Item 1. Financial Statements.

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Item 1. Financial Statements.

The Kraft Heinz Company

Condensed Consolidated Statements of Income

(in millions, except per share data)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net sales	$	6,383	$	6,570	$	19,270	$	19,780
Cost of products sold	4,197		4,335		12,547		13,171
Gross profit	2,186		2,235		6,723		6,609
Selling, general and administrative expenses, excluding impairment losses	859		920		2,718		2,675
Goodwill impairment losses	707		510		1,561		510
Intangible asset impairment losses	721		152		721		152
Selling, general and administrative expenses	2,287		1,582		5,000		3,337
Operating income/(loss)	(101)		653		1,723		3,272
Interest expense	230		228		685		683
Other expense/(income)	(48)		(35)		(56)		(94)
Income/(loss) before income taxes	(283)		460		1,094		2,683
Provision for/(benefit from) income taxes	7		206		480		594
Net income/(loss)	(290)		254		614		2,089
Net income/(loss) attributable to noncontrolling interest	—		(8)		1		(9)
Net income/(loss) attributable to common shareholders	$	(290)	$	262	$	613	$	2,098
Per share data applicable to common shareholders:
Basic earnings/(loss)	$	(0.24)	$	0.21	$	0.51	$	1.71
Diluted earnings/(loss)	(0.24)		0.21		0.50		1.70

See accompanying notes to the condensed consolidated financial statements.

The Kraft Heinz Company

Condensed Consolidated Statements of Comprehensive Income

(in millions)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net income/(loss)	$	(290)	$	254	$	614	$	2,089
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments	369		(355)		77		(61)
Net deferred gains/(losses) on net investment hedges	(128)		92		(25)		17
Amounts excluded from the effectiveness assessment of net investment hedges	9		7		27		21
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)	(9)		(8)		(27)		(21)
Net deferred gains/(losses) on cash flow hedges	(8)		14		(5)		5
Amounts excluded from the effectiveness assessment of cash flow hedges	6		3		5		13
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)	(26)		13		(7)		(18)
Amounts excluded from the effectiveness assessment of fair value hedges	(12)		—		(9)		—


Net postemployment benefit losses/(gains) reclassified to net income/(loss)	(3)		(1)		(10)		(8)
Total other comprehensive income/(loss)	198		(235)		26		(52)
Total comprehensive income/(loss)	(92)		19		640		2,037
Comprehensive income/(loss) attributable to noncontrolling interest	7		(11)		(30)		(8)
Comprehensive income/(loss) attributable to common shareholders	$	(99)	$	30	$	670	$	2,045

See accompanying notes to the condensed consolidated financial statements.

The Kraft Heinz Company

Condensed Consolidated Balance Sheets

(in millions, except per share data)

(Unaudited)


	September 28, 2024		December 30, 2023
ASSETS
Cash and cash equivalents	$	1,284	$	1,400
Trade receivables (net of allowances of $32 at September 28, 2024 and $38 at December 30, 2023)	2,178		2,112
Inventories	3,872		3,614
Prepaid expenses	228		234
Other current assets	633		566
Assets held for sale	7		3
Total current assets	8,202		7,929
Property, plant and equipment, net	7,137		7,122
Goodwill	28,946		30,459
Intangible assets, net	41,802		42,448
Other non-current assets	2,479		2,381
TOTAL ASSETS	$	88,566	$	90,339
LIABILITIES AND EQUITY
Commercial paper and other short-term debt	$	13	$	—
Current portion of long-term debt	695		638
Accounts payable	4,553		4,627
Accrued marketing	752		733
Interest payable	273		258

Other current liabilities	1,442		1,781

Total current liabilities	7,728		8,037
Long-term debt	19,383		19,394
Deferred income taxes	10,023		10,201
Accrued postemployment costs	140		143
Long-term deferred income	1,386		1,424
Other non-current liabilities	1,437		1,418
TOTAL LIABILITIES	40,097		40,617
Commitments and Contingencies (Note 14)
Redeemable noncontrolling interest	6		34
Equity:
Common stock, $0.01 par value (5,000 shares authorized; 1,254 shares issued and 1,209 shares outstanding at September 28, 2024; 1,249 shares issued and 1,218 shares outstanding at December 30, 2023)	12		12
Additional paid-in capital	52,106		52,037
Retained earnings/(deficit)	521		1,367
Accumulated other comprehensive income/(losses)	(2,547)		(2,604)
Treasury stock, at cost (45 shares at September 28, 2024 and 31 shares at December 30, 2023)	(1,764)		(1,286)
Total shareholders' equity	48,328		49,526
Noncontrolling interest	135		162
TOTAL EQUITY	48,463		49,688
TOTAL LIABILITIES AND EQUITY	$	88,566	$	90,339

See accompanying notes to the condensed consolidated financial statements.

The Kraft Heinz Company

Condensed Consolidated Statements of Equity

(in millions)

(Unaudited)


	Common Stock		Additional Paid-in Capital		Retained Earnings/(Deficit)		Accumulated Other Comprehensive Income/(Losses)		Treasury Stock, at Cost		Noncontrolling Interest		Total Equity
Balance at December 30, 2023	$	12	$	52,037	$	1,367	$	(2,604)	$	(1,286)	$	162	$	49,688
Net income/(loss) excluding redeemable noncontrolling interest	—		—		801		—		—		2		803
Other comprehensive income/(loss) excluding redeemable noncontrolling interest	—		—		—		(65)		—		(29)		(94)
Dividends declared-common stock ($0.40 per share)	—		—		(488)		—		—		—		(488)
Dividends declared-noncontrolling interest ($98.77 per share)	—		—		—		—		—		(7)		(7)
Repurchase of common stock	—		—		—		—		(280)		—		(280)
Exercise of stock options, issuance of other stock awards, and other	—		13		—		—		15		3		31
Balance at March 30, 2024	$	12	$	52,050	$	1,680	$	(2,669)	$	(1,551)	$	131	$	49,653
Net income/(loss) excluding redeemable noncontrolling interest	—		—		102		—		—		(1)		101
Other comprehensive income/(loss) excluding redeemable noncontrolling interest	—		—		—		(69)		—		(4)		(73)
Dividends declared-common stock ($0.40 per share)	—		—		(485)		—		—		—		(485)
Repurchase of common stock	—		—		—		—		(204)		—		(204)
Exercise of stock options, issuance of other stock awards, and other	—		36		—		—		(7)		—		29
Balance at June 29, 2024	$	12	$	52,086	$	1,297	$	(2,738)	$	(1,762)	$	126	$	49,021
Net income/(loss) excluding redeemable noncontrolling interest	—		—		(290)		—		—		—		(290)
Other comprehensive income/(loss) excluding redeemable noncontrolling interest	—		—		—		191		—		8		199
Dividends declared-common stock ($0.40 per share)	—		—		(486)		—		—		—		(486)

Exercise of stock options, issuance of other stock awards, and other	—		20		—		—		(2)		1		19
Balance at September 28, 2024	$	12	$	52,106	$	521	$	(2,547)	$	(1,764)	$	135	$	48,463


	Common Stock		Additional Paid-in Capital		Retained Earnings/(Deficit)		Accumulated Other Comprehensive Income/(Losses)		Treasury Stock, at Cost		Noncontrolling Interest		Total Equity
Balance at December 31, 2022	$	12	$	51,834	$	489	$	(2,810)	$	(847)	$	152	$	48,830
Net income/(loss) excluding redeemable noncontrolling interest	—		—		836		—		—		1		837
Other comprehensive income/(loss) excluding redeemable noncontrolling interest	—		—		—		62		—		4		66
Dividends declared-common stock ($0.40 per share)	—		—		(494)		—		—		—		(494)
Exercise of stock options, issuance of other stock awards, repurchase of common stock, and other	—		76		—		—		(5)		3		74
Balance at April 1, 2023	$	12	$	51,910	$	831	$	(2,748)	$	(852)	$	160	$	49,313
Net income/(loss) excluding redeemable noncontrolling interest	—		—		1,000		—		—		—		1,000
Other comprehensive income/(loss) excluding redeemable noncontrolling interest	—		—		—		117		—		—		117
Dividends declared-common stock ($0.40 per share)	—		—		(495)		—		—		—		(495)
Exercise of stock options, issuance of other stock awards, repurchase of common stock, and other	—		57		—		—		(18)		—		39
Balance at July 1, 2023	$	12	$	51,967	$	1,336	$	(2,631)	$	(870)	$	160	$	49,974
Net income/(loss) excluding redeemable noncontrolling interest	—		—		262		—		—		(2)		260
Other comprehensive income/(loss) excluding redeemable noncontrolling interest	—		—		—		(232)		—		(3)		(235)
Dividends declared-common stock ($0.40 per share)	—		—		(494)		—		—		—		(494)
Exercise of stock options, issuance of other stock awards, repurchase of common stock, and other	—		37		—		—		(111)		3		(71)
Balance at September 30, 2023	$	12	$	52,004	$	1,104	$	(2,863)	$	(981)	$	158	$	49,434

See accompanying notes to the condensed consolidated financial statements.

The Kraft Heinz Company

Condensed Consolidated Statements of Cash Flows

(in millions)

(Unaudited)


	For the Nine Months Ended
	September 28, 2024		September 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)	$	614	$	2,089
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization	714		710
Amortization of postemployment benefit plans prior service costs/(credits)	(6)		(10)
Divestiture-related license income	(41)		(41)
Equity award compensation expense	83		110
Deferred income tax provision/(benefit)	(277)		(15)
Postemployment benefit plan contributions	16		(18)
Goodwill and intangible asset impairment losses	2,282		662
Nonmonetary currency devaluation	7		27
Loss/(gain) on sale of business	78		2

Other items, net	(39)		(44)
Changes in current assets and liabilities:
Trade receivables	(83)		(16)
Inventories	(392)		(277)
Accounts payable	48		(221)
Other current assets	(129)		139
Other current liabilities	(79)		(477)
Net cash provided by/(used for) operating activities	2,796		2,620
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(777)		(779)


Proceeds from sale of business, net of cash disposed and working capital adjustments	5		—
Payments to acquire intangible assets	(140)		—
Other investing activities, net	63		41
Net cash provided by/(used for) investing activities	(849)		(738)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(607)		(823)
Proceeds from issuance of long-term debt	594		657





Dividends paid	(1,452)		(1,474)
Repurchases of common stock	(538)		(150)
Other financing activities, net	(43)		(26)
Net cash provided by/(used for) financing activities	(2,046)		(1,816)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(17)		(53)
Cash, cash equivalents, and restricted cash
Net increase/(decrease)	(116)		13
Balance at beginning of period	1,404		1,041
Balance at end of period	$	1,288	$	1,054

See accompanying notes to the condensed consolidated financial statements.

The Kraft Heinz Company

Notes to Condensed Consolidated Financial Statements

Note 1. Basis of Presentation

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted, in accordance with the rules of the SEC. In management’s opinion, these interim financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary to fairly state our results for the periods presented.

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 2024 fiscal year is scheduled to be a 52-week period ending on December 28, 2024, and our 2023 fiscal year was a 52-week period that ended on December 30, 2023.

The condensed consolidated balance sheet data at December 30, 2023 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. These statements should be read in conjunction with our audited consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 30, 2023. The results for interim periods are not necessarily indicative of future or annual results.

Principles of Consolidation

The condensed consolidated financial statements include The Kraft Heinz Company and all of our controlled subsidiaries. All intercompany transactions are eliminated.

Reportable Segments

In the first quarter of 2024, our internal reporting structure and reportable segments changed. We divided our International segment into three operating segments — Europe and Pacific Developed Markets (“EPDM” or “International Developed Markets”), West and East Emerging Markets (“WEEM”), and Asia Emerging Markets (“AEM”) — to enable enhanced focus on the different strategies required for each of these regions as part of our long-term strategic plan. Subsequently, we manage our operating results through four operating segments. We have two reportable segments defined by geographic region: North America and International Developed Markets. Our remaining operating segments, consisting of WEEM and AEM, are combined and disclosed as Emerging Markets.

Use of Estimates

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

Reclassifications

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

Cash, Cash Equivalents, and Restricted Cash

Cash equivalents include term deposits with banks, money market funds, and all highly liquid investments with original maturities of three months or less. The fair value of cash equivalents approximates the carrying amount. Cash and cash equivalents that are legally restricted as to withdrawal or usage are classified in other current assets or other non-current assets, as applicable, on the condensed consolidated balance sheets. At September 28, 2024, we had $2 million of restricted cash recorded in other current assets and $2 million of restricted cash recorded in other non-current assets. At December 30, 2023, we had restricted cash recorded in other current assets of $3 million and $1 million of restricted cash in other non-current assets. Total cash, cash equivalents, and restricted cash was $1,288 million at September 28, 2024 and $1,404 million at December 30, 2023.

Note 2. Significant Accounting Policies

There were no significant changes to our accounting policies from those disclosed in our Annual Report on Form 10-K for the year ended December 30, 2023.

Note 3. New Accounting Standards

Accounting Standards Not Yet Adopted

Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures:

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-07 to improve segment disclosure requirements under Accounting Standards Codification (“ASC”) 280, Segment Reporting, through enhancing disclosures about significant segment expenses. The guidance requires entities to provide significant segment expenses that are regularly provided to the chief operating decision maker and other segment expenses included in each reported measure of segment profitability. This ASU also enhances interim segment reporting requirements by aligning interim disclosures with information that must be disclosed annually in accordance with ASC 280. This ASU will be effective beginning in 2024 for annual reports and in 2025 for quarterly reports. Early adoption is permitted. The new guidance must be applied retrospectively to all prior periods presented in the financial statements, with the significant segment expense and other segment item amounts disclosed based on categories identified in the period of adoption. We are still evaluating the impacts this ASU will have on our notes to the consolidated financial statements.

Income Taxes (Topic 740) – Improvements to Income Tax Disclosures:

In December 2023, the FASB issued ASU 2023-09 to improve income tax disclosure requirements under ASC 740, Income Taxes. The guidance requires entities to provide separate information about a reporting entity’s effective tax rate reconciliation and about income taxes paid. This ASU will be effective for annual periods beginning after December 15, 2024 and will impact our 2025 annual report. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. While the standard will require additional disclosures related to the Company’s income taxes, we do not expect this ASU to have a significant impact on our financial statements.

Note 4. Acquisitions and Divestitures

Divestitures

Russia Infant Transaction:

On March 11, 2024, we closed and finalized the sale of our infant nutrition business in Russia to a third party for total cash consideration of approximately $25 million (the “Russia Infant Transaction”). As a result of the Russia Infant Transaction, we recognized an insignificant pre-tax gain in other expense/(income) on our condensed consolidated statement of income in the first quarter of 2024.

Papua New Guinea Transaction:

On February 5, 2024, we closed and finalized the sale of 100% of the equity interests in our Papua New Guinea subsidiary, Hugo Canning Company Limited, to a third party for total cash consideration of approximately $22 million, which is to be paid incrementally over two years following the transaction closing date (the “Papua New Guinea Transaction”). As a result of the Papua New Guinea Transaction, we recognized a pre-tax loss on sale of business of approximately $80 million in other expense/(income) on our condensed consolidated statement of income in the first quarter of 2024, of which approximately $41 million relates to the release of accumulated foreign currency losses.

Deal Costs:

We incurred insignificant deal costs for the three and nine months ended September 28, 2024 and the three and nine months ended September 30, 2023 related to our divestitures. We recognized these deal costs in selling, general and administrative expenses (“SG&A”).

Note 5. Restructuring Activities

See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 30, 2023 for additional information on our restructuring activities.

Restructuring Activities:

We have restructuring programs globally, which are focused primarily on streamlining our organizational design. For the nine months ended September 28, 2024, we eliminated approximately 100 positions related to these programs. As of September 28, 2024, we expect to eliminate approximately 40 additional positions during the remainder of 2024. For the three months ended September 28, 2024, restructuring activities resulted in income of $7 million, which included a net benefit of $6 million from other restructuring costs and a net benefit of $1 million from severance and employee benefit costs. For the nine months ended September 28, 2024, restructuring activities resulted in income of $8 million, which included a net benefit of $7 million from severance and employee benefit costs and a net benefit of $1 million from other restructuring costs. Restructuring activities resulted in expenses of $45 million for the three months and $27 million for the nine months ended September 30, 2023.

Our net liability balance for restructuring project costs that qualify as exit and disposal costs under U.S. GAAP was (in millions):


	Severance and Employee Benefit Costs		Other Exit Costs		Total
Balance at December 30, 2023	$	23	$	14	$	37
Charges/(credits)	(7)		—		(7)
Cash payments	(13)		(1)		(14)
Non-cash utilization	1		—		1
Balance at September 28, 2024	$	4	$	13	$	17

We expect the majority of the liability for severance and employee benefit costs as of September 28, 2024 to be paid by the end of 2024. The liability for other exit costs primarily relates to lease obligations. The cash impact of these obligations will continue for the duration of the lease terms, which expire between 2024 and 2031.

Total Expenses/(Income):

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


	For the Three Months Ended				For the Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Severance and employee benefit costs - Cost of products sold	$	(1)	$	2	$	(1)	$	7
Severance and employee benefit costs - SG&A	—		—		(5)		(7)
Severance and employee benefit costs - Other expense/(income)	—		—		(1)		2
Asset-related costs - Cost of products sold	—		41		—		32
Asset-related costs - SG&A	—		—		—		(1)

Other costs - Cost of products sold	1		1		3		5
Other costs - SG&A	—		1		3		(11)
Other costs - Other expense/(income)	(7)		—		(7)		—
	$	(7)	$	45	$	(8)	$	27

We do not include our restructuring activities within Segment Adjusted Operating Income (as defined in Note 16, Segment Reporting). The pre-tax impact of allocating such expenses/(income) to our segments would have been (in millions):


	For the Three Months Ended				For the Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
North America	$	—	$	9	$	(1)	$	(1)
International Developed Markets	(8)		—		(10)		(1)
Emerging Markets(a)	—		36		—		42
General corporate expenses	1		—		3		(13)
	$	(7)	$	45	$	(8)	$	27

(a) Emerging Markets represents the aggregation of our WEEM and AEM operating segments.

Note 6. Inventories

Inventories consisted of the following (in millions):


	September 28, 2024		December 30, 2023
Packaging and ingredients	$	970	$	1,014
Spare parts	247		233
Work in process	348		338
Finished products	2,307		2,029
Inventories	$	3,872	$	3,614

Note 7. Goodwill and Intangible Assets

Goodwill:

As described in Note 1, Basis of Presentation, in the first quarter of 2024, we divided our International segment into three operating segments — EPDM, WEEM, and AEM. While this reorganization resulted in a change to our operating segments, it did not impact the existing composition of our reporting units that formerly comprised the goodwill balance of our International segment — Northern Europe, Continental Europe, Latin America (“LATAM”), and Asia — and, therefore, was not indicative of an impairment triggering event. We have reflected the impact of this segment change in all historical periods presented.

As of March 31, 2024, which was the first day of our second quarter of 2024, certain organizational changes occurred that impacted our reporting unit composition within our North America segment (the “Q2 North America reorganization”). Two of our North America reporting units — Taste, Meals, and Away From Home (“TMA”), and Fresh, Beverages, and Desserts (“FBD”) — were reorganized into the four reporting units: Taste Elevation, Ready Meals and Snacking (“TMS”), Hydration & Desserts (“HD”), Meat & Cheese (“MC”), and Away from Home & Kraft Heinz Ingredients (“AFH”). The Canada and North America Coffee (“CNAC”) and Other North America reporting units were not impacted by this reorganization.

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


	North America		International Developed Markets		Emerging Markets		Total
Balance at December 30, 2023	$	27,248	$	2,687	$	524	$	30,459
Impairment losses	(898)		(479)		(184)		(1,561)




Translation adjustments and other	(14)		85		(23)		48
Balance at September 28, 2024	$	26,336	$	2,293	$	317	$	28,946

2024 Year-to-Date Goodwill Impairment Testing

As a result of the Q2 North America reorganization, we reassigned assets and liabilities to the applicable reporting units and allocated goodwill using the relative fair value approach. We performed an interim impairment test (or “2024 transition test”) on the affected reporting units on both a pre- and post-reorganization basis.

As part of our Q2 North America pre-reorganization impairment test of the TMA and FBD reporting units, we utilized the discounted cash flow method under the income approach to estimate the fair values as of March 31, 2024, for these two reporting units and concluded that the fair value of these reporting units exceeded their carrying values and no impairment was recorded.

We performed our Q2 North America post-reorganization impairment test as of March 31, 2024, and tested the new North America reporting units (TMS, HD, MC and AFH). We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units. As a result of our Q2 North America post-reorganization impairment test, we recognized a non-cash impairment loss of approximately $854 million in SG&A in our North America segment in the second quarter of 2024. The $854 million impairment loss related to our MC reporting unit, which had a goodwill carrying amount of approximately $2.5 billion after impairment. The impairment of our MC reporting unit was driven by the disaggregation of the former FBD reporting unit, which previously held all the net assets for the HD and MC reporting units as well as the Snacking category of TMS. The other three reporting units for which no impairment charge was required were TMS, which had a goodwill carrying amount of approximately $15.9 billion; HD, which had a goodwill carrying amount of approximately $4.3 billion; and AFH, which had a goodwill carrying amount of approximately $2.8 billion.

We performed our 2024 annual impairment test as of June 30, 2024, which was the first day of our third quarter of 2024. We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units. As a result of our 2024 annual impairment test, we recognized non-cash goodwill impairment losses in SG&A of approximately $479 million related to our Continental Europe reporting unit within our International Developed Markets segment, $184 million related to our LATAM reporting unit within Emerging Markets, and $44 million related to our AFH reporting unit within our North America segment. The impairment of our Continental Europe reporting unit was primarily driven by a reduction of future year profitability assumptions from prior estimates in non-core categories and the Just Spices business, as well as higher intercompany royalty expenses resulting from a change in our product mix. The impairment of our LATAM reporting unit was primarily driven by a reduction of future year profitability assumptions from prior estimates and negative macroeconomic factors, including weakening of the foreign currency exchange rate of the Brazilian real relative to the U.S. dollar. After these impairments, the goodwill carrying amount is approximately $2.8 billion in our AFH reporting unit, approximately $501 million in our Continental Europe reporting unit, and there is no goodwill carrying value remaining in our LATAM reporting unit.

In performing these tests, we incorporated information that was known through the date of filing this Quarterly Report on Form 10-Q.

As of the 2024 annual impairment test, our reporting units with 20% or less fair value over carrying amount had an aggregate goodwill carrying amount of $24.2 billion and included TMS, MC, AFH, CNAC, Northern Europe, and Continental Europe. Our HD and Asia reporting units had 20-50% fair value over carrying amount with an aggregate goodwill carrying amount of $4.6 billion as of our 2024 annual impairment test date.

As of September 28, 2024, we maintain 12 reporting units, eight of which comprise our goodwill balance. These eight reporting units had an aggregate goodwill carrying amount of $28.9 billion at September 28, 2024.

Accumulated impairment losses to goodwill were $13.4 billion as of September 28, 2024 and $11.8 billion as of December 30, 2023.

2023 Year-to-Date Goodwill Impairment Testing

We performed our 2023 annual impairment test as of July 2, 2023, which was the first day of our third quarter of 2023. In performing this test, we incorporated information that was known through the date of filing our Quarterly Report on Form 10-Q for the period ended September 30, 2023. We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units. As a result of our 2023 annual impairment test, we recognized a non-cash goodwill impairment loss of approximately $510 million in SG&A, which included a $452 million impairment loss in our Canada and North America Coffee (“CNAC”) reporting unit within our North America segment and a $58 million impairment loss in our Continental Europe reporting unit within our former International segment. These impairments were primarily driven by an increase in the discount rate, which was impacted by higher interest rates, a decline in market capitalization, and other market inputs.

Additional Goodwill Considerations

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, discount rates, growth rates, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units might become impaired in the future. Additionally, any decisions to divest certain non-strategic assets has led and could in the future lead to goodwill impairments.

Our reporting units that were impaired in 2024 and 2023 were written down to their respective fair values resulting in zero excess fair value over carrying amount as of the applicable impairment test dates. Accordingly, these and our other reporting units that had 20% or less excess fair value over carrying amount as of our 2024 annual impairment test have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future. Although the remaining reporting units had more than 20% excess fair value over carrying amount as of our 2024 annual impairment test, this amount is also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.

Indefinite-lived intangible assets:

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


Balance at December 30, 2023	$	38,502
Impairment losses	(593)



Translation adjustments and other	137
Balance at September 28, 2024	$	38,046

2024 Year-to-Date Indefinite-Lived Intangible Asset Impairment Testing

Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $38.0 billion at September 28, 2024.

As a result of our 2024 annual impairment test as of June 30, 2024, we recognized non-cash intangible asset impairment losses of $593 million in SG&A in the third quarter of 2024 related to our Lunchables, Claussen, and Wattie’s brands. We utilized the relief from royalty method under the income approach to estimate the fair values and recorded non-cash impairment losses of $560 million in our North America segment and $33 million in our International Developed Markets segment, consistent with ownership of the trademarks. The impairments of the Lunchables and Wattie’s brands were primarily due to a reduction of future year revenue growth and margin assumptions from prior estimates. The impairment of the Claussen brand was primarily due to a reduction of future year margin assumptions from prior estimates. After these impairments, the aggregate carrying amount of these brands was $1.2 billion.

As of the 2024 annual impairment test, brands with 20% or less fair value over carrying amount had an aggregate carrying amount after impairment of $18.1 billion, brands with 20-50% fair value over carrying amount had an aggregate carrying amount of $2.8 billion, and brands that had over 50% fair value over carrying amount had an aggregate carrying amount of $16.9 billion.

2023 Year-to-Date Indefinite-Lived Intangible Asset Impairment Testing

As a result of our 2023 annual impairment test as of July 2, 2023, we recognized non-cash intangible asset impairment losses of $152 million in SG&A in the third quarter of 2023 related to Maxwell House, Cool Whip, and two other brands. We utilized the relief from royalty method under the income approach to estimate the fair values and recorded non-cash impairment losses of $139 million in our North America segment and $13 million in our former International segment, consistent with ownership of the trademarks. The impairment of these four brands was primarily due to an increase in the discount rate, which was impacted by higher interest rates, a decline in market capitalization, and other market inputs, as well as sustained expectations of declining revenue growth in future years and decreased margin expectations.

As part of the 2023 annual impairment test, we reclassified two indefinite-lived intangible assets to definite-lived intangible assets related to trademarks in our former International segment that had a history of impairment and limited capital investment. After the fair value assessment of these brands as part of the 2023 annual impairment test, we transferred $73 million from indefinite-lived intangible assets to definite-lived trademarks as of July 2, 2023, and recognized three months of amortization expense as of September 30, 2023.

Additional Indefinite-Lived Intangible Asset Considerations

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual brands requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, income tax considerations, discount rates, growth rates, royalty rates, contributory asset charges, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our brands might become impaired in the future. Additionally, any decisions to divest certain non-strategic assets has led and could in the future lead to intangible asset impairments.

Our brands that were impaired in 2024 and 2023 were written down to their respective fair values resulting in zero excess fair value over carrying amount as of the applicable impairment test dates. Accordingly, these and other individual brands that had 20% or less excess fair value over carrying amount as of our 2024 annual impairment test have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future. Although the remaining brands had more than 20% excess fair value over carrying amount as of our 2024 annual impairment test, these amounts are also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.

Definite-lived intangible assets:

Definite-lived intangible assets were (in millions):


	September 28, 2024						December 30, 2023
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Trademarks	$	2,442	$	(886)	$	1,556	$	2,313	$	(755)	$	1,558
Customer-related assets	3,715		(1,524)		2,191		3,710		(1,331)		2,379
Other	12		(3)		9		12		(3)		9
	$	6,169	$	(2,413)	$	3,756	$	6,035	$	(2,089)	$	3,946

In the second quarter of 2024, we entered into an amended license agreement to grant us the exclusive, irrevocable, royalty-free, and perpetual right to use certain TGI Friday trademarks to manufacture, distribute, market, and sell certain TGI Friday licensed products (the “TGI Friday License”). The total cash consideration related to the TGI Friday License was approximately $140 million. We recognized this TGI Friday License as a definite-lived intangible asset to be amortized over its 27-year useful life.

In the third quarter of 2024, we recognized non-cash definite-lived intangible asset impairment losses of $128 million in SG&A related to the Just Spices trademark and customer-related assets. We utilized the relief from royalty method under the income approach for the trademark and the distributor method under the income approach for the customer-related assets to estimate the fair values and recorded non-cash impairment losses in our Continental Europe reporting unit within our International Developed Markets segment, consistent with ownership of the trademarks and customer-related assets. The impairment of Just Spices trademark and customer-related assets were primarily due to a reduction of future year revenue growth and margin assumptions from prior expectations.

Amortization expense for definite-lived intangible assets was $62 million for the three months and $191 million for the nine months ended September 28, 2024, and $61 million for the three months and $187 million for the nine months ended September 30, 2023. Aside from amortization expense, the change in definite-lived intangible assets from December 30, 2023 to September 28, 2024, primarily related to the acquisition of the TGI Friday License, the $128 million of non-cash impairment losses related to the Just Spices trademark and customer-related assets within our International Developed Markets segment, and the impacts of foreign currency.

We estimate that amortization expense related to definite-lived intangible assets will be approximately $250 million in 2024, $250 million in each of the following three years, and $240 million in 2028 and 2029.

Note 8. Income Taxes

The provision for income taxes consists of provisions for federal, state, and non-U.S. income taxes. We operate in an international environment; accordingly, the consolidated effective tax rate is a composite rate reflecting the earnings in various locations and the applicable tax rates. Additionally, the calculation of the percentage point impact of goodwill impairment and other items on the effective tax rate is affected by income/(loss) before income taxes. Further, small movements in tax rates due to a change in tax law or a change in tax rates that cause us to revalue our deferred tax balances produce volatility in our effective tax rate. Our quarterly income tax provision is determined based on our estimated full year effective tax rate, adjusted for tax attributable to infrequent or unusual items, which are recognized on a discrete period basis in the income tax provision for the period in which they occur. Our estimated annual effective tax rate was 20.5% as of September 28, 2024, and 20.5% as of September 30, 2023.

Our effective tax rate for the three months ended September 28, 2024 was an expense of 2.5% on pre-tax loss, which included the net unfavorable effective tax rate impact of goodwill and intangible asset impairment losses of 23.1%. In addition to the impact of these non-cash impairment losses, our effective tax rate was unfavorably impacted by the establishment of valuation allowances in certain foreign jurisdictions, partially offset by the favorable changes in estimates of certain 2023 U.S. income and deductions and the geographic mix of pre-tax income in various non-U.S. jurisdictions.

Our effective tax rate for the three months ended September 30, 2023 was an expense of 44.7% on pre-tax income, which included the net unfavorable effective tax rate impact of goodwill and intangible asset impairment losses of 24.3%. In addition to the impact of these non-cash impairment losses, our effective tax rate was favorably impacted by changes in estimates of certain 2022 U.S. income and deductions as well as the geographic mix of pre-tax income in various non-U.S. jurisdictions, partially offset by certain net discrete items including a net increase in uncertain tax position reserves.

The year-over-year change in the effective tax rate for the three-month period was primarily due to the unfavorable impact of goodwill and intangible asset impairment losses and the establishment of valuation allowances in certain foreign jurisdictions, partially offset by more favorable changes in estimates of certain 2022 U.S. income and deductions in the prior year period.

Our effective tax rate for the nine months ended September 28, 2024 was an expense of 43.9% on pre-tax income, which included the net unfavorable effective tax rate impact of goodwill and intangible asset impairment losses of 22.9%. In addition to the impact of these non-cash impairment losses, our effective tax rate was unfavorably impacted by certain net discrete items including the establishment of valuation allowances in certain foreign jurisdictions, partially offset by the favorable geographic mix of pre-tax income in various non-U.S. jurisdictions.

Our effective tax rate for the nine months ended September 30, 2023 was an expense of 22.1% on pre-tax income, which included the net unfavorable effective tax rate impact of goodwill and intangible asset impairment losses of 3.9%. In addition to the impact of these non-cash impairment losses, our effective tax rate was favorably impacted by the geographic mix of pre-tax income in various non-U.S. jurisdictions and certain net discrete items, including the net decrease in uncertain tax position reserves primarily in the U.S. resulting from a conclusion of the Internal Revenue Service’s (“IRS”) income tax examination for the year 2017 and the lapsing of the statute of limitations for such year (2.1%), as well as favorable changes in estimates of certain 2022 U.S. income and deductions. These impacts were partially offset by the impact of certain unfavorable net discrete items.

The year-over-year increase in the effective tax rate for the nine-month period was primarily due to the unfavorable impact of goodwill and intangible asset impairment losses, the establishment of valuation allowances in certain foreign jurisdictions, and the impact of a net decrease in uncertain tax position reserves in the prior year period.

Other Income Tax Matters:

We are currently under examination for income taxes by the IRS for the years 2018 through 2022. In the third quarter of 2023, we received two Notices of Proposed Adjustment (the “NOPAs”) relating to transfer pricing with our foreign subsidiaries. The NOPAs propose an increase to our U.S. taxable income that could result in additional U.S. federal income tax expense and liability of approximately $200 million for 2018 and approximately $210 million for 2019, excluding interest, and assert penalties of approximately $85 million for each of 2018 and 2019. We strongly disagree with the IRS’s positions, believe that our tax positions are well documented and properly supported, and intend to vigorously contest the positions taken by the IRS and pursue all available administrative and judicial remedies. Therefore, we have not recorded any reserves related to this issue. We continue to maintain the same operating model and transfer pricing methodology with our foreign subsidiaries that was in place for the years 2018 and 2019, and the IRS began its audit of 2020, 2021, and 2022 during the first quarter of 2024. We believe our income tax reserves are appropriate for all open tax years and that final adjudication of this matter will not have a material impact on our results of operations and cash flows. However, the ultimate outcome of this matter is uncertain, and if we are required to pay the IRS additional U.S. taxes, interest, and/or potential penalties, our results of operations and cash flows could be materially affected.

The Organization for Economic Co-operation and Development (OECD), a global coalition of member countries, proposed a two-pillar plan to reform international taxation. The proposals aim to ensure a fairer distribution of profits among countries and impose a floor on tax competition through the introduction of a global minimum tax. Many countries have enacted or begun the process of enacting laws based on the two-pillar plan proposals. As part of our planning for the changes resulting from this tax reform, we are currently evaluating certain updates to our organizational structure. The OECD and implementing countries are expected to continue to make further revisions to their legislation and release additional guidance. We will continue to monitor developments to determine any potential impact in the countries in which we operate.

Note 9. Employees’ Stock Incentive Plans

Stock Options:

Our stock option activity and related information was:


	Number of Stock Options	Weighted Average Exercise Price (per share)
Outstanding at December 30, 2023	8,022,540	$	46.87
Granted	654,724	35.13
Forfeited	(1,467,229)	46.75
Exercised	(308,010)	25.95
Outstanding at September 28, 2024	6,902,025	46.71

The aggregate intrinsic value of stock options exercised during the period was insignificant for the nine months ended September 28, 2024.

Restricted Stock Units:

Our restricted stock unit (“RSU”) activity and related information was:


	Number of Units	Weighted Average Grant Date Fair Value (per share)
Outstanding at December 30, 2023	7,722,870	$	36.80
Granted	3,085,347	35.33
Forfeited	(731,541)	37.23
Vested	(3,242,886)	34.12
Outstanding at September 28, 2024	6,833,790	37.36

The aggregate fair value of RSUs that vested during the period was $115 million for the nine months ended September 28, 2024.

Performance Share Units:

Our performance share unit (“PSU”) activity and related information was:


	Number of Units	Weighted Average Grant Date Fair Value (per share)
Outstanding at December 30, 2023	4,855,432	$	33.65
Granted	2,591,382	29.14
Forfeited	(833,074)	32.36
Vested	(1,143,479)	33.36
Outstanding at September 28, 2024	5,470,261	31.76

The aggregate fair value of PSUs that vested during the period was $40 million for the nine months ended September 28, 2024.

Note 10. Postemployment Benefits

See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 30, 2023 for additional information on our postemployment-related accounting policies.

Pension Plans

Components of Net Pension Cost/(Benefit):

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


	For the Three Months Ended
	U.S. Plan				Non-U.S. Plans
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Service cost	$	—	$	—	$	2	$	2
Interest cost	33		35		14		17
Expected return on plan assets	(49)		(48)		(21)		(23)
Amortization of prior service costs/(credits)	1		—		—		1
Amortization of unrecognized losses/(gains)	—		—		3		4



Other	—		—		(7)		—
Net pension cost/(benefit)	$	(15)	$	(13)	$	(9)	$	1


	For the Nine Months Ended
	U.S. Plan				Non-U.S. Plans
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Service cost	$	1	$	1	$	5	$	5
Interest cost	100		106		42		50
Expected return on plan assets	(147)		(146)		(63)		(66)
Amortization of prior service costs/(credits)	1		—		1		1
Amortization of unrecognized losses/(gains)	—		—		9		10


Special/contractual termination benefits	—		—		(1)		2
Other	—		—		(7)		—
Net pension cost/(benefit)	$	(45)	$	(39)	$	(14)	$	2

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

Employer Contributions:

Related to our non-U.S. pension plans, we contributed $5 million during the nine months ended September 28, 2024 and plan to make further contributions of approximately $2 million during the remainder of 2024. We did not contribute to our U.S. pension plan during the nine months ended September 28, 2024 and do not plan to make contributions during the remainder of 2024. Estimated future contributions take into consideration current economic conditions, which at this time are expected to have minimal impact on expected contributions for the remainder of 2024. Our actual contributions and plans may change due to many factors, including changes in tax, employee benefit, or other laws and regulations, tax deductibility, significant differences between expected and actual pension asset performance or interest rates, or other factors.

In 2023, we settled one of our U.K. defined benefit pension plans, which resulted in a surplus asset. During the third quarter of 2024, the surplus asset was distributed to Kraft Heinz as a negative contribution in the amount of $29 million net of tax, which is shown as a cash inflow on the Consolidated Statements of Cash Flows.

Postretirement Plans

Components of Net Postretirement Cost/(Benefit):

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


	For the Three Months Ended				For the Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Service cost	$	1	$	1	$	2	$	2
Interest cost	8		10		24		28
Expected return on plan assets	(14)		(14)		(42)		(41)
Amortization of prior service costs/(credits)	(3)		(4)		(8)		(11)
Amortization of unrecognized losses/(gains)	(5)		(3)		(16)		(11)

Net postretirement cost/(benefit)	$	(13)	$	(10)	$	(40)	$	(33)

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

Employer Contributions:

During the nine months ended September 28, 2024, we contributed $8 million to our postretirement benefit plans. We plan to make further contributions of approximately $4 million to our postretirement benefit plans during the remainder of 2024. Estimated future contributions take into consideration current economic conditions, which at this time are expected to have minimal impact on expected contributions for the remainder of 2024. Our actual contributions and plans may change due to many factors, including changes in tax, employee benefit, or other laws and regulations, tax deductibility, significant differences between expected and actual postretirement plan asset performance or interest rates, or other factors.

Note 11. Financial Instruments

See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 30, 2023 for additional information on our overall risk management strategies, our use of derivatives, and our related accounting policies.

Derivative Volume:

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


	Notional Amount
	September 28, 2024		December 30, 2023
Commodity contracts	$	1,032	$	954
Foreign exchange contracts	4,399		4,618
Cross-currency contracts	7,397		6,133

Fair Value of Derivative Instruments:

The fair values and the levels within the fair value hierarchy of derivative instruments recorded on the condensed consolidated balance sheets were (in millions):


	September 28, 2024
	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Total Fair Value
	Assets		Liabilities		Assets		Liabilities		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)	$	—	$	—	$	9	$	38	$	9	$	38
Cross-currency contracts(b)	—		—		142		254		142		254

Derivatives not designated as hedging instruments:
Commodity contracts(c)	36		48		6		7		42		55
Foreign exchange contracts(a)	—		—		19		26		19		26
Cross-currency contracts(b)	—		—		9		—		9		—

Total fair value	$	36	$	48	$	185	$	325	$	221	$	373

(a) At September 28, 2024, the fair value of our derivative assets was recorded in other current assets ($27 million) and other non-current assets ($1 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($48 million) and other non-current liabilities ($16 million).

(b) At September 28, 2024, the fair value of our derivative assets was recorded in other current assets ($58 million) and other non-current assets ($93 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($45 million) and other non-current liabilities ($209 million).

(c) At September 28, 2024, the fair value of our derivative assets was recorded in other current assets ($40 million) and other non-current assets ($2 million), and the fair value of derivative liabilities was recorded in other current liabilities ($49 million) and non-current liabilities ($6 million).


	December 30, 2023
	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Total Fair Value
	Assets		Liabilities		Assets		Liabilities		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)	$	—	$	—	$	12	$	42	$	12	$	42
Cross-currency contracts(b)	—		—		140		165		140		165
Derivatives not designated as hedging instruments:
Commodity contracts(c)	20		59		3		7		23		66
Foreign exchange contracts(a)	—		—		17		23		17		23
Total fair value	$	20	$	59	$	172	$	237	$	192	$	296

(a) At December 30, 2023, the fair value of our derivative assets was recorded in other current assets ($21 million) and other non-current assets ($8 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($51 million) and other non-current liabilities ($14 million).

(b) At December 30, 2023, the fair value of our derivative assets was recorded in other current assets ($37 million) and other non-current assets ($103 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($31 million) and other non-current liabilities ($134 million).

(c) At December 30, 2023, the fair value of our derivative assets was recorded in other current assets and the fair value of derivative liabilities was recorded in other current liabilities ($64 million) and other non-current liabilities ($2 million).

Our derivative financial instruments are subject to master netting arrangements that allow for the offset of assets and liabilities in the event of default or early termination of the contract. We elect to record the gross assets and liabilities of our derivative financial instruments on the condensed consolidated balance sheets. If the derivative financial instruments had been netted on the condensed consolidated balance sheets, the asset and liability positions each would have been reduced by $152 million at September 28, 2024 and $130 million at December 30, 2023. We had posted collateral related to commodity derivative margin requirements of $12 million at September 28, 2024 and $41 million at December 30, 2023, which were included in prepaid expenses on our condensed consolidated balance sheets.

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

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

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

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

Net Investment Hedging:

At September 28, 2024, we had the following items designated as net investment hedges:

Non-derivative foreign-currency denominated debt with principal amounts of €300 million and £400 million; and
Cross-currency contracts with notional amounts of C$1.8 billion ($1.3 billion), €2.1 billion ($2.3 billion), JPY9.6 billion ($68 million), and CNY2.5 billion ($344 million).

We periodically use non-derivative instruments such as non-U.S. dollar financing transactions or non-U.S. dollar assets or liabilities, including intercompany loans, to hedge the exposure of changes in underlying foreign-currency denominated subsidiary net assets, and they are designated as net investment hedges. At September 28, 2024, we had a euro intercompany loan with a notional amount of $363 million designated as a net investment hedge.

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

Cash Flow Hedge Coverage:

At September 28, 2024, we had entered into foreign exchange contracts designated as cash flow hedges for periods not exceeding the next 22 months and into cross-currency contracts designated as cash flow hedges for periods not exceeding the next 54 months.

Fair Value Hedge Coverage:

In 2024, we designated cross-currency contracts as fair value hedges of the foreign currency exposure of foreign currency denominated intercompany loans. At September 28, 2024, the notional amounts of the cross-currency contracts were £683 million ($864 million) and MXN4.8 billion ($251 million) and the carrying value of the hedged items was $1.2 billion. The gains/(losses) on the hedged item, driven by changes in foreign exchange rates, are economically offset by fair value movements on the effective portion of our cross-currency contract, which is reported in the same income statement line item in the same period. The amounts excluded from the assessment of effectiveness are recognized in earnings over the life of the hedge on a systematic and rational basis in the same line item as the hedged item.

Deferred Hedging Gains and Losses on Fair Value and Cash Flow Hedges:

Based on our valuation at September 28, 2024 and assuming market rates remain constant through contract maturities, we expect transfers to net income/(loss) of the existing losses reported in accumulated other comprehensive income/(losses) on interest rate cash flow hedges, cross-currency cash flow hedges, and cross-currency fair value hedges during the next 12 months to be insignificant. Additionally, we expect transfers to net income/(loss) of the existing gains reported in accumulated other comprehensive income/(losses) on foreign-currency cash flow hedges during the next 12 months to be insignificant.

Derivative Impact on the Statements of Comprehensive Income:

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


Accumulated Other Comprehensive Income/(Losses) Component	Gains/(Losses) Recognized in Other Comprehensive Income/(Losses) Related to Derivatives Designated as Hedging Instruments								Location of Gains/(Losses) When Reclassified to Net Income/(Loss)
	For the Three Months Ended				For the Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Cash flow hedges:

Foreign exchange contracts	$	(14)	$	29	$	17	$	11	Cost of products sold
Foreign exchange contracts (excluded component)	1		(3)		(5)		(6)		Cost of products sold
Foreign exchange contracts	(2)		—		(2)		—		SG&A
Foreign exchange contracts	(38)		—		(11)		—		Other expense/(income)
Foreign exchange contracts (excluded component)	5		—		5		—		Other expense/(income)
Cross-currency contracts	61		(14)		2		20		Other expense/(income)
Cross-currency contracts (excluded component)	—		7		—		20		Other expense/(income)
Cross-currency contracts	(6)		(7)		(21)		(20)		Interest expense
Interest rate contracts	—		—		—		(3)		Interest expense
Net investment hedges:
Foreign exchange contracts	(3)		1		(3)		4		Other expense/(income)

Foreign exchange contracts (excluded component)	1		—		1		1		Interest expense
Cross-currency contracts	(101)		77		5		7		Other expense/(income)
Cross-currency contracts (excluded component)	10		10		34		27		Interest expense
Fair value hedges:
Cross-currency contracts (excluded component)	(24)		—		(21)		—		Other expense/(income)
Total gains/(losses) recognized in statements of comprehensive income	$	(110)	$	100	$	1	$	61

Derivative Impact on the Statements of Income:

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


	For the Three Months Ended
	September 28, 2024				September 30, 2023
	Cost of products sold		Interest expense		Other expense/(income)		Cost of products sold		Interest expense		Other expense/(income)
Total amounts presented in the condensed consolidated statements of income in which the following effects were recorded	$	4,197	$	230	$	(48)	$	4,335	$	228	$	(35)

Gains/(losses) related to derivatives designated as hedging instruments:
Cash flow hedges:(a)
Foreign exchange contracts	$	4	$	—	$	(39)	$	8	$	—	$	—
Foreign exchange contracts (excluded component)	(1)		—		3		(3)		—		—

Cross-currency contracts	—		(6)		81		—		(8)		(31)
Cross-currency contracts (excluded component)	—		—		—		—		—		7
Net investment hedges:(a)

Foreign exchange contracts (excluded component)	—		1		—		—		1		—
Cross-currency contracts (excluded component)	—		10		—		—		9		—
Fair Value hedges:
Cross-currency contracts	—		—		(56)		—		—		—

Hedged items(b)	—		—		56		—		—		—
Gains/(losses) related to derivatives not designated as hedging instruments:
Commodity contracts	(6)		—		—		24		—		—
Foreign exchange contracts	—		—		—		—		—		(5)

Cross-currency contracts	—		—		13		—		—		(1)
Total gains/(losses) recognized in statements of income	$	(3)	$	5	$	58	$	29	$	2	$	(30)

(a) Represents the pre-tax amounts of derivative gains/(losses) reclassified from accumulated other comprehensive income/(losses) to net income/(loss).

(b) Represents the pre-tax amounts of the hedged items gains/(losses) in fair value hedges.


	For the Nine Months Ended
	September 28, 2024				September 30, 2023
	Cost of products sold		Interest expense		Other expense/(income)		Cost of products sold		Interest expense		Other expense/(income)
Total amounts presented in the condensed consolidated statements of income in which the following effects were recorded	$	12,547	$	685	$	(56)	$	13,171	$	683	$	(94)

Gains/(losses) related to derivatives designated as hedging instruments:
Cash flow hedges:(a)
Foreign exchange contracts	$	9	$	—	$	(12)	$	27	$	—	$	—
Foreign exchange contracts (excluded component)	(5)		—		6		(8)		—		—

Cross-currency contracts	—		(21)		23		—		(21)		(2)
Cross-currency contracts (excluded component)	—		—		—		—		—		20
Net investment hedges:(a)

Foreign exchange contracts (excluded component)	—		1		—		—		1		—
Cross-currency contracts (excluded component)	—		34		—		—		26		—
Fair Value hedges:
Cross-currency contracts	—		—		(63)		—		—		—

Hedged items(b)	—		—		63		—		—		—
Gains/(losses) related to derivatives not designated as hedging instruments:
Commodity contracts	(4)		—		—		(50)		—		—
Foreign exchange contracts	—		—		9		—		—		(12)
Interest rates contracts(c)	—		—		(3)		—		—		—
Cross-currency contracts	—		—		(6)		—		—		2
Total gains/(losses) recognized in statements of income	$	—	$	14	$	17	$	(31)	$	6	$	8

(a) Represents the pre-tax amounts of derivative gains/(losses) reclassified from accumulated other comprehensive income/(losses) to net income/(loss).

(b) Represents the pre-tax amounts of the hedged items gains/(losses) in fair value hedges.

(c) Represents recognition of realized hedge losses resulting from the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring.

Non-Derivative Impact on Statements of Comprehensive Income:

Related to our non-derivative foreign currency denominated debt instruments designated as net investment hedges, we recognized pre-tax losses of $66 million for the three months and $35 million for the nine months ended September 28, 2024 and pre-tax gains of $44 million for the three months and $12 million for the nine months ended September 30, 2023. These amounts were recognized in other comprehensive income/(loss).

Note 12. Accumulated Other Comprehensive Income/(Losses)

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


	Foreign Currency Translation Adjustments		Net Postemployment Benefit Plan Adjustments		Net Cash Flow Hedge Adjustments		Net Fair Value Hedges		Total
Balance as of December 30, 2023	$	(2,634)	$	15	$	15	$	—	$	(2,604)
Foreign currency translation adjustments	108		—		—		—		108
Net deferred gains/(losses) on net investment hedges	(25)		—		—		—		(25)
Amounts excluded from the effectiveness assessment of net investment hedges	27		—		—		—		27
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)	(27)		—		—		—		(27)
Net deferred gains/(losses) on cash flow hedges	—		—		(5)		—		(5)
Amounts excluded from the effectiveness assessment of cash flow hedges	—		—		5		—		5
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)	—		—		(7)		—		(7)
Amounts excluded from the effectiveness assessment of fair value hedges	—		—		—		(9)		(9)


Net postemployment benefit losses/(gains) reclassified to net income/(loss)	—		(10)		—		—		(10)
Total other comprehensive income/(loss)	83		(10)		(7)		(9)		57
Balance as of September 28, 2024	$	(2,551)	$	5	$	8	$	(9)	$	(2,547)

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


	For the Three Months Ended
	September 28, 2024						September 30, 2023
	Before Tax Amount		Tax		Net of Tax Amount		Before Tax Amount		Tax		Net of Tax Amount
Foreign currency translation adjustments	$	362	$	—	$	362	$	(352)	$	—	$	(352)
Net deferred gains/(losses) on net investment hedges	(170)		42		(128)		122		(30)		92
Amounts excluded from the effectiveness assessment of net investment hedges	11		(2)		9		10		(3)		7
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)	(11)		2		(9)		(10)		2		(8)
Net deferred gains/(losses) on cash flow hedges	1		(9)		(8)		8		6		14
Amounts excluded from the effectiveness assessment of cash flow hedges	6		—		6		4		(1)		3
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)	(42)		16		(26)		27		(14)		13
Amounts excluded from the effectiveness assessment of fair value hedges	(24)		12		(12)		—		—		—


Net postemployment benefit losses/(gains) reclassified to net income/(loss)	(4)		1		(3)		(2)		1		(1)


	For the Nine Months Ended
	September 28, 2024						September 30, 2023
	Before Tax Amount		Tax		Net of Tax Amount		Before Tax Amount		Tax		Net of Tax Amount
Foreign currency translation adjustments	$	108	$	—	$	108	$	(62)	$	—	$	(62)
Net deferred gains/(losses) on net investment hedges	(33)		8		(25)		23		(6)		17
Amounts excluded from the effectiveness assessment of net investment hedges	35		(8)		27		28		(7)		21
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)	(35)		8		(27)		(27)		6		(21)
Net deferred gains/(losses) on cash flow hedges	(15)		10		(5)		8		(3)		5
Amounts excluded from the effectiveness assessment of cash flow hedges	—		5		5		14		(1)		13
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)	3		(10)		(7)		(16)		(2)		(18)
Amounts excluded from the effectiveness assessment of fair value hedges	(21)		12		(9)		—		—		—


Net postemployment benefit losses/(gains) reclassified to net income/(loss)	(13)		3		(10)		(11)		3		(8)

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


Accumulated Other Comprehensive Income/(Losses) Component	Reclassified from Accumulated Other Comprehensive Income/(Losses) to Net Income/(Loss)								Affected Line Item in the Statements of Income
	For the Three Months Ended				For the Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Losses/(gains) on net investment hedges:

Foreign exchange contracts(a)	$	(1)	$	(1)	$	(1)	$	(1)	Interest expense
Cross-currency contracts(a)	(10)		(9)		(34)		(26)		Interest expense
Losses/(gains) on cash flow hedges:

Foreign exchange contracts(b)	(3)		(5)		(4)		(19)		Cost of products sold

Foreign exchange contracts(b)	36		—		6		—		Other expense/(income)
Cross-currency contracts(b)	(81)		24		(23)		(18)		Other expense/(income)
Cross-currency contracts(b)	6		8		21		21		Interest expense

Interest rate contracts(c)	—		—		3		—		Other expense/(income)


Losses/(gains) on hedges before income taxes	(53)		17		(32)		(43)
Losses/(gains) on hedges, income taxes	18		(12)		(2)		4
Losses/(gains) on hedges	$	(35)	$	5	$	(34)	$	(39)
Losses/(gains) on postemployment benefits:
Amortization of unrecognized losses/(gains)(d)	$	(2)	$	1	$	(7)	$	(1)
Amortization of prior service costs/(credits)(d)	(2)		(3)		(6)		(10)


Losses/(gains) on postemployment benefits before income taxes	(4)		(2)		(13)		(11)
Losses/(gains) on postemployment benefits, income taxes	1		1		3		3
Losses/(gains) on postemployment benefits	$	(3)	$	(1)	$	(10)	$	(8)

(a) Represents recognition of the excluded component in net income/(loss).

(b) Includes amortization of the excluded component and the effective portion of the related hedges.

(c) Represents recognition of realized hedge losses resulting from the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring.

(d) These components are included in the computation of net periodic postemployment benefit costs. See Note 10, Postemployment Benefits, for additional information.

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

Note 13. Financing Arrangements

Transfers of Financial Assets:

We have a nonrecourse accounts receivable factoring program whereby certain eligible receivables are sold to third party financial institutions in exchange for cash. The program provides us with an additional means for managing liquidity. Under the terms of the arrangement, we act as the collecting agent on behalf of the financial institutions to collect amounts due from customers for the receivables sold. We account for the transfer of receivables as a true sale at the point control is transferred through derecognition of the receivable on our condensed consolidated balance sheet. There were no receivables sold under this accounts receivable factoring program during the three and nine months ended September 28, 2024, and no amounts outstanding as of September 28, 2024. Receivables sold under this accounts receivable factoring program were $242 million during the three months and $863 million during the nine months ended September 30, 2023, and there were no amounts outstanding as of December 30, 2023. There were no incremental costs of factoring receivables under this arrangement for the three and nine months ended September 28, 2024 and there was an insignificant amount for the three and nine months ended September 30, 2023. The proceeds from the sales of receivables are included in cash flows from operating activities on the condensed consolidated statement of cash flows.

Trade Payables Programs:

In order to manage our cash flow and related liquidity, we work with our suppliers to optimize our terms and conditions, which include the extension of payment terms. Our current payment terms with our suppliers, which we deem to be commercially reasonable, generally range from 0 to 250 days. We also maintain agreements with third party administrators that allow participating suppliers to track payment obligations from us, and, at the sole discretion of the supplier, sell one or more of those payment obligations to participating financial institutions. We have no economic interest in a supplier’s decision to enter into these agreements and no direct financial relationship with the financial institutions related to these programs. We pledged no assets in connection with our trade payable programs. Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. All amounts due to participating suppliers are paid to the third party on the original invoice due dates, regardless of whether a particular invoice was sold. Supplier participation in these agreements is voluntary. We estimate that the amounts outstanding under these programs were $0.8 billion at September 28, 2024 and December 30, 2023. The amounts were included in accounts payable on our condensed consolidated balance sheets.

Note 14. Commitments, Contingencies, and Debt

Legal Proceedings

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

Class Actions and Stockholder Derivative Actions:

Certain of The Kraft Heinz Company’s current and former officers and directors and 3G Capital, Inc. and several of its subsidiaries and affiliates (the “3G Entities”) were named as defendants in two stockholder derivative actions previously pending in the Delaware Court of Chancery, Datnoff, et al. v. Behring, et al., which was filed on May 6, 2022, and Felicetti, et al. v. Behring, et al., which was filed on March 6, 2023. The complaints alleged state law claims and contended that The Kraft Heinz Company’s Board of Directors wrongfully refused plaintiffs’ demands to pursue legal action against the named defendants. Specifically, the complaints alleged that certain of the Company’s current and former officers and directors breached their fiduciary duties to the Company by purportedly making materially misleading statements and omissions regarding the Company’s financial performance and the impairment of its goodwill and intangible assets. The complaints further alleged that the 3G Entities and certain of the Company’s current and former officers and directors breached their fiduciary duties by engaging in insider trading and misappropriating the Company’s material, non-public information, or aided and abetted such alleged breaches of fiduciary duty. The complaints sought relief against the defendants, principally in the form of damages, disgorgement of all profits obtained from the alleged insider trading, contribution and indemnification, and an award of attorneys’ fees and costs. The defendants filed a motion to dismiss the complaints, which the Delaware Chancery Court granted in an order dated July 23, 2024, dismissing the complaints with prejudice. The plaintiffs filed a notice of appeal on August 19, 2024, followed by a notice of voluntary dismissal of the appeal on September 3, 2024. The Delaware Supreme Court closed the case on September 4, 2024, formally concluding this matter in full.

Certain of The Kraft Heinz Company’s current and former officers and directors and the 3G Entities were also named as defendants in a consolidated stockholder derivative action, In re Kraft Heinz Company Derivative Litigation, which was filed in the Delaware Court of Chancery. The consolidated amended complaint, which was filed on April 27, 2020, alleged state law claims, contending that the 3G Entities were controlling stockholders who owed fiduciary duties to the Company, and that they breached those duties by allegedly engaging in insider trading and misappropriating the Company’s material, non-public information. The complaint further alleged that certain of The Kraft Heinz Company’s current and former officers and directors breached their fiduciary duties to the Company by purportedly making materially misleading statements and omissions regarding the Company’s financial performance and the impairment of its goodwill and intangible assets, and by supposedly approving or allowing the 3G Entities’ alleged insider trading. The complaint sought relief against the defendants in the form of damages, disgorgement of all profits obtained from the alleged insider trading, contribution and indemnification, and an award of attorneys’ fees and costs. The defendants filed a motion to dismiss the consolidated amended complaint, which motion the Delaware Chancery Court granted in an order dated December 15, 2021. The plaintiffs filed a notice of appeal on January 13, 2022, and the Delaware Supreme Court affirmed the trial court’s dismissal with prejudice of the consolidated amended complaint in an order dated August 1, 2022. One of the plaintiffs in said dismissed derivative litigation subsequently filed a new complaint, Erste Asset Management v. Hees, et al., against certain current and former officers and directors of The Kraft Heinz Company on November 28, 2023 in the Delaware Court of Chancery, seeking to reinstate the plaintiff’s previously-dismissed claims and recover attorneys’ fees and costs incurred in the dismissed litigation on the basis of alleged newly discovered evidence. Specifically, the plaintiff alleges the 3G Entities caused the Company to make false and misleading public disclosures regarding the independence of two directors of The Kraft Heinz Company, one of whose independence plaintiff contends formed a basis for the court’s prior dismissal of the consolidated amended complaint. The defendants filed a motion to dismiss the complaint, which the Delaware Chancery Court granted in an order dated August 8, 2024, dismissing the complaint with prejudice. The plaintiff filed a notice of appeal on September 5, 2024. We intend to vigorously defend against this lawsuit; however, we cannot reasonably estimate the potential range of loss, if any, due to the early stage of the proceedings.

Environmental Actions:

Since March 2024, the Company has been engaged in ongoing discussions with the U.S. Department of Justice, joined by the U.S. Environmental Protection Agency (“U.S. EPA”) and the Indiana Department of Environmental Management, concerning alleged violations of the Clean Water Act related to a Company facility in Kendallville, Indiana. Previously, the Company entered into an Administrative Order on Consent with the U.S. EPA that requires the Company to implement a compliance plan to address related alleged violations of the Clean Water Act related to the facility in Kendallville, Indiana. While we cannot predict with certainty the resolution of these discussions, we do not expect that the ultimate costs to resolve this matter will have a material adverse effect on our financial condition, results of operations, or cash flows.

Debt

We may from time to time seek to retire or purchase our outstanding debt through redemptions, tender offers, cash purchases, prepayments, refinancing, exchange offers, open market or privately negotiated transactions, Rule 10b5-1 plans, or otherwise.

Borrowing Arrangements:

Together with Kraft Heinz Foods Company (“KHFC”), our 100% owned operating subsidiary, we have a credit agreement, which provides for a five-year senior unsecured revolving credit facility in an aggregate amount of $4.0 billion (as amended, the “Senior Credit Facility”). On September 27, 2024, we entered into an agreement to extend the maturity date of our Senior Credit Facility from July 8, 2028 to July 8, 2029. See Note 16, Debt, to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 30, 2023 for information on our borrowing arrangements.

Our long-term debt contains customary representations, covenants, and events of default. We were in compliance with all financial covenants as of September 28, 2024.

Debt Issuances:

In the first quarter of 2024, KHFC, our 100% owned operating subsidiary, issued 550 million euro aggregate principal amount of 3.500% senior notes due March 2029 (the “2024 Notes”). The 2024 Notes are fully and unconditionally guaranteed by The Kraft Heinz Company as to payment of principal, premium, and interest on a senior unsecured basis. We used the net proceeds from the 2024 Notes for general corporate purposes, including to fund the repayment of our 550 million euro senior notes that matured in May 2024.

In May 2023, KHFC issued 600 million euro aggregate principal amount of floating rate senior notes due May 2025 (the “2023 Notes”). The 2023 Notes are fully and unconditionally guaranteed by The Kraft Heinz Company as to payment of principal and interest on a senior unsecured basis. We used the proceeds from the 2023 Notes for general corporate purposes, including to partially fund the repayment of our 750 million euro senior notes that matured in June 2023.

Debt Issuance Costs:

Debt issuance costs related to the 2024 Notes and 2023 Notes were insignificant.

Debt Repayments:

In May 2024, we repaid 550 million euro aggregate principal amount of senior notes that matured in the period.

In June 2023, we repaid 750 million euro aggregate principal amount of senior notes that matured in the period.

Fair Value of Debt:

At September 28, 2024, the aggregate fair value of our total debt was $19.9 billion as compared with a carrying value of $20.1 billion. At December 30, 2023, the aggregate fair value of our total debt was $19.6 billion as compared with a carrying value of $20.0 billion. Our short-term debt had a carrying value that approximated its fair value at September 28, 2024 and December 30, 2023. We determined the fair value of our long-term debt using Level 2 inputs. Fair values are generally estimated based on quoted market prices for identical or similar instruments.

Synthetic Lease Arrangements:

As previously disclosed in our Annual Report on Form 10-K for the year ended December 30, 2023, in June 2023, we entered into a non-cancellable synthetic lease for a distribution facility, for which we are the construction agent. In the first half of 2024, we encountered a construction delay that is expected to postpone the originally planned commencement date and is expected to require substantial incremental construction costs to remediate. We are currently evaluating the potential implications of this delay to the Company, the results of which cannot be reasonably determined at this time.

Note 15. Earnings Per Share

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


	For the Three Months Ended				For the Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
	(in millions, except per share data)
Basic Earnings Per Common Share:
Net income/(loss) attributable to common shareholders	$	(290)	$	262	$	613	$	2,098
Weighted average shares of common stock outstanding	1,210		1,229		1,212		1,228
Net earnings/(loss)	$	(0.24)	$	0.21	$	0.51	$	1.71
Diluted Earnings Per Common Share:
Net income/(loss) attributable to common shareholders	$	(290)	$	262	$	613	$	2,098
Weighted average shares of common stock outstanding	1,210		1,229		1,212		1,228
Effect of dilutive equity awards	—		6		5		7
Weighted average shares of common stock outstanding, including dilutive effect	1,210		1,235		1,217		1,235
Net earnings/(loss)	$	(0.24)	$	0.21	$	0.50	$	1.70

We use the treasury stock method to calculate the dilutive effect of outstanding equity awards in the denominator for diluted EPS. Anti-dilutive shares were 15 million for the three months and 6 million for the nine months ended September 28, 2024 and 7 million for the three and nine months ended September 30, 2023.

Note 16. Segment Reporting

In the first quarter of 2024, our internal reporting and reportable segments changed. We divided our International segment into three operating segments — EPDM, WEEM, and AEM — to enable enhanced focus on the different strategies required for each of these regions as part of our long-term strategic plan. Subsequently, we manage our operating results through four operating segments. We have two reportable segments defined by geographic region: North America and International Developed Markets. Our remaining operating segments, consisting of WEEM and AEM, are combined and disclosed as Emerging Markets. We have reflected this segment change in all historical periods presented.

As part of the segment reorganization, management reallocated certain corporate expenses previously reported within our International segment to general corporate expenses. This reflects management’s approach to centrally manage these expenses. We have reflected this reallocation in all historical periods presented.

Our chief operating decision maker (“CODM”) evaluates segment performance based on several factors, including net sales and Segment Adjusted Operating Income. In the first quarter of 2024, following changes to our segments, our CODM reevaluated and changed the primary measure utilized to evaluate segment profitability from Segment Adjusted EBITDA to Segment Adjusted Operating Income. This change is expected to allow our CODM to better evaluate segment performance in line with our long-term strategic plan. Segment Adjusted Operating Income is defined as operating income/(loss) excluding, when they occur, the impacts of restructuring activities, deal costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results), impairment losses, and certain non-ordinary course legal and regulatory matters. Emerging Markets represents the aggregation of our WEEM and AEM operating segments. Adjusted Operating Income for WEEM and AEM is the measure reported to our chief operating decision maker for purposes of making decisions about allocating resources to these operating segments and assessing their performance. Segment Adjusted Operating Income is a financial measure that assists our CODM in comparing our performance on a consistent basis by removing the impact of certain items that our CODM believes do not directly reflect our underlying operations. Our CODM also uses Segment Adjusted Operating Income to allocate resources. We have reflected this change from Segment Adjusted EBITDA to Segment Adjusted Operating Income in all historical periods presented.

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

Net sales by segment were (in millions):


	For the Three Months Ended				For the Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net sales:
North America	$	4,826	$	4,995	$	14,575	$	14,959
International Developed Markets	882		883		2,622		2,675
Total segment net sales	5,708		5,878		17,197		17,634
Emerging Markets net sales	675		692		2,073		2,146
Total net sales	$	6,383	$	6,570	$	19,270	$	19,780

Segment Adjusted Operating Income was (in millions):


	For the Three Months Ended				For the Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Segment Adjusted Operating Income:
North America	$	1,237	$	1,245	$	3,793	$	3,701
International Developed Markets	135		129		397		376
Total Segment Adjusted Operating Income	1,372		1,374		4,190		4,077
Emerging Markets(a)	84		88		232		286
General corporate expenses	(126)		(150)		(447)		(455)
Restructuring activities	—		(45)		—		(25)

Unrealized gains/(losses) on commodity hedges	(3)		48		30		53
Impairment losses	(1,428)		(662)		(2,282)		(662)
Certain non-ordinary course legal and regulatory matters	—		—		—		(2)
Operating income/(loss)	(101)		653		1,723		3,272
Interest expense	230		228		685		683
Other expense/(income)	(48)		(35)		(56)		(94)
Income/(loss) before income taxes	$	(283)	$	460	$	1,094	$	2,683

(a) Emerging Markets represents the aggregation of our WEEM and AEM operating segments.

In the first quarter of 2024, we changed the way we manage our product portfolio to align with our future growth strategy. As of September 28, 2024, we manage our product portfolio through eight consumer-driven product platforms: Taste Elevation, Easy Ready Meals, Substantial Snacking, Desserts, Hydration, Cheese, Coffee, and Meats. A platform is a lens created for the portfolio based on a grouping of consumer needs. The platforms help us to manage and organize our business effectively by providing insight into our various product categories and brands.

Taste Elevation includes condiments, sauces, dressings, and spreads. Easy Ready Meals includes Kraft Mac & Cheese varieties, frozen potato products, and other frozen meals. Substantial Snacking includes Lunchables meal kits, frozen snacks, and pickles. Desserts includes dry packaged desserts, refrigerated ready to eat desserts, and other dessert toppings. Hydration includes ready to drink beverages, powdered beverages, and liquid concentrates. Cheese includes American sliced and recipe cheeses. Coffee includes mainstream coffee, coffee pods, and premium coffee. Meats includes cold cuts, bacon, and hot dogs.

Each platform is assigned a role within our business to help inform our resource allocation and investment decisions, which are made at the operating segment level. These roles include: Accelerate, Protect, and Balance. Our Accelerate role contains platforms that are expected to have high growth potential, generate higher gross margins, and are in markets in which we have higher market share. Our Protect role contains platforms that are expected to have moderate growth potential, tend to generate higher gross margins, and are in markets in which we have higher market share. Our Balance role contains platforms that include commodity-heavy categories with relatively flat growth potential but help us to maintain our brand footprint.

We have reflected this change to our platforms in all historical periods presented.

Net sales by platform were (in millions):


	For the Three Months Ended				For the Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
ACCELERATE
Taste Elevation	$	2,825	$	2,788	$	8,443	$	8,514
Easy Ready Meals	1,171		1,213		3,497		3,592
Substantial Snacking	317		387		955		1,070
Total Accelerate	4,313		4,388		12,895		13,176
PROTECT
Desserts	292		284		815		813
Hydration	539		540		1,635		1,743
Total Protect	831		824		2,450		2,556
BALANCE
Cheese	426		433		1,273		1,310
Coffee	200		219		621		647
Meats	538		568		1,633		1,670
Other	75		138		398		421
Total Balance	1,239		1,358		3,925		4,048
Total net sales	$	6,383	$	6,570	$	19,270	$	19,780

Note 17. Other Financial Data

Condensed Consolidated Statements of Income Information

Other expense/(income) consists of the following (in millions):


	For the Three Months Ended				For the Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Amortization of postemployment benefit plans prior service costs/(credits)	$	(2)	$	(3)	$	(6)	$	(10)
Net pension and postretirement non-service cost/(benefit)(a)	(38)		(22)		(101)		(68)
Loss/(gain) on sale of business	(1)		—		78		2
Interest income	(16)		(12)		(49)		(28)
Foreign exchange losses/(gains)	7		(25)		(28)		21
Derivative losses/(gains)	(2)		30		46		(8)
Other miscellaneous expense/(income)	4		(3)		4		(3)
Other expense/(income)	$	(48)	$	(35)	$	(56)	$	(94)

(a) Excludes amortization of postemployment benefit plans prior service costs/(credits).

We present all non-service cost components of net pension cost/(benefit) and net postretirement cost/(benefit) within other expense/(income) on our condensed consolidated statements of income. See Note 10, Postemployment Benefits, for additional information on these components, including any curtailments and settlements, as well as information on our prior service costs/(credits) amortization. See Note 11, Financial Instruments, for information related to our derivative impacts.

Other expense/(income) was $48 million of income for the three months ended September 28, 2024 compared to $35 million of income for the three months ended September 30, 2023. This change was primarily driven by a $2 million net gain on derivative activities in the third quarter of 2024 compared to a $30 million net loss on derivative activities in the third quarter of 2023,a $16 million increase in non-cash net pension and postretirement non-service benefits compared to the third quarter of 2023, and $16 million in interest income in the third quarter of 2024 compared to $12 million in interest income in the third quarter of 2023. These positive impacts on other expense/(income) were partially offset by a $7 million net foreign exchange loss in the third quarter of 2024 compared to a $25 million net foreign exchange gain in the third quarter of 2023 and $4 million in other miscellaneous expense in the third quarter of 2024 compared to $3 million of income in the third quarter of 2023.

Other expense/(income) was $56 million of income for the nine months ended September 28, 2024 compared to $94 million of income for the nine months ended September 30, 2023. This change was primarily driven by a $78 million net loss on the sale of businesses in 2024 compared to a $2 million net loss on the sale of business in 2023 and a $46 million net loss on derivative activities in 2024 compared to a $8 million net gain on derivative activities in 2023, which was partially offset by a $28 million net foreign exchange gain in 2024 compared to a $21 million net foreign exchange loss in 2023, a $33 million increase in net pension and postretirement non-service benefit compared to 2023, and $49 million in interest income in 2024 compared to $28 million in interest income in 2023.

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