Document





UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 2, 2018

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12224659&doc=5
The Kraft Heinz Company
(Exact name of registrant as specified in its charter)

Commission File Number: 001-37482
Delaware
 
46-2078182
(State or other jurisdiction of incorporation)
 
(IRS Employer Identification No.)

One PPG Place, Pittsburgh, Pennsylvania 15222
(Address of principal executive offices, including zip code)

(412) 456-5700
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (§230.405 of this chapter) or Rule 12b-2 of the Exchange Act (§240.12b-2 of this chapter).
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. ☐






Item 2.02. Results of Operations and Financial Condition.

On May 2, 2018, we issued a press release announcing results for the first quarter ended March 31, 2018. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.
(d) The following exhibit is furnished with this Current Report on Form 8-K.
 
Exhibit No.
  
Description
99.1
  


1



SIGNATURE
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 hereunto duly authorized.

 
The Kraft Heinz Company
 
 
 
Date: May 2, 2018
By:
/s/ David Knopf
 
 
David Knopf
 
 
Executive Vice President and Chief Financial Officer


2
Exhibit
Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12224659&doc=3
Contacts:
Michael Mullen (media)
 
Christopher Jakubik, CFA (investors)
 
Michael.Mullen@kraftheinz.com

 
ir@kraftheinzcompany.com

KRAFT HEINZ REPORTS FIRST QUARTER 2018 RESULTS

Q1 net sales decreased 0.3%; Organic Net Sales(1) decreased 1.5%
Q1 diluted EPS increased to $0.81; Adjusted EPS(1) increased to $0.89 from $0.84 the prior year

PITTSBURGH & CHICAGO - May 2, 2018 - The Kraft Heinz Company (NASDAQ: KHC) (“Kraft Heinz” or the “Company”) today reported first quarter 2018 financial results that reflected higher input costs, lower net sales in the United States, and investments to enhance capabilities, as well as lower taxes versus the prior year period.

“Our first-quarter results were consistent with, if not slightly better than, the expectations we expressed in February,” said Kraft Heinz CEO Bernardo Hees. “The initial successes we’re seeing in the marketplace, together with the strong investments we’re making in marketing, new product innovation, and capability-building, give us increased confidence in delivering the top- and bottom-line growth we expect in 2018.”

Q1 2018 Financial Summary
 
For the Quarter Ended
 
Year-over-year Change
 
March 31, 2018
 
April 1,
2017
 
Actual
 
Impact of Currency
 
Organic
 
(in millions, except per share data)
 
 
 
 
 
 
Net sales
$
6,304

 
$
6,324

 
(0.3
)%
 
1.2 pp
 
(1.5
)%
Operating income
1,481

 
1,433

 
3.4
 %
 
 
 
 
Net income/(loss) attributable to common shareholders
993

 
893

 
11.1
 %
 
 
 
 
Diluted EPS
$
0.81

 
$
0.73

 
11.0
 %
 
 
 
 
Adjusted EBITDA(1)
1,795

 
1,844

 
(2.6
)%
 
0.9 pp
 
 
Adjusted EPS(1)
$
0.89

 
$
0.84

 
6.0
 %
 
 
 
 
Net sales were $6.3 billion, down 0.3 percent versus the year-ago period, including a 1.2 percentage point benefit from currency. Organic Net Sales decreased 1.5 percent versus the year-ago period. Pricing increased 1.0 percentage points, driven by price increases in the United States and Rest of World markets. Volume/mix decreased 2.5 percentage points, primarily driven by lower shipments in the United States and Rest of World markets that more than offset solid retail growth in Canada and EMEA(3) as well as foodservice gains in the United States and EMEA.
Net income attributable to common shareholders increased to $1.0 billion and diluted EPS increased to $0.81, primarily reflecting benefits from U.S. Tax Reform. Adjusted EBITDA decreased 2.6 percent versus the year-ago period to $1.8 billion, including a favorable 0.9 percentage point impact from currency.


1


Excluding the impact of currency, the decline in Adjusted EBITDA reflected higher input costs, lower volume/mix and investments in strategic initiatives. Adjusted EPS increased 6.0 percent to $0.89, mainly reflecting lower taxes versus the prior year period.

Q1 2018 Business Segment Highlights
United States
 
For the Quarter Ended
 
Year-over-year Change
 
March 31, 2018
 
April 1,
2017
 
Actual
 
Impact of Currency
 
Organic
 
(in millions)
 
 
 
 
 
 
Net sales
$
4,368

 
$
4,518

 
(3.3
)%
 
0.0 pp
 
(3.3
)%
Segment Adjusted EBITDA
1,382

 
1,464

 
(5.6
)%
 
0.0 pp
 
 
United States net sales were $4.4 billion, down 3.3 percent versus the year-ago period. Pricing increased 0.8 percentage points as higher pricing was partially offset by the timing of trade spending versus the prior year period. Volume/mix decreased 4.1 percentage points as solid gains in foodservice and a favorable shift in Easter-related sales was more than offset by lower shipments of nuts, cold cuts, frozen potatoes and parts of the cheese business.
United States Segment Adjusted EBITDA decreased 5.6 percent versus the year-ago period to $1.4 billion, primarily reflecting lower volume/mix, non-key commodity(2) inflation and investments to enhance capabilities that were partially offset by gains from productivity and pricing.

Canada
 
For the Quarter Ended
 
Year-over-year Change
 
March 31, 2018
 
April 1,
2017
 
Actual
 
Impact of Currency
 
Organic
 
(in millions)
 
 
 
 
 
 
Net sales
$
484

 
$
440

 
9.8
%
 
4.8 pp
 
5.0
%
Segment Adjusted EBITDA
134

 
125

 
7.1
%
 
4.4 pp
 
 
Canada net sales were $484 million, up 9.8 percent versus the year-ago period, including a favorable 4.8 percentage point impact from currency. Organic Net Sales increased 5.0 percent versus the year-ago period. Pricing was neutral with the prior year period as higher pricing in several categories was offset by lower pricing in cheese. Volume/mix increased 5.0 percentage points reflecting earlier implementation of go-to-market agreements with key retailers that primarily benefited cheese and coffee sales.
Canada Segment Adjusted EBITDA increased 7.1 percent versus the year-ago period to $134 million, including a favorable 4.4 percentage point impact from currency. Excluding the impact of currency, Segment Adjusted EBITDA increased 2.7 percent, primarily driven by volume/mix growth that was partially offset by higher input costs.


2


EMEA(3) 
 
For the Quarter Ended
 
Year-over-year Change
 
March 31, 2018
 
April 1,
2017
 
Actual
 
Impact of Currency
 
Organic
 
(in millions)
 
 
 
 
 
 
Net sales
$
685

 
$
597

 
14.7
%
 
12.4 pp
 
2.3
%
Segment Adjusted EBITDA
182

 
140

 
30.4
%
 
14.7 pp
 
 
EMEA net sales were $685 million, up 14.7 percent versus the year-ago period, including a 12.4 percentage point benefit from currency. Organic Net Sales increased 2.3 percent versus the year-ago period. Pricing declined 0.5 percentage points, driven by increased promotional activity in infant nutrition, primarily in Italy. Volume/mix increased 2.8 percentage points, reflecting a strong soup season in the UK and growth in condiments and sauces, as well as gains in foodservice.
EMEA Segment Adjusted EBITDA increased 30.4 percent versus the year-ago period to $182 million, including a positive 14.7 percentage point impact from currency. Excluding currency impacts, the increase in Segment Adjusted EBITDA reflected gains from productivity, pension and postretirement cost favorability versus the prior year period, as well as volume/mix growth that was partially offset by lower pricing.

Rest of World(3)(4) 
 
For the Quarter Ended
 
Year-over-year Change
 
March 31, 2018
 
April 1,
2017
 
Actual
 
Impact of Currency
 
Organic
 
(in millions)
 
 
 
 
 
 
Net sales
$
767

 
$
769

 
(0.2
)%
 
(3.2) pp
 
3.0
%
Segment Adjusted EBITDA
143

 
144

 
(0.7
)%
 
(5.6) pp
 
 
Rest of World net sales were $767 million, 0.2 percent lower than the year-ago period, including a negative 3.2 percentage point impact from currency. Organic Net Sales increased 3.0 percent versus the year-ago period. Pricing was up 4.3 percentage points, primarily driven by actions to offset higher input costs in local currency, particularly in Latin America. Volume/mix decreased 1.3 percentage points, driven by a combination of unfavorable impacts from distributor network realignment in select markets and lower shipments in Indonesia and Brazil that was partially offset by growth in Australia.
Rest of World Segment Adjusted EBITDA decreased 0.7 percent versus the year-ago period to $143 million, including an unfavorable 5.6 percentage point impact from currency. Excluding the impact of currency, Segment Adjusted EBITDA increased 4.9 percentage points as Organic Net Sales gains were partially offset by higher input costs in local currency.


3


End Notes
(1)
Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures. Please see discussion of non-GAAP financial measures and the reconciliations at the end of this press release for more information.
(2)
The Company's key commodities in the United States and Canada are dairy, meat, coffee and nuts.
(3)
In the first quarter of our fiscal year 2018, we reorganized certain of our international businesses to better align our global geographies. As a result, we moved our Middle East and Africa businesses from the historical Asia Pacific, Middle East, and Africa (“AMEA”) operating segment into the historical Europe reportable segment, forming the new Europe, Middle East, and Africa (“EMEA”) reportable segment. The remaining businesses from the AMEA operating segment became the Asia Pacific (“APAC”) operating segment. We have reflected this change in all historical periods presented.
(4)
Rest of World is comprised of two operating segments: Latin America and APAC.
Webcast and Conference Call Information
A webcast of The Kraft Heinz Company's first quarter 2018 earnings conference call will be available at ir.kraftheinzcompany.com. The call begins today at 5:00 p.m. Eastern Time.



4


ABOUT THE KRAFT HEINZ COMPANY
The Kraft Heinz Company (NASDAQ: KHC) is the fifth-largest food and beverage company in the world. A globally trusted producer of delicious foods, The Kraft Heinz Company provides high quality, great taste and nutrition for all eating occasions whether at home, in restaurants, or on the go. The Company’s iconic brands include Kraft, Heinz, ABC, Capri Sun, ClassicoJell-OKool-Aid, Lunchables, Maxwell House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Smart Ones and Velveeta. The Kraft Heinz Company is dedicated to the sustainable health of our people, our planet and our Company. For more information, visit www.kraftheinzcompany.com.


5


Forward-Looking Statements
This press release contains a number of forward-looking statements. Words such as "reflect," "invest," "see," "make," "expect," "give," "deliver," "drive," "believe," "will," and variations of such words and similar expressions are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding the Company's plans, expectations, investments, innovations, opportunities, capabilities, execution and growth. 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 the Company's control.
Important factors that may affect the Company's 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; changes in the retail landscape or the loss of key retail customers; the Company’s ability to maintain, extend and expand its reputation and brand image; the impacts of the Company’s international operations; the Company’s ability to leverage its brand value; the Company’s ability to predict, identify and interpret changes in consumer preferences and demand; the Company’s ability to drive revenue growth in its key product categories, increase its market share, or add products; an impairment of the carrying value of goodwill or other indefinite-lived intangible assets; volatility in commodity, energy and other input costs; changes in the Company’s management team or other key personnel; the Company’s ability to realize the anticipated benefits from its cost savings initiatives; changes in relationships with significant customers and suppliers; the execution of the Company’s international expansion strategy; tax law changes or interpretations; legal claims or other regulatory enforcement actions; product recalls or product liability claims; unanticipated business disruptions; the Company’s ability to complete or realize the benefits from potential and completed acquisitions, alliances, divestitures or joint ventures; economic and political conditions in the United States and in various other nations in which we operate; the volatility of capital markets; increased pension, labor and people-related expenses; volatility in the market value of all or a portion of the derivatives we use; exchange rate fluctuations; risks associated with information technology and systems, including service interruptions, misappropriation of data or breaches of security; the Company’s ability to protect intellectual property rights; impacts of natural events in the locations in which we or the Company’s customers, suppliers or regulators operate; the Company’s indebtedness and ability to pay such indebtedness; the Company’s ownership structure; the impact of future sales of its common stock in the public markets; the Company’s ability to continue to pay a regular dividend; changes in laws and regulations; restatements of the Company’s consolidated financial statements; and other factors. For additional information on these and other factors that could affect the Company's forward-looking statements, see the Company's risk factors, as they may be amended from time to time, set forth in its filings with the Securities and Exchange Commission (the “SEC”). The Company disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation.


6


Non-GAAP Financial Measures
To supplement the financial information, the Company has presented Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA, and Adjusted EPS, which are considered non-GAAP financial measures. The non-GAAP financial measures provided should be viewed in addition to, and not as an alternative for, results prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) that are presented in this press release. 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 GAAP financial measures, such as net sales, net income/(loss), diluted earnings per share, or other measures prescribed by GAAP, and there are limitations to using non-GAAP financial measures.
Management uses these non-GAAP financial measures to assist in comparing the Company's 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 the Company's underlying operations. Management believes that presenting the Company's 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 the Company's results. The Company believes that the presentation of these non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provides investors with additional understanding of the factors and trends affecting the Company's business than could be obtained absent these disclosures.
Organic Net Sales is defined as net sales excluding, when they occur, the impact of acquisitions, currency, divestitures and a 53rd week of shipments. The Company calculates the impact of currency on net sales by holding exchange rates constant at the previous year's exchange rate, with the exception of Venezuela following the Company's June 28, 2015 currency devaluation, for which the Company calculates the previous year's results using the current year's exchange rate. Organic Net Sales is a tool that can assist management and investors in comparing the Company's performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect the Company's underlying operations. 
Adjusted EBITDA is defined as net income/(loss) from continuing operations before interest expense, other expense/(income), net, provision for/(benefit from) income taxes, and depreciation and amortization (excluding integration and restructuring expenses); in addition to these adjustments, the Company excludes, when they occur, the impacts of integration and restructuring expenses, merger costs, unrealized losses/(gains) on commodity hedges, impairment losses, losses/(gains) on the sale of a business, nonmonetary currency devaluation (e.g., remeasurement gains and losses), and equity award compensation expense (excluding integration and restructuring expenses). The Company also presents Adjusted EBITDA on a constant currency basis. The Company calculates the impact of currency on Adjusted EBITDA by holding exchange rates constant at the previous year's exchange rate, with the exception of Venezuela following the Company's June 28, 2015 devaluation of the Venezuelan bolivar and remeasurement of assets and liabilities of its Venezuelan subsidiary, for which it calculates the previous year's results using the current year's exchange rate. Adjusted EBITDA and Constant Currency


7


Adjusted EBITDA are tools that can assist management and investors in comparing the Company's performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect the Company's underlying operations.  
Adjusted EPS is defined as diluted earnings per share excluding, when they occur, the impacts of integration and restructuring expenses, merger costs, unrealized losses/(gains) on commodity hedges, impairment losses, losses/(gains) on the sale of a business, nonmonetary currency devaluation (e.g., remeasurement gains and losses), and U.S. Tax Reform, and including when they occur, adjustments to reflect preferred stock dividend payments on an accrual basis. The Company believes Adjusted EPS provides important comparability of underlying operating results, allowing investors and management to assess operating performance on a consistent basis.
See the attached schedules for supplemental financial data, which includes the financial information, the non-GAAP financial measures and corresponding reconciliations to the comparable GAAP financial measures for the relevant periods.


8


 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12224659&doc=6
 
Schedule 1
 
The Kraft Heinz Company
Condensed Consolidated Statements of Income
(in millions, except per share data)
(Unaudited)
 
For the Quarter Ended
 
March 31,
2018
 
April 1,
2017
Net sales
$
6,304

 
$
6,324

Cost of products sold(a)
4,059

 
4,125

Gross profit
2,245

 
2,199

Selling, general and administrative expenses(b)
764

 
766

Operating income
1,481

 
1,433

Interest expense
317

 
313

Other expense/(income), net(c)
(90
)
 
(130
)
Income/(loss) before income taxes
1,254

 
1,250

Provision for/(benefit from) income taxes
261

 
359

Net income/(loss)
993

 
891

Net income/(loss) attributable to noncontrolling interest

 
(2
)
Net income/(loss) attributable to common shareholders
$
993

 
$
893

 
 
 
 
Basic shares outstanding
1,219

 
1,217

Diluted shares outstanding
1,228

 
1,229

 
 
 
 
Per share data applicable to common shareholders:
 
 
 
Basic earnings/(loss) per share
$
0.81

 
$
0.73

Diluted earnings/(loss) per share
0.81

 
0.73


(a)
Integration and restructuring expenses recorded in cost of products sold were $76 million for the quarter ended March 31, 2018 ($61 million after-tax) and $96 million for the quarter ended April 1, 2017 ($66 million after-tax).

(b)
Integration and restructuring expenses recorded in selling, general and administrative expenses (“SG&A”) were $14 million for the quarter ended March 31, 2018 ($10 million after-tax) and $39 million for the quarter ended April 1, 2017 ($26 million after-tax).

(c)
Integration and restructuring expenses recorded in other expense/(income), net were $13 million for the quarter ended April 1, 2017 ($9 million after-tax). There were no such expenses for the quarter ended March 31, 2018.


9


 
 
 
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12224659&doc=4
 
 
 
 
 
 
 
Schedule 2
The Kraft Heinz Company
Reconciliation of Net Sales to Organic Net Sales
For the Quarter Ended
(dollars in millions)
(Unaudited)
 
Net Sales
 
Impact of Currency
 
Organic Net Sales
 
Price
 
Volume/Mix
March 31, 2018
 
 
 
 
 
 
 
 
 
United States
$
4,368

 
$

 
$
4,368

 
 
 
 
Canada
484

 
22

 
462

 
 
 
 
EMEA
685

 
74

 
611

 
 
 
 
Rest of World
767

 
17

 
750

 
 
 
 
 
$
6,304

 
$
113

 
$
6,191

 
 
 
 
 
 
 
 
 
 
 
 
 
 
April 1, 2017
 
 
 
 
 
 
 
 
 
United States
$
4,518

 
$

 
$
4,518

 
 
 
 
Canada
440

 

 
440

 
 
 
 
EMEA
597

 

 
597

 
 
 
 
Rest of World
769

 
40

 
729

 
 
 
 
 
$
6,324

 
$
40

 
$
6,284

 
 
 
 
Year-over-year growth rates
 
 
 
 
 
 
 
 
 
United States
(3.3
)%
 
0.0 pp
 
(3.3
)%
 
0.8 pp
 
(4.1) pp
Canada
9.8
 %
 
4.8 pp
 
5.0
 %
 
0.0 pp
 
5.0 pp
EMEA
14.7
 %
 
12.4 pp
 
2.3
 %
 
(0.5) pp
 
2.8 pp
Rest of World
(0.2
)%
 
(3.2) pp
 
3.0
 %
 
4.3 pp
 
(1.3) pp
Kraft Heinz
(0.3
)%
 
1.2 pp
 
(1.5
)%
 
1.0 pp
 
(2.5) pp






10


 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12224659&doc=4
 
 
Schedule 3
 
The Kraft Heinz Company
Reconciliation of Net Income/(Loss) to Adjusted EBITDA
(dollars in millions)
(Unaudited)
 
For the Quarter Ended
 
March 31,
2018
 
April 1,
2017
Net income/(loss)
$
993

 
$
891

Interest expense
317

 
313

Other expense/(income), net
(90
)
 
(130
)
Provision for/(benefit from) income taxes
261

 
359

Operating income
1,481

 
1,433

Depreciation and amortization (excluding integration and restructuring expenses)
206

 
222

Integration and restructuring expenses
90

 
135

Merger costs
9

 

Unrealized losses/(gains) on commodity hedges
2

 
42

Equity award compensation expense (excluding integration and restructuring expenses)
7

 
12

Adjusted EBITDA
$
1,795

 
$
1,844

 
 
 
 
Segment Adjusted EBITDA:
 
 
 
United States
$
1,382

 
$
1,464

Canada
134

 
125

EMEA
182

 
140

Rest of World
143

 
144

General corporate expenses
(46
)
 
(29
)
Adjusted EBITDA
$
1,795

 
$
1,844




11


 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12224659&doc=4
 
 
 
 
 
 
Schedule 4

The Kraft Heinz Company
Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA
For the Quarter Ended
(dollars in millions)
(Unaudited)
 
Adjusted EBITDA
 
Impact of Currency
 
Constant Currency Adjusted EBITDA
March 31, 2018
 
 
 
 
 
United States
$
1,382

 
$

 
$
1,382

Canada
134

 
6

 
128

EMEA
182

 
20

 
162

Rest of World
143

 
3

 
140

General corporate expenses
(46
)
 
(2
)
 
(44
)
 
$
1,795

 
$
27

 
$
1,768

 
 
 
 
 
 
April 1, 2017
 
 
 
 
 
United States
$
1,464

 
$

 
$
1,464

Canada
125

 

 
125

EMEA
140

 

 
140

Rest of World
144

 
11

 
133

General corporate expenses
(29
)
 

 
(29
)
 
$
1,844

 
$
11

 
$
1,833


Year-over-year growth rates
 
 
 
 
 
United States
(5.6
)%
 
0.0 pp
 
(5.6
)%
Canada
7.1
 %
 
4.4 pp
 
2.7
 %
EMEA
30.4
 %
 
14.7 pp
 
15.7
 %
Rest of World
(0.7
)%
 
(5.6) pp
 
4.9
 %
General corporate expenses
55.1
 %
 
5.0 pp
 
50.1
 %
Kraft Heinz
(2.6
)%
 
0.9 pp
 
(3.5
)%




12


 
 
 
Schedule 5
 
The Kraft Heinz Company
Reconciliation of Diluted EPS to Adjusted EPS
(Unaudited)
 
For the Quarter Ended
 
March 31,
2018
 
April 1,
2017
Diluted EPS
$
0.81

 
$
0.73

Integration and restructuring expenses(a)(c)
0.05

 
0.08

Merger costs(a)(b)
0.01

 

Unrealized losses/(gains) on commodity hedges(a)(b)

 
0.02

Nonmonetary currency devaluation(a)(d)
0.04

 
0.01

U.S. Tax Reform(e)
(0.02
)
 

Adjusted EPS
$
0.89

 
$
0.84

(a)
Income tax expense associated with these items is based on applicable jurisdictional tax rates and deductibility assessments of individual items.
(b)
Refer to the reconciliation of net income/(loss) to Adjusted EBITDA for the related gross expenses.
(c)
Integration and restructuring included the following gross expenses:
Expenses recorded in cost of products sold were $76 million for the three months ended March 31, 2018 and $96 million for the three months ended April 1, 2017.
Expenses recorded in SG&A were $14 million for the three months ended March 31, 2018 and $39 million for the three months ended April 1, 2017; and
Expenses recorded in other expense/(income), net, were $13 million for the three months ended April 1, 2017 (there were no such expenses for the three months ended March 31, 2018).
(d)
Nonmonetary currency devaluation included the following gross expenses:  
Expenses recorded in other expense/(income), net, were $47 million for the three months ended March 31, 2018 and $8 million for the three months ended April 1, 2017.
(e)
U.S. Tax Reform included a benefit from income taxes of $20 million for the three months ended March 31, 2018 (there were no such expenses for the three months ended April 1, 2017).




13


 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12224659&doc=4
 
 
 
 
Schedule 6

The Kraft Heinz Company
Condensed Consolidated Balance Sheets
(in millions, except per share data)
(Unaudited)
 
March 31, 2018
 
December 30, 2017
ASSETS
 
 
 
Cash and cash equivalents
$
1,794

 
$
1,629

Trade receivables, net
1,044

 
921

Sold receivables
530

 
353

Income taxes receivable
150

 
582

Inventories
3,144

 
2,815

Other current assets
775

 
966

Total current assets
7,437

 
7,266

Property, plant and equipment, net
7,267

 
7,120

Goodwill
44,843

 
44,824

Intangible assets, net
59,600

 
59,449

Other assets
1,640

 
1,573

TOTAL ASSETS
$
120,787

 
$
120,232

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Commercial paper and other short-term debt
$
1,001

 
$
460

Current portion of long-term debt
2,742

 
2,743

Trade payables
4,241

 
4,449

Accrued marketing
567

 
680

Income taxes payable
291

 
152

Interest payable
345

 
419

Other current liabilities
1,142

 
1,229

Total current liabilities
10,329

 
10,132

Long-term debt
28,561

 
28,333

Deferred income taxes
14,085

 
14,076

Accrued postemployment costs
400

 
427

Other liabilities
949

 
1,017

TOTAL LIABILITIES
54,324

 
53,985

Redeemable noncontrolling interest
8

 
6

Equity:
 
 
 
Common stock, $0.01 par value
12

 
12

Additional paid-in capital
58,733

 
58,711

Retained earnings/(deficit)
8,718

 
8,589

Accumulated other comprehensive income/(losses)
(975
)
 
(1,054
)
Treasury stock, at cost
(240
)
 
(224
)
Total shareholders' equity
66,248

 
66,034

Noncontrolling interest
207

 
207

TOTAL EQUITY
66,455

 
66,241

TOTAL LIABILITIES AND EQUITY
$
120,787

 
$
120,232



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