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Item 8. Financial Statements and Supplementary Data.

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Item 8. Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of The Kraft Heinz Company

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Kraft Heinz Company and its subsidiaries (the “Company”) as of December 29, 2018 and December 30, 2017, and the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 29, 2018, including the related notes and financial statement schedule listed in the index appearing under Item 15 (a) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 29, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 29, 2018 and December 30, 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 29, 2018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 29, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date related to the risk assessment component of internal control, as the Company did not appropriately design controls in response to the risk of material misstatement due to changes in their business environment. The risk assessment material weakness gave rise to additional material weaknesses as the Company did not design and maintain effective controls over the accounting for supplier contracts and related arrangements or to reassess the level of precision used to review the impairment assessments related to forecasted cash flows used within goodwill and indefinite-lived intangible asset impairment calculations.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses referred to above are described in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A. We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2018 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Restatement of Previously Issued Financial Statements

As discussed in Note 2 to the consolidated financial statements, the Company has restated its 2017 and 2016 financial statements to correct misstatements.

Change in Accounting Principle

As discussed in Note 4 to the consolidated financial statements, the Company changed the manner in which it presents net periodic benefit costs in 2018.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in management’s report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

June 7, 2019

We have served as the Company’s or its predecessor’s auditor since 1979.

The Kraft Heinz Company

Consolidated Statements of Income

(in millions, except per share data)

As Restated & Recast
December 29, 2018December 30, 2017December 31, 2016
Net sales$26,268$26,076$26,300
Cost of products sold17,34717,04317,154
Gross profit8,9219,0339,146
Selling, general and administrative expenses, excluding impairment losses3,2052,9273,527
Goodwill impairment losses7,008——
Intangible asset impairment losses8,9284918
Selling, general and administrative expenses19,1412,9763,545
Operating income/(loss)(10,220)6,0575,601
Interest expense1,2841,2341,134
Other expense/(income), net(183)(627)(472)
Income/(loss) before income taxes(11,321)5,4504,939
Provision for/(benefit from) income taxes(1,067)(5,482)1,333
Net income/(loss)(10,254)10,9323,606
Net income/(loss) attributable to noncontrolling interest(62)(9)10
Net income/(loss) attributable to Kraft Heinz(10,192)10,9413,596
Preferred dividends——180
Net income/(loss) attributable to common shareholders$(10,192)$10,941$3,416
Per share data applicable to common shareholders:
Basic earnings/(loss)$(8.36)$8.98$2.81
Diluted earnings/(loss)(8.36)8.912.78

See accompanying notes to the consolidated financial statements.

The Kraft Heinz Company

Consolidated Statements of Comprehensive Income

(in millions)

As Restated
December 29, 2018December 30, 2017December 31, 2016
Net income/(loss)$(10,254)$10,932$3,606
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments(1,187)1,185(979)
Net deferred gains/(losses) on net investment hedges284(353)226
Amounts excluded from the effectiveness assessment of net investment hedges7——
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)(7)——
Net deferred gains/(losses) on cash flow hedges99(113)46
Amounts excluded from the effectiveness assessment of cash flow hedges2——
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)(44)85(87)
Net actuarial gains/(losses) arising during the period5869(40)
Prior service credits/(costs) arising during the period31731
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(118)(309)(204)
Total other comprehensive income/(loss)(903)581(1,007)
Total comprehensive income/(loss)(11,157)11,5132,599
Comprehensive income/(loss) attributable to noncontrolling interest(76)(3)16
Comprehensive income/(loss) attributable to Kraft Heinz$(11,081)$11,516$2,583

See accompanying notes to the consolidated financial statements.

The Kraft Heinz Company

Consolidated Balance Sheets

(in millions, except per share data)

As Restated
December 29, 2018December 30, 2017
ASSETS
Cash and cash equivalents$1,130$1,629
Trade receivables (net of allowances of $24 at December 29, 2018 and $23 at December 30, 2017)2,129921
Sold receivables—353
Income taxes receivable152538
Inventories2,6672,760
Prepaid expenses400345
Other current assets1,221655
Assets held for sale1,376—
Total current assets9,0757,201
Property, plant and equipment, net7,0787,061
Goodwill36,50344,825
Intangible assets, net49,46859,432
Other non-current assets1,3371,573
TOTAL ASSETS$103,461$120,092
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$21$462
Current portion of long-term debt3772,733
Trade payables4,1534,362
Accrued marketing722689
Interest payable408419
Other current liabilities1,7671,489
Liabilities held for sale55—
Total current liabilities7,50310,154
Long-term debt30,77028,308
Deferred income taxes12,20214,039
Accrued postemployment costs306427
Other non-current liabilities9021,088
TOTAL LIABILITIES51,68354,016
Commitments and Contingencies (Note 18)
Redeemable noncontrolling interest36
Equity:
Common stock, $0.01 par value (5,000 shares authorized; 1,224 shares issued and 1,220 shares outstanding at December 29, 2018; 1,221 shares issued and 1,219 shares outstanding at December 30, 2017)1212
Additional paid-in capital58,72358,634
Retained earnings/(deficit)(4,853)8,495
Accumulated other comprehensive income/(losses)(1,943)(1,054)
Treasury stock, at cost (4 shares at December 29, 2018 and 2 shares at December 30, 2017)(282)(224)
Total shareholders' equity51,65765,863
Noncontrolling interest118207
TOTAL EQUITY51,77566,070
TOTAL LIABILITIES AND EQUITY$103,461$120,092

See accompanying notes to the consolidated financial statements.

The Kraft Heinz Company

Consolidated Statements of Equity

(in millions)

Common StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
Balance at January 3, 2016 (As Restated)1258,298—(616)(31)20857,871
Net income/(loss) excluding redeemable noncontrolling interest——3,596——103,606
Other comprehensive income/(loss) excluding redeemable noncontrolling interest———(1,013)—6(1,007)
Dividends declared-Series A Preferred Stock ($2,250.00 per share)——(180)———(180)
Dividends declared-common stock ($2.35 per share)——(2,862)———(2,862)
Dividends declared-noncontrolling interest ($90.82 per share)—————(8)(8)
Exercise of stock options, issuance of other stock awards, and other—218(2)—(176)—40
Balance at December 31, 2016 (As Restated)1258,516552(1,629)(207)21657,460
Net income/(loss) excluding redeemable noncontrolling interest——10,941——(5)10,936
Other comprehensive income/(loss)———575—6581
Dividends declared-common stock ($2.45 per share)——(2,988)———(2,988)
Dividends declared-noncontrolling interest ($52.75 per share)—————(10)(10)
Exercise of stock options, issuance of other stock awards, and other—118(10)—(17)—91
Balance at December 30, 2017 (As Restated)1258,6348,495(1,054)(224)20766,070
Net income/(loss) excluding redeemable noncontrolling interest——(10,192)——(50)(10,242)
Other comprehensive income/(loss)———(889)—(14)(903)
Dividends declared-common stock ($2.50 per share)——(3,048)———(3,048)
Dividends declared-noncontrolling interest ($174.76 per share)—————(12)(12)
Cumulative effect of accounting standards adopted in the period——(97)———(97)
Exercise of stock options, issuance of other stock awards, and other—89(11)—(58)(13)7
Balance at December 29, 2018$12$58,723$(4,853)$(1,943)$(282)$118$51,775

See accompanying notes to the consolidated financial statements.

The Kraft Heinz Company

Consolidated Statements of Cash Flows

(in millions)

As Restated
December 29, 2018December 30, 2017December 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)$(10,254)$10,932$3,606
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization9831,0311,337
Amortization of postretirement benefit plans prior service costs/(credits)(339)(328)(347)
Equity award compensation expense334646
Deferred income tax provision/(benefit)(1,967)(6,495)(72)
Postemployment benefit plan contributions(76)(1,659)(494)
Goodwill and intangible asset impairment losses15,9364918
Nonmonetary currency devaluation1463624
Other items, net17525325
Changes in current assets and liabilities:
Trade receivables(2,280)(2,629)(2,055)
Inventories(251)(236)(130)
Accounts payable(23)441879
Other current assets(146)(64)(41)
Other current liabilities637(876)(148)
Net cash provided by/(used for) operating activities2,5745012,648
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash receipts on sold receivables1,2962,2862,589
Capital expenditures(826)(1,194)(1,247)
Payments to acquire business, net of cash acquired(248)——
Other investing activities, net6685110
Net cash provided by/(used for) investing activities2881,1771,452
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt(2,713)(2,641)(85)
Proceeds from issuance of long-term debt2,9901,4966,981
Proceeds from issuance of commercial paper2,7846,0436,680
Repayments of commercial paper(3,213)(6,249)(6,043)
Dividends paid - Series A Preferred Stock——(180)
Dividends paid - common stock(3,183)(2,888)(3,584)
Redemption of Series A Preferred Stock——(8,320)
Other financing activities, net(28)18(69)
Net cash provided by/(used for) financing activities(3,363)(4,221)(4,620)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(132)57(137)
Cash, cash equivalents, and restricted cash
Net increase/(decrease)(633)(2,486)(657)
Balance at beginning of period1,7694,2554,912
Balance at end of period$1,136$1,769$4,255

See accompanying notes to the consolidated financial statements.

The Kraft Heinz Company

Consolidated Statements of Cash Flows

(in millions)

As Restated
December 29, 2018December 30, 2017December 31, 2016
NON-CASH INVESTING ACTIVITIES:
Beneficial interest obtained in exchange for securitized trade receivables$938$2,519$2,213
CASH PAID DURING THE PERIOD FOR:
Interest$1,322$1,269$1,176
Income taxes5431,2061,619

See accompanying notes to the consolidated financial statements.

The Kraft Heinz Company

Notes to Consolidated Financial Statements

Note 1. Basis of Presentation

Organization

On July 2, 2015 (the “2015 Merger Date”), through a series of transactions, we consummated the merger of Kraft Foods Group, Inc. (“Kraft”) with and into a wholly-owned subsidiary of H.J. Heinz Holding Corporation (“Heinz”) (the “2015 Merger”). At the closing of the 2015 Merger, Heinz was renamed The Kraft Heinz Company (“Kraft Heinz”). Before the consummation of the 2015 Merger, Heinz was controlled by Berkshire Hathaway Inc. and 3G Global Food Holdings, LP (“3G Global Food Holdings” and together with its affiliates, “3G Capital”), following their acquisition of H. J. Heinz Company on June 7, 2013.

Principles of Consolidation

The consolidated financial statements include Kraft Heinz, as well as our wholly-owned and majority-owned subsidiaries. All intercompany transactions are eliminated.

Reportable Segments

We manage and report our operating results through four segments. We have three reportable segments defined by geographic region: United States, Canada, and Europe, Middle East, and Africa (“EMEA”). Our remaining businesses are combined and disclosed as “Rest of World.” Rest of World comprises two operating segments: Latin America and Asia Pacific (“APAC”).

Our segments reflect a change, effective in the first quarter of our fiscal year 2018, to reorganize our international businesses to better align our global geographies. We moved our Middle East and Africa businesses from the historical Asia Pacific, Middle East, and Africa (“AMEA”) operating segment into the historical Europe reportable segment, forming the new EMEA reportable segment. The remaining businesses from the AMEA operating segment became the APAC operating segment. We have reflected this change in all historical periods presented. See Note 22, Segment Reporting, for our financial information by segment.

Held for Sale

In the fourth quarter of 2018, we announced our plans to divest certain assets and operations, predominantly in Canada and India. At December 29, 2018, we have classified the assets and liabilities related to these disposal groups as held for sale in our consolidated balance sheets. These assets and liabilities are included in assets held for sale within current assets and liabilities held for sale within current liabilities. See Note 5, Acquisitions and Divestitures, for additional information.

Use of Estimates

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which requires us to make accounting policy elections, estimates, and assumptions that affect the reported amount of assets, liabilities, reserves, and expenses. These policy elections, estimates, and assumptions are based on our best estimates and judgments. We evaluate our policy elections, estimates, and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. We believe these estimates to be reasonable given the current facts available. We adjust our policy elections, estimates, and assumptions when facts and circumstances dictate. Market volatility, including foreign currency exchange rates, increases the uncertainty inherent in our estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from estimates. If actual amounts differ from estimates, we include the revisions in our consolidated results of operations in the period the actual amounts become known. Historically, the aggregate differences, if any, between our estimates and actual amounts in any year have not had a material effect on our consolidated financial statements.

Reclassifications

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

Note 2. Restatement of Previously Issued Consolidated Financial Statements

We have restated herein our audited consolidated financial statements at December 30, 2017 and for the years ended December 30, 2017 and December 31, 2016. We have also restated impacted amounts within the accompanying footnotes to the consolidated financial statements.

Restatement Background

As previously disclosed on February 21, 2019, we received a subpoena from the Securities and Exchange Commission (“SEC”) in October 2018 related to our procurement area, specifically the accounting policies, procedures, and internal controls related to our procurement function, including, but not limited to, agreements, side agreements, and changes or modifications to agreements with our suppliers. Following the receipt of this subpoena, we, together with external counsel and forensic accountants, and subsequently, under the oversight of the Audit Committee of our Board of Directors (the “Audit Committee”), conducted an internal investigation into the procurement area and related matters. As a result of the findings from this internal investigation, which is now complete and which identified that multiple employees in the procurement area engaged in misconduct, we corrected prior period misstatements that generally increased the total cost of products sold in prior financial periods. These misstatements principally related to the incorrect timing of when certain cost and rebate elements associated with supplier contracts and related arrangements were initially recognized.

In connection with the internal investigation, we also conducted a comprehensive review of supplier contracts and related arrangements to identify other potential misstatements in the timing of the recognition of supplier rebates, incentive payments, and pricing arrangements. The review identified further misstatements, which we also investigated and have been unable to conclude if they resulted from the misconduct described above. These misstatements are described in more detail in restatement reference (a) below.

Our internal investigation and review identified adjustments that resulted in an understatement of cost of products sold totaling $208 million, including misstatements of $175 million relating to the periods up through September 29, 2018 that are being restated in this Annual Report on Form 10-K. The misstatements of cost of products sold related to our internal investigation and review included $22 million for fiscal year 2018, $94 million for fiscal year 2017, $35 million for fiscal year 2016, and $24 million for fiscal year 2015. We do not believe that the misstatements are quantitatively material to any period presented in our prior financial statements. However, due to the qualitative nature of the matters identified in our internal investigation, including the number of years over which the misconduct occurred and the number of transactions, suppliers, and procurement employees involved, we determined that it would be appropriate to correct the misstatements in our previously issued consolidated financial statements by restating such financial statements. The restatement also included corrections for additional identified out-of-period and uncorrected misstatements in the impacted periods.

Accordingly, we have restated herein our consolidated financial statements at December 30, 2017 and for the fiscal years ended December 30, 2017 and December 31, 2016, in accordance with Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections. In addition to the misstatements related to the supplier contracts and related arrangements, including the misstatements related to lease classification described in restatement reference (b) below, we corrected additional identified out-of-period and uncorrected misstatements that were not material, individually or in the aggregate, to our consolidated financial statements. These misstatements were related to customer incentive program expense misclassifications, balance sheet misclassifications, income taxes, impairments, and other misstatements, all of which are described in more detail in restatement references (c) through (g) below.

The restated interim financial information for the relevant unaudited interim financial information for the quarterly periods ended September 29, 2018, June 30, 2018, March 31, 2018, December 30, 2017, September 30, 2017, July 1, 2017, and April 1, 2017, is included in Note 23, Quarterly Financial Information (Unaudited). The categories of misstatements and their impact on our previously issued consolidated financial statements are described in more detail below.

Description of Misstatements

Misstatements Associated with Supplier Contracts and Related Arrangements

(a) Supplier Rebates

We recorded adjustments to correct the misstatements found as a result of the internal investigation related to procurement described above. In connection with the internal investigation, we also conducted a comprehensive review of supplier contracts and related arrangements to identify other potential misstatements in the timing of the recognition of supplier rebates, incentive payments, and pricing arrangements. The review identified further misstatements, which we also investigated and have been unable to conclude if they resulted from the misconduct described above. These misstatements were primarily related to certain supplier contracts and related arrangements where the allocation of value of all or a portion of rebates and up-front payments to contractual elements in the current period should have been deferred and recognized over an applicable contractual period. We corrected these misstatements to defer the up-front consideration from suppliers when the retention or receipt of that consideration was contingent upon future events and to correctly recognize the consideration as a reduction of cost of products sold over the terms of the arrangements with the suppliers. The impacts of the supplier rebate misstatements on each period are discussed in restatement reference (a) throughout this note and in Note 23, Quarterly Financial Data (Unaudited).

(b) Capital Leases

As part of our review of supplier contracts and related arrangements in connection with the internal investigation, we evaluated additional elements of such arrangements, including the classification of embedded lease provisions as capital or operating. We had initially classified certain embedded lease provisions as capital leases and allocated their fixed consideration to the lease components. As a result of our analysis, and also taking into consideration, among other elements, the total value of supplier contracts and related arrangements, we determined that the classification of the embedded lease element for certain contracts should have been classified as an operating lease instead of a capital lease. In addition, we identified certain arrangements that were improperly accounted for as embedded capital leases. The impacts of the capital lease misstatements on each period are discussed in restatement reference (b) throughout this note and in Note 23, Quarterly Financial Data (Unaudited).

Additional Misstatements

(c) Customer Incentive Program Expense Misclassifications

As previously disclosed in March 2018, we retrospectively corrected immaterial misclassifications in our statements of income principally related to customer incentive program expense misclassifications. The impacts of the customer incentive program expense misclassifications on each period are discussed in restatement reference (c) throughout this note and in Note 23, Quarterly Financial Data (Unaudited).

(d) Balance Sheet Misclassifications

We recorded adjustments to recognize certain balance sheet misclassifications in the correct period. These adjustments primarily related to the classification of state income taxes, capital expenditures, and the classification of products held at co-packer locations. The impacts of the balance sheet misclassifications on each period are discussed in restatement reference (d) throughout this note and in Note 23, Quarterly Financial Data (Unaudited).

(e) Income Taxes

We recorded adjustments to recognize certain income tax items in the correct period, primarily deferred tax adjustments related to a Brazilian subsidiary, as well as return-to-provision adjustments and various other misclassifications. The income tax impacts of all misstatements outside of this category are included in their respective misstatement categories. The impacts of income tax misstatements on each period are discussed in restatement reference (e) throughout this note and in Note 23, Quarterly Financial Data (Unaudited).

(f) Impairments

We recorded an adjustment to recognize certain non-cash impairment losses in the correct period. In 2018, we had determined that a definite-lived intangible asset had been impaired in the fourth quarter of 2016 due to a license termination in that period and recorded an out-of-period correction to recognize the non-cash impairment loss. In addition, we recorded an adjustment to correct goodwill impairment losses related to our Australia and New Zealand reporting unit, which had been overstated. The impacts of the impairment misstatements on each period are discussed in restatement reference (f) throughout this note and in Note 23, Quarterly Financial Data (Unaudited).

(g) Other

We recorded adjustments to correct other identified out-of-period and uncorrected misstatements that were not material, individually or in the aggregate, to our consolidated financial statements. These other misstatements were primarily related to structured payable and product financing arrangements, postemployment benefit plans, inventory write-offs, certain accrued liabilities, and other misstatements within net sales and certain income tax and balance sheet accounts. The impacts of the other misstatements on each period are discussed in restatement reference (g) throughout this note and in Note 23, Quarterly Financial Data (Unaudited).

Description of Restatement Tables

The following tables represent our restated consolidated statements of income, statements of comprehensive income, statements of equity, and statements of cash flows for the years ended December 30, 2017 and December 31, 2016, as well as our restated consolidated balance sheet at December 30, 2017.

Following the restated consolidated financial statement tables, we have presented a reconciliation from our prior periods as previously reported to the restated values. The values as previously reported for fiscal years 2017 and 2016 were derived from our Annual Report on Form 10-K for the fiscal year ended December 30, 2017 filed on February 16, 2018.

In addition, the statements of income for fiscal years 2017 and 2016, as previously reported, did not originally reflect the adoption of accounting standards update (“ASU”) 2017-07 related to the presentation of net periodic benefit cost (pension and postretirement cost). This ASU was adopted in the first quarter of 2018 and was applied retrospectively for statement of income presentation of service cost components and other net periodic benefit cost components. The restated statements of income for fiscal years 2017 and 2016 reflect the retrospective application of ASU 2017-07 and are labeled “As Recast.” See Note 4, New Accounting Standards, for additional information related to our adoption of ASU 2017-07.

The Kraft Heinz Company

Consolidated Statement of Income

(in millions, except per share data)

For the Year Ended December 30, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs RestatedASU Adoption ImpactsAs Restated & Recast
Net sales$26,232$(156)(c)(g)$26,076$—$26,076
Cost of products sold16,529(44)(a)(b)(c)(g)16,48555817,043
Gross profit9,703(112)9,591(558)9,033
Selling, general and administrative expenses, excluding impairment losses2,881(32)(c)(g)2,849782,927
Goodwill impairment losses—————
Intangible asset impairment losses49—(f)49—49
Selling, general and administrative expenses2,930(32)2,898782,976
Operating income/(loss)6,773(80)6,693(636)6,057
Interest expense1,234—(b)(g)1,234—1,234
Other expense/(income), net9—9(636)(627)
Income/(loss) before income taxes5,530(80)5,450—5,450
Provision for/(benefit from) income taxes(5,460)(22)(a)(b)(e)(f)(g)(5,482)—(5,482)
Net income/(loss)10,990(58)10,932—10,932
Net income/(loss) attributable to noncontrolling interest(9)—(9)—(9)
Net income/(loss) attributable to Kraft Heinz10,999(58)10,941—10,941
Preferred dividends—————
Net income/(loss) attributable to common shareholders$10,999$(58)$10,941$—$10,941
Per share data applicable to common shareholders:
Basic earnings/(loss)$9.03$(0.05)$8.98$—$8.98
Diluted earnings/(loss)8.95(0.04)8.91—8.91

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to cost of products sold of $94 million and an increase to benefit from income taxes of $18 million for the year ended December 30, 2017.

(b) Capital Leases—The correction of these misstatements resulted in a decrease to cost of products sold of less than $1 million, a decrease to interest expense of less than $1 million, and a decrease to benefit from income taxes of less than $1 million for the year ended December 30, 2017.

(c) Customer Incentive Program Expense Misclassifications—As previously disclosed in March 2018, the correction of these misstatements resulted in a decrease to net sales of $147 million, a decrease to cost of products sold of $139 million, and a decrease to selling, general and administrative expenses (“SG&A”) of $8 million for the year ended December 30, 2017.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in an increase to benefit from income taxes of $12 million for the year ended December 30, 2017.

(f) Impairments—The correction of these misstatements resulted in a decrease to SG&A of less than $1 million and a decrease to benefit from income taxes of less than $1 million for the year ended December 30, 2017.

(g) Other—The correction of these misstatements resulted in a decrease to net sales of $9 million, an increase to cost of products sold of $1 million, a decrease to SG&A of $24 million, a decrease to interest expense of less than $1 million, and a decrease to benefit from income taxes of $8 million for the year ended December 30, 2017.

The values as previously reported for the year ended December 30, 2017 were derived from our Annual Report on Form 10-K for the year ended December 30, 2017 filed on February 16, 2018.

The Kraft Heinz Company

Consolidated Statement of Income

(in millions, except per share data)

For the Year Ended December 31, 2016
As Previously ReportedRestatement ImpactsRestatement ReferenceAs RestatedASU Adoption ImpactsAs Restated & Recast
Net sales$26,487$(187)(c)(g)$26,300$—$26,300
Cost of products sold16,901(116)(a)(c)(g)16,78536917,154
Gross profit9,586(71)9,515(369)9,146
Selling, general and administrative expenses, excluding impairment losses3,444(5)(c)(g)3,439883,527
Goodwill impairment losses—————
Intangible asset impairment losses—18(f)18—18
Selling, general and administrative expenses3,444133,457883,545
Operating income/(loss)6,142(84)6,058(457)5,601
Interest expense1,134—(g)1,134—1,134
Other expense/(income), net(15)—(g)(15)(457)(472)
Income/(loss) before income taxes5,023(84)4,939—4,939
Provision for/(benefit from) income taxes1,381(48)(a)(e)(f)(g)1,333—1,333
Net income/(loss)3,642(36)3,606—3,606
Net income/(loss) attributable to noncontrolling interest10—10—10
Net income/(loss) attributable to Kraft Heinz3,632(36)3,596—3,596
Preferred dividends180—180—180
Net income/(loss) attributable to common shareholders$3,452$(36)$3,416$—$3,416
Per share data applicable to common shareholders:
Basic earnings/(loss)$2.84$(0.03)$2.81$—$2.81
Diluted earnings/(loss)2.81(0.03)2.78—2.78

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to cost of products sold of $35 million and a decrease to provision for income taxes of $13 million for the year ended December 31, 2016.

(b) Capital Leases—None.

(c) Customer Incentive Program Expense Misclassifications—As previously disclosed in March 2018, the correction of these misstatements resulted in a decrease to net sales of $152 million, a decrease to cost of products sold of $145 million, and a decrease to SG&A of $7 million for the year ended December 31, 2016.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in a decrease to provision for income taxes of $18 million for the year ended December 31, 2016.

(f) Impairments—The correction of these misstatements resulted in an increase to SG&A of $18 million and a decrease to provision for income taxes of $4 million for the year ended December 31, 2016.

(g) Other—The correction of these misstatements resulted in a decrease to net sales of $35 million, a decrease to cost of products sold of $6 million, an increase to SG&A of $2 million, a decrease to interest expense of less than $1 million, a decrease to other expense/(income), net, of less than $1 million, and a decrease to provision for income taxes of $13 million for the year ended December 31, 2016.

The values as previously reported for the year ended December 31, 2016 were derived from our Annual Report on Form 10-K for the year ended December 30, 2017 filed on February 16, 2018.

The Kraft Heinz Company

Consolidated Statement of Comprehensive Income

(in millions)

For the Year Ended December 30, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$10,990$(58)(a)(b)(e)(f)(g)$10,932
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments1,1841(b)(e)1,185
Net deferred gains/(losses) on net investment hedges(353)—(353)
Amounts excluded from the effectiveness assessment of net investment hedges———
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)———
Net deferred gains/(losses) on cash flow hedges(113)—(113)
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)85—85
Net actuarial gains/(losses) arising during the period69—69
Prior service credits/(costs) arising during the period17—17
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(309)—(309)
Total other comprehensive income/(loss)5801581
Total comprehensive income/(loss)11,570(57)11,513
Comprehensive income/(loss) attributable to noncontrolling interest(3)—(3)
Comprehensive income/(loss) attributable to Kraft Heinz$11,573$(57)$11,516

The $58 million decrease to net income was primarily driven by misstatements in the supplier rebates category, partially offset by misstatements in the income taxes, other, impairments, and capital leases categories. See additional descriptions of the net income impacts in the consolidated statement of income for the year ended December 30, 2017 section above.

The $1 million increase to foreign currency translation adjustments is the result of misstatements in the capital leases and income taxes categories.

The Kraft Heinz Company

Consolidated Statement of Comprehensive Income

(in millions)

For the Year Ended December 31, 2016
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$3,642$(36)(a)(e)(f)(g)$3,606
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments(986)7(d)(g)(e)(979)
Net deferred gains/(losses) on net investment hedges226—226
Amounts excluded from the effectiveness assessment of net investment hedges———
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)———
Net deferred gains/(losses) on cash flow hedges46—46
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)(87)—(87)
Net actuarial gains/(losses) arising during the period(40)—(40)
Prior service credits/(costs) arising during the period97(66)(g)31
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(207)3(g)(204)
Total other comprehensive income/(loss)(951)(56)(1,007)
Total comprehensive income/(loss)2,691(92)2,599
Comprehensive income/(loss) attributable to noncontrolling interest16—16
Comprehensive income/(loss) attributable to Kraft Heinz$2,675$(92)$2,583

The $36 million decrease to net income was primarily driven by the misstatements in the other, supplier rebates, and impairments categories, partially offset by the misstatements in the income taxes category. See additional descriptions of the net income impacts in the consolidated statement of income for the year ended December 31, 2016 section above.

The $7 million increase to foreign currency translation adjustments is primarily the result of misstatements in the balance sheet misclassifications and the other misstatements categories, partially offset by misstatements in the income taxes category.

The $66 million decrease to prior service credits arising during the period and the $3 million increase to net postemployment benefit gains reclassified to net income are the result of misstatements in the other category.

The Kraft Heinz Company

Consolidated Balance Sheets

(in millions, except per share data)

December 30, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
ASSETS
Cash and cash equivalents$1,629$—$1,629
Trade receivables (net of allowances of $23 at December 30, 2017)921—921
Sold receivables353—353
Income taxes receivable582(44)(a)(b)(d)(e)(g)538
Inventories2,815(55)(d)(g)2,760
Prepaid expenses345—345
Other current assets62134(a)(d)655
Total current assets7,266(65)7,201
Property, plant and equipment, net7,120(59)(b)(d)(g)7,061
Goodwill44,8241(g)44,825
Intangible assets, net59,449(17)(f)59,432
Other non-current assets1,573—1,573
TOTAL ASSETS$120,232$(140)$120,092
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$460$2(g)$462
Current portion of long-term debt2,743(10)(b)(g)2,733
Trade payables4,449(87)(d)(g)4,362
Accrued marketing6809(g)689
Interest payable419—419
Other current liabilities1,381108(a)(d)(g)1,489
Total current liabilities10,1322210,154
Long-term debt28,333(25)(b)28,308
Deferred income taxes14,076(37)(a)(d)(e)(f)(g)14,039
Accrued postemployment costs427—427
Other non-current liabilities1,01771(a)1,088
TOTAL LIABILITIES53,9853154,016
Commitments and Contingencies
Redeemable noncontrolling interest6—6
Equity:
Common stock, $0.01 par value (5,000 shares authorized; 1,221 shares issued and 1,219 shares outstanding at December 30, 2017)12—12
Additional paid-in capital58,711(77)(d)58,634
Retained earnings/(deficit)8,589(94)(a)(b)(d)(e)(f)(g)8,495
Accumulated other comprehensive income/(losses)(1,054)—(1,054)
Treasury stock, at cost (2 shares at December 30, 2017)(224)—(224)
Total shareholders' equity66,034(171)65,863
Noncontrolling interest207—207
TOTAL EQUITY66,241(171)66,070
TOTAL LIABILITIES AND EQUITY$120,232$(140)$120,092

(a) Supplier Rebates—The correction of these misstatements resulted in a decrease to income taxes receivable of $1 million, a decrease to other current assets of $21 million, an increase to other current liabilities of $57 million, a decrease to deferred income taxes of $37 million, an increase to other non-current liabilities of $71 million, and a decrease to retained earnings of $113 million at December 30, 2017.

(b) Capital Leases—The correction of these misstatements resulted in a decrease to income taxes receivable of less than $1 million, a decrease to property, plant and equipment, net, of $34 million, a decrease to current portion of long-term debt of $9 million, a decrease to long-term debt of $25 million, and a decrease to retained earnings of less than $1 million at December 30, 2017.

(c) Customer Incentive Program Expense Misclassifications—None.

(d) Balance Sheet Misclassifications—The correction of these misstatements resulted in a decrease to income taxes receivable of $83 million, a decrease to inventories of $55 million, an increase to other current assets of $55 million, a decrease to property, plant and equipment, net, of $23 million, a decrease to trade payables of $23 million, a decrease to other current liabilities of $28 million, a decrease to deferred income taxes of $55 million, a decrease to additional paid-in capital of $77 million, and an increase to retained earnings of $77 million at December 30, 2017.

(e) Income Taxes—The correction of these misstatements resulted in an increase to income taxes receivable of $33 million, an increase to deferred income taxes of $58 million, and a decrease to retained earnings of $25 million at December 30, 2017.

(f) Impairments—The correction of these misstatements resulted in a decrease to intangible assets, net, of $17 million, a decrease to deferred income taxes of $4 million, and a decrease to retained earnings of $13 million at December 30, 2017.

(g) Other—The correction of these misstatements resulted in an increase to income taxes receivable of $7 million, a decrease to inventories of less than $1 million, a decrease to property, plant and equipment, net, of $2 million, an increase to goodwill of $1 million, an increase to commercial paper and other short-term debt of $2 million, a decrease to current portion of long-term debt of $1 million, a decrease to trade payables of $64 million, an increase to accrued marketing of $9 million, an increase to other current liabilities of $79 million, an increase to deferred income taxes of $1 million, and a decrease to retained earnings of $20 million at December 30, 2017.

The Kraft Heinz Company

Consolidated Statement of Equity

For the Year Ended December 30, 2017

(in millions)

Restatement ReferenceCommon StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
As Previously Reported
Balance at December 31, 2016$12$58,593$588$(1,628)$(207)$216$57,574
Net income/(loss) excluding redeemable noncontrolling interest——10,999——(5)10,994
Other comprehensive income/(loss)———574—6580
Dividends declared-common stock ($2.45 per share)——(2,988)———(2,988)
Dividends declared-noncontrolling interest ($52.75 per share)—————(10)(10)
Exercise of stock options, issuance of other stock awards, and other—118(10)—(17)—91
Balance at December 30, 2017$12$58,711$8,589$(1,054)$(224)$207$66,241
Restatement Impacts
Balance at December 31, 2016$—$(77)$(36)$(1)$—$—$(114)
Net income/(loss) excluding redeemable noncontrolling interest(a)(b)(e)(f)(g)——(58)———(58)
Other comprehensive income/(loss)(b)(e)———1——1
Dividends declared-common stock ($2.45 per share)———————
Dividends declared-noncontrolling interest ($52.75 per share)———————
Exercise of stock options, issuance of other stock awards, and other———————
Balance at December 30, 2017$—$(77)$(94)$—$—$—$(171)
As Restated
Balance at December 31, 2016$12$58,516$552$(1,629)$(207)$216$57,460
Net income/(loss) excluding redeemable noncontrolling interest——10,941——(5)10,936
Other comprehensive income/(loss)———575—6581
Dividends declared-common stock ($2.45 per share)——(2,988)———(2,988)
Dividends declared-noncontrolling interest ($52.75 per share)—————(10)(10)
Exercise of stock options, issuance of other stock awards, and other—118(10)—(17)—91
Balance at December 30, 2017$12$58,634$8,495$(1,054)$(224)$207$66,070

See descriptions of the net income and other comprehensive income impacts in the consolidated statement of income and consolidated statement of comprehensive income for the year ended December 30, 2017 sections above.

The Kraft Heinz Company

Consolidated Statement of Equity

For the Year Ended December 31, 2016

(in millions)

Restatement ReferenceCommon StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
As Previously Reported
Balance at January 3, 2016$12$58,375$—$(671)$(31)$208$57,893
Net income/(loss) excluding redeemable noncontrolling interest——3,632——103,642
Other comprehensive income/(loss) excluding redeemable noncontrolling interest———(957)—6(951)
Dividends declared-Series A Preferred Stock ($2,250.00 per share)——(180)———(180)
Dividends declared-common stock ($2.35 per share)——(2,862)———(2,862)
Dividends declared-noncontrolling interest ($90.82 per share)—————(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$57,574
Restatement Impacts
Balance at January 3, 2016(a)(d)(e)(g)$—$(77)$—$55$—$—$(22)
Net income/(loss) excluding redeemable noncontrolling interest(a)(e)(f)(g)——(36)———(36)
Other comprehensive income/(loss) excluding redeemable noncontrolling interest(g)———(56)——(56)
Dividends declared-Series A Preferred Stock ($2,250.00 per share)———————
Dividends declared-common stock ($2.35 per share)———————
Dividends declared-noncontrolling interest ($90.82 per share)———————
Exercise of stock options, issuance of other stock awards, and other———————
Balance at December 31, 2016$—$(77)$(36)$(1)$—$—$(114)
As Restated
Balance at January 3, 2016$12$58,298$—$(616)$(31)$208$57,871
Net income/(loss) excluding redeemable noncontrolling interest——3,596——103,606
Other comprehensive income/(loss) excluding redeemable noncontrolling interest———(1,013)—6(1,007)
Dividends declared-Series A Preferred Stock ($2,250.00 per share)——(180)———(180)
Dividends declared-common stock ($2.35 per share)——(2,862)———(2,862)
Dividends declared-noncontrolling interest ($90.82 per share)—————(8)(8)
Exercise of stock options, issuance of other stock awards, and other—218(2)—(176)—40
Balance at December 31, 2016$12$58,516$552$(1,629)$(207)$216$57,460

The $77 million decrease to additional paid-in capital was primarily driven by the misstatements in the income taxes, supplier rebates, and other categories, which resulted in a decrease to net income for the fiscal year ended January 3, 2016, which has been reflected as a reduction to additional paid-in capital rather than retained earnings due to certain dividends declared in 2015 without a corresponding amount in retained earnings.

The $55 million decrease to accumulated other comprehensive losses at January 3, 2016 was primarily driven by the misstatements in the other and income taxes categories, partially offset by the misstatements in the balance sheet reclassifications category.

See descriptions of the net income and other comprehensive income impacts in the consolidated statement of income and consolidated statement of comprehensive income for the year ended December 31, 2016 sections above.

The Kraft Heinz Company

Consolidated Statement of Cash Flows

(in millions)

For the Year Ended December 30, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)$10,990$(58)(a)(b)(e)(f)(g)$10,932
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization1,036(5)(b)(f)(g)1,031
Amortization of postretirement benefit plans prior service costs/(credits)(328)—(328)
Equity award compensation expense46—46
Deferred income tax provision/(benefit)(6,467)(28)(a)(e)(g)(6,495)
Postemployment benefit plan contributions(1,659)—(1,659)
Goodwill and intangible asset impairment losses49—49
Nonmonetary currency devaluation36—36
Other items, net21934(a)(g)253
Changes in current assets and liabilities:——
Trade receivables(2,629)—(2,629)
Inventories(251)15(d)(236)
Accounts payable464(23)(d)441
Other current assets(67)3(a)(d)(64)
Other current liabilities(912)36(a)(e)(g)(876)
Net cash provided by/(used for) operating activities527(26)501
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash receipts on sold receivables2,286—2,286
Capital expenditures(1,217)23(d)(1,194)
Payments to acquire business, net of cash acquired———
Other investing activities, net87(2)(g)85
Net cash provided by/(used for) investing activities1,156211,177
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt(2,644)3(b)(g)(2,641)
Proceeds from issuance of long-term debt1,496—1,496
Proceeds from issuance of commercial paper6,043—6,043
Repayments of commercial paper(6,249)—(6,249)
Dividends paid - Series A Preferred Stock———
Dividends paid - common stock(2,888)—(2,888)
Redemption of Series A Preferred Stock———
Other financing activities, net162(g)18
Net cash provided by/(used for) financing activities(4,226)5(4,221)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash57—57
Cash, cash equivalents, and restricted cash
Net increase/(decrease)(2,486)—(2,486)
Balance at beginning of period4,255—4,255
Balance at end of period$1,769$—$1,769
NON-CASH INVESTING ACTIVITIES:
Beneficial interest obtained in exchange for securitized trade receivables$2,519$—$2,519
CASH PAID DURING THE PERIOD FOR:
Interest$1,269$—$1,269
Income taxes1,206—1,206

See descriptions of the net income impacts in the consolidated statement of income for the year ended December 30, 2017 section above.

The misstatements in the balance sheet misclassifications category resulted in a decrease to net cash flows provided by operating activities of $23 million and an increase to net cash flows provided by investing activities of $23 million for the year ended December 30, 2017.

The misstatements in the other misclassifications category resulted in a decrease to net cash flows provided by operating activities of $1 million, a decrease to net cash flows provided by investing activities of $2 million, and an increase to net cash flows provided by financing activities of $3 million for the year ended December 30, 2017.

The misstatements in the capital leases misclassifications category resulted in a decrease to net cash flows provided by operating activities of $2 million and an increase to net cash flows provided by financing activities of $2 million for the year ended December 30, 2017.

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the year ended December 30, 2017.

The Kraft Heinz Company

Consolidated Statement of Cash Flows

(in millions)

For the Year Ended December 31, 2016
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)$3,642$(36)(a)(e)(f)(g)$3,606
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization1,337—1,337
Amortization of postretirement benefit plans prior service costs/(credits)(333)(14)(g)(347)
Equity award compensation expense46—46
Deferred income tax provision/(benefit)(29)(43)(a)(e)(f)(g)(72)
Postemployment benefit plan contributions(494)—(494)
Goodwill and intangible asset impairment losses—18(f)18
Nonmonetary currency devaluation24—24
Other items, net169(a)(g)25
Changes in current assets and liabilities:——
Trade receivables(2,055)—(2,055)
Inventories(130)—(130)
Accounts payable943(64)(d)879
Other current assets(42)1(a)(41)
Other current liabilities(276)128(a)(d)(e)(g)(148)
Net cash provided by/(used for) operating activities2,649(1)2,648
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash receipts on sold receivables2,589—2,589
Capital expenditures(1,247)—(1,247)
Payments to acquire business, net of cash acquired———
Other investing activities, net110—110
Net cash provided by/(used for) investing activities1,452—1,452
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt(86)1(g)(85)
Proceeds from issuance of long-term debt6,981—6,981
Proceeds from issuance of commercial paper6,680—6,680
Repayments of commercial paper(6,043)—(6,043)
Dividends paid - Series A Preferred Stock(180)—(180)
Dividends paid - common stock(3,584)—(3,584)
Redemption of Series A Preferred Stock(8,320)—(8,320)
Other financing activities, net(69)—(69)
Net cash provided by/(used for) financing activities(4,621)1(4,620)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(137)—(137)
Cash, cash equivalents, and restricted cash
Net increase/(decrease)(657)—(657)
Balance at beginning of period4,912—4,912
Balance at end of period$4,255$—$4,255
NON-CASH INVESTING ACTIVITIES:
Beneficial interest obtained in exchange for securitized trade receivables$2,213$—$2,213
CASH PAID DURING THE PERIOD FOR:
Interest$1,176$—$1,176
Income taxes1,619—1,619

See descriptions of the net income impacts in the consolidated statement of income for the year ended December 31, 2016 section above.

The misstatements in the other misclassifications category resulted in a decrease to net cash flows provided by operating activities of $1 million and an increase to net cash flows provided by financing activities of $1 million for the year ended December 31, 2016.

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the year ended December 31, 2016.

Note 3. Significant Accounting Policies

Revenue Recognition:

Our revenues are primarily derived from customer orders for the purchase of our products. We recognize revenues as performance obligations are fulfilled when control passes to our customers. We record revenues net of variable consideration, including consumer incentives and performance obligations related to trade promotions, excluding taxes, and including all shipping and handling charges billed to customers (accounting for shipping and handling charges that occur after the transfer of control as fulfillment costs). We also record a refund liability for estimated product returns and customer allowances as reductions to revenues within the same period that the revenue is recognized. We base these estimates principally on historical and current period experience factors. We recognize costs paid to third party brokers to obtain contracts as expenses as our contracts are generally less than one year.

Advertising, Consumer Incentives, and Trade Promotions:

We promote our products with advertising, consumer incentives, and performance obligations related to trade promotions. Consumer incentives and trade promotions include, but are not limited to, discounts, coupons, rebates, performance-based in-store display activities, and volume-based incentives. Variable consideration related to consumer incentive and trade promotion activities is recorded as a reduction to revenues based on amounts estimated as being due to customers and consumers at the end of a period. We base these estimates principally on historical utilization, redemption rates, and/or current period experience factors. We review and adjust these estimates at least quarterly based on actual experience and other information.

Advertising expenses are recorded in SG&A. For interim reporting purposes, we charge advertising to operations as a percentage of estimated full year sales activity and marketing costs. We review and adjust these estimates each quarter based on actual experience and other information. We recorded advertising expenses of $584 million in 2018, $629 million in 2017, and $708 million in 2016, which represented costs to obtain physical advertisement spots in television, radio, print, digital, and social channels. We also incur other advertising and marketing costs such as shopper marketing, sponsorships, and agency advertisement conception, design, and public relations fees. Total advertising and marketing costs were $1,140 million in 2018, $1,115 million in 2017, and $1,221 million in 2016.

Research and Development Expense:

We expense costs as incurred for product research and development within SG&A. Research and development expenses were approximately $109 million in 2018, $93 million in 2017, and $120 million in 2016.

Stock-Based Compensation:

We recognize compensation costs related to equity awards on a straight-line basis over the vesting period of the award, which is generally five years. These costs are primarily recognized within SG&A. We estimate expected forfeitures rather than recognizing forfeitures as they occur in determining our equity award compensation costs. We classify equity award compensation costs primarily within general corporate expenses. See Note 12, Employees’ Stock Incentive Plans, for additional information.

Postemployment Benefit Plans:

We maintain various retirement plans for the majority of our employees. These include pension benefits, postretirement health care benefits, and defined contribution benefits. The cost of these plans is charged to expense over an appropriate term based on, among other things, the cost component and whether the plan is active or inactive. Changes in the fair value of our plan assets result in net actuarial gains or losses. These net actuarial gains and losses are deferred into accumulated other comprehensive income/(losses) and amortized within other expense/(income), net in future periods using the corridor approach. The corridor is 10% of the greater of the market-related value of the plan’s asset or projected benefit obligation. Any actuarial gains and losses in excess of the corridor are then amortized over an appropriate term based on whether the plan is active or inactive. See Note 13, Postemployment Benefits, for additional information.

Income Taxes:

We recognize income taxes based on amounts refundable or payable for the current year and record deferred tax assets or liabilities for any difference between the financial reporting and tax basis of our assets and liabilities. We also recognize deferred tax assets for temporary differences, operating loss carryforwards, and tax credit carryforwards. Inherent in determining our annual tax rate are judgments regarding business plans, planning opportunities, and expectations about future outcomes. Realization of certain deferred tax assets, primarily net operating loss and other carryforwards, is dependent upon generating sufficient taxable income in the appropriate jurisdiction prior to the expiration of the carryforward periods.

We apply a more-likely-than-not threshold to the recognition and derecognition of uncertain tax positions. Accordingly, we recognize the amount of tax benefit that has a greater than 50 percent likelihood of being ultimately realized upon settlement. Future changes in judgment related to the expected ultimate resolution of uncertain tax positions will affect our results in the quarter of such change.

We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. When assessing the need for valuation allowances, we consider future taxable income and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, we would adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding adjustment to our provision for/(benefit from) income taxes. The resolution of tax reserves and changes in valuation allowances could be material to our results of operations for any period, but is not expected to be material to our financial position.

Common Stock and Preferred Stock Dividends:

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

Cash and Cash Equivalents:

Cash equivalents include demand deposits with banks and all highly liquid investments with original maturities of three months or less. Cash and cash equivalents that are legally restricted as to withdrawal or usage is classified in other current assets or other non-current assets, as applicable, on the consolidated balance sheets.

Inventories:

Inventories are stated at the lower of cost or net realizable value. We value inventories primarily using the average cost method.

Property, Plant and Equipment:

Property, plant and equipment are stated at historical cost and depreciated on the straight-line method over the estimated useful lives of the assets. Machinery and equipment are depreciated over periods ranging from three to 20 years and buildings and improvements over periods up to 40 years. Capitalized software costs are included in property, plant and equipment and amortized on a straight-line basis over the estimated useful lives of the software, which do not exceed seven years. We review long-lived assets for impairment when conditions exist that indicate the carrying amount of the assets may not be fully recoverable. Such conditions could include significant adverse changes in the business climate, current-period operating or cash flow losses, significant declines in forecasted operations, or a current expectation that an asset group will be disposed of before the end of its useful life. We perform undiscounted operating cash flow analyses to determine if an impairment exists. When testing for impairment of assets held for use, we group assets at the lowest level for which cash flows are separately identifiable. If an impairment is determined to exist, the loss is calculated based on estimated fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal.

Goodwill and Intangible Assets:

Our goodwill balance consists of 20 reporting units, and our indefinite-lived intangible asset balance primarily consists of a number of individual brands. We test our reporting units and brands for impairment annually as of the first day of our second quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit or brand is less than its carrying amount. Such events and circumstances could include a sustained decrease in our market capitalization, increased competition or unexpected loss of market share, increased input costs beyond projections (for example due to regulatory or industry changes), disposals of significant brands or components of our business, unexpected business disruptions (for example due to a natural disaster or loss of a customer, supplier, or other significant business relationship), unexpected significant declines in operating results, or significant adverse changes in the markets in which we operate. We test reporting units for impairment by comparing the estimated fair value of each reporting unit with its carrying amount. We test brands for impairment by comparing the estimated fair value of each brand with its carrying amount. If the carrying amount of a reporting unit or brand exceeds its estimated fair value, we record an impairment loss based on the difference between fair value and carrying amount, in the case of reporting units, not to exceed to the associated carrying amount of goodwill.

Definite-lived intangible assets are amortized on a straight-line basis over the estimated periods benefited. We review definite-lived intangible assets for impairment when conditions exist that indicate the carrying amount of the assets may not be recoverable. Such conditions could include significant adverse changes in the business climate, current-period operating or cash flow losses, significant declines in forecasted operations, or a current expectation that an asset group will be disposed of before the end of its useful life. We perform undiscounted operating cash flow analyses to determine if an impairment exists. When testing for impairment of definite-lived intangible assets held for use, we group assets at the lowest level for which cash flows are separately identifiable. If an impairment is determined to exist, the loss is calculated based on estimated fair value. Impairment losses on definite-lived intangible assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal.

See Note 10, Goodwill and Intangible Assets, for additional information.

Financial Instruments:

As we source our commodities on global markets and periodically enter into financing or other arrangements abroad, we use a variety of risk management strategies and financial instruments to manage commodity price, foreign currency exchange rate, and interest rate risks. Our risk management program focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on our operating results. One way we do this is through actively hedging our risks through the use of derivative instruments. As a matter of policy, we do not use highly leveraged derivative instruments, nor do we use financial instruments for speculative purposes.

Derivatives are recorded on our consolidated balance sheets as assets or liabilities at fair value, which fluctuates based on changing market conditions.

Certain derivatives are designated as cash flow hedges and qualify for hedge accounting treatment, while others are not designated as hedging instruments and are marked to market through net income/(loss). The gains and losses on cash flow hedges are deferred as a component of accumulated other comprehensive income/(losses) and are recognized in net income/(loss) at the time the hedged item affects net income/(loss), in the same line item as the underlying hedged item. The excluded component on cash flow hedges is recognized in net income/(loss) over the life of the hedging relationship in the same income statement line item as the underlying hedged item. We also designate certain derivatives and non-derivatives as net investment hedges to hedge the net assets of certain foreign subsidiaries which are exposed to volatility in foreign currency exchange rates. Changes in the value of these derivatives and remeasurements of our non-derivatives designated as net investment hedges are calculated each period using the spot method, with changes reported in foreign currency translation adjustment within accumulated other comprehensive income/(losses). Such amounts will remain in accumulated other comprehensive income/(losses) until the complete or substantially complete liquidation of our investment in the underlying foreign operations. The excluded component on derivatives designated as net investment hedges is recognized in net income/(loss) within interest expense. The income statement classification of gains and losses related to derivative instruments not designated as hedging instruments is determined based on the underlying intent of the contracts. Cash flows related to the settlement of derivative instruments designated as net investment hedges of foreign operations are classified in the consolidated statements of cash flows within investing activities. All other cash flows related to derivative instruments are classified in the same line item as the cash flows of the related hedged item, which is generally within operating activities.

To qualify for hedge accounting, a specified level of hedging effectiveness between the hedging instrument and the item being hedged must be achieved at inception and maintained throughout the hedged period. When a hedging instrument no longer meets the specified level of hedging effectiveness, we reclassify the related hedge gains or losses previously deferred into other comprehensive income/(losses) to net income within other expense/(income), net. We formally document our risk management objectives, our strategies for undertaking the various hedge transactions, the nature of and relationships between the hedging instruments and hedged items, and the method for assessing hedge effectiveness. Additionally, for qualified hedges of forecasted transactions, we specifically identify the significant characteristics and expected terms of the forecasted transactions. If it becomes probable that a forecasted transaction will not occur, the hedge will no longer be effective and all of the derivative gains or losses would be recognized in net income in the current period.

Unrealized gains and losses on our commodity derivatives not designated as hedging instruments are recorded in cost of products sold and are included within general corporate expenses until realized. Once realized, the gains and losses are included within the applicable segment operating results. See Note 14, Financial Instruments, for additional information.

Our designated and undesignated derivative contracts include:

•Net investment hedges. We have numerous investments in our foreign subsidiaries, the net assets of which are exposed to volatility in foreign currency exchange rates. We manage this risk by utilizing derivative and non-derivative instruments, including cross-currency swap contracts, foreign exchange contracts, and certain foreign denominated debt designated as net investment hedges. We exclude the interest accruals on cross-currency swap contracts and the forward points on foreign exchange forward contracts from the assessment and measurement of hedge effectiveness. We recognize the interest accruals on cross-currency swap contracts in net income/(loss) within interest expense. We amortize the forward points on foreign exchange contracts into net income/(loss) within interest expense over the life of the hedging relationship.
•Foreign currency cash flow hedges. We use various financial instruments to mitigate our exposure to changes in exchange rates from third-party and intercompany actual and forecasted transactions. Our principal foreign currency exposures that are hedged include the British pound sterling, euro, and Canadian dollar. These instruments include cross-currency swap contracts and foreign exchange forward and option contracts. Substantially all of these derivative instruments are highly effective and qualify for hedge accounting treatment. We exclude the interest accruals on cross-currency swap contracts and the forward points and option premiums or discounts on foreign exchange contracts from the assessment and measurement of hedge effectiveness and amortize such amounts into net income/(loss) in the same line item as the underlying hedged item over the life of the hedging relationship.
•Interest rate cash flow hedges. From time to time, we have used derivative instruments, including interest rate swaps, as part of our interest rate risk management strategy. We have primarily used interest rate swaps to hedge the variability of interest payment cash flows on a portion of our future debt obligations.
•Commodity derivatives. We are exposed to price risk related to forecasted purchases of certain commodities that we primarily use as raw materials. We enter into commodity purchase contracts primarily for dairy products, meat products, coffee beans, sugar, vegetable oils, wheat products, corn products, and cocoa products. These commodity purchase contracts generally are not subject to the accounting requirements for derivative instruments and hedging activities under the normal purchases and normal sales exception. We also use commodity futures, options, and swaps to economically hedge the price of certain commodity costs, including the commodities noted above, as well as packaging products, diesel fuel, and natural gas. We do not designate these commodity contracts as hedging instruments. We also occasionally use futures to economically cross hedge a commodity exposure.

Translation of Foreign Currencies:

For all significant foreign operations, the functional currency is the local currency. Assets and liabilities of these operations are translated at the exchange rate in effect at each period end. Income statement accounts are translated at the average rate of exchange prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included as a component of accumulated other comprehensive income/(losses) on the balance sheet. Gains and losses from foreign currency transactions are included in net income/(loss) for the period.

Highly Inflationary Accounting:

We apply highly inflationary accounting if the cumulative inflation rate in an economy for a three-year period meets or exceeds 100%. Under highly inflationary accounting, the financial statements of a subsidiary are remeasured into our reporting currency (U.S. dollars) based on the legally available exchange rate at which we expect to settle the underlying transactions. Exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in net income/(loss), rather than accumulated other comprehensive income/(losses) on the balance sheet, until such time as the economy is no longer considered highly inflationary. Certain non-monetary assets and liabilities are recorded at the applicable historical exchange rates. We apply highly inflationary accounting to the results of our subsidiaries in Venezuela and Argentina. The net monetary assets of our subsidiary in Argentina were approximately $2 million at December 29, 2018. See Note 16, Venezuela - Foreign Currency and Inflation, for additional information related to our subsidiary in Venezuela.

Note 4. New Accounting Standards

Accounting Standards Adopted in the Current Year

Presentation of Net Periodic Benefit Costs:

In March 2017, the Financial Accounting Standards Board (the “FASB”) issued ASU 2017-07 related to the presentation of net periodic benefit cost (pension and postretirement cost). This ASU became effective beginning in the first quarter of our fiscal year 2018. Under the new guidance, the service cost component of net periodic benefit cost must be presented in the same statement of income line item as other employee compensation costs arising from services rendered by employees during the period. Other components of net periodic benefit cost must be disaggregated from the service cost component in the statements of income and must be presented outside the operating income/(loss) subtotal. Additionally, only the service cost component is eligible for capitalization in assets. The new guidance must be applied retrospectively for the statement of income presentation of service cost components and other net periodic benefit cost components and prospectively for the capitalization of service cost components. There is a practical expedient that allows us to use historical amounts disclosed in our Postemployment Benefits footnote as an estimation basis for retrospectively applying the statement of income presentation requirements. In the first quarter of 2018, we adopted this ASU using the practical expedient described above. There was no impact to our consolidated balance sheet at December 30, 2017 or to our consolidated statements of cash flows for the years ended December 30, 2017 and December 31, 2016. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for the impacts on our consolidated statements of income for the years ended December 30, 2017 and December 31, 2016.

Revenue Recognition:

In May 2014, the FASB issued ASU 2014-09, which superseded previously existing revenue recognition guidance. Under this ASU, companies must apply a five step model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The ASU may be applied using a full retrospective method or a modified retrospective transition method, with a cumulative-effect adjustment as of the date of adoption. The ASU also provides for certain practical expedients, including the option to expense as incurred the incremental costs of obtaining a contract, if the contract period is for one year or less. This ASU was effective beginning in the first quarter of our fiscal year 2018. We adopted this ASU in the first quarter of 2018 using the full retrospective method and the practical expedient described above. Upon adoption, we made the following policy elections: (i) we account for shipping and handling costs as contract fulfillment costs, and (ii) we exclude taxes imposed on and collected from customers in revenue producing transactions (e.g., sales, use, and value added taxes) from the transaction price. The impact of adopting this guidance was immaterial to our financial statements and related disclosures.

Income Tax Impacts of Certain Intercompany Transfers:

In October 2016, the FASB issued ASU 2016-16 related to the income tax accounting impacts of intra-entity transfers of assets other than inventory, such as intellectual property and property, plant and equipment. Under the new accounting guidance, current and deferred income taxes should be recognized upon transfer of the assets. Previously, recognition of current and deferred income taxes was prohibited until the asset was sold to an external party. This ASU became effective beginning in the first quarter of our fiscal year 2018. We adopted this new guidance on a modified retrospective basis through a cumulative-effect adjustment of $95 million to decrease retained earnings in the first quarter of 2018.

Definition of a Business Clarification:

In January 2017, the FASB issued ASU 2017-01 clarifying the definition of a business used in determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU provides a screen for companies to determine if an integrated set of assets and activities (“set”) is not a business. If substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If this screen is not met, the entity then determines if the set meets the minimum requirement of a business. For a set to be a business, it must include an input and a substantive process which together significantly contribute to the ability to create outputs. This ASU became effective beginning in the first quarter of our fiscal year 2018. We adopted this ASU on a prospective basis. The adoption of this ASU did not impact our financial statements or related disclosures.

Goodwill Impairment Test Simplification:

In January 2017, the FASB issued ASU 2017-04 related to goodwill impairment testing. This ASU eliminates Step 2 from the goodwill impairment test. Under the new guidance, if a reporting unit’s carrying amount exceeds its fair value, the entity will record an impairment loss based on that difference. The impairment loss will be limited to the amount of goodwill allocated to that reporting unit. Previously, if the fair value of a reporting unit was lower than its carrying amount (Step 1), an entity was required to calculate any impairment loss by comparing the implied fair value of goodwill with its carrying amount (Step 2). Additionally, under the new standard, companies that have reporting units with zero or negative carrying amounts will no longer be required to perform the qualitative assessment to determine whether to perform Step 2 of the goodwill impairment test. As a result, reporting units with zero or negative carrying amounts will generally be expected to pass the simplified impairment test; however, additional disclosure will be required of those companies. We early adopted this guidance on a prospective basis as of April 1, 2018 (our annual impairment testing date in the second quarter of 2018). As a result of adopting this ASU, we no longer perform Step 2 while completing our goodwill impairment testing, beginning with our annual goodwill impairment testing in the second quarter of 2018.

Accounting for Hedging Activities:

In August 2017, the FASB issued ASU 2017-12 related to accounting for hedging activities. This guidance impacted the accounting for financial (e.g., foreign exchange and interest rate) and non-financial (e.g., commodity) hedging activities. We early adopted this guidance on a modified retrospective basis in the third quarter of 2018. Upon adoption, we recognized an insignificant cumulative-effect adjustment to retained earnings/(deficit). The most significant impacts of adoption are that we now:

•Recognize changes in the fair value of excluded components in net income/(loss) in the current period or in other comprehensive income/(loss) (and then amortize into net income/(loss) over the life of the hedging relationship);
•Defer changes in the spot rate of the hedging instrument into other comprehensive income/(loss), while the excluded component (i.e., forward points or option premiums or discounts) is amortized into net income/(loss) over the life of the hedging relationship. When the excluded component is released or the forecasted transaction occurs, it is recognized in the same income statement line item affected by the hedged item; and
•Present additional details in our tabular disclosures in the footnotes to the financial statements.

Additionally, ASU 2017-12 eliminated the requirement to separately measure and report hedge ineffectiveness; therefore, we removed disclosures related to hedge ineffectiveness. See our consolidated statements of other comprehensive income, Note 3, Significant Accounting Policies, Note 14, Financial Instruments, and Note 15, Accumulated Other Comprehensive Income/(Losses), for updated disclosures pursuant to ASU 2017-12.

Accounting Standards Not Yet Adopted

Leases:

In February 2016, the FASB issued ASU 2016-02 to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The updated guidance requires lessees to reflect the majority of leases on their balance sheets as assets and obligations. This ASU will be effective beginning in the first quarter of our fiscal year 2019. Early adoption is permitted. The guidance must be adopted using a modified retrospective transition method. The ASU also provides for certain practical expedients. Among the practical expedients is an optional transition method that allows companies to apply the guidance at the adoption date and recognize a cumulative-effect adjustment to retained earnings/(deficit) on the adoption date. We plan to elect this practical expedient upon adoption. We also plan to elect the package of practical expedients that will allow us to carry forward our determination of whether a lease exists, the classification of a lease, and whether initial direct lease costs exist for purposes of transition to the new standard. We do not expect to use the hindsight practical expedient. We do plan to elect the land easement option, which will allow us to continue to use prior accounting conclusions reached in our accounting for land easements. We also plan to elect the short-term lease exemption whereby we will not record an asset or liability for short-term leases. We have completed our scoping reviews, identified our significant leases by geography and by asset type, and developed our accounting policies and expected policy elections, which will take effect upon adoption of the standard. We have executed our lease data extraction strategy and completed data extraction efforts. Our identified accounting system, which will support the future state leasing process, is also ready for implementation. We have completed our future state process design as part of the overall system implementation. Upon adoption, we expect that our financial statement disclosures will be expanded to present additional details of our leasing arrangements. We expect this guidance to have a significant impact on our financial statements. We currently estimate that, upon adoption, we will have total lease assets between approximately $750 million and $910 million and total lease liabilities between approximately $810 million and $990 million. We will adopt this ASU on the first day of our fiscal year 2019.

Measurement of Current Expected Credit Losses:

In June 2016, the FASB issued ASU 2016-13 to update the methodology used to measure current expected credit losses (“CECL”). This ASU applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investments in leases, and trade accounts receivable as well as certain off-balance sheet credit exposures, such as loan commitments. This ASU replaces the current incurred loss impairment methodology with a methodology to reflect CECL and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. The guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption. This ASU will be effective beginning in the first quarter of our fiscal year 2020. Early adoption is permitted. We are currently evaluating the impact this ASU will have on our financial statements and related disclosures as well as the timing of adoption.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income:

In February 2018, the FASB issued ASU 2018-02 related to reclassifying tax effects stranded in accumulated other comprehensive income/(losses) because of the Tax Cuts and Jobs Act (“U.S. Tax Reform”) enacted on December 22, 2017. U.S. Tax Reform reduced the U.S. federal corporate tax rate from 35.0% to 21.0%. ASC Topic 740, Income Taxes, requires the remeasurement of deferred tax assets and liabilities as a result of such changes in tax laws or rates to be presented in net income/(loss) from continuing operations. However, the related tax effects of such deferred tax assets and liabilities may have been originally recorded in other comprehensive income/(loss). This ASU allows companies to reclassify such stranded tax effects from accumulated other comprehensive income/(losses) to retained earnings/(deficit). This reclassification adjustment is optional, and if elected, may be applied either to the period of adoption or retrospectively to the period(s) impacted by U.S. Tax Reform. Additionally, this ASU requires companies to disclose the policy election for stranded tax effects as well as the general accounting policy for releasing income tax effects from accumulated other comprehensive income/(losses). This ASU will be effective beginning in the first quarter of our fiscal year 2019. Early adoption is permitted. We will adopt this ASU on the first day of our fiscal year 2019 and will make the policy election to reclassify stranded tax effects from accumulated other comprehensive income/(losses) to retained earnings/(deficit). We currently estimate the increase to retained earnings/(deficit) upon adoption will be between approximately $130 million and $140 million.

Fair Value Measurement Disclosures:

In August 2018, the FASB issued ASU 2018-13 related to fair value measurement disclosures. This ASU removes the requirement to disclose the amount of and reasons for transfers between Levels 1 and 2 of the fair value hierarchy, the policy for determining that a transfer has occurred, and valuation processes for Level 3 fair value measurements. Additionally, this ASU modifies the disclosures related to the measurement uncertainty for recurring Level 3 fair value measurements (by removing the requirement to disclose sensitivity to future changes) and the timing of liquidation of investee assets (by removing the timing requirement in certain instances). The guidance also requires new disclosures for Level 3 financial assets and liabilities, including the amount and location of unrealized gains and losses recognized in other comprehensive income/(loss) and additional information related to significant unobservable inputs used in determining Level 3 fair value measurements. This ASU will be effective beginning in the first quarter of our fiscal year 2020. Early adoption of the guidance in whole is permitted. Alternatively, companies may early adopt removed or modified disclosures and delay adoption of the additional disclosures until their effective date. Certain of the amendments in this ASU must be applied prospectively upon adoption, while other amendments must be applied retrospectively upon adoption. We elected to early adopt the provisions related to removing disclosures in the fourth quarter of our fiscal year 2018 on a retrospective basis. Accordingly, we have removed information related to our valuation process for Level 3 fair value measurements for pension plan investments within Note 13, Postemployment Benefits. We also removed information about the amount of and reasons for transfers between Levels 1 and 2 of the fair value hierarchy from Note 14, Financial Instruments. There was no other impact to our financial statement disclosures as a result of early adopting the provisions related to removing disclosures. We are currently evaluating the disclosure impact of the provisions related to modifying and adding disclosures as well as the timing of adoption.

Disclosure Requirements for Certain Employer-Sponsored Benefit Plans:

In August 2018, the FASB issued ASU 2018-14 related to the disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans. The guidance requires sponsors of these plans to provide additional disclosures, including weighted-average interest rates used in the company’s cash balance plans and a narrative description of reasons for any significant gains or losses impacting the benefit obligation for the period. Additionally, this guidance eliminates certain previous disclosure requirements. This ASU will be effective beginning in the first quarter of our fiscal year 2020. Early adoption is permitted. This guidance must be applied on a retrospective basis to all periods presented. We are currently evaluating the impact this ASU will have on our financial statements and related disclosures as well as the timing of adoption.

Implementation Costs Incurred in Hosted Cloud Computing Service Arrangements:

In August 2018, the FASB issued ASU 2018-15 related to accounting for implementation costs incurred in hosted cloud computing service arrangements. Under the new guidance, implementation costs incurred in a hosting arrangement that is a service contract should be expensed or capitalized based on the nature of the costs and the project stage during which such costs are incurred. If the implementation costs qualify for capitalization, they must be amortized over the term of the hosting arrangement and assessed for impairment. Companies must disclose the nature of any hosted cloud computing service arrangements. This ASU also provides guidance for balance sheet and income statement presentation of capitalized implementation costs and statement of cash flows presentation for the related payments. This ASU will be effective beginning in the first quarter of our fiscal year 2020. Early adoption is permitted, including in an interim period. This guidance may be adopted either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are currently evaluating the impact this ASU will have on our financial statements and related disclosures as well as the timing of adoption and the application method.

Note 5. Acquisitions and Divestitures

Cerebos Acquisition

On March 9, 2018 (the “Acquisition Date”), we acquired all of the outstanding equity interests in Cerebos Pacific Limited (“Cerebos”) (the “Cerebos Acquisition”), an Australian food and beverage company with several local brands in Australia and New Zealand. The Cerebos business manufactures, markets, and sells food and beverage products, including gravies, sauces, instant coffee, salt, herbs and spices, and tea. Cerebos is included in our consolidated financial statements as of the Acquisition Date. We have not included unaudited pro forma results, prepared in accordance with ASC 805, as if Cerebos had been acquired as of January 1, 2018, as it would not yield significantly different results.

The Cerebos Acquisition was accounted for under the acquisition method of accounting for business combinations. The total consideration paid for Cerebos was $244 million. We utilized estimated fair values at the Acquisition Date to allocate the total consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed. Such allocation was final as of December 29, 2018.

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

Cash$23
Other current assets65
Property, plant and equipment, net75
Identifiable intangible assets100
Trade and other payables(41)
Other non-current liabilities(3)
Net assets acquired219
Goodwill on acquisition25
Total consideration$244

The Cerebos Acquisition resulted in $25 million of non tax deductible goodwill relating principally to planned expansion of Cerebos brands into new categories and markets. This goodwill was allocated to Rest of World as shown in Note 10, Goodwill and Intangible Assets.

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

Fair Value (in millions of dollars)Weighted Average Life (in years)
Definite-lived trademarks$8722
Customer-related assets1312
Total$100

We valued trademarks using the relief from royalty method and customer-related assets using the distributor method. Some of the more significant assumptions inherent in developing the valuations included the estimated annual net cash flows for each definite-lived intangible asset (including net sales, cost of products sold, selling and marketing costs, and working capital/contributory asset charges), the discount rate that appropriately reflects the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, and competitive trends, as well as other factors. We determined the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product category growth rates, management plans, and market comparables.

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

We valued finished goods and work-in-process inventory using a net realizable value approach. Raw materials and packaging inventory was valued using the replacement cost approach.

We valued property, plant and equipment using a combination of the income approach, the market approach, and the cost approach, which is based on the current replacement and/or reproduction cost of the asset as new, less depreciation attributable to physical, functional, and economic factors.

We incurred deal costs of $18 million in 2018 related to the Cerebos Acquisition.

Other Acquisitions

In the third quarter of 2018, we had two additional acquisitions of businesses, including The Ethical Bean Coffee Company Ltd., a Canadian-based coffee roaster, and Wellio, Inc., a full-service meal planning and preparation technology start-up in the U.S. The aggregate consideration paid related to these acquisitions was $27 million.

In November 2018, we entered into a definitive agreement with a third party to acquire all of the outstanding equity interests in Primal Nutrition, LLC (“Primal Nutrition”) for approximately $200 million (the “Primal Acquisition”). Primal Nutrition is a better-for-you brand primarily focused on condiments, sauces, and dressings, with growing product lines in healthy snacks and other categories. The brand holds leading positions in the e-commerce and natural channels. The Primal Acquisition closed on January 3, 2019.

We incurred aggregate deal costs related to other acquisitions of $2 million in 2018.

Divestitures

In May 2018, we sold our 50.1% interest in our South African subsidiary to our minority interest partner. The transaction included proceeds of $18 million, which are included in other investing activities, net on the consolidated statement of cash flows for 2018. We recorded a pre-tax loss on sale of business of approximately $15 million. The pre-tax loss was included in SG&A on the consolidated statement of income for 2018.

In October 2018, we entered into a definitive agreement with Zydus Wellness Limited and Cadila Healthcare Limited (collectively, the “Buyers”) to sell 100% of our equity interests in Heinz India Private Limited (“Heinz India”) for approximately 46 billion Indian rupees (approximately $660 million at December 29, 2018) (the “Heinz India Transaction”). In connection with the Heinz India Transaction, we will transfer to the Buyers, among other assets and operations, our global intellectual property rights to several brands, including Complan, Glucon-D, Nycil, and Sampriti. Our core brands (i.e., Heinz and Kraft) will not be transferred. The Heinz India Transaction closed on January 30, 2019. We expect to recognize a gain on this transaction upon closing. We have presented the assets and liabilities related to the Heinz India Transaction as held for sale on the consolidated balance sheet at December 29, 2018. This divestiture is not considered a strategic shift that will have a major effect on our operations or financial results; therefore, it will not be reported as discontinued operations.

We entered into foreign exchange derivative contracts to economically hedge the foreign currency exposure related to the Heinz India Transaction. Additionally, we entered into foreign exchange derivative contracts, which are designated as net investment hedges related to our investment in Heinz India. See Note 14, Financial Instruments, for additional information. We also recorded changes in our deferred tax liabilities related to the Heinz India Transaction. See Note 11, Income Taxes, for additional information.

Additionally, in November 2018, we entered into a definitive agreement with Parmalat SpA (“Parmalat”) to sell certain assets in our natural cheese portfolio in Canada for approximately 1.6 billion Canadian dollars (approximately $1.2 billion at December 29, 2018) (the “Canada Natural Cheese Transaction”). In connection with the Canada Natural Cheese Transaction, we will transfer certain assets to Parmalat, including the intellectual property rights to Cracker Barrel in Canada and P’Tit Quebec globally. While this transaction is contingent on customary closing conditions, we expect the Canada Natural Cheese Transaction to be finalized in mid-2019. We expect to recognize a gain on this transaction upon closing. We have presented the assets and liabilities related to the Canada Natural Cheese Transaction as held for sale on the consolidated balance sheet at December 29, 2018. This divestiture is not considered a strategic shift that will have a major effect on our operations or financial results; therefore, it will not be reported as discontinued operations.

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

December 29, 2018
ASSETS
Inventories$92
Property, plant and equipment, net139
Goodwill669
Intangible assets, net437
Other39
Total assets held for sale$1,376
LIABILITIES
Trade payables$16
Other39
Total liabilities held for sale$55

We incurred aggregate deal costs related to these divestitures of $3 million in 2018.

Note 6. Integration and Restructuring Expenses

As part of our restructuring activities, we incur expenses that qualify as exit and disposal costs under U.S. GAAP. These include severance and employee benefit costs and other exit costs. Severance and employee benefit costs primarily relate to cash severance, non-cash severance, including accelerated equity award compensation expense, and pension and other termination benefits. Other exit costs primarily relate to lease and contract terminations. We also incur expenses that are an integral component of, and directly attributable to, our restructuring activities, which do not qualify as exit and disposal costs under U.S. GAAP. These include asset-related costs and other implementation costs. Asset-related costs primarily relate to accelerated depreciation and asset impairment charges. Other implementation costs primarily relate to start-up costs of new facilities, professional fees, asset relocation costs, costs to exit facilities, and costs associated with restructuring benefit plans.

Employee severance and other termination benefit packages are primarily determined based on established benefit arrangements, local statutory requirements, or historical benefit practices. We recognize the contractual component of these benefits when payment is probable and estimable; additional elements of severance and termination benefits associated with non-recurring benefits are recognized ratably over each employee’s required future service period. Charges for accelerated depreciation are recognized on long-lived assets that will be taken out of service before the end of their normal service, in which case depreciation estimates are revised to reflect the use of the asset over its shortened useful life. Asset impairments establish a new fair value basis for assets held for disposal or sale, and those assets are written down to expected net realizable value if carrying value exceeds fair value. All other costs are recognized as incurred.

Integration Program:

At the end of 2017, we had substantially completed our multi-year program announced following the 2015 Merger (the “Integration Program”), which was designed to reduce costs and integrate and optimize our combined organization, primarily in the U.S. and Canada segments. Overall, as part of the Integration Program, we closed net six factories, consolidated our distribution network, and eliminated 4,900 positions. Approximately 65% of total Integration Program costs were reflected in cost of products sold, and approximately 60% were cash expenditures.

As of December 29, 2018, we had incurred cumulative pre-tax costs of $2,146 million, including $92 million in 2018, $316 million in 2017, and $887 million in 2016. The $2,146 million of cumulative pre-tax costs included $541 million of severance and employee benefit costs, $889 million of non-cash asset-related costs, $609 million of other implementation costs, and $107 million of other exit costs. The related amounts incurred in 2018 were $2 million of severance and employee benefit costs, $32 million of non-cash asset-related costs, $59 million of other implementation costs, and $1 million of credits in other exit costs.

Our cumulative pre-tax costs related to the Integration Program, as well as the associated costs for the year ended December 30, 2017, reflect the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

As of December 29, 2018, we do not expect to incur significant additional expenses related to the Integration Program.

Our liability balance for Integration Program costs that qualify as exit and disposal costs under U.S. GAAP (i.e., severance and employee benefit costs and other exit costs) was (in millions):

Severance and Employee Benefit CostsOther Exit Costs(a)Total
Balance at December 30, 2017$24$22$46
Charges/(credits)2(1)1
Cash payments(12)(2)(14)
Non-cash utilization(9)(19)(28)
Balance at December 29, 2018$5$—$5

(a) Other exit costs primarily consist of lease and contract terminations.

The Integration Program liability at December 29, 2018 relates to the elimination of salaried positions in Canada. We expect the majority of this liability to be paid by the end of 2019.

Restructuring Activities:

In addition to our Integration Program in North America, we have other restructuring programs globally, which are focused primarily on workforce reduction, factory closure and consolidation, and benefit plan restructuring. Related to these programs, we expect to eliminate approximately 1,900 positions, 1,400 of which were eliminated in 2018. These programs resulted in expenses of $368 million in 2018, including $48 million of severance and employee benefit costs, $63 million of non-cash asset-related costs, $251 million of other implementation costs, and $6 million of other exit costs. Other implementation costs included a non-cash settlement charge related to the settlement of our Canadian salaried and Canadian hourly defined benefit pension plans in 2018. See Note 13, Postemployment Benefit Plans, for additional information. Other restructuring program expenses totaled $118 million in 2017 and $125 million in 2016.

Our liability balance for restructuring project costs that qualify as exit and disposal costs under U.S. GAAP (i.e., severance and employee benefit costs and other exit costs) was (in millions):

Severance and Employee Benefit CostsOther Exit Costs(a)Total
Balance at December 30, 2017$16$25$41
Charges/(credits)48654
Cash payments(35)(12)(47)
Non-cash utilization31417
Balance at December 29, 2018$32$33$65

(a) Other exit costs primarily consist of lease and contract terminations.

We expect the liability for severance and employee benefit costs as of December 29, 2018 to be paid by the end of 2019. The liability for other exit costs primarily relates to lease obligations. The cash impact of these obligations will continue for the duration of the lease terms, which expire between 2019 and 2026.

Total Integration and Restructuring:

Total expense/(income) related to the Integration Program and restructuring activities, by income statement caption, were (in millions):

As Restated & RecastAs Recast
December 29, 2018December 30, 2017December 31, 2016
Severance and employee benefit costs - COGS$12$9$41
Severance and employee benefit costs - SG&A322696
Severance and employee benefit costs - Other expense/(income), net6(149)20
Asset-related costs - COGS59191496
Asset-related costs - SG&A362641
Other costs - COGS123264162
Other costs - SG&A3567156
Other costs - Other expense/(income), net157——
$460$434$1,012

Total expense/(income) for the year ended December 30, 2017 reflects the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

We do not include Integration Program and restructuring expenses within Segment Adjusted EBITDA (as defined in Note 22, Segment Reporting). The pre-tax impact of allocating such expenses to our segments would have been (in millions):

As Restated
December 29, 2018December 30, 2017December 31, 2016
United States$205$270$759
Canada1763445
EMEA165685
Rest of World25136
General corporate expenses3861117
$460$434$1,012

In the first quarter of 2018, we reorganized our segment structure to move our Middle East and Africa businesses from the Rest of World segment to the EMEA reportable segment. We have reflected this change in all historical periods presented. This change did not have a material impact on our current or any prior period results. See Note 22, Segment Reporting, for additional information.

In addition, total expense/(income) for the year ended December 30, 2017 reflects the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

Note 7. Restricted Cash

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

December 29, 2018December 30, 2017
Cash and cash equivalents$1,130$1,629
Restricted cash included in other current assets1140
Restricted cash included in other non-current assets5—
Cash, cash equivalents, and restricted cash$1,136$1,769

Our restricted cash at December 30, 2017 primarily related to withholding taxes on our common stock dividends to our only significant international shareholder, 3G Capital.

Note 8. Inventories

Inventories consisted of the following (in millions):

As Restated
December 29, 2018December 30, 2017
Packaging and ingredients$510$560
Work in process343384
Finished product1,8141,816
Inventories$2,667$2,760

At December 29, 2018, inventories excluded amounts classified as held for sale. See Note 5, Acquisitions and Divestitures, for additional information. Additionally, inventories at December 30, 2017 reflect the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

Note 9. Property, Plant and Equipment

Property, plant and equipment consisted of the following (in millions):

As Restated
December 29, 2018December 30, 2017
Land$218$250
Buildings and improvements2,3752,232
Equipment and other5,9045,323
Construction in progress1,1651,345
9,6629,150
Accumulated depreciation(2,584)(2,089)
Property, plant and equipment, net$7,078$7,061

At December 29, 2018, property, plant and equipment, net, excluded amounts classified as held for sale. See Note 5, Acquisitions and Divestitures, for additional information. Additionally, property, plant and equipment balances at December 30, 2017 reflect the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

Note 10. Goodwill and Intangible Assets

Goodwill:

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

United StatesCanadaEMEARest of WorldTotal
Balance at December 30, 2017 (As Restated)$33,701$5,246$3,238$2,640$44,825
Impairment losses(4,104)(1,947)—(957)(7,008)
Reclassified to assets held for sale—(496)—(173)(669)
Acquisitions—16—2541
Translation adjustments and other—(381)(164)(141)(686)
Balance at December 29, 2018$29,597$2,438$3,074$1,394$36,503

Goodwill at December 30, 2017 reflects the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

In the first quarter of 2018, we reorganized our segment structure to move our Middle East and Africa businesses from the Rest of World segment to the EMEA reportable segment. We have reflected this change in all historical periods presented. Accordingly, the segment goodwill balances at December 30, 2017 reflect an increase of $179 million in EMEA and a corresponding decrease in Rest of World. This change did not have a material impact on our current or any prior period results. See Note 22, Segment Reporting, for additional information.

See Note 5, Acquisitions and Divestitures, for additional information related to our acquisitions in 2018, as well as assets held for sale at December 29, 2018 related to the Canada Natural Cheese Transaction and the Heinz India Transaction.

Our goodwill balance consists of 20 reporting units and had an aggregate carrying amount of $36.5 billion as of December 29, 2018. We test our reporting units for impairment annually as of the first day of our second quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We performed our 2018 annual impairment test as of April 1, 2018. We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units. As a result of our 2018 annual impairment test, we recognized a non-cash impairment loss of $133 million in SG&A related to our Australia and New Zealand reporting unit within our Rest of World segment primarily due to anticipated and sustained margin declines in the region. The goodwill carrying amount of this reporting unit was $509 million prior to its impairment.

For the fourth quarter of 2018, in connection with the preparation of our year-end financial statements, we assessed the changes in circumstances that occurred during the quarter to determine if it was more likely than not that the fair values of any reporting units were below their carrying amounts. Although our annual impairment test is performed during the second quarter, we perform this qualitative assessment each interim reporting period.

While there was no single determinative event or factor, the consideration in totality of several factors that developed during the fourth quarter of 2018 led us to conclude that it was more likely than not that the fair values of seven of our 20 reporting units, including U.S. Grocery, U.S. Refrigerated, Canada Retail, Australia and New Zealand, Northeast Asia, Southeast Asia, and Other Latin America, were below their carrying amounts. These factors included: (i) a sustained decrease in our share price in November and December of 2018, which reduced our market capitalization below the book value of net assets; (ii) the completion of our fourth quarter results, which were below management’s expectations due to several factors such as higher than expected supply chain costs and increased competition; (iii) the development and approval of our 2019 annual operating plan in December 2018, which provided additional insights into expectations and priorities for the coming years, such as lower growth and margin expectations; (iv) the announcement in November 2018 to sell certain assets in our natural cheese portfolio in Canada, which changed the composition and use of the remaining assets and brands in the associated reporting unit; (v) fluctuations in foreign exchange rates in certain countries; (vi) increased interest rates in certain locations, including an increase in the United States in December 2018; and (vii) increased and prolonged economic and regulatory uncertainty in the United States and global economies as of the end of December 2018.

As we determined that it was more likely than not that the fair values of these seven reporting units were below their carrying amounts, we performed an interim impairment test on these reporting units as of December 29, 2018. After assessing the totality of circumstances, we determined that each of the remaining 13 reporting units was unlikely to have a fair value below carrying amount.

As a result of our interim test, we recognized a non-cash impairment loss of $6.9 billion in SG&A related to five reporting units, including U.S. Refrigerated, Canada Retail, Southeast Asia, Northeast Asia, and Other Latin America. The other two reporting units we tested were determined to not be impaired. We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units. Drivers of these impairment losses, by reporting unit, were as follows:

•We recognized a $4.1 billion impairment loss in our U.S. Refrigerated reporting unit within our United States segment due to revised 2019 base and future year margin expectations, primarily in the natural cheese and meats categories, and, to a lesser extent, expectations for lower long-term net sales growth in the natural and processed cheese categories. Changes in future year margin expectations were primarily driven by sustained increases in supply chain costs, expectations for lower pricing to maintain competitive positioning, and expectations for increased marketing investments, primarily in response to private label competition, as well as customer-driven packaging investments. Changes in expectations for lower long-term net sales growth were primarily due to sustained private label competition and anticipated trends in consumer preferences. Our revised expectations were based on the completion of our fourth quarter results, which were below management’s expectations, and the development of our 2019 annual operating plan in December 2018. Additionally, our revised expectations were based on the development of our global five-year operating plan, which commenced in November 2018 and we expect to be completed in 2019. The goodwill carrying amount of the U.S. Refrigerated reporting unit was $11.3 billion prior to its impairment.
•We recognized a $1.9 billion impairment loss in our Canada Retail reporting unit within our Canada segment due to lower positive net sales growth expectations and revised 2019 base and future year margin expectations, as well as the reassessment of our Canadian operations following the announcement in November to sell certain assets in our natural cheese portfolio in Canada. We revised our net sales growth expectations primarily due to our expected exit of the natural cheese category and expected declines in the coffee category (exclusive of our coffee business acquisition in Canada in 2018). Our revised expectations were based on the completion of our fourth quarter results, which were below management’s expectations, and the development of our 2019 annual operating plan in December 2018. Changes in future year margin expectations were primarily driven by sustained increases in supply chain costs and expectations for lower pricing to maintain competitive positioning. The goodwill carrying amount of the Canada Retail reporting unit was $4.0 billion prior to its impairment.
•We recognized a $315 million impairment loss in our Southeast Asia reporting unit within our Rest of World segment due to margin and net sales declines in the seafood and seasonal cordials categories and foreign exchange rate declines in Indonesia and Papua New Guinea. Our revised expectations were based on the completion of our fourth quarter results, which were below management’s expectations, and the development of our 2019 annual operating plan in December 2018. This impairment represents all of the goodwill of the Southeast Asia reporting unit.
•We recognized a $302 million impairment loss in our Northeast Asia reporting unit within our Rest of World segment due to margin and net sales declines as well as foreign exchange rate declines in Japan and Korea. Our revised expectations were based on the completion of our fourth quarter results, which were below management’s expectations, and the development of our 2019 annual operating plan in December 2018. The goodwill carrying amount of the Northeast Asia reporting unit was $391 million prior to its impairment.
•We recognized a $207 million impairment loss in our Other Latin America reporting unit within our Rest of World segment due to net sales and margin declines in the region. Our revised expectations were based on the completion of our fourth quarter results, which were below management’s expectations, and the development of our 2019 annual operating plan in December 2018. This impairment represents all of the goodwill of the Other Latin America reporting unit.

The goodwill carrying amounts associated with an additional four reporting units, which each had excess fair value over its carrying amount of 20% or less, were $18.5 billion for U.S. Grocery, $424 million for Latin America Exports, $404 million for Southeast Europe, and $367 million for Australia and New Zealand as of December 29, 2018.

Accumulated impairment losses to goodwill were $7.0 billion at December 29, 2018.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, income tax rates, discount rates, growth rates, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, change, or if management’s expectations or plans otherwise change, including as a result of the development of our global five-year operating plan, then one or more of our reporting units might become impaired in the future. Our reporting units that were impaired in 2018 were written down to their respective fair values resulting in zero excess fair value over carrying amount as of their latest 2018 impairment testing dates. Accordingly, these and other individual reporting units that have 20% or less excess fair value over carrying amount as of their latest testing date have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future. Reporting units with a heightened risk of future impairments had an aggregate goodwill carrying amount of $29.0 billion at December 29, 2018 and included: U.S. Grocery, U.S. Refrigerated, Canada Retail, Latin America Exports, Southeast Europe, Australia and New Zealand, and Northeast Asia. Of the $29.0 billion with a heightened risk of future impairments, $9.3 billion is attributable to reporting units with 0% excess fair value over carrying amount. Although the remaining reporting units have more than 20% excess fair value over carrying amount as of their latest 2018 impairment testing date, these amounts are also associated with the 2013 Heinz acquisition and the 2015 Merger and are recorded on the balance sheet at their estimated acquisition date fair values. Therefore, if any assumptions, estimates, or market factors change in the future, these amounts are also susceptible to impairments.

Indefinite-lived intangible assets:

Changes in the carrying amount of indefinite-lived intangible assets, which primarily consisted of trademarks, were (in millions):

Balance at December 30, 2017$53,655
Impairment losses(8,925)
Reclassified to assets held for sale(341)
Transfers to definite-lived intangible assets(72)
Translation adjustments(351)
Balance at December 29, 2018$43,966

Indefinite-lived intangible assets reclassified to assets held for sale included the Cracker Barrel trademark in Canada and Complan and Glucon-D trademarks in India. See Note 5, Acquisitions and Divestitures, for additional information on assets held for sale at December 29, 2018 related to the Canada Natural Cheese Transaction and the Heinz India Transaction.

Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $44.0 billion as of December 29, 2018. We test our brands for impairment annually as of the first day of our second quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a brand is less than its carrying amount. We performed our 2018 annual impairment test as of April 1, 2018. As a result of our 2018 annual impairment test, we recognized a non-cash impairment loss of $101 million in SG&A in the second quarter of 2018. This impairment loss was due to net sales and margin declines related to the Quero brand in Brazil, which was valued using the relief from royalty method. The impairment loss was recorded in our Rest of World segment, consistent with the ownership of the trademark.

In the third quarter of 2018, we recognized a non-cash impairment loss of $215 million in SG&A related to the Smart Ones brand, which was valued using the relief from royalty method. This impairment loss was primarily due to reduced future investment expectations and continued sales declines in the third quarter of 2018. The impairment loss was recorded in our United States segment, consistent with the ownership of the trademark. We transferred the remaining carrying amount of Smart Ones to definite-lived intangible assets due to a shift in future investments to other brands in the frozen and chilled foods category.

For the fourth quarter of 2018, in connection with the preparation of our year-end financial statements, we assessed the changes in circumstances that occurred during the quarter to determine if it was more likely than not that the fair values of any brands were below their carrying amounts. Although our annual impairment test is performed during the second quarter, we perform this qualitative assessment each interim reporting period.

While there was no single determinative event or factor, the consideration in totality of several factors that developed during the fourth quarter of 2018 led us to conclude that it was more likely than not that the fair values of six of our brands, including Kraft, Philadelphia, Oscar Mayer, Velveeta, Cool Whip, and ABC, were below their carrying amounts. These factors were the same fourth quarter circumstances outlined in the goodwill impairment discussion above. As we determined that it was more likely than not that the fair values of these six brands were below their carrying amounts, we performed an interim impairment test on these brands as of December 29, 2018. After assessing the totality of circumstances, we determined that each of the remaining brands was unlikely to have a fair value below its carrying amount.

As a result of our interim test, we recognized a non-cash impairment loss of $8.6 billion in SG&A related to five brands, including three that were valued using the excess earnings method (Kraft, Oscar Mayer, and Philadelphia) and two that were valued using the relief from royalty method (Velveeta and ABC). The other brand we tested was determined to not be impaired. The impairment losses for Kraft, Oscar Mayer, Philadelphia, and Velveeta were recorded in our United States segment, and the ABC impairment loss was recorded in our Rest of World segment, consistent with the ownership of each trademark. Drivers of these impairment losses, by brand, were as follows:

•We recognized a $4.3 billion impairment loss related to the Kraft brand, primarily due to lower long-term net sales growth expectations in the natural cheese category in the United States, lower net sales growth expectations in the processed cheese category in the United States and Canada, and the exit of the natural cheese category in Canada announced in November 2018. Changes in expectations for lower net sales growth were primarily due to distribution losses driven by sustained private label competition and anticipated trends in consumer preferences. Our revised expectations were based on the completion of our fourth quarter results, which were below management’s expectations, and the development of our 2019 annual operating plan in December 2018. Additionally, our revised expectations were based on the development of our global five-year operating plan, which commenced in November 2018 and we expect to be completed in 2019. The carrying amount of the Kraft brand was $15.9 billion prior to its impairment.
•We recognized a $3.3 billion impairment loss related to the Oscar Mayer brand, primarily due to revised 2019 annual and future margin expectations in the United States. Changes in future year margin expectations were primarily driven by sustained increases in supply chain costs, expectations for lower pricing to maintain competitive positioning, and expectations for increased marketing investments and customer-driven packaging investments. Our revised expectations were based on the completion of our fourth quarter results, which were below management’s expectations, and the development of our 2019 annual operating plan in December 2018. Additionally, our revised expectations were based on the development of our global five-year operating plan, which commenced in November 2018 and we expect to be completed in 2019. The carrying amount of the Oscar Mayer brand was $6.6 billion prior to its impairment.
•We recognized a $797 million impairment loss related to the Philadelphia brand, primarily due to revised 2019 annual and future margin expectations, and to a lesser extent, lower future positive net sales growth expectations in the United States. Changes in future year margin expectations were primarily driven by sustained increases in supply chain costs and expectations for lower pricing to maintain competitive positioning, as well as unfavorable changes in product mix and customer-driven packaging investments. Our revised expectations were based on the completion of our fourth quarter results, which were below management’s expectations, and the development of our 2019 annual operating plan in December 2018. Additionally, our revised expectations were based on the development of our global five-year operating plan, which commenced in November 2018 and we expect to be completed in 2019. The carrying amount of the Philadelphia brand was $6.7 billion prior to its impairment.
•We recognized a $168 million impairment loss related to the Velveeta brand, primarily due to expectations for lower long-term net sales growth due to anticipated trends in consumer preferences. The carrying amount of the Velveeta brand was $2.5 billion prior to its impairment.
•We recognized an $84 million impairment loss related to the ABC brand, primarily due to revised expectations of future net sales growth and margins in the seafood and seasonal cordials categories in Southeast Asia as well as foreign exchange rates in the regions in which this brand is sold. The carrying amount of the ABC brand was $357 million prior to its impairment.

The aggregate carrying amount associated with an additional six brands (Miracle Whip, Planters, A1, Cool Whip, Stove Top, and Quero), which each had excess fair value over its carrying amount of 20% or less, was $5.8 billion as of December 29, 2018.

As a result of our 2017 annual impairment testing, we recognized a non-cash impairment loss of $49 million in SG&A in the second quarter of 2017. This loss was due to continued declines in nutritional beverages in India. The loss was recorded in our EMEA segment as the related trademark is owned by an Italian subsidiary.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual brands requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, income tax considerations, discount rates, growth rates, royalty rates, contributory asset charges, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, change, or if management’s expectations or plans otherwise change, including as a result of the development of our global five-year operating plan, then one or more of our brands might become impaired in the future. Our brands that were impaired in 2018 were written down to their respective fair values resulting in zero excess fair value over carrying amount as of their latest 2018 impairment testing dates. Accordingly, these and other individual brands that have 20% or less excess fair value over carrying amount as of their latest testing date have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future. Brands with a heightened risk of future impairments had an aggregate carrying amount of $29.3 billion at December 29, 2018 and included: Kraft, Philadelphia, Oscar Mayer, Velveeta, Miracle Whip, Planters, A1, Cool Whip, Stove Top, ABC, and Quero. Of the $29.3 billion with a heightened risk of future impairments, $24.0 billion is attributable to brands with 0% excess fair value over carrying amount. Although the remaining brands have more than 20% excess fair value over carrying amount as of their latest 2018 impairment testing date, these amounts are also associated with the 2013 Heinz acquisition and the 2015 Merger and are recorded on the balance sheet at their estimated acquisition date fair values. Therefore, if any assumptions, estimates, or market factors change in the future, these amounts are also susceptible to impairments.

Definite-lived intangible assets:

Definite-lived intangible assets were (in millions):

As Restated
December 29, 2018December 30, 2017
GrossAccumulated AmortizationNetGrossAccumulated AmortizationNet
Trademarks$2,474$(402)$2,072$2,368$(287)$2,081
Customer-related assets4,097(681)3,4164,231(544)3,687
Other18(4)1414(5)9
$6,589$(1,087)$5,502$6,613$(836)$5,777

Definite-lived intangible asset balances at December 30, 2017 reflect the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

Amortization expense for definite-lived intangible assets was $290 million in 2018, $278 million in 2017, and $267 million in 2016. Aside from amortization expense, the changes in definite-lived intangible assets from December 30, 2017 to December 29, 2018 primarily reflect the reclassification to assets held for sale of $96 million, additions of $100 million related to purchase accounting for Cerebos, transfers of $72 million from indefinite-lived intangible assets, impairment losses of $3 million, and foreign currency. The impairment of definite-lived intangible assets in 2018 related to a trademark which had a carrying amount that was deemed not to be recoverable. This non-cash impairment loss was recognized in SG&A. Definite-lived intangible assets reclassified to assets held for sale included customer-related assets in Canada and India and certain trademarks, including P’Tit Quebec in Canada. See Note 5, Acquisitions and Divestitures, for additional information related to our acquisition of Cerebos in 2018, as well as our assets held for sale at December 29, 2018.

We estimate that amortization expense related to definite-lived intangible assets will be approximately $284 million in 2019 and approximately $274 million in each of the four fiscal years thereafter.

Note 11. Income Taxes

U.S. Tax Reform:

On December 22, 2017, U.S. Tax Reform legislation was enacted by the federal government. The legislation significantly changed U.S. tax laws by, among other things, lowering the federal corporate tax rate from 35.0% to 21.0%, effective January 1, 2018 and imposing a one-time toll charge on deemed repatriated earnings of foreign subsidiaries as of December 30, 2017. In addition, there were many new provisions, including changes to bonus depreciation, revised deductions for executive compensation and interest expense, a tax on global intangible low-taxed income (“GILTI”), the base erosion anti-abuse tax (“BEAT”), and a deduction for foreign-derived intangible income (“FDII”). While the corporate tax rate reduction was effective January 1, 2018, we accounted for this anticipated rate change in 2017, the period of enactment.

Staff Accounting Bulletin No. 118 issued by the SEC in December 2017 provided us with up to one year to finalize accounting for the impacts of U.S. Tax Reform and allowed for provisional estimates when actual amounts could not be determined. As of December 30, 2017, we had made estimates of our deferred income tax benefit related to the corporate rate change, the toll charge, certain components of the revaluation of deferred tax assets and liabilities, including depreciation and executive compensation, and a change in our indefinite reinvestment assertion. In connection with U.S. Tax Reform, we reassessed our international investment assertion and no longer consider the historic earnings of our foreign subsidiaries as of December 30, 2017 to be indefinitely reinvested. We made an estimate of local country withholding taxes that would be owed when our historic earnings are distributed. Additionally, we elected to account for the tax on GILTI as a period cost and thus did not adjust any of the deferred tax assets and liabilities of our foreign subsidiaries for U.S. Tax Reform.

Our initial accounting for U.S. Tax Reform as of December 30, 2017 resulted in a net tax benefit of approximately $7.0 billion, including an estimate of our deferred income tax benefit of approximately $7.5 billion related to the corporate rate change, which was partially offset by an estimate of $312 million for the toll charge and approximately $125 million for other tax expenses, including a change in our indefinite reinvestment assertion. Related to our indefinite reinvestment assertion change, we had recorded an estimate of deferred tax liabilities of $96 million on approximately $1.2 billion of historic earnings as of December 30, 2017.

In the first quarter of 2018, we recorded a measurement period adjustment to reduce income tax expense and reduce deferred tax liabilities each by approximately $20 million. We also recorded insignificant measurement period adjustments in the second, third, and fourth quarters of 2018.

As of December 29, 2018, we had finalized our accounting for U.S. Tax Reform. The final impact (the majority of which was recorded in 2017, the period of enactment) was a net tax benefit of approximately $7.1 billion, including a deferred tax benefit of approximately $7.5 billion related to the corporate rate change, partially offset by tax expense of $224 million related to the toll charge and $120 million for other tax expenses, including the deferred tax liability recorded for changing our indefinite reinvestment assertion. Related to our indefinite reinvestment assertion change, we had a deferred tax liability of $111 million on approximately $1.2 billion of historic earnings as of December 30, 2017.

Additionally, we recorded a deferred tax liability of $33 million as of December 29, 2018 to reflect our investment in an Indian subsidiary that is no longer considered to be indefinitely reinvested. At the same time, we reversed $28 million of deferred tax liabilities related to local withholding tax obligations. As of December 29, 2018, we have recorded a deferred tax liability of $78 million on $1.2 billion of historic earnings related to local withholding taxes that will be owed when this cash is distributed.

We consider the unremitted current year earnings of certain international subsidiaries that impose local country taxes on dividends to be indefinitely reinvested. For those undistributed earnings considered to be indefinitely reinvested, our intent is to reinvest these funds in our international operations, and our current plans do not demonstrate a need to repatriate the accumulated earnings to fund our U.S. cash requirements. The amount of unrecognized deferred tax liabilities for local country withholding taxes that would be owed related to our current year earnings of certain international subsidiaries is approximately $20 million.

Provision for/(Benefit from) Income Taxes:

Income/(loss) before income taxes and the provision for/(benefit from) income taxes, consisted of the following (in millions):

As Restated
December 29, 2018December 30, 2017December 31, 2016
Income/(loss) before income taxes:
United States$(10,305)$3,811$3,271
International(1,016)1,6391,668
Total$(11,321)$5,450$4,939
Provision for/(benefit from) income taxes:
Current:
U.S. federal$444$765$1,085
U.S. state and local134(47)82
International322295238
9001,0131,405
Deferred:
U.S. federal(1,843)(6,590)(11)
U.S. state and local(121)97(63)
International(3)(2)2
(1,967)(6,495)(72)
Total provision for/(benefit from) income taxes$(1,067)$(5,482)$1,333

Tax benefits related to the exercise of stock options and other equity instruments recorded directly to additional paid-in capital totaled $30 million in 2016. In the first quarter of 2017, we prospectively adopted ASU 2016-09. We now record tax benefits related to the exercise of stock options and other equity instruments within our tax provision, rather than within equity. Accordingly, we recognized a tax benefit in our statements of income of $12 million in 2018 and $22 million in 2017 related to tax benefits upon the exercise of stock options and other equity instruments.

Effective Tax Rate:

The effective tax rate on income/(loss) before income taxes differed from the U.S. federal statutory tax rate for the following reasons:

As Restated
December 29, 2018December 30, 2017December 31, 2016
U.S. federal statutory tax rate21.0%35.0%35.0%
Tax on income of foreign subsidiaries3.4%(4.8)%(3.6)%
Domestic manufacturing deduction—%(1.5)%(2.0)%
U.S. state and local income taxes, net of federal tax benefit1.6%1.1%0.8%
Tax exempt income—%(0.7)%(3.4)%
Deferred tax effect of statutory tax rate changes(0.9)%0.3%(2.0)%
Audit settlements and changes in uncertain tax positions(0.3)%(0.2)%1.9%
Venezuela nondeductible devaluation loss(0.4)%—%0.3%
U.S. Tax Reform discrete income tax benefit0.5%(129.0)%—%
Global intangible low-taxed income(0.5)%—%—%
Goodwill impairment(15.1)%—%—%
Wind-up of non-U.S. pension plans(0.4)%—%—%
Other0.5%(0.8)%—%
Effective tax rate9.4%(100.6)%27.0%

The provision for income taxes consists of provisions for federal, state, and foreign income taxes. We operate in an international environment; accordingly, the consolidated effective tax rate is a composite rate reflecting the earnings in various locations and the applicable tax rates. Additionally, the calculation of the percentage point impact of U.S. Tax Reform, tax exempt income, and other items on the effective tax rate shown in the table above are affected by income/(loss) before income taxes. Fluctuations in the amount of income generated across locations around the world could impact comparability of reconciling items between periods. Additionally, small movements in tax rates due to a change in tax law or a change in tax rates that causes us to revalue our deferred tax balances produces volatility in our effective tax rate.

The 2018 effective tax rate was lower, primarily due to a decrease in the U.S. federal statutory rate, non-deductible items (including goodwill impairments, nonmonetary currency devaluation losses, and the wind-up of non-U.S. pension plans), the impact of the federal tax on GILTI, and the revaluation of our deferred tax balances due to changes in state tax laws following U.S. Tax Reform, which were partially offset by the benefit from intangible asset impairment losses in the fourth quarter of 2018. See Note 10, Goodwill and Intangible Assets, for additional information related to our impairment losses in the fourth quarter of 2018.

The tax provision for the 2017 tax year benefited from U.S. Tax Reform enacted on December 22, 2017. The related income tax benefit of 129.0% in 2017 primarily reflects adjustments to our deferred tax positions for the lower federal income tax rate, partially offset by our provision for the one-time toll charge.

The tax provision for the 2016 tax year included a benefit related to the tax effect of statutory tax rate changes, including 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.

Deferred Income Tax Assets and Liabilities:

The tax effects of temporary differences and carryforwards that gave rise to deferred income tax assets and liabilities consisted of the following (in millions):

As Restated
December 29, 2018December 30, 2017
Deferred income tax liabilities:
Intangible assets, net$11,571$13,567
Property, plant and equipment, net735676
Other410288
Deferred income tax liabilities12,71614,531
Deferred income tax assets:
Benefit plans(172)(212)
Other(470)(422)
Deferred income tax assets(642)(634)
Valuation allowance8180
Net deferred income tax liabilities$12,155$13,977

At December 29, 2018, deferred income tax liabilities excluded amounts classified as held for sale. See Note 5, Acquisitions and Divestitures, for additional information.

The decrease in deferred tax liabilities from December 30, 2017 to December 29, 2018 was primarily driven by intangible asset impairment losses recorded in the fourth quarter of 2018. See Note 10, Goodwill and Intangible Assets, for additional information.

At December 29, 2018, foreign operating loss carryforwards totaled $307 million. Of that amount, $26 million expire between 2019 and 2038; the other $281 million do not expire. We have recorded $86 million of deferred tax assets related to these foreign operating loss carryforwards. Deferred tax assets of $90 million have been recorded for U.S. state and local operating loss carryforwards. These losses expire between 2019 and 2038.

Uncertain Tax Positions:

At December 29, 2018, our unrecognized tax benefits for uncertain tax positions were $387 million. If we had recognized all of these benefits, the impact on our effective tax rate would have been $352 million. It is reasonably possible that our unrecognized tax benefits will decrease by as much as $54 million in the next 12 months primarily due to the progression of federal, state, and foreign audits in process. Our unrecognized tax benefits for uncertain tax positions are included in income taxes payable and other non-current liabilities on our consolidated balance sheets.

The changes in our unrecognized tax benefits were (in millions):

December 29, 2018December 30, 2017December 31, 2016
Balance at the beginning of the period$408$389$353
Increases for tax positions of prior years9259
Decreases for tax positions of prior years(81)(35)(18)
Increases based on tax positions related to the current year7413562
Decreases due to settlements with taxing authorities(3)(59)(62)
Decreases due to lapse of statute of limitations(10)(24)(5)
Reclassified to liabilities held for sale(10)——
Balance at the end of the period$387$408$389

Our unrecognized tax benefits decreased during 2018 mainly as a result of audit settlements with federal, state, and foreign taxing authorities and statute of limitations expirations. Our unrecognized tax benefits increased during 2017 as a result of evaluating tax positions taken or expected to be taken on our federal, state, and foreign income tax returns.

In 2016, we reached an agreement with the IRS resolving all Kraft open matters related to the audits of taxable years 2012 through 2014. This settlement reduced our reserves for uncertain tax positions and resulted in a non-cash tax benefit of $42 million.

We include interest and penalties related to uncertain tax positions in our tax provision. Our provision for/(benefit from) income taxes included a $5 million expense in 2018, $24 million benefit in 2017, and $8 million expense in 2016 related to interest and penalties. Accrued interest and penalties were $62 million as of December 29, 2018 and $57 million as of December 30, 2017.

Other Income Tax Matters:

In the normal course of business, we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Canada, Italy, the Netherlands, the United Kingdom, and the United States. As of December 29, 2018, we have substantially concluded all national income tax matters through 2016 for the Netherlands, through 2014 for the United States, through 2012 for the United Kingdom, through 2011 for Australia, Canada, and Italy. We have substantially concluded all state income tax matters through 2007. Additionally, as of April 2019, we had substantially concluded all national income tax matters through 2015 for the United States.

We have a tax sharing agreement with Mondelēz International, Inc. (“Mondelēz International”), which generally provides that (i) we are liable for U.S. state income taxes and Canadian federal and provincial income taxes for Kraft periods prior to October 1, 2012 and (ii) Mondelēz International is responsible for U.S. federal income taxes and substantially all non-U.S. income taxes, excluding Canadian income taxes, for Kraft periods prior to October 1, 2012.

Kraft's U.S. operations were included in Mondelēz International's U.S. federal consolidated income tax returns for tax periods through October 1, 2012. In December 2016, Mondelēz International reached a final resolution on a U.S. federal income tax audit of the 2010-2012 tax years. As noted above, we are indemnified for U.S. federal income taxes related to these periods.

Note 12. Employees’ Stock Incentive Plans

We grant equity awards, including stock options, restricted stock units (“RSUs”), and performance share units (“PSUs”), to select employees to provide long-term performance incentives to our employees. As a result of the failure to remain current in our reporting requirements with the SEC, we are not currently eligible to use Form S-8 registration statements.

Stock Plans

We had activity related to equity awards from the following plans in 2018, 2017, and 2016:

2016 Omnibus Incentive Plan:

In April 2016, our Board of Directors approved the 2016 Omnibus Incentive Plan (“2016 Omnibus Plan”), which authorized grants of options, stock appreciation rights, RSUs, deferred stock, performance awards, investment rights, other stock-based awards, and cash-based awards. This plan authorizes the issuance of up to 18 million shares of our common stock. Equity awards granted under the 2016 Omnibus Plan generally have a five-year cliff vest period, and non-qualified stock options have a maximum exercise term of 10 years. Equity awards granted under the 2016 Omnibus Plan since inception include non-qualified stock options, RSUs, and PSUs.

2013 Omnibus Incentive Plan:

Prior to approval of the 2016 Omnibus Plan, we issued non-qualified stock options to select employees under the 2013 Omnibus Incentive Plan (“2013 Omnibus Plan”). As a result of the 2015 Merger, each outstanding Heinz stock option was converted into 0.443332 of a Kraft Heinz stock option. Following this conversion, the 2013 Omnibus Plan authorized the issuance of up to 17,555,947 shares of our common stock. Non-qualified stock options awarded under the 2013 Omnibus Plan have a five-year cliff vest period and a maximum exercise term of 10 years. These non-qualified stock options will continue to vest and become exercisable in accordance with the terms and conditions of the 2013 Omnibus Plan and the relevant award agreements.

Kraft 2012 Performance Incentive Plan:

Prior to the 2015 Merger, Kraft issued equity-based awards, including stock options and RSUs, under its 2012 Performance Incentive Plan. As a result of the 2015 Merger, each outstanding Kraft stock option was converted into an option to purchase a number of shares of our common stock based upon an option adjustment ratio, and each outstanding Kraft RSU was converted into one Kraft Heinz RSU. These Kraft Heinz equity awards will continue to vest and become exercisable in accordance with the terms and conditions that were applicable immediately prior to the completion of the 2015 Merger. These options generally become exercisable in three annual installments beginning on the first anniversary of the original grant date, and have a maximum exercise term of 10 years. RSUs generally cliff vest on the third anniversary of the original grant date. In accordance with the terms of the 2012 Performance Incentive Plan, vesting generally accelerates for holders of Kraft awards who are terminated without cause within two years of the 2015 Merger Date.

In addition, prior to the 2015 Merger, Kraft issued performance-based, long-term incentive awards (“Performance Shares”), which vested based on varying performance, market, and service conditions. In connection with the 2015 Merger, all outstanding Performance Shares were converted into cash awards, payable in two installments: (i) a 2015 pro-rata payment based upon the portion of the Performance Share cycle completed prior to the 2015 Merger and (ii) the remaining value of the award to be paid on the earlier of the first anniversary of the closing of the 2015 Merger and a participant's termination without cause.

Stock Options

We use the Black-Scholes model to estimate the fair value of stock option grants. Our weighted average Black-Scholes fair value assumptions were:

December 29, 2018December 30, 2017December 31, 2016
Risk-free interest rate2.75%2.25%1.63%
Expected term7.5 years7.5 years7.5 years
Expected volatility21.3%19.6%22.0%
Expected dividend yield3.6%2.8%3.1%
Weighted average grant date fair value per share$10.26$14.24$12.48

The risk-free interest rate represented the constant maturity U.S. Treasury rate in effect at the grant date, with a remaining term equal to the expected life of the options. The expected life is the period over which our employees are expected to hold their options. Due to the lack of historical data, we calculated expected life using the Safe Harbor method, which uses the weighted average vesting period and the contractual term of the options. In 2018, we estimated volatility using a blended volatility approach of term-matched historical volatility from our daily stock prices and weighted average implied volatility. In 2017 and 2016, we estimated volatility using a blended approach of implied volatility and peer volatility. We calculated peer volatility as the average of the term-matched, leverage-adjusted historical volatilities of Colgate-Palmolive Co., The Coca-Cola Company, Mondelēz International, Altria Group, Inc., PepsiCo, Inc., and Unilever plc. We estimated the expected dividend yield using the quarterly dividend divided by the three-month average stock price, annualized and continuously compounded.

Our stock option activity and related information was:

Number of Stock OptionsWeighted Average Exercise Price (per share)Aggregate Intrinsic Value (in millions)Average Remaining Contractual Term
Outstanding at December 30, 201719,289,564$41.63
Granted2,143,73064.37
Forfeited(1,136,924)61.10
Exercised(2,036,405)27.68
Outstanding at December 29, 201818,259,96544.64$1686 years
Exercisable at December 29, 201810,492,04833.481244 years

The aggregate intrinsic value of stock options exercised during the period was $67 million in 2018, $124 million in 2017, and $186 million in 2016.

Cash received from options exercised was $56 million in 2018, $66 million in 2017, and $140 million in 2016. The tax benefit realized from stock options exercised was $23 million in 2018, $44 million in 2017, and $68 million in 2016.

Our unvested stock options and related information was:

Number of Stock OptionsWeighted Average Grant Date Fair Value (per share)
Unvested options at December 30, 201711,827,142$8.36
Granted2,143,73010.26
Vested(5,135,897)5.99
Forfeited(1,067,058)10.45
Unvested options at December 29, 20187,767,91710.16

Restricted Stock Units

RSUs represent a right to receive one share or the value of one share upon the terms and conditions set forth in the plan and the applicable award agreement.

We used the stock price on the grant date to estimate the fair value of our RSUs. Certain of our RSUs are not dividend-eligible. We discounted the fair value of these RSUs based on the dividend yield. Dividend yield was estimated using the quarterly dividend divided by the three-month average stock price, annualized and continuously compounded. The grant date fair value of RSUs is amortized to expense over the vesting period.

The weighted average grant date fair value per share of our RSUs granted during the year was $58.59 in 2018, $91.25 in 2017, and $77.53 in 2016. Our expected dividend yield was 3.31% in 2018. All RSUs granted in 2017 and 2016 were dividend-eligible.

Our RSU activity and related information was:

Number of UnitsWeighted Average Grant Date Fair Value (per share)
Outstanding at December 30, 20171,284,262$81.91
Granted1,443,08858.59
Forfeited(253,249)77.42
Vested(135,143)73.57
Outstanding at December 29, 20182,338,95868.49

The aggregate fair value of RSUs that vested during the period was $9 million in 2018, $12 million in 2017, and $40 million in 2016.

Performance Share Units

PSUs represent a right to receive one share or the value of one share upon the terms and conditions set forth in the plan and the applicable award agreement and are subject to achievement or satisfaction of performance conditions specified by the Compensation Committee of our Board of Directors.

We used the stock price on the grant date to estimate the fair value of our PSUs. None of our PSUs are dividend-eligible; therefore, we discounted the fair value of our PSUs based on the dividend yield. Dividend yield was estimated using the quarterly dividend divided by the three-month average stock price, annualized and continuously compounded. The grant date fair value of PSUs is amortized to expense over the vesting period. We adjust the expense based on the likelihood of future achievement of performance metrics.

The weighted average grant date fair value per share of our PSUs granted during the year was $56.31 in 2018 and $79.85 in 2017. Our expected dividend yield was 3.31% in 2018 and 2.73% in 2017. There were no PSUs granted in 2016.

Our PSU activity and related information was:

Number of UnitsWeighted Average Grant Date Fair Value (per share)
Outstanding at December 30, 2017815,383$70.16
Granted2,730,13056.31
Forfeited(293,457)62.28
Outstanding at December 29, 20183,252,05659.24

Total Equity Awards

Equity award compensation cost and the related tax benefit was (in millions):

December 29, 2018December 30, 2017December 31, 2016
Pre-tax compensation cost$33$46$46
Related tax benefit(7)(14)(15)
After-tax compensation cost$26$32$31

Unrecognized compensation cost related to unvested equity awards was $149 million at December 29, 2018 and is expected to be recognized over a weighted average period of four years.

Note 13. Postemployment Benefits

As noted above, as a result of the failure to remain current in our reporting requirements with the SEC, we are not currently eligible to use Form S-8 registration statements. As a result, on April 23, 2019, the administrator of the Kraft Heinz Savings Plan and the Kraft Heinz Union Savings Plan (collectively, the “Plan”) issued a notice to Plan participants advising participants of a blackout period during which participants are prohibited from acquiring beneficial ownership of additional interests in The Kraft Heinz Company Stock Fund. If we are not able to become and remain current in our reporting requirements with the SEC, it restricts our ability to maintain The Kraft Heinz Company Stock Fund or issue other equity securities to our employees.

We maintain various retirement plans for the majority of our employees. Current defined benefit pension plans are provided primarily for certain domestic union and foreign employees. Local statutory requirements govern many of these plans. The pension benefits of our unionized workers are in accordance with the applicable collective bargaining agreement covering their employment. Defined contribution plans are provided for certain domestic unionized, non-union hourly, and salaried employees as well as certain employees in foreign locations.

We provide health care and other postretirement benefits to certain of our eligible retired employees and their eligible dependents. Certain of our U.S. and Canadian employees may become eligible for such benefits. We may modify plan provisions or terminate plans at our discretion. The postretirement benefits of our unionized workers are in accordance with the applicable collective bargaining agreement covering their employment.

We remeasure our postemployment benefit plans at least annually.

We capitalize a portion of net pension and postretirement cost/(benefit) into inventory based on our production activities. Beginning January 1, 2018, only the service cost component of net pension and postretirement cost/(benefit) is capitalized into inventory. As part of the adoption of ASU 2017-07 in the first quarter of 2018, we recognized a one-time favorable credit of $42 million within cost of products sold related to amounts that were previously capitalized into inventory. Included in this credit was $28 million related to prior service credits that were previously capitalized to inventory.

Pension Plans

In 2018, we settled our Canadian salaried and Canadian hourly defined benefit pension plans, which resulted in settlement charges of $162 million for the year ended December 29, 2018. Additionally, the settlement of these plans impacted the projected benefit obligation, accumulated benefit obligation, fair value of plan assets, and service costs associated with our non-U.S. pension plans.

We had approved the wind-up of the Canadian salaried and Canadian hourly defined benefit pension plans in 2016, and the wind-up was effective on December 31, 2016. This action resulted in an increase to our projected benefit obligations of approximately $85 million at December 31, 2016. This action had no impact on the consolidated statements of income or consolidated statements of cash flows for the year ended December 31, 2016.

Obligations and Funded Status:

The projected benefit obligations, fair value of plan assets, and funded status of our pension plans were (in millions):

U.S. PlansNon-U.S. Plans
December 29, 2018December 30, 2017December 29, 2018December 30, 2017
Benefit obligation at beginning of year$4,719$5,157$3,464$3,099
Service cost10111919
Interest cost1581786766
Benefits paid(191)(224)(126)(161)
Actuarial losses/(gains)(447)270(118)120
Plan amendments1—14(2)
Currency——(175)264
Settlements(190)(692)(1,221)(1)
Curtailments——(1)—
Special/contractual termination benefits—1979
Other———51
Benefit obligation at end of year4,0604,7191,9303,464
Fair value of plan assets at beginning of year4,7854,7884,1563,628
Actual return on plan assets(185)61349289
Employer contributions—3005730
Benefits paid(191)(224)(126)(161)
Currency——(221)322
Settlements(190)(692)(1,221)(1)
Other——(5)49
Fair value of plan assets at end of year4,2194,7852,6894,156
Net pension liability/(asset) recognized at end of year$(159)$(66)$(759)$(692)

The accumulated benefit obligation, which represents benefits earned to the measurement date, was $4.1 billion at December 29, 2018 and $4.7 billion at December 30, 2017 for the U.S. pension plans. The accumulated benefit obligation for the non-U.S. pension plans was $1.7 billion at December 29, 2018 and $3.3 billion at December 30, 2017.

The combined U.S. and non-U.S. pension plans resulted in net pension assets of $918 million at December 29, 2018 and $758 million at December 30, 2017. We recognized these amounts on our consolidated balance sheets as follows (in millions):

December 29, 2018December 30, 2017
Other non-current assets$999$871
Other current liabilities(4)(41)
Accrued postemployment costs(77)(72)
Net pension asset/(liability) recognized$918$758

For certain of our U.S. and non-U.S. plans that were underfunded based on accumulated benefit obligations in excess of plan assets, the projected benefit obligations, accumulated benefit obligations, and the fair value of plan assets were (in millions):

U.S. PlansNon-U.S. Plans
December 29, 2018December 30, 2017December 29, 2018December 30, 2017
Projected benefit obligation$—$—$146$1,368
Accumulated benefit obligation——1391,360
Fair value of plan assets——651,254

All of our U.S. plans were overfunded based on plan assets in excess of accumulated benefit obligations as of December 29, 2018 and December 30, 2017.

For certain of our U.S. and non-U.S. plans that were underfunded based on projected benefit obligations in excess of plan assets, the projected benefit obligations, accumulated benefit obligations, and the fair value of plan assets were (in millions):

U.S. PlansNon-U.S. Plans
December 29, 2018December 30, 2017December 29, 2018December 30, 2017
Projected benefit obligation$—$—$148$1,400
Accumulated benefit obligation——1411,392
Fair value of plan assets——671,287

All of our U.S. plans were overfunded based on plan assets in excess of projected benefit obligations as of December 29, 2018 and December 30, 2017.

We used the following weighted average assumptions to determine our projected benefit obligations under the pension plans:

U.S. PlansNon-U.S. Plans
December 29, 2018December 30, 2017December 29, 2018December 30, 2017
Discount rate4.4%3.7%2.9%2.4%
Rate of compensation increase4.1%4.1%3.9%3.9%

Discount rates for our U.S. and non-U.S. plans were developed from a model portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the plans.

Components of Net Pension Cost/(Benefit):

Net pension cost/(benefit) consisted of the following (in millions):

U.S. PlansNon-U.S. Plans
December 29, 2018December 30, 2017December 31, 2016December 29, 2018December 30, 2017December 31, 2016
Service cost$10$11$13$19$19$25
Interest cost158178203676687
Expected return on plan assets(247)(262)(290)(175)(180)(182)
Amortization of unrecognized losses/(gains)———21—
Settlements(4)223158—2
Curtailments———(1)——
Special/contractual termination benefits—19—793
Other—2——(15)—
Net pension cost/(benefit)$(83)$(50)$(51)$77$(100)$(65)

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

We used the following weighted average assumptions to determine our net pension costs:

U.S. PlansNon-U.S. Plans
December 29, 2018December 30, 2017December 31, 2016December 29, 2018December 30, 2017December 31, 2016
Discount rate - Service cost3.8%4.2%4.5%3.0%3.2%4.2%
Discount rate - Interest cost3.6%3.6%3.5%2.9%2.1%3.3%
Expected rate of return on plan assets5.5%5.7%5.7%4.5%4.8%5.6%
Rate of compensation increase4.1%4.1%4.1%3.9%4.0%3.4%

Discount rates for our U.S. and non-U.S. plans were developed from a model portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the plans. We determine our expected rate of return on plan assets from the plan assets' historical long-term investment performance, target asset allocation, and estimates of future long-term returns by asset class.

Plan Assets:

The underlying basis of the investment strategy of our defined benefit plans is to ensure that pension funds are available to meet the plans’ benefit obligations when they are due. Our investment objectives include: investing plan assets in a high-quality, diversified manner in order to maintain the security of the funds; achieving an optimal return on plan assets within specified risk tolerances; and investing according to local regulations and requirements specific to each country in which a defined benefit plan operates. The investment strategy expects equity investments to yield a higher return over the long term than fixed-income securities, while fixed-income securities are expected to provide certain matching characteristics to the plans’ benefit payment cash flow requirements. Our investment policy specifies the type of investment vehicles appropriate for the applicable plan, asset allocation guidelines, criteria for the selection of investment managers, procedures to monitor overall investment performance as well as investment manager performance. It also provides guidelines enabling the applicable plan fiduciaries to fulfill their responsibilities.

Our weighted average asset allocations were:

U.S. PlansNon-U.S. Plans
December 29, 2018December 30, 2017December 29, 2018December 30, 2017
Fixed-income securities84%62%45%39%
Equity securities14%27%34%27%
Cash and cash equivalents2%11%16%4%
Real estate—%—%3%6%
Certain insurance contracts—%—%2%24%
Total100%100%100%100%

Our pension investment strategy for U.S. plans is designed to align our pension assets with our projected benefit obligation to reduce volatility by targeting an investment of approximately 85% of our U.S. plan assets in fixed-income securities and approximately 15% in return-seeking assets, primarily equity securities.

For pension plans outside the United States, our investment strategy is subject to local regulations and the asset/liability profiles of the plans in each individual country. In aggregate, the long-term asset allocation targets of our non-U.S. plans are broadly characterized as a mix of approximately 65% fixed-income securities and annuity contracts, and approximately 35% in return-seeking assets, primarily equity securities and real estate.

The fair value of pension plan assets at December 29, 2018 was determined using the following fair value measurements (in millions):

Asset CategoryTotal Fair ValueQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Corporate bonds and other fixed-income securities$3,089$—$3,089$—
Government bonds366366——
Total fixed-income securities3,4553663,089—
Equity securities665665——
Cash and cash equivalents4224193—
Real estate79——79
Certain insurance contracts53——53
Fair value excluding investments measured at net asset value4,6741,4503,092132
Investments measured at net asset value(a)2,234
Total plan assets at fair value$6,908
(a)Amount includes cash collateral of $269 million associated with our securities lending program, which is reflected as an asset, and a corresponding securities lending payable of $269 million, which is reflected as a liability. The net impact on total plan assets at fair value is zero.

The fair value of pension plan assets at December 30, 2017 was determined using the following fair value measurements (in millions):

Asset CategoryTotal Fair ValueQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Corporate bonds and other fixed-income securities$2,606$—$2,606$—
Government bonds467467——
Total fixed-income securities3,0734672,606—
Equity securities1,0441,044——
Cash and cash equivalents2082053—
Real estate262——262
Certain insurance contracts983——983
Fair value excluding investments measured at net asset value5,5701,7162,6091,245
Investments measured at net asset value(a)3,371
Total plan assets at fair value$8,941
(a)Amount includes cash collateral of $278 million associated with our securities lending program, which is reflected as an asset, and a corresponding securities lending payable of $278 million, which is reflected as a liability. The net impact on total plan assets at fair value is zero.

The following section describes the valuation methodologies used to measure the fair value of pension plan assets, including an indication of the level in the fair value hierarchy in which each type of asset is generally classified.

Corporate Bonds and Other Fixed-Income Securities. These securities consist of publicly traded U.S. and non-U.S. fixed interest obligations (principally corporate bonds). Such investments are valued through consultation and evaluation with brokers in the institutional market using quoted prices and other observable market data. As such, these securities are included in Level 2.

Government Bonds. These securities consist of direct investments in publicly traded U.S. fixed interest obligations (principally debentures). Such investments are valued using quoted prices in active markets. These securities are included in Level 1.

Equity Securities. These securities consist of direct investments in the stock of publicly traded companies. Such investments are valued based on the closing price reported in an active market on which the individual securities are traded. As such, the direct investments are classified as Level 1.

Cash and Cash Equivalents. This consists of direct cash holdings and institutional short-term investment vehicles. Direct cash holdings are valued based on cost, which approximates fair value and are classified as Level 1. Certain institutional short-term investment vehicles are valued daily and are classified as Level 1. Other cash equivalents that are not traded on an active exchange, such as bank deposits, are classified as Level 2.

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

Certain Insurance Contracts. This category consists of group annuity contracts that have been purchased to cover a portion of the plan members and have been classified as Level 3.

Investments Measured at Net Asset Value. This category consists of pooled funds, short-term investments and partnership/corporate feeder interests.

•Pooled funds. The fair values of participation units held in collective trusts are based on their net asset values, as reported by the managers of the collective trusts and as supported by the unit prices of actual purchase and sale transactions occurring as of or close to the financial statement date. The fair value of these investments measured at net asset value is excluded from the fair value hierarchy. Investments in the collective trusts can be redeemed on each business day based upon the applicable net asset value per unit. Investments in the international large/mid cap equity collective trust can be redeemed on the last business day of each month and at least one business day during the month.

The mutual fund investments are not traded on an exchange, and a majority of these funds are held in a separate account managed by a fixed income manager. The fair values of these investments are based on their net asset values, as reported by the managers and as supported by the unit prices of actual purchase and sale transactions occurring as of or close to the financial statement date. The fair value of these investments measured at net asset value is excluded from the fair value hierarchy. The objective of the account is to provide superior return with reasonable risk, where performance is expected to exceed Barclays Long U.S. Credit Index. Investments in this account can be redeemed with a written notice to the investment manager.

•Short-term investments. Short-term investments largely consist of a money market fund, the fair value of which is based on the net asset value reported by the manager of the fund and supported by the unit prices of actual purchase and sale transactions. The fair value of these investments measured at net asset value is excluded from the fair value hierarchy. The money market fund is designed to provide safety of principal, daily liquidity, and a competitive yield by investing in high quality money market instruments. The investment objective of the money market fund is to provide the highest possible level of current income while still maintaining liquidity and preserving capital.
•Partnership/corporate feeder interests. Fair value estimates of the equity partnership are based on their net asset values, as reported by the manager of the partnership. The fair value of these investments measured at net asset value is excluded from the fair value hierarchy. Investments in the equity partnership may be redeemed once per month upon 10 days’ prior written notice to the General Partner, subject to the discretion of the General Partner. The investment objective of the equity partnership is to seek capital appreciation by investing primarily in equity securities.

The fair values of the corporate feeder are based upon the net asset values of the equity master fund in which it invests. The fair value of these investments measured at net asset value is excluded from the fair value hierarchy. Investments in the corporate feeder can be redeemed quarterly with at least 90 days’ notice. The investment objective of the corporate feeder is to generate long-term returns by investing in large, liquid equity securities with attractive fundamentals.

Changes in our Level 3 plan assets for the year ended December 29, 2018 included (in millions):

Asset CategoryDecember 30, 2017AdditionsNet Realized Gain/(Loss)Net Unrealized Gain/(Loss)Net Purchases, Issuances and SettlementsTransfers Into/(Out of) Level 3December 29, 2018
Real estate$262$—$49$(7)$(210)$(15)$79
Certain insurance contracts983—(82)(3)(845)—53
Total Level 3 investments$1,245$—$(33)$(10)$(1,055)$(15)$132

Net purchases, issuances and settlements of $845 million principally related to insurance contract settlements in Canada in connection with the wind-up of our Canadian salaried and hourly defined benefit pension plans.

Changes in our Level 3 plan assets for the year ended December 30, 2017 included (in millions):

Asset CategoryDecember 31, 2016AdditionsNet Realized Gain/(Loss)Net Unrealized Gain/(Loss)Net Purchases, Issuances and SettlementsTransfers Into/(Out of) Level 3December 30, 2017
Real estate$234$—$14$14$—$—$262
Certain insurance contracts189797—36(39)—983
Total Level 3 investments$423797$14$50$(39)$—$1,245

Additions of $797 million were principally related to insurance contracts entered into in Canada in connection with the wind-up of our Canadian salaried and hourly defined benefit pension plans.

Employer Contributions:

In 2018, we contributed $57 million to our non-U.S. pension plans. We did not contribute to our U.S. pension plans. We estimate that 2019 pension contributions will be approximately $15 million to our non-U.S. plans. We do not plan to make contributions to our U.S. pension plans in 2019. Our actual contributions and plans may change due to many factors, including changes in tax, employee benefit, or other laws and regulations, tax deductibility, significant differences between expected and actual pension asset performance or interest rates, or other factors.

Future Benefit Payments:

The estimated future benefit payments from our pension plans at December 29, 2018 were (in millions):

U.S. PlansNon-U.S. Plans
2019$331$70
202032070
202131772
202230980
202330179
2024-20281,351436

Postretirement Plans

Obligations and Funded Status:

The accumulated benefit obligation, fair value of plan assets, and funded status of our postretirement benefit plans were (in millions):

December 29, 2018December 30, 2017
Benefit obligation at beginning of year$1,553$1,714
Service cost810
Interest cost4549
Benefits paid(136)(142)
Actuarial losses/(gains)(142)(70)
Plan amendments(21)(24)
Currency(13)13
Other—3
Benefit obligation at end of year1,2941,553
Fair value of plan assets at beginning of year1,188—
Actual return on plan assets(26)—
Employer contributions191,329
Benefits paid(137)(142)
Other—1
Fair value of plan assets at end of year1,0441,188
Net postretirement benefit liability/(asset) recognized at end of year$250$365

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

December 29, 2018December 30, 2017
Other current liabilities$(14)$(10)
Accrued postemployment costs(236)(355)
Net postretirement benefit asset/(liability) recognized$(250)$(365)

For certain of our postretirement benefit plans that were underfunded based on accumulated postretirement benefit obligations in excess of plan assets, the accumulated benefit obligations and the fair value of plan assets were (in millions):

December 29, 2018December 30, 2017
Accumulated benefit obligation$1,294$1,553
Fair value of plan assets1,0441,188

We used the following weighted average assumptions to determine our postretirement benefit obligations:

December 29, 2018December 30, 2017
Discount rate4.2%3.5%
Health care cost trend rate assumed for next year6.7%6.7%
Ultimate trend rate4.9%4.9%

Discount rates for our plans were developed from a model portfolio of high-quality, fixed-income debt instruments with durations that match the expected future cash flows of the plans. Our expected health care cost trend rate is based on historical costs and our expectation for health care cost trend rates going forward.

The year that the health care cost trend rate reaches the ultimate trend rate varies by plan and ranges between 2019 and 2030 as of December 29, 2018.

Assumed health care costs trend rates have a significant impact on the amounts reported for the postretirement benefit plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects, increase/(decrease) in cost and obligation, as of December 29, 2018 (in millions):

One-Percentage-Point
Increase(Decrease)
Effect on annual service and interest cost$3$(3)
Effect on postretirement benefit obligation48(41)

Components of Net Postretirement Cost/(Benefit):

Net postretirement cost/(benefit) consisted of the following (in millions):

As Restated
December 29, 2018December 30, 2017December 31, 2016
Service cost$8$10$12
Interest cost454952
Expected return on plan assets(50)——
Amortization of prior service costs/(credits)(311)(328)(355)
Amortization of unrecognized losses/(gains)——(1)
Curtailments—(177)—
Net postretirement cost/(benefit)$(308)$(446)$(292)

The amortization of prior service credits was primarily driven by plan amendments in 2015 and 2016. We estimate that amortization of prior service credits will be approximately $306 million in 2019, $122 million in 2020, $8 million in 2021, $6 million in 2022, and $6 million in 2023.

In 2017, we remeasured certain of our postretirement plans and recognized a curtailment gain of $177 million. The curtailment was triggered by the number of cumulative headcount reductions after the closure of certain U.S. factories during the year. The resulting gain is attributed to accelerating a portion of the previously deferred actuarial gains and prior service credits. The headcount reductions and factory closures were part of our Integration Program. See Note 6, Integration and Restructuring Expenses, for additional information.

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

December 29, 2018December 30, 2017December 31, 2016
Discount rate - Service cost3.6%4.0%4.3%
Discount rate - Interest cost3.0%3.0%3.0%
Expected rate of return on plan assets4.4%—%—%
Health care cost trend rate6.7%6.3%6.5%

Discount rates for our plans were developed from a model portfolio of high-quality, fixed-income debt instruments with durations that match the expected future cash flows of the plans. We determine our expected rate of return on plan assets from the plan assets' target asset allocation and estimates of future long-term returns by asset class. Our expected health care cost trend rate is based on historical costs and our expectation for health care cost trend rates going forward.

Plan Assets:

In December 2017, we made a cash contribution of approximately $1.2 billion to pre-fund a portion of our U.S. postretirement plan benefits following enactment of U.S. Tax Reform on December 22, 2017. The underlying basis of the investment strategy of our U.S. postretirement plans is to ensure that funds are available to meet the plans’ benefit obligations when they are due by investing plan assets in a high-quality, diversified manner in order to maintain the security of the funds. The investment strategy expects equity investments to yield a higher return over the long term than fixed-income securities, while fixed-income securities are expected to provide certain matching characteristics to the plans’ benefit payment cash flow requirements.

Our weighted average asset allocations were:

December 29, 2018December 30, 2017
Fixed-income securities65%—%
Equity securities27%—%
Cash and cash equivalents8%100%

Our postretirement benefit plan investment strategy is subject to local regulations and the asset/liability profiles of the plans in each individual country. Our investment strategy is designed to align our postretirement benefit plan assets with our postretirement benefit obligation to reduce volatility. In aggregate, our long-term asset allocation targets are broadly characterized as a mix of approximately 70% in fixed-income securities and approximately 30% in return-seeking assets, primarily equity securities.

The fair value of postretirement benefit plan assets at December 29, 2018 was determined using the following fair value measurements (in millions):

Asset CategoryTotal Fair ValueQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Government bonds$26$26$—$—
Corporate bonds and other fixed-income securities567—567—
Total fixed-income securities59326567—
Equity securities146146——
Fair value excluding investments measured at net asset value739172567—
Investments measured at net asset value305
Total plan assets at fair value$1,044

The fair value of our postretirement benefit plan assets was $1.2 billion at December 30, 2017. These assets were all classified as Level 1 short-term investments.

The following section describes the valuation methodologies used to measure the fair value of postretirement benefit plan assets, including an indication of the level in the fair value hierarchy in which each type of asset is generally classified.

Corporate Bonds and Other Fixed-Income Securities. These securities consist of publicly traded U.S. and non-U.S. fixed interest obligations (principally corporate bonds an tax-exempt municipal bonds). Such investments are valued through consultation and evaluation with brokers in the institutional market using quoted prices and other observable market data. As such, these securities are included in Level 2.

Government Bonds. These securities consist of direct investments in publicly traded U.S. fixed interest obligations (principally debentures). Such investments are valued using quoted prices in active markets. These securities are included in Level 1.

Equity Securities. These securities consist of direct investments in the stock of publicly traded companies. Such investments are valued based on the closing price reported in an active market on which the individual securities are traded. As such, the direct investments are classified as Level 1.

Investments Measured at Net Asset Value. This category consists of pooled funds and short-term investments.

•Pooled funds. The fair values of participation units held in collective trusts are based on their net asset values, as reported by the managers of the collective trusts and as supported by the unit prices of actual purchase and sale transactions occurring as of or close to the financial statement date. The fair value of these investments measured at net asset value is excluded from the fair value hierarchy. Investments in the collective trusts can be redeemed on each business day based upon the applicable net asset value per unit. Investments in the international large/mid cap equity collective trust can be redeemed on the last business day of each month and at least one business day during the month.

The mutual fund investments are not traded on an exchange. The fair values of the mutual fund investments that are not traded on an exchange are based on their net asset values, as reported by the managers and as supported by the unit prices of actual purchase and sale transactions occurring as of or close to the financial statement date. The fair value of these investments measured at net asset value is excluded from the fair value hierarchy.

•Short-term investments. Short-term investments largely consist of a money market fund, the fair value of which is based on the net asset value reported by the manager of the fund and supported by the unit prices of actual purchase and sale transactions. The fair value of these investments measured at net asset value is excluded from the fair value hierarchy. The money market fund is designed to provide safety of principal, daily liquidity, and a competitive yield by investing in high quality money market instruments. The investment objective of the money market fund is to provide the highest possible level of current income while still maintaining liquidity and preserving capital.

Employer Contributions:

In 2018, we contributed $19 million to our postretirement benefit plans. We estimate that 2019 postretirement benefit plan contributions will be approximately $15 million. Our actual contributions and plans may change due to many factors, including changes in tax, employee benefit, or other laws and regulations, tax deductibility, significant differences between expected and actual postretirement plan asset performance or interest rates, or other factors.

Future Benefit Payments:

Our estimated future benefit payments for our postretirement plans at December 29, 2018 were (in millions):

2019$131
2020127
2021120
2022114
2023107
2024-2028440

Other Plans

We sponsor and contribute to employee savings plans that cover eligible salaried, non-union, and union employees. Our contributions and costs are determined by the matching of employee contributions, as defined by the plans. Amounts charged to expense for defined contribution plans totaled $85 million in 2018, $78 million in 2017, and $74 million in 2016.

Accumulated Other Comprehensive Income/(Losses)

Our accumulated other comprehensive income/(losses) pension and postretirement benefit plans balances, before tax, consisted of the following (in millions):

Pension BenefitsPostretirement BenefitsTotal
December 29, 2018December 30, 2017December 29, 2018December 30, 2017December 29, 2018December 30, 2017
Net actuarial gain/(loss)$175$13$177$111$352$124
Prior service credit/(cost)(14)1458748444749
$161$14$635$859$796$873

The net postemployment benefits recognized in other comprehensive income/(loss), consisted of the following (in millions):

As Restated
December 29, 2018December 30, 2017December 31, 2016
Net postemployment benefit gains/(losses) arising during the period:
Net actuarial gains/(losses) arising during the period - Pension Benefits$8$45$(73)
Net actuarial gains/(losses) arising during the period - Postretirement Benefits6671(5)
Prior service credits/(costs) arising during the period - Pension Benefits(15)1—
Prior service credits/(costs) arising during the period - Postretirement Benefits212451
80141(27)
Tax benefit/(expense)(19)(55)18
$61$86$(9)
Reclassification of net postemployment benefit losses/(gains) to net income/(loss):
Amortization of unrecognized losses/(gains) - Pension Benefits$2$1$—
Amortization of unrecognized losses/(gains) - Postretirement Benefits——(1)
Amortization of prior service costs/(credits) - Postretirement Benefits(311)(328)(355)
Net settlement and curtailment losses/(gains) - Pension Benefits153225
Net settlement and curtailment losses/(gains) - Postretirement Benefits—(177)—
(156)(502)(331)
Tax benefit/(expense)38193127
$(118)$(309)$(204)

As of December 29, 2018, we expect to amortize $306 million of postretirement benefit plans prior service credits from accumulated other comprehensive income/(losses) into net postretirement benefit plans costs/(benefits) during 2019. We do not expect to amortize any other significant postemployment benefit losses/(gains) into net pension or net postretirement benefit plan costs/(benefits) during 2019.

Note 14. Financial Instruments

All of our non-exchange traded derivative contracts are governed by an International Swaps and Derivatives Association master agreement, and these master agreements and their schedules contain certain obligations regarding the delivery of certain financial information upon demand.

Derivative Volume:

The notional values of our outstanding derivative instruments were (in millions):

Notional Amount
December 29, 2018December 30, 2017
Commodity contracts$478$272
Foreign exchange contracts3,2632,876
Cross-currency contracts10,1463,161

The increase in our derivative volume for cross-currency contracts was primarily driven by the addition of new Canadian dollar and British pound sterling cross-currency swaps. A portion of these new contracts is being used to offset existing cross-currency contracts that are no longer designated as hedging instruments. The remaining portion of the new contracts is designated as net investment hedges.

Fair Value of Derivative Instruments:

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair values and the levels within the fair value hierarchy of derivative instruments recorded on the consolidated balance sheets were (in millions):

December 29, 2018
Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)Significant Other Observable Inputs (Level 2)Total Fair Value
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)$—$—$51$26$51$26
Cross-currency contracts(b)——13931393
Derivatives not designated as hedging instruments:
Commodity contracts(c)527—2529
Foreign exchange contracts(c)——542542
Cross-currency contracts(b)——557119557119
Total fair value$5$27$752$192$757$219
(a)The fair value of derivative assets was recorded in other current assets and the fair value of derivative liabilities was recorded in other current liabilities.
(b)The fair value of derivative assets was recorded in other current assets ($557 million) and other non-current assets ($139 million), and the fair value of derivative liabilities was recorded within other current liabilities ($119 million) and other non-current liabilities ($3 million).
(c)The fair value of derivative assets was recorded in other current assets and the fair value of derivative liabilities was recorded in other current liabilities.
December 30, 2017
Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)Significant Other Observable Inputs (Level 2)Total Fair Value
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)$—$—$8$42$8$42
Cross-currency contracts(b)——344—344—
Derivatives not designated as hedging instruments:
Commodity contracts(c)48——48
Foreign exchange contracts(c)——173173
Cross-currency contracts(b)——19—19—
Total fair value$4$8$388$45$392$53
(a)The fair value of derivative assets was recorded in other current assets and the fair value of derivative liabilities was recorded in other current liabilities ($41 million) and other non-current liabilities ($1 million).
(b)The fair value of our derivative assets was recorded in other non-current assets.
(c)The fair value of derivative assets was recorded in other current assets and the fair value of derivative liabilities was recorded in other current liabilities.

Our derivative financial instruments are subject to master netting arrangements that allow for the offset of assets and liabilities in the event of default or early termination of the contract. We elect to record the gross assets and liabilities of our derivative financial instruments on the consolidated balance sheets. If the derivative financial instruments had been netted on the consolidated balance sheets, the asset and liability positions each would have been reduced by $124 million at December 29, 2018 and $23 million at December 30, 2017. At December 29, 2018, collateral of $32 million was posted related to commodity derivative margin requirements. This was included in other current assets on our consolidated balance sheet at December 29, 2018.

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

Level 2 financial assets and liabilities consist of commodity swaps, foreign exchange forwards, options, and swaps, and cross-currency swaps. Commodity swaps are valued using an income approach based on the observable market commodity index prices less the contract rate multiplied by the notional amount. Foreign exchange forwards and swaps are valued using an income approach based on observable market forward rates less the contract rate multiplied by the notional amount. Foreign exchange options are valued using an income approach based on a Black-Scholes-Merton formula. This formula uses present value techniques and reflects the time value and intrinsic value based on observable market rates. Cross-currency swaps are valued based on observable market spot and swap rates.

We did not have any Level 3 financial assets or liabilities in any period presented.

Our calculation of the fair value of financial instruments takes into consideration the risk of nonperformance, including counterparty credit risk.

Net Investment Hedging:

At December 29, 2018, we had the following items designated as net investment hedges:

•Non-derivative foreign denominated debt with principal amounts of €2,550 million and £400 million;
•Cross-currency contracts with notional amounts of £1.0 billion ($1.4 billion), C$2.1 billion ($1.6 billion), and ¥9.6 billion ($85 million); and
•Foreign exchange contracts, including contracts denominated in:
◦Chinese renminbi with an aggregate notional amount of $127 million,
◦Euros with an aggregate notional amount of $264 million, and
◦Indian rupees with an aggregate notional amount of $279 million.

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

Interest Rate Hedging:

From time to time we have had derivatives designated as interest rate hedges, including interest rate swaps. We no longer have any outstanding interest rate swaps. We continue to amortize the realized hedge losses that were deferred into accumulated other comprehensive income/(losses) into interest expense through the original maturity of the related long-term debt instruments.

Cash Flow Hedge Coverage:

At December 29, 2018, we had entered into foreign exchange contracts designated as cash flow hedges for periods not exceeding the next 12 months and into cross-currency contracts designated as cash flow hedges for periods not exceeding the next five years.

Deferred Hedging Gains and Losses on Cash Flow Hedges:

Based on our valuation at December 29, 2018 and assuming market rates remain constant through contract maturities, we expect transfers to net income/(loss) of unrealized gains for foreign currency cash flow hedges during the next 12 months to be approximately $32 million. Additionally, we expect transfers to net income/(loss) of unrealized losses for interest rate cash flow hedges and cross-currency cash flow hedges during the next 12 months to be insignificant.

Concentration of Credit Risk:

Counterparties to our foreign exchange derivatives consist of major international financial institutions. We continually monitor our positions and the credit ratings of the counterparties involved and, by policy, limit the amount of our credit exposure to any one party. While we may be exposed to potential losses due to the credit risk of non-performance by these counterparties, losses are not anticipated. We closely monitor the credit risk associated with our counterparties and customers and to date have not experienced material losses.

Economic Hedging:

We enter into certain derivative contracts not designated as hedging instruments in accordance with our risk management strategy which have an economic impact of largely mitigating commodity price risk and foreign currency exposures. Gains and losses are recorded in net income/(loss) as a component of cost of products sold for our commodity contracts and other expense/(income), net for our cross currency and foreign exchange contracts.

Divestiture Hedging:

We entered into foreign exchange derivative contracts to economically hedge the foreign currency exposure related to the Heinz India Transaction. The related derivative losses were $20 million, including $17 million recorded within other expense/(income), net, and $3 million recorded within interest expense for the year ended December 29, 2018. These losses are classified as other losses/(gains) related to acquisitions and divestitures. Additionally, we entered into foreign exchange contracts, which are designated as net investment hedges related to our investment in Heinz India. Related to these net investment hedges, we had unrealized hedge losses of $10 million, which were recognized in accumulated other comprehensive income/(losses). See Note 5, Acquisitions and Divestitures, for additional information related to the Heinz India Transaction.

Derivative Impact on the Statements of Comprehensive Income:

The following table presents the pre-tax amounts of derivative gains/(losses) deferred into accumulated other comprehensive income/(losses) and the income statement line item that will be affected when reclassified to net income/(loss) (in millions):

Accumulated Other Comprehensive Income/(Losses) ComponentGains/(Losses) Recognized in Other Comprehensive Income/(Losses) Related to Derivatives Designated as Hedging InstrumentsLocation of Gains/(Losses) When Reclassified to Net Income/(Loss)
December 29, 2018December 30, 2017December 31, 2016
Cash flow hedges:
Foreign exchange contracts$—$1$3Net sales
Foreign exchange contracts64(42)6Cost of products sold
Foreign exchange contracts (excluded component)(2)——Cost of products sold
Foreign exchange contracts56(82)39Other expense/(income), net
Foreign exchange contracts (excluded component)3——Other expense/(income), net
Interest rate contracts——(8)Interest expense
Cross-currency contracts(4)——Other expense/(income), net
Cross-currency contracts (excluded component)1——Other expense/(income), net
Net investment hedges:
Foreign exchange contracts(11)(23)45SG&A
Foreign exchange contracts (excluded component)(3)——Interest expense
Cross-currency contracts214(184)147SG&A
Cross-currency contracts (excluded component)13——Interest expense
Total gains/(losses) recognized in statements of comprehensive income$331$(330)$232

Derivative Impact on the Statements of Income:

The following tables present the pre-tax amounts of derivative gains/(losses) reclassified from accumulated other comprehensive income/(losses) to net income/(loss) and the affected income statement line items (in millions):

December 29, 2018
Cost of products soldInterest expenseOther expense/ (income), net
Total amounts presented in the consolidated statements of income in which the following effects were recorded$17,347$1,284$(183)
Gains/(losses) related to derivatives designated as hedging instruments:
Cash flow hedges:
Foreign exchange contracts$(2)$—$56
Foreign exchange contracts (excluded component)(2)—3
Interest rate contracts—(4)—
Cross-currency contracts——(7)
Cross-currency contracts (excluded component)——1
Net investment hedges:
Foreign exchange contracts (excluded component)—(3)—
Cross-currency contracts (excluded component)—13—
Gains/(losses) related to derivatives not designated as hedging instruments:
Commodity contracts(44)——
Foreign exchange contracts——(84)
Cross-currency contracts——4
Total gains/(losses) recognized in statements of income$(48)$6$(27)
December 30, 2017December 31, 2016
Cost of products soldInterest expenseOther expense/ (income), netNet salesCost of products soldInterest expenseOther expense/ (income), net
Total amounts presented in the consolidated statements of income in which the following effects were recorded (As Restated & Recast)$17,043$1,234$(627)$26,300$17,154$1,134$(472)
Gains/(losses) related to derivatives designated as hedging instruments:
Cash flow hedges:
Foreign exchange contracts$—$—$(81)$6$41$—$38
Interest rate contracts—(4)———(4)—
Gains/(losses) related to derivatives not designated as hedging instruments:
Commodity contracts(37)———9——
Foreign exchange contracts——54———(63)
Cross-currency contracts——(2)———(3)
Total gains/(losses) recognized in statements of income$(37)$(4)$(29)$6$50$(4)$(28)

Non-Derivative Impact on Statements of Comprehensive Income:

Related to our non-derivative, foreign denominated debt instruments designated as net investment hedges, we recognized pre-tax gains of $174 million in 2018, pre-tax losses of $425 million in 2017, and pre-tax gains of $234 million in 2016. These amounts were recognized in other comprehensive income/(loss).

Note 15. Accumulated Other Comprehensive Income/(Losses)

Certain prior period balances herein reflect the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

The components of, and changes in, accumulated other comprehensive income/(losses), net of tax, were as follows (in millions):

Foreign Currency Translation AdjustmentsNet Postemployment Benefit Plan AdjustmentsNet Cash Flow Hedge AdjustmentsTotal
Balance as of January 3, 2016 (As Restated)$(1,654)$985$53$(616)
Foreign currency translation adjustments(985)——(985)
Net deferred gains/(losses) on net investment hedges226——226
Net deferred gains/(losses) on cash flow hedges——4646
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)——(87)(87)
Net postemployment benefit gains/(losses) arising during the period—(9)—(9)
Net postemployment benefit losses/(gains) reclassified to net income/(loss)—(204)—(204)
Total other comprehensive income/(loss)(759)(213)(41)(1,013)
Balance as of December 31, 2016 (As Restated)(2,413)77212(1,629)
Foreign currency translation adjustments1,179——1,179
Net deferred gains/(losses) on net investment hedges(353)——(353)
Net deferred gains/(losses) on cash flow hedges——(113)(113)
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)——8585
Net postemployment benefit gains/(losses) arising during the period—86—86
Net postemployment benefit losses/(gains) reclassified to net income/(loss)—(309)—(309)
Total other comprehensive income/(loss)826(223)(28)575
Balance as of December 30, 2017 (As Restated)(1,587)549(16)(1,054)
Foreign currency translation adjustments(1,173)——(1,173)
Net deferred gains/(losses) on net investment hedges284——284
Amounts excluded from the effectiveness assessment of net investment hedges7——7
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)(7)——(7)
Net deferred gains/(losses) on cash flow hedges——9999
Amounts excluded from the effectiveness assessment of cash flow hedges——22
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)——(44)(44)
Net postemployment benefit gains/(losses) arising during the period—61—61
Net postemployment benefit losses/(gains) reclassified to net income/(loss)—(118)—(118)
Total other comprehensive income/(loss)(889)(57)57(889)
Balance as of December 29, 2018$(2,476)$492$41$(1,943)

Reclassification of net postemployment benefit losses/(gains) included amounts reclassified to net income and amounts reclassified into inventory (consistent with our capitalization policy).

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

As Restated
December 29, 2018December 30, 2017December 31, 2016
Before Tax AmountTaxNet of Tax AmountBefore Tax AmountTaxNet of Tax AmountBefore Tax AmountTaxNet of Tax Amount
Foreign currency translation adjustments$(1,173)$—$(1,173)$1,179$—$1,179$(985)$—$(985)
Net deferred gains/(losses) on net investment hedges377(93)284(632)279(353)426(200)226
Amounts excluded from the effectiveness assessment of net investment hedges10(3)7——————
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)(10)3(7)——————
Net deferred gains/(losses) on cash flow hedges116(17)99(123)10(113)40646
Amounts excluded from the effectiveness assessment of cash flow hedges2—2——————
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)(45)1(44)85—85(81)(6)(87)
Net actuarial gains/(losses) arising during the period74(16)58116(47)69(78)38(40)
Prior service credits/(costs) arising during the period6(3)325(8)1751(20)31
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(156)38(118)(502)193(309)(331)127(204)

The amounts reclassified from accumulated other comprehensive income/(losses) were as follows (in millions):

Accumulated Other Comprehensive Income/(Losses) ComponentReclassified from Accumulated Other Comprehensive Income/(Losses) to Net Income/(Loss)Affected Line Item in the Statements of Income
As Restated
December 29, 2018December 30, 2017December 31, 2016
Losses/(gains) on net investment hedges:
Foreign exchange contracts(a)$3$—$—Interest expense
Cross-currency contracts(a)(13)——Interest expense
Losses/(gains) on cash flow hedges:
Foreign exchange contracts(b)——(6)Net sales
Foreign exchange contracts(b)4—(41)Cost of products sold
Foreign exchange contracts(b)(59)81(38)Other expense/(income), net
Cross-currency contracts(a)6——Other expense/(income), net
Interest rate contracts(c)444Interest expense
Losses/(gains) on hedges before income taxes(55)85(81)
Losses/(gains) on hedges, income taxes4—(6)
Losses/(gains) on hedges$(51)$85$(87)
Losses/(gains) on postemployment benefits:
Amortization of unrecognized losses/(gains)$2$1$(1)(d)
Amortization of prior service costs/(credits)(311)(328)(355)(d)
Settlement and curtailment losses/(gains)153(175)25(d)
Losses/(gains) on postemployment benefits before income taxes(156)(502)(331)
Losses/(gains) on postemployment benefits, income taxes38193127
Losses/(gains) on postemployment benefits$(118)$(309)$(204)
(a)Represents recognition of the excluded component in net income/(loss).
(b)Includes amortization of the excluded component and the effective portion of the related hedges.
(c)Represents amortization of realized hedge losses that were deferred into accumulated other comprehensive income/(losses) through the maturity of the related long-term debt instruments.
(d)These components are included in the computation of net periodic postemployment benefit costs. See Note 13, Postemployment Benefits, for additional information.

In this note we have excluded activity and balances related to noncontrolling interest due to its insignificance. This activity was primarily related to foreign currency translation adjustments.

Note 16. Venezuela - Foreign Currency and Inflation

We have a subsidiary in Venezuela that manufactures and sells a variety of products, primarily in the condiments and sauces and infant and nutrition categories. We apply highly inflationary accounting to the results of our Venezuelan subsidiary and include these results in our consolidated financial statements. Under highly inflationary accounting, the functional currency of our Venezuelan subsidiary is the U.S. dollar (the reporting currency of Kraft Heinz), although the majority of its transactions are in Venezuelan bolivars. As a result, we must revalue the results of our Venezuelan subsidiary to U.S. dollars. We revalue the income statement using daily weighted average DICOM (as defined below) rates, and we revalue the bolivar denominated monetary assets and liabilities at the period-end DICOM spot rate. The resulting revaluation gains and losses are recorded in current net income/(loss), rather than accumulated other comprehensive income/(losses). These gains and losses are classified within other expense/(income), net as nonmonetary currency devaluation on our consolidated statements of income.

In February 2018, the Venezuelan government eliminated the official exchange rate, which was available through the Sistema de Divisa Protegida (“DIPRO”) for purchases and sales of certain essential items, including food products. At December 30, 2017, we had outstanding invoice reimbursement requests of $26 million related to the purchase of ingredients and packaging materials for the years 2012 through 2015. Following the elimination of this preferential rate, we determined that these outstanding requests, which were approved by the Venezuelan government, were no longer collectible. There was no impact on our consolidated statements of income for 2018.

Following elimination of the DIPRO rate, the Sistema de Divisa Complementaria (“DICOM”) is the only foreign currency exchange mechanism legally available to us for converting Venezuelan bolivars to U.S. dollars. As of December 29, 2018, we believe the DICOM rate is the most appropriate legally available rate at which to translate the results of our Venezuelan subsidiary. We continue to monitor the DICOM rate, and the nonmonetary assets supported by the underlying operations in Venezuela, for impairment.

The auction-based DICOM system was temporarily frozen in September 2017 and reopened in February 2018. The last published DICOM rate before the auction freeze was BsF3,345 per U.S. dollar compared to BsF25,000 per U.S. dollar upon reopening. In August 2018, the Venezuelan government changed the unit for measuring bolivars from the bolivar fuerte (“BsF”) to the bolivar soberano (“BsS”). The conversion ratio is BsF100,000 to BsS1. Upon converting to the bolivar soberano measurement unit, the Venezuelan government further devalued the currency. On August 20, 2018, the published DICOM rate was BsF6,000,000 (BsS60.00) per U.S. dollar compared to approximately BsF249,000 (BsS2.49) per U.S. dollar immediately preceding the conversion to BsS.

The DICOM rate at December 29, 2018 was BsS638.18 per U.S. dollar compared to BsS0.03 at December 30, 2017. We remeasured the bolivar denominated assets and liabilities of our Venezuelan subsidiary at December 29, 2018 using the DICOM spot rate of BsS638.18 per U.S. dollar. We remeasured the income statements of our Venezuelan subsidiary using a weighted average rate of BsS25.06 in 2018, BsS0.02 in 2017, and BsS0.01 in 2016. Remeasurements of the monetary assets and liabilities and operating results of our Venezuelan subsidiary at DICOM rates resulted in nonmonetary currency devaluation losses of $146 million in 2018, $36 million in 2017, and $24 million in 2016. These losses were recorded in other expense/(income), net in the consolidated statements of income.

Additionally, in the second quarter of 2016, we assessed the nonmonetary assets of our Venezuelan subsidiary for impairment, resulting in a $53 million loss to write down property, plant and equipment, net, and prepaid spare parts, which was recorded within cost of products sold in the consolidated statement of income in 2016.

We did not obtain any U.S. dollars at DICOM rates during 2018. In addition to DICOM, there is an unofficial market for obtaining U.S. dollars with Venezuelan bolivars. The exact exchange rate is widely debated but is generally accepted to be substantially higher than the latest published DICOM rate. We have not transacted at any unofficial market rates and have no plans to transact at unofficial market rates in the foreseeable future.

Our Venezuelan subsidiary obtains U.S. dollars through exports and royalty payments. These U.S. dollars are primarily used for purchases of tomato paste and spare parts for manufacturing, as well as a limited amount of other operating costs. As of December 29, 2018, our Venezuelan subsidiary has sufficient U.S. dollars to fund these operational needs in the foreseeable future. However, further deterioration of the economic environment or regulation changes could jeopardize our export business. Our Venezuelan subsidiary has increasingly sourced production inputs locally, including tomato paste and sugar, in order to reduce reliance on U.S. dollars, which we expect to continue in the foreseeable future.

Our results of operations in Venezuela reflect a controlled subsidiary. We continue to have sufficient currency liquidity and pricing flexibility to control our operations. However, the continuing economic uncertainty, strict labor laws, and evolving government controls over imports, prices, currency exchange, and payments present a challenging operating environment. Increased restrictions imposed by the Venezuelan government or further deterioration of the economic environment could impact our ability to control our Venezuelan operations and could lead us to deconsolidate our Venezuelan subsidiary in the future. We currently do not expect to make any new investments or contributions into Venezuela.

Note 17. Financing Arrangements

We have utilized accounts receivable securitization and factoring programs (the “Programs”) globally for our working capital needs and to provide efficient liquidity. During 2018, we had Programs in place in various countries across the globe. In the second quarter of 2018, we unwound our U.S. securitization program, which represented the majority of our Programs, using proceeds from the issuance of long-term debt in June 2018. As of December 29, 2018, we have unwound all of our Programs.

We operated the Programs such that we generally utilized the majority of the available aggregate cash consideration limits. We accounted for transfers of receivables pursuant to the Programs as a sale and removed them from our consolidated balance sheets. Under the Programs, we generally received cash consideration up to a certain limit and recorded a non-cash exchange for sold receivables for the remainder of the purchase price. We maintained a “beneficial interest,” or a right to collect cash, in the sold receivables. Cash receipts from the payments on sold receivables (which are cash receipts on the underlying trade receivables that have already been securitized in these Programs) are classified as investing activities and presented as cash receipts on sold receivables on our consolidated statements of cash flows.

The carrying value of trade receivables removed from our consolidated balance sheets in connection with the Programs was $1.0 billion at December 30, 2017. In exchange for the sale of trade receivables, we received cash of $673 million at December 30, 2017 and recorded sold receivables of $353 million at December 30, 2017. There were no such balances at December 29, 2018. The carrying value of sold receivables approximated the fair value at December 30, 2017.

We acted as servicer for certain of the Programs. We did not record any related servicing assets or liabilities as of December 30, 2017 because they were not material to the financial statements.

Our U.S. securitization program utilized a bankruptcy-remote special-purpose entity (“SPE”). The SPE was wholly-owned by a subsidiary of Kraft Heinz, and its sole business consisted of the purchase or acceptance, through capital contributions, of receivables and related assets from a Kraft Heinz subsidiary and the subsequent transfer of such receivables and related assets to a bank. Although the SPE is included in our consolidated financial statements, it was a separate legal entity with separate creditors who were entitled, upon its liquidation in the second quarter of 2018, to be satisfied out of the SPE's assets prior to any assets or value in the SPE becoming available to Kraft Heinz or its subsidiaries.

Additionally, we enter into various structured payable and product financing arrangements to facilitate supply from our vendors. Balance sheet classification is based on the nature of the agreements. For certain arrangements, we classify amounts outstanding within other current liabilities on our consolidated balance sheets. We had approximately $267 million on our consolidated balance sheets at December 29, 2018 and approximately $268 million at December 30, 2017 related to these arrangements.

Note 18. Commitments and Contingencies

Legal Proceedings

We are involved in legal proceedings, claims, and governmental inquiries, inspections, or investigations (“Legal Matters”) arising in the ordinary course of our business. While we cannot predict with certainty the results of Legal Matters in which we are currently involved or may in the future be involved, we do not expect that the ultimate costs to resolve any of the Legal Matters that are currently pending will have a material adverse effect on our financial condition or results of operations.

Class Actions and Stockholder Derivative Actions:

We and certain of our current and former officers and directors are currently defendants in three securities class action lawsuits filed in February, March, and April 2019. The first filed action, Hedick v. The Kraft Heinz Company, was filed on February 24, 2019 against the Company and three of its officers (the “Hedick Action”). The second filed action, Iron Workers District Council (Philadelphia and Vicinity) Retirement and Pension Plan v. The Kraft Heinz Company, was filed on March 15, 2019 against, among others, the Company and six of its current and former officers (the “Iron Workers Action”). The third filed action, Timber Hill LLC v. The Kraft Heinz Company, was filed on April 25, 2019 against, among others, the Company and six of its current and former officers and one of its directors (the “Timber Hill Action”). All of these securities class action lawsuits were filed in the United States District Court for the Northern District of Illinois. Another securities class action lawsuit, Walling v. Kraft Heinz Company, was filed on February 26, 2019 in the United States District Court for the Western District of Pennsylvania against, among others, the Company and six of its current and former officers (the “Walling Action”). Plaintiff in the Walling Action filed a notice of voluntary dismissal of his complaint, without prejudice, on April 26, 2019.

Plaintiffs in these lawsuits purport to represent a class of all individuals and entities who purchased, sold, or otherwise acquired or disposed of publicly traded securities of the Company (including in the Timber Hill Action, the purchase of call options on Company common stock, the sale of put options on Company common stock, and the purchase of futures on the Company’s common stock) from May 4, 2017 through February 21, 2019, in the case of the Hedick Action and the Walling Action, and from July 6, 2015 through February 21, 2019, in the case of the Iron Workers Action and the Timber Hill Action. The complaints assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, based on allegedly materially false or misleading statements and omissions in public statements, press releases, investor presentations, earnings calls, and SEC filings regarding the Company’s business, financial results, and internal controls. The plaintiffs seek damages in an unspecified amount, attorneys’ fees and other relief.

In addition, our Employee Benefits Administration Board and certain of our current and former employees are currently defendants in one class action lawsuit, Osborne v. Employee Benefits Administration Board of Kraft Heinz, which was filed on March 19, 2019 in the United States District Court for the Western District of Pennsylvania. Plaintiffs in the lawsuit purport to represent a class of current and former employees who were participants in and beneficiaries of various retirement plans which were co-invested in a commingled investment fund known as the Kraft Foods Savings Plan Master Trust (the “Master Trust”) during the period of May 4, 2017 through February 21, 2019. The complaint alleges violations of Section 502 of the Employee Retirement Income Security Act (“ERISA”) based on alleged breaches of obligations as fiduciaries subject to ERISA by allowing the Master Trust to continue investing in our common stock. The plaintiffs seek damages in an unspecified amount, attorneys’ fees, and other relief.

Certain of our current and former officers and directors, among others, are also currently defendants in five stockholder derivative actions: DeFabiis v. Hees filed on April 16, 2019, Vladimir Gusinsky Revocable Trust v. Hees filed on May 8, 2019, Kailas v. Hees filed on May 13, 2019, Silverman v. Behring filed on May 15, 2019, and Green v. Behring filed on May 23, 2019, with the Company named as a nominal defendant. Plaintiffs, derivatively on behalf of the Company, assert claims under the common law and statutory law of Delaware for alleged breaches of fiduciary duties as well as alleged violations of Sections 10(b) and 14(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, based on allegedly materially false or misleading statements and omissions in public statements and SEC filings. The plaintiffs seek damages in an unspecific amount, attorneys’ fees, and other relief. All of these stockholder derivative actions were filed in the United States District Court for the Western District of Pennsylvania.

We intend to vigorously defend against these lawsuits; however, we cannot reasonably estimate the potential range of loss, if any, due to the early stage of these proceedings.

Securities and Exchange Commission Investigation:

As previously disclosed on February 21, 2019, we received a subpoena in October 2018 from the SEC related to our procurement area, specifically the accounting policies, procedures, and internal controls related to our procurement function, including, but not limited to, agreements, side agreements, and changes or modifications to agreements with our suppliers. Following the receipt of this subpoena, we, together with external counsel and forensic accountants, and subsequently, under the oversight of the Audit Committee, conducted an internal investigation into our procurement area and related matters. Following our earnings release and investor call on February 21, 2019, when we announced the results of our interim assessment of goodwill and intangible asset impairments, the SEC requested additional information related to our financial reporting, internal controls, and disclosures, our assessment of goodwill and intangible asset impairments, and our communications with certain shareholders. It is our understanding that the United States Attorney’s Office for the Northern District of Illinois also is reviewing this matter, working with the SEC and receiving materials from it. We cannot predict the eventual scope, duration or outcome of any potential SEC legal action or other action or whether it could have a material impact on our financial condition, results of operations, or cash flow. We have been responsive to the ongoing subpoenas and other document requests and will continue to cooperate fully with any governmental or regulatory inquiries or investigations.

Other Commitments and Contingencies

As a result of our review of supplier contracts and related arrangements, we determined that the classification of the embedded lease element for certain contracts should have been classified as an operating lease instead of a capital lease. In addition, we identified certain arrangements that were improperly accounted for as embedded capital leases. Therefore, future obligations associated with operating leases and purchase obligations have been restated below. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for additional information related to the restatement and our review of supplier contracts and related arrangements.

Leases:

Rental expenses for leases of warehouse, production, and office facilities and equipment were $200 million in 2018, $244 million in 2017, and $198 million in 2016.

Minimum rental commitments under non-cancelable operating leases in effect at December 29, 2018 were (in millions):

2019$185
2020137
2021105
202270
202349
Thereafter148
Total$694

Purchase Obligations:

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.

As of December 29, 2018, our take-or-pay purchase obligations were as follows (in millions):

2019$1,569
2020757
2021405
2022287
2023210
Thereafter217
Total$3,445

Redeemable Noncontrolling Interest:

In 2017, we commenced operations of a joint venture with a minority partner to manufacture, package, market, and distribute refrigerated soups and meal sides. We control operations and include this business in our consolidated results. Our minority partner has put options that, if it chooses to exercise, would require us to purchase portions of its equity interest at a future date. These put options will become exercisable beginning in 2025 (on the eighth anniversary of the product launch date) at a price to be determined at that time based upon an independent third party valuation. The minority partner’s put options are reflected on our consolidated balance sheets as a redeemable noncontrolling interest. We accrete the redeemable noncontrolling interest to its estimated redemption value over the term of the put options. At December 29, 2018, we estimate the redemption value to be approximately $35 million.

Note 19. Debt

Borrowing Arrangements:

On July 6, 2015, together with Kraft Heinz Foods Company (“KHFC”), our 100% owned operating subsidiary, we entered into a credit agreement (as amended, the “Credit Agreement”), which provides for a $4.0 billion senior unsecured revolving credit facility (the “Senior Credit Facility”). In June 2018, we entered into an agreement that became effective on July 6, 2018 to extend the maturity date of our Senior Credit Facility from July 6, 2021 to July 6, 2023 and to establish a $400 million euro equivalent swing line facility, which is available under the $4.0 billion revolving credit facility limit for short-term loans denominated in euros on a same-day basis.

No amounts were drawn on our Senior Credit Facility at December 29, 2018, at December 30, 2017, or during the years ended December 29, 2018, December 30, 2017, and December 31, 2016.

The Senior Credit Facility includes a $1.0 billion sub-limit for borrowings in alternative currencies (i.e., euro, sterling, Canadian dollars, or other lawful currencies readily available and freely transferable and convertible into U.S. dollars), as well as a letter of credit sub-facility of up to $300 million. Subject to certain conditions, we may increase the amount of revolving commitments and/or add additional tranches of term loans in a combined aggregate amount of up to $1.0 billion.

Any committed borrowings under the Senior Credit Facility bear interest at a variable annual rate based on LIBOR/EURIBOR/CDOR loans or an alternate base rate/Canadian prime rate, in each case subject to an applicable margin based upon the long-term senior unsecured, non-credit enhanced debt rating assigned to us. The borrowings under the Senior Credit Facility have interest rates based on, at our election, base rate, LIBOR, EURIBOR, CDOR, or Canadian prime rate plus a spread ranging from 87.5 to 175 basis points for LIBOR, EURIBOR, and CDOR loans, and 0 to 75 basis points for base rate or Canadian prime rate loans.

The Senior Credit Facility contains representations, warranties, and covenants that are typical for these types of facilities and could upon the occurrence of certain events of default restrict our ability to access our Senior Credit Facility. Our Senior Credit Facility requires us to maintain a minimum shareholders’ equity (excluding accumulated other comprehensive income/(losses)) of at least $35 billion. We were in compliance with all financial covenants during the year ended December 29, 2018.

During the period from December 29, 2018 to the filing date of this Annual Report on Form 10-K, due to the delays in the preparation of our financial statements for the fiscal year ended December 29, 2018 and the fiscal quarter ended March 30, 2019, we were not in compliance with certain reporting covenants under the Senior Credit Facility.

However, as previously disclosed, on March 22, 2019, we entered into a Waiver and Consent No. 1 (the “Original Waiver”) with respect to the Senior Credit Facility, pursuant to which the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, granted a temporary waiver of compliance by us with respect to the requirement to furnish the lenders a copy of the consolidated financial statements for our fiscal year ended December 29, 2018. Pursuant to the Original Waiver, we were required to provide consolidated financial statements no later than May 14, 2019. Due to additional delays in our financial reporting, on May 10, 2019, we entered into a Waiver and Consent No. 2 (the “Second Waiver”) with respect to the Senior Credit Facility, pursuant to which the lenders, as party to the Senior Credit Facility, and JPMorgan Chase Bank, N.A., as administrative agent, granted a temporary waiver of compliance by us with respect to the requirements to furnish the lenders copies of the consolidated financial statements for our fiscal year ended December 29, 2018 and for the fiscal quarter ended March 30, 2019. Pursuant to the Second Waiver and in order to remedy our noncompliance, we are required to provide consolidated financial statements for our fiscal year ended December 29, 2018 no later than June 28, 2019 and for our fiscal quarter ended March 30, 2019 no later than July 31, 2019. If we had not obtained these waivers, we would not have been able to access our Senior Credit Facility.

The obligations under the Credit Agreement are guaranteed by KHFC in the case of indebtedness and other liabilities of any subsidiary borrower and by Kraft Heinz in the case of indebtedness and other liabilities of any subsidiary borrower and KHFC.

In August 2017, we repaid $600 million aggregate principal amount of our previously outstanding senior unsecured loan facility (the “Term Loan Facility”). Accordingly, there were no amounts outstanding on the Term Loan Facility at December 29, 2018 or December 30, 2017.

We obtain funding through our U.S. and European commercial paper programs. At December 29, 2018, we had no commercial paper outstanding. At December 30, 2017, we had commercial paper outstanding of $448 million with a weighted average interest rate of 1.541%.

Long-Term Debt:

The following table summarizes our long-term debt obligations. Long-term debt at December 30, 2017 reflects the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

Priority (a)Maturity DatesInterest Rates (b)Carrying Values
As Restated
December 29, 2018December 30, 2017
(in millions)
U.S. dollar notes:
2025 Notes(c)Senior Secured NotesFebruary 15, 20254.875%$1,193$1,192
Other U.S. dollar notes(d)(e)Senior Notes2019-20462.800% - 7.125%25,55125,165
Euro notes(d)Senior Notes2023-20281.500% - 2.250%2,8993,038
Canadian dollar notes(f)Senior NotesJuly 6, 20202.700% - 3.128%586794
British pound sterling notes:
2030 Notes(g)Senior Secured NotesFebruary 18, 20306.250%165176
Other British pound sterling notes(d)Senior NotesJuly 1, 20274.125%504536
Other long-term debtVarious2019-20350.800% - 5.500%5056
Capital lease obligations19984
Total long-term debt31,14731,041
Current portion of long-term debt3772,733
Long-term debt, excluding current portion$30,770$28,308
(a)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.
(b)Floating interest rates are stated as of December 29, 2018.
(c)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. Kraft Heinz fully and unconditionally guarantees these notes.
(d)Kraft Heinz fully and unconditionally guarantees these notes, which were issued by KHFC.
(e)Includes current year issuances (the “New Notes”) described below.
(f)Kraft Heinz fully and unconditionally guarantees these notes, which were issued by Kraft Heinz Canada ULC (formerly Kraft Canada Inc.).
(g)The 6.250% Pound Sterling Senior Secured Notes due February 18, 2030 (the “2030 Notes”) were issued by H.J. Heinz Finance UK Plc. Kraft Heinz and KHFC fully and unconditionally guarantee the 2030 Notes. This guarantee is secured and senior in right of payment of existing and future unsecured and subordinated indebtedness. Kraft Heinz became guarantor of the 2030 Notes in connection with the 2015 Merger. The 2030 Notes were previously only guaranteed by KHFC.

Our long-term debt contains customary representations, covenants, and events of default. We were in compliance with all financial covenants during the year ended December 29, 2018.

During the period from December 29, 2018 to the filing date of this Annual Report on Form 10-K, due to the delays in the preparation of our financial statements for the fiscal year ended December 29, 2018 and the fiscal quarter ended March 30, 2019, we were not in compliance with certain reporting covenants under certain indentures. The filing of this Annual Report on Form 10-K will constitute compliance with the requirement to furnish the lenders a copy of the consolidated financial statements for our fiscal year ended December 29, 2018 no later than June 28, 2019. We also currently expect to file our Quarterly Report on Form 10-Q for the quarter ended March 30, 2019 on or before July 31, 2019 in compliance with the requirement to furnish the lenders a copy of the consolidated financial statements for such quarter no later than July 31, 2019.

Under our existing indentures, if we do not file required reports within specified time periods, the trustee or holders of at least 30% in the case of our Second Lien Senior Secured Notes due 2025 and 25% in the case of any other series of notes may deliver a notice of default for such series of notes which would commence the applicable cure period under such indenture. As of June 5, 2019, none of the cure periods under our existing indentures have been triggered in connection with our failure to comply with the respective reporting covenants set forth in such indentures. However, if a cure period is triggered under such indentures and we fail to file our annual and interim financial statements within such cure period, any outstanding notes issued thereunder would become callable.

At December 29, 2018, our long-term debt excluded amounts classified as held for sale. See Note 5, Acquisitions and Divestitures, for additional information.

At December 29, 2018, aggregate principal maturities of our long-term debt excluding capital leases were (in millions):

2019$355
20202,992
2021990
20223,508
20232,460
Thereafter20,329

Debt Issuances:

In June 2018, KHFC, our 100% owned operating subsidiary, issued $300 million aggregate principal amount of 3.375% senior notes due 2021, $1.6 billion aggregate principal amount of 4.000% senior notes due 2023, and $1.1 billion aggregate principal amount of 4.625% senior notes due 2029 (collectively, the “New Notes”). The New Notes are fully and unconditionally guaranteed by Kraft Heinz as to payment of principal, premium, and interest on a senior unsecured basis.

We used approximately $500 million of the proceeds from the New Notes in connection with the wind-down of our U.S. securitization program in the second quarter of 2018. We also used proceeds from the New Notes to refinance a portion of our commercial paper borrowings in the second quarter of 2018, to repay certain notes that matured in July and August 2018, and for other general corporate purposes.

In August 2017, KHFC issued $350 million aggregate principal amount of floating rate senior notes due 2019, $650 million aggregate principal amount of floating rate senior notes due 2021, and $500 million aggregate principal amount of floating rate senior notes due 2022 (collectively, the “2017 Notes”). The 2017 Notes are fully and unconditionally guaranteed by Kraft Heinz as to payment of principal, premium, and interest on a senior unsecured basis.

We used the net proceeds from the 2017 Notes primarily to repay all amounts outstanding under our $600 million Term Loan Facility together with accrued interest thereon, to refinance a portion of our commercial paper programs, and for other general corporate purposes.

In May 2016, KHFC issued $2.0 billion aggregate principal amount of 3.000% senior notes due June 2026, $3.0 billion aggregate principal amount of 4.375% senior notes due June 2046, €550 million aggregate principal amount of 1.500% senior notes due May 2024, and €1,250 million aggregate principal amount of 2.250% senior notes due May 2028 (collectively, the “2016 Notes”). The 2016 Notes are fully and unconditionally guaranteed by Kraft Heinz as to payment of principal, premium, and interest on a senior unsecured basis.

We used the net proceeds from the 2016 Notes primarily to redeem all outstanding shares of our 9.00% cumulative compounding preferred stock, Series A (“Series A Preferred Stock”) for $8.3 billion. See Note 20, Capital Stock, for additional information.

Debt Issuance Costs:

Debt issuance costs are reflected as a direct deduction of our long-term debt balance on the consolidated balance sheets. We incurred debt issuance costs of $15 million in 2018 and $53 million in 2016. Debt issuance costs in 2017 were insignificant. Unamortized debt issuance costs were $115 million at December 29, 2018, $114 million at December 30, 2017, and $124 million at December 31, 2016. Amortization of debt issuance costs was $16 million in 2018, $16 million in 2017, and $14 million in 2016.

Debt Premium:

Unamortized debt premiums are presented on the consolidated balance sheets as a direct addition to the carrying amount of debt. Unamortized debt premium, net, was $430 million at December 29, 2018 and $505 million at December 30, 2017. Amortization of our debt premium, net, was $65 million in 2018, $81 million in 2017, and $88 million in 2016.

Debt Repayments:

In July and August 2018, we repaid $2.7 billion aggregate principal amount of senior notes that matured in the period. We funded these long-term debt repayments primarily with proceeds from the New Notes issued in June 2018.

Additionally, in June 2017, we repaid $2.0 billion aggregate principal amount of senior notes that matured in the period. We funded these long-term debt repayments primarily with cash on hand and our commercial paper programs.

Fair Value of Debt:

At December 29, 2018, the aggregate fair value of our total debt was $30.1 billion as compared with a carrying value of $31.2 billion. At December 30, 2017, the aggregate fair value of our total debt was $33.0 billion as compared with a carrying value of $31.5 billion. Our short-term debt and commercial paper had carrying values that approximated their fair values at December 29, 2018 and December 30, 2017. We determined the fair value of our long-term debt using Level 2 inputs. Fair values are generally estimated based on quoted market prices for identical or similar instruments.

Note 20. Capital Stock

Preferred Stock

Our Second Amended and Restated Certificate of Incorporation authorizes the issuance of up to 920,000 shares of preferred stock.

On June 7, 2016, we redeemed all 80,000 outstanding shares of our Series A Preferred Stock for $8.3 billion. We funded this redemption primarily through the issuance of long-term debt in May 2016, as well as other sources of liquidity, including our U.S. commercial paper program, U.S. securitization program, and cash on hand. In connection with the redemption, all Series A Preferred Stock was canceled and automatically retired.

Common Stock

Our Second Amended and Restated Certificate of Incorporation authorizes the issuance of up to 5.0 billion shares of common stock.

Shares of common stock issued, in treasury, and outstanding were (in millions of shares):

Shares IssuedTreasury SharesShares Outstanding
Balance at January 3, 20161,214—1,214
Exercise of stock options, issuance of other stock awards, and other5(2)3
Balance at December 31, 20161,219(2)1,217
Exercise of stock options, issuance of other stock awards, and other2—2
Balance at December 30, 20171,221(2)1,219
Exercise of stock options, issuance of other stock awards, and other3(2)1
Balance at December 29, 20181,224(4)1,220

Note 21. Earnings Per Share

Our earnings per common share (“EPS”) were:

As Restated
December 29, 2018December 30, 2017December 31, 2016
(in millions, except per share data)
Basic Earnings Per Common Share:
Net income/(loss) attributable to common shareholders$(10,192)$10,941$3,416
Weighted average shares of common stock outstanding1,2191,2181,217
Net earnings/(loss)$(8.36)$8.98$2.81
Diluted Earnings Per Common Share:
Net income/(loss) attributable to common shareholders$(10,192)$10,941$3,416
Weighted average shares of common stock outstanding1,2191,2181,217
Effect of dilutive equity awards—109
Weighted average shares of common stock outstanding, including dilutive effect1,2191,2281,226
Net earnings/(loss)$(8.36)$8.91$2.78

Basic and diluted EPS for the years ended December 30, 2017 and December 31, 2016 reflect the restatements that impacted net income/(loss) attributable to common shareholders. The restatements had no impact on weighted average shares of common stock outstanding or dilutive equity awards in prior periods. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for additional information.

We use the treasury stock method to calculate the dilutive effect of outstanding equity awards in the denominator for diluted EPS. We had net losses attributable to common shareholders in 2018. Therefore, we have excluded the dilutive effects of equity awards in 2018 as their inclusion would have had an anti-dilutive effect on EPS. Anti-dilutive shares were 13 million in 2018, 2 million in 2017, and 3 million in 2016.

Note 22. Segment Reporting

Management evaluates segment performance based on several factors, including net sales and Segment Adjusted EBITDA. Segment Adjusted EBITDA is defined as net income/(loss) from continuing operations before interest expense, other expense/(income), net, provision for/(benefit from) income taxes, and depreciation and amortization (excluding integration and restructuring expenses); in addition to these adjustments, we exclude, when they occur, the impacts of integration and restructuring expenses, deal costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results), impairment losses, gains/(losses) on the sale of a business, other gains/(losses) related to acquisitions and divestitures (e.g., tax and hedging impacts), nonmonetary currency devaluation (e.g., remeasurement gains and losses), and equity award compensation expense (excluding integration and restructuring expenses). Segment Adjusted EBITDA is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operations. Management uses Segment Adjusted EBITDA to evaluate segment performance and allocate resources.

Management does not use assets by segment to evaluate performance or allocate resources. Therefore, we do not disclose assets by segment.

Net sales by segment were (in millions):

As Restated
December 29, 2018December 30, 2017December 31, 2016
Net sales:
United States$18,122$18,230$18,469
Canada2,1732,1772,302
EMEA2,7182,5852,586
Rest of World3,2553,0842,943
Total net sales$26,268$26,076$26,300

Net sales for the years ended December 30, 2017 and December 31, 2016 reflect the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

Segment Adjusted EBITDA was (in millions):

As Restated & Recast
December 29, 2018December 30, 2017December 31, 2016
Segment Adjusted EBITDA:
United States$5,218$5,873$5,744
Canada608636632
EMEA724673741
Rest of World635590621
General corporate expenses(161)(108)(164)
Depreciation and amortization (excluding integration and restructuring expenses)(919)(907)(875)
Integration and restructuring expenses(297)(583)(992)
Deal costs(23)—(30)
Unrealized gains/(losses) on commodity hedges(21)(19)38
Impairment losses(15,936)(49)(71)
Gains/(losses) on sale of business(15)——
Nonmonetary currency devaluation——(4)
Equity award compensation expense (excluding integration and restructuring expenses)(33)(49)(39)
Operating income/(loss)(10,220)6,0575,601
Interest expense1,2841,2341,134
Other expense/(income), net(183)(627)(472)
Income/(loss) before income taxes$(11,321)$5,450$4,939

Segment Adjusted EBITDA for the years ended December 30, 2017 and December 31, 2016 reflects restatements and has been recast to reflect the impact of adopting ASU 2017-07 in the first quarter of 2018. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for additional information. In addition, see Note 23, Quarterly Financial Data (Unaudited), for restated Segment Adjusted EBITDA for the interim periods within fiscal years 2018 and 2017.

Total depreciation and amortization expense by segment was (in millions):

As Restated
December 29, 2018December 30, 2017December 31, 2016
Depreciation and amortization expense:
United States$626$658$966
Canada394856
EMEA1029987
Rest of World1199884
General corporate expenses97128144
Total depreciation and amortization expense$983$1,031$1,337

Depreciation and amortization expense for the year ended December 30, 2017 reflects the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

The decrease in depreciation and amortization expense in 2017 compared to 2016 was primarily driven by accelerated depreciation recognized in 2016 resulting from factory closures as part of our Integration Program. See Note 6, Integration and Restructuring Expenses, for additional information.

Total capital expenditures by segment were (in millions):

As Restated
December 29, 2018December 30, 2017December 31, 2016
Capital expenditures:
United States$388$764$843
Canada214230
EMEA124127115
Rest of World23618496
General corporate expenses5777163
Total capital expenditures$826$1,194$1,247

Capital expenditures for the year ended December 30, 2017 reflect the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

Net sales by product category were (in millions):

As Restated
December 29, 2018December 30, 2017December 31, 2016
Condiments and sauces$6,752$6,429$6,297
Cheese and dairy5,2875,4095,537
Ambient foods2,5762,5642,488
Frozen and chilled foods2,5482,5782,577
Meats and seafood2,5052,5672,659
Refreshment beverages1,5071,5061,517
Coffee1,4381,4221,489
Infant and nutrition756755761
Desserts, toppings and baking1,0381,0331,054
Nuts and salted snacks9679701,069
Other894843852
Total net sales$26,268$26,076$26,300

In 2018, we reorganized the products within our product categories to reflect how we manage our business. We have reflected this change for all historical periods presented. In addition, net sales by product category for the years ended December 30, 2017 and December 31, 2016 reflect the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

Concentration of Risk:

Our largest customer, Walmart Inc., represented approximately 21% of our net sales in 2018, 21% of our net sales in 2017, and approximately 22% of our net sales in 2016. All of our segments have sales to Walmart Inc.

Geographic Financial Information:

We had significant sales in the United States, Canada, and the United Kingdom. Our net sales by geography were (in millions):

As Restated
December 29, 2018December 30, 2017December 31, 2016
Net sales:
United States$18,218$18,324$18,556
Canada2,1732,1772,302
United Kingdom1,0711,0181,053
Other4,8064,5574,389
Total net sales$26,268$26,076$26,300

Net sales by geography for the years ended December 30, 2017 and December 31, 2016 reflect the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

We had significant long-lived assets in the United States, Canada, and the United Kingdom. Long-lived assets include property, plant and equipment, goodwill, trademarks, and other intangible assets, net of related depreciation and amortization. Our long-lived assets by geography were (in millions):

As Restated
December 29, 2018December 30, 2017
Long-lived assets:
United States$79,057$92,504
United Kingdom4,9966,226
Canada3,6206,585
Other5,3766,003
Total long-lived assets$93,049$111,318

At December 29, 2018, long-lived assets by geography excluded amounts classified as held for sale. See Note 5, Acquisitions and Divestitures, for additional information. Long-lived assets at December 30, 2017 reflect the restatements described in Note 2, Restatement of Previously Issued Consolidated Financial Statements.

Note 23. Quarterly Financial Data (Unaudited)

Our quarterly financial data for 2018 and 2017 is summarized as follows:

2018 Quarters
As Restated
FourthThirdSecondFirst
(in millions, except per share data)
Net sales$6,891$6,383$6,690$6,304
Gross profit2,2162,0942,3472,264
Net income/(loss)(12,628)6187531,003
Net income/(loss) attributable to common shareholders(12,568)6197541,003
Per share data applicable to common shareholders:
Basic earnings/(loss)(10.30)0.510.620.82
Diluted earnings/(loss)(10.30)0.500.620.82
2017 Quarters
As Restated & Recast
FourthThirdSecondFirst
(in millions, except per share data)
Net sales$6,841$6,279$6,634$6,322
Gross profit2,2872,1562,4072,183
Net income/(loss)7,9829121,157881
Net income/(loss) attributable to common shareholders7,9899131,156883
Per share data applicable to common shareholders:
Basic earnings/(loss)6.550.750.950.73
Diluted earnings/(loss)6.500.740.940.72

Restatement of Previously Issued Unaudited Condensed Consolidated Financial Statements

We have restated herein our previously issued unaudited condensed consolidated financial statements for each interim period within the nine months ended September 29, 2018 and the fiscal year ended December 30, 2017. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for additional information.

The following tables represent our restated unaudited condensed consolidated financial statements for each quarter-to-date and year-to-date interim period within the nine months ended September 29, 2018 and the fiscal year ended December 30, 2017 and at each interim period therein. The 2018 quarterly restatements will be effective with the filing of our future 2019 unaudited interim condensed consolidated financial statement filings in Quarterly Reports on Form 10-Q.

The values as previously reported for the fiscal quarters ended September 29, 2018, June 30, 2018, and March 31, 2018 were derived from our Quarterly Reports on Form 10-Q filed on November 2, 2018, August 3, 2018, and May 3, 2018, respectively. The values as previously reported for the fiscal quarter ended December 30, 2017 were derived from our Annual Report on Form 10-K for the year ended December 30, 2017 filed on February 16, 2018. The values as previously reported for the fiscal quarters ended September 30, 2017, July 1, 2017, and April 1, 2017 were derived from our Quarterly Reports on Form 10-Q, as amended for the first and second quarters, all of which were filed on November 7, 2017. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

In addition, the condensed consolidated statements of income for the interim periods within the year ended December 30, 2017, as previously reported, did not originally reflect the adoption of ASU 2017-07 related to the presentation of net periodic benefit cost (pension and postretirement cost). This ASU was adopted in the first quarter of 2018 and was applied retrospectively for statement of income presentation of service cost components and other net periodic benefit cost components. Our condensed consolidated statements of income for the interim periods within fiscal year 2017 have been recast accordingly. See Note 4, New Accounting Standards, for additional information related to our adoption of ASU 2017-07.

The Kraft Heinz Company

Condensed Consolidated Statements of Income

(in millions, except per share data)

As Restated
December 29, 2018September 29, 2018June 30, 2018March 31, 2018
Three Months EndedThree Months EndedNine Months EndedThree Months EndedSix Months EndedThree Months Ended
Net sales$6,891$6,383$19,377$6,690$12,994$6,304
Cost of products sold4,6754,28912,6724,3438,3834,040
Gross profit2,2162,0946,7052,3474,6112,264
Selling, general and administrative expenses, excluding impairment losses8678032,3387711,535764
Goodwill impairment losses6,875—133133133—
Intangible asset impairment losses8,610217318101101—
Selling, general and administrative expenses16,3521,0202,7891,0051,769764
Operating income/(loss)(14,136)1,0743,9161,3422,8421,500
Interest expense325326959316633317
Other expense/(income), net13(71)(196)(35)(125)(90)
Income/(loss) before income taxes(14,474)8193,1531,0612,3341,273
Provision for/(benefit from) income taxes(1,846)201779308578270
Net income/(loss)(12,628)6182,3747531,7561,003
Net income/(loss) attributable to noncontrolling interest(60)(1)(2)(1)(1)—
Net income/(loss) attributable to Kraft Heinz(12,568)6192,3767541,7571,003
Preferred dividends——————
Net income/(loss) attributable to common shareholders$(12,568)$619$2,376$754$1,757$1,003
Per share data applicable to common shareholders:
Basic earnings/(loss)$(10.30)$0.51$1.95$0.62$1.44$0.82
Diluted earnings/(loss)(10.30)0.501.940.621.430.82

The Kraft Heinz Company

Condensed Consolidated Statements of Income

(in millions, except per share data)

As Restated & Recast
December 30, 2017September 30, 2017July 1, 2017April 1, 2017
Three Months EndedThree Months EndedNine Months EndedThree Months EndedSix Months EndedThree Months Ended
Net sales$6,841$6,279$19,235$6,634$12,956$6,322
Cost of products sold4,5544,12312,4894,2278,3664,139
Gross profit2,2872,1566,7462,4074,5902,183
Selling, general and administrative expenses, excluding impairment losses7786642,1497201,485765
Goodwill impairment losses——————
Intangible asset impairment losses—1494848—
Selling, general and administrative expenses7786652,1987681,533765
Operating income/(loss)1,5091,4914,5481,6393,0571,418
Interest expense308306926307620313
Other expense/(income), net(116)(127)(511)(254)(384)(130)
Income/(loss) before income taxes1,3171,3124,1331,5862,8211,235
Provision for/(benefit from) income taxes(6,665)4001,183429783354
Net income/(loss)7,9829122,9501,1572,038881
Net income/(loss) attributable to noncontrolling interest(7)(1)(2)1(1)(2)
Net income/(loss) attributable to Kraft Heinz7,9899132,9521,1562,039883
Preferred dividends——————
Net income/(loss) attributable to common shareholders$7,989$913$2,952$1,156$2,039$883
Per share data applicable to common shareholders:
Basic earnings/(loss)$6.55$0.75$2.42$0.95$1.67$0.73
Diluted earnings/(loss)6.500.742.400.941.660.72

The Kraft Heinz Company

Condensed Consolidated Statements of Comprehensive Income

(in millions)

As Restated
December 29, 2018September 29, 2018June 30, 2018March 31, 2018
Three Months EndedThree Months EndedNine Months EndedThree Months EndedSix Months EndedThree Months Ended
Net income/(loss)$(12,628)$618$2,374$753$1,756$1,003
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments(378)(144)(809)(862)(665)197
Net deferred gains/(losses) on net investment hedges12613158219145(74)
Amounts excluded from the effectiveness assessment of net investment hedges433———
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)(5)(2)(2)———
Net deferred gains/(losses) on cash flow hedges59(16)40345622
Amounts excluded from the effectiveness assessment of cash flow hedges2—————
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)(34)12(10)(9)(22)(13)
Net actuarial gains/(losses) arising during the period(12)17705353—
Prior service credits/(costs) arising during the period3—————
Net postemployment benefit losses/(gains) reclassified to net income/(loss)15(58)(133)(17)(75)(58)
Total other comprehensive income/(loss)(220)(175)(683)(582)(508)74
Total comprehensive income/(loss)(12,848)4431,6911711,2481,077
Comprehensive income/(loss) attributable to noncontrolling interest(61)(3)(15)(7)(12)(5)
Comprehensive income/(loss) attributable to Kraft Heinz$(12,787)$446$1,706$178$1,260$1,082

The Kraft Heinz Company

Condensed Consolidated Statements of Comprehensive Income

(in millions)

As Restated
December 30, 2017September 30, 2017July 1, 2017April 1, 2017
Three Months EndedThree Months EndedNine Months EndedThree Months EndedSix Months EndedThree Months Ended
Net income/(loss)$7,982$912$2,950$1,157$2,038$881
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments74191,178455759304
Net deferred gains/(losses) on net investment hedges(26)(124)(327)(152)(203)(51)
Amounts excluded from the effectiveness assessment of net investment hedges——————
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)——————
Net deferred gains/(losses) on cash flow hedges23(70)(136)(32)(66)(34)
Amounts excluded from the effectiveness assessment of cash flow hedges——————
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)(12)5197264620
Net actuarial gains/(losses) arising during the period82(4)(13)1(9)(10)
Prior service credits/(costs) arising during the period16—111—
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(49)(51)(260)(154)(209)(55)
Total other comprehensive income/(loss)41221540145319174
Total comprehensive income/(loss)8,0231,1333,4901,3022,3571,055
Comprehensive income/(loss) attributable to noncontrolling interest1(1)(4)1(3)(4)
Comprehensive income/(loss) attributable to Kraft Heinz$8,022$1,134$3,494$1,301$2,360$1,059

The Kraft Heinz Company

Condensed Consolidated Balance Sheets

(in millions, except per share data)

As Restated
September 29, 2018June 30, 2018March 31, 2018
ASSETS
Cash and cash equivalents$1,366$3,369$1,794
Trade receivables (net of allowances of $24 at September 29, 2018, $24 at June 30, 2018, and $24 at March 31, 2018)2,0321,9501,044
Sold receivables—37530
Income taxes receivable203211121
Inventories3,2143,0943,089
Prepaid expenses389388367
Other current assets352431426
Assets held for sale———
Total current assets7,5569,4807,371
Property, plant and equipment, net7,0747,1177,145
Goodwill44,33944,30244,844
Intangible assets, net58,72759,08459,583
Other non-current assets1,8791,7661,640
TOTAL ASSETS$119,575$121,749$120,583
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$973$34$1,003
Current portion of long-term debt3712,7232,715
Trade payables4,2384,2364,148
Accrued marketing494480576
Interest payable315404345
Other current liabilities1,2311,2361,500
Liabilities held for sale———
Total current liabilities7,6229,11310,287
Long-term debt30,88731,26928,465
Deferred income taxes14,22414,26014,106
Accrued postemployment costs394394400
Other non-current liabilities1,0359981,023
TOTAL LIABILITIES54,16256,03454,281
Commitments and Contingencies
Redeemable noncontrolling interest678
Equity:
Common stock, $0.01 par value (5,000 shares authorized; 1,222 shares issued and 1,219 shares outstanding at September 29, 2018, 1,222 shares issued and 1,219 shares outstanding at June 30, 2018, and 1,222 shares issued and 1,219 shares outstanding at March 31, 2018)121212
Additional paid-in capital58,71658,68958,656
Retained earnings/(deficit)8,4798,6248,634
Accumulated other comprehensive income/(losses)(1,724)(1,551)(975)
Treasury stock, at cost (3 shares at September 29, 2018, 3 shares at June 30, 2018, and 3 shares at March 31, 2018)(264)(254)(240)
Total shareholders' equity65,21965,52066,087
Noncontrolling interest188188207
TOTAL EQUITY65,40765,70866,294
TOTAL LIABILITIES AND EQUITY$119,575$121,749$120,583

The Kraft Heinz Company

Condensed Consolidated Balance Sheets

(in millions, except per share data)

As Restated
September 30, 2017July 1, 2017April 1, 2017
ASSETS
Cash and cash equivalents$1,441$1,445$3,242
Trade receivables (net of allowances of $29 at September 30, 2017, $28 at July 1, 2017, and $30 at April 1, 2017)938973936
Sold receivables427461538
Income taxes receivable290237269
Inventories3,1363,0123,094
Prepaid expenses368359349
Other current assets527547611
Assets held for sale———
Total current assets7,1277,0349,039
Property, plant and equipment, net6,9026,8046,689
Goodwill44,85944,56644,301
Intangible assets, net59,48359,38359,313
Other non-current assets1,5311,5351,604
TOTAL ASSETS$119,902$119,322$120,946
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$457$1,090$909
Current portion of long-term debt2,747192,022
Trade payables3,8733,8053,858
Accrued marketing500499601
Interest payable295406346
Other current liabilities1,5781,5891,905
Liabilities held for sale———
Total current liabilities9,4507,4089,641
Long-term debt28,27629,97829,747
Deferred income taxes20,84120,84020,873
Accrued postemployment costs1,8081,9752,016
Other non-current liabilities715701851
TOTAL LIABILITIES61,09060,90263,128
Commitments and Contingencies
Redeemable noncontrolling interest———
Equity:
Common stock, $0.01 par value (5,000 shares authorized; 1,221 shares issued and 1,218 shares outstanding at September 30, 2017; 1,221 shares issued and 1,218 shares outstanding at July 1, 2017; 1,220 shares issued and 1,218 shares outstanding at April 1, 2017)121212
Additional paid-in capital58,61858,59758,565
Retained earnings/(deficit)1,2801,129705
Accumulated other comprehensive income/(losses)(1,087)(1,308)(1,453)
Treasury stock, at cost (3 shares at September 30, 2017, 3 shares at July 1, 2017, and 2 shares at April 1, 2017)(223)(223)(223)
Total shareholders' equity58,60058,20757,606
Noncontrolling interest212213212
TOTAL EQUITY58,81258,42057,818
TOTAL LIABILITIES AND EQUITY$119,902$119,322$120,946

The Kraft Heinz Company

Condensed Consolidated Statements of Equity

(in millions, except per share data)

As Restated
For the Nine Months Ended September 29, 2018
Common StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
Balance at December 30, 2017$12$58,634$8,495$(1,054)$(224)$207$66,070
Net income/(loss) excluding redeemable noncontrolling interest——2,376——72,383
Other comprehensive income/(loss) excluding redeemable noncontrolling interest———(670)—(13)(683)
Dividends declared-common stock ($1.875 per share)——(2,286)———(2,286)
Cumulative effect of accounting standards adopted in the period——(97)———(97)
Exercise of stock options, issuance of other stock awards, and other—82(9)—(40)(13)20
Balance at September 29, 2018$12$58,716$8,479$(1,724)$(264)$188$65,407
As Restated
For the Six Months Ended June 30, 2018
Common StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
Balance at December 30, 2017$12$58,634$8,495$(1,054)$(224)$207$66,070
Net income/(loss) excluding redeemable noncontrolling interest——1,757——51,762
Other comprehensive income/(loss) excluding redeemable noncontrolling interest———(497)—(11)(508)
Dividends declared-common stock ($1.25 per share)——(1,524)———(1,524)
Cumulative effect of accounting standards adopted in the period——(95)———(95)
Exercise of stock options, issuance of other stock awards, and other—55(9)—(30)(13)3
Balance at June 30, 2018$12$58,689$8,624$(1,551)$(254)$188$65,708
As Restated
For the Three Months Ended March 31, 2018
Common StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
Balance at December 30, 2017$12$58,634$8,495$(1,054)$(224)$207$66,070
Net income/(loss) excluding redeemable noncontrolling interest——1,003——51,008
Other comprehensive income/(loss) excluding redeemable noncontrolling interest———79—(5)74
Dividends declared-common stock ($0.625 per share)——(762)———(762)
Cumulative effect of accounting standards adopted in the period——(95)———(95)
Exercise of stock options, issuance of other stock awards, and other—22(7)—(16)—(1)
Balance at March 31, 2018$12$58,656$8,634$(975)$(240)$207$66,294

The Kraft Heinz Company

Condensed Consolidated Statements of Equity

(in millions, except per share data)

As Restated
For the Nine Months Ended September 30, 2017
Common StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
Balance at December 31, 2016$12$58,516$552$(1,629)$(207)$216$57,460
Net income/(loss)——2,952——(2)2,950
Other comprehensive income/(loss)———542—(2)540
Dividends declared-common stock ($1.825 per share)——(2,225)———(2,225)
Exercise of stock options, issuance of other stock awards, and other—1021—(16)—87
Balance at September 30, 2017$12$58,618$1,280$(1,087)$(223)$212$58,812
As Restated
For the Six Months Ended July 1, 2017
Common StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
Balance at December 31, 2016$12$58,516$552$(1,629)$(207)$216$57,460
Net income/(loss)——2,039——(1)2,038
Other comprehensive income/(loss)———321—(2)319
Dividends declared-common stock ($1.20 per share)——(1,463)———(1,463)
Exercise of stock options, issuance of other stock awards, and other—811—(16)—66
Balance at July 1, 2017$12$58,597$1,129$(1,308)$(223)$213$58,420
As Restated
For the Three Months Ended April 1, 2017
Common StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
Balance at December 31, 2016$12$58,516$552$(1,629)$(207)$216$57,460
Net income/(loss)——883——(2)881
Other comprehensive income/(loss)———176—(2)174
Dividends declared-common stock ($0.60 per share)——(731)———(731)
Exercise of stock options, issuance of other stock awards, and other—491—(16)—34
Balance at April 1, 2017$12$58,565$705$(1,453)$(223)$212$57,818

The Kraft Heinz Company

Consolidated Statements of Cash Flows

(in millions)

As Restated
September 29, 2018June 30, 2018March 31, 2018
Nine Months EndedSix Months EndedThree Months Ended
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)$2,374$1,756$1,003
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization712462227
Amortization of postretirement benefit plans prior service costs/(credits)(261)(183)(106)
Equity award compensation expense44277
Deferred income tax provision/(benefit)10479(46)
Postemployment benefit plan contributions(64)(60)(22)
Goodwill and intangible asset impairment losses451234—
Nonmonetary currency devaluation1316747
Other items, net3527(22)
Changes in current assets and liabilities:
Trade receivables(2,154)(2,001)(712)
Inventories(645)(428)(312)
Accounts payable130127(85)
Other current assets(103)(44)26
Other current liabilities124153403
Net cash provided by/(used for) operating activities878216408
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash receipts on sold receivables1,2961,221436
Capital expenditures(594)(438)(223)
Payments to acquire business, net of cash acquired(248)(215)(215)
Other investing activities, net31116
Net cash provided by/(used for) investing activities4855794
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt(2,706)(12)(6)
Proceeds from issuance of long-term debt2,9902,990—
Proceeds from issuance of commercial paper2,4851,5251,524
Repayments of commercial paper(1,950)(1,950)(1,006)
Dividends paid - Series A Preferred Stock———
Dividends paid - common stock(2,421)(1,659)(897)
Redemption of Series A Preferred Stock———
Other financing activities, net(35)(3)14
Net cash provided by/(used for) financing activities(1,637)891(371)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(128)(80)(10)
Cash, cash equivalents, and restricted cash
Net increase/(decrease)(402)1,60631
Balance at beginning of period1,7691,7691,769
Balance at end of period$1,367$3,375$1,800
NON-CASH INVESTING ACTIVITIES:
Beneficial interest obtained in exchange for securitized trade receivables$938$899$613

The Kraft Heinz Company

Consolidated Statements of Cash Flows

(in millions)

As Restated
September 30, 2017July 1, 2017April 1, 2017
Nine Months EndedSix Months EndedThree Months Ended
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)$2,950$2,038$881
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization789517262
Amortization of postretirement benefit plans prior service costs/(credits)(247)(171)(82)
Equity award compensation expense362411
Deferred income tax provision/(benefit)43222368
Postemployment benefit plan contributions(283)(90)(38)
Goodwill and intangible asset impairment losses4948—
Nonmonetary currency devaluation36338
Other items, net(62)(48)40
Changes in current assets and liabilities:
Trade receivables(2,061)(1,598)(1,040)
Inventories(567)(418)(475)
Accounts payable1238462
Other current assets(90)(103)(72)
Other current liabilities(1,090)(717)(240)
Net cash provided by/(used for) operating activities15(178)(615)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash receipts on sold receivables1,6331,069464
Capital expenditures(956)(690)(368)
Payments to acquire business, net of cash acquired———
Other investing activities, net454438
Net cash provided by/(used for) investing activities722423134
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt(2,635)(2,032)(27)
Proceeds from issuance of long-term debt1,49642
Proceeds from issuance of commercial paper5,4954,2132,324
Repayments of commercial paper(5,709)(3,777)(2,068)
Dividends paid - Series A Preferred Stock———
Dividends paid - common stock(2,161)(1,434)(736)
Redemption of Series A Preferred Stock———
Other financing activities, net2815—
Net cash provided by/(used for) financing activities(3,486)(3,011)(505)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash432913
Cash, cash equivalents, and restricted cash
Net increase/(decrease)(2,706)(2,737)(973)
Balance at beginning of period4,2554,2554,255
Balance at end of period$1,549$1,518$3,282
NON-CASH INVESTING ACTIVITIES:
Beneficial interest obtained in exchange for securitized trade receivables$1,936$1,407$880

The Kraft Heinz Company

Condensed Consolidated Statement of Income

(in millions, except per share data)

For the Three Months Ended September 29, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net sales$6,378$5(g)$6,383
Cost of products sold4,27118(a)(b)(g)4,289
Gross profit2,107(13)2,094
Selling, general and administrative expenses, excluding impairment losses803—(g)803
Goodwill impairment losses———
Intangible asset impairment losses234(17)(f)217
Selling, general and administrative expenses1,037(17)1,020
Operating income/(loss)1,07041,074
Interest expense327(1)(b)(g)326
Other expense/(income), net(71)—(71)
Income/(loss) before income taxes8145819
Provision for/(benefit from) income taxes18615(a)(b)(e)(f)(g)201
Net income/(loss)628(10)618
Net income/(loss) attributable to noncontrolling interest(2)1(g)(1)
Net income/(loss) attributable to Kraft Heinz630(11)619
Preferred dividends———
Net income/(loss) attributable to common shareholders$630$(11)$619
Per share data applicable to common shareholders:
Basic earnings/(loss)$0.52$(0.01)$0.51
Diluted earnings/(loss)0.51(0.01)0.50

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to cost of products sold of $13 million and a decrease to provision for income taxes of $2 million for the three months ended September 29, 2018.

(b) Capital Leases—The correction of these misstatements resulted in an increase to cost of products sold of less than $1 million, a decrease to interest expense of $1 million, and an increase to provision for income taxes of less than $1 million for the three months ended September 29, 2018.

(c) Customer Incentive Program Expense Misclassifications—None.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in an increase to provision for income taxes of $14 million for the three months ended September 29, 2018.

(f) Impairments—The correction of these misstatements resulted in a decrease to SG&A of $17 million and an increase to provision for income taxes of $4 million for the three months ended September 29, 2018.

(g) Other—The correction of these misstatements resulted in an increase to net sales of $5 million, an increase to cost of products sold of $5 million, an increase to SG&A of less than $1 million, a decrease to interest expense of less than $1 million, a decrease to provision for income taxes of $1 million, and a decrease to net loss attributable to noncontrolling interest of $1 million for the three months ended September 29, 2018.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Income

(in millions, except per share data)

For the Nine Months Ended September 29, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net sales$19,368$9(g)$19,377
Cost of products sold12,65121(a)(b)(g)12,672
Gross profit6,717(12)6,705
Selling, general and administrative expenses, excluding impairment losses2,338—(g)2,338
Goodwill impairment losses164(31)(f)133
Intangible asset impairment losses335(17)(f)318
Selling, general and administrative expenses2,837(48)2,789
Operating income/(loss)3,880363,916
Interest expense962(3)(b)(g)959
Other expense/(income), net(196)—(196)
Income/(loss) before income taxes3,114393,153
Provision for/(benefit from) income taxes73841(a)(b)(e)(f)(g)779
Net income/(loss)2,376(2)2,374
Net income/(loss) attributable to noncontrolling interest(3)1(g)(2)
Net income/(loss) attributable to Kraft Heinz2,379(3)2,376
Preferred dividends———
Net income/(loss) attributable to common shareholders$2,379$(3)$2,376
Per share data applicable to common shareholders:
Basic earnings/(loss)$1.95$—$1.95
Diluted earnings/(loss)1.94—1.94

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to cost of products sold of $22 million and a decrease to provision for income taxes of $3 million for the nine months ended September 29, 2018.

(b) Capital Leases—The correction of these misstatements resulted in an increase to cost of products sold of $1 million, a decrease to interest expense of $3 million, and an increase to provision for income taxes of less than $1 million for the nine months ended September 29, 2018.

(c) Customer Incentive Program Expense Misclassifications—None.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in an increase to provision for income taxes of $40 million for the nine months ended September 29, 2018.

(f) Impairments—The correction of these misstatements resulted in a decrease to SG&A of $48 million and an increase to provision for income taxes of $4 million for the nine months ended September 29, 2018.

(g) Other—The correction of these misstatements resulted in an increase to net sales of $9 million, a decrease to cost of products sold of $2 million, an increase to SG&A of less than $1 million, a decrease to interest expense of less than $1 million, an increase to provision for income taxes of less than $1 million, and a decrease to net loss attributable to noncontrolling interest of $1 million for the nine months ended September 29, 2018.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Income

(in millions, except per share data)

For the Three Months Ended June 30, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net sales$6,686$4(g)$6,690
Cost of products sold4,32122(a)(b)(g)4,343
Gross profit2,365(18)2,347
Selling, general and administrative expenses, excluding impairment losses771—771
Goodwill impairment losses164(31)(f)133
Intangible asset impairment losses101—101
Selling, general and administrative expenses1,036(31)1,005
Operating income/(loss)1,329131,342
Interest expense318(2)(b)(g)316
Other expense/(income), net(35)—(35)
Income/(loss) before income taxes1,046151,061
Provision for/(benefit from) income taxes29117(a)(b)(e)(f)(g)308
Net income/(loss)755(2)753
Net income/(loss) attributable to noncontrolling interest(1)—(1)
Net income/(loss) attributable to Kraft Heinz756(2)754
Preferred dividends———
Net income/(loss) attributable to common shareholders$756$(2)$754
Per share data applicable to common shareholders:
Basic earnings/(loss)$0.62$—$0.62
Diluted earnings/(loss)0.62—0.62

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to cost of products sold of $13 million and a decrease to provision for income taxes of $2 million for the three months ended June 30, 2018.

(b) Capital Leases—The correction of these misstatements resulted in an increase to cost of products sold of $1 million, a decrease to interest expense of $2 million, and an increase to provision for income taxes of less than $1 million for the three months ended June 30, 2018.

(c) Customer Incentive Program Expense Misclassifications—None.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in an increase to provision for income taxes of $21 million for the three months ended June 30, 2018.

(f) Impairments—The correction of these misstatements resulted in a decrease to SG&A of $31 million and an increase to provision for income taxes of less than $1 million for the three months ended June 30, 2018.

(g) Other—The correction of these misstatements resulted in an increase to net sales of $4 million, an increase to cost of products sold of $8 million, a decrease to interest expense of less than $1 million, and a decrease to provision for income taxes of $2 million for the three months ended June 30, 2018.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Income

(in millions, except per share data)

For the Six Months Ended June 30, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net sales$12,990$4(g)$12,994
Cost of products sold8,3803(a)(b)(g)8,383
Gross profit4,61014,611
Selling, general and administrative expenses, excluding impairment losses1,535—1,535
Goodwill impairment losses164(31)(f)133
Intangible asset impairment losses101—101
Selling, general and administrative expenses1,800(31)1,769
Operating income/(loss)2,810322,842
Interest expense635(2)(b)(g)633
Other expense/(income), net(125)—(125)
Income/(loss) before income taxes2,300342,334
Provision for/(benefit from) income taxes55226(a)(b)(e)(f)(g)578
Net income/(loss)1,74881,756
Net income/(loss) attributable to noncontrolling interest(1)—(1)
Net income/(loss) attributable to Kraft Heinz1,74981,757
Preferred dividends———
Net income/(loss) attributable to common shareholders$1,749$8$1,757
Per share data applicable to common shareholders:
Basic earnings/(loss)$1.43$0.01$1.44
Diluted earnings/(loss)1.43—1.43

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to cost of products sold of $9 million and a decrease to provision for income taxes of $1 million for the six months ended June 30, 2018.

(b) Capital Leases—The correction of these misstatements resulted in an increase to cost of products sold of $1 million, a decrease to interest expense of $2 million, and an increase to provision for income taxes of less than $1 million for the six months ended June 30, 2018.

(c) Customer Incentive Program Expense Misclassifications—None.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in an increase to provision for income taxes of $26 million for the six months ended June 30, 2018.

(f) Impairments—The correction of these misstatements resulted in a decrease to SG&A of $31 million and an increase to provision for income taxes of less than $1 million for the six months ended June 30, 2018.

(g) Other—The correction of these misstatements resulted in an increase to net sales of $4 million, a decrease to cost of products sold of $7 million, a decrease to interest expense of less than $1 million, and an increase to provision for income taxes of $1 million for the six months ended June 30, 2018.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Income

(in millions, except per share data)

For the Three Months Ended March 31, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net sales$6,304$—$6,304
Cost of products sold4,059(19)(a)(b)(g)4,040
Gross profit2,245192,264
Selling, general and administrative expenses, excluding impairment losses764—764
Goodwill impairment losses———
Intangible asset impairment losses——(f)—
Selling, general and administrative expenses764—764
Operating income/(loss)1,481191,500
Interest expense317—(b)(g)317
Other expense/(income), net(90)—(90)
Income/(loss) before income taxes1,254191,273
Provision for/(benefit from) income taxes2619(a)(b)(e)(f)(g)270
Net income/(loss)993101,003
Net income/(loss) attributable to noncontrolling interest———
Net income/(loss) attributable to Kraft Heinz993101,003
Preferred dividends———
Net income/(loss) attributable to common shareholders$993$10$1,003
Per share data applicable to common shareholders:
Basic earnings/(loss)$0.81$0.01$0.82
Diluted earnings/(loss)0.810.010.82

(a) Supplier Rebates—The correction of these misstatements resulted in a decrease to cost of products sold of $4 million and an increase to provision for income taxes of $1 million for the three months ended March 31, 2018.

(b) Capital Leases—The correction of these misstatements resulted in a decrease to cost of products sold of less than $1 million, a decrease to interest expense of less than $1 million, and an increase to provision for income taxes of less than $1 million for the three months ended March 31, 2018.

(c) Customer Incentive Program Expense Misclassifications—None.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in an increase to provision for income taxes of $5 million for the three months ended March 31, 2018.

(f) Impairments—The correction of these misstatements resulted in a decrease to SG&A of less than $1 million and an increase to provision for income taxes of less than $1 million for the three months ended March 31, 2018.

(g) Other—The correction of these misstatements resulted in a decrease to cost of products sold of $15 million, a decrease to interest expense of less than $1 million, and an increase to provision for income taxes of $3 million for the three months ended March 31, 2018.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Income

(in millions, except per share data)

For the Three Months Ended December 30, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs RestatedASU Adoption ImpactsAs Restated & Recast
Net sales$6,877$(36)(c)(g)$6,841$—$6,841
Cost of products sold4,470(18)(a)(b)(c)(g)4,4521024,554
Gross profit2,407(18)2,389(102)2,287
Selling, general and administrative expenses, excluding impairment losses767(4)(c)(g)76315778
Goodwill impairment losses—————
Intangible asset impairment losses——(f)———
Selling, general and administrative expenses767(4)76315778
Operating income/(loss)1,640(14)1,626(117)1,509
Interest expense308—(g)308—308
Other expense/(income), net1—1(117)(116)
Income/(loss) before income taxes1,331(14)1,317—1,317
Provision for/(benefit from) income taxes(6,665)—(a)(b)(e)(f)(g)(6,665)—(6,665)
Net income/(loss)7,996(14)7,982—7,982
Net income/(loss) attributable to noncontrolling interest(7)—(7)—(7)
Net income/(loss) attributable to Kraft Heinz8,003(14)7,989—7,989
Preferred dividends—————
Net income/(loss) attributable to common shareholders$8,003$(14)$7,989$—$7,989
Per share data applicable to common shareholders:
Basic earnings/(loss)$6.57$(0.02)$6.55$—$6.55
Diluted earnings/(loss)6.52(0.02)6.50—6.50

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to cost of products sold of $21 million and a decrease to benefit from income taxes of $8 million for the three months ended December 30, 2017.

(b) Capital Leases—The correction of these misstatements resulted in a decrease to cost of products sold of less than $1 million, a decrease to interest expense of less than $1 million, and a decrease to benefit from income taxes of less than $1 million for the three months ended December 30, 2017.

(c) Customer Incentive Program Expense Misclassifications—As previously disclosed in March 2018, the correction of these misstatements resulted in a decrease to net sales of $33 million, a decrease to cost of products sold of $31 million, and a decrease to SG&A of $2 million for the three months ended December 30, 2017.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in an increase to benefit from income taxes of $12 million for the three months ended December 30, 2017.

(f) Impairments—The correction of these misstatements resulted in a decrease to SG&A of less than $1 million and a decrease to benefit from income taxes of less than $1 million for the three months ended December 30, 2017.

(g) Other—The correction of these misstatements resulted in a decrease to net sales of $3 million, a decrease to cost of products sold of $8 million, a decrease to SG&A of $2 million, a decrease to interest expense of less than $1 million, and a decrease to benefit from income taxes of $4 million for the three months ended December 30, 2017.

The values as previously reported for the three months ended December 30, 2017 were derived from our Annual Report on Form 10-K for the year ended December 30, 2017 filed on February 16, 2018.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Income

(in millions, except per share data)

For the Three Months Ended September 30, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs RestatedASU Adoption ImpactsAs Restated & Recast
Net sales$6,314$(35)(c)(g)$6,279$—$6,279
Cost of products sold4,00014(a)(c)(g)4,0141094,123
Gross profit2,314(49)2,265(109)2,156
Selling, general and administrative expenses, excluding impairment losses652(2)(c)65014664
Goodwill impairment losses—————
Intangible asset impairment losses1—(f)1—1
Selling, general and administrative expenses653(2)65114665
Operating income/(loss)1,661(47)1,614(123)1,491
Interest expense306—(g)306—306
Other expense/(income), net(4)—(4)(123)(127)
Income/(loss) before income taxes1,359(47)1,312—1,312
Provision for/(benefit from) income taxes416(16)(a)(e)(f)(g)400—400
Net income/(loss)943(31)912—912
Net income/(loss) attributable to noncontrolling interest(1)—(1)—(1)
Net income/(loss) attributable to Kraft Heinz944(31)913—913
Preferred dividends—————
Net income/(loss) attributable to common shareholders$944$(31)$913$—$913
Per share data applicable to common shareholders:
Basic earnings/(loss)$0.78$(0.03)$0.75$—$0.75
Diluted earnings/(loss)0.77(0.03)0.74—0.74

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to cost of products sold of $36 million and a decrease to provision for income taxes of $13 million for the three months ended September 30, 2017.

(b) Capital Leases—None.

(c) Customer Incentive Program Expense Misclassifications—As previously disclosed in March 2018, the correction of these misstatements resulted in a decrease to net sales of $34 million, a decrease to cost of products sold of $32 million, and a decrease to SG&A of $2 million for the three months ended September 30, 2017.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in an increase to provision for income taxes of less than $1 million for the three months ended September 30, 2017.

(f) Impairments—The correction of these misstatements resulted in a decrease to SG&A of less than $1 million and an increase to provision for income taxes of less than $1 million for the three months ended September 30, 2017.

(g) Other—The correction of these misstatements resulted in a decrease to net sales of $1 million, an increase to cost of products sold of $10 million, a decrease to interest expense of less than $1 million, and a decrease to provision for income taxes of $3 million for the three months ended September 30, 2017.

The values as previously reported for the three months ended September 30, 2017 were derived from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 filed on November 7, 2017.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Income

(in millions, except per share data)

For the Nine Months Ended September 30, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs RestatedASU Adoption ImpactsAs Restated & Recast
Net sales$19,355$(120)(c)(g)$19,235$—$19,235
Cost of products sold12,059(26)(a)(c)(g)12,03345612,489
Gross profit7,296(94)7,202(456)6,746
Selling, general and administrative expenses, excluding impairment losses2,114(28)(c)(g)2,086632,149
Goodwill impairment losses—————
Intangible asset impairment losses49—(f)49—49
Selling, general and administrative expenses2,163(28)2,135632,198
Operating income/(loss)5,133(66)5,067(519)4,548
Interest expense926—(g)926—926
Other expense/(income), net8—8(519)(511)
Income/(loss) before income taxes4,199(66)4,133—4,133
Provision for/(benefit from) income taxes1,205(22)(a)(e)(f)(g)1,183—1,183
Net income/(loss)2,994(44)2,950—2,950
Net income/(loss) attributable to noncontrolling interest(2)—(2)—(2)
Net income/(loss) attributable to Kraft Heinz2,996(44)2,952—2,952
Preferred dividends—————
Net income/(loss) attributable to common shareholders$2,996$(44)$2,952$—$2,952
Per share data applicable to common shareholders:
Basic earnings/(loss)$2.46$(0.04)$2.42$—$2.42
Diluted earnings/(loss)2.44(0.04)2.40—2.40

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to cost of products sold of $72 million and a decrease to provision for income taxes of $26 million for the nine months ended September 30, 2017.

(b) Capital Leases—None.

(c) Customer Incentive Program Expense Misclassifications—As previously disclosed in March 2018, the correction of these misstatements resulted in a decrease to net sales of $114 million, a decrease to cost of products sold of $108 million, and a decrease to SG&A of $6 million for the nine months ended September 30, 2017.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in an increase to provision for income taxes of less than $1 million for the nine months ended September 30, 2017.

(f) Impairments—The correction of these misstatements resulted in a decrease to SG&A of less than $1 million and an increase to provision for income taxes of less than $1 million for the nine months ended September 30, 2017.

(g) Other—The correction of these misstatements resulted in a decrease to net sales of $6 million, an increase to cost of products sold of $10 million, a decrease to SG&A of $22 million, a decrease to interest expense of less than $1 million, and an increase to provision for income taxes of $4 million for the nine months ended September 30, 2017.

The values as previously reported for the nine months ended September 30, 2017 were derived from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 filed on November 7, 2017.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Income

(in millions, except per share data)

For the Three Months Ended July 1, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs RestatedASU Adoption ImpactsAs Restated & Recast
Net sales$6,677$(43)(c)(g)$6,634$—$6,634
Cost of products sold3,996(15)(a)(c)(g)3,9812464,227
Gross profit2,681(28)2,653(246)2,407
Selling, general and administrative expenses, excluding impairment losses712(24)(c)(g)68832720
Goodwill impairment losses—————
Intangible asset impairment losses48—(f)48—48
Selling, general and administrative expenses760(24)73632768
Operating income/(loss)1,921(4)1,917(278)1,639
Interest expense307—(g)307—307
Other expense/(income), net24—24(278)(254)
Income/(loss) before income taxes1,590(4)1,586—1,586
Provision for/(benefit from) income taxes430(1)(a)(e)(f)(g)429—429
Net income/(loss)1,160(3)1,157—1,157
Net income/(loss) attributable to noncontrolling interest1—1—1
Net income/(loss) attributable to Kraft Heinz1,159(3)1,156—1,156
Preferred dividends—————
Net income/(loss) attributable to common shareholders$1,159$(3)$1,156$—$1,156
Per share data applicable to common shareholders:
Basic earnings/(loss)$0.95$—$0.95$—$0.95
Diluted earnings/(loss)0.94—0.94—0.94

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to cost of products sold of $23 million and a decrease to provision for income taxes of $8 million for the three months ended July 1, 2017.

(b) Capital Leases—None.

(c) Customer Incentive Program Expense Misclassifications—As previously disclosed in March 2018, the correction of these misstatements resulted in a decrease to net sales of $40 million, a decrease to cost of products sold of $38 million, and a decrease to SG&A of $2 million for the three months ended July 1, 2017.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in a decrease to provision for income taxes of less than $1 million for the three months ended July 1, 2017.

(f) Impairments—The correction of these misstatements resulted in a decrease to SG&A of less than $1 million and an increase to provision for income taxes of less than $1 million for the three months ended July 1, 2017.

(g) Other—The correction of these misstatements resulted in a decrease to net sales of $3 million, an increase to cost of products sold of less than $1 million, a decrease to SG&A of $22 million, a decrease to interest expense of less than $1 million, and an increase to provision for income taxes of $7 million for the three months ended July 1, 2017.

The values as previously reported for the three months ended July 1, 2017 were derived from our Quarterly Report on Form 10-Q/A for the quarter ended July 1, 2017 filed on November 7, 2017.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Income

(in millions, except per share data)

For the Six Months Ended July 1, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs RestatedASU Adoption ImpactsAs Restated & Recast
Net sales$13,041$(85)(c)(g)$12,956$—$12,956
Cost of products sold8,059(40)(a)(c)(g)8,0193478,366
Gross profit4,982(45)4,937(347)4,590
Selling, general and administrative expenses, excluding impairment losses1,462(26)(c)(g)1,436491,485
Goodwill impairment losses—————
Intangible asset impairment losses48—(f)48—48
Selling, general and administrative expenses1,510(26)1,484491,533
Operating income/(loss)3,472(19)3,453(396)3,057
Interest expense620—(g)620—620
Other expense/(income), net12—12(396)(384)
Income/(loss) before income taxes2,840(19)2,821—2,821
Provision for/(benefit from) income taxes789(6)(a)(e)(f)(g)783—783
Net income/(loss)2,051(13)2,038—2,038
Net income/(loss) attributable to noncontrolling interest(1)—(1)—(1)
Net income/(loss) attributable to Kraft Heinz2,052(13)2,039—2,039
Preferred dividends—————
Net income/(loss) attributable to common shareholders$2,052$(13)$2,039$—$2,039
Per share data applicable to common shareholders:
Basic earnings/(loss)$1.69$(0.02)$1.67$—$1.67
Diluted earnings/(loss)1.67(0.01)1.66—1.66

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to cost of products sold of $36 million and a decrease to provision for income taxes of $13 million for the six months ended July 1, 2017.

(b) Capital Leases—None.

(c) Customer Incentive Program Expense Misclassifications—As previously disclosed in March 2018, the correction of these misstatements resulted in a decrease to net sales of $80 million, a decrease to cost of products sold of $76 million, and a decrease to SG&A of $4 million for the six months ended July 1, 2017.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in an increase to provision for income taxes of less than $1 million for the six months ended July 1, 2017.

(f) Impairments—The correction of these misstatements resulted in a decrease to SG&A of less than $1 million and an increase to provision for income taxes of less than $1 million for the six months ended July 1, 2017.

(g) Other—The correction of these misstatements resulted in a decrease to net sales of $5 million, an increase to cost of products sold of less than $1 million, a decrease to SG&A of $22 million, a decrease to interest expense of less than $1 million, and an increase to provision for income taxes of $7 million for the six months ended July 1, 2017.

The values as previously reported for the six months ended July 1, 2017 were derived from our Quarterly Report on Form 10-Q/A for the quarter ended July 1, 2017 filed on November 7, 2017.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statements of Income

(in millions, except per share data)

For the Three Months Ended April 1, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs RestatedASU Adoption ImpactsAs Restated & Recast
Net sales$6,364$(42)(c)(g)$6,322$—$6,322
Cost of products sold4,063(25)(a)(c)(g)4,0381014,139
Gross profit2,301(17)2,284(101)2,183
Selling, general and administrative expenses, excluding impairment losses750(2)(c)74817765
Goodwill impairment losses—————
Intangible asset impairment losses——(f)———
Selling, general and administrative expenses750(2)74817765
Operating income/(loss)1,551(15)1,536(118)1,418
Interest expense313—(g)313—313
Other expense/(income), net(12)—(12)(118)(130)
Income/(loss) before income taxes1,250(15)1,235—1,235
Provision for/(benefit from) income taxes359(5)(a)(e)(f)(g)354—354
Net income/(loss)891(10)881—881
Net income/(loss) attributable to noncontrolling interest(2)—(2)—(2)
Net income/(loss) attributable to Kraft Heinz893(10)883—883
Preferred dividends—————
Net income/(loss) attributable to common shareholders$893$(10)$883$—$883
Per share data applicable to common shareholders:
Basic earnings/(loss)$0.73$—$0.73$—$0.73
Diluted earnings/(loss)0.73(0.01)0.72—0.72

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to cost of products sold of $13 million and a decrease to provision for income taxes of $5 million for the three months ended April 1, 2017.

(b) Capital Leases—None.

(c) Customer Incentive Program Expense Misclassifications—As previously disclosed in March 2018, the correction of these misstatements resulted in a decrease to net sales of $40 million, a decrease to cost of products sold of $38 million, and a decrease to SG&A of $2 million for the three months ended April 1, 2017.

(d) Balance Sheet Misclassifications—None.

(e) Income Taxes—The correction of these misstatements resulted in an increase to provision for income taxes of less than $1 million for the three months ended April 1, 2017.

(f) Impairments—The correction of these misstatements resulted in a decrease to SG&A of less than $1 million and an increase to provision for income taxes of less than $1 million for the three months ended April 1, 2017.

(g) Other—The correction of these misstatements resulted in a decrease to net sales of $2 million, an increase to cost of products sold of less than $1 million, a decrease to interest expense of less than $1 million, and a decrease to provision for income taxes of less than $1 million for the three months ended April 1, 2017.

The values as previously reported for the three months ended April 1, 2017 were derived from our Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2017 filed on November 7, 2017.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Comprehensive Income

(in millions)

For the Three Months Ended September 29, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$628$(10)(a)(b)(e)(f)(g)$618
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments(146)2(b)(e)(f)(144)
Net deferred gains/(losses) on net investment hedges13—13
Amounts excluded from the effectiveness assessment of net investment hedges3—3
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)(2)—(2)
Net deferred gains/(losses) on cash flow hedges(16)—(16)
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)12—12
Net actuarial gains/(losses) arising during the period17—17
Prior service credits/(costs) arising during the period———
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(58)—(58)
Total other comprehensive income/(loss)(177)2(175)
Total comprehensive income/(loss)451(8)443
Comprehensive income/(loss) attributable to noncontrolling interest(4)1(g)(3)
Comprehensive income/(loss) attributable to Kraft Heinz$455$(9)$446

The $10 million decrease to net income was primarily driven by misstatements in the income taxes and supplier rebates categories, partially offset by misstatements in the impairments, capital leases, and other categories. See additional descriptions of the net income impacts in the consolidated statement of income for the three months ended September 29, 2018 section above.

The $2 million increase to foreign currency translation adjustments is the result of misstatements in the income taxes, capital leases, and impairments categories.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Comprehensive Income

(in millions)

For the Nine Months Ended September 29, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$2,376$(2)(a)(b)(e)(f)(g)$2,374
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments(817)8(b)(e)(f)(809)
Net deferred gains/(losses) on net investment hedges158—158
Amounts excluded from the effectiveness assessment of net investment hedges3—3
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)(2)—(2)
Net deferred gains/(losses) on cash flow hedges40—40
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)(10)—(10)
Net actuarial gains/(losses) arising during the period70—70
Prior service credits/(costs) arising during the period———
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(133)—(133)
Total other comprehensive income/(loss)(691)8(683)
Total comprehensive income/(loss)1,68561,691
Comprehensive income/(loss) attributable to noncontrolling interest(16)1(g)(15)
Comprehensive income/(loss) attributable to Kraft Heinz$1,701$5$1,706

The $2 million decrease to net income was primarily driven by misstatements in the income taxes and supplier rebates categories, partially offset by misstatements in the impairments, other, and capital leases categories. See additional descriptions of the net income impacts in the consolidated statement of income for the nine months ended September 29, 2018 section above.

The $8 million increase to foreign currency translation adjustments is the result of misstatements in the income taxes, capital leases, and impairments categories.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Comprehensive Income

(in millions)

For the Three Months Ended June 30, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$755$(2)(a)(b)(e)(f)(g)$753
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments(868)6(b)(e)(f)(862)
Net deferred gains/(losses) on net investment hedges219—219
Amounts excluded from the effectiveness assessment of net investment hedges———
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)———
Net deferred gains/(losses) on cash flow hedges34—34
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)(9)—(9)
Net actuarial gains/(losses) arising during the period53—53
Prior service credits/(costs) arising during the period———
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(17)—(17)
Total other comprehensive income/(loss)(588)6(582)
Total comprehensive income/(loss)1674171
Comprehensive income/(loss) attributable to noncontrolling interest(7)—(7)
Comprehensive income/(loss) attributable to Kraft Heinz$174$4$178

The $2 million decrease to net income was primarily driven by misstatements in the income taxes, supplier rebates, and other categories, partially offset by misstatements in the impairments and capital leases categories. See additional descriptions of the net income impacts in the consolidated statement of income for the three months ended June 30, 2018 section above.

The $6 million increase to foreign currency translation adjustments is the result of misstatements in the income taxes, capital leases, and impairments categories.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Comprehensive Income

(in millions)

For the Six Months Ended June 30, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$1,748$8(a)(b)(e)(f)(g)$1,756
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments(671)6(b)(e)(f)(665)
Net deferred gains/(losses) on net investment hedges145—145
Amounts excluded from the effectiveness assessment of net investment hedges———
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)———
Net deferred gains/(losses) on cash flow hedges56—56
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)(22)—(22)
Net actuarial gains/(losses) arising during the period53—53
Prior service credits/(costs) arising during the period———
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(75)—(75)
Total other comprehensive income/(loss)(514)6(508)
Total comprehensive income/(loss)1,234141,248
Comprehensive income/(loss) attributable to noncontrolling interest(12)—(12)
Comprehensive income/(loss) attributable to Kraft Heinz$1,246$14$1,260

The $8 million increase to net income was primarily driven by misstatements in the impairments, other, and capital leases categories, partially offset by misstatements in the income taxes and supplier rebates categories. See additional descriptions of the net income impacts in the consolidated statement of income for the six months ended June 30, 2018 section above.

The $6 million increase to foreign currency translation adjustments is the result of misstatements in the income taxes, capital leases, and impairments categories.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Comprehensive Income

(in millions)

For the Three Months Ended March 31, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$993$10(a)(b)(e)(f)(g)$1,003
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments197—(b)(e)197
Net deferred gains/(losses) on net investment hedges(74)—(74)
Amounts excluded from the effectiveness assessment of net investment hedges———
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)———
Net deferred gains/(losses) on cash flow hedges22—22
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)(13)—(13)
Net actuarial gains/(losses) arising during the period———
Prior service credits/(costs) arising during the period———
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(58)—(58)
Total other comprehensive income/(loss)74—74
Total comprehensive income/(loss)1,067101,077
Comprehensive income/(loss) attributable to noncontrolling interest(5)—(5)
Comprehensive income/(loss) attributable to Kraft Heinz$1,072$10$1,082

The $10 million increase to net income was primarily driven by misstatements in the other, supplier rebates, capital leases, and impairments categories, partially offset by misstatements in the income taxes category. See additional descriptions of the net income impacts in the consolidated statement of income for the three months ended March 31, 2018 section above.

The less than $1 million decrease to foreign currency translation adjustments is the result of misstatements in the income taxes and capital leases categories.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Comprehensive Income

(in millions)

For the Three Months Ended December 30, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$7,996$(14)(a)(b)(e)(f)(g)$7,982
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments52(b)(e)7
Net deferred gains/(losses) on net investment hedges(26)—(26)
Amounts excluded from the effectiveness assessment of net investment hedges———
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)———
Net deferred gains/(losses) on cash flow hedges23—23
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)(12)—(12)
Net actuarial gains/(losses) arising during the period82—82
Prior service credits/(costs) arising during the period16—16
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(49)—(49)
Total other comprehensive income/(loss)39241
Total comprehensive income/(loss)8,035(12)8,023
Comprehensive income/(loss) attributable to noncontrolling interest1—1
Comprehensive income/(loss) attributable to Kraft Heinz$8,034$(12)$8,022

The $14 million decrease to net income was primarily driven by misstatements in the supplier rebates category, partially offset by misstatements in the income taxes, other, capital leases, and impairments categories. See additional descriptions of the net income impacts in the consolidated statement of income for the three months ended December 30, 2017 section above.

The $2 million decrease to foreign currency translation adjustments is the result of misstatements in the income taxes and capital leases categories.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Comprehensive Income

(in millions)

For the Three Months Ended September 30, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$943$(31)(a)(e)(f)(g)$912
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments421(2)(e)419
Net deferred gains/(losses) on net investment hedges(124)—(124)
Amounts excluded from the effectiveness assessment of net investment hedges———
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)———
Net deferred gains/(losses) on cash flow hedges(70)—(70)
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)51—51
Net actuarial gains/(losses) arising during the period(4)—(4)
Prior service credits/(costs) arising during the period———
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(51)—(51)
Total other comprehensive income/(loss)223(2)221
Total comprehensive income/(loss)1,166(33)1,133
Comprehensive income/(loss) attributable to noncontrolling interest(1)—(1)
Comprehensive income/(loss) attributable to Kraft Heinz$1,167$(33)$1,134

The $31 million decrease to net income was primarily driven by misstatements in the supplier rebates, other, and income taxes categories, partially offset by misstatements in the impairments category. See additional descriptions of the net income impacts in the consolidated statement of income for the three months ended September 30, 2017 section above.

The $2 million decrease to foreign currency translation adjustments is the result of misstatements in the income taxes category.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Comprehensive Income

(in millions)

For the Nine Months Ended September 30, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$2,994$(44)(a)(e)(f)(g)$2,950
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments1,179(1)(e)1,178
Net deferred gains/(losses) on net investment hedges(327)—(327)
Amounts excluded from the effectiveness assessment of net investment hedges———
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)———
Net deferred gains/(losses) on cash flow hedges(136)—(136)
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)97—97
Net actuarial gains/(losses) arising during the period(13)—(13)
Prior service credits/(costs) arising during the period1—1
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(260)—(260)
Total other comprehensive income/(loss)541(1)540
Total comprehensive income/(loss)3,535(45)3,490
Comprehensive income/(loss) attributable to noncontrolling interest(4)—(4)
Comprehensive income/(loss) attributable to Kraft Heinz$3,539$(45)$3,494

The $44 million decrease to net income was primarily driven by misstatements in the supplier rebates and income taxes categories, partially offset by misstatements in the other and impairments categories. See additional descriptions of the net income impacts in the consolidated statement of income for the nine months ended September 30, 2017 section above.

The $1 million decrease to foreign currency translation adjustments is the result of misstatements in the income taxes category.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Comprehensive Income

(in millions)

For the Three Months Ended July 1, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$1,160$(3)(a)(e)(f)(g)$1,157
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments4514(e)455
Net deferred gains/(losses) on net investment hedges(152)—(152)
Amounts excluded from the effectiveness assessment of net investment hedges———
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)———
Net deferred gains/(losses) on cash flow hedges(32)—(32)
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)26—26
Net actuarial gains/(losses) arising during the period1—1
Prior service credits/(costs) arising during the period1—1
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(154)—(154)
Total other comprehensive income/(loss)1414145
Total comprehensive income/(loss)1,30111,302
Comprehensive income/(loss) attributable to noncontrolling interest1—1
Comprehensive income/(loss) attributable to Kraft Heinz$1,300$1$1,301

The $3 million decrease to net income was primarily driven by misstatements in the supplier rebates category, partially offset by misstatements in the other, income taxes, and impairments categories. See additional descriptions of the net income impacts in the consolidated statement of income for the three months ended July 1, 2017 section above.

The $4 million increase to foreign currency translation adjustments is the result of misstatements in the income taxes category.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statements of Comprehensive Income

(in millions)

For the Six Months Ended July 1, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$2,051$(13)(a)(e)(f)(g)$2,038
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments7581(e)759
Net deferred gains/(losses) on net investment hedges(203)—(203)
Amounts excluded from the effectiveness assessment of net investment hedges———
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)———
Net deferred gains/(losses) on cash flow hedges(66)—(66)
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)46—46
Net actuarial gains/(losses) arising during the period(9)—(9)
Prior service credits/(costs) arising during the period1—1
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(209)—(209)
Total other comprehensive income/(loss)3181319
Total comprehensive income/(loss)2,369(12)2,357
Comprehensive income/(loss) attributable to noncontrolling interest(3)—(3)
Comprehensive income/(loss) attributable to Kraft Heinz$2,372$(12)$2,360

The $13 million decrease to net income was primarily driven by misstatements in the supplier rebates and income taxes categories, partially offset by misstatements in the other and impairments categories. See additional descriptions of the net income impacts in the consolidated statement of income for the three months ended July 1, 2017 section above.

The $1 million increase to foreign currency translation adjustments is the result of misstatements in the income taxes category.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statements of Comprehensive Income

(in millions)

For the Three Months Ended April 1, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
Net income/(loss)$891$(10)(a)(e)(f)(g)$881
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments307(3)(e)304
Net deferred gains/(losses) on net investment hedges(51)—(51)
Amounts excluded from the effectiveness assessment of net investment hedges———
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)———
Net deferred gains/(losses) on cash flow hedges(34)—(34)
Amounts excluded from the effectiveness assessment of cash flow hedges———
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)20—20
Net actuarial gains/(losses) arising during the period(10)—(10)
Prior service credits/(costs) arising during the period———
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(55)—(55)
Total other comprehensive income/(loss)177(3)174
Total comprehensive income/(loss)1,068(13)1,055
Comprehensive income/(loss) attributable to noncontrolling interest(4)—(4)
Comprehensive income/(loss) attributable to Kraft Heinz$1,072$(13)$1,059

The $10 million decrease to net income was primarily driven by misstatements in the supplier rebates, other, and income taxes categories, partially offset by misstatements in the impairments category. See additional descriptions of the net income impacts in the consolidated statement of income for the three months ended April 1, 2017 section above.

The $3 million decrease to foreign currency translation adjustments is the result of misstatements in the income taxes category.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Balance Sheet

(in millions, except per share data)

September 29, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
ASSETS
Cash and cash equivalents$1,366$—$1,366
Trade receivables (net of allowances of $24 at September 29, 2018)2,032—2,032
Sold receivables———
Income taxes receivable1958(a)(b)(e)(g)203
Inventories3,287(73)(d)(g)3,214
Prepaid expenses389—389
Other current assets32131(a)(d)352
Assets held for sale———
Total current assets7,590(34)7,556
Property, plant and equipment, net7,216(142)(b)(g)7,074
Goodwill44,30831(f)(g)44,339
Intangible assets, net58,727—58,727
Other non-current assets1,889(10)(e)1,879
TOTAL ASSETS$119,730$(155)$119,575
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$973$—$973
Current portion of long-term debt405(34)(b)(g)371
Trade payables4,312(74)(g)4,238
Accrued marketing494—494
Interest payable315—315
Other current liabilities1,082149(a)(g)1,231
Liabilities held for sale———
Total current liabilities7,581417,622
Long-term debt30,998(111)(b)(g)30,887
Deferred income taxes14,2159(a)(e)(g)14,224
Accrued postemployment costs394—394
Other non-current liabilities96471(a)1,035
TOTAL LIABILITIES54,1521054,162
Commitments and Contingencies
Redeemable noncontrolling interest6—6
Equity:
Common stock, $0.01 par value (5,000 shares authorized; 1,222 shares issued and 1,219 shares outstanding at September 29, 2018)12—12
Additional paid-in capital58,793(77)(d)58,716
Retained earnings/(deficit)8,576(97)(a)(b)(d)(e)(f)(g)8,479
Accumulated other comprehensive income/(losses)(1,732)8(b)(e)(f)(1,724)
Treasury stock, at cost (3 shares at September 29, 2018)(264)—(264)
Total shareholders' equity65,385(166)65,219
Noncontrolling interest1871(g)188
TOTAL EQUITY65,572(165)65,407
TOTAL LIABILITIES AND EQUITY$119,730$(155)$119,575

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to income taxes receivable of $1 million, a decrease to other current assets of $36 million, an increase to other current liabilities of $66 million, a decrease to deferred income taxes of $40 million, an increase to other non-current liabilities of $71 million, and a decrease to retained earnings of $132 million at September 29, 2018.

(b) Capital Leases—The correction of these misstatements resulted in a decrease to income taxes receivable of less than $1 million, a decrease to property, plant and equipment, net, of $141 million, a decrease to current portion of long-term debt of $32 million, a decrease to long-term debt of $111 million, an increase to retained earnings of $2 million, and a decrease to accumulated other comprehensive losses of less than $1 million at September 29, 2018.

(c) Customer Incentive Program Expense Misclassifications—None.

(d) Balance Sheet Misclassifications—The correction of these misstatements resulted in a decrease to inventories of $67 million, an increase to other current assets of $67 million, a decrease to additional paid-in capital of $77 million, and an increase to retained earnings of $77 million at September 29, 2018.

(e) Income Taxes—The correction of these misstatements resulted in an increase to income taxes receivable of $3 million, a decrease to other non-current assets of $10 million, an increase to deferred income taxes of $50 million, a decrease to retained earnings of $66 million, and a decrease to accumulated other comprehensive losses of $9 million at September 29, 2018.

(f) Impairments—The correction of these misstatements resulted in an increase to goodwill of $30 million, an increase to retained earnings of $31 million, and an increase to accumulated other comprehensive losses of $1 million at September 29, 2018.

(g) Other—The correction of these misstatements resulted in an increase to income taxes receivable of $4 million, a decrease to inventories of $6 million, a decrease to property, plant and equipment, net, of $1 million, an increase to goodwill of $1 million, a decrease to current portion of long-term debt of $2 million, a decrease to trade payables of $74 million, an increase to other current liabilities of $83 million, an increase to long-term debt of less than $1 million, a decrease to deferred income taxes of $1 million, a decrease to retained earnings of $9 million, and an increase to noncontrolling interest of $1 million at September 29, 2018.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Balance Sheet

(in millions, except per share data)

June 30, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
ASSETS
Cash and cash equivalents$3,369$—$3,369
Trade receivables (net of allowances of $24 at June 30, 2018)1,950—1,950
Sold receivables37—37
Income taxes receivable17734(a)(b)(e)(g)211
Inventories3,161(67)(d)(g)3,094
Prepaid expenses388—388
Other current assets41912(a)(d)(g)431
Assets held for sale———
Total current assets9,501(21)9,480
Property, plant and equipment, net7,258(141)(b)(g)7,117
Goodwill44,27032(f)(g)44,302
Intangible assets, net59,101(17)(f)59,084
Other non-current assets1,766—1,766
TOTAL ASSETS$121,896$(147)$121,749
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$34$—$34
Current portion of long-term debt2,754(31)(b)(g)2,723
Trade payables4,326(90)(g)4,236
Accrued marketing4746(g)480
Interest payable404—404
Other current liabilities1,099137(a)(g)1,236
Liabilities held for sale———
Total current liabilities9,091229,113
Long-term debt31,380(111)(b)(g)31,269
Deferred income taxes14,23030(a)(e)(f)(g)14,260
Accrued postemployment costs394—394
Other non-current liabilities92969(a)998
TOTAL LIABILITIES56,0241056,034
Commitments and Contingencies
Redeemable noncontrolling interest7—7
Equity:
Common stock, $0.01 par value (5,000 shares authorized; 1,222 shares issued and 1,219 shares outstanding at June 30, 2018)12—12
Additional paid-in capital58,766(77)(d)58,689
Retained earnings/(deficit)8,710(86)(a)(b)(d)(e)(f)(g)8,624
Accumulated other comprehensive income/(losses)(1,557)6(b)(e)(f)(1,551)
Treasury stock, at cost (3 shares at June 30, 2018)(254)—(254)
Total shareholders' equity65,677(157)65,520
Noncontrolling interest188—188
TOTAL EQUITY65,865(157)65,708
TOTAL LIABILITIES AND EQUITY$121,896$(147)$121,749

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to income taxes receivable of $1 million, a decrease to other current assets of $25 million, an increase to other current liabilities of $67 million, a decrease to deferred income taxes of $38 million, an increase to other non-current liabilities of $69 million, and a decrease to retained earnings of $122 million at June 30, 2018.

(b) Capital Leases—The correction of these misstatements resulted in a decrease to income taxes receivable of less than $1 million, a decrease to property, plant and equipment, net, of $139 million, a decrease to current portion of long-term debt of $29 million, a decrease to long-term debt of $111 million, an increase to retained earnings of $1 million, and an increase to accumulated other comprehensive losses of less than $1 million at June 30, 2018.

(c) Customer Incentive Program Expense Misclassifications—None.

(d) Balance Sheet Misclassifications—The correction of these misstatements resulted in a decrease to inventories of $65 million, an increase to other current assets of $65 million, a decrease to additional paid-in capital of $77 million, and an increase to retained earnings of $77 million at June 30, 2018.

(e) Income Taxes—The correction of these misstatements resulted in an increase to income taxes receivable of $29 million, an increase to deferred income taxes of $73 million, a decrease to retained earnings of $51 million, and a decrease to accumulated other comprehensive losses of $7 million at June 30, 2018.

(f) Impairments—The correction of these misstatements resulted in an increase to goodwill of $31 million, a decrease to intangible assets, net of $17 million, a decrease to deferred income taxes of $4 million, an increase to retained earnings of $19 million, and an increase to accumulated other comprehensive losses of $1 million at June 30, 2018.

(g) Other—The correction of these misstatements resulted in an increase to income taxes receivable of $4 million, a decrease to inventories of $2 million, a decrease to other current assets of $28 million, a decrease to property, plant and equipment, net of $2 million, an increase to goodwill of $1 million, a decrease to current portion of long-term debt of $2 million, a decrease to trade payables of $90 million, an increase to accrued marketing of $6 million, an increase to other current liabilities of $70 million, an increase to long-term debt of less than $1 million, a decrease to deferred income taxes of $1 million, and a decrease to retained earnings of $10 million at June 30, 2018.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Balance Sheet

(in millions, except per share data)

March 31, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
ASSETS
Cash and cash equivalents$1,794$—$1,794
Trade receivables (net of allowances of $24 at March 31, 2018)1,044—1,044
Sold receivables530—530
Income taxes receivable150(29)(a)(b)(d)(e)(g)121
Inventories3,144(55)(d)(g)3,089
Prepaid expenses367—367
Other current assets40818(a)(d)(g)426
Assets held for sale———
Total current assets7,437(66)7,371
Property, plant and equipment, net7,267(122)(b)(g)7,145
Goodwill44,8431(g)44,844
Intangible assets, net59,600(17)(f)59,583
Other non-current assets1,640—1,640
TOTAL ASSETS$120,787$(204)$120,583
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$1,001$2(g)$1,003
Current portion of long-term debt2,742(27)(b)(g)2,715
Trade payables4,241(93)(g)4,148
Accrued marketing5679(g)576
Interest payable345—345
Other current liabilities1,43367(a)(d)(e)(g)1,500
Liabilities held for sale———
Total current liabilities10,329(42)10,287
Long-term debt28,561(96)(b)(g)28,465
Deferred income taxes14,08521(a)(e)(f)(g)14,106
Accrued postemployment costs400—400
Other non-current liabilities94974(a)1,023
TOTAL LIABILITIES54,324(43)54,281
Commitments and Contingencies
Redeemable noncontrolling interest8—8
Equity:
Common stock, $0.01 par value (5,000 shares authorized; 1,222 shares issued and 1,219 shares outstanding at March 31, 2018)12—12
Additional paid-in capital58,733(77)(d)58,656
Retained earnings/(deficit)8,718(84)(a)(b)(d)(e)(f)(g)8,634
Accumulated other comprehensive income/(losses)(975)—(b)(e)(975)
Treasury stock, at cost (3 shares at March 31, 2018)(240)—(240)
Total shareholders' equity66,248(161)66,087
Noncontrolling interest207—207
TOTAL EQUITY66,455(161)66,294
TOTAL LIABILITIES AND EQUITY$120,787$(204)$120,583

(a) Supplier Rebates—The correction of these misstatements resulted in a decrease to income taxes receivable of $1 million, a decrease to other current assets of $8 million, an increase to other current liabilities of $63 million, a decrease to deferred income taxes of $35 million, an increase to other non-current liabilities of $74 million, and a decrease to retained earnings of $111 million at March 31, 2018.

(b) Capital Leases—The correction of these misstatements resulted in a decrease to income taxes receivable of less than $1 million, a decrease to property, plant and equipment, net, of $120 million, a decrease to current portion of long-term debt of $25 million, a decrease to long-term debt of $96 million, an increase to retained earnings of $1 million, and a decrease to accumulated other comprehensive losses of less than $1 million at March 31, 2018.

(c) Customer Incentive Program Expense Misclassifications—None.

(d) Balance Sheet Misclassifications—The correction of these misstatements resulted in a decrease to income taxes receivable of $28 million, a decrease to inventories of $53 million, an increase other current assets of $53 million, a decrease to other current liabilities of $28 million, a decrease to additional paid-in capital of $77 million and an increase to retained earnings of $77 million at March 31, 2018.

(e) Income Taxes—The correction of these misstatements resulted in a decrease to income taxes receivable of less than $1 million, a decrease to other current liabilities of $29 million, an increase to deferred income taxes of $59 million, a decrease to retained earnings of $30 million, and a decrease to accumulated other comprehensive losses of less than $1 million at March 31, 2018.

(f) Impairments—The correction of these misstatements resulted in a decrease to intangible assets, net of $17 million, a decrease to deferred income taxes of $4 million, and a decrease to retained earnings of $13 million at March 31, 2018.

(g) Other—The correction of these misstatements resulted in an increase to income taxes receivable of less than $1 million, a decrease to inventories of $2 million, a decrease to other current assets of $27 million, a decrease to property, plant and equipment, net of $2 million, an increase to goodwill of $1 million, an increase to commercial paper and other short term debt of $2 million, a decrease to current portion of long-term debt of $2 million, a decrease to trade payables of $93 million, an increase to accrued marketing of $9 million, an increase to other current liabilities of $61 million, an increase to long-term debt of less than $1 million, an increase to deferred income taxes of $1 million, and a decrease to retained earnings of $8 million at March 31, 2018.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Balance Sheet

(in millions, except per share data)

September 30, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
ASSETS
Cash and cash equivalents$1,441$—$1,441
Trade receivables (net of allowances of $29 at September 30, 2017)938—938
Sold receivables427—427
Income taxes receivable328(38)(a)(e)(g)290
Inventories3,188(52)(d)3,136
Prepaid expenses368—368
Other current assets538(11)(a)(d)527
Assets held for sale———
Total current assets7,228(101)7,127
Property, plant and equipment, net6,934(32)(b)(g)6,902
Goodwill44,8581(g)44,859
Intangible assets, net59,500(17)(f)59,483
Other non-current assets1,531—1,531
TOTAL ASSETS$120,051$(149)$119,902
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$455$2(g)$457
Current portion of long-term debt2,755(8)(b)(g)2,747
Trade payables3,947(74)(g)3,873
Accrued marketing4937(g)500
Interest payable295—295
Other current liabilities1,442136(a)(e)(g)1,578
Liabilities held for sale———
Total current liabilities9,387639,450
Long-term debt28,299(23)(b)(g)28,276
Deferred income taxes20,898(57)(a)(e)(f)20,841
Accrued postemployment costs1,808—1,808
Other non-current liabilities68827(a)715
TOTAL LIABILITIES61,0801061,090
Commitments and Contingencies
Redeemable noncontrolling interest———
Equity:
Common stock, $0.01 par value (5,000 shares authorized; 1,221 shares issued and 1,218 shares outstanding at September 30, 2017)12—12
Additional paid-in capital58,695(77)(d)58,618
Retained earnings/(deficit)1,360(80)(a)(d)(e)(f)(g)1,280
Accumulated other comprehensive income/(losses)(1,085)(2)(e)(1,087)
Treasury stock, at cost (3 shares at September 30, 2017)(223)—(223)
Total shareholders' equity58,759(159)58,600
Noncontrolling interest212—212
TOTAL EQUITY58,971(159)58,812
TOTAL LIABILITIES AND EQUITY$120,051$(149)$119,902

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to income taxes receivable of $1 million, a decrease to other current assets of $63 million, an increase to other current liabilities of $39 million, a decrease to deferred income taxes of $45 million, an increase to other non-current liabilities of $27 million, and a decrease to retained earnings of $83 million at September 30, 2017.

(b) Capital Leases—The correction of these misstatements resulted in a decrease to property, plant and equipment, net, of $29 million, a decrease to current portion of long-term debt of $7 million, and a decrease to long-term debt of $22 million at September 30, 2017.

(c) Customer Incentive Program Expense Misclassifications—None.

(d) Balance Sheet Misclassifications—The correction of these misstatements resulted in a decrease to inventories of $52 million, an increase other current assets of $52 million, a decrease to additional paid-in capital of $77 million, and an increase to retained earnings of $77 million at September 30, 2017.

(e) Income Taxes—The correction of these misstatements resulted in a decrease to income taxes receivable of $48 million, a decrease in other current liabilities of less than $1 million, a decrease to deferred income taxes of $8 million, a decrease to retained earnings of $38 million, and an increase to accumulated other comprehensive losses of $2 million at September 30, 2017.

(f) Impairments—The correction of these misstatements resulted in a decrease to intangible assets, net of $17 million, a decrease to deferred income taxes of $4 million, and a decrease to retained earnings of $13 million at September 30, 2017.

(g) Other—The correction of these misstatements resulted in an increase to income taxes receivable of $9 million, a decrease to property, plant and equipment, net of $3 million, an increase to goodwill of $1 million, an increase to commercial paper and other short term debt of $2 million, a decrease to current portion of long-term debt of $1 million, a decrease to trade payables of $74 million, an increase to accrued marketing of $7 million, an increase to other current liabilities of $97 million, a decrease to long-term debt of $1 million, and a decrease to retained earnings of $23 million at September 30, 2017.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Balance Sheet

(in millions, except per share data)

July 1, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
ASSETS
Cash and cash equivalents$1,445$—$1,445
Trade receivables (net of allowances of $28 at July 1, 2017)91360(d)973
Sold receivables521(60)(d)461
Income taxes receivable277(40)(a)(e)(g)237
Inventories3,065(53)(d)3,012
Prepaid expenses359—359
Other current assets52819(a)(d)547
Assets held for sale———
Total current assets7,108(74)7,034
Property, plant and equipment, net6,808(4)(g)6,804
Goodwill44,5651(g)44,566
Intangible assets, net59,400(17)(f)59,383
Other non-current assets1,535—1,535
TOTAL ASSETS$119,416$(94)$119,322
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$1,090$—$1,090
Current portion of long-term debt19—(g)19
Trade payables3,888(83)(g)3,805
Accrued marketing4945(g)499
Interest payable406—406
Other current liabilities1,459130(a)(e)(g)1,589
Liabilities held for sale———
Total current liabilities7,356527,408
Long-term debt29,979(1)(g)29,978
Deferred income taxes20,887(47)(a)(e)(f)20,840
Accrued postemployment costs1,975—1,975
Other non-current liabilities67328(a)701
TOTAL LIABILITIES60,8703260,902
Commitments and Contingencies
Redeemable noncontrolling interest———
Equity:
Common stock, $0.01 par value (5,000 shares authorized; 1,221 shares issued and 1,218 shares outstanding at July 1, 2017)12—12
Additional paid-in capital58,674(77)(d)58,597
Retained earnings/(deficit)1,178(49)(a)(d)(e)(f)(g)1,129
Accumulated other comprehensive income/(losses)(1,308)—(e)(1,308)
Treasury stock, at cost (3 shares at July 1, 2017)(223)—(223)
Total shareholders' equity58,333(126)58,207
Noncontrolling interest213—213
TOTAL EQUITY58,546(126)58,420
TOTAL LIABILITIES AND EQUITY$119,416$(94)$119,322

(a) Supplier Rebates—The correction of these misstatements resulted in an increase to income taxes receivable of $1 million, a decrease to other current assets of $34 million, an increase to other current liabilities of $31 million, a decrease to deferred income taxes of $33 million, an increase to other non-current liabilities of $28 million, and a decrease to retained earnings of $59 million at July 1, 2017.

(b) Capital Leases—None.

(c) Customer Incentive Program Expense Misclassifications—None.

(d) Balance Sheet Misclassifications—The correction of these misstatements resulted in an increase to trade receivables, net of $60 million, a decrease to sold receivables of $60 million, a decrease to inventories of $53 million, an increase other current assets of $53 million, a decrease to additional paid-in capital of $77 million, and an increase to retained earnings of $77 million at July 1, 2017.

(e) Income Taxes—The correction of these misstatements resulted in a decrease to income taxes receivable of $48 million, an increase in other current liabilities of less than $1 million, a decrease to deferred income taxes of $10 million, a decrease to retained earnings of $38 million, and an increase to accumulated other comprehensive losses of less than $1 million at July 1, 2017.

(f) Impairments—The correction of these misstatements resulted in a decrease to intangible assets, net of $17 million, a decrease to deferred income taxes of $4 million, and a decrease to retained earnings of $13 million at July 1, 2017.

(g) Other—The correction of these misstatements resulted in an increase to income taxes receivable of $7 million, a decrease to property, plant and equipment, net of $4 million, an increase to goodwill of $1 million, a decrease to current portion of long-term debt of less than $1 million, a decrease to trade payables of $83 million, an increase to accrued marketing of $5 million, an increase to other current liabilities of $99 million, a decrease to long-term debt of $1 million, and a decrease to retained earnings of $16 million at July 1, 2017.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Balance Sheet

(in millions, except per share data)

April 1, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
ASSETS
Cash and cash equivalents$3,242$—$3,242
Trade receivables (net of allowances of $30 at April 1, 2017)88650(d)936
Sold receivables588(50)(d)538
Income taxes receivable270(1)(a)(e)(g)269
Inventories3,151(57)(d)3,094
Prepaid expenses349—349
Other current assets389222(a)(d)(g)611
Assets held for sale———
Total current assets8,8751649,039
Property, plant and equipment, net6,693(4)(g)6,689
Goodwill44,3001(g)44,301
Intangible assets, net59,330(17)(f)59,313
Other non-current assets1,604—1,604
TOTAL ASSETS$120,802$144$120,946
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$909$—$909
Current portion of long-term debt2,023(1)(g)2,022
Trade payables3,936(78)(g)3,858
Accrued marketing5992(g)601
Interest payable346—346
Other current liabilities1,570335(a)(e)(g)1,905
Liabilities held for sale———
Total current liabilities9,3832589,641
Long-term debt29,748(1)(g)29,747
Deferred income taxes20,910(37)(a)(e)(f)20,873
Accrued postemployment costs2,016—2,016
Other non-current liabilities80150(a)(g)851
TOTAL LIABILITIES62,85827063,128
Commitments and Contingencies
Redeemable noncontrolling interest———
Equity:
Common stock, $0.01 par value (5,000 shares authorized; 1,220 shares issued and 1,218 shares outstanding at April 1, 2017)12—12
Additional paid-in capital58,642(77)(d)58,565
Retained earnings/(deficit)750(45)(a)(d)(e)(f)(g)705
Accumulated other comprehensive income/(losses)(1,449)(4)(e)(1,453)
Treasury stock, at cost (2 shares at April 1, 2017)(223)—(223)
Total shareholders' equity57,732(126)57,606
Noncontrolling interest212—212
TOTAL EQUITY57,944(126)57,818
TOTAL LIABILITIES AND EQUITY$120,802$144$120,946

(a) Supplier Rebates—The correction of these misstatements resulted in a decrease to income taxes receivable of $1 million, a decrease to other current assets of $15 million, an increase to other current liabilities of $26 million, a decrease to deferred income taxes of $26 million, an increase to other non-current liabilities of $28 million, and a decrease to retained earnings of $44 million at April 1, 2017.

(b) Capital Leases—None.

(c) Customer Incentive Program Expense Misclassifications—None.

(d) Balance Sheet Misclassifications—The correction of these misstatements resulted in an increase to trade receivables, net of $50 million, a decrease to sold receivables of $50 million, a decrease to inventories of $57 million, an increase to other current assets of $57 million, a decrease to additional paid-in capital of $77 million, and an increase to retained earnings of $77 million at April 1, 2017.

(e) Income Taxes—The correction of these misstatements resulted in a decrease to income taxes receivable of less than $1 million, an increase in other current liabilities of $49 million, a decrease to deferred income taxes of $7 million, a decrease to retained earnings of $38 million, and an increase to accumulated other comprehensive losses of $4 million at April 1, 2017.

(f) Impairments—The correction of these misstatements resulted in a decrease to intangible assets, net of $17 million, a decrease to deferred income taxes of $4 million, and a decrease to retained earnings of $13 million at April 1, 2017.

(g) Other—The correction of these misstatements resulted in an increase to income taxes receivable of less than $1 million, an increase to other current assets of $180 million, a decrease to property, plant and equipment, net of $4 million, an increase to goodwill of $1 million, a decrease to current portion of long-term debt of $1 million, a decrease to trade payables of $78 million, an increase to accrued marketing of $2 million, an increase to other current liabilities of $260 million, a decrease to long-term debt of $1 million, an increase to other non-current liabilities of $22 million, and a decrease to retained earnings of $27 million at April 1, 2017.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Equity

For the Nine Months Ended September 29, 2018

(in millions, except per share data)

Restatement ReferenceCommon StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
As Previously Reported
Balance at December 30, 2017$12$58,711$8,589$(1,054)$(224)$207$66,241
Net income/(loss) excluding redeemable noncontrolling interest——2,379——62,385
Other comprehensive income/(loss) excluding redeemable noncontrolling interest———(678)—(13)(691)
Dividends declared-common stock ($1.875 per share)——(2,286)———(2,286)
Cumulative effect of accounting standards adopted in the period——(97)———(97)
Exercise of stock options, issuance of other stock awards, and other—82(9)—(40)(13)20
Balance at September 29, 2018$12$58,793$8,576$(1,732)$(264)$187$65,572
Restatement Impacts
Balance at December 30, 2017$—$(77)$(94)$—$—$—$(171)
Net income/(loss) excluding redeemable noncontrolling interest(a)(b)(e)(f)(g)——(3)——1(2)
Other comprehensive income/(loss) excluding redeemable noncontrolling interest(b)(e)(f)———8——8
Dividends declared-common stock ($1.875 per share)———————
Cumulative effect of accounting standards adopted in the period———————
Exercise of stock options, issuance of other stock awards, and other———————
Balance at September 29, 2018$—$(77)$(97)$8$—$1$(165)
As Restated
Balance at December 30, 2017$12$58,634$8,495$(1,054)$(224)$207$66,070
Net income/(loss) excluding redeemable noncontrolling interest——2,376——72,383
Other comprehensive income/(loss) excluding redeemable noncontrolling interest———(670)—(13)(683)
Dividends declared-common stock ($1.875 per share)——(2,286)———(2,286)
Cumulative effect of accounting standards adopted in the period——(97)———(97)
Exercise of stock options, issuance of other stock awards, and other—82(9)—(40)(13)20
Balance at September 29, 2018$12$58,716$8,479$(1,724)$(264)$188$65,407

See descriptions of the net income and other comprehensive income impacts in the consolidated statement of income and consolidated statement of comprehensive income for the nine months ended September 29, 2018 sections above.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Equity

For the Six Months Ended June 30, 2018

(in millions, except per share data)

Restatement ReferenceCommon StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
As Previously Reported
Balance at December 30, 2017$12$58,711$8,589$(1,054)$(224)$207$66,241
Net income/(loss) excluding redeemable noncontrolling interest——1,749——51,754
Other comprehensive income/(loss) excluding redeemable noncontrolling interest———(503)—(11)(514)
Dividends declared-common stock ($1.25 per share)——(1,524)———(1,524)
Cumulative effect of accounting standards adopted in the period——(95)———(95)
Exercise of stock options, issuance of other stock awards, and other—55(9)—(30)(13)3
Balance at June 30, 2018$12$58,766$8,710$(1,557)$(254)$188$65,865
Restatement Impacts
Balance at December 30, 2017$—$(77)$(94)$—$—$—$(171)
Net income/(loss) excluding redeemable noncontrolling interest(a)(b)(e)(f)(g)——8———8
Other comprehensive income/(loss) excluding redeemable noncontrolling interest(b)(e)(f)———6——6
Dividends declared-common stock ($1.25 per share)———————
Cumulative effect of accounting standards adopted in the period———————
Exercise of stock options, issuance of other stock awards, and other———————
Balance at June 30, 2018$—$(77)$(86)$6$—$—$(157)
As Restated
Balance at December 30, 2017$12$58,634$8,495$(1,054)$(224)$207$66,070
Net income/(loss) excluding redeemable noncontrolling interest——1,757——51,762
Other comprehensive income/(loss) excluding redeemable noncontrolling interest———(497)—(11)(508)
Dividends declared-common stock ($1.25 per share)——(1,524)———(1,524)
Cumulative effect of accounting standards adopted in the period——(95)———(95)
Exercise of stock options, issuance of other stock awards, and other—55(9)—(30)(13)3
Balance at June 30, 2018$12$58,689$8,624$(1,551)$(254)$188$65,708

See descriptions of the net income and other comprehensive income impacts in the consolidated statement of income and consolidated statement of comprehensive income for the six months ended June 30, 2018 sections above.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Equity

For the Three Months Ended March 31, 2018

(in millions, except per share data)

Restatement ReferenceCommon StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
As Previously Reported
Balance at December 30, 2017$12$58,711$8,589$(1,054)$(224)$207$66,241
Net income/(loss) excluding redeemable noncontrolling interest——993——5998
Other comprehensive income/(loss) excluding redeemable noncontrolling interest———79—(5)74
Dividends declared-common stock ($0.625 per share)——(762)———(762)
Cumulative effect of accounting standards adopted in the period——(95)———(95)
Exercise of stock options, issuance of other stock awards, and other—22(7)—(16)—(1)
Balance at March 31, 2018$12$58,733$8,718$(975)$(240)$207$66,455
Restatement Impacts
Balance at December 30, 2017$—$(77)$(94)$—$—$—$(171)
Net income/(loss) excluding redeemable noncontrolling interest(a)(b)(e)(f)(g)——10———10
Other comprehensive income/(loss) excluding redeemable noncontrolling interest(b)(e)———————
Dividends declared-common stock ($0.625 per share)———————
Cumulative effect of accounting standards adopted in the period———————
Exercise of stock options, issuance of other stock awards, and other———————
Balance at March 31, 2018$—$(77)$(84)$—$—$—$(161)
As Restated
Balance at December 30, 2017$12$58,634$8,495$(1,054)$(224)$207$66,070
Net income/(loss) excluding redeemable noncontrolling interest——1,003——51,008
Other comprehensive income/(loss) excluding redeemable noncontrolling interest———79—(5)74
Dividends declared-common stock ($0.625 per share)——(762)———(762)
Cumulative effect of accounting standards adopted in the period——(95)———(95)
Exercise of stock options, issuance of other stock awards, and other—22(7)—(16)—(1)
Balance at March 31, 2018$12$58,656$8,634$(975)$(240)$207$66,294

See descriptions of the net income and other comprehensive income impacts in the consolidated statement of income and consolidated statement of comprehensive income for the three months ended March 31, 2018 sections above.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Equity

For the Nine Months Ended September 30, 2017

(in millions, except per share data)

Restatement ReferenceCommon StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
As Previously Reported
Balance at December 31, 2016$12$58,593$588$(1,628)$(207)$216$57,574
Net income/(loss)——2,996——(2)2,994
Other comprehensive income/(loss)———543—(2)541
Dividends declared-common stock ($1.825 per share)——(2,225)———(2,225)
Exercise of stock options, issuance of other stock awards, and other—1021—(16)—87
Balance at September 30, 2017$12$58,695$1,360$(1,085)$(223)$212$58,971
Restatement Impacts
Balance at December 31, 2016$—$(77)$(36)$(1)$—$—$(114)
Net income/(loss)(a)(e)(f)(g)——(44)———(44)
Other comprehensive income/(loss)(e)———(1)——(1)
Dividends declared-common stock ($1.825 per share)———————
Exercise of stock options, issuance of other stock awards, and other———————
Balance at September 30, 2017$—$(77)$(80)$(2)$—$—$(159)
As Restated
Balance at December 31, 2016$12$58,516$552$(1,629)$(207)$216$57,460
Net income/(loss)——2,952——(2)2,950
Other comprehensive income/(loss)———542—(2)540
Dividends declared-common stock ($1.825 per share)——(2,225)———(2,225)
Exercise of stock options, issuance of other stock awards, and other—1021—(16)—87
Balance at September 30, 2017$12$58,618$1,280$(1,087)$(223)$212$58,812

See descriptions of the net income and other comprehensive income impacts in the consolidated statement of income and consolidated statement of comprehensive income for the nine months ended September 30, 2017 sections above.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Equity

For the Six Months Ended July 1, 2017

(in millions, except per share data)

Restatement ReferenceCommon StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
As Previously Reported
Balance at December 31, 2016$12$58,593$588$(1,628)$(207)$216$57,574
Net income/(loss)——2,052——(1)2,051
Other comprehensive income/(loss)———320—(2)318
Dividends declared-common stock ($1.20 per share)——(1,463)———(1,463)
Exercise of stock options, issuance of other stock awards, and other—811—(16)—66
Balance at July 1, 2017$12$58,674$1,178$(1,308)$(223)$213$58,546
Restatement Impacts
Balance at December 31, 2016$—$(77)$(36)$(1)$—$—$(114)
Net income/(loss)(a)(e)(f)(g)——(13)———(13)
Other comprehensive income/(loss)(e)———1——1
Dividends declared-common stock ($1.20 per share)———————
Exercise of stock options, issuance of other stock awards, and other———————
Balance at July 1, 2017$—$(77)$(49)$—$—$—$(126)
As Restated
Balance at December 31, 2016$12$58,516$552$(1,629)$(207)$216$57,460
Net income/(loss)——2,039——(1)2,038
Other comprehensive income/(loss)———321—(2)319
Dividends declared-common stock ($1.20 per share)——(1,463)———(1,463)
Exercise of stock options, issuance of other stock awards, and other—811—(16)—66
Balance at July 1, 2017$12$58,597$1,129$(1,308)$(223)$213$58,420

See descriptions of the net income and other comprehensive income impacts in the consolidated statement of income and consolidated statement of comprehensive income for the six months ended July 1, 2017 sections above.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Condensed Consolidated Statement of Equity

For the Three Months Ended April 1, 2017

(in millions, except per share data)

Restatement ReferenceCommon StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
As Previously Reported
Balance at December 31, 2016$12$58,593$588$(1,628)$(207)$216$57,574
Net income/(loss)——893——(2)891
Other comprehensive income/(loss)———179—(2)177
Dividends declared-common stock ($0.60 per share)——(731)———(731)
Exercise of stock options, issuance of other stock awards, and other—49——(16)—33
Balance at April 1, 2017$12$58,642$750$(1,449)$(223)$212$57,944
Restatement Impacts
Balance at December 31, 2016$—$(77)$(36)$(1)$—$—$(114)
Net income/(loss)(a)(e)(f)(g)——(10)———(10)
Other comprehensive income/(loss)(e)———(3)——(3)
Dividends declared-common stock ($0.60 per share)———————
Exercise of stock options, issuance of other stock awards, and other(g)——1———1
Balance at April 1, 2017$—$(77)$(45)$(4)$—$—$(126)
As Restated
Balance at December 31, 2016$12$58,516$552$(1,629)$(207)$216$57,460
Net income/(loss)——883——(2)881
Other comprehensive income/(loss)———176—(2)174
Dividends declared-common stock ($0.60 per share)——(731)———(731)
Exercise of stock options, issuance of other stock awards, and other—491—(16)—34
Balance at April 1, 2017$12$58,565$705$(1,453)$(223)$212$57,818

See descriptions of the net income and other comprehensive income impacts in the consolidated statement of income and consolidated statement of comprehensive income for the three months ended April 1, 2017 sections above.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Consolidated Statement of Cash Flows

(in millions)

For the Nine Months Ended September 29, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)$2,376$(2)(a)(b)(e)(f)(g)$2,374
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization736(24)(b)(g)712
Amortization of postretirement benefit plans prior service costs/(credits)(261)—(261)
Equity award compensation expense44—44
Deferred income tax provision/(benefit)968(a)(e)(f)(g)104
Postemployment benefit plan contributions(64)—(64)
Goodwill and intangible asset impairment losses499(48)(f)451
Nonmonetary currency devaluation131—131
Other items, net36(1)(a)(g)35
Changes in current assets and liabilities:
Trade receivables(2,154)—(2,154)
Inventories(663)18(d)(g)(645)
Accounts payable145(15)(g)130
Other current assets(105)2(a)(d)(103)
Other current liabilities8341(a)(b)(e)(g)124
Net cash provided by/(used for) operating activities899(21)878
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash receipts on sold receivables1,296—1,296
Capital expenditures(594)—(594)
Payments to acquire business, net of cash acquired(248)—(248)
Other investing activities, net31—31
Net cash provided by/(used for) investing activities485—485
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt(2,727)21(b)(g)(2,706)
Proceeds from issuance of long-term debt2,990—2,990
Proceeds from issuance of commercial paper2,485—2,485
Repayments of commercial paper(1,950)—(1,950)
Dividends paid - Series A Preferred Stock———
Dividends paid - common stock(2,421)—(2,421)
Redemption of Series A Preferred Stock———
Other financing activities, net(35)—(35)
Net cash provided by/(used for) financing activities(1,658)21(1,637)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(128)—(128)
Cash, cash equivalents, and restricted cash
Net increase/(decrease)(402)—(402)
Balance at beginning of period1,769—1,769
Balance at end of period$1,367$—$1,367
NON-CASH INVESTING ACTIVITIES:
Beneficial interest obtained in exchange for securitized trade receivables$938$—$938

See descriptions of the net income impacts in the condensed consolidated statement of income for the nine months ended September 29, 2018 section above.

The misstatements in the capital leases misclassifications category resulted in a decrease to net cash flows provided by operating activities of $21 million and a decrease to net cash flows used for financing activities of $21 million for the nine months ended September 29, 2018.

The misstatements in the other misclassifications category resulted in a decrease to net cash flows provided by operating activities of less than $1 million and a decrease to net cash flows used for financing activities of less than $1 million for the nine months ended September 29, 2018.

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the nine months ended September 29, 2018.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Consolidated Statement of Cash Flows

(in millions)

For the Six Months Ended June 30, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)$1,748$8(a)(b)(e)(f)(g)$1,756
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization476(14)(b)(g)462
Amortization of postretirement benefit plans prior service costs/(credits)(183)—(183)
Equity award compensation expense27—27
Deferred income tax provision/(benefit)5821(a)(e)(f)(g)79
Postemployment benefit plan contributions(60)—(60)
Goodwill and intangible asset impairment losses265(31)(f)234
Nonmonetary currency devaluation67—67
Other items, net59(32)(a)(g)27
Changes in current assets and liabilities:
Trade receivables(2,001)—(2,001)
Inventories(440)12(d)(g)(428)
Accounts payable143(16)(g)127
Other current assets(66)22(a)(d)(g)(44)
Other current liabilities13617(a)(b)(e)(g)153
Net cash provided by/(used for) operating activities229(13)216
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash receipts on sold receivables1,221—1,221
Capital expenditures(438)—(438)
Payments to acquire business, net of cash acquired(215)—(215)
Other investing activities, net11—11
Net cash provided by/(used for) investing activities579—579
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt(25)13(b)(g)(12)
Proceeds from issuance of long-term debt2,990—2,990
Proceeds from issuance of commercial paper1,525—1,525
Repayments of commercial paper(1,950)—(1,950)
Dividends paid - Series A Preferred Stock———
Dividends paid - common stock(1,659)—(1,659)
Redemption of Series A Preferred Stock———
Other financing activities, net(3)—(3)
Net cash provided by/(used for) financing activities87813891
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(80)—(80)
Cash, cash equivalents, and restricted cash
Net increase/(decrease)1,606—1,606
Balance at beginning of period1,769—1,769
Balance at end of period$3,375$—$3,375
NON-CASH INVESTING ACTIVITIES:
Beneficial interest obtained in exchange for securitized trade receivables$899$—$899

See descriptions of the net income impacts in the condensed consolidated statement of income for the six months ended June 30, 2018 section above.

The misstatements in the capital leases misclassifications category resulted in a decrease to net cash flows provided by operating activities of $13 million and an increase to net cash flows provided by financing activities of $13 million for the six months ended June 30, 2018.

The misstatements in the other misclassifications category resulted in a decrease to net cash flows provided by operating activities of less than $1 million and an increase to net cash flows provided by financing activities of less than $1 million for the six months ended June 30, 2018.

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the six months ended June 30, 2018.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Consolidated Statement of Cash Flows

(in millions)

For the Three Months Ended March 31, 2018
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)$993$10(a)(b)(e)(f)(g)$1,003
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization234(7)(b)(g)227
Amortization of postretirement benefit plans prior service costs/(credits)(106)—(106)
Equity award compensation expense7—7
Deferred income tax provision/(benefit)(47)1(a)(e)(f)(46)
Postemployment benefit plan contributions(22)—(22)
Goodwill and intangible asset impairment losses——(f)—
Nonmonetary currency devaluation47—47
Other items, net5(27)(a)(g)(22)
Changes in current assets and liabilities:
Trade receivables(712)—(712)
Inventories(312)—(d)(g)(312)
Accounts payable(69)(16)(g)(85)
Other current assets917(a)(d)(g)26
Other current liabilities38617(a)(b)(e)(g)403
Net cash provided by/(used for) operating activities413(5)408
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash receipts on sold receivables436—436
Capital expenditures(223)—(223)
Payments to acquire business, net of cash acquired(215)—(215)
Other investing activities, net6—6
Net cash provided by/(used for) investing activities4—4
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt(11)5(b)(g)(6)
Proceeds from issuance of long-term debt———
Proceeds from issuance of commercial paper1,524—1,524
Repayments of commercial paper(1,006)—(1,006)
Dividends paid - Series A Preferred Stock———
Dividends paid - common stock(897)—(897)
Redemption of Series A Preferred Stock———
Other financing activities, net14—14
Net cash provided by/(used for) financing activities(376)5(371)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(10)—(10)
Cash, cash equivalents, and restricted cash
Net increase/(decrease)31—31
Balance at beginning of period1,769—1,769
Balance at end of period$1,800$—$1,800
NON-CASH INVESTING ACTIVITIES:
Beneficial interest obtained in exchange for securitized trade receivables$613$—$613

See descriptions of the net income impacts in the condensed consolidated statement of income for the three months ended March 31, 2018 section above.

The misstatements in the capital leases misclassifications category resulted in a decrease to net cash flows provided by operating activities of $5 million and a decrease to net cash flows used for financing activities of $5 million for the three months ended March 31, 2018.

The misstatements in the other misclassifications category resulted in a decrease to net cash flows provided by operating activities of less than $1 million and a decrease to net cash flows used for financing activities of less than $1 million for the three months ended March 31, 2018.

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the three months ended March 31, 2018.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Consolidated Statement of Cash Flows

(in millions)

For the Nine Months Ended September 30, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)$2,994$(44)(a)(e)(f)(g)$2,950
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization790(1)(g)789
Amortization of postretirement benefit plans prior service costs/(credits)(247)—(247)
Equity award compensation expense36—36
Deferred income tax provision/(benefit)492(60)(a)(e)(f)432
Postemployment benefit plan contributions(283)—(283)
Goodwill and intangible asset impairment losses49—(f)49
Nonmonetary currency devaluation36—36
Other items, net(52)(10)(a)(g)(62)
Changes in current assets and liabilities:
Trade receivables(2,061)—(2,061)
Inventories(580)13(d)(567)
Accounts payable123—123
Other current assets(137)47(a)(d)(90)
Other current liabilities(1,144)54(a)(g)(e)(1,090)
Net cash provided by/(used for) operating activities16(1)15
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash receipts on sold receivables1,633—1,633
Capital expenditures(956)—(956)
Payments to acquire business, net of cash acquired———
Other investing activities, net47(2)(g)45
Net cash provided by/(used for) investing activities724(2)722
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt(2,636)1(g)(2,635)
Proceeds from issuance of long-term debt1,496—1,496
Proceeds from issuance of commercial paper5,495—5,495
Repayments of commercial paper(5,709)—(5,709)
Dividends paid - Series A Preferred Stock———
Dividends paid - common stock(2,161)—(2,161)
Redemption of Series A Preferred Stock———
Other financing activities, net262(g)28
Net cash provided by/(used for) financing activities(3,489)3(3,486)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash43—43
Cash, cash equivalents, and restricted cash
Net increase/(decrease)(2,706)—(2,706)
Balance at beginning of period4,255—4,255
Balance at end of period$1,549$—$1,549
NON-CASH INVESTING ACTIVITIES:
Beneficial interest obtained in exchange for securitized trade receivables$1,936$—$1,936

See descriptions of the net income impacts in the condensed consolidated statement of income for the nine months ended September 30, 2017 section above.

The misstatements in the other misclassification category resulted in a decrease to net cash flows provided by operating activities of $1 million, a decrease to net cash flows provided by investing activities of $2 million, and a decrease to net cash flows used for financing activities of $3 million for the nine months ended September 30, 2017.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Consolidated Statement of Cash Flows

(in millions)

For the Six Months Ended July 1, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)$2,051$(13)(a)(e)(f)(g)$2,038
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization517—(g)517
Amortization of postretirement benefit plans prior service costs/(credits)(171)—(171)
Equity award compensation expense24—24
Deferred income tax provision/(benefit)269(46)(a)(e)(f)223
Postemployment benefit plan contributions(90)—(90)
Goodwill and intangible asset impairment losses48—(f)48
Nonmonetary currency devaluation33—33
Other items, net(31)(17)(a)(g)(48)
Changes in current assets and liabilities:
Trade receivables(1,598)—(1,598)
Inventories(431)13(d)(418)
Accounts payable84—84
Other current assets(121)18(a)(d)(103)
Other current liabilities(762)45(a)(g)(e)(717)
Net cash provided by/(used for) operating activities(178)—(178)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash receipts on sold receivables1,069—1,069
Capital expenditures(690)—(690)
Payments to acquire business, net of cash acquired———
Other investing activities, net44—44
Net cash provided by/(used for) investing activities423—423
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt(2,032)—(g)(2,032)
Proceeds from issuance of long-term debt4—4
Proceeds from issuance of commercial paper4,213—4,213
Repayments of commercial paper(3,777)—(3,777)
Dividends paid - Series A Preferred Stock———
Dividends paid - common stock(1,434)—(1,434)
Redemption of Series A Preferred Stock———
Other financing activities, net15—15
Net cash provided by/(used for) financing activities(3,011)—(3,011)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash29—29
Cash, cash equivalents, and restricted cash
Net increase/(decrease)(2,737)—(2,737)
Balance at beginning of period4,255—4,255
Balance at end of period$1,518$—$1,518
NON-CASH INVESTING ACTIVITIES:
Beneficial interest obtained in exchange for securitized trade receivables$1,407$—$1,407

See descriptions of the net income impacts in the condensed consolidated statement of income for the six months ended July 1, 2017 section above.

No misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the six months ended July 1, 2017.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The Kraft Heinz Company

Consolidated Statement of Cash Flows

(in millions)

For the Three Months Ended April 1, 2017
As Previously ReportedRestatement ImpactsRestatement ReferenceAs Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)$891$(10)(a)(e)(f)(g)$881
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization262—(g)262
Amortization of postretirement benefit plans prior service costs/(credits)(82)—(82)
Equity award compensation expense11—11
Deferred income tax provision/(benefit)105(37)(a)(e)(f)68
Postemployment benefit plan contributions(38)—(38)
Goodwill and intangible asset impairment losses——(f)—
Nonmonetary currency devaluation8—8
Other items, net355(a)40
Changes in current assets and liabilities:
Trade receivables(1,040)—(1,040)
Inventories(492)17(d)(475)
Accounts payable62—62
Other current assets(67)(5)(a)(d)(72)
Other current liabilities(270)30(a)(g)(e)(240)
Net cash provided by/(used for) operating activities(615)—(615)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash receipts on sold receivables464—464
Capital expenditures(368)—(368)
Payments to acquire business, net of cash acquired———
Other investing activities, net38—38
Net cash provided by/(used for) investing activities134—134
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt(27)—(g)(27)
Proceeds from issuance of long-term debt2—2
Proceeds from issuance of commercial paper2,324—2,324
Repayments of commercial paper(2,068)—(2,068)
Dividends paid - Series A Preferred Stock———
Dividends paid - common stock(736)—(736)
Redemption of Series A Preferred Stock———
Other financing activities, net———
Net cash provided by/(used for) financing activities(505)—(505)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash13—13
Cash, cash equivalents, and restricted cash
Net increase/(decrease)(973)—(973)
Balance at beginning of period4,255—4,255
Balance at end of period$3,282$—$3,282
NON-CASH INVESTING ACTIVITIES:
Beneficial interest obtained in exchange for securitized trade receivables$880$—$880

See descriptions of the net income impacts in the condensed consolidated statement of income for the three months ended April 1, 2017 section above.

No misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the three months ended April 1, 2017.

See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for a description of the misstatements in each category of restatements referenced by (a) through (g).

The following tables represent restated Segment Adjusted EBITDA for the interim periods within fiscal years 2018 and 2017. Management uses Segment Adjusted EBITDA to evaluate segment performance and allocate resources. See Note 22, Segment Reporting, for the definition of Segment Adjusted EBITDA.

As Restated
December 29, 2018September 29, 2018June 30, 2018March 31, 2018
Three Months EndedThree Months EndedNine Months EndedThree Months EndedSix Months EndedThree Months Ended
(in millions)
Segment Adjusted EBITDA:
United States$1,249$1,176$3,969$1,401$2,793$1,392
Canada157144451173307134
EMEA171165553206388182
Rest of World130148505213357144
General corporate expenses(33)(39)(128)(44)(89)(45)
Depreciation and amortization (excluding integration and restructuring expenses)(240)(245)(679)(235)(434)(199)
Integration and restructuring expenses(82)(32)(215)(93)(183)(90)
Deal costs(4)(3)(19)(7)(16)(9)
Unrealized gains/(losses) on commodity hedges(10)(6)(11)(3)(5)(2)
Impairment losses(15,485)(217)(451)(234)(234)—
Gains/(losses) on sale of business——(15)(15)(15)—
Equity award compensation expense (excluding integration and restructuring expenses)11(17)(44)(20)(27)(7)
Operating income/(loss)(14,136)1,0743,9161,3422,8421,500
Interest expense325326959316633317
Other expense/(income), net13(71)(196)(35)(125)(90)
Income/(loss) before income taxes$(14,474)$819$3,153$1,061$2,334$1,273
As Restated & Recast
December 30, 2017September 30, 2017July 1, 2017April 1, 2017
Three Months EndedThree Months EndedNine Months EndedThree Months EndedSix Months EndedThree Months Ended
(in millions)
Segment Adjusted EBITDA:
United States$1,486$1,407$4,387$1,534$2,980$1,446
Canada159159477189318129
EMEA174179499182320138
Rest of World142134448170314144
General corporate expenses(14)(29)(94)(36)(65)(29)
Depreciation and amortization (excluding integration and restructuring expenses)(224)(243)(683)(219)(440)(221)
Integration and restructuring expenses(208)(108)(375)(132)(267)(135)
Unrealized gains/(losses) on commodity hedges55(24)13(29)(42)
Impairment losses—(1)(49)(48)(48)—
Equity award compensation expense (excluding integration and restructuring expenses)(11)(12)(38)(14)(26)(12)
Operating income/(loss)1,5091,4914,5481,6393,0571,418
Interest expense308306926307620313
Other expense/(income), net(116)(127)(511)(254)(384)(130)
Income/(loss) before income taxes$1,317$1,312$4,133$1,586$2,821$1,235

Note 24. Supplemental Guarantor Information

Restatement of Previously Issued Condensed Consolidating Financial Statements

We have restated herein our previously issued condensed consolidating financial statements for fiscal years 2017 and 2016. Following the restated condensed consolidating financial statement tables, we have presented our condensed consolidating financial statements as previously reported for fiscal years 2017 and 2016, which were derived from our Annual Report on Form 10-K for the fiscal year ended December 30, 2017 filed on February 16, 2018. See Note 2, Restatement of Previously Issued Consolidated Financial Statements, for additional information, including a description of the misstatements.

In addition, the statements of income for fiscal years 2017 and 2016, as previously reported, did not originally reflect the adoption of ASU 2017-07 related to the presentation of net periodic benefit cost (pension and postretirement cost). This ASU was adopted in the first quarter of 2018 and was applied retrospectively for statement of income presentation of service cost components and other net periodic benefit cost components. The condensed consolidating statements of income for fiscal years 2017 and 2016 have been recast accordingly. See Note 4, New Accounting Standards, for additional information related to our adoption of ASU 2017-07.

Supplemental Guarantor Information

Kraft Heinz fully and unconditionally guarantees the notes issued by our 100% owned operating subsidiary, KHFC, including the New Notes. See Note 19, Debt, for additional descriptions of these guarantees. None of our other subsidiaries guarantee these notes.

Set forth below are the condensed consolidating financial statements presenting the results of operations, financial position, and cash flows of Kraft Heinz (as parent guarantor), KHFC (as subsidiary issuer of the notes), and the non-guarantor subsidiaries on a combined basis and eliminations necessary to arrive at the total reported information on a consolidated basis. This condensed consolidating financial information has been prepared and presented pursuant to the Securities and Exchange Commission Regulation S-X Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or being Registered.” This information is not intended to present the financial position, results of operations, and cash flows of the individual companies or groups of companies in accordance with U.S. GAAP. Eliminations represent adjustments to eliminate investments in subsidiaries and intercompany balances and transactions between or among the parent guarantor, subsidiary issuer, and the non-guarantor subsidiaries.

The Kraft Heinz Company

Condensed Consolidating Statements of Income

For the Year Ended December 29, 2018

(in millions)

Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
Net sales$—$17,317$9,481$(530)$26,268
Cost of products sold—11,2906,587(530)17,347
Gross profit—6,0272,894—8,921
Selling, general and administrative expenses, excluding impairment losses—8032,402—3,205
Goodwill impairment losses——7,008—7,008
Intangible asset impairment losses——8,928—8,928
Selling, general and administrative expenses—80318,338—19,141
Intercompany service fees and other recharges—3,865(3,865)——
Operating income/(loss)—1,359(11,579)—(10,220)
Interest expense—1,21272—1,284
Other expense/(income), net—(359)176—(183)
Income/(loss) before income taxes—506(11,827)—(11,321)
Provision for/(benefit from) income taxes—112(1,179)—(1,067)
Equity in earnings/(losses) of subsidiaries(10,192)(10,586)—20,778—
Net income/(loss)(10,192)(10,192)(10,648)20,778(10,254)
Net income/(loss) attributable to noncontrolling interest——(62)—(62)
Net income/(loss) excluding noncontrolling interest$(10,192)$(10,192)$(10,586)$20,778$(10,192)
Comprehensive income/(loss) excluding noncontrolling interest$(11,081)$(11,081)$(11,550)$22,631$(11,081)

The Kraft Heinz Company

Condensed Consolidating Statements of Income

For the Year Ended December 30, 2017

(in millions)

As Restated & Recast
Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
Net sales$—$17,397$9,247$(568)$26,076
Cost of products sold—11,1476,464(568)17,043
Gross profit—6,2502,783—9,033
Selling, general and administrative expenses, excluding impairment losses—6952,232—2,927
Goodwill impairment losses—————
Intangible asset impairment losses——49—49
Selling, general and administrative expenses—6952,281—2,976
Intercompany service fees and other recharges—4,307(4,307)——
Operating income/(loss)—1,2484,809—6,057
Interest expense—1,18945—1,234
Other expense/(income), net—(535)(92)—(627)
Income/(loss) before income taxes—5944,856—5,450
Provision for/(benefit from) income taxes—(243)(5,239)—(5,482)
Equity in earnings/(losses) of subsidiaries10,94110,104—(21,045)—
Net income/(loss)10,94110,94110,095(21,045)10,932
Net income/(loss) attributable to noncontrolling interest——(9)—(9)
Net income/(loss) excluding noncontrolling interest$10,941$10,941$10,104$(21,045)$10,941
Comprehensive income/(loss) excluding noncontrolling interest$11,516$11,516$7,711$(19,227)$11,516

The Kraft Heinz Company

Condensed Consolidating Statements of Income

For the Year Ended December 30, 2017

(in millions)

As Previously Reported
Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
Net sales$—$17,507$9,293$(568)$26,232
Cost of products sold—10,7106,387(568)16,529
Gross profit—6,7972,906—9,703
Selling, general and administrative expenses, excluding impairment losses—6522,229—2,881
Goodwill impairment losses—————
Intangible asset impairment losses——49—49
Selling, general and administrative expenses—6522,278—2,930
Intercompany service fees and other recharges—4,308(4,308)——
Operating income/(loss)—1,8374,936—6,773
Interest expense—1,19044—1,234
Other expense/(income), net—(10)19—9
Income/(loss) before income taxes—6574,873—5,530
Provision for/(benefit from) income taxes—(221)(5,239)—(5,460)
Equity in earnings/(losses) of subsidiaries10,99910,121—(21,120)—
Net income/(loss)10,99910,99910,112(21,120)10,990
Net income/(loss) attributable to noncontrolling interest——(9)—(9)
Net income/(loss) excluding noncontrolling interest$10,999$10,999$10,121$(21,120)$10,999
Comprehensive income/(loss) excluding noncontrolling interest$11,573$11,573$7,726$(19,299)$11,573

The Kraft Heinz Company

Condensed Consolidating Statements of Income

For the Year Ended December 31, 2016

(in millions)

As Restated & Recast
Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
Net sales$—$17,652$9,281$(633)$26,300
Cost of products sold—11,3596,428(633)17,154
Gross profit—6,2932,853—9,146
Selling, general and administrative expenses, excluding impairment losses—1,0532,474—3,527
Goodwill impairment losses—————
Intangible asset impairment losses——18—18
Selling, general and administrative expenses—1,0532,492—3,545
Intercompany service fees and other recharges—4,624(4,624)——
Operating income/(loss)—6164,985—5,601
Interest expense—1,07658—1,134
Other expense/(income), net—(230)(242)—(472)
Income/(loss) before income taxes—(230)5,169—4,939
Provision for/(benefit from) income taxes—(414)1,747—1,333
Equity in earnings/(losses) of subsidiaries3,5963,412—(7,008)—
Net income/(loss)3,5963,5963,422(7,008)3,606
Net income/(loss) attributable to noncontrolling interest——10—10
Net income/(loss) excluding noncontrolling interest$3,596$3,596$3,412$(7,008)$3,596
Comprehensive income/(loss) excluding noncontrolling interest$2,583$2,583$5,712$(8,295)$2,583

The Kraft Heinz Company

Condensed Consolidating Statements of Income

For the Year Ended December 31, 2016

(in millions)

As Previously Reported
Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
Net sales$—$17,809$9,310$(632)$26,487
Cost of products sold—11,1566,377(632)16,901
Gross profit—6,6532,933—9,586
Selling, general and administrative expenses, excluding impairment losses—9702,474—3,444
Goodwill impairment losses—————
Intangible asset impairment losses—————
Selling, general and administrative expenses—9702,474—3,444
Intercompany service fees and other recharges—4,624(4,624)——
Operating income/(loss)—1,0595,083—6,142
Interest expense—1,07658—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/(losses) of subsidiaries3,6323,421—(7,053)—
Net income/(loss)3,6323,6323,431(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

The Kraft Heinz Company

Condensed Consolidating Balance Sheets

As of December 29, 2018

(in millions)

Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
ASSETS
Cash and cash equivalents$—$202$928$—$1,130
Trade receivables, net—9331,196—2,129
Receivables due from affiliates—870341(1,211)—
Income taxes receivable—7019(558)152
Inventories—1,783884—2,667
Short-term lending due from affiliates—1,7873,753(5,540)—
Prepaid expenses—198202—400
Other current assets—776445—1,221
Assets held for sale—751,301—1,376
Total current assets—7,3259,059(7,309)9,075
Property, plant and equipment, net—4,5242,554—7,078
Goodwill—11,06725,436—36,503
Investments in subsidiaries51,65767,867—(119,524)—
Intangible assets, net—3,01046,458—49,468
Long-term lending due from affiliates——2,000(2,000)—
Other non-current assets—3161,021—1,337
TOTAL ASSETS$51,657$94,109$86,528$(128,833)$103,461
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$—$—$21$—$21
Current portion of long-term debt—36314—377
Short-term lending due to affiliates—3,7531,787(5,540)—
Trade payables—2,5631,590—4,153
Payables due to affiliates—341870(1,211)—
Accrued marketing—282440—722
Interest payable—39414—408
Other current liabilities—8881,437(558)1,767
Liabilities held for sale——55—55
Total current liabilities—8,5846,228(7,309)7,503
Long-term debt—29,872898—30,770
Long-term borrowings due to affiliates—2,00012(2,012)—
Deferred income taxes—1,31410,888—12,202
Accrued postemployment costs—89217—306
Other non-current liabilities—593309—902
TOTAL LIABILITIES—42,45218,552(9,321)51,683
Redeemable noncontrolling interest——3—3
Total shareholders’ equity51,65751,65767,855(119,512)51,657
Noncontrolling interest——118—118
TOTAL EQUITY51,65751,65767,973(119,512)51,775
TOTAL LIABILITIES AND EQUITY$51,657$94,109$86,528$(128,833)$103,461

The Kraft Heinz Company

Condensed Consolidating Balance Sheets

As of December 30, 2017

(in millions)

As Restated
Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
ASSETS
Cash and cash equivalents$—$509$1,120$—$1,629
Trade receivables, net—91830—921
Receivables due from affiliates—716240(956)—
Dividends due from affiliates135——(135)—
Sold receivables——353—353
Income taxes receivable—1,89097(1,449)538
Inventories—1,790970—2,760
Short-term lending due from affiliates—1,5983,816(5,414)—
Prepaid expenses—168177—345
Other current assets—359296—655
Total current assets1357,1217,899(7,954)7,201
Property, plant and equipment, net—4,5912,470—7,061
Goodwill—11,06833,757—44,825
Investments in subsidiaries65,86380,345—(146,208)—
Intangible assets, net—3,22256,210—59,432
Long-term lending due from affiliates—1,7002,029(3,729)—
Other non-current assets—5151,058—1,573
TOTAL ASSETS$65,998$108,562$103,423$(157,891)$120,092
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$—$450$12$—$462
Current portion of long-term debt—2,568165—2,733
Short-term lending due to affiliates—3,8161,598(5,414)—
Trade payables—2,6811,681—4,362
Payables due to affiliates—240716(956)—
Accrued marketing—236453—689
Interest payable—40415—419
Dividends due to affiliates—135—(135)—
Other current liabilities1355652,238(1,449)1,489
Total current liabilities13511,0956,878(7,954)10,154
Long-term debt—27,422886—28,308
Long-term borrowings due to affiliates—2,0291,919(3,948)—
Deferred income taxes—1,18212,857—14,039
Accrued postemployment costs—184243—427
Other non-current liabilities—787301—1,088
TOTAL LIABILITIES13542,69923,084(11,902)54,016
Redeemable noncontrolling interest——6—6
Total shareholders’ equity65,86365,86380,126(145,989)65,863
Noncontrolling interest——207—207
TOTAL EQUITY65,86365,86380,333(145,989)66,070
TOTAL LIABILITIES AND EQUITY$65,998$108,562$103,423$(157,891)$120,092

The Kraft Heinz Company

Condensed Consolidating Balance Sheets

As of December 30, 2017

(in millions)

As Previously Reported
Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
ASSETS
Cash and cash equivalents$—$509$1,120$—$1,629
Trade receivables, net—91830—921
Receivables due from affiliates—716207(923)—
Dividends due from affiliates135——(135)—
Sold receivables——353—353
Income taxes receivable—1,90497(1,419)582
Inventories—1,846969—2,815
Short-term lending due from affiliates—1,5983,816(5,414)—
Prepaid expenses—168177—345
Other current assets—325296—621
Total current assets1357,1577,865(7,891)7,266
Property, plant and equipment, net—4,5772,543—7,120
Goodwill—11,06733,757—44,824
Investments in subsidiaries66,03480,426—(146,460)—
Intangible assets, net—3,22256,227—59,449
Long-term lending due from affiliates—1,7002,029(3,729)—
Other non-current assets—5151,058—1,573
TOTAL ASSETS$66,169$108,664$103,479$(158,080)$120,232
LIABILITIES AND EQUITY
Commercial paper and other short-term debt$—$448$12$—$460
Current portion of long-term debt—2,577166—2,743
Short-term lending due to affiliates—3,8161,598(5,414)—
Trade payables—2,7181,731—4,449
Payables due to affiliates—207716(923)—
Accrued marketing—236444—680
Interest payable—40415—419
Dividends due to affiliates—135—(135)—
Other current liabilities1354732,192(1,419)1,381
Total current liabilities13511,0146,874(7,891)10,132
Long-term debt—27,442891—28,333
Long-term borrowings due to affiliates—2,0291,919(3,948)—
Deferred income taxes—1,24512,831—14,076
Accrued postemployment costs—184243—427
Other non-current liabilities—716301—1,017
TOTAL LIABILITIES13542,63023,059(11,839)53,985
Redeemable noncontrolling interest——6—6
Total shareholders’ equity66,03466,03480,207(146,241)66,034
Noncontrolling interest——207—207
TOTAL EQUITY66,03466,03480,414(146,241)66,241
TOTAL LIABILITIES AND EQUITY$66,169$108,664$103,479$(158,080)$120,232

The Kraft Heinz Company

Condensed Consolidating Statements of Cash Flows

For the Year Ended December 29, 2018

(in millions)

Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by/(used for) operating activities$3,183$1,928$656$(3,193)$2,574
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts on sold receivables——1,296—1,296
Capital expenditures—(339)(487)—(826)
Payments to acquire business, net of cash acquired—(245)(3)—(248)
Net proceeds from/(payments on) intercompany lending activities—1,626206(1,832)—
Additional investments in subsidiaries(41)41—
Return of capital7——(7)—
Other investing activities, net—3135—66
Net cash provided by/(used for) investing activities71,0321,047(1,798)288
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of long-term debt—(2,550)(163)—(2,713)
Proceeds from issuance of long-term debt—2,990——2,990
Proceeds from issuance of commercial paper—2,784——2,784
Repayments of commercial paper—(3,213)——(3,213)
Net proceeds from/(payments on) intercompany borrowing activities—(206)(1,626)1,832—
Dividends paid-common stock(3,183)(3,183)(10)3,193(3,183)
Other intercompany capital stock transactions—(7)41(34)—
Other financing activities, net(7)(17)(4)—(28)
Net cash provided by/(used for) financing activities(3,190)(3,402)(1,762)4,991(3,363)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash——(132)—(132)
Cash, cash equivalents, and restricted cash:
Net increase/(decrease)—(442)(191)—(633)
Balance at beginning of period—6441,125—1,769
Balance at end of period$—$202$934$—$1,136

The Kraft Heinz Company

Condensed Consolidating Statements of Cash Flows

For the Year Ended December 30, 2017

(in millions)

As Restated
Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by/(used for) operating activities$2,888$1,497$(996)$(2,888)$501
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts on sold receivables——2,286—2,286
Capital expenditures—(757)(437)—(1,194)
Net proceeds from/(payments on) intercompany lending activities—641(542)(99)—
Additional investments in subsidiaries(21)——21—
Other investing activities, net—6223—85
Net cash provided by/(used for) investing activities(21)(54)1,330(78)1,177
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of long-term debt—(2,628)(13)—(2,641)
Proceeds from issuance of long-term debt—1,496——1,496
Proceeds from issuance of commercial paper—6,043——6,043
Repayments of commercial paper—(6,249)——(6,249)
Net proceeds from/(payments on) intercompany borrowing activities—542(641)99—
Dividends paid-common stock(2,888)(2,888)—2,888(2,888)
Other intercompany capital stock transactions—21—(21)—
Other financing activities, net21(5)2—18
Net cash provided by/(used for) financing activities(2,867)(3,668)(652)2,966(4,221)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash——57—57
Cash, cash equivalents, and restricted cash:
Net increase/(decrease)—(2,225)(261)—(2,486)
Balance at beginning of period—2,8691,386—4,255
Balance at end of period$—$644$1,125$—$1,769

The Kraft Heinz Company

Condensed Consolidating Statements of Cash Flows

For the Year Ended December 30, 2017

(in millions)

As Previously Reported
Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by/(used for) operating activities$2,888$1,499$(972)$(2,888)$527
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts on sold receivables——2,286—2,286
Capital expenditures—(757)(460)—(1,217)
Net proceeds from/(payments on) intercompany lending activities—641(542)(99)—
Additional investments in subsidiaries(22)——22—
Other investing activities, net—6423—87
Net cash provided by/(used for) investing activities(22)(52)1,307(77)1,156
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of long-term debt—(2,632)(12)—(2,644)
Proceeds from issuance of long-term debt—1,496——1,496
Net proceeds from/(payments on) intercompany borrowing activities—542(641)99—
Proceeds from issuance of commercial paper—6,043——6,043
Repayments of commercial paper—(6,249)——(6,249)
Dividends paid-common stock(2,888)(2,888)—2,888(2,888)
Other intercompany capital stock transactions—22—(22)—
Other financing activities, net22(6)——16
Net cash provided by/(used for) financing activities(2,866)(3,672)(653)2,965(4,226)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash——57—57
Cash, cash equivalents, and restricted cash:
Net increase/(decrease)—(2,225)(261)—(2,486)
Balance at beginning of period—2,8691,386—4,255
Balance at end of period$—$644$1,125$—$1,769

The Kraft Heinz Company

Condensed Consolidating Statements of Cash Flows

For the Year Ended December 31, 2016

(in millions)

As Restated
Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by/(used for) operating activities$3,096$4,368$(1,704)$(3,112)$2,648
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts on sold receivables——2,589—2,589
Capital expenditures—(923)(324)—(1,247)
Net proceeds from/(payments on) intercompany lending activities—69037(727)—
Additional investments in subsidiaries—(10)—10—
Return of capital9,042——(9,042)—
Other investing activities, net—129(19)—110
Net cash provided by/(used for) investing activities9,042(114)2,283(9,759)1,452
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of long-term debt—(72)(13)—(85)
Proceeds from issuance of long-term debt—6,9783—6,981
Proceeds from issuance of commercial paper—6,680——6,680
Repayments of commercial paper—(6,043)——(6,043)
Net proceeds from/(payments on) intercompany borrowing activities—(37)(690)727—
Dividends paid-Series A Preferred Stock(180)———(180)
Dividends paid-common stock(3,584)(3,764)(16)3,780(3,584)
Redemption of Series A Preferred Stock(8,320)———(8,320)
Other intercompany capital stock transactions—(8,374)108,364—
Other financing activities, net(54)(5)(10)—(69)
Net cash provided by/(used for) financing activities(12,138)(4,637)(716)12,871(4,620)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash——(137)—(137)
Cash, cash equivalents, and restricted cash:
Net increase/(decrease)—(383)(274)—(657)
Balance at beginning of period—3,2521,660—4,912
Balance at end of period$—$2,869$1,386$—$4,255

The Kraft Heinz Company

Condensed Consolidating Statements of Cash Flows

For the Year Ended December 31, 2016

(in millions)

As Previously Reported
Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by/(used for) operating activities$3,097$4,369$(1,705)$(3,112)$2,649
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts on sold receivables——2,589—2,589
Capital expenditures—(923)(324)—(1,247)
Net proceeds from/(payments on) intercompany lending activities—69037(727)—
Additional investments in subsidiaries55(10)—(45)—
Return of capital8,987——(8,987)—
Other investing activities, net—129(19)—110
Net cash provided by/(used for) investing activities9,042(114)2,283(9,759)1,452
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of long-term debt—(72)(14)—(86)
Proceeds from issuance of long-term debt—6,9783—6,981
Net proceeds from/(payments on) intercompany borrowing activities—(37)(690)727—
Proceeds from issuance of commercial paper—6,680——6,680
Repayments of commercial paper—(6,043)——(6,043)
Dividends paid-Series A Preferred Stock(180)———(180)
Dividends paid-common stock(3,584)(3,764)(16)3,780(3,584)
Redemption of Series A Preferred Stock(8,320)———(8,320)
Other intercompany capital stock transactions—(8,374)108,364—
Other financing activities, net(55)(6)(8)—(69)
Net cash provided by/(used for) financing activities(12,139)(4,638)(715)12,871(4,621)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash——(137)—(137)
Cash, cash equivalents, and restricted cash:
Net increase/(decrease)—(383)(274)—(657)
Balance at beginning of period—3,2521,660—4,912
Balance at end of period$—$2,869$1,386$—$4,255

The following tables provide a reconciliation of cash and cash equivalents, as reported on our condensed consolidating balance sheets, to cash, cash equivalents, and restricted cash, as reported on our condensed consolidating statements of cash flows (in millions):

December 29, 2018
Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
Cash and cash equivalents$—$202$928$—$1,130
Restricted cash included in other current assets——1—1
Restricted cash included in other non-current assets——5—5
Cash, cash equivalents, and restricted cash$—$202$934$—$1,136
December 30, 2017
Parent GuarantorSubsidiary IssuerNon-Guarantor SubsidiariesEliminationsConsolidated
Cash and cash equivalents$—$509$1,120$—$1,629
Restricted cash included in other current assets—1355—140
Cash, cash equivalents, and restricted cash$—$644$1,125$—$1,769

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