Kraft Heinz Annual Report 2020
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Kraft Heinz Annual Report 2020 Form 10-K (NASDAQ:KHC) Published: February 14th, 2020 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 28, 2019 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) Registrant’s telephone number, including area code: (412) 456-5700 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of exchange on which registered Common stock, $0.01 par value KHC The Nasdaq Stock Market LLC Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ 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 ☒ The aggregate market value of the shares of common stock held by non-affiliates of the registrant, computed by reference to the closing price of such stock as of the last business day of the registrant’s most recently completed second quarter, was $19 billion. As of February 8, 2020, there were 1,221,399,549 shares of the registrant’s common stock outstanding. Documents Incorporated by Reference Portions of the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission in connection with its annual meeting of shareholders expected to be held on May 7, 2020 are incorporated by reference into Part III hereof. Table of Contents PART I 1 Item 1. Business. 1 Item 1A. Risk Factors. 5 Item 1B. Unresolved Staff Comments. 19 Item 2. Properties. 19 Item 3. Legal Proceedings. 19 Item 4. Mine Safety Disclosures. 19 PART II 19 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 19 Item 6. Selected Financial Data. 21 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 22 Overview 22 Consolidated Results of Operations 22 Results of Operations by Segment 25 Critical Accounting Estimates 28 New Accounting Pronouncements 32 Contingencies 32 Commodity Trends 32 Liquidity and Capital Resources 33 Off-Balance Sheet Arrangements and Aggregate Contractual Obligations 34 Equity and Dividends 36 Non-GAAP Financial Measures 36 Item 7A. Quantitative and Qualitative Disclosures about Market Risk. 41 Item 8. Financial Statements and Supplementary Data. 42 Report of Independent Registered Public Accounting Firm 42 Consolidated Statements of Income 45 Consolidated Statements of Comprehensive Income 46 Consolidated Balance Sheets 47 Consolidated Statements of Equity 48 Consolidated Statements of Cash Flows 49 Notes to Consolidated Financial Statements 50 Note 1. Basis of Presentation 50 Note 2. Significant Accounting Policies 51 Note 3. New Accounting Standards 55 Note 4. Acquisitions and Divestitures 57 Note 5. Restructuring Activities 60 Note 6. Restricted Cash 62 Note 7. Inventories 62 Note 8. Property, Plant and Equipment 62 Note 9. Goodwill and Intangible Assets 63 Note 10. Income Taxes 68 Note 11. Employees’ Stock Incentive Plans 71 Note 12. Postemployment Benefits 74 Note 13. Financial Instruments 84 Note 14. Accumulated Other Comprehensive Income/(Loss) 89 Note 15. Venezuela - Foreign Currency and Inflation 91 Note 16. Financing Arrangements 92 Note 17. Commitments and Contingencies 93 Note 18. Debt 95 Note 19. Leases 99 Note 20. Capital Stock 101 Note 21. Earnings Per Share 101 Note 22. Segment Reporting 101 Note 23. Other Financial Data 104 Note 24. Quarterly Financial Data (Unaudited) 104 Note 25. Supplemental Guarantor Information 105 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. 115 Item 9A. Controls and Procedures. 115 Item 9B. Other Information. 118 PART III 118 Item 10. Directors, Executive Officers and Corporate Governance 118 Item 11. Executive Compensation 118 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 118 Item 13. Certain Relationships and Related Transactions, and Director Independence 118 Item 14. Principal Accounting Fees and Services 118 PART IV 119 Item 15. Exhibits, Financial Statement Schedules 119 125 Item 16. Form 10-K Summary Signatures 126 Valuation and Qualifying Accounts S-1 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 Annual Report on Form 10-K contains a number of forward-looking statements. Words such as “anticipate,” “reflect,” “invest,” “see,” “make,” “expect,” “give,” “deliver,” “drive,” “believe,” “improve,” “assess,” “reassess,” “remain,” “evaluate,” “grow,” “will,” “plan,” “intend,” 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 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, suppliers, and 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, increase our market share, or add products that are in faster-growing and more profitable categories; product recalls or product liability claims; unanticipated business disruptions; our ability to identify, complete, or realize the benefits from strategic acquisitions, alliances, divestitures, joint ventures, or other investments; 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; our ability to successfully execute our strategic initiatives; the impacts of our international operations; economic and political conditions in the United States and in various other nations where we do business; 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; risks associated with information technology and systems, including service interruptions, misappropriation of data, or breaches of security; impacts of natural events in the locations in which we or our customers, suppliers, distributors, or regulators operate; our ownership structure; our indebtedness and ability to pay such indebtedness, as well as our ability to comply with covenants under our debt instruments; additional