10-K – 2026-02-12 – khc-20251227.htm

we are paid in a different currency. As a result, factors associated with our international operations, including changes in foreign currency exchange rates, could significantly affect our results of operations and financial condition.
Commodity, energy, and other input prices are volatile and could negatively affect our consolidated operating results.
We purchase and use large quantities of commodities, including dairy products, meat products, sugar and other sweeteners, coffee, tomato products, soybean and vegetable oils, eggs, other fruits and vegetables, and wheat and processed grains to manufacture our products. In addition, we purchase and use significant quantities of plastics, resin, cardboard, glass, paper and metal to package our products, and we use other inputs, such as electricity, natural gas, and water, to operate our facilities. We are also exposed to changes in oil prices, including diesel fuel, which influence both our packaging and transportation costs. Prices for commodities, energy, and other supplies are volatile and can fluctuate due to conditions that are difficult to predict, particularly due to inflationary pressures, due in part to changes in governmental regulation, including the recent tariff and trade policy actions taken by the United States and foreign governments. Further, we have experienced, and may continue to experience, input cost volatility due global competition for resources, foreign currency fluctuations, geopolitical conditions or conflicts, cybersecurity incidents, severe weather, natural disasters, global climate change, water risk, pandemics, crop failures, crop shortages due to plant disease or insect and other pest infestation, changes in consumer demand, alternative energy initiatives, including increased demand for biofuels, and agricultural programs. Additionally, we may be unable to maintain favorable arrangements with respect to the costs of procuring raw materials, packaging, services, and transporting products, which could result in increased expenses and negatively affect our operations. Furthermore, the cost of raw materials and finished products may fluctuate due to changes in cross-currency transaction rates. Rising commodity, energy, and other input costs could materially and adversely affect our cost of operations, including the manufacture, transportation, and distribution of our products, which could materially and adversely affect our financial condition and operating results.
Although we monitor our exposure to commodity and other input prices as an integral part of our overall risk management program, and seek to hedge against input price increases to the extent we deem appropriate, we do not fully hedge against changes in commodity prices, and our hedging strategies may not protect us from increases in specific raw materials costs. For example, hedging our costs for one of our key commodities, dairy products, is difficult because dairy futures markets are not as liquid as many other commodities futures markets. Continued volatility or sustained increases in the prices of commodities and other supplies we purchase could increase the costs of our products, and our profitability could suffer. Moreover, increases in the prices of our products to cover these increased costs may result in lower sales volumes, or we may be constrained from increasing the prices of our products by competitive and consumer pressures. If we are not successful in our hedging activities, or if we are unable to price our products to cover increased costs, then commodity and other input price volatility or increases could materially and adversely affect our financial condition and operating results.
In 2025, we experienced increased inflationary pressures in our supply chain costs compared to the prior year period, due in part to the tariff and trade policy actions taken by the United States and foreign governments during the year. We expect these inflationary trends to moderate through 2026, although there continues to be significant uncertainty. Although we take measures to mitigate the impact of this inflation through pricing actions and efficiency initiatives, if these measures are not effective our financial condition, operating results, and cash flows could be materially adversely affected. Even if such measures are effective, we expect that there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost inflation is incurred. Additionally, the pricing actions we take have, in some instances, negatively impacted and could continue to negatively impact our market share.
Volatility in the market value of all or a portion of the derivatives we use to manage exposures to fluctuations in commodity prices may cause volatility in our gross profit and net income.
We use commodity futures, options, and swaps to economically hedge the price of certain input costs, including dairy products, vegetable oils, coffee beans, corn, wheat products, sugar cane and meat products. We recognize gains and losses based on changes in the values of these commodity derivatives. We recognize these gains and losses in cost of products sold in our consolidated statements of income. We recognize the unrealized gains and losses on these commodity derivatives in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results. Accordingly, changes in the values of our commodity derivatives may cause volatility in our gross profit and net income.
Regulatory Risks
Our compliance with laws and regulations, and related legal claims or regulatory enforcement actions, could expose us to significant liabilities and damage our reputation.
As a large, global food and beverage company, we operate in a highly regulated environment with constantly evolving legal and regulatory frameworks. Various laws and regulations govern our practices including, but not limited to, those related to advertising and marketing, product claims and labeling, food production and nutritional requirements, environmental matters (including climate change), packaging and waste management (including packaging containing PFAS), intellectual property,
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consumer protection and product liability, commercial disputes, trade and export controls, anti-trust, data privacy, labor and employment, workplace health and safety, forced labor, and tax. As a consequence, we face a heightened risk of legal claims and regulatory enforcement actions in the ordinary course of business. In addition, the imposition of new laws, changes in laws or regulatory requirements or changing interpretations thereof, and differing or competing regulations and standards across the markets where our products are made, manufactured, distributed, and sold have in the past and could continue to result in higher compliance costs, capital expenditures, and higher production costs, adversely impacting our product sales, financial condition, and results of operations. In addition, claims about the health impacts of consumption of our products, or ingredients, additives, preservatives, components, or substances present or allegedly present in those products or packaging, including in connection with the development, manufacture, and marketing of our products, have resulted in, and could in the future result in, us being subject to regulations, fines, lawsuits (including but not limited to pending litigation alleging that certain of our products are “ultra-processed” and consuming them causes adverse health impacts, allegations with which we strongly disagree), or taxes, or may cause us to change the way in which we operate which could adversely impact our profitability, financial condition, or operating results.
As a result of any such legal claims or regulatory enforcement actions, we could be subject to monetary judgments, settlements, and civil and criminal actions, including fines, injunctions, product recalls, penalties, disgorgement of profits, or activity restrictions, which could materially and adversely affect our reputation, product sales, financial condition, results of operations, and cash flows. We evaluate these legal claims and regulatory enforcement actions to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we establish reserves and disclose relevant material litigation claims, legal proceedings, or regulatory enforcement actions as appropriate and in accordance with SEC rules and accounting principles generally accepted in the United States of America (“U.S. GAAP”). Our assessments and estimates are based on the information available to management at the time and involve a significant amount of judgment. Actual outcomes or losses may differ materially from our current assessments and estimates. In addition, even if a claim is unsuccessful, without merit, or not pursued to completion, the cost of defending against or responding to such a claim, including expenses and management time, could adversely affect our financial condition and operating results.
If we fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, which could negatively impact our business, investor confidence, and the price of our common stock.
If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process, and report financial information accurately and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation, investigations, or penalties; negatively affect our liquidity, our access to capital markets, perceptions of our creditworthiness, our ability to complete acquisitions, our ability to maintain compliance with covenants under our debt instruments or derivative arrangements regarding the timely filing of periodic reports, or investor confidence in our financial reporting; or cause defaults, accelerations, or cross-accelerations under our debt instruments or derivative arrangements to the extent we are unable to obtain waivers from the required creditors or counterparties or to cure any breaches, any of which may require management resources or cause our stock price to decline.
A downgrade in our credit rating could adversely impact interest costs or access to future borrowings.
Our borrowing costs can be affected by short and long-term credit ratings assigned by rating organizations. A decrease in these credit ratings could limit our access to capital markets and increase our borrowing costs, which could materially and adversely affect our financial condition and operating results. As of the date of this filing, our long-term debt is rated BBB with a stable outlook from S&P Global Ratings, BBB with a rating watch negative outlook from Fitch Ratings, and Baa2 with ratings under review for downgrade from Moody’s Investor Services, Inc.
Registered Securities Risks
Sales of our common stock in the public market could cause volatility in the price of our common stock or cause the share price to fall.
Sales of a substantial number of shares of our common stock in the public market, including sales of our common stock by Berkshire Hathaway, or the perception that these sales might occur, could depress the market price of our common stock, and could impair our ability to raise capital through the sale of additional equity securities. A sustained depression in the market price of our common stock has happened and could in the future happen, which could also reduce our market capitalization below the book value of net assets, which could increase the likelihood of recognizing goodwill or indefinite-lived intangible asset impairment losses that could negatively affect our financial condition and results of operations.
Kraft Heinz and Berkshire Hathaway are party to a registration rights agreement requiring us to register for resale under the Securities Act all registrable shares held by Berkshire Hathaway, which represents all shares of our common stock held by Berkshire Hathaway as of the date of the closing of the 2015 Merger. As of January 16, 2026, registrable shares represented approximately 27.5% of all outstanding shares of our common stock. Although the registrable shares are subject to certain
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holdback and suspension periods, the registrable shares are not subject to a “lock-up” or similar restriction under the registration rights agreement. Accordingly, offers and sales of a large number of registrable shares may be made pursuant to an effective registration statement under the Securities Act in accordance with the terms of the registration rights agreement. Pursuant to the registration rights agreement, on January 20, 2026, we filed a prospectus supplement with the SEC to register for resale up to 325,442,152 shares of our common stock held by Berkshire Hathaway. The filing of the prospectus supplement was made solely to register these shares for resale, does not itself constitute a sale of any shares, and does not necessarily mean that Berkshire Hathaway will sell any or all of the registered shares. If any of these registered shares are sold, we will not receive any proceeds from those sales. Because the registered shares represent a significant portion of the outstanding shares of our common stock, any future sales by Berkshire Hathaway could materially increase the number of shares being traded in the public market and may materially increase the volatility of, and cause a decrease in, the price of our common stock. In addition, the filing of the prospectus supplement and the perception of future sales by Berkshire Hathaway have already contributed to increased volatility of our common stock and could continue to affect the volatility of our common stock in the future.
Our share repurchase program may not be fully consummated and the anticipated enhanced long-term stockholder value may not be realized, and share repurchases could increase the volatility of the price of our stock.
In November 2023, the Board authorized the Company to repurchase up to $3.0 billion, exclusive of fees, of our outstanding common stock through December 26, 2026. As of December 27, 2025, we had remaining authorization under the share repurchase program of approximately $1.5 billion. Our repurchase program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares. The timing and amount of any repurchases, if any, will depend on factors such as our historical and expected business performance and cash and liquidity positions, the price of our stock, economic and market conditions, and corporate and regulatory requirements. Our share repurchase program could affect the price of our stock and increase volatility and may be suspended or terminated at any time. We cannot guarantee that we will repurchase shares or conduct future share repurchase programs, or that any such programs, even if fully implemented, will result in long-term increases to stockholder value. Any failure to fully implement our repurchase program may negatively impact our reputation, investor confidence, and the price of the Company’s common stock.
Our ability to pay regular dividends to our stockholders and the amounts of any such dividends are subject to the discretion of the Board and may be limited by our financial condition, debt agreements, or limitations under Delaware law.
Although it is currently anticipated that we will continue to pay regular quarterly dividends, any such determination to pay dividends and the amounts thereof will be at the discretion of the Board and will be dependent on then-existing conditions, including our financial condition, income, legal requirements, including limitations under Delaware law, debt agreements, and other factors the Board deems relevant. The Board has previously decided, and may in the future decide, in its sole discretion, to change the amount or frequency of dividends or discontinue the payment of dividends entirely. For these reasons, stockholders will not be able to rely on dividends to receive a return on investment. Accordingly, realization of any gain on shares of our common stock may depend on the appreciation of the price of our common stock, which may not occur.
General Risk Factors
Disruptions in the global economy caused by geopolitical conflicts could adversely affect our business, financial condition, and results of operations.
Escalation of geopolitical tensions related to military conflict, including increased trade barriers or restrictions on global trade, could result in, among other things, supply chain disruptions, changes in consumer demand, increased cyberattacks, and impacts on foreign exchange rates and financial markets, any of which may adversely affect our business, financial condition, and results of operations. Although we do not have operations in Ukraine, and our business in Russia generated approximately 1% of our consolidated net sales for the year ended December 27, 2025, the military conflict between Russia and Ukraine has caused, and could continue to cause, negative impacts on our business and the global economy. Governments in the United States, Canada, United Kingdom, and European Union have each imposed export controls and economic sanctions on certain industry sectors and parties in Russia. Further, the Russian government has placed restrictions on the transfer of funds to and from Russian entities, making it more difficult to operate in Russia and to repatriate cash to other jurisdictions from our Russian business, which had a cash and cash equivalents balance equal to approximately $140 million as of December 27, 2025. Failure to comply with applicable sanctions and measures could subject us to regulatory penalties, temporary or permanent loss of assets, or our ability to conduct business operations in Russia. While less than 1% of consolidated total assets are located in Russia as of December 27, 2025, our Russian assets may be partially or fully impaired in future periods, or our business operations terminated, based on actions taken by Russia, other parties, or us. The effects of current geopolitical conflicts as well as potential future geopolitical tensions, could heighten many of our known risks described in this Item 1A, Risk Factors .
Unanticipated business disruptions and natural events in the locations in which we or our customers, suppliers, distributors,
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or regulators operate could adversely affect our ability to provide products to our customers or our results of operations.
We have a complex network of suppliers, owned and leased manufacturing locations, co-manufacturing locations, distribution networks, and information systems that support our ability to consistently provide our products to our customers. Factors that are hard to predict or beyond our control, such as weather or other geological events or natural disasters, including hurricanes, earthquakes, floods, tsunamis, or wild fires (whether as a result of climate change or otherwise), raw material shortages, fires or explosions, political unrest, geopolitical conflicts, terrorism, civil strife, acts of war, public corruption, expropriation, generalized labor unrest or labor shortages, cybersecurity incidents, or pandemics, could damage or disrupt our operations or the operations of our customers, suppliers, vendors, co-manufacturers, distributors, or regulators. These factors include, but are not limited to:
• natural disasters, labor strikes, or other disruptions at any of our facilities or our suppliers’ or distributors’ facilities may impair or delay the delivery of our products; and
• illness of our workforce, or the workforce of third parties with which we do business, due to influenza or pandemics, could disrupt production of our products in one or more of our manufacturing facilities, or cause our suppliers, vendors, distributors, or third-party manufacturers to fail to meet their obligations to us.
These or other disruptions may require additional resources to restore our supply chain or distribution network. While we insure against many of these events and certain business interruption risks and have policies and procedures to manage business continuity planning, such insurance may not compensate us for any losses incurred and our business continuity plans may not effectively resolve the issues in a timely manner. To the extent we are unable to respond to disruptions in our operations, whether by finding alternative suppliers or replacing capacity at key manufacturing or distribution locations; to quickly repair damage to our information, production, or supply systems; or to financially mitigate the likelihood or potential impact of such events, or effectively manage them if they occur, we may be late in delivering, or unable to deliver, products to our customers or to track orders, inventory, receivables, and payables. If that occurs, our customers’ confidence in us and long-term demand for our products could decline. Any of these events could materially and adversely affect our product sales, financial condition, and results of operations.
Our performance may be adversely affected by economic and political conditions in the United States and in various other nations where we do business.
Our performance has been in the past and may continue in the future to be impacted by economic and political conditions in the United States and in other nations where we do business. Economic and financial uncertainties in our international markets, changes to major international trade arrangements, and the imposition of increased or new tariffs by the U.S. federal government, as well as retaliatory tariffs by certain foreign governments have negatively impacted, and could continue to negatively impact our operations and sales. Other factors impacting our operations in the United States and in international locations where we do business include changes in laws, export and import restrictions, foreign currency exchange rates, foreign currency devaluation, cash repatriation restrictions, recessionary conditions, governmental subsidies provided to our consumers such as the Supplemental Nutrition Assistance Program (“SNAP”) in the U.S., foreign ownership restrictions, nationalization, the impact of hyperinflationary environments, a potential U.S. federal government shutdown, terrorist acts, political unrest, and military conflict. Such factors in either domestic or foreign jurisdictions, and our responses to them, could materially and adversely affect our product sales, financial condition, and operating results.
We rely on our management team and other key personnel and may be unable to hire or retain key personnel or a highly skilled and diverse global workforce.
We depend on the skills, working relationships, and continued services of key personnel, including our experienced management team. In addition, our ability to achieve our operating goals depends on our ability to identify, hire, train, and retain qualified individuals. We compete with other companies both within and outside of our industry for talented personnel, and we may lose key personnel or fail to attract, train, and retain other talented personnel and a diverse global workforce with the skills and in the locations we need to operate and grow our business. Unplanned turnover, failure to attract and develop personnel with key emerging capabilities or failure to develop adequate succession plans for leadership positions, including the Chief Executive Officer position, could deplete our institutional knowledge base and erode our competitiveness. Additionally, the Separation, including any failure to adequately address the plans for leadership positions for the two independent companies post-Separation, may cause us to experience increased difficulties in attracting, retaining, and motivating employees during the pendency of the Separation and following completion of the Separation, and harm our businesses. Further, equity-based compensation is a key component of our compensation program and essential for attracting and retaining qualified personnel. As a result, the lack of positive performance in our stock price may adversely affect our ability to attract or retain key personnel. Changes in immigration laws and policies could also make it more difficult for us to recruit or relocate skilled employees. Any such loss, failure, or limitation could adversely affect our product sales, financial condition, and operating results.
We are significantly dependent on information technology, and we may be unable to protect our information systems against
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service interruption, misappropriation of data, or breaches of security.
We rely on information technology networks and systems, including the Internet, to process, transmit, and store electronic and financial information, to manage a variety of business processes and activities, and to comply with regulatory, legal, and tax requirements. We also depend on our information technology infrastructure for digital marketing activities and for electronic communications among our locations, personnel, customers, and suppliers. These information technology systems, some of which are managed by third parties, may be susceptible to damage, invasions, disruptions, or shutdowns due to hardware failures, computer viruses, hacker attacks and other cybersecurity risks, telecommunication failures, user errors, catastrophic events, or other factors. Geopolitical tensions or conflicts, and the rapid evolution and increased adoption of artificial intelligence technologies may further heighten the risk of cybersecurity attacks. If our information technology systems suffer severe damage, disruption, or shutdown, by unintentional or malicious actions of employees or contractors or by cyberattacks, and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience business disruptions, reputational damage, transaction errors, processing inefficiencies, the leakage of confidential information, and the loss of customers and sales, causing our product sales, financial condition, and operating results to be adversely affected and the reporting of our financial results to be delayed. While we have developed and implemented security measures and internal controls designed to protect against cyber and other security threats, such measures cannot provide absolute security and may not be successful in preventing future security breaches. Moreover, these threats are constantly evolving, thereby making it more difficult to successfully defend against them or to implement adequate preventative measures. We may not have the current capability to detect certain vulnerabilities, which may allow those vulnerabilities to persist in our systems over long periods of time. Additionally, it may take considerable time for us to investigate and evaluate the full impact of incidents, particularly for sophisticated attacks. These factors may inhibit our ability to provide prompt, full, and reliable information about the incident to our customers, partners, regulators, and the public. In the past, we have experienced security incidents resulting from unauthorized access to or use of our systems or those of third parties, which to date, have not had a material impact on our operations; however, there is no assurance that the impact of any security incidents will not be material in the future.
In addition, if we are unable to prevent security breaches or disclosure of non-public information, we may suffer financial and reputational damage, litigation or remediation costs, fines, or penalties because of the unauthorized disclosure of confidential information belonging to us or to our partners, customers, consumers, or suppliers. While we maintain a cyber insurance policy that provides coverage for security incidents, we cannot be certain that our coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on financially reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
Misuse, leakage, or falsification of information could result in violations of data privacy laws and regulations, damage to our reputation and credibility, loss of opportunities to acquire or divest of businesses or brands, and loss of our ability to commercialize products developed through research and development efforts and, therefore, could have a negative impact on net sales. In addition, we may suffer financial and reputational damage because of lost or misappropriated confidential information belonging to us, our current or former employees, or to our suppliers or consumers, and may become subject to legal action and increased regulatory oversight. We could also be required to spend significant financial and other resources to remedy the damage caused by a security breach or to repair or replace networks and information systems.
We are also subject to various laws and regulations that are continuously evolving and developing regarding privacy, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data. Such laws and regulations, as well as their interpretation and application, may vary from jurisdiction to jurisdiction, which can result in inconsistent or conflicting requirements. The European Union’s General Data Protection Regulation (“GDPR”), and similar regulations implemented in other non-U.S. geographies, adds a broad array of requirements with respect to personal data, including the public disclosure of significant data breaches, and imposes substantial penalties for non-compliance. The California Consumer Privacy Act (“CCPA”) and the California Privacy Rights Act (“CPRA”), which amended the CCPA, among other things, impose additional requirements with respect to disclosure and deletion of personal information of California residents. The CCPA and CPRA provide civil penalties for violations, as well as a private right of action for data breaches. Similar legislation in other states imposes transparency and other obligations with respect to personal data of their respective residents and provide residents with similar rights. GDPR, CCPA, CPRA, and other privacy and data protection laws may increase our costs of compliance and risks of non-compliance, which could result in substantial penalties.
Our results could be adversely impacted as a result of increased pension, labor, and people-related expenses.
Inflationary pressures, shortages in the labor market, increased employee turnover, and changes in the availability of our workers could increase labor costs, which could have a material adverse effect on our consolidated operating results or financial condition. Our labor costs include the cost of providing employee benefits in the United States, Canada, and other foreign jurisdictions, including pension, health and welfare, and severance benefits. Any declines in market returns could adversely impact the funding of pension plans, the assets of which are invested in a diversified portfolio of equity and fixed-income
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securities and other investments. Additionally, the annual costs of benefits vary with increased costs of health care and the outcome of collectively bargained wage and benefit agreements.
Furthermore, we may be subject to increased costs or experience adverse effects to our operating results if we are unable to renew collectively bargained agreements on satisfactory terms. Our financial condition and ability to meet the needs of our customers could be materially and adversely affected if strikes or work stoppages or interruptions occur as a result of delayed negotiations with union-represented employees both in and outside of the United States.
Employee turnover, changes in the availability of our workers, and labor shortages in our supply chain have resulted in, and could continue to result in, increased costs and have, and could again, impact our ability to meet consumer demand, both of which could negatively affect our financial condition, results of operations, or cash flows.
Changes in tax laws and interpretations could adversely affect our business.

We are subject to income and other taxes in the United States and in numerous foreign jurisdictions. Our domestic and foreign tax liabilities are dependent on the jurisdictions in which profits are determined to be earned and taxed. Additionally, the amount of taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we operate. A number of factors influence our effective tax rate, including changes in tax laws and treaties as well as the interpretation of existing laws and rules. Federal, state, and local governments and administrative bodies within the United States, which represents the majority of our operations, and other foreign jurisdictions have implemented, or are considering, a variety of broad tax, trade, and other regulatory reforms that may impact us.
Significant judgment, knowledge, and experience are required in determining our worldwide provision for income taxes. Our future effective tax rate is impacted by a number of factors including changes in the valuation of our deferred tax assets and liabilities, changes in geographic mix of income, changes in expenses not deductible for tax, including impairment of goodwill, and changes in available tax credits. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. We are also regularly subject to audits by tax authorities. Although we believe our tax estimates are reasonable, the final determination of tax audits, including transfer pricing matters, and any related litigation could be materially different from our historical income tax provisions and accruals. For example, we are currently under examination for income taxes by the Internal Revenue Service (“IRS”) for the years 2018 through 2022. In 2023, we received two Notices of Proposed Adjustment (the “NOPAs”) relating to transfer pricing with our foreign subsidiaries for the years 2018 and 2019. 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. In 2025, we received two NOPAs for the years 2020 through 2022 that could result in additional U.S. federal income tax expense and liability of approximately $200 million for 2020, $210 million for 2021, and $200 million for 2022, excluding interest and assert penalties of approximately $85 million for each of the years of 2020, 2021, and 2022. 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; however, the ultimate outcome of this matter is uncertain, and if we are required to pay the IRS additional U.S. taxes, interest, and potential penalties, our results of operations and cash flows could be materially affected. We continue to maintain the same operating model and transfer pricing methodology with our foreign subsidiaries that was in place for the years 2018 through 2022. Economic and political pressures to increase tax revenue in various jurisdictions may make resolving tax disputes more difficult. The results of an audit or litigation could adversely affect our financial statements in the period or periods for which that determination is made.
Volatility of capital markets or macroeconomic factors could adversely affect our business.
Changes in financial and capital markets, including market disruptions, instability in financial institutions, limited liquidity, and interest rate volatility, may increase the cost of financing as well as the risks of refinancing maturing debt. Additionally, some of our customers, suppliers, and counterparties are highly leveraged. Consolidations in some of the industries in which our customers operate have created larger customers, some of which are highly leveraged and facing increased competition and continued credit market volatility. These factors have caused some customers to be less profitable, increasing our exposure to credit risk. A significant adverse change in the financial and/or credit position of a customer, supplier, or counterparty could require us to assume greater credit risk relating to that customer or counterparty and could limit our ability to collect receivables. This could have an adverse impact on our financial condition and liquidity.

Item 1B. Unresolved Staff Comments.
None.
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Item 1C. Cybersecurity
Cybersecurity Risk Management and Strategy
We assess, identify, and manage cybersecurity risk using a data-driven risk management program intended to maintain our Company’s obligations to prevent harm to parties, including employees, customers, and stockholders; as well as reduce cybersecurity risks associated with our Company’s pursuit of business objectives .
As part of our cybersecurity strategy, we set risk targets based on our risk thresholds using industry-recognized standards for controlling and evaluating the risk of cybersecurity threats. The Company has developed cybersecurity policies supported by defined standards, including identity and access control, network controls, operational security, information classification, cybersecurity risk management, incident management and reporting, and security in software development lifecycle.
We undertake scheduled and targeted cybersecurity risk assessments to identify and prioritize risks so that foreseeably harmed parties (which include our employees, contractors, partners, customers, stockholders, consumers, and suppliers) are explicitly included in our risk analysis and risk management priorities. We plan for, implement, and improve safeguards that are designed to reduce unacceptable risks to any foreseeably harmed party. We engage third-party service providers (including contractors and vendors) as part of our normal business operations, including collaborating with third-party experts to assist with evaluating, identifying, and managing our cybersecurity risks.
Our cybersecurity risk management program includes:
• Penetration testing of the Kraft Heinz environment, and annual review of program maturity based on National Institute of Standards and Technology (“NIST”);
• Due diligence reviews of third-party service providers’ information security programs;
• Regular phishing, social engineering, and cybersecurity awareness training for employees with Company emails and access to connected devices;
• Annual tabletop exercises to educate and train our personnel on response capabilities and inform adjustments to our controls and response;
• Regular consultation with external advisors and specialists regarding opportunities and enhancements to strengthen our cybersecurity practices and policies;
• Ongoing cybersecurity event monitoring, management, and testing of incident response procedures; and
• Ongoing enhancements to cybersecurity capabilities based on evolving threats.
We have adopted an incident response plan that applies in the event of a cybersecurity threat or incident to provide a standardized framework for responding to such cybersecurity incidents. The plan sets out a coordinated approach to investigating, containing, documenting, and mitigating incidents, including reporting findings and keeping senior management, the Board, and other key stakeholders informed and involved as appropriate. The plan is aligned to NIST guidance. It also adheres to standards of practice and includes the involvement of any personnel who may detect incidents, respond to incidents, resolve incidents, and manage communications and responsibilities with authorities about those incidents. The plan applies to all Company personnel (including third-party contractors, vendors, and partners) that perform functions or services requiring access to secure Company information, and to all devices and network services that are owned or managed by the Company.
We also employ systems and processes designed to oversee, identify, and reduce the potential impact of a cybersecurity incident at a third-party service provider. We maintain a third-party cyber risk management process to review and monitor potentially material third-party service providers’ security controls. Third-party service providers are required to provide independent attestation reports of their control environment, which are reviewed to validate that the controls meet Company security requirements. In the absence of such reports, third-party service providers are required to complete a detailed questionnaire describing their controls and provide relevant documentation. As part of the third-party risk management process, we request and review annual penetration test reports for the third-party service providers designed to assess whether all high and medium risk findings are addressed. The control environments for third-party service providers are reviewed annually based on risk.
Our cybersecurity risk mitigation strategy includes the use of cybersecurity insurance that provides protection against certain potential losses arising from certain cybersecurity incidents.
Risk management concerns, priorities, and progress are reported to the Company’s Enterprise Risk Committee quarterly as part of the Company’s overall enterprise risk management process. Risk management reports describe cybersecurity priorities, planned safeguards, and resource requirements necessary to achieve acceptable risk outcomes for foreseeably harmed parties.
Cybersecurity Governance
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The Company governs cybersecurity risk through a risk management program designed to enable employees, members of the Audit Committee, Enterprise Risk Committee, executive officers, and other personnel to make informed decisions about cybersecurity risk management that are appropriate for their level of responsibility. Our Chief Information Security Officer (“CISO”) oversees the team responsible for leading enterprise-wide information security strategy, policy, standards, architecture, and processes. Our CISO has extensive cybersecurity knowledge and skills gained from more than 20 years of work experience in information security in the consumer goods, banking, legal, healthcare, and education sectors as well as the government. Our CISO holds a master’s degree in computer and information systems security/information assurance and designations as a Certified Information Systems Security Professional (CISSP) and Certified Information Security Manager (CISM). The CISO evaluates cybersecurity risks, plans for reduction of risks, directs resources and priorities to improve cybersecurity safeguards, measures the results of those efforts, reports to our senior and executive leaders (including our Global Chief Information Officer and Global Chief Financial Officer), the Enterprise Risk Management Committee, and the Audit Committee regarding our cybersecurity risk priorities and progress, and solicits support from senior and executive leaders to further reduce risks through resources, prioritization, or other means. The CISO receives reports on cybersecurity threats from our Security Operations Center, external threat intel, trusted third-party security suppliers, and a peer network of CISOs at other global companies on an ongoing basis. Our Security Operations Center verifies and validates the threat information and modifies our detection and preventative controls as appropriate. Our CISO works closely with our Chief Global Ethics and Compliance Officer and Global General Counsel and Corporate Affairs Officer to oversee compliance with legal, regulatory, and contractual security requirements. The CISO’s team evaluates third-party service providers to a degree commensurate with the risk their services pose to us. As part of that program, we also provide feedback to service providers about risks they can reduce using commercially available safeguards. Additionally, the information security team works in partnership with the Company’s internal audit and internal controls teams to review information technology-related internal controls as part of our overall internal audit and controls processes.
The Audit Committee is responsible for oversight of the Company’s information technology and cybersecurity risks. To fulfill its oversight responsibilities, the Audit Committee reviews the measures implemented by the Company to identify and mitigate cybersecurity risks and the Audit Committee receives updates from our Global Chief Information Officer and CISO at least twice a year, which cover topics related to information security, privacy, and cybersecurity risks, and the risk management processes, including the status of significant cybersecurity incidences, the emerging threat landscape, and the status of projects to strengthen the Company’s information security posture. The Audit Committee regularly reports to the Board on information technology, cybersecurity, and privacy matters. Additionally, the Board receives updates from our Global Chief Information Officer and CISO at least annually on information security, cybersecurity, and privacy matters. We have protocols by which certain cybersecurity incidents that meet established reporting thresholds are escalated within the Company and, where appropriate, reported promptly to the Audit Committee or Board, with ongoing updates regarding any such incident until it has been addressed.
We also rely on information technology, third-party service providers, and strategic joint venture partners to support our business and operations, including our secure processing of personal, confidential, financial, sensitive, proprietary, and other types of information, and to enable our service offerings. Despite ongoing efforts to improve our and third parties’ ability to protect against cybersecurity threats, we may not be able to protect all information systems, products, and service technologies.
Cybersecurity Incident Disclosure
While we have not experienced any material cybersecurity threats or incidents as of the date of this Annual Report on Form 10-K, there can be no guarantee that we will not be the subject of future successful attacks, threats, or incidents that may materially affect the Company or its business strategy, results of operations or financial condition. Additional information on cybersecurity-related risks is discussed under the heading “ We are significantly dependent on information technology, and we may be unable to protect our information systems against service interruption, misappropriation of data, or breaches of security .” under Item 1A, Risk Factors .

Item 2. Properties.
Our corporate co-headquarters are located in Pittsburgh, Pennsylvania and Chicago, Illinois. Our co-headquarters are leased and house certain executive offices, our North America business units, and our administrative, finance, legal, and human resource functions. We maintain additional owned and leased offices throughout the regions in which we operate.
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We manufacture our products in our network of manufacturing and processing facilities located throughout the world. As of December 27, 2025, we operated 69 manufacturing and processing facilities. We own 65 and lease four of these facilities. Our manufacturing and processing facilities count by segment as of December 27, 2025 was:

Owned Leased
North America 32 2
International Developed Markets
17 —
Emerging Markets (a)
16 2

(a)    Emerging Markets represents the aggregation of our WEEM and AEM operating segments.
We maintain all of our manufacturing and processing facilities in good condition and believe they are suitable and are adequate for our present needs. We also enter into co-manufacturing arrangements with third parties if we determine it is advantageous to outsource the production of any of our products.
In 2025, as part of our planned restructuring activities, we sold a manufacturing facility in China within our Asia Emerging Markets operating segment. See Note 6, Restructuring Activities , in Item 8, Financial Statements and Supplementary Data , for additional information on our exit and disposal costs.

Item 3. Legal Proceedings.
See Note 16, Commitments and Contingencies , in Item 8, Financial Statements and Supplementary Data .

Item 4. Mine Safety Disclosures.
Not applicable.
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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our common stock is listed on The Nasdaq Stock Market LLC (Nasdaq) under the ticker symbol “KHC.” At February 7, 2026, there were approximately 32,000 holders of record of our common stock.
See Equity and Dividends in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , for a discussion of cash dividends declared on our common stock.
Comparison of Cumulative Total Return
The following graph compares the cumulative total return on our common stock with the cumulative total return of the S&P 500 Index and the S&P Consumer Staples Food and Soft Drink Products, which we consider to be our peer group. Companies included in the S&P Consumer Staples Food and Soft Drink Products index change periodically and are presented on the basis of the index as it is comprised on December 27, 2025. This graph covers the five-year period from December 24, 2020 (the last trading day of our fiscal year 2020) through December 26, 2025 (the last trading day of our fiscal year 2025). The graph shows total shareholder return assuming $100 was invested on December 24, 2020 and the dividends were reinvested on a daily basis.

Kraft Heinz S&P 500 S&P Consumer Staples Food and Soft Drink Products
December 24, 2020 $ 100.00  $ 100.00  $ 100.00 
December 23, 2021 105.08  129.44  113.81 
December 30, 2022 126.55  106.92  125.59 
December 29, 2023 120.16  135.03  119.76 
December 27, 2024 104.46  171.35  117.44 
December 26, 2025 86.97  201.42  121.63 

The above performance graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act.
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Issuer Purchases of Equity Securities During the Three Months Ended December 27, 2025
Our share repurchase activity in the three months ended December 27, 2025 was:

  Total Number
of Shares Purchased (a)
Average Price 
Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
9/28/2025 — 11/01/2025
4,121  $ 25.61  —  $ 1,502 
11/02/2025 — 11/29/2025
8,483  25.65  —  1,502 
11/30/2025 — 12/27/2025
148  24.56  —  1,502 
Total 12,752  — 

(a)    Includes shares withheld for tax liabilities associated with the vesting of RSUs.
(b)    On November 27, 2023, the Company announced that the Board of Directors approved a share repurchase program authorizing the Company to purchase up to $3.0 billion of the Company’s common stock through December 26, 2026. The Company is not obligated to repurchase any specific number of shares and the program may be modified, suspended, or discontinued at any time. Under the program, shares may be repurchased in open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act, privately negotiated transactions, transactions structured through investment banking institutions, or other means.

Item 6. [Reserved].
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview
Objective:
The following discussion provides an analysis of our financial condition and results of operations from management's perspective and should be read in conjunction with the consolidated financial statements and related notes included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K. Our objective is to also provide discussion of material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be indicative of future operating results or of future financial condition and to offer information that provides an understanding of our financial condition, results of operations, and cash flows.
See below for discussion and analysis of our financial condition and results of operations for 2025 compared to 2024. See Item 7, Management’s Discussions and Analysis of Financial Condition and Results of Operations , in our Annual Report on Form 10-K for the year ended December 28, 2024 for a detailed discussion of our financial condition and results of operations for 2024 compared to 2023.
Description of the Company:
We manufacture and market food and beverage products around the world through our eight consumer-driven product platforms: Taste Elevation, Easy Ready Meals, Substantial Snacking, Desserts, Hydration, Cheese, Coffee, Meats, and other grocery products.
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.
See Note 21, Segment Reporting , in Item 8, Financial Statements and Supplementary Data , for our financial information by segment.
Previously Announced Separation Transaction:
On September 2, 2025, we announced our plan to separate the Company into two independent, publicly traded companies through a tax-free spin-off (the “Separation”). On February 11, 2026, we announced that the Kraft Heinz Board of Directors (the “Board”) has decided to pause work related to the Separation. See Item 1A, Risk Factors , for further discussion of risks relating to the Separation.
Business Trends and Items Affecting Comparability of Financial Results
Inflation and Supply Chain Impacts:
During the year ended December 27, 2025, we experienced increased inflationary pressures in our supply chain costs compared to the prior year period, due in part to the tariff and trade policy actions taken by the United States and foreign governments during the year. We expect these inflationary trends to moderate through 2026, although there continues to be significant uncertainty. Further, we continue to take measures to mitigate the impact of this inflation through efficiency initiatives, pricing actions, alternative sourcing, and hedging strategies. However, there has been, and we expect that there could continue to be, a difference between the timing of when these beneficial, mitigative actions impact our results of operations and when the cost inflation is incurred. Additionally, the pricing actions we have taken have, in some instances, negatively impacted, and could continue to negatively impact, our market share. As the situation continues to remain fluid due to the rapidly changing global trade environment, we continue to evaluate the potential implications of these actions on our business.
Consumer Trends:
In the second quarter of 2025, we announced our commitment to remove Food, Drug & Cosmetic (“FD&C”) colors from our U.S. portfolio of products before the end of 2027. Additionally, we have committed to ensuring that all new products launched in the U.S. will be free of FD&C colors. This initiative will impact a subset of the products sold within our North America segment, primarily within our Hydration and Desserts platforms. While we do not currently anticipate a significant impact to our input costs in our efforts to meet this commitment, our net sales, market share, or results of operations could be adversely affected if we are unsuccessful in our efforts to continue to satisfy consumer preferences.
Regulatory Landscape:
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law in the United States. The OBBBA includes a broad range of changes to U.S. tax law, which did not have a material impact on our total tax provision as of December 27, 2025, and we do not expect the elective provisions of the law to have a material impact on our effective tax rate in future periods. Further, certain provision of the OBBBA impact the timing of cash tax payments, which resulted in a reduction of our
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cash tax payments in 2025, and is expected to reduce cash tax payments in 2026; however we do not expect these provisions to have a material impact on our cash flows in future periods.

The OBBBA also enacted modifications to the Supplemental Nutrition Assistance Program (“SNAP”). The modifications are expected to reduce the number of SNAP participants and the average benefits received by the eligible participants, which could impact consumers’ demand for our products. We intend to take measures to mitigate the potential negative impacts through pricing strategies and changes to our product portfolios. However, the modifications to the SNAP program may have a negative impact on our results of operations, cash flows, and market share.
Impairment Losses:
Our results of operations reflect goodwill impairment losses of $6.7 billion and intangible asset impairment losses of $2.6 billion in 2025 compared to goodwill impairment losses of $1.6 billion and intangible asset impairment losses of $2.0 billion in 2024. See Note 9, Goodwill and Intangible Assets , in Item 8, Financial Statements and Supplementary Data , for additional information on our goodwill and intangible asset impairment losses.
Acquisitions and Divestitures:
In 2025, we entered into a definitive agreement to sell our infant and specialty food business in Italy, within our International Developed Markets segment. On December 31, 2025, which is in the first quarter of our fiscal year 2026, we closed the sale for total cash consideration of approximately $146 million. In 2024, we closed the sale of our infant nutrition business in Russia (the “Russia Infant Transaction”) and the sale of 100% of the equity interests in our Papua New Guinea subsidiary (the “Papua New Guinea Transaction”), both within Emerging Markets. See Note 5, Acquisitions and Divestitures , in Item 8, Financial Statements and Supplementary Data , for additional information on our acquisition and divestiture activities.

Results of Operations
We disclose in this report certain non-GAAP financial measures. These non-GAAP financial measures assist management in comparing our performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our underlying operations. For additional information and reconciliations to the most closely comparable financial measures presented in our consolidated financial statements, which are calculated in accordance with U.S. GAAP, see Non-GAAP Financial Measures.
Consolidated Results of Operations
Summary of Results:

December 27, 2025 December 28, 2024 % Change
(in millions, except per share data)
Net sales $ 24,942  $ 25,846  (3.5) %
Operating income/(loss) (4,669) 1,683  (377.4) %
Net income/(loss) (5,848) 2,746  (313.0) %
Net income/(loss) attributable to common shareholders (5,846) 2,744  (313.0) %
Diluted EPS (4.93) 2.26  (318.1) %

Net Sales:

December 27, 2025 December 28, 2024 % Change
(in millions)
Net sales $ 24,942  $ 25,846  (3.5) %
Organic Net Sales (a)
24,889  25,756  (3.4) %

(a)    Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Fiscal Year 2025 Compared to Fiscal Year 2024:
Net sales decreased 3.5% to $24.9 billion in 2025 compared to $25.8 billion in 2024, including the unfavorable impacts of foreign currency (0.1 pp). Organic Net Sales decreased 3.4% to $24.9 billion in 2025 compared to $25.8 billion in 2024, primarily due to the unfavorable volume/mix (4.1 pp), which more than offset higher pricing (0.7 pp). Pricing was higher in each segment. Volume/mix in North America and International Developed Markets was unfavorable, while volume/mix in Emerging Markets was favorable.
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Net Income/(Loss):

December 27, 2025 December 28, 2024 % Change
(in millions)
Operating income/(loss) $ (4,669) $ 1,683  (377.4) %
Net income/(loss) (5,848) 2,746  (313.0) %
Net income/(loss) attributable to common shareholders (5,846) 2,744  (313.0) %
Adjusted Operating Income (a)
4,745  5,360  (11.5) %

(a)    Adjusted Operating Income is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Fiscal Year 2025 Compared to Fiscal Year 2024:
Operating income/(loss) decreased 377.4% to a loss of $4.7 billion in 2025 compared to income of $1.7 billion in 2024, primarily due to non-cash impairment losses that were $5.6 billion higher in the current year period. In addition to the impact of these non-cash impairment losses, operating income/(loss) decreased $715 million due to inflationary pressures in commodity and manufacturing costs that outpaced our efficiency initiatives, unfavorable volume/mix, separation costs incurred in the current year, unfavorable changes in unrealized losses/(gains) on commodity hedges, increased advertising expenses and increased research and development costs. These unfavorable impacts to operating income/(loss) were partially offset by higher pricing and decreased general corporate expenses.
Net income/(loss) decreased 313.0% to a loss of $5.8 billion in 2025 compared to income of $2.7 billion in 2024. This decrease was due to the unfavorable changes in operating income/(loss) factors discussed above, higher income tax expense and higher interest expense, partially offset by favorable changes in other expense/(income).
• Our effective tax rate was an expense of 7.4% on pre-tax loss in 2025 compared to a benefit of 220.5% on pre-tax income in 2024. The year-over-year increase in the effective tax rate was due primarily to higher non-deductible goodwill impairments in the current year and recognizing a non-U.S. deferred tax asset as a result of the movement of certain business operations to a wholly-owned subsidiary in the Netherlands offset by establishing valuation allowances on certain non-U.S. deferred tax assets in the prior year.
• Other expense/(income) was income of $171 million in 2025 compared to $85 million in 2024. This change was driven by a $53 million increase in interest income primarily due to interest earned on our available-for-sale securities, and a $42 million net loss on the sale of a business recognized in 2025 compared to a $81 million net loss on the sale of businesses in 2024. These positive impacts on other expense/(income) were partially offset by a $28 million decrease in our net pension and postretirement non-service components.
Adjusted Operating Income decreased 11.5% to $4.7 billion in 2025 compared to $5.4 billion in 2024, primarily due to inflationary pressures in commodity and manufacturing costs that outpaced our efficiency initiatives, unfavorable volume/mix, increased advertising expenses, increased research and development costs, and the unfavorable impact of foreign currency (0.1 pp). These unfavorable impacts more than offset higher pricing and decreased general corporate expenses.
Diluted Earnings Per Share (“EPS”):

December 27, 2025 December 28, 2024 % Change
(in millions, except per share data)
Diluted EPS $ (4.93) $ 2.26  (318.1) %
Adjusted EPS (a)
2.60  3.06  (15.0) %

(a)    Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
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Fiscal Year 2025 Compared to Fiscal Year 2024:
Diluted EPS decreased 318.1% to $(4.93) in 2025 compared to $2.26 in 2024, primarily due to the net income/(loss) factors discussed above, which more than offset the favorable impact of our common stock repurchases.

December 27, 2025 December 28, 2024 $ Change % Change
Diluted EPS $ (4.93) $ 2.26  $ (7.19) (318.1) %
Restructuring activities 0.02  0.01  0.01 

Unrealized losses/(gains) on commodity hedges 0.02  (0.01) 0.03 
Impairment losses 7.31  2.58  4.73 
Separation costs 0.05  —  0.05 

Losses/(gains) on sale of business 0.04  0.05  (0.01)

Nonmonetary currency devaluation 0.03  0.01  0.02 

Certain significant discrete income tax items 0.06  (1.84) 1.90 
Adjusted EPS (a)
$ 2.60  $ 3.06  $ (0.46) (15.0) %

Key drivers of change in Adjusted EPS (a) :

Results of operations $ (0.40)

Effect of common stock repurchases (b) :
0.06 
Interest expense (0.02)
Other expense/(income) 0.05 
Effective tax rate (0.15)
$ (0.46)

(a)    Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
(b)    Includes the impact of the change in the weighted average shares of common stock outstanding, including dilutive effect, which is primarily due to shares purchased pursuant to our publicly announced share repurchase program. See Note 20, Earnings Per Share , in Item 8 , Financial Statements and Supplementary Data, for more information on our weighted average shares outstanding.
Adjusted EPS decreased 15.0% to $2.60 in 2025 compared to $3.06 in 2024 primarily due to lower Adjusted Operating Income, higher taxes on adjusted earnings, and higher interest expense, which more than offset the favorable impact of our common stock repurchases and favorable changes in other expense/(income).

Results of Operations by Segment
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.
Management evaluates segment performance based on several factors, including net sales, Organic 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, separation costs, and certain non-ordinary course legal and regulatory matters. Segment Adjusted Operating Income for Emerging Markets, which represents the aggregation of our WEEM and AEM operating segments, is defined and presented consistently with the Segment Adjusted Operating Income of our reportable segments — North America and International Developed Markets. Segment Adjusted Operating Income is a financial measure that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operations. Management also uses Segment Adjusted Operating Income to allocate resources.
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Under highly inflationary accounting, the financial statements of a subsidiary are remeasured into our reporting currency (U.S. dollars) based on the legally available exchange rate at which we expect to settle the underlying transactions. Exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in other expense/(income) on our consolidated statement of income, as nonmonetary currency devaluation, rather than accumulated other comprehensive income/(losses) on our consolidated balance sheet, until such time as the economy is no longer considered highly inflationary. See Note 2, Significant Accounting Policies, in Item 8, Financial Statements and Supplementary Data , for additional information. We apply highly inflationary accounting to the results of our subsidiaries in Turkey, Venezuela, and Egypt, which are all in Emerging Markets.
Net Sales:

December 27, 2025 December 28, 2024
(in millions)
Net sales:
North America $ 18,586  $ 19,543 
International Developed Markets
3,539  3,535 
Emerging Markets
2,817  2,768 
Total net sales $ 24,942  $ 25,846 

Organic Net Sales:

December 27, 2025 December 28, 2024
(in millions)
Organic Net Sales (a) :

North America $ 18,621  $ 19,543 
International Developed Markets 3,466  3,535 
Emerging Markets 2,802  2,678 
Total Organic Net Sales $ 24,889  $ 25,756 

(a)    Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Drivers of the changes in net sales and Organic Net Sales were:

Net Sales Currency Acquisitions and Divestitures Organic Net Sales Price Volume/Mix
2025 Compared to 2024

North America (4.9) % (0.2) pp 0.0 pp (4.7) % 0.3 pp (5.0) pp
International Developed Markets 0.1  % 2.0 pp 0.0 pp (1.9) % 0.9 pp (2.8) pp
Emerging Markets 1.8  % (2.4) pp (0.4) pp 4.6  % 4.0 pp 0.6 pp
Kraft Heinz (3.5) % (0.1) pp 0.0 pp (3.4) % 0.7 pp (4.1) pp

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Adjusted Operating Income:

December 27, 2025 December 28, 2024
  (in millions)
Segment Adjusted Operating Income:
North America $ 4,389  $ 5,111 
International Developed Markets 543  537 
Emerging Markets 341  321 
General corporate expenses (528) (609)
Restructuring activities (13) (27)

Unrealized gains/(losses) on commodity hedges (35) 19 
Impairment losses (9,306) (3,669)
Separation costs
(60) — 

Operating income/(loss) $ (4,669) $ 1,683 
Interest expense 947  912 
Other expense/(income) (171) (85)
Income/(loss) before income taxes $ (5,445) $ 856 

North America:

December 27, 2025 December 28, 2024 % Change
(in millions)
Net sales $ 18,586  $ 19,543  (4.9) %
Organic Net Sales (a)
18,621  19,543  (4.7) %
Segment Adjusted Operating Income
4,389  5,111  (14.1) %

(a)    Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Fiscal Year 2025 Compared to Fiscal Year 2024:
Net sales decreased 4.9% to $18.6 billion in 2025 compared to $19.5 billion in 2024, including the unfavorable impacts of foreign currency (0.2 pp). Organic Net Sales decreased 4.7% to $18.6 billion in 2025 compared to $19.5 billion in 2024, primarily due to unfavorable volume/mix (5.0 pp), which more than offset higher pricing (0.3 pp). Unfavorable volume/mix was primarily due to declines in cold cuts, coffee, certain condiments, bacon, frozen snacks, and desserts. Higher pricing was taken in certain categories to mitigate higher input costs, primarily in coffee.
Segment Adjusted Operating Income decreased 14.1% to $4.4 billion in 2025 compared to $5.1 billion in 2024, primarily due to unfavorable volume/mix, inflationary pressures in commodity and manufacturing costs that outpaced our efficiency initiatives, increased advertising expenses, higher depreciation expense, increased research and development costs, and the unfavorable impact of foreign currency (0.1 pp). These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing.
International Developed Markets:

December 27, 2025 December 28, 2024 % Change
(in millions)
Net sales $ 3,539  $ 3,535  0.1  %
Organic Net Sales (a)
3,466  3,535  (1.9) %
Segment Adjusted Operating Income
543  537  1.0  %

(a)    Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Fiscal Year 2025 Compared to Fiscal Year 2024:
Net sales increased 0.1% to $3.5 billion in 2025 compared to $3.5 billion in 2024, including the favorable impacts of foreign currency (2.0 pp). Organic Net Sales decreased 1.9% to $3.5 billion in 2025 compared to $3.5 billion in 2024, primarily due to unfavorable volume/mix (2.8 pp), which more than offset higher pricing (0.9 pp). Unfavorable volume/mix was primarily due to continued industry slowdowns of meals in the United Kingdom and pricing elasticity in New Zealand.
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Segment Adjusted Operating Income increased 1.0% to $543 million in 2025 compared to $537 million in 2024, primarily driven by higher pricing, the favorable impact of foreign currency (3.2 pp), decreased advertising expenses, and lower amortization expense. These favorable impacts to Segment Adjusted Operating Income more than offset unfavorable volume/mix and inflationary pressures in manufacturing and procurement costs that outpaced our efficiency initiatives.
Emerging Markets:

December 27, 2025 December 28, 2024 % Change
(in millions)
Net sales $ 2,817  $ 2,768  1.8  %
Organic Net Sales (a)
2,802  2,678  4.6  %
Segment Adjusted Operating Income
341  321  6.2  %

(a)    Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Fiscal Year 2025 Compared to Fiscal Year 2024:
Net sales increased 1.8% to $2.8 billion in 2025 compared to $2.8 billion in 2024, including the unfavorable impacts of foreign currency (2.4 pp) and divestitures (0.4 pp). Organic Net Sales increased 4.6% to $2.8 billion in 2025 compared to $2.7 billion in 2024, primarily driven by higher pricing (4.0 pp) and favorable volume/mix (0.6 pp). Higher pricing was taken primarily in certain countries within WEEM to address inflationary pressures, which more than offset lower pricing in Indonesia. Favorable volume/mix was primarily driven by Taste Elevation, particularly in Brazil and China, which more than offset unfavorable volume/mix in Indonesia.
Segment Adjusted Operating Income increased 6.2% to $341 million in 2025 compared to $321 million in 2024, primarily due to higher pricing, reduced manufacturing costs, primarily as a result of our efficiency initiatives, and favorable volume/mix. These favorable impacts to Segment Adjusted Operating Income more than offset higher procurement and logistics costs reflecting inflationary pressure in WEEM, increased advertising expenses, unfavorable changes in allowances for trade receivables in Indonesia, the unfavorable impact of foreign currency (4.5 pp), and higher depreciation expense.

Liquidity and Capital Resources
We believe that cash generated from our operating activities, as well as our access to other potential sources of liquidity including our available-for-sale debt securities, commercial paper programs, and our senior unsecured revolving credit facility (the “Senior Credit Facility”) will provide sufficient liquidity to meet our working capital needs, repayments of long-term debt, future contractual obligations, payment of our anticipated quarterly dividends, planned capital expenditures, restructuring expenditures, and contributions to our postemployment benefit plans for the next 12 months. An additional potential source of liquidity is access to capital markets. We intend to use our cash on hand and commercial paper programs for daily funding requirements.
Acquisitions and Divestitures:
In 2025, we entered into a definitive agreement to sell our infant and specialty food business in Italy, within our International Developed Markets segment. On December 31, 2025, in the first quarter of our fiscal year 2026, we closed the sale for total cash consideration of approximately $146 million.
In the first quarter of 2024, we consummated the Russia Infant Transaction for total cash consideration of approximately $25 million, and the Papua New Guinea Transaction for total cash consideration of approximately $22 million.
See Note 5, Acquisitions and Divestitures , in Item 8, Financial Statements and Supplementary Data , for additional information on our acquisitions and divestitures.
Cash Flow Activity for 2025 Compared to 2024:
Net Cash Provided by/Used for Operating Activities:
Net cash provided by operating activities was $4.5 billion for the year ended December 27, 2025 compared to $4.2 billion for the year ended December 28, 2024. This increase was primarily due to favorable changes in working capital, predominantly within inventory as a result of our efforts to optimize inventory levels, lower income taxes paid due, in part, to benefits received through the OBBBA, reduced cash outflows for variable compensation, and the current year conversion of certain plan assets related to the U.S. postretirement medical plan to cash. These impacts were partially offset by lower Adjusted Operating Income. See Note 12, Postemployment Benefits , in Item 8, Financial Statements and Supplementary Data , for additional information on our postemployment benefit plans activities.
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Net Cash Provided by/Used for Investing Activities:
Net cash used for investing activities was $1.8 billion for the year ended December 27, 2025 compared to $1.0 billion for the year ended December 28, 2024. This change was primarily driven by the purchases of marketable securities, partially offset by lower capital expenditures, and lapping our prior year payment to acquire the TGI Friday License. Our 2025 capital expenditures were primarily focused on maintenance, technology, and cost improvement projects. We expect 2026 capital expenditures to be approximately $950 million.
Net Cash Provided by/Used for Financing Activities:
Net cash used for financing activities was $1.3 billion for the year ended December 27, 2025 compared to $3.0 billion for the year ended December 28, 2024. This change was primarily driven by increased debt proceeds received in the current year, decreased repurchases of common stock compared to the prior year period, and increased hedge settlements. See Note 17, Debt , in Item 8, Financial Statements and Supplementary Data , for additional information on our debt transactions and Note 19, Capital Stock , in Item 8, Financial Statements and Supplementary Data , for additional information on our share repurchase program.
Cash Held by International Subsidiaries:
Of the $2.6 billion cash and cash equivalents on our consolidated balance sheet at December 27, 2025, $981 million was held by international subsidiaries.
Subsequent to January 1, 2018, we consider the unremitted earnings of certain international subsidiaries that impose local country taxes on dividends to be indefinitely reinvested. For those undistributed earnings considered to be indefinitely reinvested, our intent is to reinvest these funds in our international operations, and our current plans do not demonstrate a need to repatriate the accumulated earnings to fund our U.S. cash requirements. The amount of unrecognized deferred tax liabilities for local country withholding taxes that would be owed, if repatriated, related to our 2018 through 2025 accumulated earnings of certain international subsidiaries is approximately $65 million. Our undistributed historic earnings in foreign subsidiaries through December 31, 2017 are currently not considered to be indefinitely reinvested. Our deferred tax liability associated with these undistributed historical earnings was insignificant at December 27, 2025, December 28, 2024, and December 30, 2023, and relates to local withholding taxes that would be owed when this cash is distributed.
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. 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. 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. The amounts outstanding under these programs were $755 million at December 27, 2025 and $745 million at December 28, 2024. The amounts were included in accounts payable on our consolidated balance sheets. See Note 15, Financing Arrangements , in Item 8, Financial Statements and Supplementary Data , for additional information on our trade payables programs.
Borrowing Arrangements:
From time to time, we obtain funding through our commercial paper programs. We had no commercial paper outstanding at December 27, 2025, December 28, 2024, and December 30, 2023. We had no commercial paper outstanding during the years ended December 27, 2025 and December 28, 2024, and the maximum amount of commercial paper outstanding was $150 million during the year ended December 30, 2023.
Together with Kraft Heinz Food Company (“KHFC”), our 100% owned operating subsidiary, we have a credit agreement (the “Credit Agreement”), which provides for a five-year senior unsecured revolving credit facility in an aggregate amount of $4.0 billion (the “Senior Credit Facility”). On July 8, 2025, we entered into an amendment to this agreement to extend the maturity date from July 8, 2029 to July 8, 2030. Further, the amendment modified certain financial covenants, which changed the minimum shareholders’ equity balance from $35 billion to $25 billion, and added an allowable add-back to the minimum shareholders’ equity balance of up to $2 billion annually, commensurate with goodwill and intangible asset impairments recorded during the period. Subject to certain conditions, we may increase the amount of revolving commitments and/or add tranches of term loans in a combined aggregate amount of up to $1.0 billion.
No amounts were drawn on our Senior Credit Facility at December 27, 2025, December 28, 2024, or December 30, 2023. No amounts were drawn on our Senior Credit Facility during the years ended December 27, 2025, December 28, 2024 or December 30, 2023.
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Our credit agreement contains customary representations, warranties, and covenants that are typical for these types of facilities and could, upon the occurrence of certain events of default, restrict our ability to access our Senior Credit Facility. We were in compliance with all financial covenants as of December 27, 2025.
Long-Term Debt:
Our long-term debt, including the current portion, was $21.2 billion at December 27, 2025, $19.9 billion at December 28, 2024, and $20.0 billion at December 30, 2023. The increase of debt in 2025 was primarily due to the issuance of the 2025 Notes, as well as changes in foreign currency exchange rates on our foreign-denominated debt, partially offset by the repayment of our 600 million euro senior notes due May 2025. The decrease of debt in 2024 was primarily due to changes in foreign currency exchange rates on our foreign-denominated debt, as well as the 550 million euro aggregate principle amount of senior notes that were repaid at maturity in May 2024, partially offset by the issuance of the 2024 Notes.
We have aggregate principal amounts of senior notes of approximately $1.9 billion maturing in June 2026.
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.
Our long-term debt contains customary representations, covenants, and events of default. We were in compliance with all financial covenants as of December 27, 2025.
See Note 17, Debt , in Item 8, Financial Statements and Supplementary Data , for additional information on our long-term debt activity.
Equity and Dividends:
We paid dividends on our common stock of $1.9 billion in 2025 and 2024 and $2.0 billion in 2023. Additionally, in the first quarter of 2026, our Board declared a cash dividend of $0.40 per share of common stock, which is payable on March 27, 2026 to stockholders of record on March 6, 2026.
The declaration of dividends is subject to the discretion of our Board and depends on various factors, including our net income, financial condition, cash requirements, future prospects, and other factors that our Board deems relevant to its analysis and decision making.
On November 27, 2023, we announced that the Board approved a share repurchase program authorizing the Company to purchase up to $3.0 billion, exclusive of fees, of the Company’s common stock through December 26, 2026. We are not obligated to repurchase any specific number of shares and the program may be modified, suspended, or discontinued at any time. Under the program, shares may be repurchased in open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act, privately negotiated transactions, transactions structured through investment banking institutions, or other means. As of December 27, 2025, we had remaining authorization under the share repurchase program of approximately $1.5 billion. The share repurchase program is in addition to our share repurchases to offset the dilutive effect of equity-based compensation.
Aggregate Contractual Obligations:
Related to our current and long-term material cash requirements, the following table summarizes our aggregate contractual obligations at December 27, 2025, which we expect to primarily fund with cash from operating activities (in millions):

Material Cash Requirements
2026 2027-2028 2029-2030 2031 and Thereafter Total
Long-term debt (a)
$ 2,802  $ 5,261  $ 3,412  $ 21,577  $ 33,052 
Finance leases (b)
45  119  105  113  382 
Operating leases (c)
144  212  133  149  638 
Purchase obligations (d)
587  843  407  197  2,034 
Other long-term liabilities (e)
24  34  33  132  223 
Total $ 3,602  $ 6,469  $ 4,090  $ 22,168  $ 36,329 

(a)    Amounts represent the expected cash payments of our long-term debt, including interest on variable and fixed rate long-term debt. Interest on variable rate long-term debt is calculated based on interest rates at December 27, 2025.
(b)    Amounts represent the expected cash payments of our finance leases, including expected cash payments of interest expense.
(c)    Operating leases represent the minimum rental commitments under non-cancellable operating leases net of sublease income.
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(d)    We have purchase obligations for materials, supplies, property, plant and equipment, and co-packing, storage, and distribution services based on projected needs to be utilized in the normal course of business. Other purchase obligations include commitments for marketing, advertising, capital expenditures, information technology, and professional services. Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, and approximate timing of the transaction. Several of these obligations are long-term and are based on minimum purchase requirements. Certain purchase obligations contain variable pricing components, and, as a result, actual cash payments are expected to fluctuate based on changes in these variable components. Due to the proprietary nature of some of our materials and processes, certain supply contracts contain penalty provisions for early terminations. We do not believe that a material amount of penalties is reasonably likely to be incurred under these contracts based upon historical experience and current expectations.
(e)    Other long-term liabilities primarily consist of estimated payments for the one-time toll charge related to 2017 U.S. tax reform, as well as postretirement benefit commitments. Certain other long-term liabilities related to income taxes, insurance accruals, and other accruals included on the consolidated balance sheet are excluded from the above table as we are unable to estimate the timing of payments for these items.
Pension plan contributions were $5 million in 2025. We estimate that 2026 pension plan contributions will be approximately $6 million. Postretirement benefit plan contributions were $10 million in 2025. We estimate that 2026 postretirement benefit plan contributions will be approximately $11 million. During the fourth quarter of 2025, we amended our U.S. postretirement medical plan to establish a sub-trust to permit the payment of certain postretirement benefit plan contributions for active non-union employees using $200 million of the retiree plan surplus. During the fourth quarter of 2024, we amended our U.S. postretirement medical plan to establish a sub-trust to permit the payment of certain postretirement benefit plan contributions for active union employees using $150 million of the retiree plan surplus. See Note 12, Postemployment Benefits, in Item 8, Financial Statements and Supplementary Data , for additional information on our pension and postretirement plans.
Estimated future contributions take into consideration current economic conditions, which at this time are expected to have minimal impact on expected contributions for 2026. Beyond 2026, we are unable to reliably estimate the timing of contributions to our pension or postretirement plans. 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 or postretirement asset performance or interest rates, or other factors. As such, estimated pension and postretirement plan contributions for 2026 have been excluded from the above table.
At December 27, 2025, the amount of net unrecognized tax benefits for uncertain tax positions, including an accrual of related interest and penalties along with positions only impacting the timing of tax benefits, was approximately $589 million. The timing of payments will depend on the progress of examinations with tax authorities. We are unable to make a reasonably reliable estimate as to if or when any significant cash settlements with taxing authorities may occur; therefore, we have excluded the amount of net unrecognized tax benefits from the above table.
Supplemental Guarantor Information:
The Kraft Heinz Company (as the “Parent Guarantor”) fully and unconditionally guarantees all the senior unsecured registered notes (collectively, the “KHFC Senior Notes”) issued by KHFC, our 100% owned operating subsidiary (the “Guarantee”). See Note 17, Debt , in Item 8, Financial Statements and Supplementary Data , for additional descriptions of these guarantees.
The payment of the principal, premium, and interest on the KHFC Senior Notes is fully and unconditionally guaranteed on a senior unsecured basis by the Parent Guarantor, pursuant to the terms and conditions of the applicable indenture. None of the Parent Guarantor’s subsidiaries guarantee the KHFC Senior Notes.
The Guarantee is the Parent Guarantor’s senior unsecured obligation and is: (i) pari passu in right of payment with all of the Parent Guarantor’s existing and future senior indebtedness; (ii) senior in right of payment to all of the Parent Guarantor’s future subordinated indebtedness; (iii) effectively subordinated to all of the Parent Guarantor’s existing and future secured indebtedness to the extent of the value of the assets secured by that indebtedness; and (iv) effectively subordinated to all existing and future indebtedness and other liabilities of the Parent Guarantor’s subsidiaries.
The KHFC Senior Notes are obligations exclusively of KHFC and the Parent Guarantor and not of any of the Parent Guarantor’s other subsidiaries. Substantially all of the Parent Guarantor’s operations are conducted through its subsidiaries. The Parent Guarantor’s other subsidiaries are separate legal entities that have no obligation to pay any amounts due under the KHFC Senior Notes or to make any funds available therefor, whether by dividends, loans, or other payments. Except to the extent the Parent Guarantor is a creditor with recognized claims against its subsidiaries, all claims of creditors (including trade creditors) and holders of preferred stock, if any, of its subsidiaries will have priority with respect to the assets of such subsidiaries over its claims (and therefore the claims of its creditors, including holders of the KHFC Senior Notes). Consequently, the KHFC Senior Notes are structurally subordinated to all liabilities of the Parent Guarantor’s subsidiaries and any subsidiaries that it may in the future acquire or establish. The obligations of the Parent Guarantor will terminate and be of no further force or effect in the following circumstances: (i) (a) KHFC’s exercise of its legal defeasance option or, except in the case of a guarantee of any direct or indirect parent of KHFC, covenant defeasance option in accordance with the applicable indenture, or KHFC’s obligations under the applicable indenture have been discharged in accordance with the terms of the applicable indenture or (b) as specified in a supplemental indenture to the applicable indenture; and (ii) the Parent Guarantor has delivered to the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent provided for in the applicable indenture
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have been complied with. The Guarantee is limited by its terms to an amount not to exceed the maximum amount that can be guaranteed by the Parent Guarantor without rendering the Guarantee voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.
The following tables present summarized financial information for the Parent Guarantor and KHFC (as subsidiary issuer of the KHFC Senior Notes) (together, the “Obligor Group”), on a combined basis after the elimination of all intercompany balances and transactions between the Parent Guarantor and subsidiary issuer and investments in any subsidiary that is a non-guarantor.
Summarized Statement of Income

For the Year Ended
December 27, 2025
Net sales $ 15,849 
Gross profit (a)
5,802 

Intercompany service fees and other recharges 4,075 
Operating income/(loss) 1,008 
Equity in earnings/(losses) of subsidiaries (5,812)
Net income/(loss) (5,846)
Net income/(loss) attributable to common shareholders (5,846)

(a)    In 2025, the Obligor Group recorded $489 million of net sales to the non-guarantor subsidiaries and $67 million of purchases from the non-guarantor subsidiaries.
Summarized Balance Sheets

December 27, 2025
ASSETS
Current assets $ 6,336 
Current assets due from affiliates (a)
269 
Non-current assets 5,648 
Goodwill 8,823 
Intangible assets, net 1,768 
Non-current assets due from affiliates (b)
28 
LIABILITIES
Current liabilities $ 5,211 
Current liabilities due to affiliates (a)
1,122 
Non-current liabilities 21,260 
Non-current liabilities due to affiliates (b)
208 

(a)    Represents receivables and short-term lending due from and payables and short-term lending due to non-guarantor subsidiaries.
(b)    Represents long-term lending due from and long-term borrowings due to non-guarantor subsidiaries.

Commodity Trends
We purchase and use large quantities of commodities, including dairy products, meat products, sugar and other sweeteners, coffee, tomato products, soybean and vegetable oils, eggs, other fruits and vegetables, and wheat and processed grains to manufacture our products. In addition, we purchase and use significant quantities of plastics, resin, cardboard, glass, paper and metal to package our products, and we use electricity, diesel fuel, and natural gas in the manufacturing and distribution of our products. We continuously monitor worldwide supply and cost trends of these commodities.
During the year ended December 27, 2025, we experienced increases in certain commodity costs, particularly for coffee, meats, and eggs while costs for cheese and dairy products and tomato products decreased. We manage commodity cost volatility primarily through pricing and risk management strategies including utilizing a range of commodity hedging techniques in an effort to limit the impact of price fluctuations on many of our principal raw materials. However, we do not fully hedge against changes in commodity prices, and our hedging strategies may not protect us from increases in specific raw material costs. As a result of these risk management strategies, our commodity costs may not immediately correlate with market price trends.
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Critical Accounting Estimates
Note 2, Significant Accounting Policies , in Item 8, Financial Statements and Supplementary Data , includes a summary of the significant accounting policies we used to prepare our consolidated financial statements. The following is a review of the more significant assumptions and estimates as well as accounting policies we used to prepare our consolidated financial statements.
Revenue Recognition:
Our revenues are primarily derived from customer orders for the purchase of our products. We recognize revenues as performance obligations are fulfilled when control passes to our customers. We record revenues net of variable consideration, including consumer incentives and performance obligations related to trade promotions, excluding taxes, and including all shipping and handling charges billed to customers (accounting for shipping and handling charges that occur after the transfer of control as fulfillment costs). We also record a refund liability for estimated product returns and customer allowances as reductions to revenues within the same period that the revenue is recognized. We base these estimates principally on historical and current period experience factors. We recognize costs paid to third-party brokers to obtain contracts as expenses as our contracts are generally less than one year.
Advertising, Consumer Incentives, and Trade Promotions:
We promote our products with advertising, consumer incentives, and performance obligations related to trade promotions. Consumer incentives and trade promotions include, but are not limited to, discounts, coupons, rebates, performance-based in-store display activities, and volume-based incentives. Variable consideration related to consumer incentive and trade promotion activities is recorded as a reduction to revenues based on amounts estimated as being due to customers and consumers at the end of a period. We base these estimates principally on historical utilization, redemption rates, and/or current period experience factors. We review and adjust these estimates at least quarterly based on actual experience and other information.
Advertising expenses are recorded in selling, general and administrative expenses (“SG&A”). For interim reporting purposes, we charge advertising to operations as a percentage of estimated full year sales activity and marketing costs. We then review and adjust these estimates each quarter based on actual experience and other information. Our definition of advertising expenses includes advertising production costs, in-store advertising costs, agency fees, brand promotions and events, and sponsorships, in addition to costs to obtain advertising in television, radio, print, digital, and social channels. We recorded advertising expenses of $1,073 million in 2025, $1,031 million in 2024, and $1,071 million in 2023. We also incur market research costs, which are recorded in SG&A but are excluded from advertising expenses.
Goodwill and Intangible Assets:
As of December 27, 2025, we maintain 10 reporting units globally, six of which comprise our goodwill balance. These six reporting units had an aggregate goodwill carrying amount of $22.2 billion at December 27, 2025. Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $34.2 billion as of December 27, 2025.
We test our reporting units and brands for impairment annually as of the first day of our third quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit or brand is less than its carrying amount. Such events and circumstances could include a sustained decrease in our market capitalization, increased competition or unexpected loss of market share, increased input costs beyond projections, disposals of significant brands or components of our business, unexpected business disruptions (for example due to a natural disaster, pandemic, or loss of a customer, supplier, or other significant business relationship), unexpected significant declines in operating results, significant adverse changes in the markets in which we operate, changes in income tax rates, changes in interest rates, or changes in management strategy. We test reporting units for impairment by comparing the estimated fair value of each reporting unit with its carrying amount. We test brands for impairment by comparing the estimated fair value of each brand with its carrying amount. If the carrying amount of a reporting unit or brand exceeds its estimated fair value, we record an impairment loss based on the difference between fair value and carrying amount, in the case of reporting units, not to exceed the associated carrying amount of goodwill.
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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 and brands requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions, and to consider the market multiples of certain peer and guideline companies. 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 considerations, discount rates, long-term growth rates, royalty rates, contributory asset charges, and other market factors. As part of our 2025 annual impairment test as of June 29, 2025, we used discount rates ranging from 7.3% to 14.8% and long-term growth rates ranging from 0.0% to 4.0% in estimating the fair value of our reporting units. Additionally, we used discount rates ranging from 8.5% to 12.3%, long-term growth rates ranging from 0.0% to 4.0%, and royalty rates ranging from 5.0% to 20.0% in estimating the fair value of our brands. If current expectations of future growth rates, royalty 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 or brands might become impaired in the future. Additionally, any decisions to divest certain non-strategic assets could lead to future goodwill or intangible asset impairments.
As detailed in Note 9,  Goodwill and Intangible Assets , in Item 8,  Financial Statements and Supplementary Data , we recorded impairment losses related to goodwill and indefinite-lived intangible assets. Our reporting units and brands that were impaired in 2025, 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. Our reporting units and brands that had 20% or less excess fair value over carrying amount as of the 2025 annual impairment test have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future.
Our reporting units that were determined to have less than 5% fair value over carrying amount as of our 2025 annual impairment test had an aggregate goodwill carrying amount of $21.9 billion as of the 2025 annual impairment test and included Elevation, HDM, Western Europe, MCCS, and Canada reporting units. Our Asia reporting unit had less than 20% fair value over carrying amount with an aggregate goodwill carrying amount of $314 million as of the 2025 annual impairment test. Our reporting units that have 20% or less excess fair value over carrying amounts as of the 2025 annual impairment test are considered at a heightened risk of future impairments and had an aggregate carrying amount of $22.2 billion. Our four remaining reporting units had no goodwill carrying amount at the time of the 2025 annual impairment test.
As of the 2025 annual impairment test, our Kraft brand was determined to have less than 2% fair value over carrying amount, and had a carrying amount of $8.5 billion. Our brands that had over 2% but less than 10% fair value over carrying amount included Lunchables, Bagel Bites, and Claussen and had an aggregate carrying amount of $1.2 billion as of the 2025 annual impairment test. Our brands that had 10-20% fair value over carrying amount included Velveeta, Oscar Mayer, A1, Capri Sun, and Cool Whip and had an aggregate carrying amount of $5.3 billion as of the 2025 annual impairment test. The aggregate carrying amount of brands with fair value over carrying amount 20-50% was $17.0 billion as of the 2025 annual impairment test. Although the remaining brands, with a carrying amount of $2.2 billion, have more than 50% excess fair value over carrying amount as of the 2025 annual impairment test, these amounts are also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future. Our brands that have 20% or less excess fair value over carrying amounts as of the 2025 annual impairment test are considered at a heightened risk of future impairments and had an aggregate carrying amount of $15.0 billion.
We generally utilize the discounted cash flow method under the income approach to estimate the fair value of our reporting units. Some of the more significant assumptions inherent in estimating the fair values include the estimated future annual cash flows for each reporting unit (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, long-term growth rates, royalty rates, a discount rate that appropriately reflects the risks inherent in each future cash flow stream, and other market factors. We select the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product category growth rates, management’s plans, and a consideration of market multiples of certain peer and guideline companies.
We utilize the excess earnings method under the income approach to estimate the fair value of certain of our largest brands. Some of the more significant assumptions inherent in estimating the fair values include the estimated future annual cash flows for each brand (including net sales, cost of products sold, and SG&A), contributory asset charges, income tax considerations, long-term growth rates, a discount rate that reflects the level of risk associated with the future earnings attributable to the brand, and management’s intent to invest in the brand indefinitely. We select the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product category growth rates, management’s plans, and a consideration of market multiples of certain peer and guideline companies.
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We utilize the relief from royalty method under the income approach to estimate the fair value of our remaining brands. Some of the more significant assumptions inherent in estimating the fair values include the estimated future annual sales for each brand, royalty rates (as a percentage of net sales that would hypothetically be charged by a licensor of the brand to an unrelated licensee), income tax considerations, long-term growth rates, a discount rate that reflects the level of risk associated with the future cost savings attributable to the brand, and management’s intent to invest in the brand indefinitely. We select the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product category growth rates, management’s plans, and a consideration of market multiples of certain peer and guideline companies.
The discount rates, long-term growth rates, and royalty rates used to estimate the fair values of our reporting units and our brands with 20% or less excess fair value over carrying amount, as well as the goodwill or brand carrying amounts, as of the 2025 annual impairment test for each reporting unit and brand were as follows:

Goodwill or Brands Carrying Amount
(in billions)
Discount Rate Long-Term Growth Rate Royalty Rate
Minimum Maximum Minimum Maximum Minimum Maximum
Reporting units $ 22.2  7.3  % 11.8  % 0.5  % 4.0  %
Brands
(excess earnings method) 11.3  8.5  % 8.8  % 0.5  % 2.0  %
Brands
(relief from royalty method) 3.7  8.8  % 9.3  % 0.5  % 2.0  % 7.0  % 20.0  %

Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based on the facts and circumstances present at each annual and interim impairment test date. Additionally, these assumptions are generally interdependent and do not change in isolation. However, as it is reasonably possible that changes in assumptions could occur, as a sensitivity measure, we have presented the estimated effects of isolated changes in discount rates, long-term growth rates, and royalty rates on the fair values of our reporting units and brands with 20% or less excess fair value over carrying amount. These estimated changes in fair value are not necessarily representative of the actual impairment that would be recorded in the event of a fair value decline.
If we had changed the assumptions used to estimate the fair value of our reporting units and brands with 20% or less excess fair value over carrying amount, as a result of the 2025 annual impairment test for each of these reporting units and brands, these isolated changes, which are reasonably possible to occur, would have led to the following increase/(decrease) in the aggregate fair value of these reporting units and brands (in billions):

Discount Rate Long-Term Growth Rate Royalty Rate
50-Basis-Point 25-Basis-Point 100-Basis-Point
Increase Decrease Increase Decrease Increase Decrease
Reporting units $ (3.5) $ 4.0  $ 1.7  $ (1.6)
Brands (excess earnings method) (0.8) 1.0  0.4  (0.3)
Brands (relief from royalty method) (0.3) 0.3  0.1  (0.1) $ 0.4  $ (0.4)

Definite-lived intangible assets are amortized on a straight-line basis over the estimated periods benefited. We review definite-lived intangible assets for impairment when conditions exist that indicate the carrying amount of the assets may not be recoverable. Such conditions could include significant adverse changes in the business climate, current-period operating or cash flow losses, significant declines in forecasted operations, or a current expectation that an asset group will be disposed of before the end of its useful life. We perform undiscounted operating cash flow analyses to determine if an impairment exists. When testing for impairment of definite-lived intangible assets held for use, we group assets at the lowest level for which cash flows are separately identifiable. If an impairment is determined to exist, the loss is calculated based on estimated fair value. Impairment losses on definite-lived intangible assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal.
See Note 9, Goodwill and Intangible Assets , in Item 8, Financial Statements and Supplementary Data , for our impairment testing results.
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Postemployment Benefit Plans:
We maintain various retirement plans for the majority of our employees. These include pension benefits, postretirement health care benefits, and defined contribution benefits. The cost of these plans is charged to expense over an appropriate term based on, among other things, the cost component and whether the plan is active or inactive. Changes in the fair value of our plan assets result in net actuarial gains or losses. These net actuarial gains and losses are deferred into accumulated other comprehensive income/(losses) and amortized within other expense/(income) in future periods using the corridor approach. The corridor is 10% of the greater of the market-related value of the plan’s asset or projected benefit obligation. Any actuarial gains and losses in excess of the corridor are then amortized over an appropriate term based on whether the plan is active or inactive.
For our postretirement benefit plans, our 2026 health care cost trend rate assumption will be 6.5%. We established this rate based upon our most recent experience as well as our expectation for health care trend rates going forward. We anticipate the weighted average assumed ultimate trend rate will be 4.8%. The year in which the ultimate trend rate is reached varies by plan, ranging between the years 2027 and 2035. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans.
Our 2026 discount rate assumption will be 5.3% for service cost and 4.5% for interest cost for our postretirement plans. Our 2026 discount rate assumption will be 5.7% for service cost and 4.8% for interest cost for our U.S. pension plans and 5.8% for service cost and 5.0% for interest cost for our non-U.S. pension plans. We model these discount rates using a portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the plans. Changes in our discount rates were primarily the result of changes in bond yields year-over-year.
Our 2026 expected return on plan assets will be 5.9% (net of applicable taxes) for our postretirement plans. Our 2026 expected rate of return on plan assets will be 6.7% for our U.S. pension plans and 5.3% for our non-U.S. pension plans. We determine our expected rate of return on plan assets from the plan assets’ historical long-term investment performance, current and future asset allocation, and estimates of future long-term returns by asset class. We attempt to maintain our target asset allocation by re-balancing between asset classes as we make contributions and monthly benefit payments.
While we do not anticipate further changes in the 2026 assumptions for our U.S. and non-U.S. pension and postretirement benefit plans, as a sensitivity measure, a 100-basis-point change in our discount rate or a 100-basis-point change in the expected rate of return on plan assets would have the following effects, increase/(decrease) in cost (in millions):

U.S. Plans Non-U.S. Plans
100-Basis-Point 100-Basis-Point
Increase Decrease Increase Decrease
Effect of change in discount rate on pension costs $ 9  $ (4) $ (2) $ 3 
Effect of change in expected rate of return on plan assets on pension costs (27) 27  (14) 14 
Effect of change in discount rate on postretirement costs —  —  (1) 1 
Effect of change in expected rate of return on plan assets on postretirement costs (6) 6  —  — 

Income Taxes:
We compute our annual tax rate based on the statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we earn income. Significant judgment is required in determining our annual tax rate and in evaluating the uncertainty of our tax positions. We recognize a benefit for tax positions that we believe will more likely than not be sustained upon examination. The amount of benefit recognized is the largest amount of benefit that we believe has more than a 50% probability of being realized upon settlement. We regularly monitor our tax positions and adjust the amount of recognized tax benefit based on our evaluation of information that has become available since the end of our last financial reporting period. The annual tax rate includes the impact of these changes in recognized tax benefits. When adjusting the amount of recognized tax benefits, we do not consider information that has become available after the balance sheet date, however we do disclose the effects of new information whenever those effects would be material to our financial statements. Unrecognized tax benefits represent the difference between the amount of benefit taken or expected to be taken in a tax return and the amount of benefit recognized for financial reporting. These unrecognized tax benefits are recorded primarily within other non-current liabilities on the consolidated balance sheets.
We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. When assessing the need for valuation allowances, we consider future taxable income and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, we would adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or decrease to income. The resolution of tax reserves and changes in valuation allowances could be material to our results of operations for any period but is not expected to be material to our financial position.
42

New Accounting Pronouncements
See Note 4, New Accounting Standards , in Item 8, Financial Statements and Supplementary Data , for a discussion of new accounting pronouncements.

Contingencies
See Note 16, Commitments and Contingencies , in Item 8, Financial Statements and Supplementary Data , for a discussion of our contingencies.

Non-GAAP Financial Measures
The non-GAAP financial measures we provide in this report should be viewed in addition to, and not as an alternative for, results prepared in accordance with U.S. GAAP.
To supplement the consolidated financial statements prepared in accordance with U.S. GAAP, we have presented Organic Net Sales, Adjusted Operating Income, and Adjusted EPS, which are considered non-GAAP financial measures. The non-GAAP financial measures presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way. These measures are not substitutes for their comparable U.S. GAAP financial measures, such as net sales, net income/(loss), operating income(loss), diluted EPS, or other measures prescribed by U.S. GAAP, and there are limitations to using non-GAAP financial measures.
Management uses these non-GAAP financial measures to assist in comparing our performance on a consistent basis for purposes of business decision making by removing the impact of certain items that management believes do not directly reflect our underlying operations. We believe that Organic Net Sales, Adjusted Operating Income, and Adjusted EPS provide important comparability of underlying operating results, allowing investors and management to assess the Company’s operating performance on a consistent basis.
Management believes that presenting our non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items, (ii) permits investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating our results. We believe that the presentation of these non-GAAP financial measures, when considered together with the corresponding U.S. GAAP financial measures and the reconciliations to those measures, provides investors with additional understanding of the factors and trends affecting our business than could be obtained absent these disclosures.
Organic Net Sales is defined as net sales excluding, when they occur, the impact of currency, acquisitions and divestitures, and a 53rd week of shipments. We calculate the impact of currency on net sales by holding exchange rates constant at the previous year’s exchange rate, with the exception of highly inflationary subsidiaries, for which we calculate the previous year’s results using the current year’s exchange rate.
Adjusted Operating Income is defined as operating income excluding, when they occur, the impacts restructuring activities, deal costs, separation 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.
Adjusted EPS is defined as diluted EPS excluding, when they occur, the impacts of restructuring activities, deal costs, separation costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, losses/(gains) on the sale of a business, other losses/(gains) related to acquisitions and divestitures (e.g., tax and hedging impacts), nonmonetary currency devaluation (e.g., remeasurement gains and losses), debt prepayment and extinguishment (benefit)/costs, and certain significant discrete income tax items, and including, when they occur, adjustments to reflect preferred stock dividend payments on an accrual basis.
43

The Kraft Heinz Company
Reconciliation of Net Sales to Organic Net Sales
(dollars in millions)
(Unaudited)

Net Sales Currency Acquisitions and Divestitures Organic Net Sales Price Volume/Mix
2025

North America $ 18,586  $ (35) $ —  $ 18,621 
International Developed Markets
3,539  73  —  3,466 
Emerging Markets
2,817  15  —  2,802 
Kraft Heinz $ 24,942  $ 53  $ —  $ 24,889 

2024

North America $ 19,543  $ —  $ —  $ 19,543 
International Developed Markets
3,535  —  —  3,535 
Emerging Markets
2,768  80  10  2,678 
Kraft Heinz $ 25,846  $ 80  $ 10  $ 25,756 

Year-over-year growth rates
North America (4.9) % (0.2) pp 0.0 pp (4.7) % 0.3 pp (5.0) pp
International Developed Markets
0.1  % 2.0 pp 0.0 pp (1.9) % 0.9 pp (2.8) pp
Emerging Markets
1.8  % (2.4) pp (0.4) pp 4.6  % 4.0 pp 0.6 pp
Kraft Heinz (3.5) % (0.1) pp 0.0 pp (3.4) % 0.7 pp (4.1) pp

44

The Kraft Heinz Company
Reconciliation of Operating Income/(Loss) to Adjusted Operating Income
(in millions)
(Unaudited)

December 27, 2025 December 28, 2024
Operating income/(loss) $ (4,669) $ 1,683 
Restructuring activities 13  27 

Unrealized losses/(gains) on commodity hedges 35  (19)
Impairment losses 9,306  3,669 
Separation costs 60  — 

Adjusted Operating Income $ 4,745  $ 5,360 

45

The Kraft Heinz Company
Reconciliation of Diluted EPS to Adjusted EPS
(Unaudited)

December 27, 2025 December 28, 2024
Diluted EPS $ (4.93) $ 2.26 
Restructuring activities (a)
0.02  0.01 

Unrealized losses/(gains) on commodity hedges (b)
0.02  (0.01)
Impairment losses (c)
7.31  2.58 
Separation costs (d)
0.05  — 

Losses/(gains) on sale of business (e)
0.04  0.05 

Nonmonetary currency devaluation (f)
0.03  0.01 

Certain significant discrete income tax items (g)
0.06  (1.84)
Adjusted EPS $ 2.60  $ 3.06 

(a)    Gross expenses/(income) included in restructuring activities were expenses of $21 million ($18 million after-tax) in 2025 and $20 million ($18 million after-tax) in 2024 and were recorded in the following income statement line items:
• Cost of products sold included expenses of $1 million in 2025 and $8 million in 2024;
• SG&A included expenses of $12 million in 2025 and $19 million in 2024; and
• Other expense/(income) included expenses of $8 million in 2025 and income of $7 million in 2024.
(b)    Gross expenses/(income) included in unrealized losses/(gains) on commodity hedges were expenses of $35 million ($26 million after-tax) in 2025 and income of $19 million ($15 million after-tax) in 2024 and were recorded in cost of products sold.
(c)    Gross impairment losses included the following:
• Goodwill impairment losses of $6.7 billion ($6.7 billion after-tax) in 2025 and $1.6 billion ($1.6 billion after-tax) in 2024, which were recorded in SG&A; and
• Intangible asset impairment losses of $2.6 billion ($2.0 billion after-tax) in 2025 and $2.0 billion ($1.6 billion after-tax) in 2024, which were recorded in SG&A.
(d)    Gross expenses recorded in separation costs were $60 million ($53 million after-tax) in 2025 and were recorded in SG&A.
(e)    Gross expenses/(income) included in losses/(gains) on sale of business were expenses of $42 million ($42 million after-tax) in 2025 and expenses of $81 million ($60 million after-tax) in 2024 and were recorded in other expense/(income).
(f)    Gross expenses included in nonmonetary currency devaluation were $34 million ($34 million after-tax) in 2025 and $16 million ($16 million after-tax) in 2024 and were recorded in other expense/(income).
(g)    Certain significant discrete income tax items included expenses of $73.0 million in 2025 and a benefit of $2.2 billion in 2024. The expense in 2025 related to an adjustment to the valuation allowance associated with a non-U.S. deferred tax asset recognized in 2024 as a result of the movement of certain business operations to a wholly-owned subsidiary in the Netherlands. The benefit in 2024 represented the recognition of a foreign deferred tax asset ($3.0 billion) and an associated valuation allowance ($0.6 billion) related to the transfer of business operations to a wholly-owned subsidiary in the Netherlands, partially offset by the establishment of a valuation allowance against deferred tax assets in our subsidiary in Brazil.

46

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risks from adverse changes in commodity prices, foreign exchange rates, and interest rates. We monitor and manage these exposures as part of our overall risk management program. Our risk management program focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that volatility in these markets may have on our operating results. We maintain risk management policies that principally use derivative financial instruments to reduce significant, unanticipated fluctuations in earnings and cash flows that may arise from variations in commodity prices, foreign currency exchange rates, and interest rates. We manage market risk by incorporating parameters within our risk management strategy that limit the types of derivative instruments, the derivative strategies we use, and the degree of market risk that we hedge with derivative instruments. See Note 2, Significant Accounting Policies , and Note 13,  Financial Instruments , in Item 8, Financial Statements and Supplementary Data , for details of our market risk management policies and the financial instruments used to hedge those exposures.
When we use financial instruments, we are exposed to credit risk that a counterparty might fail to fulfill its performance obligations under the terms of our agreement. We minimize our credit risk by entering into transactions with counterparties with investment grade credit ratings, limiting the amount of exposure we have with each counterparty, and monitoring the financial condition of our counterparties. We maintain a policy of requiring that all significant, non-exchange traded derivative contracts are governed by an International Swaps and Derivatives Association master agreement. By policy, we do not engage in speculative or leveraged transactions, nor do we hold or issue financial instruments for trading purposes.
Effect of Hypothetical 10% Fluctuation in Market Prices:  
The potential gain or loss on the fair value of our outstanding commodity contracts, foreign exchange contracts, and cross-currency swap contracts, assuming a hypothetical 10% fluctuation in commodity prices and foreign currency exchange rates, would have been (in millions):

December 27,
2025 December 28,
2024
Commodity contracts $ 86  $ 81 
Foreign currency contracts 240  165 
Cross-currency swap contracts 176  71 

It should be noted that any change in the fair value of our derivative contracts, real or hypothetical, would be significantly offset by an inverse change in the value of the underlying hedged items. In relation to foreign currency contracts, this hypothetical calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. Our utilization of financial instruments in managing market risk exposures described above is consistent with the prior year. Changes in our portfolio of financial instruments are a function of our results of operations, debt repayments and debt issuances, market effects on debt and foreign currency, and our acquisition and divestiture activities.

47

Item 8. Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of The Kraft Heinz Company
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of The Kraft Heinz Company and its subsidiaries (the "Company") as of December 27, 2025 and December 28, 2024, and the related consolidated statements of income, of comprehensive income, of equity and of cash flows for each of the three years in the period ended December 27, 2025, including the related notes and financial statement schedule listed in the index appearing under Item 15(a) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 27, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 27, 2025 and December 28, 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 27, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 27, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
48

Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Interim (Q2) and Annual Goodwill Impairment Assessments for Certain Reporting Units
As described in Notes 2 and 9 to the consolidated financial statements, the Company’s goodwill balance was $22.2 billion as of December 27, 2025, a significant portion of which related to certain reporting units, Elevation; Hydration, Desserts, & Meals (HDM); Western Europe (WE); and Meat, Cheese, Coffee, & Snacks (MCCS). Management tests reporting units for impairment annually as of the first day of the third quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Reporting units are tested for impairment by comparing the estimated fair value of each reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is recorded based on the difference between the fair value and carrying amount, not to exceed the associated carrying amount of goodwill. As a result of the interim impairment test performed in the second quarter of 2025, management recognized non-cash goodwill impairment losses of $6.7 billion all of which related to the Taste Elevation, Ready Meals, and Snacking (TMS); Meat & Cheese (MC); Western Europe (WE); Canada and North America Coffee (CNAC); and Away from Home & Kraft Heinz Ingredients (AFH) reporting units. Management utilizes the discounted cash flow method under the income approach to estimate the fair value of reporting units. Management’s cash flow projections included significant assumptions related to net sales, cost of products sold, selling, general, and administrative costs (SG&A), depreciation and amortization, working capital, capital expenditures, income tax rates, discount rates, long-term growth rates, royalty rates, and other market factors.
The principal considerations for our determination that performing procedures relating to the interim goodwill impairment assessments in the second quarter of 2025 (for TMS, AFH, WE, MC, and CNAC) and the annual goodwill impairment assessments (for Elevation, HDM, WE, and MCCS) is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to net sales, cost of products sold, SG&A, income tax rate, discount rate, long-term growth rate, and royalty rate, as applicable to the reporting unit; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of the TMS, AFH, WE, MC, and CNAC reporting units on an interim basis and Elevation, HDM, WE, and MCCS on an annual basis. These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the reporting units; (ii) evaluating the appropriateness of the discounted cash flow method used by management; (iii) testing the completeness and accuracy of underlying data used in the method; and (iv) evaluating the reasonableness of the significant assumptions used by management related to net sales, cost of products sold, SG&A, income tax rate, discount rate, long-term growth rate, and royalty rate, as applicable to the reporting unit. Evaluating management’s assumptions related to net sales, cost of products sold, SG&A, income tax rates, royalty rates, discount rates, and long-term growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s discounted cash flow method and (ii) the reasonableness of the discount rate and long-term growth rate assumptions, as applicable to the reporting unit.
Interim (Q2) and Annual Impairment Assessments for Certain Indefinite-Lived Intangible Assets– Individual Brands
As described in Notes 2 and 9 to the consolidated financial statements, the Company’s indefinite-lived intangible assets balance, which consists primarily of individual brands, was $34.2 billion as of December 27, 2025, a portion of which related to certain brands, Kraft, Velveeta, Oscar Mayer, Lunchables, and Capri Sun . Management tests brands for impairment annually as of the first day of the third quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a brand is less than its carrying amount. Brands are tested for impairment by comparing the estimated fair value of each brand with its carrying amount. If the carrying amount of a brand exceeds its estimated fair value, an impairment loss is recorded based on the difference between the fair value and carrying amount. As a result of the interim impairment test performed in the second quarter of 2025, management recognized non-cash indefinite-lived intangible asset impairment losses
49

of $2.6 billion, a significant portion of which related to the Kraft , Velveeta and Lunchables brands. As disclosed by management, management utilizes either an excess earnings method or relief from royalty method to estimate the fair value of its brands. Using the excess earnings method, management’s cash flow projections included significant assumptions relating to net sales, cost of products sold, SG&A, contributory asset charges, income tax considerations, long-term growth rates, discount rates, and other market factors. Using the relief from royalty method, management’s cash flow projections included significant assumptions related to net sales, royalty rates, income tax considerations, long-term growth rates, discount rates, and other market factors.
The principal considerations for our determination that performing procedures relating to the interim goodwill impairment assessments in the second quarter of 2025 (for Kraft, Velveeta, Oscar Mayer , and Lunchables ) and the annual indefinite-lived intangible impairment assessments (for Kraft, Velveeta, Oscar Mayer, Lunchables, and Capri Sun ) is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the brands; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to (a) net sales, cost of products sold, SG&A, discount rates, and long-term growth rates, as applicable to the brand, for the excess earnings method and (b) net sales, discount rates, and royalty rates, as applicable to the brand, for the relief from royalty method; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s indefinite-lived intangible assets impairment assessments, including controls over the valuation of the Kraft, Velveeta, Oscar Mayer, and Lunchables brands on an interim basis and Kraft, Velveeta, Oscar Mayer, Lunchables and Capri Sun brands on an annual basis. These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the brands; (ii) evaluating the appropriateness of the excess earnings and relief from royalty methods used by management; (iii) testing the completeness and accuracy of underlying data used in the methods; and (iv) evaluating the reasonableness of the significant assumptions used by management related to (a) net sales, cost of products sold, SG&A, discount rates, and long-term growth rates, as applicable to the brand, used for the excess earnings method and (b) net sales, discount rates, and royalty rates, as applicable to the brand, used for the relief from royalty method. Evaluating management’s assumptions related to net sales, cost of products sold, SG&A, discount rates, and long-term growth rates for the excess earnings method and net sales, discount rates, and royalty rates for the relief from royalty method involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the brand; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s excess earnings and relief from royalty methods and (ii) the reasonableness of the discount rate and long-term growth rate assumptions for the excess earnings method and the reasonableness of the discount rate and royalty rate assumptions for the relief from royalty method.

/s/ PricewaterhouseCoopers LLP
Chicago, Illinois
February 12, 2026

We have served as the Company’s or its predecessors' auditor since 1979.
50

The Kraft Heinz Company
Consolidated Statements of Income
(in millions, except per share data)

December 27, 2025 December 28, 2024 December 30, 2023
Net sales $ 24,942   $ 25,846   $ 26,640  
Cost of products sold 16,633   16,878   17,714  
Gross profit 8,309   8,968   8,926  
Selling, general and administrative expenses, excluding impairment losses 3,672   3,616   3,692  
Goodwill impairment losses 6,734   1,638   510  
Intangible asset impairment losses 2,572   2,031   152  
Selling, general and administrative expenses 12,978   7,285   4,354  
Operating income/(loss) ( 4,669 ) 1,683   4,572  
Interest expense 947   912   912  
Other expense/(income) ( 171 ) ( 85 ) 27  
Income/(loss) before income taxes ( 5,445 ) 856   3,633  
Provision for/(benefit from) income taxes 403   ( 1,890 ) 787  
Net income/(loss) ( 5,848 ) 2,746   2,846  
Net income/(loss) attributable to noncontrolling interest ( 2 ) 2   ( 9 )
Net income/(loss) attributable to common shareholders $ ( 5,846 ) $ 2,744   $ 2,855  
Per share data applicable to common shareholders:
Basic earnings/(loss) $ ( 4.93 ) $ 2.27   $ 2.33  
Diluted earnings/(loss) ( 4.93 ) 2.26   2.31  

See accompanying notes to the consolidated financial statements.
51

The Kraft Heinz Company
Consolidated Statements of Comprehensive Income
(in millions)

December 27, 2025 December 28, 2024 December 30, 2023
Net income/(loss) $ ( 5,848 ) $ 2,746   $ 2,846  
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments 987   ( 513 ) 309  
Net deferred gains/(losses) on net investment hedges ( 313 ) 121   ( 119 )
Amounts excluded from the effectiveness assessment of net investment hedges 28   38   28  
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss) ( 30 ) ( 38 ) ( 27 )
Net deferred gains/(losses) on cash flow hedges 106   21   3  
Amounts excluded from the effectiveness assessment of cash flow hedges ( 1 ) 6   19  
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss) ( 173 ) 39   ( 50 )
Amounts excluded from the effectiveness assessment of fair value hedges 26   ( 23 ) —  
Net deferred losses/(gains) on fair value hedges reclassified to net income/(loss) ( 6 ) ( 3 ) —  
Net actuarial gains/(losses) arising during the period ( 81 ) 35   ( 70 )
Prior service credits/(costs) arising during the period ( 3 ) ( 7 ) —  
Net postemployment benefit losses/(gains) reclassified to net income/(loss) ( 6 ) ( 14 ) 115  
Total other comprehensive income/(loss) 534   ( 338 ) 208  
Total comprehensive income/(loss) ( 5,314 ) 2,408   3,054  
Comprehensive income/(loss) attributable to noncontrolling interest
( 13 ) ( 25 ) ( 7 )
Comprehensive income/(loss) attributable to common shareholders $ ( 5,301 ) $ 2,433   $ 3,061  

See accompanying notes to the consolidated financial statements.
52

The Kraft Heinz Company
Consolidated Balance Sheets
(in millions, except per share data)

  December 27, 2025 December 28, 2024
ASSETS
Cash and cash equivalents $ 2,615   $ 1,334  
Trade receivables (net of allowances of $ 34 at December 27, 2025 and $ 26 at December 28, 2024)
2,254   2,147  
Inventories 3,167   3,376  
Prepaid expenses 291   215  
Marketable securities 1,060   —  
Other current assets 588   583  
Assets held for sale 152   —  
Total current assets 10,127   7,655  
Property, plant and equipment, net 7,318   7,152  
Goodwill 22,179   28,673  
Intangible assets, net 37,529   40,099  
Other non-current assets 4,633   4,708  
TOTAL ASSETS $ 81,786   $ 88,287  
LIABILITIES AND EQUITY

Current portion of long-term debt $ 1,908   $ 654  
Accounts payable
4,308   4,188  
Accrued marketing 801   697  
Interest payable 298   263  

Other current liabilities 1,455   1,451  
Liabilities held for sale 8   —  
Total current liabilities 8,778   7,253  
Long-term debt 19,311   19,215  
Deferred income taxes 9,022   9,679  
Accrued postemployment costs 131   135  
Long-term deferred income 1,321   1,374  
Other non-current liabilities 1,434   1,306  
TOTAL LIABILITIES 39,997   38,962  
Commitments and Contingencies (Note 16)

Redeemable noncontrolling interest 12   6  
Equity:  
Common stock, $ 0.01 par value ( 5,000 shares authorized; 1,257 shares issued and 1,184 shares outstanding at December 27, 2025; 1,254 shares issued and 1,195 shares outstanding at December 28, 2024)
12   12  
Additional paid-in capital 51,287   52,135  
Retained earnings/(deficit)
( 4,629 ) 2,171  
Accumulated other comprehensive income/(losses) ( 2,370 ) ( 2,915 )
Treasury stock, at cost ( 73 shares at December 27, 2025 and 59 shares at December 28, 2024)
( 2,636 ) ( 2,218 )
Total shareholders' equity 41,664   49,185  
Noncontrolling interest 113   134  
TOTAL EQUITY 41,777   49,319  
TOTAL LIABILITIES AND EQUITY $ 81,786   $ 88,287  

See accompanying notes to the consolidated financial statements.
53

The Kraft Heinz Company
Consolidated Statements of Equity
(in millions)

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 —  —  2,855   —  —  1   2,856  
Other comprehensive income/(loss) excluding redeemable noncontrolling interest —  —  —  206   —  —  206  
Dividends declared-common stock ($ 1.60 per share)
—  —  ( 1,977 ) —  —  —  ( 1,977 )

Exercise of stock options, issuance of other stock awards, repurchase of common stock, and other —  203   —  —  ( 439 ) 9   ( 227 )
Balance at December 30, 2023
12   52,037   1,367   ( 2,604 ) ( 1,286 ) 162   49,688  
Net income/(loss) excluding redeemable noncontrolling interest —  —  2,744   —  —  2   2,746  
Other comprehensive income/(loss) excluding redeemable noncontrolling interest —  —  —  ( 311 ) —  ( 20 ) ( 331 )
Dividends declared-common stock ($ 1.60 per share)
—  —  ( 1,940 ) —  —  —  ( 1,940 )
Dividends declared-noncontrolling interest ($ 98.77 per share on January 31, 2024 and $ 95.03 per share on December 11, 2024)
—  —  —  —  —  ( 14 ) ( 14 )

Repurchase of common stock
—  —  —  —  ( 939 ) —  ( 939 )
Exercise of stock options, issuance of other stock awards, and other
—  98   —  —  7   4   109  
Balance at December 28, 2024
12   52,135   2,171   ( 2,915 ) ( 2,218 ) 134   49,319  
Net income/(loss) excluding redeemable noncontrolling interest —  —  ( 5,846 ) —  —  ( 2 ) ( 5,848 )
Other comprehensive income/(loss) excluding redeemable noncontrolling interest —  —  —  545   —  ( 17 ) 528  
Dividends declared-common stock ($ 1.60 per share)
—  ( 952 ) ( 954 ) —  —  —  ( 1,906 )
Dividends declared-noncontrolling interest ($ 92.08 per share)
—  —  —  —  —  ( 6 ) ( 6 )

Repurchase of common stock
—  —  —  —  ( 402 ) —  ( 402 )
Exercise of stock options, issuance of other stock awards, and other
—  104   —  —  ( 16 ) 4   92  
Balance at December 27, 2025
$ 12   $ 51,287   $ ( 4,629 ) $ ( 2,370 ) $ ( 2,636 ) $ 113   $ 41,777  

See accompanying notes to the consolidated financial statements.
54

The Kraft Heinz Company
Consolidated Statements of Cash Flows
(in millions)

December 27, 2025 December 28, 2024 December 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss) $ ( 5,848 ) $ 2,746   $ 2,846  
Adjustments to reconcile net income/(loss) to operating cash flows:  
Depreciation and amortization 968   948   961  

Divestiture-related license income ( 52 ) ( 54 ) ( 54 )
Equity award compensation expense 95   109   141  
Deferred income tax provision/(benefit) ( 495 ) ( 2,857 ) 17  
Postemployment benefit plan asset transfers/(contributions)
185   161   ( 22 )
Goodwill and intangible asset impairment losses 9,306   3,669   662  
Nonmonetary currency devaluation 34   16   28  
Loss/(gain) on sale of business 42   81   ( 4 )

Other items, net ( 3 ) ( 46 ) 207  
Changes in current assets and liabilities:
Trade receivables ( 55 ) ( 139 ) 18  
Inventories 133   ( 6 ) ( 106 )
Accounts payable ( 97 ) ( 308 ) ( 295 )
Other current assets ( 88 ) ( 38 ) 139  
Other current liabilities 337   ( 98 ) ( 562 )
Net cash provided by/(used for) operating activities 4,462   4,184   3,976  
CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures ( 801 ) ( 1,024 ) ( 1,013 )

Payments to acquire intangible assets
—   ( 140 ) —  

Purchases of marketable securities ( 1,724 ) —   —  
Proceeds from sale of marketable securities 686   —   —  
Proceeds from sale of business, net of cash disposed and working capital adjustments 9   8   —  
Other investing activities, net ( 3 ) 133   97  
Net cash provided by/(used for) investing activities ( 1,833 ) ( 1,023 ) ( 916 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt ( 678 ) ( 618 ) ( 848 )
Proceeds from issuance of long-term debt 1,620   594   657  

Proceeds from issuance of commercial paper —   —   150  
Repayments of commercial paper —   —   ( 150 )
Dividends paid ( 1,898 ) ( 1,931 ) ( 1,965 )
Repurchases of common stock
( 436 ) ( 988 ) ( 455 )
Other financing activities, net 141   ( 65 ) ( 67 )
Net cash provided by/(used for) financing activities ( 1,251 ) ( 3,008 ) ( 2,678 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 80   ( 71 ) ( 19 )
Cash, cash equivalents, and restricted cash
Net increase/(decrease) 1,458   82   363  
Balance at beginning of period 1,486   1,404   1,041  
Balance at end of period $ 2,944   $ 1,486   $ 1,404  

CASH PAID DURING THE PERIOD FOR:
Interest $ 903   $ 906   $ 896  

See accompanying notes to the consolidated financial statements.
55

The Kraft Heinz Company
Notes to Consolidated Financial Statements

Note 1. Basis of Presentation
Organization
On July 2, 2015 (the “2015 Merger Date”), through a series of transactions, we consummated the merger of Kraft Foods Group, Inc. (“Kraft”) with and into a wholly-owned subsidiary of H.J. Heinz Holding Corporation (“Heinz”) (the “2015 Merger”). At the closing of the 2015 Merger, Heinz was renamed The Kraft Heinz Company.
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 was a 52-week period that ended on December 27, 2025, our 2024 fiscal year was a 52-week period that ended on December 28, 2024, and our 2023 fiscal year was a 52-week period that ended on December 30, 2023.
Principles of Consolidation
The 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 consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which requires us to make accounting policy elections, estimates, and assumptions that affect the reported amount of assets, liabilities, reserves, and expenses. These 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 consolidated financial statements.
Reclassifications
We made reclassifications and adjustments to certain previously reported financial information to conform to our current period presentation.
Held for Sale
At December 27, 2025, we classified certain assets and liabilities as held for sale in our consolidated balance sheet, primarily relating to the divestiture of our infant and specialty food business in Italy in our International Developed Markets segment. At December 28, 2024, assets classified as held for sale were insignificant. See Note 5, Acquisitions and Divestitures , for additional information.
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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 consolidated balance sheets. At December 27, 2025, we had restricted cash of $ 164  million recorded in other current assets and restricted cash of $ 165  million recorded in other non-current assets. At December 28, 2024, we had restricted cash of $ 31  million recorded in other current assets and restricted cash of $ 121  million recorded in other non-current assets. The year-over-year increase was due to the conversion of certain assets related to the U.S. postretirement medical plan to cash, partially offset by claim payments for active and retired employees as a result of the conversion. See Note 12, Postemployment Benefits , for additional information. Total cash, cash equivalents, and restricted cash was $ 2,944  million at December 27, 2025 and $ 1,486  million at December 28, 2024.

Note 2. Significant Accounting Policies
Revenue Recognition:
Our revenues are primarily derived from customer orders for the purchase of our products. We recognize revenues as performance obligations are fulfilled when control passes to our customers. We record revenues net of variable consideration, including consumer incentives and performance obligations related to trade promotions, excluding taxes, and including all shipping and handling charges billed to customers (accounting for shipping and handling charges that occur after the transfer of control as fulfillment costs). We also record a refund liability for estimated product returns and customer allowances as reductions to revenues within the same period that the revenue is recognized. We base these estimates principally on historical and current period experience factors. We recognize costs paid to third-party brokers to obtain contracts as expenses as our contracts are generally less than one year.
Advertising, Consumer Incentives, and Trade Promotions:
We promote our products with advertising, consumer incentives, and performance obligations related to trade promotions. Consumer incentives and trade promotions include, but are not limited to, discounts, coupons, rebates, performance-based in-store display activities, and volume-based incentives. Variable consideration related to consumer incentive and trade promotion activities is recorded as a reduction to revenues based on amounts estimated as being due to customers and consumers at the end of a period. We base these estimates principally on historical utilization, redemption rates, and/or current period experience factors. We review and adjust these estimates at least quarterly based on actual experience and other information.
Advertising expenses are recorded in selling, general and administrative expenses (“SG&A”). For interim reporting purposes, we charge advertising to operations as a percentage of estimated full year sales activity and marketing costs. We then review and adjust these estimates each quarter based on actual experience and other information. Our definition of advertising expenses includes advertising production costs, in-store advertising costs, agency fees, brand promotions and events, and sponsorships, in addition to costs to obtain advertising in television, radio, print, digital, and social channels. We recorded advertising expenses of $ 1,073 million in 2025, $ 1,031 million in 2024, and $ 1,071 million in 2023. We also incur market research costs, which are recorded in SG&A but are excluded from advertising expenses.
Research and Development Expense:
We expense costs as incurred for product research and development within SG&A. Research and development expenses were approximately $ 167 million in 2025, $ 150 million in 2024, and $ 147 million in 2023.
Stock-Based Compensation:
We recognize compensation costs related to equity awards on a straight-line basis over the vesting period of the award, which is generally three to four years , or on a straight-line basis over the requisite service period for each separately vesting portion of the awards. These costs are primarily recognized within SG&A. We estimate expected forfeitures rather than recognizing forfeitures as they occur in determining our equity award compensation costs. We classify equity award compensation costs primarily within general corporate expenses. See Note 11, Employees’ Stock Incentive Plans , for additional information.
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Divestiture-Related License Income:
In 2021, we finalized a transaction with a third party, an affiliate of Groupe Lactalis (“Lactalis”) to sell certain assets in our global cheese business, as well as to license the Kraft , Velveeta and Philadelphia trademarks, for a total consideration of approximately $ 3.3  billion. Of the $ 3.3  billion total consideration, approximately $ 1.6  billion was attributed to the licensing of the Kraft , Velveeta and Philadelphia trademarks based on the estimated fair value of the licensed portion of each brand. The license income related to the perpetual licenses of the Kraft and Velveeta brands are recognized over a period of approximately 30 years. The license income related to the transitional license of the Philadelphia brand was recognized over a period of approximately three years . We recognized license income of approximately $ 52  million in 2025, and $ 54  million in 2024 and 2023, which is recorded as a reduction to SG&A. Related to this agreement, we have recorded approximately $ 1.3  billion in long-term deferred income and $ 54  million in other current liabilities at December 27, 2025, and $ 1.4  billion in long-term deferred income and $ 54  million in other current liabilities at December 28, 2024 on the consolidated balance sheets.
Postemployment Benefit Plans:
We maintain various retirement plans for the majority of our employees. These include pension benefits, postretirement health care benefits, and defined contribution benefits. The cost of these plans is charged to expense over an appropriate term based on, among other things, the cost component and whether the plan is active or inactive. Changes in the fair value of our plan assets result in net actuarial gains or losses. These net actuarial gains and losses are deferred into accumulated other comprehensive income/(losses) and amortized within other expense/(income) in future periods using the corridor approach. The corridor is 10% of the greater of the market-related value of the plan’s asset or projected benefit obligation. Any actuarial gains and losses in excess of the corridor are then amortized over an appropriate term based on whether the plan is active or inactive. See Note 12, Postemployment Benefits , for additional information.
Income Taxes:
We recognize income taxes based on amounts refundable or payable for the current year and record deferred tax assets or liabilities for any difference between the financial reporting and tax basis of our assets and liabilities. We also recognize deferred tax assets for temporary differences, operating loss carryforwards, and tax credit carryforwards. Deferred tax assets are included in other non-current assets on the consolidated balance sheets. Inherent in determining our annual tax rate are judgments regarding business plans, planning opportunities, and expectations about future outcomes. Realization of certain deferred tax assets, primarily net operating loss and other carryforwards, is dependent upon generating sufficient taxable income in the appropriate jurisdiction prior to the expiration of the carryforward periods.
We apply a more-likely-than-not threshold to the recognition and derecognition of uncertain tax positions. Accordingly, we recognize the amount of tax benefit that has a greater than 50 percent likelihood of being ultimately realized upon settlement. Future changes in judgment related to the expected ultimate resolution of uncertain tax positions will affect our results in the period of such change.
We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. When assessing the need for valuation allowances, we consider future taxable income, future legislative developments, and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, we would adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding adjustment to our provision for/(benefit from) income taxes. The resolution of tax reserves and changes in valuation allowances could be material to our results of operations for any period, but is not expected to be material to our financial position.
Common Stock and Preferred Stock Dividends:
Dividends are recorded as a reduction to retained earnings. When we have an accumulated retained deficit, dividends are recorded as a reduction of additional paid-in capital.
Inventories:
Inventories are stated at the lower of cost or net realizable value. We value inventories primarily using the average cost method.
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Property, Plant and Equipment:
Property, plant and equipment are stated at historical cost and depreciated on the straight-line method over the estimated useful lives of the assets. Machinery and equipment are depreciated over periods ranging from three years to 20 years and buildings and improvements over periods up to 40 years. Capitalized software costs are included in property, plant and equipment if we have the contractual right to take possession of the software at any time and it is feasible for us to either run the software on our own hardware or contract with a third party to host the software. These costs are amortized on a straight-line basis over the estimated useful lives of the software, which do not exceed 10 years. We review long-lived assets for impairment when conditions exist that indicate the carrying amount of the assets may not be fully recoverable. Such conditions could include significant adverse changes in the business climate, current-period operating or cash flow losses, significant declines in forecasted operations, or a current expectation that an asset group will be disposed of before the end of its useful life. We perform undiscounted operating cash flow analyses to determine if an impairment exists. When testing for impairment of assets held for use, we group assets at the lowest level for which cash flows are separately identifiable. If an impairment is determined to exist, the loss is calculated based on estimated fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal .
Hosted Cloud Computing Arrangement that is a Service Contract:
Deferred implementation costs for hosted cloud computing service arrangements are stated at historical cost and amortized on a straight-line basis over the term of the hosting arrangement that the implementation costs relate to. Deferred implementation costs to be amortized during the next 12 months for these arrangements are included in prepaid expenses and amortized to SG&A. All remaining amounts to be amortized are included in other non-current assets. The corresponding cash flows related to these arrangements will be reported within operating activities. We review the deferred implementation costs for impairment when we believe the deferred costs may no longer be recoverable. Such conditions could include situations where the arrangement is not expected to provide substantive service potential, a significant change occurs in the manner in which the arrangement is used or expected to be used, including early cancellation or termination of the arrangement, or situations where the arrangement has had, or will have, a significant change made to it. In instances where we have concluded that an impairment exists, we accelerate the deferred costs on the consolidated balance sheets for immediate expense recognition in SG&A.
Goodwill and Intangible Assets :
We maintain 10 reporting units globally, six of which comprise our goodwill balance. Our indefinite-lived intangible asset balance primarily consists of a number of individual brands. We test our reporting units and brands for impairment annually as of the first day of our third quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit or brand is less than its carrying amount. Such events and circumstances could include a sustained decrease in our market capitalization, increased competition or unexpected loss of market share, increased input costs beyond projections, disposals of significant brands or components of our business, unexpected business disruptions (for example due to a natural disaster, pandemic, or loss of a customer, supplier, or other significant business relationship), unexpected significant declines in operating results, significant adverse changes in the markets in which we operate, changes in income tax rates, changes in interest rates, or changes in management strategy. We test reporting units for impairment by comparing the estimated fair value of each reporting unit with its carrying amount. We test brands for impairment by comparing the estimated fair value of each brand with its carrying amount. If the carrying amount of a reporting unit or brand exceeds its estimated fair value, we record an impairment loss based on the difference between fair value and carrying amount, in the case of reporting units, not to exceed the associated carrying amount of goodwill.
Definite-lived intangible assets are amortized on a straight-line basis over the estimated periods benefited. We review definite-lived intangible assets for impairment when conditions exist that indicate the carrying amount of the assets may not be recoverable. Such conditions could include significant adverse changes in the business climate, current-period operating or cash flow losses, significant declines in forecasted operations, or a current expectation that an asset group will be disposed of before the end of its useful life. We perform undiscounted operating cash flow analyses to determine if an impairment exists. When testing for impairment of definite-lived intangible assets held for use, we group assets at the lowest level for which cash flows are separately identifiable. If an impairment is determined to exist, the loss is calculated based on estimated fair value. Impairment losses on definite-lived intangible assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal.
See Note 9, Goodwill and Intangible Assets , for additional information.
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Leases:
We determine whether a contract is or contains a lease at contract inception based on the presence of identified assets and our right to obtain substantially all the economic benefit from and to direct the use of such assets. When we determine a lease exists, we record a right-of-use (“ROU”) asset and corresponding lease liability on our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term. Lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets are recognized at the lease commencement date at the value of the lease liability and are adjusted for any prepayments, lease incentives received, and initial direct costs incurred. Lease liabilities are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term. As the discount rate implicit in the lease is not readily determinable in most of our leases, we use our incremental borrowing rate (dependent on tenor and currency and adjusted to reflect collateralization) based on the information available at the lease commencement date in determining the present value of lease payments. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
We do not record lease contracts with a term of 12 months or less on our consolidated balance sheets.
We recognize fixed lease expense for operating leases on a straight-line basis over the lease term. For finance leases, we recognize amortization expense over the shorter of the estimated useful life of the underlying assets or the lease term. In instances of title transfer, expense is recognized over the useful life. Interest expense on a finance lease is recognized using the effective interest method over the lease term.
We have lease agreements with non-lease components that relate to the lease components (e.g., common area maintenance such as cleaning or landscaping, insurance, etc.). We generally account for each lease and any non-lease components associated with that lease as a single lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as lease costs.
Certain leasing arrangements require variable payments that are dependent on usage or output or may vary for other reasons, such as insurance and tax payments. Variable lease payments that do not depend on an index or rate are excluded from lease payments in the measurement of the ROU asset and lease liability and are recognized as expenses in the period in which the payment occurs.
Our lease agreements typically do not include significant restrictions or covenants, and residual value guarantees are generally not included within our leases.
See Note 18, Leases , for additional information.
Financial Instruments:
Derivatives and hedging instruments:
As we source our commodities on global markets and periodically enter into financing or other arrangements abroad, we use a variety of risk management strategies and financial instruments to manage commodity price, foreign currency exchange rate, and interest rate risks. Our risk management program focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on our operating results. One way we do this is through actively hedging our risks through the use of derivative instruments. As a matter of policy, we do not use highly leveraged derivative instruments, nor do we use financial instruments for speculative purposes.
Derivatives are recorded on our consolidated balance sheets as assets or liabilities at fair value, which fluctuate based on changing market conditions.
Certain derivatives are designated as cash flow hedges or fair value hedges and qualify for hedge accounting treatment, while others are not designated as hedging instruments and are marked to market through net income/(loss). The gains and losses on cash flow hedges are deferred as a component of accumulated other comprehensive income/(losses) and are recognized in net income/(loss) at the time the hedged item affects net income/(loss), in the same line item as the underlying hedged item. The gains/(losses) on fair value hedges are recognized in net income/(loss) at the time the hedged item affects net income/(loss), in the same line item as the underlying hedged item. The excluded component on cash flow hedges and fair value hedges is recognized in net income/(loss) over the life of the hedging relationship in the same income statement line item as the underlying hedged item. We also designate certain derivatives and non-derivatives as net investment hedges to hedge the net assets of certain foreign subsidiaries which are exposed to volatility in foreign currency exchange rates. Changes in the value of these derivatives and remeasurements of our non-derivatives designated as net investment hedges are calculated each period using the spot method, with changes reported in foreign currency translation adjustments within accumulated other comprehensive income/(losses). Such amounts will remain in accumulated other comprehensive income/(losses) until the complete or substantially complete liquidation of our investment in the underlying foreign operations. The excluded component on derivatives designated as net investment hedges is recognized in net income/(loss) within interest expense. The income
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