Kraft Heinz (KHC) 10-K risk factor changes: FY2020 vs FY2019

Our principal competitors in these categories are [removed: manufacturers,] [added: manufacturers] as well as retailers with their own branded and private label products.

We may need to reduce our prices in response to competitive and customer pressures, including pressures [removed: in relation] [added: related] to private label products that are generally sold at lower prices.

Failure to effectively assess, timely [removed: change] [added: change,] and [added: properly] set [removed: proper] pricing, promotions, or trade incentives may negatively impact [removed: the achievement of] our [added: ability to achieve our] objectives.

In addition, because of our varied consumer base, we must offer an array of products that [removed: satisfy] [added: satisfies] a broad spectrum of consumer preferences.

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

[removed: Consolidation also produces] [added: These] larger [removed: retail] customers [removed: that] may seek to leverage their positions to improve their profitability by demanding improved efficiency, lower pricing, more favorable terms, increased promotional programs, or [removed: specifically-tailored] [added: specifically tailored] product offerings.

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

Changes in our relationships with significant [removed: customers,] [added: customers or] suppliers, or [added: in] other business [removed: relationships] [added: relationships,] could adversely impact us.

[removed: There can be no assurance that] [added: Some or] all of our significant customers [removed: will] [added: may not] continue to purchase our products in the same mix or quantities or on the same terms as in the past, particularly as increasingly powerful retailers may demand lower pricing and focus on developing their own brands.

Significant deteriorations in the financial conditions of significant [removed: customers,] [added: customers or] suppliers, [removed: and] [added: or in] other business [removed: relationships] [added: relationships,] could materially and adversely affect our product sales, financial condition, and operating results.

Negative perceptions [removed: on the role] of food and beverage marketing could adversely affect our brand image or lead to stricter regulations and scrutiny of [added: our] marketing practices.

Consumers may not buy our products if relative differences in value and/or quality between our products and private label products change in favor of competitors’ products or if consumers perceive [removed: this type of] [added: such a] change.

If consumers prefer private label products, then we could lose market share or sales [removed: volumes] [added: volumes,] or [removed: shift] our product mix [added: could shift] to lower margin offerings.

We may be unable to drive revenue growth in our key product [removed: categories,] [added: categories or platforms,] increase our market share, or add products that are in faster-growing and more profitable categories.

Our future results will depend on our ability to drive revenue growth in our key product categories [removed: and] [added: or platforms as well as] growth in the food and beverage industry in the countries in which we operate.

We could [added: also] be adversely affected if consumers lose confidence in the safety and quality of certain [added: of our] food products or ingredients, or the food safety system generally.

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

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

Factors that are hard to predict or beyond our control, such as [removed: weather,] [added: weather or other geological events (including hurricanes, earthquakes, floods, or tsunamis),] raw material shortages, natural disasters, fires or explosions, political unrest, [added: geopolitical conflicts,] terrorism, [added: civil strife, acts of war, public corruption, expropriation,] generalized labor unrest, or health pandemics, such as [removed: the new coronavirus that originated in China,] [added: COVID-19,] could damage or disrupt our operations or [added: the operations of] our [removed: suppliers’, co-manufacturers’] [added: customers, suppliers, co-manufacturers, distributors,] or [removed: distributors’ operations.][added: regulators.]

These [added: or other] disruptions may require additional resources to restore our supply chain or distribution network.

[removed: If] [added: To the extent] we [removed: cannot] [added: are unable to] respond to disruptions in our operations, whether by finding alternative suppliers or replacing capacity at key manufacturing or distribution [removed: locations, or if we are unable] [added: locations;] to quickly repair damage to our information, production, or supply [removed: systems,] [added: systems; or to financially mitigate the likelihood or potential impact of such events, or effectively manage them if they occur,] we may be late in delivering, or [removed: be] unable to deliver, products to our customers [removed: and may also be unable] [added: or] to track orders, inventory, receivables, and payables.

Any of these events could materially and adversely affect our product sales, financial condition, and [removed: operating results.][added: results of operations.]

Activities in such areas are regulated by numerous antitrust and competition laws in the United States, Canada, the European Union, [removed: and other jurisdictions, and we may be required to obtain] the [removed: approval of these transactions by competition authorities, as well as to satisfy] [added: United Kingdom, and] other [removed: legal requirements.][added: jurisdictions.]

For example, risks related to foreign operations include compliance with U.S. laws affecting operations outside of the United States, such as the FCPA, [added: foreign] currency [added: exchange] rate fluctuations, compliance with foreign regulations and laws, including tax laws, and exposure to politically and economically volatile developing markets.

To the extent we undertake divestitures, we may face additional risks related to such [removed: activity.][added: activities.]

For example, risks related to our ability to find appropriate buyers, [removed: to] execute transactions on favorable terms, [removed: to] separate divested [removed: businesses from] [added: business operations with minimal impact to] our remaining operations, and [removed: to] effectively manage any transitional service arrangements.

We have implemented a number of [removed: cost savings] initiatives, including [removed: our multi-year program announced following the 2015 Merger,] [added: development of an operations center and strategic long-term collaboration with suppliers,] that we believe are important to position our business for future success and growth.

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

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

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

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

[removed: There can be no assurance that] [added: Additionally,] we [removed: will] [added: may not] successfully complete any planned strategic initiatives, [removed: that] [added: including achieving] any [added: previously announced productivity efficiencies and financial targets, any] new business [removed: will] [added: may not] be profitable or meet our expectations, or [removed: that] any divestiture [removed: will] [added: may not] be completed without [removed: disruption, which could adversely affect our results of operations and financial condition.][added: disruption.]

Approximately [removed: 29%] [added: 27%] of our [removed: 2019] [added: 2020] net sales were generated outside of the United States.

[removed: | • |] [added: -] compliance with U.S. laws affecting operations outside of the United States, including anti-bribery laws such as the FCPA; [removed: |]

[removed: | • |] [added: -] changes in the mix of earnings in countries with differing statutory tax rates, [removed: changes in] the valuation of deferred tax assets and liabilities, [removed: changes in] tax laws or their interpretations, or tax audit implications; [removed: |]

[removed: | • |] [added: -] the imposition of increased or new tariffs, quotas, trade barriers, or similar restrictions on our sales or imports, trade agreements, regulations, taxes, or policies that might negatively affect our sales or costs; [removed: |]

[removed: | • |] [added: - foreign] currency devaluations or fluctuations in [added: foreign] currency values; [removed: |]

[removed: | • |] [added: -] compliance with antitrust and competition laws, data privacy laws, and a variety of other local, national, and multi-national regulations and laws in multiple jurisdictions; [removed: |]

[removed: | • |] [added: -] discriminatory or conflicting fiscal policies in or across foreign jurisdictions; [removed: |]

[removed: | • |] [added: -] changes in capital controls, including [added: foreign] currency exchange controls, [removed: government] [added: governmental foreign] currency policies, or other limits on our ability to import raw materials or finished product into various countries or repatriate cash from outside the United States; [removed: |]

The rapidly changing and uncertain COVID-19 pandemic, and government and consumer responses, could negatively impact our business and results of operations.

The continuing spread of COVID-19 throughout the United States and internationally and measures implemented by governmental authorities in an attempt to contain the virus, including social distancing restrictions, shelter-in-place orders, and business shutdowns, have had, and could continue to have, a negative impact on financial markets, economic conditions, and portions of our business.

Although certain portions of our business have benefited, the impact of, and associated government and consumer responses to, COVID-19 could negatively impact our business and results of operations in a number of ways, which may be difficult to accurately estimate or forecast, including, but not limited to, the following:

- a shutdown of one or more of our manufacturing facilities due to illness could significantly disrupt our production capabilities;

- a significant portion of our workforce could become unable to work, including as a result of illness or government restrictions;

- a decrease in demand for away-from-home establishments has adversely affected, and may continue to adversely affect, our foodservice operations;

- a change in demand resulting from restrictions on social interactions has affected, and could continue to affect, customers’ and consumers’ plans to purchase our products;

- a change in demand for or availability of our products as a result of retailers, distributors, or carriers modifying their restocking, fulfillment, or shipping practices;

- a shift in consumer spending as a result of the economic downturn could result in consumers moving to private label or lower margin products;

- a slowdown or stoppage in our supply chain or the failure of our suppliers, vendors, distributors, or third-party manufacturers to meet their obligations to us or experience disruptions in their ability to do so;

- a strain on our supply chain could result from increased consumer demand at our retail customers, such as grocery stores, club stores, and value stores;

- a change in trade promotion and marketing activities, e.g., in response to changes in consumer viewing and shopping habits resulting from the cancellation of major events, travel restrictions, and in-store shopping practices, could adversely affect our current and future product sales;

- an impairment in the carrying amount of goodwill or intangible assets or a change in the useful life of definite-lived intangible assets has occurred and may again occur if there are sustained changes in government restrictions, consumer purchasing behaviors, or our financial results, particularly in our Canada Foodservice reporting unit, as there may be a heightened risk of impairment if there is a sustained decrease in demand in away-from-home establishments;

- an increase in working capital needs and/or an increase in trade receivables write-offs as a result of increased financial pressures on our suppliers or customers;

- an increase in commodity and other input costs could result from market volatility;

- a fluctuation in foreign currency exchange rates or interest rates could result from market uncertainties;

- an increase in the cost of, or our difficulty in obtaining, debt or equity financing, or to refinance our debt in the future, could affect our financial condition or our ability to fund operations or future investment opportunities; and

- an increase in regulatory restrictions or continued market volatility could hinder our ability to execute strategic business activities including acquisitions and divestitures.

Additionally, COVID-19 could negatively affect our internal controls over financial reporting as a portion of our workforce is required to work from home and therefore new processes, procedures, and controls could be required to respond to changes in our business environment.

Further, should any key employees become ill from COVID-19 and unable to work, the attention of the management team and resources could be diverted.

The potential effects of COVID-19 could also heighten the risks we face related to each of the risk factors disclosed below.

As COVID-19 and its impacts are unprecedented and continuously evolving, the potential impacts to these risk factors remain uncertain.

As a result, COVID-19 may also materially adversely affect our operating and financial results in a manner that is not currently known to us or that we do not currently consider to present significant risks to our operations.

We may be required to obtain approval of these transactions by competition authorities or to satisfy other legal requirements, and we may be unable to obtain such approvals or satisfy such requirements, each of which may result in additional costs, time delays, or our inability to complete such transactions.

Further, our divestiture activities have in the past required, and may in the future require, us to recognize impairment charges.

Three of 11 members of our Board are partners and/or board members of 3G Capital and two members of our Board are officers and/or directors of Berkshire Hathaway and/or its affiliates.

Additionally, any decisions to divest certain non-strategic assets could lead to the impairment of one or more of our reporting units or brands in the future.

Reporting units with between 20-50% fair value over carrying amount had an aggregate goodwill carrying amount of $12.5 billion as of their latest 2020 impairment testing date and included: Enhancers, Specialty, and Away from Home (“ESA”) and Continental Europe.

The Asia reporting unit had a fair value over carrying amount in excess of 50% and a goodwill carrying amount of $326 million as of its latest 2020 impairment testing date.

This material weakness resulted in misstatements that were corrected in the restatement included in our Annual Report on Form 10-K for the year ended December 29, 2018.

We completed remediation measures related to the material weaknesses and concluded that our internal control over financial reporting was effective as of June 27, 2020.

Completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly or remain adequate.

As of the date of this filing, we maintain a positive outlook from Fitch and a stable outlook from Moody’s and S&P.

General Risk Factors

These factors include, but are not limited to:

Certain of these factors may be subject to additional uncertainty as a result of, or related to, the recent change in the U.S. presidential administration.

Moreover, the recent change in the U.S. presidential administration may increase the likelihood of changes to the U.S. federal income tax laws.

We may also face difficulties divesting business operations with minimal impact to the retained businesses.

| | |

| --- | --- |

In addition, political and economic changes or volatility, geopolitical conflicts, terrorist activity, political unrest, civil strife, acts of war, public corruption, expropriation, and other economic or political uncertainties could interrupt and negatively affect our business operations or customer demand.

Our results of operations could be affected by natural events in the locations in which we or our customers, suppliers, distributors, or regulators operate.

We have been and may in the future be impacted by severe weather and other geological events, including hurricanes, earthquakes, floods, or tsunamis that could disrupt our operations or the operations of our customers, suppliers, distributors, or regulators.

To the extent we are unable to, or cannot, financially mitigate the likelihood or potential impact of such events, or effectively manage such events if they occur, particularly when a product is sourced from a single location, there could be a material adverse effect on our business and results of operations, and additional resources could be required to restore our supply chain.

Three of our current 11 directors had been directors of Heinz prior to the closing of the 2015 Merger and remained directors of Kraft Heinz pursuant to the merger agreement.

In addition, the Board elected Joao M.

Castro-Neves, a partner of 3G Capital, one of the Sponsors, effective June 12, 2019.

We are currently actively reviewing the enterprise strategy for the Company.

Additionally, as a result of this strategic review process, we could decide to divest certain non-strategic assets.

As a result, the ongoing development of the enterprise strategy and underlying detailed business plans could lead to the impairment of one or more of our reporting units or brands in the future.

The aggregate carrying amount of brands with fair value over carrying amount between 20-50% was $4.2 billion as of their latest 2019 impairment testing date.

In particular, Brexit could result in a new regulatory regime in the United Kingdom that may or may not follow that of the European Union, and the creation of new and divergent laws and regulations could increase the cost and complexity of our compliance.

In addition, this shift in regime could create a number of legal and accounting complexities with respect to existing relationships, including uncertainty regarding the continuity of contracts entered into by entities in the United Kingdom or the European Union.

We identified material weaknesses in our internal control over financial reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control.

Our 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 reporting purposes in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

As a public company, we are required to comply with the Sarbanes-Oxley Act and other rules that govern public companies.

In particular, we are required to certify our compliance with Section 404 of the Sarbanes-Oxley Act, which requires us to furnish annually a report by management on the effectiveness of our internal control over financial reporting.

In addition, our independent registered public accounting firm is required to report on the effectiveness of our internal control over financial reporting.

For further discussion of the material weaknesses identified and our remedial efforts, see Item 9A, *Controls and Procedures*.

Remediation efforts place a significant burden on management and add increased pressure to our financial resources and processes.

As a result, we may not be successful in making the improvements necessary to remediate the material weaknesses identified by management, be able to do so in a timely manner, or be able to identify and remediate additional control deficiencies, including material weaknesses, in the future.

Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital.

We did not file our Annual Report on Form 10-K for the year ended December 29, 2018 or our Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2019 within each respective timeframe required by the SEC, meaning we did not remain current in our reporting requirements with the SEC.

As such, we are not currently eligible to use a registration statement on Form S-3 that would allow us to continuously incorporate by reference our SEC reports into the registration statement, or to use “shelf” registration statements to conduct offerings, until we have maintained our status as a current filer for approximately one year.

This limits our ability to access the public markets to raise debt or equity capital, which could prevent us from pursuing transactions or implementing business strategies that we might otherwise believe are beneficial to our business.

If we wish to pursue a public offering now, we would be required to file a registration statement on Form S-1 and have it reviewed and declared effective by the SEC.

Doing so would likely take significantly longer than using a registration statement on Form S-3 and increase our transaction costs, and the necessity of using a Form S-1 for a public offering of registered securities could, to the extent we are not able to conduct offerings using alternative methods, adversely impact our ability to raise capital or complete acquisitions of other companies in a timely manner.

We restated certain of our previously issued consolidated financial statements, which resulted in unanticipated costs and may affect investor confidence and raise reputational issues.

As discussed in the Explanatory Note, in Note 2, *Restatement of Previously Issued Consolidated Financial Statements*, and in Note 23, *Quarterly Financial Data (Unaudited)*, in our Annual Report on Form 10-K for the year ended December 29, 2018, we restated our consolidated financial statements and related disclosures for the years ended December 30, 2017 and December 31, 2016 and restated each of the quarterly and year-to-date periods for the nine months ended September 29, 2018 and for fiscal year 2017, following the identification of misstatements as a result of the internal investigation conducted.

We do not believe that the misstatements were 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.

As a result, we incurred unanticipated costs for accounting and legal fees in connection with or related to the restatement, and have become subject to a number of additional risks and uncertainties, which may affect investor confidence in the accuracy of our financial disclosures and may raise reputational issues for our business.

For example, the Tax Cuts and Jobs Act (the “U.S. Tax Reform”) enacted on December 22, 2017 resulted in changes in our corporate tax rate, our deferred income taxes, and the taxation of foreign earnings.

However, as two ratings agencies have downgraded our long-term credit rating to below investment grade status, we are subject to certain financial covenants in our 4.875% Second Lien Senior Secured Notes due February 15, 2025 (the “2025 Notes”).

[removed: As a result of these changes, we plan to combine] [added: We also combined] our EMEA, Latin America, and APAC zones to form the International [removed: zone.][added: zone as a result of certain previously announced organizational changes.]

We [removed: also plan to move] [added: moved] our Puerto Rico business from the Latin America zone to the United States zone to consolidate and streamline the management of our product categories and supply chain.

See Note 22, *Segment Reporting*, in Item 8, *Financial Statements and Supplementary Data*, [removed: to the consolidated financial statements] for our financial information by segment.

See below for discussion and analysis of our financial condition and results of operations for [removed: 2019] [added: 2020] compared to [removed: 2018.][added: 2019.]

See Item 7, *Management’s Discussions and Analysis of Financial Condition and Results of Operations*, in [removed: our] [added: Exhibit 99.1, *Updated portions of The Kraft Heinz Company’s] Annual Report on Form 10-K for the [added: fiscal] year ended December [removed: 29, 2018] [added: 28, 2019*, of our Current Report on Form 8-K filed with the SEC on November 13, 2020,] for a detailed discussion of our financial condition and results of operations for [removed: 2018] [added: 2019] compared to [removed: 2017.][added: 2018.]

Our [removed: 2019] results of operations reflect goodwill impairment losses of [removed: $1.2] [added: $2.3] billion and intangible asset impairment losses of [removed: $702 million] [added: $1.1 billion in 2020] compared to goodwill impairment losses of [removed: $7.0] [added: $1.2] billion and intangible asset impairment losses of [removed: $8.9 billion] [added: $702 million] in [removed: 2018.][added: 2019.]

See Note [added: 4, *Acquisitions and Divestitures*, and Note] 9, *Goodwill and Intangible Assets*, in Item 8, *Financial Statements and Supplementary Data*, for additional information on these impairment losses.

| | [added: | |] December [removed: 28, 2019] [added: 26, 2020] | | | | [added: | |] December [removed: 29, 2018] [added: 28, 2019] | | | | [added: | |] % Change | | [added: |]

| | [added: | |] (in millions, except per share data) | | | | | | | | | | [added: | | | | |]

| Net sales | [added: | |] $ | [removed: 24,977] [added: 26,185] | | | [added: | |] $ | [removed: 26,268] [added: 24,977] | | | [removed: (4.9] | [removed: )%] | [added: 4.8 | | % |]

| Operating income/(loss) | [removed: 3,070] | | [added: 2,128] | | [removed: (10,205] | | [removed: )] | | [removed: 130.1] [added: 3,070] | [removed: %] | [added: |]

| Net income/(loss) attributable to common shareholders | [removed: 1,935] | | [added: 356] | | [removed: (10,192] | | [removed: )] | | [removed: 119.0] [added: 1,935] | [added: | | | | | (81.6) | |] % |

| Diluted EPS | [removed: 1.58] | | [added: $] | [added: 0.29] | [removed: (8.36] | | [removed: )] | | [removed: 118.9] [added: $] | [removed: %] [added: 1.58] | [added: |]

| | [added: | |] (in millions) | | | | | | | | | | [added: | | | | |]

| Organic Net [removed: Sales(a)] [added: Sales(a):] | [removed: 24,961] | | | | [removed: 25,393] | | | | [removed: (1.7] | [removed: )%] | [added: |]

[removed: | (a) | Organic Net Sales is a non-GAAP financial measure.] See the *Non-GAAP Financial Measures* section at the end of this item. [removed: |]

*Fiscal* [removed: *Year* *2019] [added: *Year 2020] Compared to [removed: Fiscal* *Year* *2018:*][added: Fiscal Year 2019:*]

Net sales decreased [removed: 4.9%] [added: 12.8%] to [removed: $25.0] [added: $1.6] billion in [removed: 2019] [added: 2020] compared to [removed: $26.3] [added: $1.9] billion in [removed: 2018] [added: 2019,] primarily due to the unfavorable impacts of [removed: foreign currency (1.9] [added: divestitures (11.6] pp) and [removed: acquisitions and divestitures (1.3] [added: foreign currency (1.1] pp).

Organic Net Sales decreased [removed: 1.7%] [added: 0.1%] to [removed: $25.0] [added: $1.7] billion in [removed: 2019] [added: 2020] compared to [removed: $25.4] [added: $1.7] billion in [removed: 2018] [added: 2019, primarily] due to unfavorable volume/mix [removed: (1.8] [added: (2.3] pp), [removed: partially] [added: which more than] offset [removed: by] higher pricing [removed: (0.1] [added: (2.2] pp).

| Operating income/(loss) | [removed: $] | [removed: 3,070] | [added: 2,128] | | [removed: $] | [removed: (10,205] | [removed: )] | | [removed: 130.1] [added: 3,070] | [removed: %] | [added: |]

| Adjusted [removed: EBITDA(a)] [added: EBITDA] | [removed: 6,064] | | [added: $] | [added: 6,669] | [removed: 7,024] | | | | [removed: (13.7] [added: $] | [removed: )%] [added: 6,064] | [added: |]

[removed: | (a) | Adjusted EBITDA is a non-GAAP financial measure.] See the *Non-GAAP Financial Measures* section at the end of this item. [removed: |]

[removed: Fiscal *Year* *2019] [added: *Fiscal* *Year 2020] Compared to [removed: Fiscal* *Year* *2018:*][added: Fiscal Year 2019:*]

[removed: Impairment] [added: Non-cash impairment] losses were [removed: $1.9] [added: $3.4] billion in [removed: 2019] [added: 2020] compared to [removed: $15.9] [added: $1.9] billion in [removed: 2018.][added: 2019.]

See Note 9, *Goodwill and Intangible Assets*, in Item 8, *Financial Statements and Supplementary Data*, for additional information on our [added: non-cash] impairment losses.

Net income/(loss) attributable to common shareholders [removed: increased 119.0%] [added: decreased 81.6%] to income of [removed: $1.9 billion] [added: $356 million] in [removed: 2019] [added: 2020] compared to [removed: a loss of $10.2] [added: $1.9] billion in [removed: 2018.][added: 2019.]

This change was driven by the operating income/(loss) factors described above (primarily [removed: lower] [added: higher non-cash] impairment losses in [removed: 2019 compared to 2018) and favorable impacts] [added: the current year), unfavorable changes] in other expense/(income), [removed: partially offset by a higher effective tax rate] and higher interest expense, [removed: detailed as follows.][added: partially offset by lower tax expense in the current year.]

[removed: | • | The effective tax rate was 27.4% in 2019 on pre-tax income compared to 9.4% in 2018 on a pre-tax loss. The] [added: Our] 2019 effective tax rate was [removed: higher primarily driven by lower non-deductible goodwill impairments, partially offset] [added: unfavorably impacted] by [removed: a more favorable geographic mix of pre-tax income in various non-U.S. jurisdictions and a decrease in unfavorable] rate reconciling [removed: items. Current year unfavorable impacts] [added: items,] primarily related to non-deductible goodwill impairments, the impact of the federal tax on [removed: global intangible low-taxed income (“GILTI”),] [added: GILTI,] an increase in uncertain tax position reserves, the establishment of certain state valuation allowance reserves, and the tax impacts from the [added: sale of] Heinz India [added: Private Limited (“Heinz India Transaction”)] and [removed: Canada Natural Cheese Transactions. These impacts were partially offset by] the [removed: reversal] [added: sale] of certain [removed: withholding tax obligations and changes] [added: assets] in [removed: estimates of certain 2018 U.S. income and deductions. |][added: our natural cheese business in Canada (“Canada Natural Cheese Transaction”).]

[removed: | • | Interest expense was $1.4 billion in] [added: Our] 2019 [removed: compared to $1.3 billion in 2018. This increase was primarily driven by] [added: interest expense included] a $98 million loss on extinguishment of debt recognized in connection with our [removed: debt] tender offers and [added: debt] redemptions [removed: completed] in 2019. [removed: Excluding the impact of the loss on extinguishment of debt, interest expense was generally flat as compared to the prior year period. |]

| Diluted EPS | [removed: $] | [added: | 0.29 | | | | | |] 1.58 | | | [removed: $] | [removed: (8.36] | [removed: )] | [added: (81.6)] | [removed: 118.9] | % |

| Adjusted [removed: EPS(a)] [added: EPS] | [removed: 2.85] | | [added: $] | [added: 2.88] | [removed: 3.51] | | | | [removed: (18.8] [added: $] | [removed: )%] [added: 2.85] | [added: |]

[removed: | (a) | Adjusted EPS is a non-GAAP financial measure.] See the *Non-GAAP Financial Measures* section at the end of this item. [removed: |]

Diluted EPS [removed: increased 118.9%] [added: decreased 81.6%] to [removed: earnings of $1.58] [added: $0.29] in [removed: 2019] [added: 2020] compared to [removed: a loss of $8.36] [added: $1.58] in [removed: 2018] [added: 2019,] primarily driven by the net income/(loss) attributable to common shareholders factors discussed above.

| | [added: | |] December [removed: 28, 2019] [added: 26, 2020] | | | | [removed: December 29, 2018] | | [added: December 28, 2019] | | [removed: $ Change] | | | | % Change | | [added: |]

| Integration and restructuring expenses | [added: | | — | | | | | |] 0.07 | | | | [removed: 0.32] | | [added: (0.07)] | | [removed: (0.25] | | [removed: )] | | | | [added: |]

| Deal costs | [removed: 0.02] | | [added: —] | | [added: | | | |] 0.02 | | | | [removed: —] | | [added: (0.02)] | | | | [added: | | | | |]

| Unrealized losses/(gains) on commodity hedges | [removed: (0.04] | | [removed: )] [added: —] | | [removed: 0.01] | | | | [removed: (0.05] [added: (0.04)] | | [removed: )] | | | | [added: 0.04 | | | | | | | | |]

| Impairment [removed: losses | 1.38 | |] [added: losses(d)] | | [removed: 11.28] | [added: 2.59] | | | [removed: (9.90] | | [removed: )] | [added: 1.38] | | |

| Losses/(gains) on sale of [removed: business | (0.23 | | )] [added: business(e)] | | [removed: 0.01] | [added: (0.01)] | | | [removed: (0.24] | | [removed: )] | [added: (0.23)] | | |

| Nonmonetary currency devaluation | [added: | | — | | | | | |] 0.01 | | | | [removed: 0.12] | | [added: (0.01)] | | [removed: (0.11] | | [removed: )] | | | | [added: |]

In the first quarter of 2020, our internal reporting and reportable segments changed.

Therefore, effective in the first quarter of 2020, we manage and report our operating results through three reportable segments defined by geographic region: United States, International, and Canada.

We have reflected these changes in all historical periods presented.

COVID-19 Impacts:

We have been actively monitoring the impact of COVID-19 on our business.

In 2020, we experienced consolidated net sales growth compared to the prior year as higher demand for our retail products more than offset declines in our foodservice business.

This increased demand for our retail products could reverse in the future if consumer purchasing behavior changes.

We expect volatility in the demand for away-from-home establishments to continue through the first quarter of 2021 and potentially beyond, which is expected to negatively impact our foodservice business.

However, COVID-19 and its impacts are unprecedented and continuously evolving, and the long-term impacts to our financial condition and results of operations are still uncertain.

See *Consolidated Results of Operations* and *Liquidity and Capital Resources* for additional information related to the impact of COVID-19 on our overall results.

For information related to the impact of COVID-19 on our segment results see *Results of Operations by Segment*.

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net sales | | | $ | 26,185 | | | | | $ | 24,977 | | | | | 4.8 | | % |

(a) Organic Net Sales is a non-GAAP financial measure.

Organic Net Sales increased 6.5% to $26.3 billion in 2020 compared to $24.7 billion in 2019, primarily driven by the continued growth of at-home consumption due, in part, to the COVID-19 pandemic.

Organic Net Sales growth was driven by favorable volume/mix (3.4 pp) and higher pricing (3.1 pp).

Favorable volume/mix in the United States and International segments more than offset unfavorable volume/mix in Canada, while pricing was higher across all segments.

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | December 26, 2020 | | | | | | December 28, 2019 | | | | | | % Change | | |

| Net income/(loss) attributable to common shareholders | | | 356 | | | | | | 1,935 | | | | | | (81.6) | | % |

(a) Adjusted EBITDA is a non-GAAP financial measure.

Operating income/(loss) decreased 30.7% to income of $2.1 billion in 2020 compared to $3.1 billion in 2019, primarily driven by higher non-cash impairment losses in the current year.

The remaining change in operating income/(loss) was an increase of $572 million, primarily driven by higher Organic Net Sales in the current year, which more than offset increased variable compensation expenses, higher equity award compensation expense, investments in marketing, higher supply chain costs, higher general corporate expenses, unfavorable changes in key commodity costs (which we define as dairy, meat, coffee, and nuts), and the unfavorable impact of divestitures.

- Other expense/(income) was $296 million of income in 2020 compared to $952 million of income in 2019.

This change was primarily driven by a $2 million net loss on sales of businesses in 2020 compared to a $420 million net gain on sales of businesses in 2019, a $184 million decrease in non-cash amortization of prior service credits as compared to the prior year period, a $162 million net foreign exchange loss in 2020 compared to a $10 million net foreign exchange loss in 2019, and a $26 million loss on the dissolution of a joint venture.

These impacts were partially offset by a $154 million net gain on derivative activities in 2020 compared to a $33 million net gain on derivative activities in 2019.

As we estimate the amortization of prior service credits to be insignificant in 2021, we are forecasting a negative impact to other expense/(income) in 2021 compared to 2020 of approximately $114 million.

- Interest expense was $1.4 billion in 2020 compared to $1.4 billion in 2019.

Our 2020 interest expense included a $124 million loss on extinguishment of debt recognized in connection with our tender offer and debt redemptions in 2020, as well as $22 million of interest expense related to the $4.0 billion drawn on our Senior Credit Facility in the first quarter of 2020 and repaid by the end of the second quarter of 2020.

- Our effective tax rate was 65.0% in 2020 compared to 27.4% in 2019.

Our 2020 effective tax rate was unfavorably impacted by rate reconciling items, primarily related to non-deductible goodwill impairments, the impact of the federal tax on global intangible low-taxed income (“GILTI”), and the revaluation of our deferred tax balances due to changes in international tax laws.

These impacts were partially offset by a more favorable geographic mix of pre-tax income in various non-U.S. jurisdictions and the favorable impact of establishing certain deferred tax assets for state tax deductions.

These impacts were partially offset by the reversal of certain withholding tax obligations and changes in estimates of certain 2018 U.S. income and deductions.

Adjusted EBITDA increased 10.0% to $6.7 billion in 2020 compared to $6.1 billion in 2019, despite the unfavorable impacts of divestitures (1.0 pp) and foreign currency (0.5 pp), as increases in the United States and International segments more than offset declines in Canada and higher general corporate expenses.

Adjusted EBITDA growth was primarily driven by the continued growth of at-home consumption due, in part, to the COVID-19 pandemic.

| | | | | | | | | | | | | | | | | | |

We manage and report our operating results through four segments.

We have three reportable segments defined by geographic region: United States, Canada, and EMEA.

Our remaining businesses are combined and disclosed as “Rest of World.” Rest of World comprises two operating segments: Latin America and APAC.

During the third quarter of 2019, certain organizational changes were announced that will impact our future internal reporting and reportable segments.

The International zone will be a reportable segment along with the United States and Canada in 2020.

These changes will be effective in the first quarter of 2020.

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

Volume/mix was unfavorable in the United States, Rest of World, and EMEA, which was partially offset by growth in Canada.

Higher pricing in the United States and Rest of World was partially offset by lower pricing in Canada, while pricing in EMEA was flat.

Operating income/(loss) increased 130.1% to income of $3.1 billion in 2019 compared to a loss of $10.2 billion in 2018.

This increase was primarily driven by lower impairment losses in the current year.

Excluding the impact of these impairment losses, operating income/(loss) decreased by $762 million primarily due to lower Organic Net Sales, higher supply chain costs, the unfavorable impact of foreign currency (0.8 pp), higher general corporate expenses, and the unfavorable impact of divestitures, partially offset by lower restructuring expenses in the current period.

| • | Other expense/(income) was $952 million of income in 2019 compared to $168 million of income in 2018. This increase was primarily driven by a $420 million net gain on sales of businesses in 2019 compared to a $15 million loss on sale of our South Africa subsidiary in 2018, a $162 million non-cash settlement charge in the prior year related to the wind-up of our Canadian salaried and Canadian hourly defined benefit pension plans, and a $136 million decrease in nonmonetary currency devaluation losses related to our Venezuelan operations as compared to the prior year period. The $420 million net gain on sales of businesses in 2019 consisted of a $249 million gain on the sale of Heinz India Private Limited (“Heinz India”) (“Heinz India Transaction”), a $242 million gain on the sale of certain assets in our natural cheese business in Canada (“Canada Natural Cheese Transaction”), and a $71 million loss on an anticipated sale of a subsidiary within our Rest of World segment. |

Adjusted EBITDA decreased 13.7% to $6.1 billion in 2019 compared to $7.0 billion in 2018.

This decrease was primarily due to lower Organic Net Sales, higher supply chain costs, the unfavorable impact of foreign currency (2.8 pp), higher general corporate expenses, and the unfavorable impact of divestitures.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Diluted EPS | $ | 1.58 | | | $ | (8.36 | ) | | $ | 9.94 | | | 118.9 | % |

| Other losses/(gains) related to acquisitions and divestitures | — | | | | 0.02 | | | | (0.02 | | ) | | | |

| Adjusted EPS(a) | $ | 2.85 | | | $ | 3.51 | | | $ | (0.66 | ) | | (18.8 | )% |

| | | | | | | | | | $ | (0.66 | ) | | | |

Adjusted EPS decreased 18.8% to $2.85 in 2019 compared to $3.51 in 2018 primarily due to lower Adjusted EBITDA and higher depreciation and amortization expenses, partially offset by favorable changes in other expense/(income) and lower interest expense.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| EMEA | 2,551 | | | | 2,718 | | |

| Rest of World | 2,788 | | | | 3,255 | | |

| Canada | 1,700 | | | | 1,732 | | |

| EMEA | 2,666 | | | | 2,697 | | |

| Rest of World | 2,839 | | | | 2,842 | | |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| United States | (2.0 | )% | | 0.0 pp | | 0.0 pp | | (2.0 | )% | | 0.4 pp | | (2.4) pp |

| Canada | (13.4 | )% | | (2.1) pp | | (9.4) pp | | (1.9 | )% | | (3.4) pp | | 1.5 pp |

| EMEA | (6.2 | )% | | (4.3) pp | | (0.7) pp | | (1.2 | )% | | 0.0 pp | | (1.2) pp |

| Rest of World | (14.3 | )% | | (10.3) pp | | (3.9) pp | | (0.1 | )% | | 1.2 pp | | (1.3) pp |

| Kraft Heinz | (4.9 | )% | | (1.9) pp | | (1.3) pp | | (1.7 | )% | | 0.1 pp | | (1.8) pp |

| EMEA | 661 | | | | 724 | | |

| | [added: | |] December [removed: 28, 2019] [added: 26, 2020] | | | | [added: | |] December [removed: 29, 2018] [added: 28, 2019] | | |

| Commodity contracts | [added: | |] $ | [removed: 43] [added: 39] | | | [added: | |] $ | [removed: 38] [added: 43] | |

| Foreign currency contracts | [removed: 73] | | [added: 141] | | [removed: 100] | | | [added: | 73 | | |]

| Cross-currency swap contracts | [removed: 412] | | [added: 433] | | [removed: 402] | | | [added: | 412 | | |]

Effect of Hypothetical 1% Fluctuation in [removed: LIBOR and CDOR:][added: LIBOR:]

Based on our current variable rate debt balance as of December [removed: 28, 2019,] [added: 26, 2020,] a hypothetical 1% increase in LIBOR [removed: and CDOR] would [removed: increase] [added: have an insignificant impact on] our annual interest [removed: expense by approximately $12 million.][added: expense.]

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

The Financial Conduct Authority in the United Kingdom will be phasing out the LIBOR rates associated with our outstanding variable rate debt by the end of June 2023.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

The Financial Conduct Authority in the United Kingdom intends to phase out LIBOR by the end of 2021.

Before the consummation of the 2015 Merger, Heinz was controlled by Berkshire Hathaway Inc. (“Berkshire Hathaway”) and 3G Global Food Holdings, [removed: L.P.] [added: LP] (“3G [added: Global Food Holdings” and, together with its affiliates, “3G] Capital”) [removed: (together,] [added: (3G Capital together with Berkshire Hathaway,] the “Sponsors”), following their acquisition of H. J. Heinz Company on June 7, 2013.

Reportable [removed: Segments][added: Segments:]

We [removed: also plan to move] [added: moved] our Puerto Rico business from the Latin America zone to the United States zone to consolidate and streamline the management of our product categories and supply chain.

Trademarks and Intellectual [removed: Property][added: Property:]

Significant trademarks by segment based on net sales in [removed: 2019] [added: 2020] were:

| | | [added: | | | |] Majority Owned and Licensed Trademarks | [added: | |]

| United States | | [added: | | | |] *Kraft, Oscar Mayer, Heinz, Philadelphia, [removed: Lunchables,] Velveeta, [added: Lunchables,] Planters, Maxwell House, Capri Sun*, [removed: Kool-Aid,] Ore-Ida, [removed: Jell-O*] [added: Jell-O, Kool-Aid*] | [added: | |]

| Canada | | [added: | | | |] *Kraft, [removed: Heinz,] Philadelphia, [removed: Maxwell House,] [added: Heinz,] Classico, [removed: McCafe*, Tassimo] [added: Maxwell House*] | [added: | |]

| [removed: Rest of World] [added: International] | | [added: | | | |] *Heinz, ABC, Master, Kraft, [removed: Quero,] Golden Circle, [removed: Wattie's*] [added: Quero, Plasmon, Wattie’s, Pudliszki*] | [added: | |]

[removed: Additionally, our] [added: Our] license to use the [removed: *McCafe*] [added: *McCafé*] brand expired in [added: the United States in July 2020 and in] Canada in December 2019.

In [removed: 2019,] [added: 2020,] brands used under licenses from third parties included *Capri Sun* packaged drink pouches for sale in the United States, *TGI Fridays* frozen snacks and appetizers in the United States and Canada*, [removed: McCafe*] [added: McCafé*] ground, whole bean, and on-demand single cup coffees in the United [removed: States and Canada*,*] [added: States,] and *Taco Bell Home Originals* Mexican-style food products in U.S. grocery stores.

In addition, in our agreements with Mondelēz International, Inc. (“Mondelēz [removed: International”)] [added: International”),] following the spin-off of Kraft from Mondelēz International in 2012, we each granted the other party various licenses to use certain of our and their respective intellectual property rights in named jurisdictions for certain periods of time.

Our research and development [removed: focuses] [added: efforts focus] on achieving the following four objectives:

[removed: | • |] [added: -] product innovations, renovations, and new technologies to meet changing consumer needs and drive growth; [removed: |]

[removed: | • |] [added: -] world-class and uncompromising food safety, quality, and consistency; [removed: |]

[removed: | • |] [added: -] superior, customer-preferred product and package performance; and [removed: |]

[removed: | • |] [added: -] continuous process improvement and product optimization in pursuit of cost reductions. [removed: |]

[removed: Competitors] [added: Our competitors] include large national and international food and beverage companies and numerous local and regional companies.

Sales and [removed: Customers][added: Customers:]

Our largest customer, Walmart Inc., represented approximately [added: 22% of our net sales in 2020 and approximately] 21% of our net sales in [removed: 2019, 2018,] [added: both 2019] and [removed: 2017.][added: 2018.]

Additionally, we have [removed: significant] [added: key] customers in different regions around the world; however, none of these customers are individually [removed: material] [added: significant] to our consolidated business.

In [removed: 2019,] [added: 2020,] the five largest customers in our [removed: U.S.] [added: United States] segment accounted for approximately [removed: 48%] [added: 50%] of [removed: U.S.] [added: United States] segment net sales, the five largest customers in our [removed: Canada] [added: International] segment accounted for approximately [removed: 73%] [added: 18%] of [removed: Canada] [added: International] segment net sales, and the five largest customers in our [removed: EMEA] [added: Canada] segment accounted for approximately [removed: 26%] [added: 76%] of [removed: our EMEA] [added: Canada] segment net sales.

Net Sales by Product [removed: Category][added: Category:]

| | [added: | |] December [added: 26, 2020 | | | | | | December] 28, 2019 | | | [removed: December 29, 2018] | | | December [removed: 30, 2017] [added: 29, 2018] | | [added: |]

| Condiments and sauces | [added: | |] 26 | [added: |] % | | [added: | |] 26 | [added: |] % | | [removed: 25] | [added: | 26 | |] % |

| Cheese and dairy | [added: | |] 20 | [added: |] % | | [added: | |] 20 | [added: |] % | | [removed: 21] | [added: | 20 | |] % |

| Ambient foods | [removed: 10] | [added: | 11 | |] % | | [added: | |] 10 | [added: |] % | | [added: | |] 10 | [added: |] % |

| Meats and seafood | [added: | |] 10 | [added: |] % | | [added: | |] 10 | [added: |] % | | [added: | |] 10 | [added: |] % |

| Frozen and chilled foods | [removed: 9] | [added: | 10 | |] % | | [removed: 10] | [added: | 9 | |] % | | [added: | |] 10 | [added: |] % |

Raw Materials and [removed: Packaging][added: Packaging:]

We purchase and use large quantities of commodities, including dairy products, meat products, coffee beans, nuts, tomatoes, potatoes, soybean and vegetable oils, sugar and other sweeteners, corn products, [removed: and] wheat products, [added: and cocoa products,] to manufacture our products.

In addition, we purchase and use significant quantities of resins, metals, and cardboard to package our [removed: products] [added: products,] and [added: we use] natural [removed: gas to operate] [added: gas, electricity, and diesel fuel in the manufacturing and distribution of] our [removed: facilities.][added: products.]

The prices of raw materials that we use in our products are affected by external factors, such as global competition for resources, currency fluctuations, severe weather or global climate change, [added: pandemics,] consumer, [removed: industrial] [added: industrial,] or investment demand, and changes in governmental regulation and trade, tariffs, alternative energy, and agricultural programs.

[removed: We] [added: As of December 26, 2020, we] had approximately [removed: 37,000] [added: 38,000] employees [removed: as of December 28, 2019.][added: globally.]

[removed: Regulation][added: Government Regulation]

These laws and regulations are administered by federal, state, and local government agencies in the United States, as well as government entities and agencies outside the United States in markets where our products are manufactured, [removed: distributed] [added: distributed,] or sold.

In addition, [removed: the United Kingdom's withdrawal from the European Union (commonly referred to as “Brexit”) and other] regulatory regime changes may add cost and complexity to our compliance efforts.

Environmental [removed: Regulation][added: Regulation:]

As of December [removed: 28, 2019,] [added: 26, 2020,] we had accrued an amount we deemed appropriate for environmental remediation.

The following are our executive officers as of February [removed: 8, 2020:][added: 13, 2021:]

We are driving transformation at The Kraft Heinz Company (Nasdaq: KHC), inspired by our Purpose, *Let’s Make Life Delicious*.

Consumers are at the center of everything we do.

With 2020 net sales of approximately $26 billion, we are committed to growing our iconic and emerging food and beverage brands on a global scale.

We leverage our scale and agility to unleash the full power of Kraft Heinz across a portfolio of six consumer-driven product platforms.

As global citizens, we’re dedicated to making a sustainable, ethical impact while helping feed the world in healthy, responsible ways.

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

Unless the context requires otherwise, references to years and quarters contained herein pertain to our fiscal years and fiscal quarters.

Our 2020 fiscal year was a 52-week period that ended on December 26, 2020, the 2019 fiscal year was a 52-week period that ended on December 28, 2019, and the 2018 fiscal year was a 52-week period that ended on December 29, 2018.

In the first quarter of 2020, our internal reporting and reportable segments changed.

We also combined our Europe, Middle East, and Africa (“EMEA”), Latin America, and Asia Pacific (“APAC”) zones to form the International zone as a result of certain previously announced organizational changes.

Therefore, effective in the first quarter of 2020, we manage and report our operating results through three reportable segments defined by geographic region: United States, International, and Canada.

We have reflected these changes in all historical periods presented.

COVID-19 Pandemic:

In 2020 and continuing into 2021, the COVID-19 pandemic, along with government and consumer responses to the pandemic, caused, and continue to cause, uncertainty in the U.S. and global economies.

The ongoing spread of COVID-19 throughout the United States and internationally, and measures implemented by governmental authorities in an attempt to contain the virus, including social distancing restrictions, shelter-in-place orders, and business shutdowns, have had and continue to have negative and positive implications for portions of our business.

During 2020, COVID-19 produced a beneficial impact on our consolidated net sales results, as increased demand for our retail products more than offset declines in our foodservice (or away-from-home) business.

We incurred additional COVID-19-related operating costs as we focused on meeting increased retail demand, adding additional sanitation measures, and providing personal protective equipment to our employees.

While we expect volatility in the demand for our products to continue through the first quarter of 2021 and potentially beyond, particularly as it relates to our foodservice business, COVID-19 and its impacts are unprecedented and continuously evolving, and the long-term impacts to our financial condition and results of operations are still uncertain.

Resources

Sales

We manage our sales portfolio through six consumer-driven product platforms.

A platform is a lens created for the portfolio based on a grouping of real consumer needs and includes the following for Kraft Heinz: Taste Elevation, Fast Fresh Meals, Easy Meals Made Better, Real Food Snacking, Flavorful Hydration, and Easy Indulgent Desserts.

The platforms are modular and configurable by reportable segment and market.

Further, each platform is assigned a role within our business to help inform our resource allocation and investment decisions, which are made at the reportable segment level.

These roles include: Grow, Energize, and Stabilize.

The role of a platform may also vary by reportable segment and market.

The platform approach helps us to manage our business efficiently, including the oversight of our various product categories and brands, and transforms the way we plan for our growth.

Net Sales by Platform:

Net sales by platform as a percentage of consolidated net sales for the periods presented were:

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Taste Elevation | | | 27 | | % | | | | 27 | | % | | | | 27 | | % |

| Fast Fresh Meals | | | 25 | | % | | | | 24 | | % | | | | 24 | | % |

| Easy Meals Made Better | | | 19 | | % | | | | 17 | | % | | | | 17 | | % |

| Real Food Snacking | | | 9 | | % | | | | 9 | | % | | | | 8 | | % |

| Flavorful Hydration | | | 6 | | % | | | | 6 | | % | | | | 6 | | % |

| Easy Indulgent Desserts | | | 4 | | % | | | | 4 | | % | | | | 3 | | % |

| Other | | | 10 | | % | | | | 13 | | % | | | | 15 | | % |

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

For 150 years, we have produced some of the world’s most beloved products at The Kraft Heinz Company (Nasdaq: KHC).

Our Vision is *To Be the Best Food Company, Growing a Better World*.

We are one of the largest global food and beverage companies, with 2019 net sales of approximately $25 billion.

Our portfolio is a diverse mix of iconic and emerging brands.

As the guardians of these brands and the creators of innovative new products, we are dedicated to the sustainable health of our people and our planet.

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”).

During the third quarter of 2019, certain organizational changes were announced that will impact our future internal reporting and reportable segments.

As a result of these changes, we plan to combine our EMEA, Latin America, and APAC zones to form the International zone.

The International zone will be a reportable segment along with the United States and Canada in 2020.

These changes will be effective in the first quarter of 2020.

| | | |

| --- | --- | --- |

| EMEA | | *Heinz, Plasmon, Pudliszki, Honig, HP, Benedicta, Kraft, Karvan Cevitam* |

| | |

| --- | --- |

| | | | | | | | | |

Seasonality and Working Capital

For information related to our cash flows provided by/(used for) operating activities, including working capital items, see *Liquidity and Capital Resources* in Item 7, *Management’s Discussion and Analysis of Financial Condition and Results of Operations*, of this report.

Employees

| | | | | |

| --- | --- | --- | --- | --- |

| Nina Barton | | 46 | | Chief Growth Officer |

Nina Barton became Chief Growth Officer in September 2019.

Prior to assuming her current role, Ms. Barton served as Zone President of Canada and President of Digital Growth from January 2019 to August 2019.

Prior to that role, Ms. Barton served as President, Global Digital and Online Growth since October 2017, and from July 2015 through October 2017, she served as Senior Vice President of Marketing, Innovation and Research & Development for the U.S. business.

From July 2013 through July 2015, she served as Vice President, Marketing at Kraft Foods Group, Inc. and managed the total coffee portfolio including the *Maxwell House*, *Gevalia,* and *McCafe* brands.

Ms. Barton joined Kraft Foods in 2011 as Senior Marketing Director responsible for growing the *Philadelphia* cream cheese brand.

Prior to that, Ms. Barton served in a variety of marketing and brand-building roles in the consumer products industry.

[removed: FORM 10-K][added: FORM 10-K]

| ☒ | | [added: | | | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year ended December [removed: 28, 2019][added: 26, 2020]

| ☐ | | [added: | | | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

Commission File [removed: Number 001-37482][added: Number 001-37482]

[removed: ][added: ]

[removed: The Kraft] [added: The Kraft] Heinz [removed: Company][added: Company]

| Delaware | | | | [added: | | | | | | | |] 46-2078182 | [added: | |]

| (State or other jurisdiction of incorporation or organization) | | | | [added: | | | | | | | |] (I.R.S. Employer Identification No.) | [added: | |]

| One PPG Place, | [added: | |] Pittsburgh, | [added: | |] Pennsylvania | | [added: | | | |] 15222 | [added: | |]

| (Address of Principal Executive Offices) | | | | [added: | | | | | | | |] (Zip Code) | [added: | |]

Registrant’s telephone number, including area code: [removed: (412) 456-5700][added: (412) 456-5700]

| Title of each class | [added: | |] Trading Symbol | [added: | |] Name of exchange on which registered | [added: | |]

| Common stock, $0.01 par value | [added: | |] KHC | [added: | |] The Nasdaq Stock Market LLC | [added: | |]

Yes [removed: ☐ No] ☒ [added: No ☐]

| Large accelerated filer | [added: | |] ☒ | | [added: | | | |] Accelerated filer | [added: | |] ☐ | | | | [added: | | | | | | | |]

| Non-accelerated filer | [added: | |] ☐ | | [added: | | | |] Smaller reporting company | [added: | |] ☐ | | [added: | | | |] Emerging growth company | [added: | |] ☐ | [added: | |]

The aggregate market value of the shares of common stock held by non-affiliates of the registrant, computed by reference to the closing price of such stock as of the last business day of the registrant’s most recently completed second quarter, was [removed: $19] [added: $20] billion.

As of February [removed: 8, 2020,] [added: 13, 2021,] there were [removed: 1,221,399,549] [added: 1,223,175,747] shares of the registrant’s common stock outstanding.

Portions of the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission in connection with its annual meeting of [removed: shareholders] [added: stockholders] expected to be held on May [removed: 7, 2020] [added: 6, 2021] are incorporated by reference into Part III hereof.

| [Item 1. [removed: Business.](#s24244dc0bcb24288b25ed4e049d24314)] [added: Business.](#i539164ffdf44407ba0efe4f7363e8914_16)] | [removed: [1](#s24244dc0bcb24288b25ed4e049d24314)] | [added: | [1](#i539164ffdf44407ba0efe4f7363e8914_16) | | |]

| [Item 1A. Risk [removed: Factors.](#s7D56624AD38C5FEEA33C5B2CB7230354)] [added: Factors.](#i539164ffdf44407ba0efe4f7363e8914_25)] | [removed: [5](#s7D56624AD38C5FEEA33C5B2CB7230354)] | [added: | [7](#i539164ffdf44407ba0efe4f7363e8914_25) | | |]

| [Item 1B. Unresolved Staff [removed: Comments.](#sa3ef59648fae473c89f7bdcb8c3b2aca)] [added: Comments.](#i539164ffdf44407ba0efe4f7363e8914_28)] | [removed: [19](#sa3ef59648fae473c89f7bdcb8c3b2aca)] | [added: | [20](#i539164ffdf44407ba0efe4f7363e8914_28) | | |]

| [Item 2. [removed: Properties.](#s66964482fda242928b0f9c43fa88d14a)] [added: Properties.](#i539164ffdf44407ba0efe4f7363e8914_31)] | [removed: [19](#s66964482fda242928b0f9c43fa88d14a)] | [added: | [20](#i539164ffdf44407ba0efe4f7363e8914_31) | | |]

| [Item 3. Legal [removed: Proceedings.](#sCE6F4614435950B18D942DC5B12F1DAD)] [added: Proceedings.](#i539164ffdf44407ba0efe4f7363e8914_34)] | [removed: [19](#sCE6F4614435950B18D942DC5B12F1DAD)] | [added: | [21](#i539164ffdf44407ba0efe4f7363e8914_34) | | |]

| [Item 4. Mine Safety [removed: Disclosures.](#sceebcb0530bc46818d81e75fd697bd55)] [added: Disclosures.](#i539164ffdf44407ba0efe4f7363e8914_37)] | [removed: [19](#sceebcb0530bc46818d81e75fd697bd55)] | [added: | [21](#i539164ffdf44407ba0efe4f7363e8914_37) | | |]

| [Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities.](#s123D5E0E6F925C1FA7899CC31E6156B0)] [added: Securities.](#i539164ffdf44407ba0efe4f7363e8914_43)] | [removed: [19](#s123D5E0E6F925C1FA7899CC31E6156B0)] | [added: | [21](#i539164ffdf44407ba0efe4f7363e8914_43) | | |]

| [Item 6. Selected Financial [removed: Data.](#sbb7adb018b9d45f287a2b20066971ec6)] [added: Data.](#i539164ffdf44407ba0efe4f7363e8914_46)] | [removed: [21](#sbb7adb018b9d45f287a2b20066971ec6)] | [added: | [22](#i539164ffdf44407ba0efe4f7363e8914_46) | | |]

| [Item 7. Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations.](#s488522547F255FEAB17E72EE14147E30)] [added: Operations.](#i539164ffdf44407ba0efe4f7363e8914_49)] | [removed: [22](#s488522547F255FEAB17E72EE14147E30)] | [added: | [23](#i539164ffdf44407ba0efe4f7363e8914_49) | | |]

| [Consolidated Results of [removed: Operations](#sDFD2D850EB4859EA85359772E54F76A0)] [added: Operations](#i539164ffdf44407ba0efe4f7363e8914_55)] | [removed: [22](#sDFD2D850EB4859EA85359772E54F76A0)] | [added: | [24](#i539164ffdf44407ba0efe4f7363e8914_55) | | |]

| [Results of Operations by [removed: Segment](#s3FD6212F943F513CBF684E251C4A9F77)] [added: Segment](#i539164ffdf44407ba0efe4f7363e8914_58)] | [removed: [25](#s3FD6212F943F513CBF684E251C4A9F77)] | [added: | [26](#i539164ffdf44407ba0efe4f7363e8914_58) | | |]

| [Critical Accounting [removed: Estimates](#s09846F89A2E35FAD975D9A2E7ADC8C99)] [added: Estimates](#i539164ffdf44407ba0efe4f7363e8914_61)] | [removed: [28](#s09846F89A2E35FAD975D9A2E7ADC8C99)] | [added: | [29](#i539164ffdf44407ba0efe4f7363e8914_61) | | |]

| [New Accounting [removed: Pronouncements](#s72476EDE41E350ECAE716E1B8E25515D)] [added: Pronouncements](#i539164ffdf44407ba0efe4f7363e8914_64)] | [removed: [32](#s72476EDE41E350ECAE716E1B8E25515D)] | [added: | [34](#i539164ffdf44407ba0efe4f7363e8914_64) | | |]

| [Commodity [removed: Trends](#s16CDB6F094CF578C88E216D7D8D5893E)] [added: Trends](#i539164ffdf44407ba0efe4f7363e8914_70)] | [removed: [32](#s16CDB6F094CF578C88E216D7D8D5893E)] | [added: | [34](#i539164ffdf44407ba0efe4f7363e8914_70) | | |]

| [Liquidity and Capital [removed: Resources](#s6BF0109136E25C5689E218C844448F83)] [added: Resources](#i539164ffdf44407ba0efe4f7363e8914_73)] | [removed: [33](#s6BF0109136E25C5689E218C844448F83)] | [added: | [35](#i539164ffdf44407ba0efe4f7363e8914_73) | | |]

| [Off-Balance Sheet Arrangements and Aggregate Contractual [removed: Obligations](#sE995865468D15447A8FDB25473E92C2A)] [added: Obligations](#i539164ffdf44407ba0efe4f7363e8914_76)] | [removed: [34](#sE995865468D15447A8FDB25473E92C2A)] | [added: | [38](#i539164ffdf44407ba0efe4f7363e8914_76) | | |]

| [Equity and [removed: Dividends](#s024B86F3DCB35187A661D6E82D7FA486)] [added: Dividends](#i539164ffdf44407ba0efe4f7363e8914_79)] | [removed: [36](#s024B86F3DCB35187A661D6E82D7FA486)] | [added: | [39](#i539164ffdf44407ba0efe4f7363e8914_79) | | |]

| [Non-GAAP Financial [removed: Measures](#sEF0058AFA22F54EFB37BB251FEBA364B)] [added: Measures](#i539164ffdf44407ba0efe4f7363e8914_82)] | [removed: [36](#sEF0058AFA22F54EFB37BB251FEBA364B)] | [added: | [39](#i539164ffdf44407ba0efe4f7363e8914_82) | | |]

| [Item 7A. Quantitative and Qualitative Disclosures about Market [removed: Risk.](#sFB21BB91C8DD5B848CBC9857E9E81FC3)] [added: Risk.](#i539164ffdf44407ba0efe4f7363e8914_85)] | [removed: [41](#sFB21BB91C8DD5B848CBC9857E9E81FC3)] | [added: | [44](#i539164ffdf44407ba0efe4f7363e8914_85) | | |]

| [Item 8. Financial Statements and Supplementary [removed: Data.](#sD02FD829B5315C148A256A7E37D71E94)] [added: Data.](#i539164ffdf44407ba0efe4f7363e8914_88)] | [removed: [42](#sD02FD829B5315C148A256A7E37D71E94)] | [added: | [45](#i539164ffdf44407ba0efe4f7363e8914_88) | | |]

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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| [PART I](#i539164ffdf44407ba0efe4f7363e8914_13) | | | [1](#i539164ffdf44407ba0efe4f7363e8914_13) | | |

| [PART II](#i539164ffdf44407ba0efe4f7363e8914_40) | | | [21](#i539164ffdf44407ba0efe4f7363e8914_40) | | |

| [Overview](#i539164ffdf44407ba0efe4f7363e8914_52) | | | [23](#i539164ffdf44407ba0efe4f7363e8914_52) | | |

| [Contingencies](#i539164ffdf44407ba0efe4f7363e8914_67) | | | [34](#i539164ffdf44407ba0efe4f7363e8914_67) | | |

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| [PART III](#i539164ffdf44407ba0efe4f7363e8914_226) | | | [115](#i539164ffdf44407ba0efe4f7363e8914_226) | | |

| [Item 11. Executive Compensation.](#i539164ffdf44407ba0efe4f7363e8914_232) | | | [115](#i539164ffdf44407ba0efe4f7363e8914_232) | | |

| [Item 14. Principal Accountant Fees and Services.](#i539164ffdf44407ba0efe4f7363e8914_241) | | | [115](#i539164ffdf44407ba0efe4f7363e8914_241) | | |

| [PART IV](#i539164ffdf44407ba0efe4f7363e8914_244) | | | [116](#i539164ffdf44407ba0efe4f7363e8914_244) | | |

| [Item 16. Form 10-K Summary.](#i539164ffdf44407ba0efe4f7363e8914_250) | | | [121](#i539164ffdf44407ba0efe4f7363e8914_250) | | |

| [Signatures](#i539164ffdf44407ba0efe4f7363e8914_253) | | | [122](#i539164ffdf44407ba0efe4f7363e8914_253) | | |

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| [PART I](#s75C30ACBBC5E521B81031953985D6C4B) | [1](#s75C30ACBBC5E521B81031953985D6C4B) |

| [PART II](#s26B0233938855C9380A0A63D9FF4DBA6) | [19](#s26B0233938855C9380A0A63D9FF4DBA6) |

| [Overview](#sAC2A5C1E3296575C89AEA1AFB27156EB) | [22](#sAC2A5C1E3296575C89AEA1AFB27156EB) |

| [Contingencies](#s4B328E19E6395052AA6C3703BF3C9924) | [32](#s4B328E19E6395052AA6C3703BF3C9924) |

| [Note 25. Supplemental Guarantor Information](#s8EB8D20A51B25C4782A19903EF85A341) | [105](#s8EB8D20A51B25C4782A19903EF85A341) |

| [PART III](#s40e2be24e15d4eeebf502c9dfe7c92e8) | [118](#s40e2be24e15d4eeebf502c9dfe7c92e8) |

| [Item 11. Executive Compensation](#sa7df3c7d401c428d82d134bfd223efad) | [118](#sa7df3c7d401c428d82d134bfd223efad) |

| [Item 14. Principal Accounting Fees and Services](#sd9361bb3982548978edc3df90247b8b2) | [118](#sd9361bb3982548978edc3df90247b8b2) |

| [PART IV](#s428f5687675844fd8fb8c8cec496d0fa) | [119](#s428f5687675844fd8fb8c8cec496d0fa) |

| [Item 16. Form 10-K Summary](#s0ca0a4d8f14f4ea1ab996c3ac41bd43a) | [125](#s0ca0a4d8f14f4ea1ab996c3ac41bd43a) |

| [Signatures](#s229A5AB96A4A5F74B3DDB4FBFD873EE8) | [126](#s229A5AB96A4A5F74B3DDB4FBFD873EE8) |

As of December [removed: 28, 2019,] [added: 26, 2020,] we operated [removed: 83] [added: 81] manufacturing and processing facilities.

We own [removed: 80] [added: 78] and lease three of these facilities.

Our manufacturing and processing facilities count by segment as of December [removed: 28, 2019] [added: 26, 2020] was:

| | [added: | |] Owned | | [added: | | | |] Leased | [added: | |]

| United States | [removed: 40] | | [added: 39 | | | | | |] 1 | [added: | |]

| Canada | [added: | |] 1 | | [added: | | | |] 1 | [added: | |]

See Note 4, *Acquisitions and Divestitures*, in Item 8, *Financial Statements and Supplementary Data*, for additional information on [removed: these transactions.][added: this transaction.]

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| International | | | 38 | | | | | | 1 | | |

In the third quarter of 2020, we announced our plans to divest certain of our cheese businesses, including three owned manufacturing facilities in the United States.

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| EMEA | 13 | | — |

| Rest of World | 26 | | 1 |

In 2019, we divested certain assets and operations, predominantly in Canada and India, including one owned manufacturing facility in Canada and one owned and one leased facility in India.

Our common stock is listed on [added: The] Nasdaq [added: Stock Market LLC (“Nasdaq”)] under the ticker symbol “KHC”.

At February [removed: 8, 2020,] [added: 13, 2021,] there were approximately [removed: 47,000] [added: 45,000] holders of record of our common stock.

Companies included in the S&P Consumer Staples Food and Soft Drink Products index change periodically and are presented on the basis of the index as it is comprised on December [removed: 28, 2019.][added: 26, 2020.]

This graph covers the [added: five-year] period from [removed: July 6,] [added: December 31,] 2015 (the [removed: first] [added: last trading] day [added: of] our [removed: common stock began trading on Nasdaq)] [added: fiscal year 2015)] through December [removed: 27, 2019] [added: 24, 2020] (the last trading day of our fiscal year [removed: 2019).][added: 2020).]

The graph shows total shareholder return assuming $100 was invested on [removed: July 6,] [added: December 31,] 2015 and the dividends were reinvested on a daily basis.

[removed: ][added: ]

| | [added: | |] Kraft Heinz | | | | [added: | |] S&P 500 | | | | [added: | |] S&P Consumer Staples Food and Soft Drink Products | | |

| [removed: July 6,] [added: December 31,] 2015 | [added: | |] $ | 100.00 | | | [added: | |] $ | 100.00 | | | [added: | |] $ | 100.00 | |

Issuer Purchases of Equity Securities During the Three Months [removed: Ended December 28, 2019][added: Ended December 26, 2020]

Our share repurchase activity in the three months ended December [removed: 28, 2019] [added: 26, 2020] was:

| | | [added: | | | |] Total Number of Shares Purchased(a) | | | [added: | | |] Average [removed: Price Paid] [added: Price Paid] Per Share | | | | [added: | |] Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(b) | | | [added: | | |] Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | |

[removed: |] (a) [removed: | Includes] [added: Composed of] the following types of share repurchase activity, when they occur: (1) shares repurchased in connection with the exercise of stock options (including periodic repurchases using option exercise proceeds), (2) shares withheld for tax liabilities associated with the vesting [removed: of] restricted stock [removed: units,] [added: units (“RSUs”),] and (3) shares repurchased related to employee benefit programs (including our annual bonus swap program) or to offset the dilutive effect of equity issuances. [removed: |]

[removed: |] (b) [removed: |] We do not have any [removed: publicly announced] [added: publicly-announced] share repurchase plans or programs. [removed: |]

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| December 30, 2016 | | | 123.44 | | | | | | 111.96 | | | | | | 104.30 | | |

| December 29, 2017 | | | 113.07 | | | | | | 136.40 | | | | | | 116.50 | | |

| December 28, 2018 | | | 66.09 | | | | | | 129.44 | | | | | | 110.56 | | |

| December 27, 2019 | | | 50.70 | | | | | | 171.94 | | | | | | 143.07 | | |

| December 24, 2020 | | | 59.35 | | | | | | 200.14 | | | | | | 150.06 | | |

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| 9/27/2020 — 10/31/2020 | | | | | | 7,843 | | | | | | $ | 31.93 | | | | | — | | | | | | $ | — | |

| 11/1/2020 — 11/28/2020 | | | | | | 6,456 | | | | | | 31.75 | | | | | | — | | | | | | — | | |

| 11/29/2020 — 12/26/2020 | | | | | | 77,307 | | | | | | 33.81 | | | | | | — | | | | | | — | | |

| Total | | | | | | 91,606 | | | | | | | | | | | | — | | | | | | | | |

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| December 31, 2015 | 102.07 | | | | 99.85 | | | | 110.18 | | |

| December 30, 2016 | 125.99 | | | | 111.79 | | | | 114.98 | | |

| December 29, 2017 | 115.44 | | | | 136.20 | | | | 128.53 | | |

| December 28, 2018 | 67.49 | | | | 129.11 | | | | 121.93 | | |

| December 27, 2019 | 51.78 | | | | 171.50 | | | | 157.80 | | |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 9/29/2019 - 11/2/2019 | | 15,166 | | | $ | 27.84 | | | — | | | $ | — | |

| 11/3/2019 - 11/30/2019 | | 128,625 | | | 32.19 | | | | — | | | — | | |

| 12/1/2019 - 12/28/2019 | | 43,491 | | | 31.48 | | | | — | | | — | | |

| Total | | 187,282 | | | | | | | — | | | | | |

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| | [added: | |] December [removed: 28, 2019 (52] [added: 26, 2020 (52] weeks) | | | | [added: | |] December [removed: 29, 2018 (52] [added: 28, 2019 (52] weeks) | | | | [added: | |] December [removed: 30, 2017] [added: 29, 2018] (52 weeks) | | | | [added: | |] December [removed: 31, 2016] [added: 30, 2017] (52 [removed: weeks)(g)] [added: weeks)] | | | | [removed: January 3,] [added: | | December 31,] 2016 [removed: (53] [added: (52] weeks) | | |

| | [added: | |] (in millions, except per share data) | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Period Ended: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Net [removed: sales(a)] [added: sales] | [added: | |] $ | [removed: 24,977] [added: 26,185] | | | [added: | |] $ | [removed: 26,268] [added: 24,977] | | | [added: | |] $ | [removed: 26,076] [added: 26,268] | | | [added: | |] $ | [removed: 26,300] [added: 26,076] | | | [added: | |] $ | [removed: 18,318] [added: 26,300] | |

| [removed: Income/(loss)(b)(c)(d)] [added: Income/(loss)(a)(b)(c)(d)] | [added: | | 361 | | | | | |] 1,933 | | | | [removed: (10,254] | | [removed: )] [added: (10,254)] | | [removed: 10,932] | | | | [removed: 3,606] [added: 10,932] | | | | [removed: 614] | | [added: 3,606] | [added: | |]

| Income/(loss) attributable to common [removed: shareholders(b)(c)(d)] [added: shareholders(a)(b)(c)(d)] | [removed: $] | [added: | 356 | | | | | |] 1,935 | | | [removed: (10,192] | | [removed: )] | [added: (10,192)] | [removed: 10,941] | | | | [removed: 3,416] | [added: 10,941] | | | [removed: (299] | | [removed: )] | [added: 3,416 | | |]

| Income/(loss) per common share: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| [removed: Basic(b)(c)(d)] [added: Basic(a)(b)(c)(d)] | [added: | |] $ | [added: 0.29 | | | | | $ |] 1.59 | | | [removed: (8.36] | | [removed: )] [added: $] | [added: (8.36)] | [removed: 8.98] | | | | [removed: 2.81] [added: $] | [added: 8.98] | | | [removed: (0.38] | | [removed: )] [added: $] | [added: 2.81 | |]

| [removed: Diluted(b)(c)(d)] [added: Diluted(a)(b)(c)(d)] | [added: | | 0.29 | | | | | |] 1.58 | | | | [removed: (8.36] | | [removed: )] [added: (8.36)] | | [removed: 8.91] | | | | [removed: 2.78] [added: 8.91] | | | | [removed: (0.38] | | [removed: )] [added: 2.78] | [added: | |]

| | [added: | |] December [added: 26, 2020 | | | | | | December] 28, 2019 | | | | [added: | |] December 29, 2018 | | | | [added: | |] December 30, 2017 | | | | [removed: December 31, 2016] | | [removed: | | January 3,] [added: December 31,] 2016 | | |

| Total [removed: assets(c)] [added: assets(b)] | [added: | | $ | 99,830 | | | | | $ |] 101,450 | | | | [removed: 103,461] | [added: $] | [added: 103,461] | | [removed: 120,092] | | | [added: $] | [removed: 120,617] [added: 120,092] | | | | [removed: 123,110] | [added: $] | [added: 120,617] | [added: |]

| Long-term debt(e) | [added: | | 28,070 | | | | | |] 28,216 | | | | [added: | |] 30,770 | | | | [removed: 28,308] | | [added: 28,308] | | [removed: 29,712] | | | | [removed: 25,148] [added: 29,712] | | |

| Cash dividends per common share | [added: | | $ |] 1.60 | | | | [removed: 2.50] | [added: $] | [added: 1.60] | | [removed: 2.45] | | | [added: $] | [removed: 2.35] [added: 2.50] | | | | [removed: 1.70] | [added: $] | [added: 2.45] | [added: | | | | $ | 2.35 | |]

[removed: | (b) |] [added: (a)] The increases in income/(loss), income/(loss) attributable to common shareholders, and basic and diluted income/(loss) per common share in 2017 compared to 2016 were primarily driven by [removed: U.S.] [added: the] Tax [removed: Reform,] [added: Cuts and Jobs Act (“U.S. Tax Reform”),] which was enacted in December 2017. [removed: See Note 10, *Income Taxes*, in Item 8, *Financial Statements and Supplementary Data*, for additional information. |]

[removed: | (c) |] [added: (b)] The decreases in income/(loss), income/(loss) attributable to common shareholders, and basic and diluted income/(loss) per common share in 2018 compared to 2017, and the decrease in total assets from December 30, 2017 to December 29, 2018, were primarily driven by non-cash impairment losses in 2018. [removed: See Note 9, *Goodwill and Intangible Assets,* in Item 8, *Financial Statements and Supplementary Data*, for additional information. |]

[removed: | (d) |] [added: (c)] The increases in income/(loss), income/(loss) attributable to common shareholders, and basic and diluted income/(loss) per common share in 2019 compared to [removed: 2018,] [added: 2018] were primarily driven by [removed: higher] [added: lower] non-cash impairment losses in [removed: 2018. See Note 9, *Goodwill and Intangible Assets,* in Item 8, *Financial Statements and Supplementary Data*, for additional information. |][added: 2019.]

[removed: |] (e) [removed: |] Amounts exclude the current portion of long-term debt. [removed: |]

[removed: | (f) | On June 7, 2016, we redeemed all outstanding shares of our 9.00% cumulative compounding preferred stock, Series A.] See [removed: *Equity and Dividends* in Item 7*, Management’s Discussion and Analysis of Financial Condition and Results of Operations,* along with] Note [removed: 19, *Debt*, and Note 20, *Capital Stock*,] [added: 10, *Income Taxes*,] in Item 8, *Financial Statements and Supplementary Data*, in our Annual Report on Form 10-K for the year ended December [removed: 29, 2018] [added: 28, 2019] for additional information. [removed: |]

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| | | | (in millions, except per share data) | | | | | | | | | | | | | | | | | | | | | | | | | | |

| As of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

See Note 9, *Goodwill and Intangible Assets,* in Item 8, *Financial Statements and Supplementary Data*, in our Annual Report on Form 10-K for the year ended December 28, 2019 for additional information.

See Note 9, *Goodwill and Intangible Assets,* in Item 8, *Financial Statements and Supplementary Data*, for additional information.

(d) The decreases in income/(loss), income/(loss) attributable to common shareholders, and basic and diluted income/(loss) per common share in 2020 compared to 2019 were primarily driven by higher non-cash impairment losses in 2020.

See Note 9, *Goodwill and Intangible Assets,* in Item 8, *Financial Statements and Supplementary Data*, for additional information.

Our fiscal years 2019, 2018, 2017, and 2016 include a full year of Kraft Heinz results.

Our fiscal year 2015 includes a full year of Heinz results and post-merger Kraft results.

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| | | | | | | | | | | | | | | | | | (Unaudited) | | |

| | | | | | | | | | | | | | (Unaudited) | | | | | | |

| As of: | | | | | | | | | | | | | | | | | | | |

| Redeemable preferred stock(f) | — | | | | — | | | | — | | | | — | | | | 8,320 | | |

| | |

| --- | --- |

| (a) | The increase in net sales in 2016 compared to the prior year was primarily driven by the 2015 Merger. |

| (g) | On December 9, 2016, our Board of Directors approved a change to our fiscal year end from Sunday to Saturday. Effective December 31, 2016, we operate on a 52- or 53-week fiscal year ending on the last Saturday in December in each calendar year. In prior years, we operated on a 52- or 53-week fiscal year ending the Sunday closest to December 31. As a result, we occasionally have a 53rd week in a fiscal year. Our 2015 fiscal year includes a 53rd week of activity. |

We have audited the accompanying consolidated balance sheets of The Kraft Heinz Company and its subsidiaries (the “Company”) as of December [removed: 28, 2019] [added: 26, 2020] and December [removed: 29, 2018,] [added: 28, 2019,] and the related consolidated statements of income, of comprehensive income, of equity and of cash flows for each of the three years in the period ended December [removed: 28, 2019,] [added: 26, 2020,] 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 [removed: 28, 2019,] [added: 26, 2020,] 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 [removed: 28, 2019] [added: 26, 2020] and December [removed: 29, 2018,] [added: 28, 2019,] and the results of its operations and its cash flows for each of the three years in the period ended December [removed: 28, 2019] [added: 26, 2020] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company [removed: did not maintain,] [added: maintained,] in all material respects, effective internal control over financial reporting as of December [removed: 28, 2019,] [added: 26, 2020,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the [removed: 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.][added: COSO.]

As discussed in Note [removed: 3] [added: 19] to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

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 [removed: management's report referred to above.][added: Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.]

Our audits also included evaluating the accounting principles used and significant estimates made by [added: management, as well as evaluating the overall presentation of the consolidated financial statements.]

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 [removed: 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.]

*Goodwill Impairment [removed: Assessment*][added: Assessments*]

As described in Notes 2 and 9 to the consolidated financial statements, the Company’s consolidated goodwill balance was [removed: $35.5] [added: $33.1] billion as of December [removed: 28, 2019.][added: 26, 2020.]

Management recognized non-cash impairment losses [removed: in selling, general and administrative costs (SG&A)] of [removed: $1.2] [added: $2.3] billion for the year ended December [removed: 28, 2019.][added: 26, 2020.]

[removed: Estimating the fair value of reporting units requires the use of estimates and assumptions, including estimated future annual net] [added: As disclosed by management, management’s] cash [removed: flows (including] [added: flow projections included significant judgments and assumptions related to] net sales, cost of products sold, [removed: SG&A,] [added: selling, general and administrative costs (SG&A),] depreciation and amortization, working capital, [removed: and] capital [removed: expenditures),] [added: expenditures,] income tax rates, discount rates, long-term growth [removed: rates] [added: rates,] and other market factors.

The principal considerations for our determination that performing procedures relating to the goodwill impairment [removed: assessment] [added: assessments] is a critical audit matter are [removed: there was] [added: (i) the] significant judgment by management when developing the fair value [removed: measurement] [added: measurements] of the reporting [removed: units.][added: units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to net sales, cost of products sold, SG&A, discount rates and long-term growth rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.]

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment [removed: assessment,] [added: assessments,] including controls over the valuation of the Company’s reporting units.

These procedures also included, among others (i) testing management’s process for developing the fair value [removed: estimates,] [added: estimates;] (ii) evaluating the appropriateness of the discounted cash flow [removed: method,] [added: method;] (iii) testing the completeness and accuracy of underlying data used in [added: the fair value estimates and (iv) evaluating the significant assumptions related to net sales, cost of products sold, SG&A, discount rates and long-term growth rates.]

Evaluating management’s assumptions related to net sales, cost of products sold, SG&A, discount rates and long-term growth rates involved evaluating whether the assumptions used [added: by management] were reasonable considering (i) the current and past performance of the reporting [removed: unit,] [added: unit;] (ii) the consistency with [added: external] market [removed: data,] and [added: industry data; and] (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of [added: (i)] the Company’s discounted cash flow method and [removed: certain significant assumptions, including] [added: (ii)] the discount [removed: rates] [added: rate] and long-term growth [removed: rates.][added: rate assumptions.]

As described in Notes 2 and 9 to the consolidated financial statements, the Company’s consolidated indefinite-lived intangible assets balance, which consists primarily of individual brands, was [removed: $43.4] [added: $42.3] billion as of December [removed: 28, 2019.][added: 26, 2020.]

Management [removed: conducts an] [added: tests brands for] impairment [removed: test] annually as of the first day of the second quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a brand is less than its carrying amount.

Management recognized non-cash impairment losses of [removed: $687 million in SG&A] [added: $1.1 billion] for the year ended December [removed: 28, 2019.][added: 26, 2020.]

[removed: Management] [added: As disclosed by management, management] utilizes either an excess earnings method or relief from royalty method to estimate the fair value of its brands.

[removed: The determination of fair value using] [added: Using] the excess earnings [removed: method requires the use of estimates] [added: method, management’s cash flow projections included significant judgments] and assumptions [removed: including the estimated future annual net cash flows for each brand (including] [added: relating to] net sales, cost of products sold, [removed: and SG&A),] [added: SG&A,] contributory asset charges, income tax considerations, [removed: long-term growth rates, discount rates and other market factors.][added: long-]

[removed: The determination of fair value using] [added: Using] the relief from royalty [removed: method requires the use of estimates] [added: method, management’s cash flow projections included significant judgments] and assumptions [removed: including estimated future annual] [added: related to] net [removed: sales for each brand,] [added: sales,] royalty rates, income tax considerations, long-term growth rates, discount [removed: rates] [added: rates,] and other market factors.

The principal considerations for our determination that performing procedures relating to the indefinite-lived intangible assets impairment assessment is a critical audit matter are [removed: there was] [added: (i) the] significant judgment by management when developing the fair value [removed: measurement] [added: measurements] of the [removed: brands.][added: brands; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to net sales, cost of products sold, SG&A, long-term growth rates and discount rates for the excess earnings method and net sales, royalty rates, long-term growth rates and discount rates for the relief from royalty method; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.]

[removed: This in turn led to a high degree] [added: These procedures also included, among others (i) testing management’s process for developing the fair value estimates; (ii) evaluating the appropriateness] of [removed: auditor judgment, subjectivity,] [added: the excess earnings] and [removed: effort in performing our procedures related to indefinite-lived intangible assets] [added: relief from royalty methods; (iii) testing the completeness] and [added: accuracy of underlying data used] in [removed: evaluating management’s cash flow projections] [added: the fair value estimates;] and [added: (iv) evaluating the] significant [removed: assumptions, including] [added: assumptions used by management related to] net sales, cost of products sold, SG&A, long-term growth rates and discount rates for the excess earnings method and net sales, royalty rates, long-term growth rates and discount rates for the relief from royalty method.

Evaluating management’s assumptions related to net sales, cost of products sold, SG&A, long-term growth rates and discount rates for the excess earnings method and net sales, royalty rates, long-term growth rates and discount rates for the relief from royalty method involved evaluating whether the assumptions used [added: by management] were reasonable considering (i) the current and past performance of the [removed: brand,] [added: individual brands;] (ii) the consistency with [added: external] market [removed: data,] and [added: industry data; and] (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of [added: (i)] the Company’s excess earnings and relief from royalty methods and [removed: certain significant assumptions, including] [added: (ii)] the royalty [removed: rates,] [added: rate,] long-term growth [removed: rates] [added: rate] and discount [removed: rates.][added: rate assumptions.]

The Kraft Heinz [removed: Company][added: Company, et al*.]

| | [added: | |] December [removed: 28, 2019] [added: 26, 2020] | | | | [added: | |] December [removed: 29, 2018] [added: 28, 2019] | | | | [added: | |] December [removed: 30, 2017] [added: 29, 2018] | | |

| Net sales | [added: | |] $ | [removed: 24,977] [added: 26,185] | | | [added: | |] $ | [removed: 26,268] [added: 24,977] | | | [added: | |] $ | [removed: 26,076] [added: 26,268] | |

| Cost of products sold | [removed: 16,830] | | [added: 17,008] | | [removed: 17,347] | | | | [removed: 17,043] [added: 16,830] | | | [added: | | | 17,347 | | |]

| Gross profit | [removed: 8,147] | | [added: 9,177] | | [removed: 8,921] | | | | [removed: 9,033] [added: 8,147] | | | [added: | | | 8,921 | | |]

| Selling, general and administrative expenses, excluding impairment losses | [removed: 3,178] | | [added: 3,650] | | [removed: 3,190] | | | | [removed: 2,927] [added: 3,178] | | | [added: | | | 3,190 | | |]

| Goodwill impairment losses | [removed: 1,197] | | [added: 2,343] | | [removed: 7,008] | | | | [removed: —] [added: 1,197] | | | [added: | | | 7,008 | | |]

| Intangible asset impairment losses | [removed: 702] | | [added: 1,056] | | [removed: 8,928] | | | | [removed: 49] [added: 702] | | | [added: | | | 8,928 | | |]

| Selling, general and administrative expenses | [removed: 5,077] | | [added: 7,049] | | [removed: 19,126] | | | | [removed: 2,976] [added: 5,077] | | | [added: | | | 19,126 | | |]

| Operating income/(loss) | [removed: 3,070] | | [added: 2,128] | | [removed: (10,205] | | [removed: )] | | [removed: 6,057] [added: 3,070] | | | [added: | | | (10,205) | | |]

| Interest expense | [removed: 1,361] | | [added: 1,394] | | [removed: 1,284] | | | | [removed: 1,234] [added: 1,361] | | | [added: | | | 1,284 | | |]

| Other expense/(income) | [removed: (952] | | [removed: )] [added: (296)] | | [removed: (168] | | [removed: )] | | [removed: (627] [added: (952)] | | [removed: )] | [added: | | | (168) | | |]

| Income/(loss) before income taxes | [removed: 2,661] | | [added: 1,030] | | [removed: (11,321] | | [removed: )] | | [removed: 5,450] [added: 2,661] | | | [added: | | | (11,321) | | |]

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.

term growth rates, discount rates, and other market factors.

February 17, 2021

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