filings.toolsItem 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 | |||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||||||||||||||
| Net sales | $ | 5,999 | $ | 6,411 | |||||||||||||||||||
| Cost of products sold | 3,935 | 4,168 | |||||||||||||||||||||
| Gross profit | 2,064 | 2,243 | |||||||||||||||||||||
| Selling, general and administrative expenses | 868 | 941 | |||||||||||||||||||||
| Operating income/(loss) | 1,196 | 1,302 | |||||||||||||||||||||
| Interest expense | 229 | 226 | |||||||||||||||||||||
| Other expense/(income) | (51) | 47 | |||||||||||||||||||||
| Income/(loss) before income taxes | 1,018 | 1,029 | |||||||||||||||||||||
| Provision for/(benefit from) income taxes | 304 | 225 | |||||||||||||||||||||
| Net income/(loss) | 714 | 804 | |||||||||||||||||||||
| Net income/(loss) attributable to noncontrolling interest | 2 | 3 | |||||||||||||||||||||
| Net income/(loss) attributable to common shareholders | $ | 712 | $ | 801 | |||||||||||||||||||
| Per share data applicable to common shareholders: | |||||||||||||||||||||||
| Basic earnings/(loss) | $ | 0.60 | $ | 0.66 | |||||||||||||||||||
| Diluted earnings/(loss) | 0.59 | 0.66 |
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 | |||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||||||||||||||
| Net income/(loss) | $ | 714 | $ | 804 | |||||||||||||||||||
| Other comprehensive income/(loss), net of tax: | |||||||||||||||||||||||
| Foreign currency translation adjustments | 309 | (184) | |||||||||||||||||||||
| Net deferred gains/(losses) on net investment hedges | (60) | 74 | |||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of net investment hedges | 7 | 10 | |||||||||||||||||||||
| Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss) | (7) | (9) | |||||||||||||||||||||
| Net deferred gains/(losses) on cash flow hedges | 20 | 8 | |||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of cash flow hedges | (1) | (2) | |||||||||||||||||||||
| Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss) | (58) | 14 | |||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of fair value hedges | 19 | — | |||||||||||||||||||||
| Net deferred losses/(gains) on fair value hedges reclassified to net income/(loss) | (2) | — | |||||||||||||||||||||
| Net deferred gains/(losses) on available-for-sale debt securities | (1) | — | |||||||||||||||||||||
| Net postemployment benefit losses/(gains) reclassified to net income/(loss) | (4) | (4) | |||||||||||||||||||||
| Total other comprehensive income/(loss) | 222 | (93) | |||||||||||||||||||||
| Total comprehensive income/(loss) | 936 | 711 | |||||||||||||||||||||
| Comprehensive income/(loss) attributable to noncontrolling interest | 2 | (25) | |||||||||||||||||||||
| Comprehensive income/(loss) attributable to common shareholders | $ | 934 | $ | 736 |
See accompanying notes to the condensed consolidated financial statements.
The Kraft Heinz Company
Condensed Consolidated Balance Sheets
(in millions, except per share data)
(Unaudited)
| March 29, 2025 | December 28, 2024 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 2,113 | $ | 1,334 | |||||||
| Trade receivables (net of allowances of $25 at March 29, 2025 and $26 at December 28, 2024) | 2,257 | 2,147 | |||||||||
| Inventories | 3,591 | 3,376 | |||||||||
| Prepaid expenses | 271 | 215 | |||||||||
| Marketable securities | 674 | — | |||||||||
| Other current assets | 552 | 583 | |||||||||
| Total current assets | 9,458 | 7,655 | |||||||||
| Property, plant and equipment, net | 7,157 | 7,152 | |||||||||
| Goodwill | 28,753 | 28,673 | |||||||||
| Intangible assets, net | 40,147 | 40,099 | |||||||||
| Other non-current assets | 4,759 | 4,708 | |||||||||
| TOTAL ASSETS | $ | 90,274 | $ | 88,287 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current portion of long-term debt | 678 | 654 | |||||||||
| Accounts payable | 4,122 | 4,188 | |||||||||
| Accrued marketing | 694 | 697 | |||||||||
| Interest payable | 299 | 263 | |||||||||
| Other current liabilities | 1,442 | 1,451 | |||||||||
| Total current liabilities | 7,235 | 7,253 | |||||||||
| Long-term debt | 20,925 | 19,215 | |||||||||
| Deferred income taxes | 9,716 | 9,679 | |||||||||
| Accrued postemployment costs | 134 | 135 | |||||||||
| Long-term deferred income | 1,361 | 1,374 | |||||||||
| Other non-current liabilities | 1,298 | 1,306 | |||||||||
| TOTAL LIABILITIES | 40,669 | 38,962 | |||||||||
| Commitments and Contingencies (Note 14) | |||||||||||
| Redeemable noncontrolling interest | 7 | 6 | |||||||||
| Equity: | |||||||||||
| Common stock, $0.01 par value (5,000 shares authorized; 1,257 shares issued and 1,190 shares outstanding at March 29, 2025; 1,254 shares issued and 1,195 shares outstanding at December 28, 2024) | 12 | 12 | |||||||||
| Additional paid-in capital | 52,169 | 52,135 | |||||||||
| Retained earnings | 2,404 | 2,171 | |||||||||
| Accumulated other comprehensive income/(losses) | (2,693) | (2,915) | |||||||||
| Treasury stock, at cost (66 shares at March 29, 2025 and 59 shares at December 28, 2024) | (2,432) | (2,218) | |||||||||
| Total shareholders' equity | 49,460 | 49,185 | |||||||||
| Noncontrolling interest | 138 | 134 | |||||||||
| TOTAL EQUITY | 49,598 | 49,319 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 90,274 | $ | 88,287 |
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 28, 2024 | $ | 12 | $ | 52,135 | $ | 2,171 | $ | (2,915) | $ | (2,218) | $ | 134 | $ | 49,319 | |||||||||||||||||||||||||||
| Net income/(loss) excluding redeemable noncontrolling interest | — | — | 712 | — | — | 2 | 714 | ||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss) excluding redeemable noncontrolling interest | — | — | — | 222 | — | (1) | 221 | ||||||||||||||||||||||||||||||||||
| Dividends declared-common stock ($0.40 per share) | — | — | (479) | — | — | — | (479) | ||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | (214) | — | (214) | ||||||||||||||||||||||||||||||||||
| Exercise of stock options, issuance of other stock awards, and other | — | 34 | — | — | — | 3 | 37 | ||||||||||||||||||||||||||||||||||
| Balance at March 29, 2025 | $ | 12 | $ | 52,169 | $ | 2,404 | $ | (2,693) | $ | (2,432) | $ | 138 | $ | 49,598 | |||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
The Kraft Heinz Company
Condensed Consolidated Statements of Cash Flows
(in millions)
(Unaudited)
| For the Three Months Ended | |||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income/(loss) | $ | 714 | $ | 804 | |||||||
| Adjustments to reconcile net income/(loss) to operating cash flows: | |||||||||||
| Depreciation and amortization | 231 | 230 | |||||||||
| Divestiture-related license income | (13) | (14) | |||||||||
| Equity award compensation expense | 27 | 31 | |||||||||
| Deferred income tax provision/(benefit) | 51 | 1 | |||||||||
| Postemployment benefit plan contributions | (4) | (5) | |||||||||
| Nonmonetary currency devaluation | 14 | 3 | |||||||||
| Loss/(gain) on sale of business | — | 80 | |||||||||
| Other items, net | (14) | (17) | |||||||||
| Changes in current assets and liabilities: | |||||||||||
| Trade receivables | (89) | (145) | |||||||||
| Inventories | (217) | (56) | |||||||||
| Accounts payable | (11) | (49) | |||||||||
| Other current assets | (47) | (32) | |||||||||
| Other current liabilities | 78 | (60) | |||||||||
| Net cash provided by/(used for) operating activities | 720 | 771 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Capital expenditures | (238) | (294) | |||||||||
| Purchases of marketable securities | (673) | — | |||||||||
| Proceeds from sale of business, net of cash disposed and working capital adjustments | 9 | (3) | |||||||||
| Other investing activities, net | 24 | 10 | |||||||||
| Net cash provided by/(used for) investing activities | (878) | (287) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Proceeds from issuance of long-term debt | 1,620 | 593 | |||||||||
| Dividends paid | (477) | (486) | |||||||||
| Repurchases of common stock | (225) | (329) | |||||||||
| Other financing activities, net | (18) | (17) | |||||||||
| Net cash provided by/(used for) financing activities | 900 | (239) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 35 | (21) | |||||||||
| Cash, cash equivalents, and restricted cash | |||||||||||
| Net increase/(decrease) | 777 | 224 | |||||||||
| Balance at beginning of period | 1,486 | 1,404 | |||||||||
| Balance at end of period | $ | 2,263 | $ | 1,628 |
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 2025 fiscal year is scheduled to be a 52-week period ending on December 27, 2025, and our 2024 fiscal year was a 52-week period that ended on December 28, 2024.
The condensed consolidated balance sheet data at December 28, 2024 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 28, 2024. 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
We manage our operating results through four operating segments: North America, Europe and Pacific Developed Markets (“EPDM” or “International Developed Markets”), West and East Emerging Markets (“WEEM”), and Asia Emerging Markets (“AEM”). 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 90 days 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 March 29, 2025, we had $32 million of restricted cash recorded in other current assets and $118 million of restricted cash recorded in other non-current assets. At December 28, 2024, we had restricted cash recorded in other current assets of $31 million and $121 million of restricted cash in other non-current assets. Total cash, cash equivalents, and restricted cash was $2,263 million at March 29, 2025 and $1,486 million at December 28, 2024.
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 28, 2024.
Note 3. New Accounting Standards
Accounting Standards Not Yet Adopted
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. 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 an impact on our financial statements.
Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):
In November 2024, the FASB issued ASU 2024-03 to improve financial reporting under ASC 220, Income Statement-Reporting Comprehensive Income. The guidance requires entities to disclose additional information about specific expense categories related to cost of sales and SG&A in the notes to financial statements at interim and annual reporting periods. This ASU will be effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are evaluating the impacts this ASU will have on our financial statements and related disclosures.
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 no deal costs for the three months ended March 29, 2025 and insignificant deal costs for the three months ended March 30, 2024 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 28, 2024 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 three months ended March 29, 2025, we eliminated approximately 370 positions related to these programs. As of March 29, 2025, we expect to eliminate approximately 370 additional positions during the remainder of 2025. For the three months ended March 29, 2025, restructuring activities resulted in net expenses of $4 million from severance and employee benefit costs. Restructuring activities resulted in income of $3 million for the three months ended March 30, 2024.
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 28, 2024 | $ | 29 | $ | 11 | $ | 40 | |||||||||||
| Charges/(credits) | 4 | — | 4 | ||||||||||||||
| Cash payments | (7) | (1) | (8) | ||||||||||||||
| Balance at March 29, 2025 | $ | 26 | $ | 10 | $ | 36 |
We expect the majority of the liability for severance and employee benefit costs as of March 29, 2025 to be paid by the second quarter of 2025. 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 2026 and 2031.
Total Expenses/(Income):
Total expense/(income) related to restructuring activities, by income statement caption, were (in millions):
| For the Three Months Ended | |||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||||||||||||||
| Severance and employee benefit costs - Cost of products sold | $ | (2) | $ | — | |||||||||||||||||||
| Severance and employee benefit costs - SG&A | 6 | (6) | |||||||||||||||||||||
| Other costs - Cost of products sold | — | 1 | |||||||||||||||||||||
| Other costs - SG&A | — | 2 | |||||||||||||||||||||
| $ | 4 | $ | (3) |
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 | |||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||||||||||||||
| North America | $ | 4 | $ | (2) | |||||||||||||||||||
| International Developed Markets | (3) | (1) | |||||||||||||||||||||
| General corporate expenses | 3 | — | |||||||||||||||||||||
| $ | 4 | $ | (3) |
Note 6. Inventories
Inventories consisted of the following (in millions):
| March 29, 2025 | December 28, 2024 | ||||||||||
| Packaging and ingredients | $ | 904 | $ | 950 | |||||||
| Spare parts | 251 | 245 | |||||||||
| Work in process | 308 | 310 | |||||||||
| Finished products | 2,128 | 1,871 | |||||||||
| Inventories | $ | 3,591 | $ | 3,376 |
Note 7. Goodwill and Intangible Assets
Goodwill:
Changes in the carrying amount of goodwill, by segment, were (in millions):
| North America | International Developed Markets | Emerging Markets | Total | ||||||||||||||||||||
| Balance at December 28, 2024 | $ | 26,232 | $ | 2,134 | $ | 307 | $ | 28,673 | |||||||||||||||
| Translation adjustments and other | 4 | 74 | 2 | 80 | |||||||||||||||||||
| Balance at March 29, 2025 | $ | 26,236 | $ | 2,208 | $ | 309 | $ | 28,753 |
2025 Year-to-Date Goodwill Impairment Testing
In the first quarter of 2025, certain organizational changes occurred that impacted our reporting unit composition within our International Developed Markets segment (the “Q1 Europe reorganization”). Two of our International Developed Market reporting units — Northern Europe (“NE”) and Continental Europe (“CE”) — were combined into one reporting unit, Western Europe (“WE”). None of our other reporting units were impacted by this reorganization.
As a result of this reorganization, the existing assets and liabilities of the impacted reporting units were combined and we performed an interim impairment test (or transition test) on the affected reporting units on both a pre- and post-reorganization basis. We performed our pre-reorganization and post-reorganization tests as of December 29, 2024, which was our first day of 2025.
As part of our pre-reorganization impairment test of the NE and CE reporting units, and post-reorganization test of the WE reporting unit, we utilized the discounted cash flow method under the income approach to estimate the fair values as of December 29, 2024. As a result of these tests, we concluded that the fair value of these reporting units exceeded their carrying amounts and no impairment was recorded. The goodwill carrying amount of the WE reporting unit is $2.2 billion as of the transition test date.
As of March 29, 2025, we maintain 11 reporting units, seven of which comprise our goodwill balance. These seven reporting units had an aggregate goodwill carrying amount of $28.8 billion at March 29, 2025.
Accumulated impairment losses to goodwill were $13.5 billion as of March 29, 2025 and December 28, 2024.
Additional Goodwill Considerations
As of their latest impairment test, which was the 2024 annual impairment test for all reporting units other than WE, our reporting units with 20% or less fair value over carrying amount had an aggregate goodwill carrying amount of $24.1 billion and included Taste Elevation, Ready Meals and Snacking (“TMS”), Away from Home & Kraft Heinz Ingredients (“AFH”), Meat & Cheese (“MC”), WE, and Canada and North America Coffee (“CNAC”). Our Hydration & Desserts (“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.
Our reporting units that were impaired in 2024 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 or the latest 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 or the latest impairment test, this amount is also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.
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, long-term growth rates, royalty rates, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control change; such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, 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.
Since our latest annual impairment test, our Company’s share price has been subject to significant volatility along with fluctuations experienced by other industry peers and much of the broader market. Our fair value determinations incorporate assumptions for future interest rates, stock market volatility, country risks and consideration of our market capitalization. Given the evolving nature and uncertainty in the market and the global economy due to the potential implications from tariffs, inflationary pressures, and other macroeconomic factors, we will continue to monitor these developments, as well as our response to these potential implications, to assess if their impacts are sustained. If we determine that these factors have a sustained impact on our long-term financial forecast and/or our share price, there is a heightened risk for impairments in the near future due to the significant number of reporting units with low excess fair value over carrying amount as described above.
During the first quarter of 2025, certain organizational changes were announced that are expected to impact our reporting unit composition within our North America segment. Our six North America reporting units — TMS, HD, MC, AFH, CNAC, and Other North America — will be reorganized into the five reporting units: Elevation; Hydration, Desserts, & Meals (“HDM”); Meat, Cheese, Coffee, & Snacks (“MCCS”); Canada; and Other North America. We have determined these changes will represent a change in composition for the TMS, HD, MC, AFH, and CNAC reporting units as they will be reorganized into Elevation, HDM, MCCS, and Canada reporting units. We are currently in the process of revising our internal reporting routines and processes, and refreshing our long-term forecast to reflect the new organizational structure. We expect these organizational changes will be completed and effective as of the first day of our third quarter of 2025 and will require a transition impairment test that will occur in conjunction with our annual impairment test in the third quarter of 2025.
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 28, 2024 | $ | 36,456 | |||
| Translation adjustments and other | 89 | ||||
| Balance at March 29, 2025 | $ | 36,545 |
Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $36.5 billion at March 29, 2025.
No events occurred during the three months ended March 29, 2025 or March 30, 2024 that indicated it was more likely than not that any brand was impaired.
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, long-term 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 change; such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, 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 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.
Since our latest annual impairment test, our Company’s share price has been subject to significant volatility along with fluctuations experienced by other industry peers and much of the broader market. Our fair value determinations incorporate assumptions for future interest rates, stock market volatility, country risks and consideration of our market capitalization. Given the evolving nature and uncertainty in the market and the global economy due to the potential implications from tariffs, inflationary pressures, and other macroeconomic factors, we will continue to monitor these developments, as well as our response to these potential implications, to assess if their impacts are sustained. If we determine that these factors have a sustained impact on our long-term financial forecast and/or our share price, there is a heightened risk for impairments in the near future due to the significant number of brands with low excess fair value over carrying amount as described above.
Definite-lived intangible assets:
Definite-lived intangible assets were (in millions):
| March 29, 2025 | December 28, 2024 | ||||||||||||||||||||||||||||||||||
| Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
| Trademarks | $ | 2,413 | $ | (926) | $ | 1,487 | $ | 2,392 | $ | (893) | $ | 1,499 | |||||||||||||||||||||||
| Customer-related assets | 3,683 | (1,577) | 2,106 | 3,665 | (1,530) | 2,135 | |||||||||||||||||||||||||||||
| Other | 13 | (4) | 9 | 13 | (4) | 9 | |||||||||||||||||||||||||||||
| $ | 6,109 | $ | (2,507) | $ | 3,602 | $ | 6,070 | $ | (2,427) | $ | 3,643 |
Amortization expense for definite-lived intangible assets was $61 million for the three months ended March 29, 2025, and $64 million for the three months ended March 30, 2024. Aside from amortization expense, the change in definite-lived intangible assets from December 28, 2024 to March 29, 2025 is primarily related to the impacts of foreign currency.
We estimate that amortization expense related to definite-lived intangible assets will be approximately $240 million in 2025 and $240 million in each of the following five years.
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 26.1% as of March 29, 2025, and 21.1% as of March 30, 2024. The year-over-year increase was primarily due to the changes made to our corporate entity structure in December 2024 in conjunction with the Pillar Two legislative developments made under the Organization for Economic Co-operation and Development (OECD). See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 28, 2024 for additional information on this change to our corporate entity structure.
Our effective tax rate for the three months ended March 29, 2025 was an expense of 29.9% on pre-tax income. Our effective tax rate was impacted by a less favorable geographic mix of pre-tax income in various non-U.S. jurisdictions primarily due to the changes made to our corporate entity structure in December 2024, and certain unfavorable discrete deferred tax adjustments.
Our effective tax rate for the three months ended March 30, 2024 was an expense of 21.9% on pre-tax income. Our effective tax rate was favorably impacted by the geographic mix of pre-tax income in various non-U.S. jurisdictions. This impact was partially offset by unfavorable items, primarily from establishing a valuation allowance on the deferred tax asset for the U.S. capital loss carryover generated from our divestiture activities.
The year-over-year increase in the effective tax rate for the three-month period was primarily driven by a less favorable geographic mix of pre-tax income in various non-U.S. jurisdictions primarily due to the changes made to our corporate entity structure in December 2024, and the unfavorable impact of certain discrete deferred tax adjustments.
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.
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 28, 2024 | 6,720,421 | $ | 46.44 | ||||||||
| Granted | 936,208 | 30.71 | |||||||||
| Forfeited | (1,744,982) | 50.34 | |||||||||
| Outstanding at March 29, 2025 | 5,911,647 | 42.79 |
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 28, 2024 | 6,705,507 | $ | 37.31 | ||||||||
| Granted | 2,235,994 | 30.88 | |||||||||
| Forfeited | (194,031) | 35.89 | |||||||||
| Vested | (1,774,368) | 38.54 | |||||||||
| Outstanding at March 29, 2025 | 6,973,102 | 34.98 |
The aggregate fair value of RSUs that vested during the period was $55 million for the three months ended March 29, 2025.
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 28, 2024 | 5,389,930 | $ | 31.77 | ||||||||
| Granted | 3,163,212 | 30.50 | |||||||||
| Forfeited(a) | (865,726) | 32.96 | |||||||||
| Vested | (635,807) | 34.47 | |||||||||
| Outstanding at March 29, 2025 | 7,051,609 | 30.81 |
(a) Includes PSUs forfeited due to employee terminations and performance conditions that were not satisfied.
The aggregate fair value of PSUs that vested during the period was $20 million for the three months ended March 29, 2025.
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 28, 2024 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 | ||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | March 29, 2025 | March 30, 2024 | ||||||||||||||||||||
| Service cost | $ | — | $ | — | $ | 1 | $ | 2 | |||||||||||||||
| Interest cost | 33 | 34 | 14 | 14 | |||||||||||||||||||
| Expected return on plan assets | (49) | (49) | (21) | (21) | |||||||||||||||||||
| Amortization of prior service costs/(credits) | — | — | 1 | — | |||||||||||||||||||
| Amortization of unrecognized losses/(gains) | — | — | 3 | 3 | |||||||||||||||||||
| Net pension cost/(benefit) | $ | (16) | $ | (15) | $ | (2) | $ | (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 $1 million during the three months ended March 29, 2025 and plan to make further contributions of approximately $5 million during the remainder of 2025. We did not contribute to our U.S. pension plan during the three months ended March 29, 2025 and do not plan to make contributions during the remainder of 2025. 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 2025. 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.
Postretirement Plans
Components of Net Postretirement Cost/(Benefit):
Net postretirement cost/(benefit) consisted of the following (in millions):
| For the Three Months Ended | |||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||||||||||||||
| Service cost | $ | 1 | $ | 1 | |||||||||||||||||||
| Interest cost | 7 | 8 | |||||||||||||||||||||
| Expected return on plan assets | (12) | (14) | |||||||||||||||||||||
| Amortization of prior service costs/(credits) | (3) | (3) | |||||||||||||||||||||
| Amortization of unrecognized losses/(gains) | (6) | (5) | |||||||||||||||||||||
| Net postretirement cost/(benefit) | $ | (13) | $ | (13) |
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 three months ended March 29, 2025, we contributed $3 million to our postretirement benefit plans. We plan to make further contributions of approximately $8 million to our postretirement benefit plans during the remainder of 2025. 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 2025. 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 28, 2024 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 | |||||||||||
| March 29, 2025 | December 28, 2024 | ||||||||||
| Commodity contracts | $ | 1,097 | $ | 1,152 | |||||||
| Foreign exchange contracts | 3,461 | 3,067 | |||||||||
| Cross-currency contracts | 7,940 | 7,449 | |||||||||
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):
| March 29, 2025 | |||||||||||||||||||||||||||||||||||
| 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) | $ | — | $ | — | $ | 28 | $ | 13 | $ | 28 | $ | 13 | |||||||||||||||||||||||
| Cross-currency contracts(b) | — | — | 120 | 148 | 120 | 148 | |||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
| Commodity contracts(c) | 27 | 39 | 6 | 18 | 33 | 57 | |||||||||||||||||||||||||||||
| Foreign exchange contracts(a) | — | — | 30 | 4 | 30 | 4 | |||||||||||||||||||||||||||||
| Cross-currency contracts(b) | — | — | 13 | 13 | 13 | 13 | |||||||||||||||||||||||||||||
| Total fair value | $ | 27 | $ | 39 | $ | 197 | $ | 196 | $ | 224 | $ | 235 |
(a) At March 29, 2025, the fair value of our derivative assets was recorded in other current assets ($55 million) and other non-current assets ($3 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($14 million) and other non-current liabilities ($3 million).
(b) At March 29, 2025, the fair value of our derivative assets was recorded in other current assets ($72 million) and other non-current assets ($61 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($31 million) and other non-current liabilities ($130 million).
(c) At March 29, 2025, the fair value of our derivative assets was recorded in other current assets and the fair value of our derivative liabilities was recorded in other current liabilities ($56 million) and non-current liabilities ($1 million).
| December 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) | $ | — | $ | — | $ | 45 | $ | 9 | $ | 45 | $ | 9 | |||||||||||||||||||||||
| Cross-currency contracts(b) | — | — | 137 | 172 | 137 | 172 | |||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
| Commodity contracts(c) | 24 | 37 | 9 | 19 | 33 | 56 | |||||||||||||||||||||||||||||
| Foreign exchange contracts(a) | — | — | 33 | 8 | 33 | 8 | |||||||||||||||||||||||||||||
| Total fair value | $ | 24 | $ | 37 | $ | 224 | $ | 208 | $ | 248 | $ | 245 |
(a) At December 28, 2024, the fair value of our derivative assets was recorded in other current assets ($71 million) and other non-current assets ($7 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($16 million) and other non-current liabilities ($1 million).
(b) At December 28, 2024, the fair value of our derivative assets was recorded in other current assets ($69 million) and other non-current assets ($68 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($34 million) and other non-current liabilities ($138 million).
(c) At December 28, 2024, the fair value of our derivative assets was recorded in other current assets and the fair value of our derivative liabilities was recorded in other current liabilities ($55 million) and other non-current liabilities ($1 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 $99 million at March 29, 2025 and $141 million at December 28, 2024. We had posted collateral related to commodity derivative margin requirements of $21 million at March 29, 2025 and $25 million at December 28, 2024, which were included in prepaid expenses on our condensed consolidated balance sheets.
Level 1 derivative 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 derivative 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 derivative financial assets or liabilities in any period presented.
Our calculation of the fair value of derivative financial instruments takes into consideration the risk of nonperformance, including counterparty credit risk.
Net Investment Hedging:
At March 29, 2025, we had the following items designated as net investment hedges:
-
Non-derivative foreign-currency denominated debt with principal amounts of €1.2 billion; and
-
Cross-currency contracts with notional amounts of C$1.8 billion ($1.3 billion), €2.4 billion ($2.6 billion), JPY9.6 billion ($68 million), and CNY4.0 billion ($554 million).
The components 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.
Cash Flow Hedge Coverage:
At March 29, 2025, we had entered into foreign exchange contracts designated as cash flow hedges for periods not exceeding the next 2 years and into cross-currency contracts designated as cash flow hedges for periods not exceeding the next 4 years.
Fair Value Hedge Coverage:
At March 29, 2025, we had fair value hedges of the foreign currency exposure of both intercompany and external foreign currency denominated loans:
-
Foreign exchange contracts with notional amounts of £400 million ($518 million) and the carrying value of the hedged item of $517 million is included in the long-term debt on the condensed consolidated balance sheets; and
-
Cross-currency contracts with notional amounts of £683 million ($864 million) and MXN4.8 billion ($251 million) and carrying value of intercompany hedged items of $1.1 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 and foreign exchange contracts, which are 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 items.
Deferred Hedging Gains and Losses on Fair Value and Cash Flow Hedges:
Based on our valuation at March 29, 2025 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, foreign exchange fair value 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) during the next 12 months on foreign exchange cash flow hedges to be approximately $15 million and on cross-currency cash flow hedges 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 | ||||||||||||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | |||||||||||||||||||||||||||||||
| Cash flow hedges: | ||||||||||||||||||||||||||||||||
| Foreign exchange contracts | $ | (10) | $ | 19 | Cost of products sold | |||||||||||||||||||||||||||
| Foreign exchange contracts (excluded component) | (1) | (4) | Cost of products sold | |||||||||||||||||||||||||||||
| Foreign exchange contracts | (1) | — | SG&A | |||||||||||||||||||||||||||||
| Foreign exchange contracts | — | 21 | Other expense/(income) | |||||||||||||||||||||||||||||
| Foreign exchange contracts (excluded component) | — | (3) | Other expense/(income) | |||||||||||||||||||||||||||||
| Cross-currency contracts | 43 | (36) | Other expense/(income) | |||||||||||||||||||||||||||||
| Cross-currency contracts | (6) | (8) | Interest expense | |||||||||||||||||||||||||||||
| Net investment hedges: | ||||||||||||||||||||||||||||||||
| Cross-currency contracts | (30) | 74 | Other expense/(income) | |||||||||||||||||||||||||||||
| Cross-currency contracts (excluded component) | 9 | 12 | Interest expense | |||||||||||||||||||||||||||||
| Fair value hedges: | ||||||||||||||||||||||||||||||||
| Foreign exchange contracts (excluded component) | (3) | — | Other expense/(income) | |||||||||||||||||||||||||||||
| Cross-currency contracts (excluded component) | 29 | — | Other expense/(income) | |||||||||||||||||||||||||||||
| Total gains/(losses) recognized in statements of comprehensive income | $ | 30 | $ | 75 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 3,935 | $ | 229 | $ | (51) | $ | 4,168 | $ | 226 | $ | 47 | |||||||||||||||||||||||||||||||||||
| Gains/(losses) related to derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash flow hedges:(a) | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange contracts | $ | 10 | $ | — | $ | — | $ | 3 | $ | — | $ | 21 | |||||||||||||||||||||||||||||||||||
| Foreign exchange contracts (excluded component) | (1) | — | — | (2) | — | — | |||||||||||||||||||||||||||||||||||||||||
| Cross-currency contracts | — | (6) | 74 | — | (8) | (44) | |||||||||||||||||||||||||||||||||||||||||
| Net investment hedges:(a) | |||||||||||||||||||||||||||||||||||||||||||||||
| Cross-currency contracts (excluded component) | — | 9 | — | — | 12 | — | |||||||||||||||||||||||||||||||||||||||||
| Fair Value hedges: | |||||||||||||||||||||||||||||||||||||||||||||||
| Cross-currency contracts | — | — | (34) | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Cross-currency contracts (excluded component)(b) | — | — | 3 | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Hedged items(b) | — | — | 34 | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Gains/(losses) related to derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
| Commodity contracts | (11) | — | — | 9 | — | — | |||||||||||||||||||||||||||||||||||||||||
| Foreign exchange contracts | — | — | 9 | — | — | 8 | |||||||||||||||||||||||||||||||||||||||||
| Interest rates contracts(c) | — | — | — | — | — | (3) | |||||||||||||||||||||||||||||||||||||||||
| Cross-currency contracts | — | — | 1 | — | — | (21) | |||||||||||||||||||||||||||||||||||||||||
| Total gains/(losses) recognized in statements of income | $ | (2) | $ | 3 | $ | 87 | $ | 10 | $ | 4 | $ | (39) |
(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 hedge and 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 $49 million for the three months ended March 29, 2025 and pre-tax gains of $24 million for the three months ended March 30, 2024. These amounts were recognized in other comprehensive income/(loss).
Available-for-sale securities:
We invest in certain marketable fixed-income debt securities that are classified as available-for-sale. Our available-for-sale securities are reported at fair value based on pricing models and quoted market prices adjusted for credit and non-performance risk. Highly liquid investments with maturities of 90 days or less are included in cash and cash equivalents on our condensed consolidated balance sheets. Investments with maturities of greater than 90 days but less than 12 months are presented as marketable securities on our condensed consolidated balance sheets. We did not hold any investments with maturities exceeding 12 months.
We classify our investments in commercial paper and corporate bonds as Level 2 as such investments are valued through consultation and evaluation with brokers in the institutional market using quoted prices and other observable market data.
Unrealized holding gains/(losses) are deferred into accumulated other comprehensive income/(losses) until the security is settled or sold. We evaluate whether losses related to our available-for-sale debt securities are due to credit or non-credit factors, which includes an assessment of the financial condition of the issuer and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. Credit-related losses are recognized through other expense/
(income) in the period incurred, and non-credit related losses are deferred into accumulated other comprehensive income/(losses) until they are sold.
The following table presents our available-for-sale debt securities’ amortized cost basis, fair value and unrealized gains and losses by significant investment category (in millions):
| March 29, 2025 | |||||||||||||||||||||||
| Amortized Cost Basis**(a)** | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||||||
| Debt securities: | |||||||||||||||||||||||
| Corporate bonds | $ | 146 | $ | — | $ | — | $ | 146 | |||||||||||||||
| Commercial paper | 856 | — | (1) | 855 | |||||||||||||||||||
| Total | $ | 1,002 | $ | — | $ | (1) | $ | 1,001 |
(a) Amortized cost basis excludes approximately $1 million of accrued interest.
We purchased approximately $1.2 billion in corporate bonds and commercial paper and received approximately $156 million in proceeds from maturity of corporate bonds and commercial paper for the three months ended March 29, 2025. During the same period, no investments in corporate bonds and commercial paper were sold prior to maturity. We recognized no direct write-off’s or allowances for credit losses in earnings for the three months ended March 29, 2025. Cash flows related to the purchases and sale/maturity of these marketable securities are classified in the condensed consolidated statements of cash flows within investing activities.
The carrying values of our available-for-sale debt securities were included in the following line items in our condensed consolidated balance sheet (in millions):
| March 29, 2025 | |||||
| Cash and cash equivalents | $ | 327 | |||
| Marketable securities | 674 | ||||
| Total | $ | 1,001 |
The contractual maturities of these available-for-sale debt securities are all within one-year as of March 29, 2025. We had no available-for-sale debt securities as of December 28, 2024.
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 | Net Available-for-Sale Debt Securities | Total | ||||||||||||||||||||||||||||||
| Balance as of December 28, 2024 | $ | (2,999) | $ | 29 | $ | 81 | $ | (26) | $ | — | $ | (2,915) | |||||||||||||||||||||||
| Foreign currency translation adjustments | 309 | — | — | — | — | 309 | |||||||||||||||||||||||||||||
| Net deferred gains/(losses) on net investment hedges | (60) | — | — | — | — | (60) | |||||||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of net investment hedges | 7 | — | — | — | — | 7 | |||||||||||||||||||||||||||||
| Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss) | (7) | — | — | — | — | (7) | |||||||||||||||||||||||||||||
| Net deferred gains/(losses) on cash flow hedges | — | — | 20 | — | — | 20 | |||||||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of cash flow hedges | — | — | (1) | — | — | (1) | |||||||||||||||||||||||||||||
| Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss) | — | — | (58) | — | — | (58) | |||||||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of fair value hedges | — | — | — | 19 | — | 19 | |||||||||||||||||||||||||||||
| Net deferred losses/(gains) on fair value hedges reclassified to net income/(loss) | — | — | — | (2) | — | (2) | |||||||||||||||||||||||||||||
| Net deferred gains/(losses) on available-for-sale debt securities | — | — | — | — | (1) | (1) | |||||||||||||||||||||||||||||
| Net postemployment benefit losses/(gains) reclassified to net income/(loss) | — | (4) | — | — | — | (4) | |||||||||||||||||||||||||||||
| Total other comprehensive income/(loss) | 249 | (4) | (39) | 17 | (1) | 222 | |||||||||||||||||||||||||||||
| Balance as of March 29, 2025 | $ | (2,750) | $ | 25 | $ | 42 | $ | (9) | $ | (1) | $ | (2,693) |
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 | |||||||||||||||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||||||||||||||||||||||||||
| Before Tax Amount | Tax | Net of Tax Amount | Before Tax Amount | Tax | Net of Tax Amount | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | $ | 309 | $ | — | $ | 309 | $ | (156) | $ | — | $ | (156) | |||||||||||||||||||||||
| Net deferred gains/(losses) on net investment hedges | (79) | 19 | (60) | 98 | (24) | 74 | |||||||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of net investment hedges | 9 | (2) | 7 | 12 | (2) | 10 | |||||||||||||||||||||||||||||
| Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss) | (9) | 2 | (7) | (12) | 3 | (9) | |||||||||||||||||||||||||||||
| Net deferred gains/(losses) on cash flow hedges | 26 | (6) | 20 | (4) | 12 | 8 | |||||||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of cash flow hedges | (1) | — | (1) | (7) | 5 | (2) | |||||||||||||||||||||||||||||
| Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss) | (77) | 19 | (58) | 33 | (19) | 14 | |||||||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of fair value hedges | 26 | (7) | 19 | — | — | — | |||||||||||||||||||||||||||||
| Net deferred losses/(gains) on fair value hedges reclassified to net income/(loss) | (3) | 1 | (2) | — | — | — | |||||||||||||||||||||||||||||
| Net deferred gains/(losses) on available-for-sale debt securities | (1) | — | (1) | — | — | — | |||||||||||||||||||||||||||||
| Net postemployment benefit losses/(gains) reclassified to net income/(loss) | (5) | 1 | (4) | (5) | 1 | (4) |
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 | ||||||||||||||||||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | |||||||||||||||||||||||||||||||||||||
| Losses/(gains) on net investment hedges: | ||||||||||||||||||||||||||||||||||||||
| Cross-currency contracts(a) | $ | (9) | $ | (12) | Interest expense | |||||||||||||||||||||||||||||||||
| Losses/(gains) on cash flow hedges: | ||||||||||||||||||||||||||||||||||||||
| Foreign exchange contracts(b) | (9) | (1) | Cost of products sold | |||||||||||||||||||||||||||||||||||
| Foreign exchange contracts(b) | — | (21) | Other expense/(income) | |||||||||||||||||||||||||||||||||||
| Cross-currency contracts(b) | (74) | 44 | Other expense/(income) | |||||||||||||||||||||||||||||||||||
| Cross-currency contracts(b) | 6 | 8 | Interest expense | |||||||||||||||||||||||||||||||||||
| Interest rate contracts(c) | — | 3 | Other expense/(income) | |||||||||||||||||||||||||||||||||||
| Losses/(gains) on fair value hedges: | ||||||||||||||||||||||||||||||||||||||
| Cross-currency contracts(d) | (3) | — | Other expense/(income) | |||||||||||||||||||||||||||||||||||
| Losses/(gains) on hedges before income taxes | (89) | 21 | ||||||||||||||||||||||||||||||||||||
| Losses/(gains) on hedges, income taxes | 22 | (16) | ||||||||||||||||||||||||||||||||||||
| Losses/(gains) on hedges | $ | (67) | $ | 5 | ||||||||||||||||||||||||||||||||||
| Losses/(gains) on postemployment benefits: | ||||||||||||||||||||||||||||||||||||||
| Amortization of unrecognized losses/(gains)(e) | $ | (3) | $ | (2) | ||||||||||||||||||||||||||||||||||
| Amortization of prior service costs/(credits)(e) | (2) | (3) | ||||||||||||||||||||||||||||||||||||
| Losses/(gains) on postemployment benefits before income taxes | (5) | (5) | ||||||||||||||||||||||||||||||||||||
| Losses/(gains) on postemployment benefits, income taxes | 1 | 1 | ||||||||||||||||||||||||||||||||||||
| Losses/(gains) on postemployment benefits | $ | (4) | $ | (4) |
(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) Represents amortization of the excluded component.
(e) 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
Trade Payables Programs:
We 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 or other forms of guarantees in connection with our trade payable programs. Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. Our current payment terms with our suppliers, which we deem to be commercially reasonable, generally range from 0 to 250 days. 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. The amounts confirmed outstanding under these programs were $743 million at March 29, 2025 and $745 million at December 28, 2024. 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 affiliates (the “3G Entities”) were 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.
Since September 2021, the Company has been involved in an administrative proceeding with the environmental authority from the State of Goiás (“SEMAD”) regarding alleged pollution in the Capivara stream related to a Company facility in Brazil. In March 2025, SEMAD issued a first instance administrative decision maintaining the initial infraction notice. Given that there are several available levels of appeal from this decision, we cannot predict with certainty the resolution of this matter, however we do not expect that the ultimate costs to resolve 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:
See Note 16, Debt, to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 28, 2024 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 March 29, 2025.
Debt Issuances:
2025 Debt Issuance
In the first quarter of 2025, KHFC, our 100% owned operating subsidiary, issued 600 million euro aggregate principal amount of 3.250% senior notes due March 2033, $500 million aggregate principal amount of 5.200% senior notes due March 2032, and $500 million aggregate principal amount of 5.400% senior notes due March 2035 (collectively, the “2025 Notes”). The 2025 Notes are fully and unconditionally guaranteed by The Kraft Heinz Company as to payment of principal, premium, and interest on a senior unsecured basis.
2024 Debt Issuance
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.
Debt Issuance Costs:
Debt issuance costs related to the 2025 Notes were insignificant.
Fair Value of Debt:
At March 29, 2025, the aggregate fair value of our total debt was $20.6 billion as compared with a carrying value of $21.6 billion. At December 28, 2024, the aggregate fair value of our total debt was $18.7 billion as compared with a carrying value of $19.9 billion. Our short-term debt had a carrying value that approximated its fair value at March 29, 2025 and December 28, 2024. 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:
In June 2023, we entered into a non-cancellable synthetic lease for a distribution facility, for which we are the construction agent, for which we now anticipate the estimated construction cost to be approximately $625 million. The lease will commence upon completion of construction of the facility which is now expected to be in the later part of 2027. The term of the lease is five years after commencement. At the end of the lease term, we will be required to either purchase the facility or, in the event that option is not elected, to remarket the facility. Upon lease commencement, the lease classification, right-of-use asset, and lease liability will be determined and recorded. The lease arrangement contains a residual value guarantee of 100% of the total construction cost. The construction agreement and lease contain covenants that are consistent with our Senior Credit Facility.
Note 15. Earnings Per Share
Our earnings per common share (“EPS”) were:
| For the Three Months Ended | |||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||||||||||||||
| (in millions, except per share data) | |||||||||||||||||||||||
| Basic Earnings Per Common Share: | |||||||||||||||||||||||
| Net income/(loss) attributable to common shareholders | $ | 712 | $ | 801 | |||||||||||||||||||
| Weighted average shares of common stock outstanding | 1,194 | 1,214 | |||||||||||||||||||||
| Net earnings/(loss) | $ | 0.60 | $ | 0.66 | |||||||||||||||||||
| Diluted Earnings Per Common Share: | |||||||||||||||||||||||
| Net income/(loss) attributable to common shareholders | $ | 712 | $ | 801 | |||||||||||||||||||
| Weighted average shares of common stock outstanding | 1,194 | 1,214 | |||||||||||||||||||||
| Effect of dilutive equity awards | 4 | 9 | |||||||||||||||||||||
| Weighted average shares of common stock outstanding, including dilutive effect | 1,198 | 1,223 | |||||||||||||||||||||
| Net earnings/(loss) | $ | 0.59 | $ | 0.66 |
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 6 million for the three months ended March 29, 2025 and 6 million for the three months ended March 30, 2024.
Note 16. Segment Reporting
We manage our operating results through four operating segments: North America, Europe and Pacific Developed Markets (“EPDM” or “International Developed Markets”), West and East Emerging Markets (“WEEM”), and Asia Emerging Markets (“AEM”). 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.
Our chief operating decision maker (“CODM”), Carlos Abrams-Rivera, Chief Executive Officer, evaluates segment performance based on several factors, including net sales and Segment Adjusted Operating Income. 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. 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 considers monthly budget-to-actual variances and year-over-year performance of Segment Adjusted Operating Income when making decisions about allocating resources to our segments. Our CODM does not use assets by segment to evaluate performance or allocate resources. Therefore, we do not disclose assets by segment.
Emerging Markets represents the aggregation of our WEEM and AEM operating segments. Segment 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.
Net sales by segment were (in millions):
| For the Three Months Ended | |||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||||||||||||||
| Net sales: | |||||||||||||||||||||||
| North America | $ | 4,488 | $ | 4,828 | |||||||||||||||||||
| International Developed Markets | 817 | 855 | |||||||||||||||||||||
| Total segment net sales | 5,305 | 5,683 | |||||||||||||||||||||
| Emerging Markets net sales | 694 | 728 | |||||||||||||||||||||
| Total net sales | $ | 5,999 | $ | 6,411 |
Segment Adjusted Operating Income was (in millions):
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||||||||||||||||||||||||||
| North America | International Developed Markets | Total | North America | International Developed Markets | Total | ||||||||||||||||||||||||||||||
| Net Sales | $ | 4,488 | $ | 817 | $ | 4,828 | $ | 855 | |||||||||||||||||||||||||||
| Adjusted Cost of Products Sold(a) | 2,871 | 568 | 3,076 | 587 | |||||||||||||||||||||||||||||||
| Other segment items(b) | 516 | 122 | 537 | 132 | |||||||||||||||||||||||||||||||
| Segment Adjusted Operating Income | $ | 1,101 | $ | 127 | $ | 1,228 | $ | 1,215 | $ | 136 | $ | 1,351 | |||||||||||||||||||||||
| Emerging Markets | 99 | 82 | |||||||||||||||||||||||||||||||||
| General corporate expenses | (128) | (168) | |||||||||||||||||||||||||||||||||
| Restructuring activities | (4) | 3 | |||||||||||||||||||||||||||||||||
| Unrealized gains/(losses) on commodity hedges | 1 | 34 | |||||||||||||||||||||||||||||||||
| Operating income/(loss) | 1,196 | 1,302 | |||||||||||||||||||||||||||||||||
| Interest expense | 229 | 226 | |||||||||||||||||||||||||||||||||
| Other expense/(income) | (51) | 47 | |||||||||||||||||||||||||||||||||
| Income/(loss) before income taxes | $ | 1,018 | $ | 1,029 |
(a) Adjusted Cost of Products Sold is defined as cost of products sold 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.
(b) Other segment items for North America and International Developed Markets includes SG&A, primarily for marketing and advertising expenses, employee compensation-related expenses, amortization of definite-lived intangible assets, and research and development costs.
Total depreciation and amortization expense by segment was (in millions):
| March 29, 2025 | March 30, 2024 | ||||||||||
| Depreciation and amortization expense: | |||||||||||
| North America | $ | 155 | $ | 146 | |||||||
| International Developed Markets | 36 | 40 | |||||||||
| Total segment depreciation and amortization expense | 191 | 186 | |||||||||
| Emerging Markets | 28 | 27 | |||||||||
| General corporate expenses | 12 | 17 | |||||||||
| Total depreciation and amortization expense | $ | 231 | $ | 230 |
Total capital expenditures by segment were (in millions):
| March 29, 2025 | March 30, 2024 | ||||||||||
| Capital expenditures: | |||||||||||
| North America | $ | 139 | $ | 177 | |||||||
| International Developed Markets | 45 | 64 | |||||||||
| Total segment capital expenditures | 184 | 241 | |||||||||
| Emerging Markets | 26 | 34 | |||||||||
| General corporate expenses | 28 | 19 | |||||||||
| Total capital expenditures | $ | 238 | $ | 294 |
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.
Net sales by platform were (in millions):
| For the Three Months Ended | |||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||||||||||||||
| ACCELERATE | |||||||||||||||||||||||
| Taste Elevation | $ | 2,669 | $ | 2,803 | |||||||||||||||||||
| Easy Ready Meals | 1,018 | 1,116 | |||||||||||||||||||||
| Substantial Snacking | 395 | 443 | |||||||||||||||||||||
| Total Accelerate | 4,082 | 4,362 | |||||||||||||||||||||
| PROTECT | |||||||||||||||||||||||
| Desserts | 223 | 241 | |||||||||||||||||||||
| Hydration | 502 | 534 | |||||||||||||||||||||
| Total Protect | 725 | 775 | |||||||||||||||||||||
| BALANCE | |||||||||||||||||||||||
| Cheese | 400 | 413 | |||||||||||||||||||||
| Coffee | 220 | 221 | |||||||||||||||||||||
| Meats | 473 | 511 | |||||||||||||||||||||
| Other | 99 | 129 | |||||||||||||||||||||
| Total Balance | 1,192 | 1,274 | |||||||||||||||||||||
| Total net sales | $ | 5,999 | $ | 6,411 |
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 | |||||||||||||||||||||||
| March 29, 2025 | March 30, 2024 | ||||||||||||||||||||||
| Amortization of postemployment benefit plans prior service costs/(credits) | $ | (2) | $ | (3) | |||||||||||||||||||
| Net pension and postretirement non-service cost/(benefit)(a) | (31) | (30) | |||||||||||||||||||||
| Loss/(gain) on sale of business | — | 80 | |||||||||||||||||||||
| Interest income | (23) | (16) | |||||||||||||||||||||
| Foreign exchange losses/(gains) | 58 | (27) | |||||||||||||||||||||
| Derivative losses/(gains) | (53) | 39 | |||||||||||||||||||||
| Other miscellaneous expense/(income) | — | 4 | |||||||||||||||||||||
| Other expense/(income) | $ | (51) | $ | 47 |
(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 $51 million of income for the three months ended March 29, 2025 compared to $47 million of expense for the three months ended March 30, 2024. This change was primarily driven by a $53 million net gain on derivative activities in the first quarter of 2025 compared to a $39 million net loss on derivative activities in the first quarter of 2024, no net loss/(gain) on the sale of business in the first quarter of 2025 compared to an $80 million net loss on the sale of business in the first quarter of 2024, $23 million in interest income in the first quarter of 2025 compared to $16 million in interest income in the first quarter of 2024, no other miscellaneous expense/(income) in the first quarter of 2025 compared to $4 million of expense in other miscellaneous expenses in the first quarter of 2024, and a $31 million net pension and postretirement non-service benefit in the first quarter of 2025 compared to a $30 million net pension and postretirement non-service benefit in the first quarter of 2024. These positive impacts on other expense/(income) were partially offset by a $58 million net foreign exchange loss in the first quarter of 2025 compared to a $27 million net foreign exchange gain in the first quarter of 2024.
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