such Inventions do not otherwise automatically vest in the Company, Executive hereby irrevocably conveys, transfers and assigns to the Company, all rights, in all media now known or hereinafter devised, throughout the universe and in perpetuity, in and to the Inventions, including, without limitation, all of Executive's right, title and interest in the copyrights (and all renewals, revivals and extensions thereof) to the
|
7.
|
RETURN OF COMPANY PROPERTY.
On the date of Executive's termination of Service with the Company for any reason (or at any time prior thereto at the Company's request), Executive shall return all property belonging to the Company (including, but not limited to, any Company-provided laptops, computers, cell phones, wireless electronic mail devices or other equipment, or documents and property belonging to the Company).
|
8.
|
REASONABLENESS OF COVENANTS.
In signing this Agreement, including by electronic means, Executive gives the Company assurance that Executive has carefully read and considered all of the terms and conditions of this Agreement, including the restraints imposed by it. Executive agrees that these restraints are necessary for the reasonable and proper protection of the Company and its Confidential Information and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent Executive from obtaining other suitable employment during the period in which Executive is bound by the restraints. Executive acknowledges that each of these covenants has a unique, very substantial and immeasurable value to the Company and that Executive has sufficient assets and skills to provide a livelihood while such covenants remain in force. Executive further covenants that Executive will not challenge the reasonableness or enforceability of any of the covenants set forth in this Agreement, and that Executive will reimburse the Company for all costs (including reasonable attorneys' fees) incurred in connection with any action to enforce any of the provisions of this Agreement if either the Company prevails on any material issue involved in such dispute or if Executive challenges the reasonableness or enforceability of any of the provisions of this Agreement.
It is also agreed that the "Company" as used in this Agreement refers to each of the Company's Subsidiaries and Affiliates and that each of the Company's s Subsidiaries and Affiliates will have the right to enforce all of Executive's obligations to that Subsidiary or Affiliate under this Agreement, as applicable, subject to any limitation or restriction on such rights of the Subsidiary or Affiliate under applicable law.
|
9.
|
REFORMATION.
If it is determined by a court of competent jurisdiction in any state or country that any restriction in this Agreement is excessive in duration or scope or is unreasonable or unenforceable under applicable law, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the laws of that state or country.
|
10.
|
REMEDIES
. Executive acknowledges and agrees that the Company's remedies at law for a breach or threatened breach of any of the provisions of Agreement would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond or other security, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available, without the necessity of showing actual monetary damages, in addition to any other equitable relief (including without limitation an accounting and/or disgorgement) and/or any other damages as a matter of law.
|
11.
|
REPURCHASE
. Executive acknowledges and agrees that a breach of this Agreement would constitute a "Covenant Breach" as such term is used in the Omnibus Plan and therefore, in the event of a Covenant Breach, Executive's PSUs and the Shares issued in payment thereof (as such terms are defined in the Omnibus Plan) shall be subject to repurchase by The Kraft Heinz Company in accordance with the terms of the Omnibus Plan.
|
12.
|
TOLLING.
In the event of any violation of the provisions of this Agreement, Executive acknowledges and agrees that the post-termination restrictions contained in this Agreement shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the running of the applicable post-termination restriction period shall be tolled during any period of such violation.
|
13.
|
SURVIVAL OF PROVISIONS.
The obligations contained in this Agreement
hereof shall survive the termination or expiration of the Executive's Service with the Company and shall be fully enforceable thereafter.
|
14.
|
VENUE, PERSONAL JURISDICTION, AND COVENANT NOT TO SUE
. Executive expressly agrees to submit to the exclusive jurisdiction and exclusive venue of courts located in the State of Delaware in connection with any litigation which may be brought with respect to a dispute between the Company and Executive in relation to this Restrictive Covenants Agreement, regardless of where Executive resides or where Executive performs services for the Company. Executive hereby irrevocably waives Executive's rights, if any, to have any disputes between the Company and Executive related to this Restrictive Covenants Agreement decided in any jurisdiction or venue other than a court in the State of Delaware. Executive hereby waives, to the fullest extent permitted by applicable law, any objection which Executive now or hereafter may have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding, and Executive agrees not to plead or claim the same. Executive further irrevocably covenants not to sue the Company related to this Restrictive Covenants Agreement in any jurisdiction or venue other than a court in the State of Delaware. All matters relating to the interpretation, construction, application, validity, and enforcement of this Agreement, and any disputes or controversies arising hereunder, will be governed by the laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule, whether of the State of Delaware or any other jurisdiction, that would cause the application of laws of any jurisdiction other than the State of Delaware.
|
Vehicle and Value
|
Description
|
Restricted Stock Units
$3,000,000
nominal value, with number of shares based on average of daily closing prices on each trading day in December 2016 (rounded up or down to the nearest whole share)
|
RSUs with a time based three-year cliff vest, which will vest on December 31, 2019, subject to your continued service with the Company through such date (unless otherwise set forth herein).
|
Performance Shares
$7,000,000
nominal value, with number of shares based on average of daily closing prices on each trading day in December 2016 (rounded up or down to the nearest whole share)
|
Performance Shares with a time-based three-year cliff vest, subject to your continued service with the Company through December 31, 2019 (unless otherwise set forth herein) and the Compensation Committee’s certification of achievement relative to the following targets and thresholds:
50% ($3,500,000 of nominal value) based on US Sales Growth
50% ($3,500,000 of nominal value) based on US EBITDA Growth
|
(i)
|
Continued failure to substantially perform your job duties (other than resulting from incapacity due to Disability);
|
(ii)
|
Gross negligence, dishonesty, or violation of any reasonable rule or regulation of the Company where the violation results in significant damage to the Company; or
|
(iii)
|
Engaging in other conduct which adversely reflects on the Company in any material respect.
|
Subsidiary
|
|
State or Country
|
Alimentos Heinz de Costa Rica S.A.
|
|
Costa Rica
|
Alimentos Heinz, C.A.
|
|
Venezuela
|
Asian Restaurants Limited
|
|
United Kingdom
|
Battery Properties, Inc.
|
|
Delaware
|
Boca Foods Company
|
|
Delaware
|
Cairo Food Industries, S.A.E.
|
|
Egypt
|
Capri Sun, Inc.
|
|
Delaware
|
Carlton Bridge Limited
|
|
United Kingdom
|
Churny Company, Inc.
|
|
Delaware
|
Comercializadora Heinz de Panama SCA
|
|
Panama
|
Country Ford Development Limited
|
|
China
|
Delimex de Mexico S.A. de C.V.
|
|
Mexico
|
Delta Incorporated Limited
|
|
British Virgin Islands
|
Devour Foods LLC
|
|
Delaware
|
Distribuidora Heinz Caracas, C.A.
|
|
Venezuela
|
Distribuidora Heinz Maracaibo, C.A.
|
|
Venezuela
|
Fall Ridge Partners LLP
|
|
United Kingdom
|
Foodstar (China) Investments Company Limited
|
|
China
|
Foodstar (Shanghai) Foods Co. Ltd.
|
|
China
|
Foodstar Holdings Pte Ltd.
|
|
Singapore
|
Fundacion Heinz
|
|
Venezuela
|
Garland BBQ Company
|
|
Delaware
|
Golden Circle Limited
|
|
Australia
|
Goodwood Holdings Limited
|
|
Gibraltar
|
Guangzhou United Logistics Company Limited
|
|
China
|
H. J. Heinz Belgium S.A.
|
|
Belgium
|
H. J. Heinz Company Brands LLC
|
|
Delaware
|
H. J. Heinz Global Holding B.V.
|
|
Netherlands
|
H. J. Heinz Nigeria Limited
|
|
Nigeria
|
H.J. Heinz Asset Leasing Limited
|
|
United Kingdom
|
H.J. Heinz B.V.
|
|
Netherlands
|
H.J. Heinz Company (New Zealand) Limited
|
|
New Zealand
|
H.J. Heinz Company Australia Limited
|
|
Australia
|
H.J. Heinz Company Limited
|
|
United Kingdom
|
H.J. Heinz Company of Canada LP
|
|
Canada
|
H.J. Heinz Company of Canada Ltd.
|
|
Canada
|
H.J. Heinz CR/SR a.s.
|
|
Czech Republic
|
H.J. Heinz European Holding B.V.
|
|
Netherlands
|
H.J. Heinz Finance UK PLC
|
|
United Kingdom
|
H.J. Heinz Foods Spain S.L.U.
|
|
Spain
|
H.J. Heinz Foods UK Limited
|
|
United Kingdom
|
H.J. Heinz France SAS
|
|
France
|
H.J. Heinz Frozen & Chilled Foods Limited
|
|
United Kingdom
|
H.J. Heinz GmbH
|
|
Germany
|
H.J. Heinz Group B.V.
|
|
Netherlands
|
H.J. Heinz Holding B.V.
|
|
Netherlands
|
H.J. Heinz Investments Coöperatief U.A.
|
|
Netherlands
|
H.J. Heinz Ireland Holdings
|
|
Ireland
|
H.J. Heinz Manufacturing Belgium BVBA
|
|
Belgium
|
H.J. Heinz Manufacturing Ireland Limited
|
|
Ireland
|
H.J. Heinz Manufacturing Spain S.L.U.
|
|
Spain
|
H.J. Heinz Manufacturing UK Limited
|
|
United Kingdom
|
H.J. Heinz Nederland B.V.
|
|
Netherlands
|
H.J. Heinz Netherlands Holdings C.V.
|
|
Netherlands
|
H.J. Heinz Supply Chain Coöperatief U.A.
|
|
Netherlands
|
H.J. Heinz Supply Chain Europe B.V.
|
|
Netherlands
|
H.J. Heinz US Brands LLC
|
|
Delaware
|
Heinz (China) Investment Company Limited
|
|
China
|
Heinz (China) Sauces & Condiments Co. Ltd.
|
|
China
|
Heinz Africa and Middle East FZE
|
|
United Arab Emirates
|
Heinz Africa FZE
|
|
United Arab Emirates
|
Heinz ASEAN Pte. Ltd.
|
|
Singapore
|
Heinz Brasil, S.A.
|
|
Brazil
|
Kraft Heinz Canada ULC
|
|
Canada
|
Heinz Canada R&D ULC
|
|
Canada
|
Heinz Colombia SAS
|
|
Colombia
|
Heinz Credit LLC
|
|
Delaware
|
Heinz Egypt LLC
|
|
Egypt
|
Heinz Egypt Trading LLC
|
|
Egypt
|
Heinz Europe Unlimited
|
|
United Kingdom
|
Heinz Finance (Luxembourg) S.a.r.l.
|
|
Luxembourg
|
Heinz Foods South Africa (Proprietary) Limited
|
|
South Africa
|
Heinz Foreign Investment Company
|
|
Idaho
|
Heinz Frozen & Chilled Foods B.V.
|
|
Netherlands
|
Heinz Gida Anonim Sirketi
|
|
Turkey
|
Heinz Hong Kong Limited
|
|
China
|
Heinz India Private Ltd.
|
|
India
|
Heinz Investments (Cyprus) Limited
|
|
Cyprus
|
Heinz Israel Limited
|
|
Israel
|
Heinz Italia S.p.A.
|
|
Italy
|
Heinz Japan Ltd.
|
|
Japan
|
Heinz Korea Ltd.
|
|
Korea
|
Heinz Mexico, S.A. de C.V.
|
|
Mexico
|
Heinz Nutrition Foundation India
|
|
India
|
Heinz Pakistan (Pvt.) Limited
|
|
Pakistan
|
Heinz Panama, S.A.
|
|
Panama
|
Heinz Philippines
|
|
Philippines
|
Heinz Produzioni Alimentari SRL
|
|
Italy
|
Heinz Purchasing Company
|
|
Delaware
|
Heinz Qingdao Food Co., Ltd.
|
|
China
|
Heinz Receivables LLC
|
|
Delaware
|
Heinz Sales & Marketing (MALAYSIA) SDN. BHD.
|
|
Malaysia
|
Heinz Single Service Limited
|
|
United Kingdom
|
Heinz South Africa (Pty.) Ltd.
|
|
South Africa
|
Heinz Thailand Limited
|
|
Delaware
|
Heinz Transatlantic Holding LLC
|
|
Delaware
|
Heinz UFE Ltd.
|
|
China
|
Heinz Vietnam Company Limited
|
|
Vietnam
|
Heinz Wattie's Limited
|
|
New Zealand
|
Heinz Wattie's Pty Ltd
|
|
Australia
|
Heinz-Noble, Inc.
|
|
Arizona
|
Highview Atlantic Finance Company
|
|
Cayman Islands
|
HJH Development Corporation
|
|
Delaware
|
HJH Overseas L.L.C.
|
|
Delaware
|
Horizon UAE FZCO
|
|
United Arab Emirates
|
HP Foods Holdings Limited
|
|
United Kingdom
|
HP Foods International Limited
|
|
United Kingdom
|
HP Foods Limited
|
|
United Kingdom
|
Hugo Canning Company Pty Limited
|
|
Papua New Guinea
|
HZ.I.L. Ltd.
|
|
Israel
|
Industria Procesadora de Alimentos de Barcelona C.A.
|
|
Venezuela
|
Intercorp Excelle Inc.
|
|
Canada
|
International Gourmet Specialties LLC
|
|
Delaware
|
International Spirits Recipes, LLC
|
|
Delaware
|
Istituto Scotti Bassani per la Ricerca e l'Informazione Scientifica e Nutrizionale
|
|
Italy
|
Ivanovsky Kombinat Detskogo Pitaniya
|
|
Russia
|
Jacobs Road Limited
|
|
Cayman Islands
|
Kaiping Guanghe Fermented Bean Curd Co. Ltd.
|
|
China
|
Kaiping Weishida Seasonings Co. Ltd.
|
|
China
|
KFG Management Services LLC
|
|
Delaware
|
KFG Netherlands Holdings C.V.
|
|
Netherlands
|
KHFC Luxembourg Holdings S.à r.l
|
|
Luxembourg
|
Koninklijke De Ruijter B.V.
|
|
Netherlands
|
Kraft Canada Inc.
|
|
Canada
|
Kraft Food Ingredients Corp.
|
|
Delaware
|
Kraft Foods Group Brands LLC
|
|
Delaware
|
Kraft Foods Group Exports LLC
|
|
Delaware
|
Kraft Foods Group Netherlands Holding B.V.
|
|
Netherlands
|
Kraft Foods Group Puerto Rico LLC
|
|
Puerto Rico
|
Kraft Heinz (Barbados) SRL
|
|
Barbados
|
Kraft Heinz (Ireland) Ltd
|
|
Ireland
|
Kraft Heinz Argentina S.R.L.
|
|
Argentina
|
Kraft Heinz Brasil Participações LTDA
|
|
Brazil
|
Kraft Heinz Foods Company
|
|
Pennsylvania
|
Kraft Heinz Foods Company L.P.
|
|
Canada
|
Kraft Heinz Foods Luxembourg Holdings S.a.r.l.
|
|
Luxembourg
|
Kraft Heinz Holding B.V.
|
|
Netherlands
|
Kraft Heinz Intermediate Corporation I
|
|
Delaware
|
Kraft Heinz Intermediate Corporation II
|
|
Delaware
|
Kraft Heinz International B.V.
|
|
Netherlands
|
Kraft Heinz Receivables LLC
|
|
Delaware
|
Kraft Heinz UK Limited
|
|
United Kingdom
|
Kraft New Services LLC
|
|
Delaware
|
La Bonne Cuisine Limited
|
|
New Zealand
|
Langtech Citrus Pty. Limited
|
|
Australia
|
Lea & Perrins Limited
|
|
United Kingdom
|
Lea & Perrins LLC
|
|
Delaware
|
LLC Heinz-Georgievsk
|
|
Russia
|
Master Chef Limited
|
|
New Zealand
|
MILKSUN, spol. s.r.o.
|
|
Slovakia
|
Nanjing Jilun Seasoning Products Pte. Ltd.
|
|
China
|
Nature's Delicious Foods Group LLC
|
|
Delaware
|
Noble Insurance Company Limited
|
|
Ireland
|
O.R.A. LLC
|
|
California
|
P.T. Heinz ABC Indonesia
|
|
Indonesia
|
Petroproduct-Otradnoye Ltd.
|
|
Russia
|
Phenix Management Corporation
|
|
Delaware
|
PPK Ltd.
|
|
Russia
|
Pro-Share Limited
|
|
United Kingdom
|
Pudliszki Sp. Z.O.O.
|
|
Poland
|
Renee's Gourmet Foods Inc.
|
|
Canada
|
RINC Ltd.
|
|
Israel
|
Seven Seas Foods, Inc.
|
|
Delaware
|
Sewickley LLC
|
|
Delaware
|
The Kraft Heinz Company Foundation (non-profit)
|
|
Illinois
|
Thompson & Hills Limited
|
|
New Zealand
|
TNCOR Ltd.
|
|
Israel
|
Top Taste Company Limited
|
|
New Zealand
|
Tsai Weng Ping Incorporated Limited
|
|
British Virgin Islands
|
Mealtime Stories, LLC
|
|
Delaware
|
Vict. Th. Engwall LLC
|
|
Delaware
|
Weishida (Nanjing) Foods Co. Ltd.
|
|
China
|
Wexford LLC
|
|
Delaware
|
WW Foods, LLC
|
|
Delaware
|
Signature
|
Title
|
Date
|
|
|
|
/s/ Bernardo Hees
|
Chief Executive Officer
|
January 31, 2017
|
Bernardo Hees
|
(Principal Executive Officer)
|
|
|
|
|
/s/ Paulo Basilio
|
Chief Financial Officer
|
January 31, 2017
|
Paulo Basilio
|
(Principal Financial Officer)
|
|
|
|
|
/s/ Christopher R. Skinger
|
Global Controller
|
January 31, 2017
|
Christopher R. Skinger
|
(Principal Accounting Officer)
|
|
|
|
|
/s/ Alexandre Behring
|
Chairman of the Board
|
January 31, 2017
|
Alexandre Behring
|
|
|
|
|
|
/s/ John T. Cahill
|
Vice Chairman of the Board
|
January 31, 2017
|
John T. Cahill
|
|
|
|
|
|
/s/ Gregory E. Abel
|
Director
|
January 31, 2017
|
Gregory E. Abel
|
|
|
|
|
|
/s/ Warren E. Buffett
|
Director
|
January 31, 2017
|
Warren E. Buffett
|
|
|
|
|
|
/s/ Tracy Britt Cool
|
Director
|
January 31, 2017
|
Tracy Britt Cool
|
|
|
|
|
|
/s/ Feroz Dewan
|
Director
|
January 31, 2017
|
Feroz Dewan
|
|
|
|
|
|
/s/ Jeanne P. Jackson
|
Director
|
January 31, 2017
|
Jeanne P. Jackson
|
|
|
|
|
|
/s/ Jorge Paulo Lemann
|
Director
|
January 31, 2017
|
Jorge Paulo Lemann
|
|
|
|
|
|
/s/ Mackey J. McDonald
|
Director
|
January 31, 2017
|
Mackey J. McDonald
|
|
|
|
|
|
/s/ John C. Pope
|
Director
|
January 31, 2017
|
John C. Pope
|
|
|
|
|
|
/s/ Marcel Herrmann Telles
|
Director
|
January 31, 2017
|
Marcel Herrmann Telles
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K for the period ended
December 31, 2016
of
The Kraft Heinz Company
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Bernardo Hees
|
|
Bernardo Hees
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K for the period ended
December 31, 2016
of
The Kraft Heinz Company
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Paulo Basilio
|
|
Paulo Basilio
|
|
Executive Vice President and Chief Financial Officer
|
1.
|
The Company’s Annual Report on Form 10-K for the period ended
December 31, 2016
(the “Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ Bernardo Hees
|
Name:
|
Bernardo Hees
|
Title:
|
Chief Executive Officer
|
1.
|
The Company’s Annual Report on Form 10-K for the period ended
December 31, 2016
(the “Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ Paulo Basilio
|
Name:
|
Paulo Basilio
|
Title:
|
Executive Vice President and Chief Financial Officer
|