UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
For the quarterly period ended September 27, 2025
or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
For the transition period from __________ to __________
Commission File Number: 001-37482
The Kraft Heinz Company
(Exact name of registrant as specified in its charter)
| Delaware | 46-2078182 | |||||||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| One PPG Place, | Pittsburgh, | Pennsylvania | 15222 | |||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
(412) 456-5700
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common stock, $0.01 par value | KHC | The Nasdaq Stock Market LLC | ||||||
3.500% Senior Notes due 2029 | KHC29 | The Nasdaq Stock Market LLC | ||||||
3.250% Senior Notes due 2033 | KHC33 | The Nasdaq Stock Market LLC | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ☐ | ||||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ | ||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 25, 2025, there were 1,183,655,579 shares of the registrant’s common stock outstanding.
Table of Contents
Unless the context otherwise requires, the terms “we,” “us,” “our,” “Kraft Heinz,” and the “Company” each refer to The Kraft Heinz Company and all of its consolidated subsidiaries.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains a number of forward-looking statements. Words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “intend,” “plan,” “will,” and variations of such words and similar future or conditional expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding our plans, impacts of accounting standards and guidance, growth, legal matters, taxes, costs and cost savings, impairments, and dividends, as well as statements regarding the proposed separation of Kraft Heinz into two independent publicly traded companies, including the timing and structure of such separation, the ability to effect the separation and to meet the condition thereto, the characteristics of the separated businesses and the expected benefits of the separation. These forward-looking statements reflect management’s current expectations and are not guarantees of future performance and are subject to a number of risks and uncertainties, many of which are difficult to predict and beyond our control.
Important factors that may affect our business and operations and that may cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, operating in a highly competitive industry; our ability to correctly predict, identify, and interpret changes in consumer preferences and demand, to offer new products to meet those changes, and to respond to competitive innovation; changes in the retail landscape or the loss of key retail customers; changes in our relationships with significant customers or suppliers, or in other business relationships; our ability to maintain, extend, and expand our reputation and brand image; our ability to effect the proposed separation of Kraft Heinz into two independent publicly traded companies and to meet the conditions related thereto, including obtaining applicable regulatory approvals, within the anticipated time period or at all; negative effects of the announcement pendency of the separation on the market price of Kraft Heinz’s securities and/or on Kraft Heinz’s financial performance; uncertainty of the financial performance of the separated companies following completion of the separation; the ability of the separated companies to each succeed as a standalone publicly traded company; the possibility that the separation will not achieve its intended benefits; the possibility of disruption, including changes to existing business relationships, disputes, litigation or unanticipated costs in connection with the separation; the impact of the separation on Kraft Heinz’s businesses and the risk that the separation may be more difficult, time-consuming or costly than expected, including the impact on Kraft Heinz’s resources, systems, procedures and controls and diversion of management’s attention and the impact and possible disruption of existing relationships with regulators, customers, suppliers, employees and other business counterparties; the ability to achieve anticipated capital structures in connection with the separation, including the future availability of credit and factors that may affect such availability; the ability to achieve anticipated credit ratings in connection with the separation; the ability to achieve anticipated tax treatments in connection with the separation and future, if any, divestitures, mergers, acquisitions and other portfolio changes and the impact of changes in relevant tax and other laws and regulations; the uncertainty of obtaining regulatory approvals in connection with the separation; our ability to leverage our brand value to compete against private label products; our ability to drive revenue growth in our key product categories or platforms, increase our market share, or add products that are in faster-growing and more profitable categories; product recalls or other product liability claims; climate change and legal or regulatory responses; our ability to identify, complete, or realize the benefits from strategic acquisitions, divestitures, alliances, joint ventures, or investments; our ability to successfully execute our strategic initiatives; the impacts of our international operations; our ability to protect intellectual property rights; our ability to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes, and improve our competitiveness; the influence of our largest stockholder; our level of indebtedness, as well as our ability to comply with covenants under our debt instruments; additional impairments of the carrying amounts of goodwill or other indefinite-lived intangible assets; foreign exchange rate fluctuations; volatility in commodity, energy, and other input costs; volatility in the market value of all or a portion of the commodity derivatives we use; compliance with laws and regulations and related legal claims or regulatory enforcement actions; failure to maintain an effective system of internal controls; a downgrade in our credit rating; the impact of sales of our common stock in the public market; the impact of our share repurchases or any change in our share repurchase activity; our ability to continue to pay a regular dividend and the amounts of any such dividends; disruptions in the global economy caused by geopolitical conflicts, unanticipated business disruptions and natural events in the locations in which we or our customers, suppliers, distributors, or regulators operate; economic and political conditions in the United States and various other nations where we do business (including inflationary pressures, the imposition of increased or new tariffs or other trade restrictions, instability in financial institutions, general economic slowdown, recession, or a potential U.S. federal government shutdown); changes in our management team or other key personnel and our ability to hire or retain key personnel or a highly skilled and diverse global workforce; our dependence on information technology and systems, including service interruptions, misappropriation of data, or breaches of security; increased pension, labor, and people-related expenses; changes in tax laws and interpretations and the final determination of tax audits, including transfer pricing matters, and any related litigation; volatility of capital markets and other macroeconomic factors; and other factors. For additional information on these and other factors that could affect our forward-looking statements, see Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 28, 2024. We disclaim and do not undertake any obligation to update, revise, or withdraw any forward-looking statement in this report, except as required by applicable law or regulation.
We use our investor relations website, ir.kraftheinzcompany.com, as a routine channel for distribution of important, and often material, information about Kraft Heinz, including quarterly and annual earnings results and presentations, press releases and other announcements, webcasts, analyst presentations, investor days, sustainability initiatives, financial information, and corporate governance practices, as well as archives of past presentations and events. We encourage you to follow our investor relations website in addition to our filings with the SEC to receive timely information about the Company. The information on our website is not part of this Quarterly Report on Form 10-Q and shall not be deemed to be incorporated by reference into this report or any other filings we make with the Securities and Exchange Commission (“SEC”).
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Kraft Heinz Company
Condensed Consolidated Statements of Income
(in millions, except per share data)
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Net sales | $ | 6,237 | $ | 6,383 | $ | 18,588 | $ | 19,270 | |||||||||||||||
| Cost of products sold | 4,247 | 4,197 | 12,351 | 12,547 | |||||||||||||||||||
| Gross profit | 1,990 | 2,186 | 6,237 | 6,723 | |||||||||||||||||||
| Selling, general and administrative expenses, excluding impairment losses | 930 | 859 | 2,689 | 2,718 | |||||||||||||||||||
| Goodwill impairment losses | 35 | 707 | 6,729 | 1,561 | |||||||||||||||||||
| Intangible asset impairment losses | — | 721 | 2,572 | 721 | |||||||||||||||||||
| Selling, general and administrative expenses | 965 | 2,287 | 11,990 | 5,000 | |||||||||||||||||||
| Operating income/(loss) | 1,025 | (101) | (5,753) | 1,723 | |||||||||||||||||||
| Interest expense | 240 | 230 | 709 | 685 | |||||||||||||||||||
| Other expense/(income) | (22) | (48) | (120) | (56) | |||||||||||||||||||
| Income/(loss) before income taxes | 807 | (283) | (6,342) | 1,094 | |||||||||||||||||||
| Provision for/(benefit from) income taxes | 194 | 7 | 154 | 480 | |||||||||||||||||||
| Net income/(loss) | 613 | (290) | (6,496) | 614 | |||||||||||||||||||
| Net income/(loss) attributable to noncontrolling interest | (2) | — | 1 | 1 | |||||||||||||||||||
| Net income/(loss) attributable to common shareholders | $ | 615 | $ | (290) | $ | (6,497) | $ | 613 | |||||||||||||||
| Per share data applicable to common shareholders: | |||||||||||||||||||||||
| Basic earnings/(loss) | $ | 0.52 | $ | (0.24) | $ | (5.47) | $ | 0.51 | |||||||||||||||
| Diluted earnings/(loss) | 0.52 | (0.24) | (5.47) | 0.50 | |||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
1
The Kraft Heinz Company
Condensed Consolidated Statements of Comprehensive Income
(in millions)
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Net income/(loss) | $ | 613 | $ | (290) | $ | (6,496) | $ | 614 | |||||||||||||||
| Other comprehensive income/(loss), net of tax: | |||||||||||||||||||||||
| Foreign currency translation adjustments | (77) | 369 | 904 | 77 | |||||||||||||||||||
| Net deferred gains/(losses) on net investment hedges | 10 | (128) | (289) | (25) | |||||||||||||||||||
| Amounts excluded from the effectiveness assessment of net investment hedges | 7 | 9 | 24 | 27 | |||||||||||||||||||
| Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss) | (6) | (9) | (25) | (27) | |||||||||||||||||||
| Net deferred gains/(losses) on cash flow hedges | 11 | (8) | 117 | (5) | |||||||||||||||||||
| Amounts excluded from the effectiveness assessment of cash flow hedges | — | 6 | (1) | 5 | |||||||||||||||||||
| Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss) | 5 | (26) | (173) | (7) | |||||||||||||||||||
| Amounts excluded from the effectiveness assessment of fair value hedges | 12 | (12) | 24 | (9) | |||||||||||||||||||
| Net deferred losses/(gains) on fair value hedges reclassified to net income/(loss) | (2) | — | (3) | — | |||||||||||||||||||
| Net deferred gains/(losses) on available-for-sale debt securities | 1 | — | — | — | |||||||||||||||||||
| Net actuarial gains/(losses) arising during the period | (27) | — | (60) | — | |||||||||||||||||||
| Net postemployment benefit losses/(gains) reclassified to net income/(loss) | (3) | (3) | (3) | (10) | |||||||||||||||||||
| Total other comprehensive income/(loss) | (69) | 198 | 515 | 26 | |||||||||||||||||||
| Total comprehensive income/(loss) | 544 | (92) | (5,981) | 640 | |||||||||||||||||||
| Comprehensive income/(loss) attributable to noncontrolling interest | (6) | 7 | (15) | (30) | |||||||||||||||||||
| Comprehensive income/(loss) attributable to common shareholders | $ | 550 | $ | (99) | $ | (5,966) | $ | 670 | |||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
2
The Kraft Heinz Company
Condensed Consolidated Balance Sheets
(in millions, except per share data)
(Unaudited)
| September 27, 2025 | December 28, 2024 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 2,114 | $ | 1,334 | |||||||
Trade receivables (net of allowances of $37 at September 27, 2025 and $26 at December 28, 2024) | 2,255 | 2,147 | |||||||||
| Inventories | 3,530 | 3,376 | |||||||||
| Prepaid expenses | 281 | 215 | |||||||||
| Marketable securities | 1,020 | — | |||||||||
| Other current assets | 640 | 583 | |||||||||
| Assets held for sale | 148 | — | |||||||||
| Total current assets | 9,988 | 7,655 | |||||||||
| Property, plant and equipment, net | 7,144 | 7,152 | |||||||||
| Goodwill | 22,167 | 28,673 | |||||||||
| Intangible assets, net | 37,545 | 40,099 | |||||||||
| Other non-current assets | 4,851 | 4,708 | |||||||||
| TOTAL ASSETS | $ | 81,695 | $ | 88,287 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current portion of long-term debt | $ | 1,905 | $ | 654 | |||||||
| Accounts payable | 4,582 | 4,188 | |||||||||
| Accrued marketing | 711 | 697 | |||||||||
| Interest payable | 283 | 263 | |||||||||
| Other current liabilities | 1,371 | 1,451 | |||||||||
| Liabilities held for sale | 11 | — | |||||||||
| Total current liabilities | 8,863 | 7,253 | |||||||||
| Long-term debt | 19,287 | 19,215 | |||||||||
| Deferred income taxes | 9,103 | 9,679 | |||||||||
| Accrued postemployment costs | 136 | 135 | |||||||||
| Long-term deferred income | 1,331 | 1,374 | |||||||||
| Other non-current liabilities | 1,396 | 1,306 | |||||||||
| TOTAL LIABILITIES | 40,116 | 38,962 | |||||||||
| Commitments and Contingencies (Note 15) | |||||||||||
| Redeemable noncontrolling interest | 7 | 6 | |||||||||
| Equity: | |||||||||||
Common stock, $0.01 par value (5,000 shares authorized; 1,257 shares issued and 1,184 shares outstanding at September 27, 2025; 1,254 shares issued and 1,195 shares outstanding at December 28, 2024) | 12 | 12 | |||||||||
| Additional paid-in capital | 51,738 | 52,135 | |||||||||
| Retained earnings/(deficit) | (5,280) | 2,171 | |||||||||
| Accumulated other comprehensive income/(losses) | (2,384) | (2,915) | |||||||||
Treasury stock, at cost (73 shares at September 27, 2025 and 59 shares at December 28, 2024) | (2,636) | (2,218) | |||||||||
| Total shareholders' equity | 41,450 | 49,185 | |||||||||
| Noncontrolling interest | 122 | 134 | |||||||||
| TOTAL EQUITY | 41,572 | 49,319 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 81,695 | $ | 88,287 | |||||||
See accompanying notes to the condensed consolidated financial statements.
3
The Kraft Heinz Company
Condensed Consolidated Statements of Equity
(in millions)
(Unaudited)
| Common Stock | Additional Paid-in Capital | Retained Earnings/(Deficit) | Accumulated Other Comprehensive Income/(Losses) | Treasury Stock, at Cost | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||
| Balance at December 28, 2024 | $ | 12 | $ | 52,135 | $ | 2,171 | $ | (2,915) | $ | (2,218) | $ | 134 | $ | 49,319 | |||||||||||||||||||||||||||
| Net income/(loss) excluding redeemable noncontrolling interest | — | — | 712 | — | — | 2 | 714 | ||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss) excluding redeemable noncontrolling interest | — | — | — | 222 | — | (1) | 221 | ||||||||||||||||||||||||||||||||||
Dividends declared-common stock ($0.40 per share) | — | — | (479) | — | — | — | (479) | ||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | (214) | — | (214) | ||||||||||||||||||||||||||||||||||
| Exercise of stock options, issuance of other stock awards, and other | — | 34 | — | — | — | 3 | 37 | ||||||||||||||||||||||||||||||||||
| Balance at March 29, 2025 | $ | 12 | $ | 52,169 | $ | 2,404 | $ | (2,693) | $ | (2,432) | $ | 138 | $ | 49,598 | |||||||||||||||||||||||||||
| Net income/(loss) excluding redeemable noncontrolling interest | — | — | (7,824) | — | — | 1 | (7,823) | ||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss) excluding redeemable noncontrolling interest | — | — | — | 374 | — | (13) | 361 | ||||||||||||||||||||||||||||||||||
Dividends declared-common stock ($0.40 per share) | — | — | (475) | — | — | — | (475) | ||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | (188) | — | (188) | ||||||||||||||||||||||||||||||||||
| Exercise of stock options, issuance of other stock awards, and other | — | 27 | — | — | (16) | 1 | 12 | ||||||||||||||||||||||||||||||||||
| Balance at June 28, 2025 | $ | 12 | $ | 52,196 | $ | (5,895) | $ | (2,319) | $ | (2,636) | $ | 127 | $ | 41,485 | |||||||||||||||||||||||||||
| Net income/(loss) excluding redeemable noncontrolling interest | — | — | 615 | — | — | (2) | 613 | ||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss) excluding redeemable noncontrolling interest | — | — | — | (65) | — | (3) | (68) | ||||||||||||||||||||||||||||||||||
Dividends declared-common stock ($0.40 per share) | — | (476) | — | — | — | — | (476) | ||||||||||||||||||||||||||||||||||
| Exercise of stock options, issuance of other stock awards, and other | — | 18 | — | — | — | — | 18 | ||||||||||||||||||||||||||||||||||
| Balance at September 27, 2025 | $ | 12 | $ | 51,738 | $ | (5,280) | $ | (2,384) | $ | (2,636) | $ | 122 | $ | 41,572 | |||||||||||||||||||||||||||
4
| Common Stock | Additional Paid-in Capital | Retained Earnings/(Deficit) | Accumulated Other Comprehensive Income/(Losses) | Treasury Stock, at Cost | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||
| Balance at December 30, 2023 | $ | 12 | $ | 52,037 | $ | 1,367 | $ | (2,604) | $ | (1,286) | $ | 162 | $ | 49,688 | |||||||||||||||||||||||||||
| Net income/(loss) excluding redeemable noncontrolling interest | — | — | 801 | — | — | 2 | 803 | ||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss) excluding redeemable noncontrolling interest | — | — | — | (65) | — | (29) | (94) | ||||||||||||||||||||||||||||||||||
Dividends declared-common stock ($0.40 per share) | — | — | (488) | — | — | — | (488) | ||||||||||||||||||||||||||||||||||
Dividends declared-noncontrolling interest ($98.77 per share) | — | — | — | — | — | (7) | (7) | ||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | (280) | — | (280) | ||||||||||||||||||||||||||||||||||
| Exercise of stock options, issuance of other stock awards, and other | — | 13 | — | — | 15 | 3 | 31 | ||||||||||||||||||||||||||||||||||
| Balance at March 30, 2024 | $ | 12 | $ | 52,050 | $ | 1,680 | $ | (2,669) | $ | (1,551) | $ | 131 | $ | 49,653 | |||||||||||||||||||||||||||
| Net income/(loss) excluding redeemable noncontrolling interest | — | — | 102 | — | — | (1) | 101 | ||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss) excluding redeemable noncontrolling interest | — | — | — | (69) | — | (4) | (73) | ||||||||||||||||||||||||||||||||||
Dividends declared-common stock ($0.40 per share) | — | — | (485) | — | — | — | (485) | ||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | (204) | — | (204) | ||||||||||||||||||||||||||||||||||
| Exercise of stock options, issuance of other stock awards, and other | — | 36 | — | — | (7) | — | 29 | ||||||||||||||||||||||||||||||||||
| Balance at June 29, 2024 | $ | 12 | $ | 52,086 | $ | 1,297 | $ | (2,738) | $ | (1,762) | $ | 126 | $ | 49,021 | |||||||||||||||||||||||||||
| Net income/(loss) excluding redeemable noncontrolling interest | — | — | (290) | — | — | — | (290) | ||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss) excluding redeemable noncontrolling interest | — | — | — | 191 | — | 8 | 199 | ||||||||||||||||||||||||||||||||||
Dividends declared-common stock ($0.40 per share) | — | — | (486) | — | — | — | (486) | ||||||||||||||||||||||||||||||||||
| Exercise of stock options, issuance of other stock awards, and other | — | 20 | — | — | (2) | 1 | 19 | ||||||||||||||||||||||||||||||||||
| Balance at September 28, 2024 | $ | 12 | $ | 52,106 | $ | 521 | $ | (2,547) | $ | (1,764) | $ | 135 | $ | 48,463 | |||||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
5
The Kraft Heinz Company
Condensed Consolidated Statements of Cash Flows
(in millions)
(Unaudited)
| For the Nine Months Ended | |||||||||||
| September 27, 2025 | September 28, 2024 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income/(loss) | $ | (6,496) | $ | 614 | |||||||
| Adjustments to reconcile net income/(loss) to operating cash flows: | |||||||||||
| Depreciation and amortization | 717 | 714 | |||||||||
| Divestiture-related license income | (39) | (41) | |||||||||
| Equity award compensation expense | 70 | 83 | |||||||||
| Deferred income tax provision/(benefit) | (488) | (277) | |||||||||
| Postemployment benefit plan contributions | (11) | 16 | |||||||||
| Goodwill and intangible asset impairment losses | 9,301 | 2,282 | |||||||||
| Nonmonetary currency devaluation | 26 | 7 | |||||||||
| Loss/(gain) on sale of business | 44 | 78 | |||||||||
| Other items, net | 13 | (45) | |||||||||
| Changes in current assets and liabilities: | |||||||||||
| Trade receivables | (53) | (83) | |||||||||
| Inventories | (205) | (392) | |||||||||
| Accounts payable | 312 | 48 | |||||||||
| Other current assets | (188) | (129) | |||||||||
| Other current liabilities | 83 | (79) | |||||||||
| Net cash provided by/(used for) operating activities | 3,086 | 2,796 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Capital expenditures | (596) | (777) | |||||||||
| Purchases of marketable securities | (1,358) | — | |||||||||
| Proceeds from sale of marketable securities | 354 | — | |||||||||
| Proceeds from sale of business, net of cash disposed and working capital adjustments | 9 | 5 | |||||||||
| Payments to acquire intangible assets | — | (140) | |||||||||
| Other investing activities, net | (19) | 63 | |||||||||
| Net cash provided by/(used for) investing activities | (1,610) | (849) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Repayments of long-term debt | (677) | (607) | |||||||||
| Proceeds from issuance of long-term debt | 1,620 | 594 | |||||||||
| Dividends paid | (1,424) | (1,452) | |||||||||
| Repurchases of common stock | (435) | (538) | |||||||||
| Other financing activities, net | 153 | (43) | |||||||||
| Net cash provided by/(used for) financing activities | (763) | (2,046) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 52 | (17) | |||||||||
| Cash, cash equivalents, and restricted cash | |||||||||||
| Net increase/(decrease) | 765 | (116) | |||||||||
| Balance at beginning of period | 1,486 | 1,404 | |||||||||
| Balance at end of period | $ | 2,251 | $ | 1,288 | |||||||
See accompanying notes to the condensed consolidated financial statements.
6
The Kraft Heinz Company
Notes to Condensed Consolidated Financial Statements
Note 1. Basis of Presentation
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted, in accordance with the rules of the SEC. In management’s opinion, these interim financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary to fairly state our results for the periods presented.
We operate on a 52- or 53-week fiscal year ending on the last Saturday in December in each calendar year. Unless the context requires otherwise, references to years and quarters contained herein pertain to our fiscal years and fiscal quarters. Our 2025 fiscal year is scheduled to be a 52-week period ending on December 27, 2025, and our 2024 fiscal year was a 52-week period that ended on December 28, 2024.
The condensed consolidated balance sheet data at December 28, 2024 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. These statements should be read in conjunction with our audited consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 28, 2024. The results for interim periods are not necessarily indicative of future or annual results.
Principles of Consolidation
The condensed consolidated financial statements include The Kraft Heinz Company and all of our controlled subsidiaries. All intercompany transactions are eliminated.
Reportable Segments
We manage our operating results through four operating segments: North America, Europe and Pacific Developed Markets (“EPDM” or “International Developed Markets”), West and East Emerging Markets (“WEEM”), and Asia Emerging Markets (“AEM”). We have two reportable segments defined by geographic region: North America and International Developed Markets. Our remaining operating segments, consisting of WEEM and AEM, are combined and disclosed as Emerging Markets.
Use of Estimates
We prepare our condensed consolidated financial statements in accordance with U.S. GAAP, which requires us to make accounting policy elections, estimates, and assumptions that affect the reported amount of assets, liabilities, reserves, and expenses. These accounting policy elections, estimates, and assumptions are based on our best estimates and judgments. We evaluate our policy elections, estimates, and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. We believe these estimates to be reasonable given the current facts available. We adjust our policy elections, estimates, and assumptions when facts and circumstances dictate. Market volatility, including foreign currency exchange rates, increases the uncertainty inherent in our estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from estimates. If actual amounts differ from estimates, we include the revisions in our consolidated results of operations in the period the actual amounts become known. Historically, the aggregate differences, if any, between our estimates and actual amounts in any year have not had a material effect on our condensed consolidated financial statements.
Reclassifications
We made reclassifications and adjustments to certain previously reported financial information to conform to our current period presentation.
Held for Sale
As of September 27, 2025, we classified certain assets and liabilities as held for sale in our condensed consolidated balance sheet, primarily relating to the divestiture of our infant and specialty food business in Italy within our International Developed Markets segment. As of 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 90 days or less. The fair value of cash equivalents approximates the carrying amount. Cash and cash equivalents that are legally restricted as to withdrawal or usage are classified in other current assets or other non-current assets, as applicable, on the condensed consolidated balance sheets. At September 27, 2025, we had restricted cash of $32 million recorded in other current assets and restricted cash of $105 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. Total cash, cash equivalents, and restricted cash was $2,251 million at September 27, 2025 and $1,486 million at December 28, 2024.
Note 2. Proposed 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”). The two resulting companies, whose names will be determined at a later date, are referred to as: “Global Taste Elevation Co.”, which will focus on Taste Elevation and shelf-stable meals, and “North American Grocery Co.”, which will focus on certain North American staples. While we currently expect to complete the Separation in the second half of 2026, the transaction is subject to the satisfaction of customary conditions, including final approval by the Kraft Heinz Board of Directors, receipt of favorable tax opinions of our U.S. tax advisors with respect to the tax-free nature of the Separation, and the effectiveness of appropriate filings with the U.S. Securities and Exchange Commission. Therefore, we cannot assure that the Separation will be completed on the anticipated timeline or at all or that the terms of the Separation will not change.
We incurred $17 million of separation costs for the three and nine months ended September 27, 2025 which were recognized in selling, general and administrative expenses (“SG&A”).
Note 3. Significant Accounting Policies
There were no significant changes to our accounting policies from those disclosed in our Annual Report on Form 10-K for the year ended December 28, 2024.
Note 4. New Accounting Standards
Accounting Standards Not Yet Adopted
Income Taxes (Topic 740) – Improvements to Income Tax Disclosures:
In December 2023, the FASB issued ASU 2023-09 to improve income tax disclosure requirements under ASC 740, Income Taxes. The guidance requires entities to provide separate information about a reporting entity’s effective tax rate reconciliation and about income taxes paid. This ASU will be effective for annual periods beginning after December 15, 2024. We currently expect to adopt ASU 2023-09 in our Annual Report on Form 10-K for the year ended December 27, 2025 on a prospective basis. While the standard will require additional disclosures related to the Company’s income taxes, we do not expect this ASU to have an impact on our financial statements.
Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):
In November 2024, the FASB issued ASU 2024-03 to improve financial reporting under ASC 220, Income Statement-Reporting Comprehensive Income. The guidance requires entities to disclose additional information about specific expense categories related to cost of sales and SG&A in the notes to financial statements at interim and annual reporting periods. This ASU will be effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are evaluating the impacts this ASU will have on our financial statements and related disclosures.
Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):
In September 2025, the FASB issued ASU 2025-06 to provide clarification and improvements to the accounting for internal-use software costs under ASC 350-40, Intangibles – Goodwill and Other – Internal-Use Software. The guidance includes amendments related to capitalization of implementation costs, subsequent measurement, and related presentation and disclosure requirements. This ASU will be effective beginning in 2028 for annual and quarterly reports. Early adoption is permitted. We are currently evaluating the impacts this ASU will have on our financial statements and related disclosures.
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Note 5. Acquisitions and Divestitures
Divestitures
Italy Infant Transaction:
On July 9, 2025, we entered into a definitive agreement with a third party, NewPrinces S.p.A., to sell our infant and specialty food business in Italy, within our International Developed Markets segment, for cash consideration of approximately $140 million (the “Italy Infant Transaction”). The net assets to be transferred in the Italy Infant Transaction include, among other things, our intellectual property rights to the Plasmon and Nipiol brands and one manufacturing facility in Italy (collectively, the “Italy Infant Disposal Group”). The Italy Infant Transaction is expected to close in the first quarter of 2026, subject to customary closing conditions, including regulatory approvals.
In the third quarter of 2025, we determined that the Italy Infant Disposal Group met the held for sale criteria. Accordingly, we have presented the assets and liabilities of the Italy Infant Disposal Group as held for sale on the condensed consolidated balance sheet at September 27, 2025. As of July 9, 2025, the date the Italy Infant Disposal Group was determined to be held for sale, we tested the individual assets included within the Italy Infant Disposal Group for impairment. We determined that the net assets of the Italy Infant Disposal Group had an aggregate carrying amount above their estimated fair value less cost to sell, and that the goodwill within the Italy Infant Disposal Group was fully impaired. Accordingly, we recorded a non-cash goodwill impairment loss of $35 million, which was recognized in SG&A, for the three and nine months ended September 27, 2025. Further, we recorded an estimated pre-tax loss on sale of business of $44 million for the three and nine months ended September 27, 2025, which was recognized in other expense/(income) on our condensed consolidated statement of income.
Russia Infant Transaction:
On March 11, 2024, we closed and finalized the sale of our infant nutrition business in Russia to a third party for total cash consideration of approximately $25 million (the “Russia Infant Transaction”). As a result of the Russia Infant Transaction, we recognized an insignificant pre-tax gain in other expense/(income) on our condensed consolidated statement of income in the first quarter of 2024.
Papua New Guinea Transaction:
On February 5, 2024, we closed and finalized the sale of 100% of the equity interests in our Papua New Guinea subsidiary, Hugo Canning Company Limited, to a third party for total cash consideration of approximately $22 million (the “Papua New Guinea Transaction”). As a result of the Papua New Guinea Transaction, we recognized a pre-tax loss on sale of business of approximately $80 million in other expense/(income) on our condensed consolidated statement of income in the first quarter of 2024, of which approximately $41 million relates to the release of accumulated foreign currency losses.
Deal Costs:
We incurred insignificant deal costs for the three and nine months ended September 27, 2025 and insignificant deal costs for the three and nine months ended September 28, 2024 related to our divestitures. We recognized these deal costs in SG&A.
Note 6. Restructuring Activities
See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 28, 2024 for additional information on our restructuring activities.
Restructuring Activities:
We have restructuring programs globally, which are focused primarily on streamlining our organizational design. For the nine months ended September 27, 2025, we eliminated approximately 580 positions related to these programs. As of September 27, 2025, we expect to eliminate approximately 180 additional positions related to these programs, primarily during the remainder of 2025. For the three months ended September 27, 2025, restructuring activities resulted in net expenses of $4 million and included a net expense of $6 million of severance and employee benefit costs and a net benefit of $2 million of other restructuring costs. For the nine months ended September 27, 2025, restructuring activities resulted in net expenses of $18 million and included a net expense of $12 million of other restructuring costs, a net expense of $9 million of severance and employee benefit costs, and a net benefit of $3 million of other exit costs. Restructuring activities resulted in income of $7 million for the three months and $8 million for the nine months ended September 28, 2024.
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Our net liability balance for restructuring project costs that qualify as exit and disposal costs under U.S. GAAP was (in millions):
| Severance and Employee Benefit Costs | Other Exit Costs | Total | |||||||||||||||
| Balance at December 28, 2024 | $ | 29 | $ | 11 | $ | 40 | |||||||||||
| Charges/(credits) | 9 | (3) | 6 | ||||||||||||||
| Cash payments | (28) | (6) | (34) | ||||||||||||||
| Balance at September 27, 2025 | $ | 10 | $ | 2 | $ | 12 | |||||||||||
We expect the majority of the liability for severance and employee benefit costs as of September 27, 2025 to be paid by the end of 2025. The liability for other exit costs primarily relates to lease obligations. The cash impact of these obligations will continue for the duration of the lease terms, which expire in 2026.
Total Expenses/(Income):
Total expense/(income) related to restructuring activities, by income statement caption, were (in millions):
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Severance and employee benefit costs - Cost of products sold | $ | 2 | $ | (1) | $ | 1 | $ | (1) | |||||||||||||||
| Severance and employee benefit costs - SG&A | 4 | — | 8 | (5) | |||||||||||||||||||
| Severance and employee benefit costs - Other expense/(income) | — | — | — | (1) | |||||||||||||||||||
| Other costs - Cost of products sold | — | 1 | — | 3 | |||||||||||||||||||
| Other costs - SG&A | — | — | 1 | 3 | |||||||||||||||||||
| Other costs - Other expense/(income) | (2) | (7) | 8 | (7) | |||||||||||||||||||
| $ | 4 | $ | (7) | $ | 18 | $ | (8) | ||||||||||||||||
We do not include our restructuring activities within Segment Adjusted Operating Income (as defined in Note 17, Segment Reporting). The pre-tax impact of allocating such expenses/(income) to our segments would have been (in millions):
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| North America | $ | — | $ | — | $ | 15 | $ | (1) | |||||||||||||||
| International Developed Markets | 4 | (8) | 1 | (10) | |||||||||||||||||||
Emerging Markets(a) | (4) | — | (5) | — | |||||||||||||||||||
| General corporate expenses | 4 | 1 | 7 | 3 | |||||||||||||||||||
| $ | 4 | $ | (7) | $ | 18 | $ | (8) | ||||||||||||||||
(a) Emerging Markets represents the aggregation of our WEEM and AEM operating segments.
Note 7. Inventories
Inventories consisted of the following (in millions):
| September 27, 2025 | December 28, 2024 | ||||||||||
| Packaging and ingredients | $ | 869 | $ | 950 | |||||||
| Spare parts | 257 | 245 | |||||||||
| Work in process | 320 | 310 | |||||||||
| Finished products | 2,084 | 1,871 | |||||||||
| Inventories | $ | 3,530 | $ | 3,376 | |||||||
At September 27, 2025, inventories excluded amounts classified as held for sale. See Note 5, Acquisitions and Divestitures, for additional information.
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Note 8. Goodwill and Intangible Assets
Goodwill:
Changes in the carrying amount of goodwill, by segment, were (in millions):
| North America | International Developed Markets | Emerging Markets | Total | ||||||||||||||||||||
| Balance at December 28, 2024 | $ | 26,232 | $ | 2,134 | $ | 307 | $ | 28,673 | |||||||||||||||
Impairment losses(a) | (5,875) | (854) | — | (6,729) | |||||||||||||||||||
| Translation adjustments and other | 33 | 184 | 6 | 223 | |||||||||||||||||||
Balance at September 27, 2025 | $ | 20,390 | $ | 1,464 | $ | 313 | $ | 22,167 | |||||||||||||||
(a) Includes $35 million of impairment losses within our International Developed Markets segment related to goodwill attributable to the Italy Infant Disposal Group that was determined to be fully impaired. See Note 5, Acquisitions and Divestitures, for additional information related to the Italy Infant Transaction and its financial statement impact.
Q3 2025 Goodwill Impairment Testing
As of the first day of the third quarter of 2025, certain organizational changes occurred that resulted in a change to the reporting unit composition within our North America segment. Our six North America reporting units — Taste Elevation, Ready Meals and Snacking (“TMS”), Hydration & Desserts (“HD”), Meat & Cheese (“MC”), Away from Home & Kraft Heinz Ingredients (“AFH”), Canada and North America Coffee (“CNAC”), and Other North America — were reorganized into five reporting units: Elevation; Hydration, Desserts, & Meals (“HDM”); Meat, Cheese, Coffee, & Snacks (“MCCS”); Canada; and Other North America.
As a result of this reorganization, we reassigned assets and liabilities to the applicable reporting units and allocated goodwill using the relative fair value approach. We performed an interim impairment test on the affected reporting units on both a pre- and post-reorganization basis.
We performed our pre-reorganization impairment test as of June 29, 2025, which was our first day of the third quarter of 2025. There were five reporting units affected by the reassignment of assets and liabilities that maintained a goodwill balance as of our pre-reorganization impairment test date. These reporting units were TMS, HD, MC, AFH, and CNAC. Our Other North America reporting unit did not have a goodwill balance as of our pre-reorganization impairment test date.
As part of our pre-reorganization impairment test, we utilized the discounted cash flow method under the income approach to estimate the fair values as of June 29, 2025 for the five reporting units noted above. As a result of our pre-reorganization impairment test, we concluded that the fair value of these reporting units exceeded their carrying amounts and no impairment was recorded.
We performed our post-reorganization impairment test in conjunction with our 2025 Annual Impairment Test and tested the new North America reporting units (Elevation, HDM, MCCS, Canada, and Other North America) along with the reporting units in our International Developed Markets segment and Emerging Markets. We tested our reporting units for impairment as of the first day of our third quarter, which was June 29, 2025 for our 2025 Annual Impairment Test. In performing this test, we incorporated information that was known through the date of filing of our Quarterly Report on Form 10-Q for the period ended September 27, 2025. We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units. As a result of our 2025 Annual Impairment Test, we determined that the fair value of each of the reporting units tested was in excess of its carrying amount and no impairments were recorded.
As of September 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 September 27, 2025.
Accumulated impairment losses to goodwill were $20.2 billion as of September 27, 2025 and $13.5 billion as of December 28, 2024.
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Q2 2025 Goodwill Impairment Testing
During the second quarter of 2025, we concluded that the sustained decline in our share price and market capitalization was a triggering event requiring an interim goodwill impairment assessment for all reporting units. We performed an interim impairment test (“Q2 Impairment Test”) as of the last day of our second quarter, June 28, 2025, and utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units.
As a result of our Q2 Impairment Test, we recognized non-cash goodwill impairment losses of $6.7 billion in SG&A in the second quarter of 2025, of which $3.1 billion related to our TMS reporting unit, $1.6 billion related to our MC reporting unit, $805 million related to our CNAC reporting unit, and $400 million related to our AFH reporting unit within our North America segment, as well as $819 million related to our Western Europe (“WE”) reporting unit within our International Developed Markets segment.
The impairments of our TMS, AFH, WE, MC, and CNAC reporting units were primarily due to the market’s perceived risk of our ability to achieve our future cash flow projections, due, in part, to uncertainty in the macroeconomic environment in which we operate. The impairment of our MC reporting unit was also partially driven by a reduction of future long-term growth assumptions.
Q1 2025 Goodwill Impairment Testing
In the first quarter of 2025, certain organizational changes occurred that impacted our reporting unit composition within our International Developed Markets segment (the “Q1 Europe reorganization”). Two of our International Developed Market reporting units — Northern Europe (“NE”) and Continental Europe (“CE”) — were combined into one reporting unit, Western Europe (“WE”). None of our other reporting units were impacted by this reorganization.
As a result of this reorganization, the existing assets and liabilities of the impacted reporting units were combined and we performed an interim impairment test (or transition test) on the affected reporting units on both a pre- and post-reorganization basis. We performed our pre-reorganization and post-reorganization tests as of December 29, 2024, which was our first day of 2025.
As part of our pre-reorganization impairment test of the NE and CE reporting units, and post-reorganization test of the WE reporting unit, we utilized the discounted cash flow method under the income approach to estimate the fair values as of December 29, 2024. As a result of these tests, we concluded that the fair value of these reporting units exceeded their carrying amounts and no impairment was recorded.
2024 Year-to-Date Goodwill Impairment Testing
As of March 31, 2024, which was the first day of our second quarter of 2024, certain organizational changes occurred that impacted our reporting unit composition within our North America segment (the “Q2 North America reorganization”). Two of our North America reporting units — Taste, Meals, and Away From Home (“TMA”), and Fresh, Beverages, and Desserts (“FBD”) — were reorganized into the four reporting units: Taste Elevation, Ready Meals and Snacking (“TMS”), Hydration & Desserts (“HD”), Meat & Cheese (“MC”), and Away from Home & Kraft Heinz Ingredients (“AFH”). The Canada and North America Coffee (“CNAC”) and Other North America reporting units were not impacted by this reorganization.
As a result of the Q2 North America reorganization, we reassigned assets and liabilities to the applicable reporting units and allocated goodwill using the relative fair value approach. We performed an interim impairment test (or “2024 transition test”) on the affected reporting units on both a pre- and post-reorganization basis.
As part of our Q2 North America pre-reorganization impairment test of the TMA and FBD reporting units, we utilized the discounted cash flow method under the income approach to estimate the fair values as of March 31, 2024 for these two reporting units and concluded that the fair value of these reporting units exceeded their carrying values and no impairment was recorded.
We performed our Q2 North America post-reorganization impairment test as of March 31, 2024, and tested the new North America reporting units (TMS, HD, MC and AFH). We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units. As a result of our Q2 North America post-reorganization impairment test, we recognized a non-cash impairment loss of approximately $854 million in SG&A in our North America segment in the second quarter of 2024. The $854 million impairment loss related to our MC reporting unit, which had a goodwill carrying amount of approximately $2.5 billion after impairment. The impairment of our MC reporting unit was driven by the disaggregation of the former FBD reporting unit, which previously held all the net assets for the HD and MC reporting units as well as the Snacking category of TMS.
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We performed our 2024 annual impairment test as of June 30, 2024, which was the first day of our third quarter of 2024. We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units. As a result of our 2024 annual impairment test, we recognized non-cash goodwill impairment losses in SG&A of approximately $479 million related to our Continental Europe reporting unit within our International Developed Markets segment, $184 million related to our LATAM reporting unit within Emerging Markets, and $44 million related to our AFH reporting unit within our North America segment. The impairment of our Continental Europe reporting unit was primarily driven by a reduction of future year profitability assumptions from prior estimates in non-core categories and the Just Spices business, as well as higher intercompany royalty expenses resulting from a change in our product mix. The impairment of our LATAM reporting unit was primarily driven by a reduction of future year profitability assumptions from prior estimates and negative macroeconomic factors, including weakening of the foreign currency exchange rate of the Brazilian real relative to the U.S. dollar.
Additional Goodwill Considerations
Following the 2025 Annual Impairment Test, our Elevation, HDM, Western Europe, MCCS, and Canada reporting units had less than 5% fair value over carrying amount with an aggregate goodwill carrying amount of $21.9 billion. 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 date. Accordingly, these reporting units have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future.
Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions, and to consider the market multiples of certain peer and guideline companies. These assumptions and estimates include estimated future annual cash flows (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, discount rates, long-term growth rates, royalty rates, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control change; such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units might become impaired in the future. Additionally, any decisions to divest certain non-strategic assets could lead to future goodwill impairments.
Indefinite-lived intangible assets:
Changes in the carrying amount of indefinite-lived intangible assets, which primarily consisted of trademarks, were (in millions):
| Balance at December 28, 2024 | $ | 36,456 | |||
| Impairment losses | (2,561) | ||||
| Translation adjustments and other | 226 | ||||
Balance at September 27, 2025 | $ | 34,121 | |||
Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $34.1 billion at September 27, 2025.
Q3 2025 Indefinite-Lived Intangible Asset Impairment Testing
We performed our 2025 Annual Impairment Test as of June 29, 2025, which was the first day of our third quarter of 2025. As part of the Annual Impairment Test, we utilized the multi-period excess earnings and relief from royalty method under the income approach to estimate the fair value of our indefinite-lived intangible assets. As a result of our 2025 Annual Impairment Test, we concluded that the fair value of these brands exceeded their carrying amounts and no impairment was recorded.
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Q2 2025 Indefinite-Lived Intangible Asset Impairment Testing
During the second quarter of 2025, we concluded that the sustained decline in our share price and market capitalization was a triggering event requiring an interim indefinite-lived intangible asset impairment assessment for our brands. As part of the Q2 Impairment Test, we utilized the multi-period excess earnings and relief from royalty method under the income approach to estimate the fair value of our indefinite-lived intangible assets.
As a result of our Q2 Impairment Test, we recognized non-cash intangible asset impairment losses of $2.6 billion in SG&A in the second quarter of 2025, of which $1.9 billion related to Kraft, $382 million related to Velveeta, $175 million related to Lunchables, $100 million related to Maxwell House and $42 million related to two other brands in our North America segment, consistent with ownership of the trademarks. The impairments of these brands were primarily due to the market’s perceived risk of our ability to achieve our future year revenue growth and margin growth assumptions, due, in part, to uncertainty in the macroeconomic environment in which we operate. After these impairments, the aggregate carrying amount of these brands was $13.0 billion.
2024 Year-to-Date Indefinite-Lived Intangible Asset Impairment Testing
As a result of our 2024 annual impairment test as of June 30, 2024, we recognized non-cash intangible asset impairment losses of $593 million in SG&A in the third quarter of 2024 related to our Lunchables, Claussen, and Wattie’s brands. We utilized the relief from royalty method under the income approach to estimate the fair values and recorded non-cash impairment losses of $560 million in our North America segment and $33 million in our International Developed Markets segment, consistent with ownership of the trademarks. The impairments of the Lunchables and Wattie’s brands were primarily due to a reduction of future year revenue growth and margin assumptions from prior estimates. The impairment of the Claussen brand was primarily due to a reduction of future year margin assumptions from prior estimates. After these impairments, the aggregate carrying amount of these brands was $1.2 billion.
Additional Indefinite-Lived Intangible Asset Considerations
As of the 2025 Annual Impairment Test, brands with 20% or less fair value over carrying amount had an aggregate carrying amount after impairment of $15.0 billion, brands with 20%-50% fair value over carrying amount had an aggregate carrying amount of $17.0 billion, and brands that had over 50% fair value over carrying amount had an aggregate carrying amount of $2.2 billion.
Our brands that had 20% or less excess fair value over carrying amount as of our 2025 Annual Impairment Test have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future. Although our remaining brands had more than 20% excess fair value over carrying amount as of our 2025 Annual Impairment Test, these amounts are also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.
Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual 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 cash flows, income tax considerations, discount rates, long-term growth rates, royalty rates, contributory asset charges, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control change; such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our brands might become impaired in the future. Additionally, any decisions to divest certain non-strategic assets could lead to future intangible asset impairments.
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Definite-lived intangible assets:
Definite-lived intangible assets were (in millions):
| September 27, 2025 | December 28, 2024 | ||||||||||||||||||||||||||||||||||
| Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
| Trademarks | $ | 2,367 | $ | (989) | $ | 1,378 | $ | 2,392 | $ | (893) | $ | 1,499 | |||||||||||||||||||||||
| Customer-related assets | 3,700 | (1,661) | 2,039 | 3,665 | (1,530) | 2,135 | |||||||||||||||||||||||||||||
| Other | 12 | (5) | 7 | 13 | (4) | 9 | |||||||||||||||||||||||||||||
| $ | 6,079 | $ | (2,655) | $ | 3,424 | $ | 6,070 | $ | (2,427) | $ | 3,643 | ||||||||||||||||||||||||
At September 27, 2025, definite-lived intangible assets excluded amounts classified as held for sale due to the Italy Infant Transaction. See Note 5, Acquisitions and Divestitures, for additional information on amounts held for sale.
Amortization expense for definite-lived intangible assets was $61 million for the three months and $184 million for the nine months ended September 27, 2025, and $62 million for the three months and $191 million for the nine months ended September 28, 2024. Aside from amortization expense, the change in definite-lived intangible assets from December 28, 2024 to September 27, 2025 is primarily related to amounts reclassified to assets held for sale, the impact of foreign currency, and non-cash intangible asset impairment losses of $11 million recognized in the second quarter of 2025 related to two definite-lived intangible assets within our International Developed Markets segment.
We estimate that amortization expense related to definite-lived intangible assets will be approximately $240 million in 2025 and $240 million in each of the following five years.
Note 9. Income Taxes
The provision for income taxes consists of provisions for federal, state, and non-U.S. income taxes. We operate in an international environment; accordingly, the consolidated effective tax rate is a composite rate reflecting the earnings in various locations and the applicable tax rates. Additionally, the calculation of the percentage point impact of goodwill impairment and other items on the effective tax rate is affected by income/(loss) before income taxes. Further, small movements in tax rates due to a change in tax law or a change in tax rates that cause us to revalue our deferred tax balances produce volatility in our effective tax rate. Our quarterly income tax provision is determined based on our estimated full year effective tax rate, adjusted for tax attributable to infrequent or unusual items, which are recognized on a discrete period basis in the income tax provision for the period in which they occur.
Our estimated annual effective tax rate was 26.0% as of September 27, 2025, and 20.5% as of September 28, 2024. The year-over-year increase was primarily due to the changes made to our corporate entity structure in December 2024 in conjunction with the Pillar Two legislative developments made under the Organization for Economic Co-operation and Development (OECD). See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 28, 2024 for additional information on this change to our corporate entity structure.
Our effective tax rate for the three months ended September 27, 2025 was an expense of 24.0% on pre-tax income, which was favorably impacted by certain discrete deferred tax adjustments, changes in estimates of certain 2024 U.S. income and deductions and the geographic mix of pre-tax income in various non-U.S. jurisdictions.
Our effective tax rate for the three months ended September 28, 2024 was an expense of 2.5% on pre-tax loss, which included the net unfavorable effective tax rate impact of goodwill and intangible asset impairment losses of 22.9%. In addition to the impact of these non-cash impairment losses, our effective tax rate was unfavorably impacted by the establishment of valuation allowances in certain foreign jurisdictions, partially offset by the favorable changes in estimates of certain 2023 U.S. income and deductions and the geographic mix of pre-tax income in various non-U.S. jurisdictions.
The year-over-year change in the effective tax rate for the three-month period was primarily driven by the impact of non-deductible goodwill impairments and a less favorable geographic mix of pre-tax income in various non-U.S. jurisdictions primarily due to the changes made to our corporate entity structure in December 2024.
Our effective tax rate for the nine months ended September 27, 2025 was an expense of 2.4% on pre-tax loss, which included the net unfavorable effective tax rate impact of non-deductible goodwill impairments of 24.8%. In addition to the impact of these non-cash impairment losses, our effective tax rate was favorably impacted by the geographic mix of pre-tax income in various non-U.S. jurisdictions.
Our effective tax rate for the nine months ended September 28, 2024 was an expense of 43.9% on pre-tax income, which included the net unfavorable effective tax rate impact of goodwill and intangible asset impairment losses of 21.5%. In addition
15
to the impact of these non-cash impairment losses, our effective tax rate was unfavorably impacted by certain net discrete items including the establishment of valuation allowances in certain foreign jurisdictions, partially offset by the favorable geographic mix of pre-tax income in various non-U.S. jurisdictions.
The year-over-year change in the effective tax rate for the nine month period was primarily due to the impact of non-deductible goodwill impairments, and a less favorable geographic mix of pre-tax income in various non-U.S. jurisdictions.
Other Income Tax Matters:
We are currently under examination for income taxes by the IRS for the years 2018 through 2022. In the third quarter of 2023, we received two Notices of Proposed Adjustment (the “NOPAs”) relating to transfer pricing with our foreign subsidiaries 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 the third quarter of 2025, we received a NOPA 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 penalties for each year. We expect to receive a NOPA in the fourth quarter of 2025 asserting penalties for these periods similar to the amounts asserted for the years 2018 and 2019. We strongly disagree with the IRS’s positions, believe that our tax positions are well documented and properly supported, and intend to vigorously contest the positions taken by the IRS and pursue all available administrative and judicial remedies. Therefore, we have not recorded any reserves related to this issue. We continue to maintain the same operating model and transfer pricing methodology with our foreign subsidiaries that was in place for the years 2018 through 2022. We believe our income tax reserves are appropriate for all open tax years and that final adjudication of this matter will not have a material impact on our results of operations and cash flows. However, the ultimate outcome of this matter is uncertain, and if we are required to pay the IRS additional U.S. taxes, interest, and/or potential penalties, our results of operations and cash flows could be materially affected.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law in the United States. The OBBBA includes changes to U.S. tax law that will be applicable to the Company beginning in 2025. These changes include provisions allowing accelerated tax deductions for qualified property and research and development expenditures. While OBBBA did not have a significant impact on our total tax provision as of September 27, 2025, we are still evaluating our position on the elective provisions of the law and the potential impacts of those elections on our financial statements.
Note 10. Employees’ Stock Incentive Plans
Stock Options:
Our stock option activity and related information was:
| Number of Stock Options | Weighted Average Exercise Price (per share) | ||||||||||
| Outstanding at December 28, 2024 | 6,720,421 | $ | 46.44 | ||||||||
| Granted | 936,208 | 30.71 | |||||||||
| Forfeited | (1,933,016) | 51.30 | |||||||||
| Exercised | (39,355) | 25.41 | |||||||||
| Outstanding at September 27, 2025 | 5,684,258 | 42.34 | |||||||||
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The aggregate intrinsic value of stock options exercised during the period was insignificant for the nine months ended September 27, 2025
Restricted Stock Units:
Our restricted stock unit (“RSU”) activity and related information was:
| Number of Units | Weighted Average Grant Date Fair Value (per share) | ||||||||||
| Outstanding at December 28, 2024 | 6,705,507 | $ | 37.31 | ||||||||
| Granted | 2,776,815 | 30.74 | |||||||||
| Forfeited | (718,915) | 35.25 | |||||||||
| Vested | (1,957,252) | 38.40 | |||||||||
| Outstanding at September 27, 2025 | 6,806,155 | 34.54 | |||||||||
The aggregate fair value of RSUs that vested during the period was $60 million for the nine months ended September 27, 2025.
Performance Share Units:
Our performance share unit (“PSU”) activity and related information was:
| Number of Units | Weighted Average Grant Date Fair Value (per share) | ||||||||||
| Outstanding at December 28, 2024 | 5,389,930 | $ | 31.77 | ||||||||
| Granted | 3,188,751 | 30.48 | |||||||||
Forfeited(a) | (1,541,095) | 31.15 | |||||||||
| Vested | (636,046) | 34.78 | |||||||||
| Outstanding at September 27, 2025 | 6,401,540 | 31.01 | |||||||||
(a) Includes PSUs forfeited due to employee terminations and performance conditions that were not satisfied.
The aggregate fair value of PSUs that vested during the period was $19 million for the nine months ended September 27, 2025.
Note 11. Postemployment Benefits
See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 28, 2024 for additional information on our postemployment-related accounting policies.
Pension Plans
Components of Net Pension Cost/(Benefit):
Net pension cost/(benefit) consisted of the following (in millions):
| For the Three Months Ended | |||||||||||||||||||||||
| U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Service cost | $ | — | $ | — | $ | 2 | $ | 2 | |||||||||||||||
| Interest cost | 28 | 33 | 15 | 14 | |||||||||||||||||||
| Expected return on plan assets | (44) | (49) | (24) | (21) | |||||||||||||||||||
| Amortization of prior service costs/(credits) | — | 1 | 1 | — | |||||||||||||||||||
| Amortization of unrecognized losses/(gains) | — | — | 4 | 3 | |||||||||||||||||||
Settlements | 1 | — | — | — | |||||||||||||||||||
| Other | — | — | — | (7) | |||||||||||||||||||
| Net pension cost/(benefit) | $ | (15) | $ | (15) | $ | (2) | $ | (9) | |||||||||||||||
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| For the Nine Months Ended | |||||||||||||||||||||||
| U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Service cost | $ | 1 | $ | 1 | $ | 4 | $ | 5 | |||||||||||||||
| Interest cost | 93 | 100 | 43 | 42 | |||||||||||||||||||
| Expected return on plan assets | (143) | (147) | (66) | (63) | |||||||||||||||||||
| Amortization of prior service costs/(credits) | 1 | 1 | 2 | 1 | |||||||||||||||||||
| Amortization of unrecognized losses/(gains) | — | — | 11 | 9 | |||||||||||||||||||
Settlements | 11 | — | — | — | |||||||||||||||||||
| Special/contractual termination benefits | — | — | — | (1) | |||||||||||||||||||
| Other | — | — | — | (7) | |||||||||||||||||||
| Net pension cost/(benefit) | $ | (37) | $ | (45) | $ | (6) | $ | (14) | |||||||||||||||
We present all non-service cost components of net pension cost/(benefit) within other expense/(income) on our condensed consolidated statements of income.
Employer Contributions:
Related to our non-U.S. pension plans, we contributed $4 million during the nine months ended September 27, 2025 and plan to make further contributions of approximately $2 million during the remainder of 2025. We did not contribute to our U.S. pension plans during the nine months ended September 27, 2025 and do not plan to make contributions during the remainder of 2025. Estimated future contributions take into consideration current economic conditions, which at this time are expected to have minimal impact on expected contributions for the remainder of 2025. Our actual contributions and plans may change due to many factors, including changes in tax, employee benefit, or other laws and regulations, tax deductibility, significant differences between expected and actual pension asset performance or interest rates, or other factors.
Postretirement Plans
Components of Net Postretirement Cost/(Benefit):
Net postretirement cost/(benefit) consisted of the following (in millions):
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Service cost | $ | 1 | $ | 1 | $ | 2 | $ | 2 | |||||||||||||||
| Interest cost | 7 | 8 | 22 | 24 | |||||||||||||||||||
| Expected return on plan assets | (12) | (14) | (35) | (42) | |||||||||||||||||||
| Amortization of prior service costs/(credits) | (3) | (3) | (9) | (8) | |||||||||||||||||||
| Amortization of unrecognized losses/(gains) | (7) | (5) | (20) | (16) | |||||||||||||||||||
| Net postretirement cost/(benefit) | $ | (14) | $ | (13) | $ | (40) | $ | (40) | |||||||||||||||
We present all non-service cost components of net postretirement cost/(benefit) within other expense/(income) on our condensed consolidated statements of income.
Employer Contributions:
During the nine months ended September 27, 2025, we contributed $7 million to our postretirement benefit plans. We plan to make further contributions of approximately $4 million to our postretirement benefit plans during the remainder of 2025. Estimated future contributions take into consideration current economic conditions, which at this time are expected to have minimal impact on expected contributions for the remainder of 2025. Our actual contributions and plans may change due to many factors, including changes in tax, employee benefit, or other laws and regulations, tax deductibility, significant differences between expected and actual postretirement plan asset performance or interest rates, or other factors.
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Note 12. Financial Instruments
See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 28, 2024 for additional information on our overall risk management strategies, our use of derivatives, and our related accounting policies.
Derivative Volume:
The notional values of our outstanding derivative instruments were (in millions):
| Notional Amount | |||||||||||
| September 27, 2025 | December 28, 2024 | ||||||||||
| Commodity contracts | $ | 1,027 | $ | 1,152 | |||||||
| Foreign exchange contracts | 4,236 | 3,067 | |||||||||
| Cross-currency contracts | 3,083 | 7,449 | |||||||||
Fair Value of Derivative Instruments:
The fair values and the levels within the fair value hierarchy of derivative instruments recorded on the condensed consolidated balance sheets were (in millions):
| September 27, 2025 | |||||||||||||||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Total Fair Value | |||||||||||||||||||||||||||||||||
| Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
Foreign exchange contracts(a) | $ | — | $ | — | $ | 14 | $ | 22 | $ | 14 | $ | 22 | |||||||||||||||||||||||
Cross-currency contracts(b) | — | — | 30 | 186 | 30 | 186 | |||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
Commodity contracts(c) | 31 | 54 | 7 | 14 | 38 | 68 | |||||||||||||||||||||||||||||
Foreign exchange contracts(a) | — | — | 13 | 20 | 13 | 20 | |||||||||||||||||||||||||||||
| Total fair value | $ | 31 | $ | 54 | $ | 64 | $ | 242 | $ | 95 | $ | 296 | |||||||||||||||||||||||
(a) At September 27, 2025, the fair value of our derivative assets was recorded in other current assets ($25 million) and other non-current assets ($2 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($35 million) and other non-current liabilities ($7 million).
(b) At September 27, 2025, the fair value of our derivative assets was recorded in other current assets ($25 million) and other non-current assets ($5 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($2 million) and other non-current liabilities ($184 million).
(c) At September 27, 2025, the fair value of our derivative assets was recorded in other current assets ($37 million) and other non-current assets ($1 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($67 million) and non-current liabilities ($1 million).
| December 28, 2024 | |||||||||||||||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Total Fair Value | |||||||||||||||||||||||||||||||||
| Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
Foreign exchange contracts(a) | $ | — | $ | — | $ | 45 | $ | 9 | $ | 45 | $ | 9 | |||||||||||||||||||||||
Cross-currency contracts(b) | — | — | 137 | 172 | 137 | 172 | |||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
Commodity contracts(c) | 24 | 37 | 9 | 19 | 33 | 56 | |||||||||||||||||||||||||||||
Foreign exchange contracts(a) | — | — | 33 | 8 | 33 | 8 | |||||||||||||||||||||||||||||
| Total fair value | $ | 24 | $ | 37 | $ | 224 | $ | 208 | $ | 248 | $ | 245 | |||||||||||||||||||||||
(a) At December 28, 2024, the fair value of our derivative assets was recorded in other current assets ($71 million) and other non-current assets ($7 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($16 million) and other non-current liabilities ($1 million).
(b) At December 28, 2024, the fair value of our derivative assets was recorded in other current assets ($69 million) and other non-current assets ($68 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($34 million) and other non-current liabilities ($138 million).
(c) At December 28, 2024, the fair value of our derivative assets was recorded in other current assets and the fair value of our derivative liabilities was recorded in other current liabilities ($55 million) and other non-current liabilities ($1 million).
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Our derivative financial instruments are subject to master netting arrangements that allow for the offset of assets and liabilities in the event of default or early termination of the contract. We elect to record the gross assets and liabilities of our derivative financial instruments on the condensed consolidated balance sheets. If the derivative financial instruments had been netted on the condensed consolidated balance sheets, the asset and liability positions each would have been reduced by $52 million at September 27, 2025 and $141 million at December 28, 2024. We had posted collateral related to commodity derivative margin requirements of $43 million at September 27, 2025 and $25 million at December 28, 2024, which were included in prepaid expenses on our condensed consolidated balance sheets.
Level 1 derivative financial assets and liabilities consist of commodity future and options contracts and are valued using quoted prices in active markets for identical assets and liabilities.
Level 2 derivative financial assets and liabilities consist of commodity swaps, foreign exchange forwards, options, and swaps, and cross-currency contracts. Commodity swaps are valued using an income approach based on the observable market commodity index prices less the contract rate multiplied by the notional amount. Foreign exchange forwards and swaps are valued using an income approach based on observable market forward rates less the contract rate multiplied by the notional amount. Foreign exchange options are valued using an income approach based on a Black-Scholes-Merton formula. This formula uses present value techniques and reflects the time value and intrinsic value based on observable market rates. Cross-currency contracts are valued based on observable market spot and swap rates.
We did not have any Level 3 derivative financial assets or liabilities in any period presented.
Our calculation of the fair value of derivative financial instruments takes into consideration the risk of nonperformance, including counterparty credit risk.
Net Investment Hedging:
At September 27, 2025, we had the following items designated as net investment hedges:
•Non-derivative foreign-currency denominated debt with principal amounts of €2.4 billion; and
•Cross-currency contracts with notional amounts of €954 million ($1.0 billion), C$1.3 billion ($900 million), and JPY9.6 billion ($68 million).
•Foreign exchange contracts with notional amounts of CNY4.0 billion ($561 million).
The components of the gains and losses on our net investment in these designated foreign operations, driven by changes in foreign exchange rates, are economically offset by fair value movements on the effective portion of our cross-currency contracts and foreign exchange contracts.
Cash Flow Hedge Coverage:
At September 27, 2025, we had entered into foreign exchange contracts designated as cash flow hedges for periods not exceeding the next 2 years.
Fair Value Hedge Coverage:
At September 27, 2025, we had fair value hedges of the foreign currency exposure of both intercompany and external foreign currency denominated loans:
•Foreign exchange contracts with notional amounts of £400 million ($536 million) and the carrying value of the hedged item of $535 million is included in the long-term debt on the condensed consolidated balance sheets; and
•Cross-currency contracts with notional amounts of £683 million ($864 million) and MXN4.8 billion ($251 million) and the carrying value of intercompany hedged items of $1.2 billion.
The gains/(losses) on the hedged item, driven by changes in foreign exchange rates, are economically offset by fair value movements on the effective portion of our cross-currency and foreign exchange contracts, which are reported in the same income statement line item in the same period. The amounts excluded from the assessment of effectiveness are recognized in earnings over the life of the hedge on a systematic and rational basis in the same line item as the hedged items.
Deferred Hedging Gains and Losses on Fair Value and Cash Flow Hedges:
Based on our valuation at September 27, 2025 and assuming market rates remain constant through contract maturities, we expect transfers to net income/(loss) of the existing losses reported in accumulated other comprehensive income/(losses) on interest rate cash flow hedges, cross-currency fair value hedges, and foreign exchange fair value hedges during the next 12 months to be insignificant. Additionally, we expect transfers to net income/(loss) of the existing gains reported in accumulated other comprehensive income/(losses) during the next 12 months on foreign exchange cash flow hedges and cross-currency cash flow hedges to be insignificant.
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Derivative Impact on the Statements of Comprehensive Income:
The following table presents the pre-tax amounts of derivative gains/(losses) deferred into accumulated other comprehensive income/(losses) and the income statement line item that will be affected when reclassified to net income/(loss) (in millions):
| Accumulated Other Comprehensive Income/(Losses) Component | Gains/(Losses) Recognized in Other Comprehensive Income/(Losses) Related to Derivatives Designated as Hedging Instruments | Location of Gains/(Losses) When Reclassified to Net Income/(Loss) | ||||||||||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | |||||||||||||||||||||||||||||
| Cash flow hedges: | ||||||||||||||||||||||||||||||||
| Foreign exchange contracts | $ | 1 | $ | — | $ | 1 | $ | — | Net sales | |||||||||||||||||||||||
| Foreign exchange contracts | 19 | (14) | (29) | 17 | Cost of products sold | |||||||||||||||||||||||||||
| Foreign exchange contracts (excluded component) | — | 1 | (1) | (5) | Cost of products sold | |||||||||||||||||||||||||||
| Foreign exchange contracts | — | (2) | (2) | (2) | SG&A | |||||||||||||||||||||||||||
| Foreign exchange contracts | — | (38) | — | (11) | Other expense/(income) | |||||||||||||||||||||||||||
| Foreign exchange contracts (excluded component) | — | 5 | — | 5 | Other expense/(income) | |||||||||||||||||||||||||||
| Cross-currency contracts | (4) | 61 | 197 | 2 | Other expense/(income) | |||||||||||||||||||||||||||
| Cross-currency contracts | (2) | (6) | (12) | (21) | Interest expense | |||||||||||||||||||||||||||
| Net investment hedges: | ||||||||||||||||||||||||||||||||
| Foreign exchange contracts | (4) | (3) | (4) | (3) | Other expense/(income) | |||||||||||||||||||||||||||
| Foreign exchange contracts (excluded component) | 2 | 1 | 2 | 1 | Interest expense | |||||||||||||||||||||||||||
| Cross-currency contracts | 22 | (101) | (237) | 5 | Other expense/(income) | |||||||||||||||||||||||||||
| Cross-currency contracts (excluded component) | 8 | 10 | 30 | 34 | Interest expense | |||||||||||||||||||||||||||
| Fair value hedges: | ||||||||||||||||||||||||||||||||
| Foreign exchange contracts (excluded component) | — | — | (3) | — | Other expense/(income) | |||||||||||||||||||||||||||
| Cross-currency contracts (excluded component) | 16 | (24) | 38 | (21) | Other expense/(income) | |||||||||||||||||||||||||||
| Total gains/(losses) recognized in statements of comprehensive income | $ | 58 | $ | (110) | $ | (20) | $ | 1 | ||||||||||||||||||||||||
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Derivative Impact on the Statements of Income:
The following tables present the pre-tax amounts of derivative gains/(losses) recorded to net income/(loss) and the affected income statement line items (in millions):
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | ||||||||||||||||||||||||||||||||||
| Cost of products sold | Interest expense | Other expense/(income) | Cost of products sold | Interest expense | Other expense/(income) | ||||||||||||||||||||||||||||||
| Total amounts presented in the condensed consolidated statements of income in which the following effects were recorded | $ | 4,247 | $ | 240 | $ | (22) | $ | 4,197 | $ | 230 | $ | (48) | |||||||||||||||||||||||
| Gains/(losses) related to derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
Cash flow hedges:(a) | |||||||||||||||||||||||||||||||||||
| Foreign exchange contracts | $ | 1 | $ | — | $ | — | $ | 4 | $ | — | $ | (39) | |||||||||||||||||||||||
| Foreign exchange contracts (excluded component) | — | — | — | (1) | — | 3 | |||||||||||||||||||||||||||||
| Cross-currency contracts | — | (1) | (6) | — | (6) | 81 | |||||||||||||||||||||||||||||
Net investment hedges:(a) | |||||||||||||||||||||||||||||||||||
| Foreign exchange contracts (excluded component) | — | 1 | — | — | 1 | — | |||||||||||||||||||||||||||||
| Cross-currency contracts (excluded component) | — | 7 | — | — | 10 | — | |||||||||||||||||||||||||||||
Fair Value hedges:(b) | |||||||||||||||||||||||||||||||||||
| Foreign exchange contracts | — | — | (14) | — | — | — | |||||||||||||||||||||||||||||
| Cross-currency contracts | — | — | 28 | — | — | (56) | |||||||||||||||||||||||||||||
Cross-currency contracts (excluded component)(a) | — | — | 3 | — | — | — | |||||||||||||||||||||||||||||
Hedged items | — | — | (14) | — | — | 56 | |||||||||||||||||||||||||||||
| Gains/(losses) related to derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
| Commodity contracts | (34) | — | — | (6) | — | — | |||||||||||||||||||||||||||||
| Foreign exchange contracts | — | — | (15) | — | — | — | |||||||||||||||||||||||||||||
| Cross-currency contracts | — | — | 7 | — | — | 13 | |||||||||||||||||||||||||||||
| Total gains/(losses) recognized in statements of income | $ | (33) | $ | 7 | $ | (11) | $ | (3) | $ | 5 | $ | 58 | |||||||||||||||||||||||
(a) Represents the pre-tax amounts of derivative gains/(losses) reclassified from accumulated other comprehensive income/(losses) to net income/(loss).
(b) Represents the pre-tax amounts of the hedge and hedged items gains/(losses) in fair value hedges.
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| For the Nine Months Ended | |||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | ||||||||||||||||||||||||||||||||||
| Cost of products sold | Interest expense | Other expense/(income) | Cost of products sold | Interest expense | Other expense/(income) | ||||||||||||||||||||||||||||||
| Total amounts presented in the condensed consolidated statements of income in which the following effects were recorded | $ | 12,351 | $ | 709 | $ | (120) | $ | 12,547 | $ | 685 | $ | (56) | |||||||||||||||||||||||
| Gains/(losses) related to derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
Cash flow hedges:(a) | |||||||||||||||||||||||||||||||||||
| Foreign exchange contracts | $ | 16 | $ | — | $ | — | $ | 9 | $ | — | $ | (12) | |||||||||||||||||||||||
| Foreign exchange contracts (excluded component) | (1) | — | — | (5) | — | 6 | |||||||||||||||||||||||||||||
| Cross-currency contracts | — | (12) | 229 | — | (21) | 23 | |||||||||||||||||||||||||||||
Net investment hedges: (a) | |||||||||||||||||||||||||||||||||||
| Foreign exchange contracts (excluded component) | — | 1 | — | — | 1 | — | |||||||||||||||||||||||||||||
| Cross-currency contracts (excluded component) | — | 32 | — | — | 34 | — | |||||||||||||||||||||||||||||
Fair Value hedges:(b) | |||||||||||||||||||||||||||||||||||
| Foreign exchange contracts | — | — | 17 | — | — | — | |||||||||||||||||||||||||||||
| Cross-currency contracts | — | — | (59) | — | — | (63) | |||||||||||||||||||||||||||||
Cross-currency contracts (excluded component)(a) | — | — | 6 | — | — | — | |||||||||||||||||||||||||||||
Hedged items | — | — | 42 | — | — | 63 | |||||||||||||||||||||||||||||
| Gains/(losses) related to derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
| Commodity contracts | (39) | — | — | (4) | — | — | |||||||||||||||||||||||||||||
| Foreign exchange contracts | — | — | (8) | — | — | 9 | |||||||||||||||||||||||||||||
Interest rate contracts(c) | — | — | — | — | — | (3) | |||||||||||||||||||||||||||||
| Cross-currency contracts | — | — | 9 | — | — | (6) | |||||||||||||||||||||||||||||
| Total gains/(losses) recognized in statements of income | $ | (24) | $ | 21 | $ | 236 | $ | — | $ | 14 | $ | 17 | |||||||||||||||||||||||
(a) Represents the pre-tax amounts of derivative gains/(losses) reclassified from accumulated other comprehensive income/(losses) to net income/(loss).
(b) Represents the pre-tax amounts of the hedged items gains/(losses) in fair value hedges.
(c) Represents recognition of realized hedge losses resulting from the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring.
Non-Derivative Impact on Statements of Comprehensive Income:
Related to our non-derivative foreign currency denominated debt instruments designated as net investment hedges, we recognized pre-tax losses of $5 million for the three months and $140 million for the nine months ended September 27, 2025 and pre-tax losses of $66 million for the three months and $35 million for the nine months ended September 28, 2024. These amounts were recognized in other comprehensive income/(loss).
Available-for-sale securities:
We invest in certain marketable fixed-income debt securities that are classified as available-for-sale. Our available-for-sale securities are reported at fair value based on pricing models and quoted market prices adjusted for credit and non-performance risk. Highly liquid investments with maturities of 90 days or less are included in cash and cash equivalents on our condensed consolidated balance sheets. Investments with maturities of greater than 90 days but less than 12 months are presented as marketable securities on our condensed consolidated balance sheets. We did not hold any investments with maturities exceeding 12 months.
23
We classify our investments in commercial paper, corporate bonds, and U.S. treasury and agency securities as Level 2 as such investments are valued through consultation and evaluation with brokers in the institutional market using quoted prices and other observable market data.
Unrealized holding gains/(losses) are deferred into accumulated other comprehensive income/(losses) until the security is settled or sold. We evaluate whether losses related to our available-for-sale debt securities are due to credit or non-credit factors, which includes an assessment of the financial condition of the issuer and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. Credit-related losses are recognized through other expense/(income) in the period incurred, and non-credit related losses are deferred into accumulated other comprehensive income/(losses) until they are sold.
The following table presents our available-for-sale debt securities’ amortized cost basis, fair value and unrealized gains and losses by significant investment category (in millions):
September 27, 2025 | |||||||||||||||||||||||
Amortized Cost Basis(a) | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||
Corporate bonds | $ | 428 | $ | — | $ | — | $ | 428 | |||||||||||||||
Commercial paper | 532 | — | — | 532 | |||||||||||||||||||
| U.S. treasury and agency | 60 | — | — | 60 | |||||||||||||||||||
Total | $ | 1,020 | $ | — | $ | — | $ | 1,020 | |||||||||||||||
(a) Amortized cost basis excludes approximately $4 million of accrued interest.
We purchased approximately $1.9 billion in corporate bonds, commercial paper, and U.S. treasury and agency securities and received approximately $891 million in proceeds from maturity of corporate bonds, commercial paper, and U.S. treasury and agency securities for the nine months ended September 27, 2025. During the same period, no investments in corporate bonds, commercial paper, and U.S. treasury and agency securities were sold prior to maturity. We recognized no direct write-offs or allowances for credit losses in earnings for the three and nine months ended September 27, 2025. Cash flows related to the purchases and sale/maturity of these marketable securities are classified in the condensed consolidated statements of cash flows within investing activities.
The carrying values of our available-for-sale debt securities were included in the following line items in our condensed consolidated balance sheet (in millions):
| September 27, 2025 | |||||
Marketable securities | $ | 1,020 | |||
The contractual maturities of these available-for-sale debt securities are all within one-year as of September 27, 2025. We had no available-for-sale debt securities as of December 28, 2024.
24
Note 13. Accumulated Other Comprehensive Income/(Losses)
The components of, and changes in, accumulated other comprehensive income/(losses), net of tax, were as follows (in millions):
| Foreign Currency Translation Adjustments | Net Postemployment Benefit Plan Adjustments | Net Cash Flow Hedge Adjustments | Net Fair Value Hedges | Total | |||||||||||||||||||||||||
| Balance as of December 28, 2024 | $ | (2,999) | $ | 29 | $ | 81 | $ | (26) | $ | (2,915) | |||||||||||||||||||
| Foreign currency translation adjustments | 920 | — | — | — | 920 | ||||||||||||||||||||||||
| Net deferred gains/(losses) on net investment hedges | (289) | — | — | — | (289) | ||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of net investment hedges | 24 | — | — | — | 24 | ||||||||||||||||||||||||
| Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss) | (25) | — | — | — | (25) | ||||||||||||||||||||||||
| Net deferred gains/(losses) on cash flow hedges | — | — | 117 | — | 117 | ||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of cash flow hedges | — | — | (1) | — | (1) | ||||||||||||||||||||||||
| Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss) | — | — | (173) | — | (173) | ||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of fair value hedges | — | — | — | 24 | 24 | ||||||||||||||||||||||||
| Net deferred losses/(gains) on fair value hedges reclassified to net income/(loss) | — | — | — | (3) | (3) | ||||||||||||||||||||||||
| Net actuarial gains/(losses) arising during the period | — | (60) | — | — | (60) | ||||||||||||||||||||||||
| Net postemployment benefit losses/(gains) reclassified to net income/(loss) | — | (3) | — | — | (3) | ||||||||||||||||||||||||
Other activity | 15 | — | (15) | — | — | ||||||||||||||||||||||||
| Total other comprehensive income/(loss) | 645 | (63) | (72) | 21 | 531 | ||||||||||||||||||||||||
| Balance as of September 27, 2025 | $ | (2,354) | $ | (34) | $ | 9 | $ | (5) | $ | (2,384) | |||||||||||||||||||
25
The gross amount and related tax benefit/(expense) recorded in, and associated with, each component of other comprehensive income/(loss) were as follows (in millions):
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | ||||||||||||||||||||||||||||||||||
| Before Tax Amount | Tax | Net of Tax Amount | Before Tax Amount | Tax | Net of Tax Amount | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | $ | (73) | $ | — | $ | (73) | $ | 362 | $ | — | $ | 362 | |||||||||||||||||||||||
| Net deferred gains/(losses) on net investment hedges | 13 | (3) | 10 | (170) | 42 | (128) | |||||||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of net investment hedges | 10 | (3) | 7 | 11 | (2) | 9 | |||||||||||||||||||||||||||||
| Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss) | (8) | 2 | (6) | (11) | 2 | (9) | |||||||||||||||||||||||||||||
| Net deferred gains/(losses) on cash flow hedges | 14 | (3) | 11 | 1 | (9) | (8) | |||||||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of cash flow hedges | — | — | — | 6 | — | 6 | |||||||||||||||||||||||||||||
| Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss) | 6 | (1) | 5 | (42) | 16 | (26) | |||||||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of fair value hedges | 16 | (4) | 12 | (24) | 12 | (12) | |||||||||||||||||||||||||||||
| Net deferred losses/(gains) on fair value hedges reclassified to net income/(loss) | (3) | 1 | (2) | — | — | — | |||||||||||||||||||||||||||||
| Net deferred gains/(losses) on available-for-sale debt securities | 1 | — | 1 | — | — | — | |||||||||||||||||||||||||||||
| Net actuarial gains/(losses) arising during the period | (35) | 8 | (27) | — | — | — | |||||||||||||||||||||||||||||
| Net postemployment benefit losses/(gains) reclassified to net income/(loss) | (4) | 1 | (3) | (4) | 1 | (3) | |||||||||||||||||||||||||||||
| For the Nine Months Ended | |||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | ||||||||||||||||||||||||||||||||||
| Before Tax Amount | Tax | Net of Tax Amount | Before Tax Amount | Tax | Net of Tax Amount | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | $ | 920 | $ | — | $ | 920 | $ | 108 | $ | — | $ | 108 | |||||||||||||||||||||||
| Net deferred gains/(losses) on net investment hedges | (381) | 92 | (289) | (33) | 8 | (25) | |||||||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of net investment hedges | 32 | (8) | 24 | 35 | (8) | 27 | |||||||||||||||||||||||||||||
| Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss) | (33) | 8 | (25) | (35) | 8 | (27) | |||||||||||||||||||||||||||||
| Net deferred gains/(losses) on cash flow hedges | 155 | (38) | 117 | (15) | 10 | (5) | |||||||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of cash flow hedges | (1) | — | (1) | — | 5 | 5 | |||||||||||||||||||||||||||||
| Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss) | (232) | 59 | (173) | 3 | (10) | (7) | |||||||||||||||||||||||||||||
| Amounts excluded from the effectiveness assessment of fair value hedges | 35 | (11) | 24 | (21) | 12 | (9) | |||||||||||||||||||||||||||||
| Net deferred losses/(gains) on fair value hedges reclassified to net income/(loss) | (6) | 3 | (3) | — | — | — | |||||||||||||||||||||||||||||
| Net actuarial gains/(losses) arising during the period | (79) | 19 | (60) | — | — | — | |||||||||||||||||||||||||||||
| Net postemployment benefit losses/(gains) reclassified to net income/(loss) | (4) | 1 | (3) | (13) | 3 | (10) | |||||||||||||||||||||||||||||
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The amounts reclassified from accumulated other comprehensive income/(losses) were as follows (in millions):
| Accumulated Other Comprehensive Income/(Losses) Component | Reclassified from Accumulated Other Comprehensive Income/(Losses) to Net Income/(Loss) | Affected Line Item in the Statements of Income | ||||||||||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | |||||||||||||||||||||||||||||
| Losses/(gains) on net investment hedges: | ||||||||||||||||||||||||||||||||
Foreign exchange contracts(a) | $ | (1) | $ | (1) | $ | (1) | $ | (1) | Interest expense | |||||||||||||||||||||||
Cross-currency contracts(a) | (7) | (10) | (32) | (34) | Interest expense | |||||||||||||||||||||||||||
| Losses/(gains) on cash flow hedges: | ||||||||||||||||||||||||||||||||
Foreign exchange contracts(a) (b) | (1) | (3) | (15) | (4) | Cost of products sold | |||||||||||||||||||||||||||
Foreign exchange contracts(a) (b) | — | 36 | — | 6 | Other expense/(income) | |||||||||||||||||||||||||||
Cross-currency contracts(a) (b) | 6 | (81) | (229) | (23) | Other expense/(income) | |||||||||||||||||||||||||||
Cross-currency contracts(a) (b) | 1 | 6 | 12 | 21 | Interest expense | |||||||||||||||||||||||||||
Interest rate contracts(c) | — | — | — | 3 | Other expense/(income) | |||||||||||||||||||||||||||
| Losses/(gains) on fair value hedges: | ||||||||||||||||||||||||||||||||
Cross-currency contracts(a) | (3) | — | (6) | — | Other expense/(income) | |||||||||||||||||||||||||||
| Losses/(gains) on hedges before income taxes | (5) | (53) | (271) | (32) | ||||||||||||||||||||||||||||
| Losses/(gains) on hedges, income taxes | 2 | 18 | 70 | (2) | ||||||||||||||||||||||||||||
| Losses/(gains) on hedges | $ | (3) | $ | (35) | $ | (201) | $ | (34) | ||||||||||||||||||||||||
| Losses/(gains) on postemployment benefits: | ||||||||||||||||||||||||||||||||
Amortization of unrecognized losses/(gains)(d) | $ | (3) | $ | (2) | $ | (9) | $ | (7) | ||||||||||||||||||||||||
Amortization of prior service costs/(credits)(d) | (2) | (2) | (6) | (6) | ||||||||||||||||||||||||||||
Settlement and curtailment losses/(gains)(d) | 1 | — | 11 | — | ||||||||||||||||||||||||||||
| Losses/(gains) on postemployment benefits before income taxes | (4) | (4) | (4) | (13) | ||||||||||||||||||||||||||||
| Losses/(gains) on postemployment benefits, income taxes | 1 | 1 | 1 | 3 | ||||||||||||||||||||||||||||
| Losses/(gains) on postemployment benefits | $ | (3) | $ | (3) | $ | (3) | $ | (10) | ||||||||||||||||||||||||
(a) Represents recognition of the excluded component in net income/(loss) following a systematic and rational approach.
(b) Includes the effective portion of the related hedges.
(c) Represents recognition of realized hedge losses resulting from the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring.
(d) These components are included in the computation of net periodic postemployment benefit costs. See Note 11, Postemployment Benefits, for additional information.
In this note we have excluded activity and balances related to noncontrolling interest due to their insignificance. This activity was primarily related to foreign currency translation adjustments.
27
Note 14. Financing Arrangements
Trade Payables Programs:
We maintain agreements with third party administrators that allow participating suppliers to track payment obligations from us, and, at the sole discretion of the supplier, sell one or more of those payment obligations to participating financial institutions. We have no economic interest in a supplier’s decision to enter into these agreements and no direct financial relationship with the financial institutions related to these programs. We pledged no assets or other forms of guarantees in connection with our trade payable programs. Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. Our current payment terms with our suppliers, which we deem to be commercially reasonable, generally range from 0 to 250 days. All amounts due to participating suppliers are paid to the third party on the original invoice due dates, regardless of whether a particular invoice was sold. Supplier participation in these agreements is voluntary. The amounts confirmed outstanding under these programs were $767 million at September 27, 2025 and $745 million at December 28, 2024. The amounts were included in accounts payable on our condensed consolidated balance sheets.
Note 15. Commitments, Contingencies, and Debt
Legal Proceedings
We are involved in legal proceedings, claims, and governmental inquiries, inspections, or investigations (“Legal Matters”) arising in the ordinary course of our business. While we cannot predict with certainty the results of Legal Matters in which we are currently involved or may in the future be involved, we do not expect that the ultimate costs to resolve the Legal Matters that are currently pending will have a material adverse effect on our financial condition, results of operations, or cash flows.
Stockholder Derivative Actions:
Certain of The Kraft Heinz Company’s current and former officers and directors and 3G Capital, Inc. and several of its subsidiaries and affiliates (the “3G Entities”) were named as defendants in a consolidated stockholder derivative action, In re Kraft Heinz Company Derivative Litigation, which was filed in the Delaware Court of Chancery. The consolidated amended complaint, which was filed on April 27, 2020, alleged state law claims, contending that the 3G Entities were controlling stockholders who owed fiduciary duties to the Company, and that they breached those duties by allegedly engaging in insider trading and misappropriating the Company’s material, non-public information. The complaint further alleged that certain of The Kraft Heinz Company’s current and former officers and directors breached their fiduciary duties to the Company by purportedly making materially misleading statements and omissions regarding the Company’s financial performance and the impairment of its goodwill and intangible assets, and by supposedly approving or allowing the 3G Entities’ alleged insider trading. The complaint sought relief against the defendants in the form of damages, disgorgement of all profits obtained from the alleged insider trading, contribution and indemnification, and an award of attorneys’ fees and costs. The defendants filed a motion to dismiss the consolidated amended complaint, which motion the Delaware Chancery Court granted in an order dated December 15, 2021. The plaintiffs filed a notice of appeal on January 13, 2022, and the Delaware Supreme Court affirmed the trial court’s dismissal with prejudice of the consolidated amended complaint in an order dated August 1, 2022. One of the plaintiffs in said dismissed derivative litigation subsequently filed a new complaint, Erste Asset Management v. Hees, et al., against certain current and former officers and directors of The Kraft Heinz Company on November 28, 2023 in the Delaware Court of Chancery, seeking to reinstate the plaintiff’s previously-dismissed claims and recover attorneys’ fees and costs incurred in the dismissed litigation on the basis of alleged newly discovered evidence. Specifically, the plaintiff alleges the 3G Entities caused the Company to make false and misleading public disclosures regarding the independence of two directors of The Kraft Heinz Company, one of whose independence plaintiff contends formed a basis for the court’s prior dismissal of the consolidated amended complaint. The defendants filed a motion to dismiss the complaint, which the Delaware Chancery Court granted in an order dated August 8, 2024, dismissing the complaint with prejudice. The plaintiff filed a notice of appeal on September 5, 2024. The Delaware Supreme Court issued an opinion and order on June 9, 2025, reversing the trial court’s dismissal of the complaint and remanding the case to the trial court for further proceedings. We intend to vigorously defend against this lawsuit; however, we cannot reasonably estimate the potential range of loss, if any, due to the early stage of the proceedings.
Environmental Actions:
Since March 2024, the Company has been engaged in ongoing discussions with the U.S. Department of Justice, joined by the U.S. Environmental Protection Agency (“U.S. EPA”) and the Indiana Department of Environmental Management, concerning alleged violations of the Clean Water Act related to a Company facility in Kendallville, Indiana. Previously, the Company entered into an Administrative Order on Consent with the U.S. EPA that requires the Company to implement a compliance plan to address related alleged violations of the Clean Water Act related to the facility in Kendallville, Indiana. While we cannot predict with certainty the resolution of these discussions, we do not expect that the ultimate costs to resolve this matter will have a material adverse effect on our financial condition, results of operations, or cash flows.
28
Since September 2021, the Company has been involved in an administrative proceeding with the environmental authority from the State of Goiás (“SEMAD”) regarding alleged pollution in the Capivara stream related to a Company facility in Brazil. In March 2025, SEMAD issued a first instance administrative decision maintaining the initial infraction notice, and in September 2025, SEMAD issued a second instance administrative decision again maintaining the initial infraction notice. Given that there are several available levels of appeal from this decision, we cannot predict with certainty the resolution of this matter; however, we do not expect that the ultimate costs to resolve will have a material adverse effect on our financial condition, results of operations, or cash flows.
Debt
We may from time to time seek to retire or purchase our outstanding debt through redemptions, tender offers, cash purchases, prepayments, refinancing, exchange offers, open market or privately negotiated transactions, Rule 10b5-1 plans, or otherwise.
Borrowing Arrangements:
Together with Kraft Heinz Foods Company (“KHFC”), our 100% owned operating subsidiary, we have a credit agreement, which provides for a five-year senior unsecured revolving credit facility in an aggregate amount of $4.0 billion (as amended, the “Senior Credit Facility”). On 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. No amounts were drawn on our Senior Credit Facility at September 27, 2025 and December 28, 2024. See Note 16, Debt, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 28, 2024 for additional information on our borrowing arrangements.
Our long-term debt contains customary representations, covenants, and events of default. We were in compliance with all financial covenants as of September 27, 2025.
Debt Issuances:
2025 Debt Issuance
In the first quarter of 2025, KHFC, our 100% owned operating subsidiary, issued 600 million euro aggregate principal amount of 3.250% senior notes due March 2033, $500 million aggregate principal amount of 5.200% senior notes due March 2032, and $500 million aggregate principal amount of 5.400% senior notes due March 2035 (collectively, the “2025 Notes”). The 2025 Notes are fully and unconditionally guaranteed by The Kraft Heinz Company as to payment of principal, premium, and interest on a senior unsecured basis.
2024 Debt Issuance
In the first quarter of 2024, KHFC, our 100% owned operating subsidiary, issued 550 million euro aggregate principal amount of 3.500% senior notes due March 2029 (the “2024 Notes”). The 2024 Notes are fully and unconditionally guaranteed by The Kraft Heinz Company as to payment of principal, premium, and interest on a senior unsecured basis.
Debt Issuance Costs:
Debt issuance costs related to the 2025 Notes and revolver credit agreement extension were $2 million for the three months and $15 million for the nine months ended September 27, 2025.
Debt Repayments:
In May 2025, we repaid 600 million euro aggregate principal amount of senior notes that matured in the period.
In May 2024, we repaid 550 million euro aggregate principal amount of senior notes that matured in the period.
Fair Value of Debt:
At September 27, 2025, the aggregate fair value of our total debt was $20.3 billion as compared with a carrying value of $21.2 billion. At December 28, 2024, the aggregate fair value of our total debt was $18.7 billion as compared with a carrying value of $19.9 billion. Our short-term debt had a carrying value that approximated its fair value at September 27, 2025 and December 28, 2024. We determined the fair value of our long-term debt using Level 2 inputs. Fair values are generally estimated based on quoted market prices for identical or similar instruments.
Synthetic Lease Arrangements
29
In June 2023, we entered into a non-cancellable synthetic lease for a distribution facility, for which we are the construction agent, for which we now anticipate the estimated construction cost to be approximately $625 million. The lease will commence upon completion of construction of the facility which is now expected to be in the later part of 2027. The term of the lease is five years after commencement. At the end of the lease term, we will be required to either purchase the facility or, in the event that option is not elected, to remarket the facility. Upon lease commencement, the lease classification, right-of-use asset, and lease liability will be determined and recorded. The lease arrangement contains a residual value guarantee of 100% of the total construction cost. The construction agreement and lease contain covenants that are consistent with our Senior Credit Facility.
Note 16. Earnings Per Share
Our earnings per common share (“EPS”) were:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| (in millions, except per share data) | |||||||||||||||||||||||
| Basic Earnings Per Common Share: | |||||||||||||||||||||||
| Net income/(loss) attributable to common shareholders | $ | 615 | $ | (290) | $ | (6,497) | $ | 613 | |||||||||||||||
| Weighted average shares of common stock outstanding | 1,184 | 1,210 | 1,188 | 1,212 | |||||||||||||||||||
| Net earnings/(loss) | $ | 0.52 | $ | (0.24) | $ | (5.47) | $ | 0.51 | |||||||||||||||
| Diluted Earnings Per Common Share: | |||||||||||||||||||||||
| Net income/(loss) attributable to common shareholders | $ | 615 | $ | (290) | $ | (6,497) | $ | 613 | |||||||||||||||
| Weighted average shares of common stock outstanding | 1,184 | 1,210 | 1,188 | 1,212 | |||||||||||||||||||
| Effect of dilutive equity awards | 2 | — | — | 5 | |||||||||||||||||||
| Weighted average shares of common stock outstanding, including dilutive effect | 1,186 | 1,210 | 1,188 | 1,217 | |||||||||||||||||||
| Net earnings/(loss) | $ | 0.52 | $ | (0.24) | $ | (5.47) | $ | 0.50 | |||||||||||||||
We use the treasury stock method to calculate the dilutive effect of outstanding equity awards in the denominator for diluted EPS. Anti-dilutive shares were 5 million for the three months and 13 million for the nine months ended September 27, 2025 and 15 million for the three months and 6 million for the nine months ended September 28, 2024.
Note 17. Segment Reporting
We manage our operating results through four operating segments: North America, Europe and Pacific Developed Markets (“EPDM” or “International Developed Markets”), West and East Emerging Markets (“WEEM”), and Asia Emerging Markets (“AEM”). We have two reportable segments defined by geographic region: North America and International Developed Markets. Our remaining operating segments, consisting of WEEM and AEM, are combined and disclosed as Emerging Markets.
Our chief operating decision maker (“CODM”), Carlos Abrams-Rivera, Chief Executive Officer, evaluates segment performance based on several factors, including net sales and Segment Adjusted Operating Income. Segment Adjusted Operating Income is defined as operating income/(loss) excluding, when they occur, the impacts of restructuring activities, deal costs, 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. Segment Adjusted Operating Income is a financial measure that assists our CODM in comparing our performance on a consistent basis by removing the impact of certain items that our CODM believes do not directly reflect our underlying operations. Our CODM also considers monthly budget-to-actual variances and year-over-year performance of Segment Adjusted Operating Income when making decisions about allocating resources to our segments. Our CODM does not use assets by segment to evaluate performance or allocate resources. Therefore, we do not disclose assets by segment.
Emerging Markets represents the aggregation of our WEEM and AEM operating segments. Segment Adjusted Operating Income for WEEM and AEM is the measure reported to our chief operating decision maker for purposes of making decisions about allocating resources to these operating segments and assessing their performance.
30
Net sales by segment were (in millions):
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Net sales: | |||||||||||||||||||||||
| North America | $ | 4,641 | $ | 4,826 | $ | 13,886 | $ | 14,575 | |||||||||||||||
| International Developed Markets | 895 | 882 | 2,609 | 2,622 | |||||||||||||||||||
| Total segment net sales | 5,536 | 5,708 | 16,495 | 17,197 | |||||||||||||||||||
Emerging Markets | 701 | 675 | 2,093 | 2,073 | |||||||||||||||||||
| Total net sales | $ | 6,237 | $ | 6,383 | $ | 18,588 | $ | 19,270 | |||||||||||||||
Segment Adjusted Operating Income was (in millions):
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | ||||||||||||||||||||||||||||||||||
| North America | International Developed Markets | Total | North America | International Developed Markets | Total | ||||||||||||||||||||||||||||||
| Net Sales | $ | 4,641 | $ | 895 | $ | 4,826 | $ | 882 | |||||||||||||||||||||||||||
Adjusted Cost of Products Sold(a) | 3,081 | 640 | 3,070 | 629 | |||||||||||||||||||||||||||||||
Other segment items(b) | 542 | 125 | 519 | 118 | |||||||||||||||||||||||||||||||
| Segment Adjusted Operating Income | $ | 1,018 | $ | 130 | $ | 1,148 | $ | 1,237 | $ | 135 | $ | 1,372 | |||||||||||||||||||||||
Emerging Markets | 79 | 84 | |||||||||||||||||||||||||||||||||
| General corporate expenses | (121) | (126) | |||||||||||||||||||||||||||||||||
| Restructuring activities | (6) | — | |||||||||||||||||||||||||||||||||
| Unrealized gains/(losses) on commodity hedges | (23) | (3) | |||||||||||||||||||||||||||||||||
| Impairment losses | (35) | (1,428) | |||||||||||||||||||||||||||||||||
Separation costs | (17) | — | |||||||||||||||||||||||||||||||||
| Operating income/(loss) | 1,025 | (101) | |||||||||||||||||||||||||||||||||
| Interest expense | 240 | 230 | |||||||||||||||||||||||||||||||||
| Other expense/(income) | (22) | (48) | |||||||||||||||||||||||||||||||||
| Income/(loss) before income taxes | $ | 807 | $ | (283) | |||||||||||||||||||||||||||||||
(a) Adjusted Cost of Products Sold is defined as cost of products sold excluding, when they occur, the impacts of restructuring activities, deal costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results), impairment losses, separation costs, and certain non-ordinary course legal and regulatory matters.
(b) Other segment items for North America and International Developed Markets includes SG&A, primarily for marketing and advertising expenses, employee compensation-related expenses, amortization of definite-lived intangible assets, and research and development costs.
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For the Nine Months Ended | |||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | ||||||||||||||||||||||||||||||||||
| North America | International Developed Markets | Total | North America | International Developed Markets | Total | ||||||||||||||||||||||||||||||
| Net Sales | $ | 13,886 | $ | 2,609 | $ | 14,575 | $ | 2,622 | |||||||||||||||||||||||||||
Adjusted Cost of Products Sold(a) | 9,012 | 1,841 | 9,193 | 1,840 | |||||||||||||||||||||||||||||||
Other segment items(b) | 1,582 | 375 | 1,589 | 385 | |||||||||||||||||||||||||||||||
| Segment Adjusted Operating Income | $ | 3,292 | $ | 393 | $ | 3,685 | $ | 3,793 | $ | 397 | $ | 4,190 | |||||||||||||||||||||||
Emerging Markets | 278 | 232 | |||||||||||||||||||||||||||||||||
| General corporate expenses | (382) | (447) | |||||||||||||||||||||||||||||||||
| Restructuring activities | (10) | — | |||||||||||||||||||||||||||||||||
| Unrealized gains/(losses) on commodity hedges | (6) | 30 | |||||||||||||||||||||||||||||||||
| Impairment losses | (9,301) | (2,282) | |||||||||||||||||||||||||||||||||
Separation costs | (17) | — | |||||||||||||||||||||||||||||||||
| Operating income/(loss) | (5,753) | 1,723 | |||||||||||||||||||||||||||||||||
| Interest expense | 709 | 685 | |||||||||||||||||||||||||||||||||
| Other expense/(income) | (120) | (56) | |||||||||||||||||||||||||||||||||
| Income/(loss) before income taxes | $ | (6,342) | $ | 1,094 | |||||||||||||||||||||||||||||||
(a) Adjusted Cost of Products Sold is defined as cost of products sold excluding, when they occur, the impacts of restructuring activities, deal costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results), impairment losses, separation costs, and certain non-ordinary course legal and regulatory matters.
(b) Other segment items for North America and International Developed Markets includes SG&A, primarily for marketing and advertising expenses, employee compensation-related expenses, amortization of definite-lived intangible assets, and research and development costs.
Total depreciation and amortization expense by segment was (in millions):
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Depreciation and amortization expense: | |||||||||||||||||||||||
| North America | $ | 158 | $ | 158 | $ | 474 | $ | 458 | |||||||||||||||
| International Developed Markets | 36 | 42 | 110 | 122 | |||||||||||||||||||
| Total segment depreciation and amortization expense | 194 | 200 | 584 | 580 | |||||||||||||||||||
| Emerging Markets | 28 | 25 | 84 | 79 | |||||||||||||||||||
| General corporate expenses | 23 | 20 | 49 | 55 | |||||||||||||||||||
| Total depreciation and amortization expense | $ | 245 | $ | 245 | $ | 717 | $ | 714 | |||||||||||||||
Total capital expenditures by segment were (in millions):
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Capital expenditures: | |||||||||||||||||||||||
| North America | $ | 104 | $ | 151 | $ | 369 | $ | 490 | |||||||||||||||
| International Developed Markets | 24 | 32 | 86 | 121 | |||||||||||||||||||
| Total segment capital expenditures | 128 | 183 | 455 | 611 | |||||||||||||||||||
| Emerging Markets | 25 | 25 | 76 | 84 | |||||||||||||||||||
| General corporate expenses | 18 | 26 | 65 | 82 | |||||||||||||||||||
| Total capital expenditures | $ | 171 | $ | 234 | $ | 596 | $ | 777 | |||||||||||||||
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We manage our product portfolio through eight consumer-driven product platforms: Taste Elevation, Easy Ready Meals, Substantial Snacking, Desserts, Hydration, Cheese, Coffee, and Meats. A platform is a lens created for the portfolio based on a grouping of consumer needs. The platforms help us to manage and organize our business effectively by providing insight into our various product categories and brands.
Taste Elevation includes condiments, sauces, dressings, and spreads. Easy Ready Meals includes Kraft Mac & Cheese varieties, frozen potato products, and other frozen meals. Substantial Snacking includes Lunchables meal kits, frozen snacks, and pickles. Desserts includes dry packaged desserts, refrigerated ready to eat desserts, and other dessert toppings. Hydration includes ready to drink beverages, powdered beverages, and liquid concentrates. Cheese includes American sliced and recipe cheeses. Coffee includes mainstream coffee, coffee pods, and premium coffee. Meats includes cold cuts, bacon, and hot dogs.
Each platform is assigned a role within our business to help inform our resource allocation and investment decisions, which are made at the operating segment level. These roles include: Accelerate, Protect, and Balance. Our Accelerate role contains platforms that are expected to have high growth potential, generate higher gross margins, and are in markets in which we have higher market share. Our Protect role contains platforms that are expected to have moderate growth potential, tend to generate higher gross margins, and are in markets in which we have higher market share. Our Balance role contains platforms that include commodity-heavy categories with relatively flat growth potential but help us to maintain our brand footprint.
Net sales by platform were (in millions):
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| ACCELERATE | |||||||||||||||||||||||
| Taste Elevation | $ | 2,788 | $ | 2,825 | $ | 8,389 | $ | 8,443 | |||||||||||||||
| Easy Ready Meals | 1,020 | 1,065 | 2,986 | 3,162 | |||||||||||||||||||
| Substantial Snacking | 406 | 423 | 1,181 | 1,290 | |||||||||||||||||||
| Total Accelerate | 4,214 | 4,313 | 12,556 | 12,895 | |||||||||||||||||||
| PROTECT | |||||||||||||||||||||||
| Desserts | 291 | 292 | 791 | 815 | |||||||||||||||||||
| Hydration | 552 | 539 | 1,624 | 1,635 | |||||||||||||||||||
| Total Protect | 843 | 831 | 2,415 | 2,450 | |||||||||||||||||||
| BALANCE | |||||||||||||||||||||||
| Cheese | 392 | 426 | 1,217 | 1,273 | |||||||||||||||||||
| Coffee | 219 | 200 | 646 | 621 | |||||||||||||||||||
| Meats | 485 | 538 | 1,486 | 1,633 | |||||||||||||||||||
| Other | 84 | 75 | 268 | 398 | |||||||||||||||||||
| Total Balance | 1,180 | 1,239 | 3,617 | 3,925 | |||||||||||||||||||
| Total net sales | $ | 6,237 | $ | 6,383 | $ | 18,588 | $ | 19,270 | |||||||||||||||
The net sales by platform for the three and nine months ended September 28, 2024 presented in the table above has been corrected to conform to our previously disclosed platform definitions. The update had no impact on net sales or on the condensed consolidated financial statements and we do not believe they are material to the condensed consolidated financial statements.
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Note 18. Other Financial Data
Condensed Consolidated Statements of Income Information
Other expense/(income) consists of the following (in millions):
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Amortization of postemployment benefit plans prior service costs/(credits) | $ | (2) | $ | (2) | $ | (6) | $ | (6) | |||||||||||||||
Net pension and postretirement non-service cost/(benefit)(a) | (32) | (38) | (84) | (101) | |||||||||||||||||||
| Loss/(gain) on sale of business | 44 | (1) | 44 | 78 | |||||||||||||||||||
| Interest income | (34) | (16) | (85) | (49) | |||||||||||||||||||
| Foreign exchange losses/(gains) | 5 | 7 | 209 | (28) | |||||||||||||||||||
| Derivative losses/(gains) | (3) | (2) | (194) | 46 | |||||||||||||||||||
| Other miscellaneous expense/(income) | — | 4 | (4) | 4 | |||||||||||||||||||
| Other expense/(income) | $ | (22) | $ | (48) | $ | (120) | $ | (56) | |||||||||||||||
(a) Excludes amortization of postemployment benefit plans prior service costs/(credits).
We present all non-service cost components of net pension cost/(benefit) and net postretirement cost/(benefit) within other expense/(income) on our condensed consolidated statements of income. See Note 11, Postemployment Benefits, for additional information on these components, including any curtailments and settlements, as well as information on our prior service costs/(credits) amortization. See Note 12, Financial Instruments, for information related to our derivative impacts.
Other expense/(income) was $22 million of income for the three months ended September 27, 2025 compared to $48 million of income for the three months ended September 28, 2024. This change was primarily driven by a $44 million net loss on sale of business in the third quarter of 2025 compared to a $1 million net gain on sale of business in the third quarter of 2024, and a $6 million decrease in non-cash net pension and postretirement non-service benefits in the third quarter of 2025 compared to the third quarter of 2024. These negative impacts on other expense/(income) were partially offset by an $18 million increase in interest income in the third quarter of 2025 compared to the third quarter of 2024.
Other expense/(income) was $120 million of income for the nine months ended September 27, 2025 compared to $56 million of income for the nine months ended September 28, 2024. This change was primarily driven by a $194 million net gain on derivative activities in 2025 compared to a $46 million net loss on derivative activities in 2024, a $36 million increase in interest income in 2025 compared to 2024, a $44 million loss on sale of business in 2025 compared to a $78 million loss on the sale of business in 2024, and $4 million of income in other miscellaneous income in 2025 compared to $4 million of expense in other miscellaneous expense in 2024. These positive impacts on other expense/(income) were partially offset by a $209 million net foreign exchange loss in 2025 compared to a $28 million net foreign exchange gain in 2024, and a $17 million decrease in non-cash net pension and postretirement non-service benefits in 2025 compared to 2024.
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Item 2. 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 condensed consolidated financial statements and related notes included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q. 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.
Description of the Company:
We manufacture and market food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee, and other grocery products throughout the world.
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 17, Segment Reporting, in Item 1, Financial Statements, for our financial information by segment.
Proposed 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 is expected to allow each company to have greater strategic and operational focus to better serve customers, customize capital allocation, and accelerate profitable growth. We currently expect to complete the Separation in the second half of 2026. See Part II. Items 1A. Risk Factors of this Quarterly Report on Form 10-Q for further discussion of risks relating to the Separation.
Acquisitions and Divestitures:
On July 9, 2025, we entered into a definitive agreement to sell our infant and specialty food business in Italy, within our International Developed Markets segment, which is expected to close in the first quarter of 2026. In the first quarter of 2024, we closed the sale of the Russia Infant Transaction and the Papua New Guinea Transaction, both within Emerging Markets. See Note 5, Acquisitions and Divestitures, in Item 1, Financial Statements, for additional information on divestiture activities.
Business Trends and Items Affecting Comparability of Financial Results
Inflation, Supply Chain, and Tariff Impacts:
During the nine months ended September 27, 2025, we experienced increased inflationary pressures compared to the prior year, due in part to the recent tariff and trade policy actions taken by the United States and foreign governments. We have incurred increased cost of products sold within a subset of our North America segment (primarily within our Coffee and Hydration platforms) due to the impacts of tariffs on certain raw materials currently sourced from outside of the U.S. and on certain products that are manufactured through our integrated supply chain that spans the U.S. and Canada.
While these increased costs have had a negative impact on our results of operations, we have taken measures to mitigate the impact of this inflation through pricing actions, efficiency gains, and alternative sourcing. However, there has been, and we expect that there could continue to be, a difference between the timing of when these mitigative 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. 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.
35
Regulatory Landscape:
On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the United States. The OBBBA includes, among other provisions, a broad range of changes to U.S. tax law, as well as changes to eligibility requirements for Supplemental Nutrition Assistance Program (“SNAP”) recipients. While OBBBA did not have a significant impact on our total tax provision as of September 27, 2025, we are still evaluating our position on the elective provisions of the law and the potential impacts of those elections on our financial statements.
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 condensed consolidated financial statements, which are calculated in accordance with U.S. GAAP see Non-GAAP Financial Measures.
Consolidated Results of Operations
Summary of Results:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | % Change | September 27, 2025 | September 28, 2024 | % Change | ||||||||||||||||||||||||||||||
| (in millions, except per share data) | (in millions, except per share data) | ||||||||||||||||||||||||||||||||||
| Net sales | $ | 6,237 | $ | 6,383 | (2.3) | % | $ | 18,588 | $ | 19,270 | (3.5) | % | |||||||||||||||||||||||
| Operating income/(loss) | 1,025 | (101) | 1,114.9 | % | (5,753) | 1,723 | (433.9) | % | |||||||||||||||||||||||||||
| Net income/(loss) | 613 | (290) | 311.4 | % | (6,496) | 614 | (1,158.0) | % | |||||||||||||||||||||||||||
| Net income/(loss) attributable to common shareholders | 615 | (290) | 312.1 | % | (6,497) | 613 | (1,159.9) | % | |||||||||||||||||||||||||||
| Diluted EPS | 0.52 | (0.24) | 316.7 | % | (5.47) | 0.50 | (1,194.0) | % | |||||||||||||||||||||||||||
Net Sales:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | % Change | September 27, 2025 | September 28, 2024 | % Change | ||||||||||||||||||||||||||||||
| (in millions) | (in millions) | ||||||||||||||||||||||||||||||||||
| Net sales | $ | 6,237 | $ | 6,383 | (2.3) | % | $ | 18,588 | $ | 19,270 | (3.5) | % | |||||||||||||||||||||||
Organic Net Sales(a) | 6,201 | 6,363 | (2.5) | % | 18,612 | 19,204 | (3.1) | % | |||||||||||||||||||||||||||
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Three Months Ended September 27, 2025 Compared to the Three Months Ended September 28, 2024:
Net sales decreased 2.3% to $6.2 billion for the three months ended September 27, 2025 compared to $6.4 billion for the three months ended September 28, 2024, including the favorable impact of foreign currency (0.2 pp). Organic Net Sales decreased 2.5% to $6.2 billion for the three months ended September 27, 2025 compared to $6.4 billion for the three months ended September 28, 2024, primarily due to the unfavorable volume/mix (3.5 pp), which more than offset higher pricing (1.0 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.
Nine Months Ended September 27, 2025 Compared to the Nine Months Ended September 28, 2024:
Net sales decreased 3.5% to $18.6 billion for the nine months ended September 27, 2025 compared to $19.3 billion for the nine months ended September 28, 2024, including the unfavorable impact of foreign currency (0.4 pp). Organic Net Sales decreased 3.1% to $18.6 billion for the nine months ended September 27, 2025 compared to $19.2 billion for the nine months ended September 28, 2024, primarily due to the unfavorable volume/mix (3.9 pp), which more than offset higher pricing (0.8 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.
36
Net Income/(Loss):
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | % Change | September 27, 2025 | September 28, 2024 | % Change | ||||||||||||||||||||||||||||||
| (in millions) | (in millions) | ||||||||||||||||||||||||||||||||||
| Operating income/(loss) | $ | 1,025 | $ | (101) | 1,114.9 | % | $ | (5,753) | $ | 1,723 | (433.9) | % | |||||||||||||||||||||||
| Net income/(loss) | 613 | (290) | 311.4 | % | (6,496) | 614 | (1,158.0) | % | |||||||||||||||||||||||||||
| Net income/(loss) attributable to common shareholders | 615 | (290) | 312.1 | % | (6,497) | 613 | (1,159.9) | % | |||||||||||||||||||||||||||
Adjusted Operating Income(a) | 1,106 | 1,330 | (16.9) | % | 3,581 | 3,975 | (9.9) | % | |||||||||||||||||||||||||||
(a) Adjusted Operating Income is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Three Months Ended September 27, 2025 Compared to the Three Months Ended September 28, 2024:
Operating income/(loss) increased 1,114.9% to income of $1.0 billion for the three months ended September 27, 2025 compared to losses of $101 million for the three months ended September 28, 2024, primarily due to non-cash impairment losses that were $1.4 billion lower in the current year period. In addition to the impact of these non-cash impairment losses, operating income/(loss) decreased $267 million due to inflationary pressures in commodity and manufacturing costs that outpaced our efficiency initiatives, unfavorable volume/mix, increased SG&A, primarily due to increased advertising expenses, and unfavorable changes in unrealized losses/(gains) on commodity hedges. These unfavorable impacts to operating income/(loss) were partially offset by higher pricing.
Net income/(loss) increased 311.4% to income of $613 million for the three months ended September 27, 2025 compared to losses of $290 million for the three months ended September 28, 2024. This increase was due to the favorable changes in operating income/(loss) factors discussed above, partially offset by higher income tax expense, unfavorable changes in other expense/(income), and higher interest expense.
•Our effective tax rate for the three months ended September 27, 2025 was an expense of 24.0% on pre-tax income. Our effective tax rate for the three months ended September 28, 2024 was an expense of 2.5% on pre-tax loss, which included the net unfavorable effective tax rate impact of goodwill and intangible asset impairment losses of 22.9%. The year-over-year change in the effective tax rate for the three-month period was primarily driven by the impact of non-deductible goodwill impairments and a less favorable geographic mix of pre-tax income in various non-U.S. jurisdictions primarily due to the changes made to our corporate entity structure in December 2024.
•Other expense/(income) was $22 million of income for the three months ended September 27, 2025 compared to $48 million of income for the three months ended September 28, 2024. This change was primarily driven by a $44 million net loss on the sale of a business recognized in the third quarter of 2025 associated with the Italy Infant Transaction, partially offset by an $18 million increase in interest income primarily due to interest earned on our available-for-sale securities.
Adjusted Operating Income decreased 16.9% to $1.1 billion for the three months ended September 27, 2025 compared to $1.3 billion for the three months ended September 28, 2024, primarily due to inflationary pressures in commodity and manufacturing costs that outpaced our efficiency initiatives, unfavorable volume/mix, and increased SG&A, primarily due to increased advertising expenses. These unfavorable impacts more than offset higher pricing and the favorable impact of foreign currency (0.1 pp).
Nine Months Ended September 27, 2025 Compared to the Nine Months Ended September 28, 2024:
Operating income/(loss) decreased 433.9% to a loss of $5.8 billion for the nine months ended September 27, 2025 compared to income of $1.7 billion for the nine months ended September 28, 2024, primarily due to non-cash impairment losses that were $7.0 billion higher in the current year period. In addition to the impact of these non-cash impairment losses, operating income/(loss) decreased $457 million due to inflationary pressures in commodity and manufacturing costs that outpaced our efficiency initiatives, unfavorable volume/mix, and unfavorable changes in unrealized losses/(gains) on commodity hedges. These unfavorable impacts to operating income/(loss) were partially offset by higher pricing and decreased SG&A, primarily due to decreased advertising expenses and lower variable compensation expense.
37
Net income/(loss) decreased 1,158.0% to a loss of $6.5 billion for the nine months ended September 27, 2025 compared to income of $614 million for the nine months ended September 28, 2024. This decrease was due to the unfavorable changes in operating income/(loss) factors discussed above and higher interest expense, partially offset by lower income tax expense and favorable changes in other expense/(income).
•Our effective tax rate for the nine months ended September 27, 2025 was an expense of 2.4% on pre-tax loss, which included the net unfavorable effective tax rate impact of non-deductible goodwill impairments of 24.8%. Our effective tax rate for the nine months ended September 28, 2024 was an expense of 43.9% on pre-tax income, which included the net unfavorable effective tax rate impact of goodwill and intangible asset impairment losses of 21.5%. The year-over-year change in the effective tax rate for the nine month period was primarily due to the impact of non-deductible goodwill impairments, and a less favorable geographic mix of pre-tax income in various non-U.S. jurisdictions.
•Other expense/(income) was $120 million of income for the nine months ended September 27, 2025 compared to $56 million of income for the nine months ended September 28, 2024. This change was primarily driven by a $36 million increase in interest income in 2025 compared to 2024 primarily due to interest earned our available-for-sale securities, and a $44 million net loss on the sale of a business recognized in 2025 compared to a $78 million net loss on the sale of businesses in 2024.
Adjusted Operating Income decreased 9.9% to $3.6 billion for the nine months ended September 27, 2025 compared to $4.0 billion for the nine months ended September 28, 2024, primarily due to inflationary pressures in commodity and manufacturing costs that outpaced our efficiency initiatives, unfavorable volume/mix, and the unfavorable impact of foreign currency (0.1 pp). These unfavorable impacts more than offset higher pricing and decreased SG&A, primarily due to decreased advertising expenses and lower variable compensation expense.
Diluted EPS:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | % Change | September 27, 2025 | September 28, 2024 | % Change | ||||||||||||||||||||||||||||||
| Diluted EPS | $ | 0.52 | $ | (0.24) | 316.7 | % | $ | (5.47) | $ | 0.50 | (1,194.0) | % | |||||||||||||||||||||||
Adjusted EPS(a) | 0.61 | 0.75 | (18.7) | % | 1.92 | 2.22 | (13.5) | % | |||||||||||||||||||||||||||
(a) Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Three Months Ended September 27, 2025 Compared to the Three Months Ended September 28, 2024:
Diluted EPS increased 316.7% to $0.52 for the three months ended September 27, 2025 compared to $(0.24) for the three months ended September 28, 2024, primarily due to the net income/(loss) factors discussed above and the favorable impact of our common stock repurchases.
| For the Three Months Ended | |||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | $ Change | % Change | ||||||||||||||||||||
| Diluted EPS | $ | 0.52 | $ | (0.24) | $ | 0.76 | 316.7 | % | |||||||||||||||
| Unrealized losses/(gains) on commodity hedges | 0.02 | — | 0.02 | ||||||||||||||||||||
| Impairment losses | 0.03 | 0.99 | (0.96) | ||||||||||||||||||||
| Separation costs | 0.01 | — | 0.01 | ||||||||||||||||||||
| Losses/(gains) on sale of business | 0.04 | — | 0.04 | ||||||||||||||||||||
| Certain significant discrete income tax items | (0.01) | — | (0.01) | ||||||||||||||||||||
Adjusted EPS(a) | $ | 0.61 | $ | 0.75 | $ | (0.14) | (18.7) | % | |||||||||||||||
Key drivers of change in Adjusted EPS(a): | |||||||||||||||||||||||
| Results of operations | $ | (0.14) | |||||||||||||||||||||
| Interest expense | (0.01) | ||||||||||||||||||||||
| Other expense/(income) | 0.02 | ||||||||||||||||||||||
| Effective tax rate | (0.02) | ||||||||||||||||||||||
Effect of common stock repurchases(b) | 0.01 | ||||||||||||||||||||||
| $ | (0.14) | ||||||||||||||||||||||
(a) Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
38
(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 16, Earnings Per Share, for more information on our weighted average shares outstanding.
Adjusted EPS decreased 18.7% to $0.61 for the three months ended September 27, 2025 compared to $0.75 for the three months ended September 28, 2024. This decrease was primarily due to lower Adjusted Operating Income, higher taxes on adjusted earnings, and higher interest expense, which more than offset the favorable changes in other expense/(income) and the favorable impact of our common stock repurchases.
Nine Months Ended September 27, 2025 Compared to the Nine Months Ended September 28, 2024:
Diluted EPS decreased 1,194.0% to $(5.47) for the nine months ended September 27, 2025 compared to $0.50 for the nine months ended September 28, 2024, primarily due to the net income/(loss) factors discussed above, which more than offset the favorable impact of our common stock repurchases.
For the Nine Months Ended | |||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | $ Change | % Change | ||||||||||||||||||||
| Diluted EPS | $ | (5.47) | $ | 0.50 | $ | (5.97) | (1,194.0) | % | |||||||||||||||
| Restructuring activities | 0.01 | — | 0.01 | ||||||||||||||||||||
| Unrealized losses/(gains) on commodity hedges | — | (0.02) | 0.02 | ||||||||||||||||||||
| Impairment losses | 7.30 | 1.69 | 5.61 | ||||||||||||||||||||
| Separation costs | 0.01 | — | 0.01 | ||||||||||||||||||||
| Losses/(gains) on sale of business | 0.04 | 0.05 | (0.01) | ||||||||||||||||||||
| Nonmonetary currency devaluation | 0.02 | — | 0.02 | ||||||||||||||||||||
| Certain significant discrete income tax items | 0.01 | — | 0.01 | ||||||||||||||||||||
Adjusted EPS(a) | $ | 1.92 | $ | 2.22 | $ | (0.30) | (13.5) | % | |||||||||||||||
Key drivers of change in Adjusted EPS(a): | |||||||||||||||||||||||
| Results of operations | $ | (0.26) | |||||||||||||||||||||
| Interest expense | (0.01) | ||||||||||||||||||||||
| Other expense/(income) | 0.04 | ||||||||||||||||||||||
| Effective tax rate | (0.11) | ||||||||||||||||||||||
Effect of common stock repurchases(b) | 0.04 | ||||||||||||||||||||||
| $ | (0.30) | ||||||||||||||||||||||
(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 16, Earnings Per Share, for more information on our weighted average shares outstanding.
Adjusted EPS decreased 13.5% to $1.92 for the nine months ended September 27, 2025 compared to $2.22 for the nine months ended September 28, 2024. This decrease was 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).
39
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.
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 condensed consolidated statements of income, as nonmonetary currency devaluation, rather than accumulated other comprehensive income/(losses) on our condensed consolidated balance sheets, until such time as the economy is no longer considered highly inflationary. See Note 3, Significant Accounting Policies, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 28, 2024, for additional information. We apply highly inflationary accounting to the results of our subsidiaries in Venezuela, Turkey, and Egypt, which are all in Emerging Markets.
Net Sales:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Net sales: | |||||||||||||||||||||||
| North America | $ | 4,641 | $ | 4,826 | $ | 13,886 | $ | 14,575 | |||||||||||||||
| International Developed Markets | 895 | 882 | 2,609 | 2,622 | |||||||||||||||||||
Emerging Markets | 701 | 675 | 2,093 | 2,073 | |||||||||||||||||||
| Total net sales | $ | 6,237 | $ | 6,383 | $ | 18,588 | $ | 19,270 | |||||||||||||||
Organic Net Sales:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
Organic Net Sales(a): | |||||||||||||||||||||||
| North America | $ | 4,645 | $ | 4,826 | $ | 13,921 | $ | 14,575 | |||||||||||||||
| International Developed Markets | 869 | 882 | 2,575 | 2,622 | |||||||||||||||||||
Emerging Markets | 687 | 655 | 2,116 | 2,007 | |||||||||||||||||||
| Total Organic Net Sales | $ | 6,201 | $ | 6,363 | $ | 18,612 | $ | 19,204 | |||||||||||||||
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
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Drivers of the changes in net sales and Organic Net Sales for the three and nine months ended September 27, 2025 compared to the three and nine months ended September 28, 2024 were:
| Net Sales | Currency | Acquisitions and Divestitures | Organic Net Sales | Price | Volume/Mix | ||||||||||||||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||
| North America | (3.8) | % | 0.0 pp | 0.0 pp | (3.8) | % | 0.4 pp | (4.2) pp | |||||||||||||||||||||||||||
| International Developed Markets | 1.6 | % | 3.0 pp | 0.0 pp | (1.4) | % | 1.0 pp | (2.4) pp | |||||||||||||||||||||||||||
Emerging Markets | 3.8 | % | (0.9) pp | 0.0 pp | 4.7 | % | 4.0 pp | 0.7 pp | |||||||||||||||||||||||||||
| Kraft Heinz | (2.3) | % | 0.2 pp | 0.0 pp | (2.5) | % | 1.0 pp | (3.5) pp | |||||||||||||||||||||||||||
| Net Sales | Currency | Acquisitions and Divestitures | Organic Net Sales | Price | Volume/Mix | ||||||||||||||||||||||||||||||
For the Nine Months Ended | |||||||||||||||||||||||||||||||||||
| North America | (4.7) | % | (0.2) pp | 0.0 pp | (4.5) | % | 0.4 pp | (4.9) pp | |||||||||||||||||||||||||||
| International Developed Markets | (0.5) | % | 1.3 pp | 0.0 pp | (1.8) | % | 0.5 pp | (2.3) pp | |||||||||||||||||||||||||||
| Emerging Markets | 0.9 | % | (4.0) pp | (0.5) pp | 5.4 | % | 4.5 pp | 0.9 pp | |||||||||||||||||||||||||||
| Kraft Heinz | (3.5) | % | (0.4) pp | 0.0 pp | (3.1) | % | 0.8 pp | (3.9) pp | |||||||||||||||||||||||||||
Adjusted Operating Income:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Segment Adjusted Operating Income: | |||||||||||||||||||||||
| North America | $ | 1,018 | $ | 1,237 | $ | 3,292 | $ | 3,793 | |||||||||||||||
| International Developed Markets | 130 | 135 | 393 | 397 | |||||||||||||||||||
| Total Segment Adjusted Operating Income | 1,148 | 1,372 | 3,685 | 4,190 | |||||||||||||||||||
Emerging Markets | 79 | 84 | 278 | 232 | |||||||||||||||||||
| General corporate expenses | (121) | (126) | (382) | (447) | |||||||||||||||||||
| Restructuring activities | (6) | — | (10) | — | |||||||||||||||||||
| Unrealized gains/(losses) on commodity hedges | (23) | (3) | (6) | 30 | |||||||||||||||||||
| Impairment losses | (35) | (1,428) | (9,301) | (2,282) | |||||||||||||||||||
| Separation costs | (17) | — | (17) | — | |||||||||||||||||||
| Operating income/(loss) | 1,025 | (101) | (5,753) | 1,723 | |||||||||||||||||||
| Interest expense | 240 | 230 | 709 | 685 | |||||||||||||||||||
| Other expense/(income) | (22) | (48) | (120) | (56) | |||||||||||||||||||
| Income/(loss) before income taxes | $ | 807 | $ | (283) | $ | (6,342) | $ | 1,094 | |||||||||||||||
North America:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | % Change | September 27, 2025 | September 28, 2024 | % Change | ||||||||||||||||||||||||||||||
| (in millions) | (in millions) | ||||||||||||||||||||||||||||||||||
| Net sales | $ | 4,641 | $ | 4,826 | (3.8) | % | $ | 13,886 | $ | 14,575 | (4.7) | % | |||||||||||||||||||||||
Organic Net Sales(a) | 4,645 | 4,826 | (3.8) | % | 13,921 | 14,575 | (4.5) | % | |||||||||||||||||||||||||||
Segment Adjusted Operating Income | 1,018 | 1,237 | (17.8) | % | 3,292 | 3,793 | (13.2) | % | |||||||||||||||||||||||||||
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Three Months Ended September 27, 2025 Compared to the Three Months Ended September 28, 2024:
Net sales decreased 3.8% to $4.6 billion for the three months ended September 27, 2025 compared to $4.8 billion for the three months ended September 28, 2024. Organic Net Sales decreased 3.8% to $4.6 billion for the three months ended September 27, 2025 compared to $4.8 billion for the three months ended September 28, 2024, primarily due to unfavorable volume/mix (4.2
41
pp), which more than offset higher pricing (0.4 pp). Unfavorable volume/mix was primarily due to declines in coffee, cold cuts, frozen snacks, and certain condiments. Higher pricing was taken in certain categories to mitigate higher input costs, primarily in coffee.
Segment Adjusted Operating Income decreased 17.8% to $1.0 billion for the three months ended September 27, 2025 compared to $1.2 billion for the three months ended September 28, 2024, primarily due to inflationary pressures in commodity and manufacturing costs that outpaced our efficiency initiatives, unfavorable volume/mix, increased SG&A, primarily due to increased advertising expenses, and the unfavorable impact of foreign currency (0.1 pp). These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing.
Nine Months Ended September 27, 2025 Compared to the Nine Months Ended September 28, 2024:
Net sales decreased 4.7% to $13.9 billion for the nine months ended September 27, 2025 compared to $14.6 billion for the nine months ended September 28, 2024, including the unfavorable impacts of foreign currency (0.2 pp). Organic Net Sales decreased 4.5% to $13.9 billion for the nine months ended September 27, 2025 compared to $14.6 billion for the nine months ended September 28, 2024, primarily due to unfavorable volume/mix (4.9 pp), which more than offset higher pricing (0.4 pp). Unfavorable volume/mix was primarily driven by declines in cold cuts, coffee, frozen snacks, desserts, and certain condiments. Higher pricing was taken in certain categories to mitigate higher input costs, primarily in coffee.
Segment Adjusted Operating Income decreased 13.2% to $3.3 billion for the nine months ended September 27, 2025 compared to $3.8 billion for the nine months ended September 28, 2024, primarily due to inflationary pressures in commodity and manufacturing costs that outpaced our efficiency initiatives, unfavorable volume/mix, higher depreciation expense, and the unfavorable impact of foreign currency (0.1 pp). These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing and decreased SG&A, primarily due to decreased advertising expenses, and lower variable compensation expense.
International Developed Markets:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | % Change | September 27, 2025 | September 28, 2024 | % Change | ||||||||||||||||||||||||||||||
| (in millions) | (in millions) | ||||||||||||||||||||||||||||||||||
| Net sales | $ | 895 | $ | 882 | 1.6 | % | $ | 2,609 | $ | 2,622 | (0.5) | % | |||||||||||||||||||||||
Organic Net Sales(a) | 869 | 882 | (1.4) | % | 2,575 | 2,622 | (1.8) | % | |||||||||||||||||||||||||||
Segment Adjusted Operating Income | 130 | 135 | (3.5) | % | 393 | 397 | (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.
Three Months Ended September 27, 2025 Compared to the Three Months Ended September 28, 2024:
Net sales increased 1.6% to $895 million for the three months ended September 27, 2025 compared to $882 million for the three months ended September 28, 2024, including the favorable impacts of foreign currency (3.0 pp). Organic Net Sales decreased 1.4% to $869 million for the three months ended September 27, 2025 compared to $882 million for the three months ended September 28, 2024, primarily due to unfavorable volume/mix (2.4 pp), which more than offset higher pricing (1.0 pp). Unfavorable volume/mix was primarily due to continued industry slowdowns in meals in the United Kingdom and pricing elasticity in New Zealand.
Segment Adjusted Operating Income decreased 3.5% to $130 million for the three months ended September 27, 2025 compared to $135 million for the three months ended September 28, 2024, primarily due to unfavorable volume/mix and increased SG&A, primarily due to increased variable compensation expense and research and development costs. These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing and the favorable impact of foreign currency (4.1 pp).
Nine Months Ended September 27, 2025 Compared to the Nine Months Ended September 28, 2024:
Net sales decreased 0.5% to $2.6 billion for the nine months ended September 27, 2025 compared to $2.6 billion for the nine months ended September 28, 2024, including the favorable impacts of foreign currency (1.3 pp). Organic Net Sales decreased 1.8% to $2.6 billion for the nine months ended September 27, 2025 compared to $2.6 billion for the nine months ended September 28, 2024, primarily due to unfavorable volume/mix (2.3 pp), which more than offset higher pricing (0.5 pp). Unfavorable volume/mix was primarily due to continued industry slowdowns of meals in the United Kingdom and pricing elasticity in New Zealand.
42
Segment Adjusted Operating Income decreased 1.0% to $393 million for the nine months ended September 27, 2025 compared to $397 million for the nine months ended September 28, 2024, primarily due to unfavorable volume/mix and inflationary pressures in manufacturing and procurement costs that outpaced our efficiency initiatives. These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing, the favorable impact of foreign currency (2.8 pp), lower amortization expense, and decreased SG&A, primarily due to decreased advertising expenses.
Emerging Markets:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | % Change | September 27, 2025 | September 28, 2024 | % Change | ||||||||||||||||||||||||||||||
| (in millions) | (in millions) | ||||||||||||||||||||||||||||||||||
| Net sales | $ | 701 | $ | 675 | 3.8 | % | $ | 2,093 | $ | 2,073 | 0.9 | % | |||||||||||||||||||||||
Organic Net Sales(a) | 687 | 655 | 4.7 | % | 2,116 | 2,007 | 5.4 | % | |||||||||||||||||||||||||||
Segment Adjusted Operating Income(b) | 79 | 84 | (6.5) | % | 278 | 232 | 19.6 | % | |||||||||||||||||||||||||||
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
(b) Segment Adjusted Operating Income for Emerging Markets, which represents the combination 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.
Three Months Ended September 27, 2025 Compared to the Three Months Ended September 28, 2024:
Net sales increased 3.8% to $701 million for the three months ended September 27, 2025 compared to $675 million for the three months ended September 28, 2024, including the unfavorable impacts of foreign currency (0.9 pp). Organic Net Sales increased 4.7% to $687 million for the three months ended September 27, 2025 compared to $655 million for the three months ended September 28, 2024, primarily driven by higher pricing (4.0 pp) and favorable volume/mix (0.7 pp). Higher pricing was taken primarily in certain countries within WEEM to address inflationary pressures. Favorable volume/mix was primarily driven by Taste Elevation within our LATAM region, which more than offset unfavorable volume/mix in Indonesia.
Segment Adjusted Operating Income decreased 6.5% to $79 million for the three months ended September 27, 2025 compared to $84 million for the three months ended September 28, 2024, primarily due to increased advertising expenses, higher procurement and logistics costs reflecting inflationary pressure in WEEM, unfavorable changes in allowances for trade receivables in Indonesia, higher depreciation expense, and the unfavorable impact of foreign currency (1.8 pp). These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing, reduced manufacturing costs primarily as a result of our efficiency initiatives, and favorable volume/mix.
Nine Months Ended September 27, 2025 Compared to the Nine Months Ended September 28, 2024:
Net sales increased 0.9% to $2.1 billion for the nine months ended September 27, 2025 compared to $2.1 billion for the nine months ended September 28, 2024, including the unfavorable impacts of foreign currency (4.0 pp) and divestitures (0.5 pp). Organic Net Sales increased 5.4% to $2.1 billion for the nine months ended September 27, 2025 compared to $2.0 billion for the nine months ended September 28, 2024, primarily driven by higher pricing (4.5 pp) and favorable volume/mix (0.9 pp). Higher pricing was taken primarily in certain countries within WEEM to address inflationary pressures. Favorable volume/mix was primarily driven by Taste Elevation within LATAM, particularly in Brazil, which more than offset unfavorable volume/mix in Indonesia.
Segment Adjusted Operating Income increased 19.6% to $278 million for the nine months ended September 27, 2025 compared to $232 million for the nine months ended September 28, 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 increased SG&A, primarily due to increased advertising expenses, higher procurement and logistics costs reflecting inflationary pressure in WEEM, higher depreciation expense, and the unfavorable impact of foreign currency (4.9 pp).
Liquidity and Capital Resources
We believe that cash generated from our operating activities, 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.
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Cash Flow Activity for the Nine Months Ended September 27, 2025 Compared to the Nine Months Ended September 28, 2024:
Net Cash Provided by/Used for Operating Activities:
Net cash provided by operating activities was $3.1 billion for the nine months ended September 27, 2025 compared to $2.8 billion for the nine months ended September 28, 2024. This increase was primarily due to favorable changes in working capital, predominantly within inventory and accounts payable, as well as lower cash outflows from variable compensation in the 2025 period compared to the 2024 period. These impacts were partially offset by lower Adjusted Operating Income.
Net Cash Provided by/Used for Investing Activities:
Net cash used for investing activities was $1.6 billion for the nine months ended September 27, 2025 compared to $849 million for the nine months ended September 28, 2024. This change was primarily driven by the purchases of marketable securities, partially offset by proceeds received from the sale of marketable securities in the 2025 period, lower capital expenditures in the 2025 period compared to the 2024 period, and lapping our prior year payment to acquire the TGI Friday License. We expect 2025 capital expenditures to be approximately $950 million compared to the 2024 capital expenditures of $1.0 billion. Our 2025 capital expenditures are expected to be primarily driven by maintenance projects, investments in technology, capital investments focused on generating growth, including cost improvements, capacity expansion, and investments in warehouse.
Net Cash Provided by/Used for Financing Activities:
Net cash used for financing activities was $763 million for the nine months ended September 27, 2025 compared to $2.0 billion for the nine months ended September 28, 2024. This change was primarily driven by debt proceeds received from the issuance of the 2025 Notes in the current year period, increased cash flow hedge settlements, and decreased repurchases of common stock compared to the prior year period. See Note 15, Commitments, Contingencies, and Debt for additional information on our debt issuances.
Cash Held by International Subsidiaries:
Of the $2.1 billion cash and cash equivalents on our condensed consolidated balance sheet at September 27, 2025, $1.1 billion 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 September 27, 2025 and December 28, 2024 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 confirmed outstanding under these programs were $767 million at September 27, 2025 and $745 million at December 28, 2024. The amounts were included in accounts payable on our consolidated balance sheets. See Note 14, Financing Arrangements, in Item 1, Financial Statements, 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 September 27, 2025, at December 28, 2024, or during the nine months ended September 27, 2025 or September 28, 2024.
Our Senior Credit Facility provides for a revolving commitment of $4.0 billion through July 8, 2030. 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 September 27, 2025 or December 28, 2024, or during the nine months ended September 27, 2025 or September 28, 2024.
44
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 September 27, 2025.
Long-Term Debt:
Our long-term debt, including the current portion, was $21.2 billion at September 27, 2025 and $19.9 billion at December 28, 2024. This increase 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.
In the first quarter of 2025, KHFC, our 100% owned operating subsidiary, issued 600 million euro aggregate principal amount of 3.250% senior notes due March 2033, $500 million aggregate principal amount of 5.200% senior notes due March 2032, and $500 million aggregate principal amount of 5.400% senior notes due March 2035 (collectively, the “2025 Notes”). We used a portion of the net proceeds from the 2025 Notes to fund the 600 million euro senior notes that matured in May 2025 and expect to use the remaining net proceeds from the 2025 Notes for general corporate purposes, including our investment in certain marketable fixed-income debt securities that are classified as available-for-sale and to fund the repayment of outstanding indebtedness such as our $1.9 billion senior notes that mature in June 2026.
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 September 27, 2025.
See Note 15, Commitments, Contingencies, and Debt, in Item 1, Financial Statements, for additional information on our long-term debt activity, Note 12, Financial Instruments, in Item 1, Financial Statements, for additional information on our available-for-sale securities, and Note 16, Debt, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 28, 2024 for additional information on our borrowing arrangements and long-term debt.
Equity and Dividends:
We paid dividends on our common stock of $1.4 billion for the nine months ended September 27, 2025. Additionally, in the fourth quarter of 2025, our Board of Directors declared a cash dividend of $0.40 per share of common stock, which is payable on December 26, 2025 to stockholders of record on November 28, 2025.
The declaration of dividends is subject to the discretion of our Board of Directors and depends on various factors, including our net income, financial condition, cash requirements, future prospects, and other factors that our Board of Directors deems relevant to its analysis and decision making.
On November 27, 2023, we announced that the Board of Directors 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”), privately negotiated transactions, transactions structured through investment banking institutions, or other means. We purchased no shares during the three months ended and 13.5 million shares during the nine months ended September 27, 2025 and had approximately $1.5 billion remaining authorization under the share repurchase program as of September 27, 2025. The share repurchase program is in addition to our share repurchases to offset the dilutive effect of equity-based compensation.
Aggregate Contractual Obligations:
In the first quarter of 2025, we issued the 2025 Notes, which mature between 2032 and 2035. See Note 15, Commitments, Contingencies and Debt, in Item 1, Financial Statements, for additional information. There were no other material changes to our aggregate contractual obligations from those disclosed in our Annual Report on Form 10-K for the year ended December 28, 2024.
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 15, Commitments, Contingencies, and Debt, in Item 1, Financial Statements, and Note 16, Debt, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 28, 2024 for additional descriptions of these guarantees.
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The payment of the principal, interest and premium, when applicable, 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 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 Nine Months Ended | |||||
| September 27, 2025 | |||||
| Net sales | $ | 11,834 | |||
Gross profit(a) | 4,363 | ||||
| Intercompany service fees and other recharges | 3,108 | ||||
| Operating income/(loss) | 758 | ||||
| Equity in earnings/(losses) of subsidiaries | (6,421) | ||||
| Net income/(loss) | (6,497) | ||||
| Net income/(loss) attributable to common shareholders | (6,497) | ||||
(a) For the nine months ended September 27, 2025, the Obligor Group recorded $363 million of net sales to the non-guarantor subsidiaries and $46 million of purchases from the non-guarantor subsidiaries.
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Summarized Balance Sheets
| September 27, 2025 | December 28, 2024 | ||||||||||
| ASSETS | |||||||||||
| Current assets | $ | 4,895 | $ | 4,506 | |||||||
Current assets due from affiliates(a) | 147 | 445 | |||||||||
| Non-current assets | 5,689 | 5,848 | |||||||||
| Goodwill | 8,823 | 8,823 | |||||||||
| Intangible assets, net | 1,796 | 1,881 | |||||||||
Non-current assets due from affiliates(b) | 28 | 28 | |||||||||
| LIABILITIES | |||||||||||
| Current liabilities | $ | 4,757 | $ | 5,563 | |||||||
Current liabilities due to affiliates(a) | 1,548 | 1,924 | |||||||||
| Non-current liabilities | 21,266 | 22,846 | |||||||||
Non-current liabilities due to affiliates(b) | 206 | 194 | |||||||||
(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, meats, sugar and other sweeteners, coffee beans, tomatoes, edible oils, eggs, fruits and vegetables, and wheat products to manufacture our products. In addition, we purchase and use significant quantities of plastics, resins, cardboard, glass and paper to package our products, and we use electricity, diesel fuel, and natural gas in the manufacturing and distribution of our products. We continuously monitor global supply and cost trends of these commodities.
During the nine months ended September 27, 2025, we experienced increased commodity costs for coffee, meat, and eggs, while commodity costs for cheese and dairy, tomato products, edible oil and wheat 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.
See our Annual Report on Form 10-K for the year ended December 28, 2024 for additional information on how we manage commodity costs.
Critical Accounting Estimates
Our significant accounting policies are described in Note 2, Significant Accounting Policies, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 28, 2024.
We prepare our condensed consolidated financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires the use of estimates, judgments, and assumptions. Our critical accounting estimates and assumptions related to goodwill and intangible assets are described below. See Item 7, Management’s Discussion 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 discussion of our other critical accounting estimates and assumptions.
47
Goodwill and Intangible Assets:
As of September 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 September 27, 2025. Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $34.1 billion at September 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. See Note 8, Goodwill and Intangible Assets, in Item 1, Financial Statements, for a discussion of the timing of the annual impairment test.
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 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. If current expectations of future growth rates and margins are not met, if market factors outside of our control change; such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units 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 8, Goodwill and Intangible Assets, in Item 1, Financial Statements, we performed our 2025 Annual Impairment Test as of June 29, 2025, which was the first day of our third quarter of 2025. We concluded that the fair value of our reporting units and brands exceeded their carrying amounts and no impairment was recorded in the third quarter of 2025 as a result of the 2025 Annual Impairment Test. Our reporting units and brands that have 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.
48
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.
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 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) | |||||||||||||||||||||||||||
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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 8, Goodwill and Intangible Assets, in Item 1, Financial Statements, for our impairment testing results.
New Accounting Pronouncements
See Note 4, New Accounting Standards, in Item 1, Financial Statements, for a discussion of new accounting pronouncements.
Contingencies
See Note 15, Commitments, Contingencies, and Debt, in Item 1, Financial Statements, 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 condensed 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.
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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 | ||||||||||||||||||||||||||||||
Three Months Ended September 27, 2025 | |||||||||||||||||||||||||||||||||||
| North America | $ | 4,641 | $ | (4) | $ | — | $ | 4,645 | |||||||||||||||||||||||||||
| International Developed Markets | 895 | 26 | — | 869 | |||||||||||||||||||||||||||||||
| Emerging Markets | 701 | 14 | — | 687 | |||||||||||||||||||||||||||||||
| Kraft Heinz | $ | 6,237 | $ | 36 | $ | — | $ | 6,201 | |||||||||||||||||||||||||||
Three Months Ended September 28, 2024 | |||||||||||||||||||||||||||||||||||
| North America | $ | 4,826 | $ | — | $ | — | $ | 4,826 | |||||||||||||||||||||||||||
| International Developed Markets | 882 | — | — | 882 | |||||||||||||||||||||||||||||||
| Emerging Markets | 675 | 20 | — | 655 | |||||||||||||||||||||||||||||||
| Kraft Heinz | $ | 6,383 | $ | 20 | $ | — | $ | 6,363 | |||||||||||||||||||||||||||
| Year-over-year growth rates | |||||||||||||||||||||||||||||||||||
| North America | (3.8) | % | 0.0 pp | 0.0 pp | (3.8) | % | 0.4 pp | (4.2) pp | |||||||||||||||||||||||||||
| International Developed Markets | 1.6 | % | 3.0 pp | 0.0 pp | (1.4) | % | 1.0 pp | (2.4) pp | |||||||||||||||||||||||||||
| Emerging Markets | 3.8 | % | (0.9) pp | 0.0 pp | 4.7 | % | 4.0 pp | 0.7 pp | |||||||||||||||||||||||||||
| Kraft Heinz | (2.3) | % | 0.2 pp | 0.0 pp | (2.5) | % | 1.0 pp | (3.5) pp | |||||||||||||||||||||||||||
51
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 | ||||||||||||||||||||||||||||||
Nine Months Ended September 27, 2025 | |||||||||||||||||||||||||||||||||||
| North America | $ | 13,886 | $ | (35) | $ | — | $ | 13,921 | |||||||||||||||||||||||||||
| International Developed Markets | 2,609 | 34 | — | 2,575 | |||||||||||||||||||||||||||||||
| Emerging Markets | 2,093 | (23) | — | 2,116 | |||||||||||||||||||||||||||||||
| Kraft Heinz | $ | 18,588 | $ | (24) | $ | — | $ | 18,612 | |||||||||||||||||||||||||||
Nine Months Ended September 28, 2024 | |||||||||||||||||||||||||||||||||||
| North America | $ | 14,575 | $ | — | $ | — | $ | 14,575 | |||||||||||||||||||||||||||
| International Developed Markets | 2,622 | — | — | 2,622 | |||||||||||||||||||||||||||||||
| Emerging Markets | 2,073 | 56 | 10 | 2,007 | |||||||||||||||||||||||||||||||
| Kraft Heinz | $ | 19,270 | $ | 56 | $ | 10 | $ | 19,204 | |||||||||||||||||||||||||||
| Year-over-year growth rates | |||||||||||||||||||||||||||||||||||
| North America | (4.7) | % | (0.2) pp | 0.0 pp | (4.5) | % | 0.4 pp | (4.9) pp | |||||||||||||||||||||||||||
| International Developed Markets | (0.5) | % | 1.3 pp | 0.0 pp | (1.8) | % | 0.5 pp | (2.3) pp | |||||||||||||||||||||||||||
Emerging Markets | 0.9 | % | (4.0) pp | (0.5) pp | 5.4 | % | 4.5 pp | 0.9 pp | |||||||||||||||||||||||||||
| Kraft Heinz | (3.5) | % | (0.4) pp | 0.0 pp | (3.1) | % | 0.8 pp | (3.9) pp | |||||||||||||||||||||||||||
52
The Kraft Heinz Company
Reconciliation of Operating Income/(Loss) to Adjusted Operating Income
(dollars in millions)
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Operating income/(loss) | $ | 1,025 | $ | (101) | $ | (5,753) | $ | 1,723 | |||||||||||||||
| Restructuring activities | 6 | — | 10 | — | |||||||||||||||||||
| Unrealized losses/(gains) on commodity hedges | 23 | 3 | 6 | (30) | |||||||||||||||||||
| Impairment losses | 35 | 1,428 | 9,301 | 2,282 | |||||||||||||||||||
| Separation costs | 17 | — | 17 | — | |||||||||||||||||||
| Adjusted Operating Income | $ | 1,106 | $ | 1,330 | $ | 3,581 | $ | 3,975 | |||||||||||||||
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The Kraft Heinz Company
Reconciliation of Diluted EPS to Adjusted EPS
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Diluted EPS | $ | 0.52 | $ | (0.24) | $ | (5.47) | $ | 0.50 | |||||||||||||||
Restructuring activities(a) | — | — | 0.01 | — | |||||||||||||||||||
Unrealized losses/(gains) on commodity hedges(b) | 0.02 | — | — | (0.02) | |||||||||||||||||||
Impairment losses(c) | 0.03 | 0.99 | 7.30 | 1.69 | |||||||||||||||||||
Separation costs(d) | 0.01 | — | 0.01 | — | |||||||||||||||||||
Losses/(gains) on sale of business(e) | 0.04 | — | 0.04 | 0.05 | |||||||||||||||||||
Nonmonetary currency devaluation(f) | — | — | 0.02 | — | |||||||||||||||||||
Certain significant discrete income tax items(g) | (0.01) | — | 0.01 | — | |||||||||||||||||||
| Adjusted EPS | $ | 0.61 | $ | 0.75 | $ | 1.92 | $ | 2.22 | |||||||||||||||
(a) Gross expenses/(income) included in restructuring activities were expenses of $4 million ($1 million after-tax) for the three months and $18 million ($9 million after-tax) for the nine months ended September 27, 2025 and income of $7 million ($5 million after-tax) for the three months and $8 million ($6 million after-tax) for the nine months ended September 28, 2024 and were recorded in the following income statement line items:
•Cost of products sold included expenses of $2 million for the three months and $1 million for the nine months ended September 27, 2025 and expenses of $2 million for the nine months ended September 28, 2024; and
•SG&A included expenses of $4 million for the three months and $9 million for the nine months ended September 27, 2025 and income of $2 million for the nine months ended September 28, 2024.
•Other expense/(income) included income of $2 million for the three months and expenses of $8 million for the nine months ended September 27, 2025 and income of $7 million for the three months and $8 million for the nine months ended September 28, 2024
(b) Gross expenses/(income) included in unrealized losses/(gains) on commodity hedges were expenses of $23 million ($18 million after-tax) for the three months and $6 million ($5 million after-tax) for the nine months ended September 27, 2025 and expenses of $3 million ($2 million after-tax) for the three months and income of $30 million ($22 million after-tax) for the nine months ended September 28, 2024, and were recorded in cost of products sold.
(c) Gross impairment losses included the following:
•Goodwill impairment losses of $35 million ($35 million after-tax) for the three months and $6.7 billion ($6.7 billion after-tax) for the nine months ended September 27, 2025 and $707 million ($659 million after-tax) for the three months and $1.6 billion ($1.5 billion after-tax) for the nine months ended September 28, 2024, which were recorded in SG&A;
•Intangible asset impairment losses of $2.6 billion ($2 billion after-tax) for the nine months ended September 27, 2025 and $721 million ($541 million after-tax) for the three and nine months ended September 28, 2024, which were recorded in SG&A.
(d) Gross expenses recorded in separation costs were $17 million ($13 million after-tax) for the three and nine months ended September 27, 2025, and were recorded in SG&A.
(e) Gross expenses/(income) included in losses/(gains) on sale of business were expenses of $44 million ($44 million after-tax) for the three and nine months ended September 27, 2025 and expenses of zero ($4 million after-tax) for the three months and $78 million ($57 million after-tax) for the nine months ended September 28, 2024, and were recorded in other expense/(income).
(f) Gross expenses included in nonmonetary currency devaluation were $5 million ($5 million after-tax) for the three months and $26 million ($26 million after-tax) for the nine months ended September 27, 2025 and $3 million ($3 million after-tax) for the three months and $7 million ($7 million after-tax) for the nine months ended September 28, 2024, and were recorded in other expense/(income).
(g) Certain significant discrete income tax items were a benefit of $6 million for the three months and expenses of $10 million for the nine months ended September 27, 2025. The expense represents current period movement in the valuation allowance against deferred tax assets in our subsidiary in Brazil and adjustments recorded to the deferred tax asset and valuation allowance related to the transfer of business operations to a wholly-owned subsidiary in the Netherlands in December 2024.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes to our market risk during the nine months ended September 27, 2025. For additional information, refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, in our Annual Report on Form 10-K for the year ended December 28, 2024.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 27, 2025. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of September 27, 2025, were effective and provided reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended September 27, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
In 2024, we initiated a multi-year project to migrate certain of our financial processing systems. The project includes the migration to a new enterprise resource planning (ERP) solution that we expect to implement in phases throughout our businesses over the next several years. During the first half of 2025, we completed the implementation of our new ERP solution in certain countries in Emerging Markets as part of the first phase of our ERP transition, which did not result in significant changes in our internal control over financial reporting. As we progress through our migration, we continue to evaluate the design and operating effectiveness of internal controls as they relate to the system upgrades, and we will implement any required control changes prior to relevant go-live dates associated with the system implementations.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
See Note 15, Commitments, Contingencies, and Debt, in Item 1, Financial Statements.
Item 1A. Risk Factors.
The following risk factors are in addition to our risk factors included in Part I, Item 1A, Risk Factors to our Annual Report on Form 10-K for the year ended December 28, 2024, that could affect our business, financial condition, and results of operations. These risk factors should be considered in connection with the forward-looking statements included in this Quarterly Report on Form 10-Q because these factors could cause the actual results and conditions to differ materially from those projected in forward-looking statements.
The Separation is subject to various risks and uncertainties and may not be completed in accordance with the expected plans or anticipated timeline, or at all, and will involve significant time, expense, and resources, which could disrupt or adversely affect our business.
On September 2, 2025, we announced our intention to separate our company into two independent publicly traded companies through a tax free spin-off. We currently expect to complete the Separation in the second half of 2026. The Separation is subject to the satisfaction of customary conditions, including final approval by the Kraft Heinz Board of Directors, receipt of favorable tax opinions of our U.S. tax advisors with respect to the tax-free nature of the Separation, and the effectiveness of appropriate filings with the U.S. Securities and Exchange Commission. The failure to satisfy any of the required conditions could delay the completion of the Separation for a significant period of time or prevent it from occurring at all.
The Separation is complex in nature, and unanticipated developments or changes, including changes in the law, macroeconomic environment, regulatory and political conditions and competitive conditions of our markets, the need both to receive regulatory approvals or clearances and to satisfy the requirements to effectuate a generally tax-free transaction, the uncertainty of the financial markets and challenges in executing the Separation, could delay or prevent the completion of the Separation or cause the Separation to occur on terms or conditions that are different or less favorable than expected. Any changes to the Separation or delay in completing the Separation could cause us not to realize some or all of the expected benefits, or realize them on a different timeline than currently expected. Further, our Board of Directors could decide, either because of a failure of conditions or because of market or other factors, to abandon the Separation. No assurance can be given as to whether and when the Separation will occur.
Whether or not we complete the Separation, our ongoing business may be adversely affected and we may be subject to certain risks and consequences as a result of pursuing the Separation, including the following:
•The process of completing the Separation will be time-consuming and involve significant additional costs and expenses, which may not yield a discernible benefit if the Separation is not completed.
•Executing the Separation will require significant time and attention from our senior management and employees, which may divert management’s attention from operating and growing our business and could adversely affect our business, financial condition, results of operations, or cash flows.
•We may also experience increased difficulties in attracting, retaining, and motivating employees during the pendency of the Separation and following completion of the Separation, which could harm our businesses.
•The assumptions underlying expectations regarding the integration process, including with respect to the Separation may prove to be faulty and/or inaccurate.
•Some of our customers or suppliers may delay or defer decisions or may end their relationships with us.
•We may experience negative reactions from the financial markets if we fail to complete the Separation or fail to complete it on a timely basis.
•The announcement of the Separation may create greater volatility in the trading price of our shares and potentially cause market prices to decline.
Any of the above factors could cause the Separation (or the failure to execute the Separation) to have a material adverse effect on our business, financial condition, results of operations, or cash flows.
The Separation may not achieve the anticipated benefits and will expose us to new risks.
We may not realize the anticipated strategic, financial, operational, or other benefits from the Separation. We cannot predict with certainty when the benefits expected from the Separation will occur or the extent to which they will be achieved. If the
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Separation is completed, our operational and financial profile will change and we will face new risks. As independent, publicly traded companies, the newly created companies will each be smaller, less-diversified companies and may be more vulnerable to changing market conditions. There is no assurance that following the Separation each separated company will be successful. The announcement and/or completion of the Separation may cause uncertainty for or disruptions with our customers, partners, suppliers, and employees, which may negatively impact these relationships or our operations. In addition, we will incur one-time costs and ongoing costs in connection with, or as a result of, the Separation, including costs of operating as independent, publicly-traded companies that the two businesses will no longer be able to share. Those costs may exceed our estimates or could negate some of the benefits we expect to realize. If we do not realize the intended benefits or if our costs exceed our estimates, the separated businesses could suffer a material adverse effect on their respective business, financial condition, results of operations, or cash flows.
The Separation may adversely impact our ability to access the capital markets and our cost of capital.
The Separation may have the effect of, among other things:
•Requiring us to dedicate significant cash flow to our debt, including, without limitation, the payment of principal and interest, payment of costs associated with the refinancing, repayment, redemption, repurchase, defeasance, discharge or exchange of the Company’s outstanding debt, and payment of costs associated with the Separation, which will reduce funds we have available for other purposes.
•Exposing us to interest rate risk at the time of refinancing outstanding debt or on the portion of our debt obligations that are issued at variable rates.
•Increasing the borrowing costs associated with the re-allocation or taking on of new debt.
•Although we expect to maintain investment grade ratings, resulting in downgrades of our credit ratings leading to increased borrowing costs to the Company.
Our primary sources of liquidity to finance operations, including stock repurchases and dividends on our common stock, is cash generated by our businesses and access to the debt capital markets. Further, in connection with the Separation, we may repay, redeem, repurchase, defease, discharge or exchange all of our senior notes, of which there are approximately $20.9 billion aggregate principal amount outstanding, with maturities in years starting in 2026 through 2050. If our ability to continue to raise money in the debt capital markets is impaired, or if there is a significant increase in the cost of debt, there could be an adverse effect on our liquidity. If we are unable to generate sufficient cash flow or maintain access to adequate external financing, it could impact our current operations, activities under our current and future stock buyback programs, and our growth opportunities, which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
If the Separation and/or certain related transactions do not qualify as transactions that are generally tax-free for U.S. federal income tax purposes, we and our stockholders could be subject to significant tax liabilities.
Notwithstanding that we intend to structure the Separation to generally be a tax-free transaction, there is no assurance that the spin-off and/or certain related transactions will qualify for this treatment. If the spin-off and/or certain related transactions are ultimately determined to be taxable, we and our stockholders could be subject to significant U.S. federal income taxes.
Following the Separation, the price of shares of the Company’s common stock may fluctuate significantly.
The Company cannot predict the effect of the Separation on the trading price of shares of its common stock, and the market value of shares of its common stock may be less than, equal to or greater than the market value of shares of its common stock prior to the Separation. In addition, the price of the Company’s common stock may be more volatile around the time of the Separation.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Our share repurchase activity in the three months ended September 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) | |||||||||||||||||||||||
6/29/2025 — 8/2/2025 | 11,418 | $ | 26.78 | — | $ | 1,502 | ||||||||||||||||||||
8/3/2025 — 8/30/2025 | 2,948 | 28.55 | — | 1,502 | ||||||||||||||||||||||
8/31/2025 — 9/27/2025 | 2,004 | 27.91 | — | 1,502 | ||||||||||||||||||||||
| Total | 16,370 | — | ||||||||||||||||||||||||
(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 5. Other Information.
(c) Insider Stock Trading Arrangements: On September 17, 2025, a revocable trust of which Miguel Patricio, Executive Chair of the Board of Directors, is co-trustee and a beneficiary, modified a trading plan intended to satisfy Rule 10b5-1(c), which was previously adopted on August 5, 2024, to sell up to 250,000 shares between December 17, 2025 and March 15, 2026, subject to certain conditions.
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| Exhibit No. | Descriptions | |||||||
| 10.1 | ||||||||
| 22.1 | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | ||||||||
| 32.2 | ||||||||
| 101.1 | The following materials from The Kraft Heinz Company’s Quarterly Report on Form 10-Q for the period ended September 27, 2025 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Equity, (v) the Condensed Consolidated Statements of Cash Flows, (vi) Notes to Condensed Consolidated Financial Statements, and (vii) document and entity information.* | |||||||
| 104.1 | The cover page from The Kraft Heinz Company’s Quarterly Report on Form 10-Q for the three months ended September 27, 2025, formatted in iXBRL.* | |||||||
| + | Indicates a management contract or compensatory plan or arrangement. | |||||||
| * | Filed herewith. | |||||||
| ** | Furnished herewith. | |||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| The Kraft Heinz Company | |||||||||||
Date: | October 29, 2025 | ||||||||||
| By: | /s/ Andre Maciel | ||||||||||
| Andre Maciel | |||||||||||
| Executive Vice President and Global Chief Financial Officer | |||||||||||
(Duly Authorized Officer and Principal Financial Officer) | |||||||||||
| The Kraft Heinz Company | |||||||||||
Date: | October 29, 2025 | ||||||||||
| By: | /s/ Chris Asher | ||||||||||
| Chris Asher | |||||||||||
| Vice President and Global Controller | |||||||||||
(Principal Accounting Officer) | |||||||||||
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