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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 June 29, 2024
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
kraftheinzlogo49.jpg
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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.01 par valueKHCThe Nasdaq Stock Market LLC
Floating Rate Senior Notes due 2025KHC25The Nasdaq Stock Market LLC
3.500% Senior Notes due 2029
KHC29
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 July 27, 2024, there were 1,209,078,897 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. 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 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, 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 30, 2023. 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 EndedFor the Six Months Ended
June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Net sales$6,476 $6,721 $12,887 $13,210 
Cost of products sold4,182 4,460 8,350 8,836 
Gross profit2,294 2,261 4,537 4,374 
Selling, general and administrative expenses, excluding impairment losses918 885 1,859 1,755 
Goodwill impairment losses854 — 854 — 
Selling, general and administrative expenses1,772 885 2,713 1,755 
Operating income/(loss)522 1,376 1,824 2,619 
Interest expense229 228 455 455 
Other expense/(income)(55)(24)(8)(59)
Income/(loss) before income taxes348 1,172 1,377 2,223 
Provision for/(benefit from) income taxes248 174 473 388 
Net income/(loss)100 998 904 1,835 
Net income/(loss) attributable to noncontrolling interest(2)(2)1 (1)
Net income/(loss) attributable to common shareholders$102 $1,000 $903 $1,836 
Per share data applicable to common shareholders:
Basic earnings/(loss)$0.08 $0.81 $0.74 $1.50 
Diluted earnings/(loss)0.08 0.81 0.74 1.49 
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 EndedFor the Six Months Ended
June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Net income/(loss)$100 $998 $904 $1,835 
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments(108)175 (292)294 
Net deferred gains/(losses) on net investment hedges29 (51)103 (75)
Amounts excluded from the effectiveness assessment of net investment hedges8 8 18 14 
Net deferred losses/(gains) on net investment hedges reclassified to net income/(loss)(9)(7)(18)(13)
Net deferred gains/(losses) on cash flow hedges(5)6 3 (9)
Amounts excluded from the effectiveness assessment of cash flow hedges1 6 (1)10 
Net deferred losses/(gains) on cash flow hedges reclassified to net income/(loss)5 (15)19 (31)
Amounts excluded from the effectiveness assessment of fair value hedges3 — 3 — 
Net actuarial gains/(losses) arising during the period— — — — 
Net postemployment benefit losses/(gains) reclassified to net income/(loss)(3)(5)(7)(7)
Total other comprehensive income/(loss)(79)117 (172)183 
Total comprehensive income/(loss)21 1,115 732 2,018 
Comprehensive income/(loss) attributable to noncontrolling interest(12)(2)(37)3 
Comprehensive income/(loss) attributable to common shareholders$33 $1,117 $769 $2,015 
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)
 June 29, 2024December 30, 2023
ASSETS
Cash and cash equivalents$900 $1,400 
Trade receivables (net of allowances of $35 at June 29, 2024 and $38 at December 30, 2023)
2,160 2,112 
Inventories3,573 3,614 
Prepaid expenses273 234 
Other current assets624 566 
Assets held for sale— 3 
Total current assets7,530 7,929 
Property, plant and equipment, net7,038 7,122 
Goodwill29,501 30,459 
Intangible assets, net42,347 42,448 
Other non-current assets2,381 2,381 
TOTAL ASSETS$88,797 $90,339 
LIABILITIES AND EQUITY
Current portion of long-term debt$669 $638 
Accounts payable4,448 4,627 
Accrued marketing724 733 
Interest payable260 258 
Other current liabilities1,385 1,781 
Total current liabilities7,486 8,037 
Long-term debt19,265 19,394 
Deferred income taxes10,173 10,201 
Accrued postemployment costs137 143 
Long-term deferred income1,400 1,424 
Other non-current liabilities1,305 1,418 
TOTAL LIABILITIES39,766 40,617 
Commitments and Contingencies (Note 14)
Redeemable noncontrolling interest10 34 
Equity: 
Common stock, $0.01 par value (5,000 shares authorized; 1,254 shares issued and 1,209 shares outstanding at June 29, 2024; 1,249 shares issued and 1,218 shares outstanding at December 30, 2023)
12 12 
Additional paid-in capital52,086 52,037 
Retained earnings/(deficit)1,297 1,367 
Accumulated other comprehensive income/(losses)(2,738)(2,604)
Treasury stock, at cost (45 shares at June 29, 2024 and 31 shares at December 30, 2023)
(1,762)(1,286)
Total shareholders' equity48,895 49,526 
Noncontrolling interest126 162 
TOTAL EQUITY49,021 49,688 
TOTAL LIABILITIES AND EQUITY$88,797 $90,339 
See accompanying notes to the condensed consolidated financial statements.
3

The Kraft Heinz Company
Condensed Consolidated Statements of Equity
(in millions)
(Unaudited)
Common StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal 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 
Common StockAdditional Paid-in CapitalRetained Earnings/(Deficit)Accumulated Other Comprehensive Income/(Losses)Treasury Stock, at CostNoncontrolling InterestTotal Equity
Balance at December 31, 2022$12 $51,834 $489 $(2,810)$(847)$152 $48,830 
Net income/(loss) excluding redeemable noncontrolling interest— — 836 — — 1 837 
Other comprehensive income/(loss) excluding redeemable noncontrolling interest— — — 62 — 4 66 
Dividends declared-common stock ($0.40 per share)
— — (494)— — — (494)
Exercise of stock options, issuance of other stock awards, repurchase of common stock, and other— 76 — — (5)3 74 
Balance at April 1, 2023$12 $51,910 $831 $(2,748)$(852)$160 $49,313 
Net income/(loss) excluding redeemable noncontrolling interest— — 1,000 — — — 1,000 
Other comprehensive income/(loss) excluding redeemable noncontrolling interest— — — 117 — — 117 
Dividends declared-common stock ($0.40 per share)
— — (495)— — — (495)
Exercise of stock options, issuance of other stock awards, repurchase of common stock, and other— 57 — — (18)— 39 
Balance at July 1, 2023$12 $51,967 $1,336 $(2,631)$(870)$160 $49,974 
See accompanying notes to the condensed consolidated financial statements.
4

The Kraft Heinz Company
Condensed Consolidated Statements of Cash Flows
(in millions)
(Unaudited)
For the Six Months Ended
June 29, 2024July 1, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)$904 $1,835 
Adjustments to reconcile net income/(loss) to operating cash flows: 
Depreciation and amortization469 436 
Amortization of postemployment benefit plans prior service costs/(credits)(4)(7)
Divestiture-related license income(27)(27)
Equity award compensation expense65 77 
Deferred income tax provision/(benefit)(48)(34)
Postemployment benefit plan contributions(9)(11)
Goodwill and intangible asset impairment losses854 — 
Nonmonetary currency devaluation4 18 
Loss/(gain) on sale of business79 2 
Other items, net(56)(26)
Changes in current assets and liabilities:
Trade receivables(113)(114)
Inventories(101)(232)
Accounts payable(40)(156)
Other current assets(114)(2)
Other current liabilities(150)(175)
Net cash provided by/(used for) operating activities1,713 1,584 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(543)(508)
Proceeds from sale of business, net of cash disposed and working capital adjustments3 — 
Payments to acquire intangible assets(140)— 
Other investing activities, net48 33 
Net cash provided by/(used for) investing activities(632)(475)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt(606)(822)
Proceeds from issuance of long-term debt593 657 
Dividends paid(969)(982)
Repurchases of common stock(537)(38)
Other financing activities, net(46)(2)
Net cash provided by/(used for) financing activities(1,565)(1,187)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(18)(14)
Cash, cash equivalents, and restricted cash
Net increase/(decrease)(502)(92)
Balance at beginning of period1,404 1,041 
Balance at end of period$902 $949 
See accompanying notes to the condensed consolidated financial statements.
5

The Kraft Heinz Company
Notes to Condensed Consolidated Financial Statements
Note 1. Basis of Presentation
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted, in accordance with the rules of the SEC. In management’s opinion, these interim financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary to fairly state our results for the periods presented.
We operate on a 52- or 53-week fiscal year ending on the last Saturday in December in each calendar year. Unless the context requires otherwise, references to years and quarters contained herein pertain to our fiscal years and fiscal quarters. Our 2024 fiscal year is scheduled to be a 52-week period ending on December 28, 2024, and our 2023 fiscal year was a 52-week period that ended on December 30, 2023.
The condensed consolidated balance sheet data at December 30, 2023 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. These statements should be read in conjunction with our audited consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 30, 2023. The results for interim periods are not necessarily indicative of future or annual results.
Principles of Consolidation
The condensed consolidated financial statements include The Kraft Heinz Company and all of our controlled subsidiaries. All intercompany transactions are eliminated.
Reportable Segments
In the first quarter of 2024, our internal reporting structure and reportable segments changed. We divided our International segment into three operating segments — Europe and Pacific Developed Markets (“EPDM” or “International Developed Markets”), West and East Emerging Markets (“WEEM”), and Asia Emerging Markets (“AEM”) — to enable enhanced focus on the different strategies required for each of these regions as part of our long-term strategic plan. Subsequently, we manage our operating results through four operating segments. We have two reportable segments defined by geographic region: North America and International Developed Markets. Our remaining operating segments, consisting of WEEM and AEM, are combined and disclosed as Emerging Markets.
Use of Estimates
We prepare our condensed consolidated financial statements in accordance with U.S. GAAP, which requires us to make accounting policy elections, estimates, and assumptions that affect the reported amount of assets, liabilities, reserves, and expenses. These accounting policy elections, estimates, and assumptions are based on our best estimates and judgments. We evaluate our policy elections, estimates, and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. We believe these estimates to be reasonable given the current facts available. We adjust our policy elections, estimates, and assumptions when facts and circumstances dictate. Market volatility, including foreign currency exchange rates, increases the uncertainty inherent in our estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from estimates. If actual amounts differ from estimates, we include the revisions in our consolidated results of operations in the period the actual amounts become known. Historically, the aggregate differences, if any, between our estimates and actual amounts in any year have not had a material effect on our condensed consolidated financial statements.
Reclassifications
We made reclassifications and adjustments to certain previously reported financial information to conform to our current period presentation.
Cash, Cash Equivalents, and Restricted Cash
Cash equivalents include term deposits with banks, money market funds, and all highly liquid investments with original maturities of three months or less. The fair value of cash equivalents approximates the carrying amount. Cash and cash equivalents that are legally restricted as to withdrawal or usage are classified in other current assets or other non-current assets, as applicable, on the condensed consolidated balance sheets. At June 29, 2024, we had $2 million of restricted cash in other non-current assets. At December 30, 2023, we had restricted cash recorded in other current assets of $3 million and $1 million of restricted cash in other non-current assets. Total cash, cash equivalents, and restricted cash was $902 million at June 29, 2024 and $1,404 million at December 30, 2023.
6

Note 2. Significant Accounting Policies
There were no significant changes to our accounting policies from those disclosed in our Annual Report on Form 10-K for the year ended December 30, 2023.
Note 3. New Accounting Standards
Accounting Standards Not Yet Adopted
Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures:
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-07 to improve segment disclosure requirements under Accounting Standards Codification (“ASC”) 280, Segment Reporting, through enhancing disclosures about significant segment expenses. The guidance requires entities to provide significant segment expenses that are regularly provided to the chief operating decision maker and other segment expenses included in each reported measure of segment profitability. This ASU also enhances interim segment reporting requirements by aligning interim disclosures with information that must be disclosed annually in accordance with ASC 280. This ASU will be effective beginning in 2024 for annual reports and in 2025 for quarterly reports. Early adoption is permitted. The new guidance must be applied retrospectively to all prior periods presented in the financial statements, with the significant segment expense and other segment item amounts disclosed based on categories identified in the period of adoption. We are still evaluating the impacts this ASU will have on our notes to the consolidated financial statements.
Income Taxes (Topic 740) – Improvements to Income Tax Disclosures:
In December 2023, the FASB issued ASU 2023-09 to improve income tax disclosure requirements under ASC 740, Income Taxes. The guidance requires entities to provide separate information about a reporting entity’s effective tax rate reconciliation and about income taxes paid. This ASU will be effective for annual periods beginning after December 15, 2024 and will impact our 2025 annual report. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. While the standard will require additional disclosures related to the Company’s income taxes, we do not expect this ASU to have a significant impact on our financial statements.
Note 4. Acquisitions and Divestitures
Divestitures
Russia Infant Transaction:
On March 11, 2024, we closed and finalized the sale of our infant nutrition business in Russia to a third party for total cash consideration of approximately $25 million (the “Russia Infant Transaction”). As a result of the Russia Infant Transaction, we recognized an insignificant pre-tax gain in other expense/(income) on our consolidated statement of income in the first quarter of 2024.
Papua New Guinea Transaction:
On February 5, 2024, we closed and finalized the sale of 100% of the equity interests in our Papua New Guinea subsidiary, Hugo Canning Company Limited, to a third party for total cash consideration of approximately $22 million, which is to be paid incrementally over two years following the transaction closing date (the “Papua New Guinea Transaction”). As a result of the Papua New Guinea Transaction, we recognized a pre-tax loss on sale of business of approximately $80 million in other expense/(income) on our 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 six months ended June 29, 2024 and the three and six months ended July 1, 2023 related to our divestitures. We recognized these deal costs in selling, general and administrative expenses (“SG&A”).
Note 5. Restructuring Activities
See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 30, 2023 for additional information on our restructuring activities.
7

Restructuring Activities:
We have restructuring programs globally, which are focused primarily on streamlining our organizational design. For the six months ended June 29, 2024, we eliminated approximately 100 positions related to these programs. As of June 29, 2024, we expect to eliminate approximately 50 additional positions during the remainder of 2024. For the three months ended June 29, 2024, restructuring activities resulted in expense of $2 million and included a net expense of $3 million from other restructuring costs and a net benefit of $1 million from other exit costs. For the six months ended June 29, 2024, restructuring activities resulted in income of $1 million, which included a net benefit of $6 million from severance and employee benefit costs, partially offset by $5 million of other restructuring costs. Restructuring activities resulted in income of $10 million for the three months and $18 million for the six months ended July 1, 2023.
Our net liability balance for restructuring project costs that qualify as exit and disposal costs under U.S. GAAP was (in millions):
Severance and Employee Benefit CostsOther Exit CostsTotal
Balance at December 30, 2023$23 $14 $37 
Charges/(credits)(6)— (6)
Cash payments(8)(1)(9)
Non-cash utilization1 — 1 
Balance at June 29, 2024$10 $13 $23 
We expect the majority of the liability for severance and employee benefit costs as of June 29, 2024 to be paid by the end of 2024. The liability for other exit costs primarily relates to lease obligations. The cash impact of these obligations will continue for the duration of the lease terms, which expire between 2024 and 2031.
Total Expenses/(Income):
Total expense/(income) related to restructuring activities, by income statement caption, were (in millions):
For the Three Months EndedFor the Six Months Ended
June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Severance and employee benefit costs - Cost of products sold$— $3 $— $5 
Severance and employee benefit costs - SG&A1 (3)(5)(7)
Severance and employee benefit costs - Other expense/(income)(1)— (1)2 
Asset-related costs - Cost of products sold— (11)— (9)
Asset-related costs - SG&A— (1)— (1)
Other costs - Cost of products sold1 2 2 4 
Other costs - SG&A1 — 3 (12)
$2 $(10)$(1)$(18)
We do not include our restructuring activities within Segment Adjusted Operating Income (as defined in Note 16, Segment Reporting). The pre-tax impact of allocating such expenses/(income) to our segments would have been (in millions):
For the Three Months EndedFor the Six Months Ended
 June 29, 2024July 1, 2023June 29, 2024July 1, 2023
North America$1 $(16)$(1)$(10)
International Developed Markets(1)(1)(2)(1)
Emerging Markets(a)
— 7 — 6 
General corporate expenses2 — 2 (13)
$2 $(10)$(1)$(18)
(a)    Emerging Markets represents the aggregation of our WEEM and AEM operating segments.
8

Note 6. Inventories
Inventories consisted of the following (in millions):
June 29, 2024December 30, 2023
Packaging and ingredients$885 $1,014 
Spare parts241 233 
Work in process272 338 
Finished products2,175 2,029 
Inventories$3,573 $3,614 
Note 7. Goodwill and Intangible Assets
Goodwill:
As described in Note 1, Basis of Presentation, in the first quarter of 2024, we divided our International segment into three operating segments — EPDM, WEEM, and AEM. While this reorganization resulted in a change to our operating segments, it did not impact the existing composition of our reporting units that formerly comprised the goodwill balance of our International segment — Northern Europe, Continental Europe, Latin America (“LATAM”), and Asia — and, therefore, was not indicative of an impairment triggering event. We have reflected the impact of this segment change in all historical periods presented.
As of March 31, 2024, which was the first day of our second quarter of 2024, certain organizational changes occurred that impacted our reporting unit composition within our North America segment (the “Q2 North America reorganization”). Two of our North America reporting units — Taste, Meals, and Away From Home (“TMA”), and Fresh, Beverages, and Desserts (“FBD”) — were reorganized into the four reporting units: Taste Elevation, Ready Meals and Snacking (“TMS”), Hydration & Desserts (“HD”), Meat & Cheese (“MC”), and Away from Home & Kraft Heinz Ingredients (“AFH”). The Canada and North America Coffee (“CNAC”) and Other North America reporting units were not impacted by this reorganization.
Changes in the carrying amount of goodwill, by segment, were (in millions):
North America
International Developed Markets
Emerging Markets(a)
Total
Balance at December 30, 2023$27,248 $2,687 $524 $30,459 
Impairment losses(854)— — (854)
Translation adjustments and other(22)(48)(34)(104)
Balance at June 29, 2024$26,372 $2,639 $490 $29,501 
(a)    Emerging Markets represents the aggregation of our WEEM and AEM operating segments.
2024 Year-to-Date Goodwill Impairment Testing
As a result of the Q2 North America reorganization, we reassigned assets and liabilities to the applicable reporting units and allocated goodwill using the relative fair value approach. We performed an interim impairment test (or “2024 transition test”) on the affected reporting units on both a pre- and post-reorganization basis.
As part of our Q2 North America pre-reorganization impairment test of the TMA and FBD reporting units, we utilized the discounted cash flow method under the income approach to estimate the fair values as of March 31, 2024 for these two reporting units and concluded that the fair value of these reporting units exceeded their carrying values and no impairment was recorded.
We performed our Q2 North America post-reorganization impairment test as of March 31, 2024, and tested the new North America reporting units (TMS, HD, MC and AFH). We utilized the discounted cash flow method under the income approach to estimate the fair value of our reporting units. As a result of our Q2 North America post-reorganization impairment test, we recognized a non-cash impairment loss of approximately $854 million in SG&A in our North America segment in the second quarter of 2024. The $854 million impairment loss related to our MC reporting unit, which had a goodwill carrying amount of approximately $2.5 billion after impairment. The impairment of our MC reporting unit was driven by the disaggregation of the former FBD reporting unit, which previously held all the net assets for the HD and MC reporting units as well as the Snacking category of TMS. The other three reporting units for which no impairment charge was required were TMS, which had a goodwill carrying amount of approximately $15.9 billion; HD, which had a goodwill carrying amount of approximately $4.3 billion; and AFH, which had a goodwill carrying amount of approximately $2.8 billion.
9

In performing these tests, we incorporated information that was known through the date of filing this Quarterly Report on Form 10-Q.
As of June 29, 2024, we maintain 13 reporting units, nine of which comprise our goodwill balance. These nine reporting units had an aggregate goodwill carrying amount of $29.5 billion at June 29, 2024.
Accumulated impairment losses to goodwill were $12.7 billion as of June 29, 2024 and $11.8 billion as of December 30, 2023.
Additional Goodwill Considerations
Our reporting units that were impaired in the 2024 transition test were written down to their respective fair values resulting in zero excess fair value over carrying amount as of the applicable impairment test dates. As of our Q2 North America post-reorganization impairment test date, our reporting units with 20% or less fair value over carrying amount had an aggregate carrying amount of $21.2 billion and included the TMS, AFH, and MC reporting units. Our HD reporting unit had between 20-50% fair value over carrying amount and an aggregate carrying amount of $4.3 billion.
Our reporting units that were not subject to the 2024 transition test are carried at their carrying amounts as of their latest impairment test date, the 2023 annual impairment test. As of our 2023 annual impairment test, our reporting units with 20% or less fair value over carrying amount had an aggregate goodwill carrying amount of $3.8 billion and included Northern Europe; Continental Europe; CNAC; and LATAM. Our Asia reporting unit had between 20-50% fair value over carrying amount with an aggregate goodwill carrying amount of $309 million as of our 2023 annual impairment test date. Accordingly, our reporting units that had 20% or less excess fair value over carrying amount as of our 2024 transition test and 2023 annual impairment test have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future. Although the remaining reporting unit had more than 20% excess fair value over carrying amount as of our 2023 annual impairment test, this amount is also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.
Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, discount rates, growth rates, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units might become impaired in the future. Additionally, any decisions to divest certain non-strategic assets has led and could in the future lead to goodwill impairments.
Indefinite-lived intangible assets:
Changes in the carrying amount of indefinite-lived intangible assets, which primarily consisted of trademarks, were (in millions):
Balance at December 30, 2023$38,502 
Translation adjustments and other(71)
Balance at June 29, 2024$38,431 
Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $38.4 billion at June 29, 2024.
No events occurred during the six months ended June 29, 2024 or the six months ended July 1, 2023 that indicated it was more likely than not that any brand was impaired.
Additional Indefinite-Lived Intangible Asset Considerations
Our brands that were impaired in 2023 were written down to their respective fair values resulting in zero excess fair value over carrying amount as of the applicable impairment test dates. As of the latest impairment test, brands with 20% or less fair value over carrying amount had an aggregate carrying amount after impairment of $18.7 billion, brands with between 20-50% fair value over carrying amount had an aggregate carrying amount of $4.2 billion, and brands that had over 50% fair value over carrying amount had an aggregate carrying amount of $15.7 billion. Accordingly, these and other individual brands that had 20% or less excess fair value over carrying amount as of our 2023 annual impairment test have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future. Although the remaining brands had more than 20% excess fair value over carrying amount as of our 2023 annual impairment test, these amounts are also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.
10

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual brands requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, income tax considerations, discount rates, growth rates, royalty rates, contributory asset charges, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our brands might become impaired in the future. Additionally, any decisions to divest certain non-strategic assets has led and could in the future lead to intangible asset impairments.
Definite-lived intangible assets:
Definite-lived intangible assets were (in millions):
 June 29, 2024December 30, 2023
GrossAccumulated
Amortization		NetGrossAccumulated
Amortization		Net
Trademarks$2,420 $(802)$1,618 $2,313 $(755)$1,558 
Customer-related assets3,684 (1,395)2,289 3,710 (1,331)2,379 
Other12 (3)9 12 (3)9 
$6,116 $(2,200)$3,916 $6,035 $(2,089)$3,946 
In the second quarter of 2024, we entered into an amended license agreement to grant us the exclusive, irrevocable, royalty-free, and perpetual right to use certain TGI Friday trademarks to manufacture, distribute, market, and sell certain TGI Friday licensed products (the “TGI Friday License”). The total cash consideration related to the TGI Friday License was approximately $140 million. We recognized this TGI Friday License as a definite-lived intangible asset to be amortized over its 27-year useful life.
Amortization expense for definite-lived intangible assets was $65 million for the three months ended June 29, 2024 and $129 million for the six months ended June 29, 2024, and $64 million for the three months and $126 million for the six months ended July 1, 2023. Aside from amortization expense, the change in definite-lived intangible assets from December 30, 2023 to June 29, 2024, primarily related to the TGI Friday License and the impacts of foreign currency.
We estimate that amortization expense related to definite-lived intangible assets will be approximately $260 million in 2024, $260 million in each of the following four years, and $250 million in 2029.
Note 8. Income Taxes
The provision for income taxes consists of provisions for federal, state, and non-U.S. income taxes. We operate in an international environment; accordingly, the consolidated effective tax rate is a composite rate reflecting the earnings in various locations and the applicable tax rates. Additionally, the calculation of the percentage point impact of goodwill impairment and other items on the effective tax rate is affected by income/(loss) before income taxes. Further, small movements in tax rates due to a change in tax law or a change in tax rates that cause us to revalue our deferred tax balances produce volatility in our effective tax rate. Our quarterly income tax provision is determined based on our estimated full year effective tax rate, adjusted for tax attributable to infrequent or unusual items, which are recognized on a discrete period basis in the income tax provision for the period in which they occur.
Our effective tax rate for the three months ended June 29, 2024 was an expense of 71.1% on pre-tax income. Our effective tax rate was unfavorably impacted by certain net discrete items, primarily non-deductible goodwill impairments (56.5%). This impact was partially offset by the favorable geographic mix of pre-tax income in various non-U.S. jurisdictions and the release of a valuation allowance on certain deferred tax assets.
Our effective tax rate for the three months ended July 1, 2023 was an expense of 14.9% on pre-tax income. Our effective tax rate was favorably impacted by certain net discrete items, including the net decrease in uncertain tax position reserves primarily in the U.S. resulting from a conclusion of the Internal Revenue Service’s (“IRS”) income tax examination for the year 2017 and the lapsing of the statute of limitations for such year (7.1%), and the geographic mix of pre-tax income in various non-U.S. jurisdictions.
The year-over-year increase in the effective tax rate for the three month period was primarily due to the impact of non-deductible goodwill impairments, partially offset by the impact of the net decrease in uncertain tax position reserves in the prior year period and the release of a valuation allowance on certain deferred tax assets.
11

Our effective tax rate for the six months ended June 29, 2024 was an expense of 34.4% on pre-tax income. Our effective tax rate was unfavorably impacted by certain net discrete items, primarily non-deductible goodwill impairments (14.3%). This impact was partially offset by the favorable geographic mix of pre-tax income in various non-U.S. jurisdictions.
Our effective tax rate for the six months ended July 1, 2023 was an expense of 17.5% on pre-tax income. Our effective tax rate was favorably impacted by the geographic mix of pre-tax income in various non-U.S. jurisdictions and certain net discrete items, including the net decrease in uncertain tax position reserves primarily in the U.S. resulting from a conclusion of the IRS’s income tax examination for the year 2017 and the lapsing of the statute of limitations for such year (3.6%).
The year-over-year increase in the effective tax rate for the six month period was primarily due to the impact of non-deductible goodwill impairments, partially offset by the impact of the net decrease in uncertain tax position reserves in the prior year period.
Other Income Tax Matters:
We are currently under examination for income taxes by the IRS for the years 2018 through 2022. In the third quarter of 2023, we received two Notices of Proposed Adjustment (the “NOPAs”) relating to transfer pricing with our foreign subsidiaries. The NOPAs propose an increase to our U.S. taxable income that could result in additional U.S. federal income tax expense and liability of approximately $200 million for 2018 and approximately $210 million for 2019, excluding interest, and assert penalties of approximately $85 million for each of 2018 and 2019. We strongly disagree with the IRS’s positions, believe that our tax positions are well documented and properly supported, and intend to vigorously contest the positions taken by the IRS and pursue all available administrative and judicial remedies. Therefore, we have not recorded any reserves related to this issue. We continue to maintain the same operating model and transfer pricing methodology with our foreign subsidiaries that was in place for the years 2018 and 2019, and the IRS began its audit of 2020, 2021, and 2022 during the first quarter of 2024. We believe our income tax reserves are appropriate for all open tax years and that final adjudication of this matter will not have a material impact on our results of operations and cash flows. However, the ultimate outcome of this matter is uncertain, and if we are required to pay the IRS additional U.S. taxes, interest, and/or potential penalties, our results of operations and cash flows could be materially affected.
Note 9. Employees’ Stock Incentive Plans
Stock Options:
Our stock option activity and related information was:
Number of Stock OptionsWeighted Average Exercise Price
(per share)
Outstanding at December 30, 20238,022,540 $46.87 
Granted654,724 35.13 
Forfeited(1,278,958)46.86 
Exercised(260,676)25.33 
Outstanding at June 29, 20247,137,630 46.58 
The aggregate intrinsic value of stock options exercised during the period was insignificant for the six months ended June 29, 2024.
Restricted Stock Units:
Our restricted stock unit (“RSU”) activity and related information was:
Number of UnitsWeighted Average Grant Date Fair Value
(per share)
Outstanding at December 30, 20237,722,870 $36.80 
Granted3,008,962 35.28 
Forfeited(468,088)37.09 
Vested(3,174,957)34.03 
Outstanding at June 29, 20247,088,787 37.38 
The aggregate fair value of RSUs that vested during the period was $112 million for the six months ended June 29, 2024.
12

Performance Share Units:
Our performance share unit (“PSU”) activity and related information was:
Number of UnitsWeighted Average Grant Date Fair Value
(per share)
Outstanding at December 30, 20234,855,432 $33.65 
Granted2,591,382 29.14 
Forfeited(503,180)32.60 
Vested(1,141,835)33.37 
Outstanding at June 29, 20245,801,799 31.77 
The aggregate fair value of PSUs that vested during the period was $40 million for the six months ended June 29, 2024.
Note 10. Postemployment Benefits
See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 30, 2023 for additional information on our postemployment-related accounting policies.
Pension Plans
Components of Net Pension Cost/(Benefit):
Net pension cost/(benefit) consisted of the following (in millions):
For the Three Months Ended
U.S. PlanNon-U.S. Plans
June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Service cost$1 $1 $1 $1 
Interest cost33 35 14 18 
Expected return on plan assets(49)(49)(21)(22)
Amortization of prior service costs/(credits)— — 1 — 
Amortization of unrecognized losses/(gains)— — 3 2 
Special/contractual termination benefits— — (1)— 
Net pension cost/(benefit)$(15)$(13)$(3)$(1)
For the Six Months Ended
U.S. PlanNon-U.S. Plans
June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Service cost$1 $1 $3 $3 
Interest cost67 71 28 33 
Expected return on plan assets(98)(98)(42)(43)
Amortization of prior service costs/(credits)— — 1 — 
Amortization of unrecognized losses/(gains)— — 6 6 
Special/contractual termination benefits— — (1)2 
Net pension cost/(benefit)$(30)$(26)$(5)$1 
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 $3 million during the six months ended June 29, 2024 and plan to make further contributions of approximately $7 million during the remainder of 2024. We did not contribute to our U.S. pension plan during the six months ended June 29, 2024 and do not plan to make contributions during the remainder of 2024. Estimated future contributions take into consideration current economic conditions, which at this time are expected to have minimal impact on expected contributions for the remainder of 2024. Our actual contributions and plans may change due to many factors, including changes in tax, employee benefit, or other laws and regulations, tax deductibility, significant differences between expected and actual pension asset performance or interest rates, or other factors.
13

Postretirement Plans
Components of Net Postretirement Cost/(Benefit):
Net postretirement cost/(benefit) consisted of the following (in millions):
For the Three Months EndedFor the Six Months Ended
June 29, 2024July 1, 2023June 29, 2024July 1, 2023
Service cost$— $— $1 $1 
Interest cost8 9 16 18 
Expected return on plan assets(14)(13)(28)(27)
Amortization of prior service costs/(credits)(2)(4)(5)(7)
Amortization of unrecognized losses/(gains)(6)(4)(11)(8)
Net postretirement cost/(benefit)$(14)$(12)$(27)$(23)
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 six months ended June 29, 2024, we contributed $6 million to our postretirement benefit plans. We plan to make further contributions of approximately $6 million to our postretirement benefit plans during the remainder of 2024. Estimated future contributions take into consideration current economic conditions, which at this time are expected to have minimal impact on expected contributions for the remainder of 2024. Our actual contributions and plans may change due to many factors, including changes in tax, employee benefit, or other laws and regulations, tax deductibility, significant differences between expected and actual postretirement plan asset performance or interest rates, or other factors.
Note 11. Financial Instruments
See our consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 30, 2023 for additional information on our overall risk management strategies, our use of derivatives, and our related accounting policies.
Derivative Volume:
The notional values of our outstanding derivative instruments were (in millions):
Notional Amount
June 29, 2024December 30, 2023
Commodity contracts$1,040 $954 
Foreign exchange contracts4,190 4,618 
Cross-currency contracts6,803 6,133 
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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):
June 29, 2024
Quoted Prices in Active Markets for Identical Assets and Liabilities
(Level 1)		Significant Other Observable Inputs
(Level 2)		Total Fair Value
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)
$— $— $37 $13 $37 $13 
Cross-currency contracts(b)
— — 117 108 117 108 
Derivatives not designated as hedging instruments:
Commodity contracts(c)
30 39 7 6 37 45 
Foreign exchange contracts(a)
— — 15 7 15 7 
Cross-currency contracts(b)
— — — 4 — 4 
Total fair value$30 $39 $176 $138 $206 $177 
(a)    At June 29, 2024, the fair value of our derivative assets was recorded in other current assets ($49 million) and other non-current assets ($3 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($15 million) and other non-current liabilities ($5 million).
(b)    At June 29, 2024, the fair value of our derivative assets was recorded in other current assets ($43 million) and other non-current assets ($74 million), and the fair value of our derivative liabilities was recorded in other current liabilities ($33 million) and other non-current liabilities ($79 million).
(c)     At June 29, 2024, the fair value of our derivative assets was recorded in other current assets ($34 million) and other non-current assets ($3 million), and the fair value of derivative liabilities was recorded in other current liabilities.
December 30, 2023
Quoted Prices in Active Markets for Identical Assets and Liabilities
(Level 1)		Significant Other Observable Inputs
(Level 2)		Total Fair Value
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts(a)
$— $— $12 $42 $12 $42 
Cross-currency contracts(b)
— — 140 165 140