Kraft Heinz : Annual report which provides a comprehensive overview of the company for the past year

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

• ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 29, 2018

or

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________

Commission File Number 001-37482

The Kraft Heinz Company

(Exact name of registrant as specified in its charter)

Delaware		46-2078182
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
One PPG Place, Pittsburgh, Pennsylvania		15222
(Address of Principal Executive Offices)		(Zip Code)
Registrant's telephone number, including area code: [phone]
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of exchange on which registered
Common stock, $0.01 par value	KHC	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No x

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes o No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The aggregate market value of the shares of common stock held by non-affiliates of the registrant, computed by reference to the closing price of such stock as of the last business day of the registrant's most recently completed second quarter, was $38 billion. As of June 5, 2019, there were 1,219,938,804 shares of the registrant's common stock outstanding.

Table of Contents
PART I	6
Item 1. Business.	6
Item 1A. Risk Factors.	11
Item 1B. Unresolved Staff Comments.	25
Item 2. Properties.	25
Item 3. Legal Proceedings.	25
Item 4. Mine Safety Disclosures.	25
PART II	25
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	25
Item 6. Selected Financial Data.	27
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.	28
Overview	28
Consolidated Results of Operations	30
Results of Operations by Segment	34
Critical Accounting Estimates	39
New Accounting Pronouncements	43
Contingencies	43
Commodity Trends	43
Liquidity and Capital Resources	43
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations	46
Equity and Dividends	47
Non-GAAP Financial Measures	47
Supplemental Unaudited Quarterly Financial Information	53
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.	56
Item 8. Financial Statements and Supplementary Data.	58
Report of Independent Registered Public Accounting Firm	58
Consolidated Statements of Income	60
Consolidated Statements of Comprehensive Income	61
Consolidated Balance Sheets	62
Consolidated Statements of Equity	63
Consolidated Statements of Cash Flows	64
Notes to Consolidated Financial Statements	66
Note 1. Basis of Presentation	66
Note 2. Restatement of Previously Issued Consolidated Financial Statements	67
Note 3. Significant Accounting Policies	82
Note 4. New Accounting Standards	86
Note 5. Acquisitions and Divestitures	89
Note 6. Integration and Restructuring Expenses	92
Note 7. Restricted Cash	94
Note 8. Inventories	94
Note 9. Property, Plant and Equipment	95
Note 10. Goodwill and Intangible Assets	95
Note 11. Income Taxes	99
Note 12. Employees' Stock Incentive Plans	103
Note 13. Postemployment Benefits	106
Note 14. Financial Instruments	116
Note 15. Accumulated Other Comprehensive Income/(Loss)	121
Note 16. Venezuela - Foreign Currency and Inflation	123

1

Note 17. Financing Arrangements	124
Note 18. Commitments and Contingencies	125
Note 19. Debt	127
Note 20. Capital Stock	130
Note 21. Earnings Per Share	131
Note 22. Segment Reporting	131
Note 23. Quarterly Financial Data (Unaudited)	134
Note 24. Supplemental Guarantor Information	200
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	215
Item 9A. Controls and Procedures.	215
Item 9B. Other Information.	217
PART III	217
Item 10. Directors, Executive Officers and Corporate Governance.	217
Executive Officers	217
Board of Directors	217
Corporate Governance and Board Matters	220
Board Committees and Membership-Audit Committee	221
Board Committees and Membership-Operations and Strategy Committee	221
Item 11. Executive Compensation.	222
Board Committees and Membership-Compensation Committee	222
Compensation of Non-Employee Directors	223
Compensation Discussion and Analysis	224
Executive Compensation Tables	231
Pay Ratio Disclosure	238
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	239
Securities Authorized for Issuance Under Equity Compensation Plans	239
Ownership of Equity Securities	239
Item 13. Certain Relationships and Related Transactions, and Director Independence.	241
Independence and Related Person Transactions	241
Item 14. Principal Accounting Fees and Services.	243
PART IV	244
Item 15. Exhibits, Financial Statement Schedules.	244
Item 16. Form 10-K Summary.	249
Signatures	250
Valuation and Qualifying Accounts	S-1

Unless the context otherwise requires, the terms "we," "us," "our," "Kraft Heinz," and the "Company" each refer to The Kraft Heinz Company and all of its consolidated subsidiaries.

2

Forward-Looking Statements

This Annual Report on Form 10-K contains a number of forward-looking statements. Words such as "anticipate," "reflect," "invest," "see," "make," "expect," "give," "deliver," "drive," "believe," "improve," "assess," "reassess," "remain," "evaluate," "grow," "will," "plan," and variations of such words and similar future or conditional expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding our plans, impacts of accounting standards and guidance, growth, legal matters, taxes, costs and cost savings, impairments, and dividends. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties, many of which are difficult to predict and beyond our control.

Important factors that may affect our business and operations and that may cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, operating in a highly competitive industry; our ability to correctly predict, identify, and interpret changes in consumer preferences and demand, to offer new products to meet those changes, and to respond to competitive innovation; changes in the retail landscape or the loss of key retail customers; changes in our relationships with significant customers, suppliers, and other business relationships; our ability to maintain, extend, and expand our reputation and brand image; our ability to leverage our brand value to compete against private label products; our ability to drive revenue growth in our key product categories, increase our market share, or add products that are in faster-growing and more profitable categories; product recalls or product liability claims; unanticipated business disruptions; our ability to identify, complete, or realize the benefits from strategic acquisitions, alliances, divestitures, joint ventures, or other investments; our ability to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes, and improve our competitiveness; our ability to successfully execute our strategic initiatives; the impacts of our international operations; economic and political conditions in the United States and in various other nations where we do business; changes in our management team or other key personnel and our ability to hire or retain key personnel or a highly skilled and diverse global workforce; risks associated with information technology and systems, including service interruptions, misappropriation of data, or breaches of security; impacts of natural events in the locations in which we or our customers, suppliers, distributors, or regulators operate; our ownership structure; our indebtedness and ability to pay such indebtedness; additional impairments of the carrying amounts of goodwill or other indefinite-lived intangible assets; exchange rate fluctuations; volatility in commodity, energy, and other input costs; volatility in the market value of all or a portion of the derivatives we use; increased pension, labor and people- related expenses; compliance with laws, regulations, and related interpretations and related legal claims or other regulatory enforcement actions, including additional risks and uncertainties related to our restatement and any potential actions resulting from the Securities and Exchange Commission's ongoing investigation, as well as potential additional subpoenas, litigation, and regulatory proceedings; an inability to remediate the material weaknesses in our internal control over financial reporting or additional material weaknesses or other deficiencies in the future or the failure to maintain an effective system of internal controls; our failure to prepare and timely file our periodic reports; the restatement of certain of our previously issued consolidated financial statements, which resulted in unanticipated costs and may affect investor confidence and raise reputational issues; our ability to protect intellectual property rights; tax law changes or interpretations; the impact of future sales of our common stock in the public markets; our ability to continue to pay a regular dividend and the amounts of any such dividends; volatility of capital markets and other macroeconomic factors. For additional information on these and other factors that could affect our forward-looking statements, see Item 1A, Risk Factors. We disclaim and do not undertake any obligation to update or revise any forward-looking statement in this report, except as required by applicable law or regulation.

3