The Kraft Heinz Company
Annual Report 2017

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K(Mark One)x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 30, 2017oro TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from __________ to __________Commission File Number 001-37482The Kraft Heinz Company(Exact name of registrant as specified in its charter)Delaware(State or other jurisdiction of incorporation or organization) 46-2078182(I.R.S. Employer Identification No.)One PPG Place, Pittsburgh, Pennsylvania(Address of Principal Executive Offices) 15222(Zip Code)Registrant’s telephone number, including area code: (412) 456-5700Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of exchange on which registeredCommon stock, $0.01 par value The NASDAQ Stock Market LLCSecurities 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 x No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No xNote – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from theirobligations under those Sections.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 1934during 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 filingrequirements for the past 90 days. Yes x No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes x No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and willnot be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K orany amendment to this Form 10-K. xIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or anemerging 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 xAccelerated filer o Non-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company oEmerging growth company oIf 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 orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No xThe 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 asof the last business day of the registrant’s most recently completed second quarter, was $52 billion. As of February 10, 2018, there were 1,218,801,890 sharesof the registrant’s common stock outstanding.Documents Incorporated by ReferencePortions of the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission in connection with its annual meeting ofshareholders expected to be held on April 23, 2018 are incorporated by reference into Part III hereof.The Kraft Heinz CompanyTable of ContentsPART I1Item 1. Business.1Item 1A. Risk Factors.6Item 1B. Unresolved Staff Comments.16Item 2. Properties.16Item 3. Legal Proceedings.16Item 4. Mine Safety Disclosures.16PART II17Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.17Item 6. Selected Financial Data.18Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.19Overview19Consolidated Results of Operations21Results of Operations by Segment25Critical Accounting Policies30New Accounting Pronouncements33Contingencies33Commodity Trends34Liquidity and Capital Resources34Off-Balance Sheet Arrangements and Aggregate Contractual Obligations36Equity and Dividends37Supplemental Unaudited Pro Forma Condensed Combined Financial Information38Non-GAAP Financial Measures41Item 7A. Quantitative and Qualitative Disclosures about Market Risk.46Item 8. Financial Statements and Supplementary Data.47Report of Independent Registered Public Accounting Firm47Consolidated Statements of Income49Consolidated Statements of Comprehensive Income50Consolidated Balance Sheets51Consolidated Statements of Equity52Consolidated Statements of Cash Flows53Notes to Consolidated Financial Statements55Note 1. Background and Basis of Presentation55Note 2. Merger and Acquisition61Note 3. Integration and Restructuring Expenses63Note 4. Restricted Cash66Note 5. Inventories66Note 6. Property, Plant and Equipment66Note 7. Goodwill and Intangible Assets66Note 8. Income Taxes 68Note 9. Employees’ Stock Incentive Plan71Note 10. Postemployment Benefits74Note 11. Financial Instruments83Note 12. Accumulated Other Comprehensive Income/(Loss)88Note 13. Venezuela - Foreign Currency and Inflation90Note 14. Financing Arrangements91Note 15. Commitments and Contingencies91Note 16. Debt92Note 17. Capital Stock94Note 18. Earnings Per Share95Note 19. Segment Reporting95Note 20. Quarterly Financial Data (Unaudited)98Note 21. Supplemental Financial Information99Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.109Item 9A. Controls and Procedures.109Item 9B. Other Information.110PART III110Item 10. Directors, Executive Officers and Corporate Governance.110Item 11. Executive Compensation.110Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.110Item 13. Certain Relationships and Related Transactions, and Director Independence.111Item 14. Principal Accountant Fees and Services.111PART IV111Item 15. Exhibits and Financial Statement Schedules.111Item 16. Form 10-K Summary.115Signatures116Valuation and Qualifying AccountsS-1Unless the context otherwise requires, the terms “we,” “us,” “our,” “Kraft Heinz,” and the “Company” each refer to The Kraft Heinz Company.Forward-Looking StatementsThis Annual Report on Form 10-K contains a number of forward-looking statements. Words such as “anticipate,” “expect,” “improve,” “assess,” “remain,”“evaluate,” “grow,” “will,” “plan,” and variations of such words and similar expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding our plans, segment changes, growth, taxes, cost savings, impacts of accountingguidance, 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 affect our business and operations and that may cause actual results to differ materially from those in the forward-looking statementsinclude, but are not limited to, operating in a highly competitive industry; changes in the retail landscape or the loss of key retail customers; our ability tomaintain, extend and expand our reputation and brand image; the impacts of our international operations; our ability to leverage our brand value; our abilityto predict, identify and interpret changes in consumer preferences and demand; our ability to drive revenue growth in our key product categories, increase ourmarket share, or add products; an impairment of the carrying value of goodwill or other indefinite-lived intangible assets; volatility in commodity, energyand other input costs; changes in our management team or other key personnel; our ability to realize the anticipated benefits from our cost savingsinitiatives; changes in relationships with significant customers and suppliers; the execution of our international expansion strategy; tax law changes orinterpretations; legal claims or other regulatory enforcement actions; product recalls or product liability claims; unanticipated business disruptions; ourability to complete or realize the benefits from potential and completed acquisitions, alliances, divestitures or joint ventures; economic and politicalconditions 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 informationtechnology and systems, including service interruptions, misappropriation of data or breaches of security; our inability to protect intellectual property rights;impacts of natural events in the locations in which we or our customers, suppliers or regulators operate; our indebtedness and ability to pay suchindebtedness; our ownership structure; the impact of future sales of our common stock in the public markets; our ability to continue to pay a regulardividend; changes in laws and regulations; restatements of our consolidated financial statements; and other factors. For additional information on these andother factors that could affect our forward-looking statements, see “Risk Factors” below in this Annual Report on Form 10-K. We disclaim and do notundertake any obligation to update or revise any forward-looking statement in this report, except as required by applicable law or regulation.PART IItem 1. Business.GeneralKraft Heinz is one of the largest food and beverage companies in the world, with sales in approximately 190 countries and territories. We manufacture andmarket food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee, and other groceryproducts, throughout the world, under a host of iconic brands including Heinz, Kraft, Oscar Mayer, Philadelphia, Velveeta, Lunchables, Planters, MaxwellHouse, Capri Sun, Ore-Ida, Kool-Aid, Jell-O. A globally recognized producer of delicious foods, we provide products for all occasions whether at home, inrestaurants or on the go. As of December 30, 2017, we had assets of $120.2 billion. Our common stock is listed on The NASDAQ Global Select Market(“NASDAQ”) under the ticker symbol “KHC”.On July 2, 2015 (the “2015 Merger Date”), through a series of transactions, we consummated the merger of Kraft Foods Group, Inc. (“Kraft”) with and into awholly-owned subsidiary of H.J. Heinz Holding Corporation (“Heinz”) (the “2015 Merger”). At the closing of the 2015 Merger, Heinz was renamed The KraftHeinz Company and H. J. Heinz Company changed its name to Kraft Heinz Foods Company. While we were organized as a Delaware corporation in 2013 (asHeinz), both Kraft and Heinz each had been pioneers in the food industry for over 100 years.Before the consummation of the 2015 Merger, Heinz was controlled by Berkshire Hathaway Inc. ("Berkshire Hathaway") and 3G Global Food Holdings, L.P.(“3G Capital”) (together, the "Sponsors"), following their acquisition of H. J. Heinz Company (the “2013 Merger”).See Note 1, Background and Basis of Presentation, and Note 2, Merger and Acquisition, to the consolidated financial statements for additional informationon the 2015 Merger.Reportable SegmentsWe manage and report our operating results through four segments. We have three reportable segments defined by geographic region: United States, Canada,and Europe. Our remaining businesses are combined and disclosed as “Rest of World”. Rest of World is comprised of two operating segments: Latin America;and Asia Pacific, Middle East, and Africa (“AMEA”).In the third quarter of 2017, we announced our plans to reorganize certain of our international businesses to better align our global geographies. These plansinclude moving our Middle East and Africa businesses from the AMEA segment into the Europe segment, forming the Europe, Middle East, and Africa(“EMEA”) segment. The remaining AMEA businesses will become the Asia Pacific (“APAC”) segment, which will remain in Rest of World. We expect thesechanges to become effective in the first quarter of 2018. As a result, we expect to restate our Europe and Rest of World segments to reflect these changes forhistorical periods presented in the first quarter of 2018.See Note 19, Segment Reporting, to the consolidated financial statements for our geographic financial information by segment.Net Sales by Product CategoryIn the first quarter of 2017, we reorganized the products within our product categories to reflect how we manage our business. We have reflected this changefor all historical periods presented. The product categories that contributed 10% or more to consolidated net sales in any of the periods presented were: December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Condiments and sauces25% 24% 32%Cheese and dairy21% 21% 15%Ambient meals9% 9% 10%Frozen and chilled meals10% 10% 12%Meats and seafood10% 10% 8%We completed the 2015 Merger on July 2, 2015. As a result, 2016 was the first full year of combined Kraft and Heinz results, while 2015 included a full yearof Heinz results and post-2015 Merger results of Kraft. The year-over-year fluctuations in the percentages between 2015 and 2016 are primarily driven byincluding Kraft’s results.1Sales and CustomersOur products are sold through our own sales organizations and through independent brokers, agents and distributors to chain, wholesale, cooperative andindependent grocery accounts, convenience stores, drug stores, value stores, bakeries, pharmacies, mass merchants, club stores, foodservice distributors andinstitutions, including hotels, restaurants, hospitals, health care facilities, and certain government agencies. Our products are also sold online through variouse-commerce platforms and retailers. Our largest customer, Walmart Inc., represented approximately 21% of our net sales in 2017, approximately 22% of ournet sales in 2016, and approximately 20% of our net sales in 2015.Additionally, we have significant customers in different regions around the world; however, none of these customers individually are material to ourconsolidated business. In 2017, the five largest customers in our United States segment accounted for approximately 48% of United States segment net sales,the five largest customers in our Canada segment accounted for approximately 72% of Canada segment net sales, and the five largest customers in our Europesegment accounted for approximately 31% of our Europe segment net sales.Raw Materials and PackagingWe manufacture (and contract for the manufacture of) our products from a wide variety of raw food materials. We purchase and use large quantities ofcommodities, including dairy products, meat products, coffee beans, nuts, tomatoes, potatoes, soybean and vegetable oils, sugar and other sweeteners, cornproducts, wheat and other goods to manufacture our products. In addition, we purchase and use significant quantities of resins and cardboard to package ourproducts and natural gas to operate our facilities. For commodities that we use across many of our product categories, such as corrugated paper and energy, wecoordinate sourcing requirements and centralize procurement to leverage our scale. In addition, some of our product lines and brands separately source rawmaterials that are specific to their operations. We source these commodities from a variety of providers including large, international producers, and smaller,local, independent sellers. Where appropriate, we seek to establish preferred purchaser status and/or have developed strategic partnerships with many of oursuppliers with the objective of achieving favorable pricing and dependable supply for many of our commodities. The prices of raw materials and agriculturalmaterials that we use in our products are affected by external factors, such as global competition for resources, currency fluctuations, severe weather or globalclimate change, consumer, industrial or investment demand, and changes in governmental regulation and trade, alternative energy, and agricultural programs.Our procurement teams monitor worldwide supply and cost trends so we can obtain ingredients and packaging needed for production at competitive prices.Although the prices of our principal raw materials can be expected to fluctuate, we believe there will be an adequate supply of the raw materials we use andthat they are generally available from numerous sources. We use a range of hedging techniques in an effort to limit the impact of price fluctuations on manyof our principal raw materials. However, we do not fully hedge against changes in commodity prices, and our hedging strategies may not protect us fromincreases in specific raw material costs. We actively monitor changes to commodity costs so that we can seek to mitigate the effect through pricing and otheroperational measures.CompetitionOur products are sold in highly competitive marketplaces, which have experienced increased concentration and the growing presence of e-commerceretailers, large-format retailers, and discounters. Competitors include large national and international food and beverage companies and numerous local andregional companies. We compete with both branded and generic products, in addition to retailer brands, wholesalers, and cooperatives. We compete primarilyon the basis of product quality and innovation, brand recognition and loyalty, service, the ability to identify and satisfy consumer preferences, theintroduction of new products and the effectiveness of our advertising campaigns and marketing programs, distribution, shelf space, merchandising support,and price. Improving our market position or introducing new products requires substantial advertising and promotional expenditures.2Trademarks and Intellectual PropertyOur trademarks are material to our business and are among our most valuable assets. Depending on the country, trademarks generally remain valid for as longas they are in use or their registration status is maintained. Trademark registrations generally are for renewable, fixed terms. Significant trademarks bysegment based on net sales in 2017 were: Majority Owned and Licensed TrademarksUnited States Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Planters, Maxwell House, Capri Sun*, Ore-Ida, Kool-Aid, Jell-OCanada Kraft, Heinz, Philadelphia, Cracker Barrel, P’Tit Cheese, Maxwell House, Tassimo*, ClassicoEurope Heinz, Plasmon, Pudliszki, Honig, HP, BenedictaRest of World Heinz, ABC, Master, Quero, Golden Circle, Kraft, Wattie's, Glucon D, Complan*Used under licenseWe sell some products under brands we license from third parties, including Capri Sun packaged drink pouches for sale in the United States, TGI Fridaysfrozen snacks and appetizers in the United States and Canada, McCafe ground, whole bean, and on-demand single cup coffees in the United States andCanada, and Taco Bell Home Originals Mexican-style food products in U.S. grocery stores. In our agreements with Mondelēz International, Inc. (“MondelēzInternational”), we each granted the other party various licenses to use certain of our and their respective intellectual property rights in named jurisdictionsfor certain periods of time following the spin-off of Kraft from Mondelēz International in 2012.We own numerous patents worldwide. We consider our portfolio of patents, patent applications, patent licenses under patents owned by third parties,proprietary trade secrets, technology, know-how processes, and related intellectual property rights to be material to our operations. Patents, issued or appliedfor, cover inventions ranging from basic packaging techniques to processes relating to specific products and to the products themselves. While our patentportfolio is material to our business, the loss of one patent or a group of related patents would not have a material adverse effect on our business.Our issued patents extend for varying periods according to the date of the patent application filing or grant and the legal term of patents in the variouscountries where patent protection is obtained. The actual protection afforded by a patent, which can vary from country to country, depends upon the type ofpatent, the scope of its coverage as determined by the patent office or courts in the country, and the availability of legal remedies in the country.Research and DevelopmentOur research and development focuses on achieving the following four objectives:•growth through product improvements and renovation, innovation, and line extensions,•uncompromising product safety and quality,•superior customer satisfaction, and•cost reduction.Research and development expense was approximately $93 million in 2017, $120 million in 2016, and $105 million in 2015.SeasonalityAlthough crops constituting some of our raw food ingredients are harvested on a seasonal basis, most of our products are produced throughout the year.Seasonal factors inherent in our business change the demand for products, including holidays, changes in seasons, or other annual events. These factorsinfluence our quarterly sales, operating income, and cash flows.EmployeesWe had approximately 39,000 employees as of December 30, 2017.3RegulationThe manufacture and sale of consumer food and beverage products is highly regulated. Our business operations, including the production, transportation,storage, distribution, sale, display, advertising, marketing, labeling, quality and safety of our products and their ingredients, occupational safety and healthpractices, are subject to various laws and regulations administered by federal, state and local governmental agencies in the United States, as well as laws andregulations administered by government entities and agencies outside the United States in markets in which our products are manufactured, distributed orsold. In the U.S., our activities are subject to regulation by various federal government agencies, including the Food and Drug Administration, U.S.Department of Agriculture, Federal Trade Commission, Department of Labor, Department of Commerce and Environmental Protection Agency, as well asvarious state and local agencies. We are also subject to numerous similar and other laws and regulations outside of North America, including but not limitedto laws and regulations governing food safety, health and safety, anti-corruption, and data privacy. In our business dealings, we are also required to complywith the Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act, the Trade Sanctions Reform and Export Enhancement Act, and various other anti-corruption regulations in the regions in which we operate. We rely on legal and operational compliance programs, as well as in-house and outside counsel, toguide our businesses in complying with applicable laws and regulations of the countries in which we do business.Environmental RegulationOur activities throughout the world are highly regulated and subject to government oversight. Various laws concerning the handling, storage, and disposal ofhazardous materials and the operation of facilities in environmentally sensitive locations may impact aspects of our operations.In the United States, where a significant portion of our business operates, these laws and regulations include the Clean Air Act, the Clean Water Act, theResource Conservation and Recovery Act, and the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). CERCLAimposes joint and several liability on each potentially responsible party. We are involved in a number of active proceedings in the United States underCERCLA (and other similar state actions and legislation) related to our current operations and certain closed, inactive, or divested operations for which weretain liability. We do not currently expect these to have a material effect on our earnings or financial condition.As of December 30, 2017, we had accrued an amount we deemed appropriate for environmental remediation. Based on information currently available, webelieve that the ultimate resolution of existing environmental remediation actions and our compliance in general with environmental laws and regulationswill not have a material effect on our earnings or financial condition. However, it is difficult to predict with certainty the potential impact of futurecompliance efforts and environmental remedial actions and thus, future costs associated with such matters may exceed current reserves.Executive OfficersThe following are our executive officers as of February 10, 2018:Name Age TitleBernardo Hees 48 Chief Executive OfficerDavid Knopf 29 Executive Vice President and Chief Financial OfficerPaulo Basilio 43 President of U.S. Commercial BusinessPedro Drevon 35 Zone President of Latin AmericaRashida La Lande 44 Senior Vice President, Global General Counsel and Corporate SecretaryRafael Oliveira 43 Zone President of EMEAEduardo Pelleissone 44 Executive Vice President of Global OperationsCarlos Piani 44 Zone President of CanadaRodrigo Wickbold 41 Zone President of APACBernardo Hees became Chief Executive Officer upon the closing of the 2015 Merger. He had previously served as Chief Executive Officer of Heinz sinceJune 2013. Previously, Mr. Hees served as Chief Executive Officer of Burger King Worldwide Holdings, Inc., a global fast food restaurant chain, fromSeptember 2010 to June 2013 and Burger King Worldwide, Inc. from June 2012 to June 2013 and as Chief Executive Officer of América Latina Logística(“ALL”), a logistics company, from January 2005 to September 2010. Mr. Hees has also been a partner at 3G Capital since July 2010.4David Knopf became Executive Vice President and Chief Financial Officer in October 2017. He had previously served as Vice President, Category Head ofPlanters Business since August 2016. Prior to that role, Mr. Knopf served as Vice President of Finance, Head of Global Budget & Business Planning, Zero-Based Budgeting, and Financial & Strategic Planning from July 2015 to August 2016. Prior to joining Kraft Heinz in July 2015, Mr. Knopf served in variousroles at 3G Capital, including as an associate partner. Before joining 3G Capital in October 2013, Mr. Knopf served in various roles at Onex Partners, aprivate equity firm, and Goldman Sachs, a global investment banking, securities, and investment management firm. Mr. Knopf has also been a partner of 3GCapital since July 2015.Paulo Basilio assumed his current role as President of the U.S. Commercial Business in October 2017. Mr. Basilio previously served as Executive VicePresident and Chief Financial Officer upon the closing of the 2015 Merger until October 2017. He had previously served as Chief Financial Officer of Heinzsince June 2013. Previously, Mr. Basilio served as Chief Executive Officer of ALL from September 2010 to June 2012, after having served in various roles atALL, including Chief Operating Officer, Chief Financial Officer, and Analyst. Mr. Basilio has also been a partner of 3G Capital since July 2012.Pedro Drevon assumed his current role as Zone President of Latin America in October 2017. Previously he served as Managing Director for Kraft HeinzBrazil since August 2015. Prior to joining Kraft Heinz in 2015, Mr. Drevon served in various capacities at 3G Capital. Before joining 3G Capital in 2008, Mr.Drevon served in various roles at Banco BBM, a financial advisory and wealth management firm. Mr. Drevon has also been a partner of 3G Capital sinceJanuary 2011.Rashida La Lande joined Kraft Heinz as Senior Vice President, Global General Counsel and Corporate Secretary in January 2018. Prior to joining KraftHeinz, Ms. La Lande was a partner at the law firm of Gibson, Dunn & Crutcher, where she advised corporations and their boards, primarily in the areas ofmergers and acquisitions, leveraged buyouts, private equity deals, and joint ventures. During her nearly 20-year career at Gibson, Dunn & Crutcher, sherepresented companies and private equity sponsors in the consumer products, retail, financial services, and technology industries.Rafael Oliveira assumed his current role as Zone President of EMEA in October 2016 after serving as the Managing Director of Kraft Heinz UK & Ireland.Mr. Oliveira joined Kraft Heinz in July 2014 and served as President of Kraft Heinz Australia, New Zealand, and Papua New Guinea until September 2016.Prior to joining Kraft Heinz, Mr. Oliveira spent 17 years in the financial industry, the final 10 of which he held a variety of leadership positions with GoldmanSachs, a global investment banking, securities, and investment management firm.Eduardo Pelleissone assumed his current role as Executive Vice President of Global Operations upon the closing of the 2015 Merger and had previouslyheld the same role at Heinz since July 2013. Prior to joining Heinz, Mr. Pelleissone was Chief Executive Officer of ALL from May 2012 to June 2013. Prior toassuming that role, Mr. Pelleissone held the roles of Chief Operating Officer from July 2011 to 2012 and Commercial Vice President of the AgricultureSegment at ALL from 2004 to 2011.Carlos Piani was appointed Zone President of Canada in September 2015. Prior to joining Kraft Heinz, Mr. Piani served as Chief Executive Officer of PDGRealty S.A. Empreendimentos e Participacoes, a real estate company, from August 2012 to August 2015. Previously, he served as Co-Head of Private Equityof Vinci Partners, an independent asset management firm, from April 2010 to August 2012, as Chief Executive Officer of Companhia Energetica do Maranhao(“CEMAR”), an electricity distribution company, from March 2006 to April 2010, and as Chief Executive Officer of Equatorial Energia S/A, CEMAR’scontrolling shareholder, from March 2007 to April 2010.Rodrigo Wickbold assumed his current role as Zone President of APAC in January 2018 after serving as Chief Marketing Officer of APAC since January2016. Prior to joining Kraft Heinz in January 2016, Mr. Wickbold served in various marketing and business leadership roles at Unilever, a consumer productscompany, since 2000, including as Global Senior Brand Manager - Skin Care.Available InformationOur website address is www.kraftheinzcompany.com. The information on our website is not, and shall not be deemed to be, a part of this Annual Report onForm 10-K or incorporated into any other filings we make with the Securities and Exchange Commission (the “SEC”). Our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of theSecurities Exchange Act of 1934 (the “Exchange Act”) are available free of charge on our website as soon as possible after we electronically file them with, orfurnish them to, the SEC. You can also read, access and copy any document that we file, including this Annual Report on Form 10-K, at the SEC’s PublicReference Room at 100 F Street, N.E., Washington, D.C. 20549. Call the SEC at 1-800-SEC-0330 for information on the operation of the Public ReferenceRoom. In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regardingissuers, including Kraft Heinz, that are electronically filed with the SEC.5Item 1A. Risk Factors.We operate in a highly competitive industry.The food and beverage industry is highly competitive across all of our product offerings. We compete based on product innovation, price, product quality,nutritional value, service, taste, convenience, brand recognition and loyalty, effectiveness of marketing and distribution, promotional activity, and the abilityto identify and satisfy consumer preferences.We may need to reduce our prices in response to competitive and customer pressures. These pressures may also restrict our ability to increase prices inresponse to commodity and other cost increases. Failure to effectively assess, timely change and set proper pricing or trade incentives may negatively impactthe achievement of our objectives.The rapid emergence of new distribution channels, particularly e-commerce, may create consumer price deflation, affecting our retail customer relationshipsand presenting additional challenges to increasing prices in response to commodity or other cost increases. We may also need to increase or reallocatespending on marketing, retail trade incentives, materials, advertising, and new product innovation to maintain or increase market share. These expendituresare subject to risks, including uncertainties about trade and consumer acceptance of our efforts. If we are unable to compete effectively, our profitability,financial condition, and operating results may suffer.Changes in the retail landscape or the loss of key retail customers could adversely affect our financial performance.Retail customers, such as supermarkets, warehouse clubs, and food distributors in our major markets, may continue to consolidate, resulting in fewer butlarger customers for our business across various channels. Consolidation also produces larger retail customers that may seek to leverage their position toimprove their profitability by demanding improved efficiency, lower pricing, more favorable terms, increased promotional programs, or specifically tailoredproduct offerings. In addition, larger retailers have the scale to develop supply chains that permit them to operate with reduced inventories or to develop andmarket their own retailer brands. Retail consolidation and increasing retailer power could materially and adversely affect our product sales, financialcondition, and operating results.Retail consolidation also increases the risk that adverse changes in our customers’ business operations or financial performance may have a correspondingmaterial and adverse effect on us. For example, if our customers cannot access sufficient funds or financing, then they may delay, decrease, or cancelpurchases of our products, or delay or fail to pay us for previous purchases, which could materially and adversely affect our product sales, financial condition,and operating results.In addition, technology-based systems, which give consumers the ability to shop through e-commerce websites and mobile commerce applications, are alsosignificantly altering the retail landscape in many of our markets. If we are unable to adjust to developments in these changing landscapes, we may bedisadvantaged in key channels and with certain consumers, which could materially and adversely affect our product sales, financial condition, and operatingresults.Maintaining, extending, and expanding our reputation and brand image are essential to our business success.We have many iconic brands with long-standing consumer recognition across the globe. Our success depends on our ability to maintain brand image for ourexisting products, extend our brands to new platforms, and expand our brand image with new product offerings.We seek to maintain, extend, and expand our brand image through marketing investments, including advertising and consumer promotions, and productinnovation. Negative perceptions on the role of food and beverage marketing could adversely affect our brand image or lead to stricter regulations andscrutiny of marketing practices. Existing or increased legal or regulatory restrictions on our advertising, consumer promotions, and marketing, or our responseto those restrictions, could limit our efforts to maintain, extend, and expand our brands. Moreover, adverse publicity about legal or regulatory action againstus, our quality and safety, our environmental or social impacts, or our suppliers and, in some cases, our competitors, could damage our reputation and brandimage, undermine our customers’ confidence, and reduce demand for our products, even if the regulatory or legal action is unfounded or not material to ouroperations.In addition, our success in maintaining, extending, and expanding our brand image depends on our ability to adapt to a rapidly changing mediaenvironment. We increasingly rely on social media and online dissemination of advertising campaigns. The growing use of social and digital media increasesthe speed and extent that information, including misinformation, and opinions can be shared. Negative posts or comments about us, our brands or ourproducts, or our suppliers and, in some cases, our competitors, on social or digital media, whether or not valid, could seriously damage our brands andreputation. In addition, we might fail to anticipate consumer preferences, invest sufficiently in maintaining, extending, and expanding our brand image. If wedo not maintain, extend, and expand our reputation or brand image, then our product sales, financial condition, and operating results could be materially andadversely affected.6Our international operations subject us to additional risks and costs and may cause our profitability to decline.We are a global company with sales in approximately 190 countries and territories; approximately 30% of our 2017 net sales were generated outside of theUnited States. As a result, we are subject to risks inherent in global operations. These risks, which can vary substantially by market, are described in many ofthe risk factors discussed in this section and also include:•compliance with U.S. laws affecting operations outside of the United States, including anti-bribery laws such as the FCPA;•changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changesin tax laws or their interpretation, or tax audit implications;•the imposition of increased or new tariffs, quotas, trade barriers or similar restrictions on our sales or regulations, taxes or policies that mightnegatively affect our sales;•currency devaluations or fluctuations in currency values;•compliance with antitrust and competition laws, data privacy laws, and a variety of other local, national and multi-national regulations and laws inmultiple jurisdictions;•discriminatory or conflicting fiscal policies in or across foreign jurisdictions;•changes in capital controls, including currency exchange controls, government currency policies or other limits on our ability to import rawmaterials or finished product into various countries or repatriate cash from outside the United States;•challenges associated with cross-border product distribution;•changes in local regulations and laws, the uncertainty of enforcement of remedies in foreign jurisdictions, and foreign ownership restrictions and thepotential for nationalization or expropriation of property or other resources;•risks and costs associated with political and economic instability, corruption, anti-American sentiment and social and ethnic unrest in the countriesin which we operate;•the risks of operating in developing or emerging markets in which there are significant uncertainties regarding the interpretation, application andenforceability of laws and regulations and the enforceability of contract rights and intellectual property rights;•risks arising from the significant and rapid fluctuations in currency exchange markets and the decisions and positions that we take to hedge suchvolatility;•changing labor conditions and difficulties in staffing our operations;•greater risk of uncollectible accounts and longer collection cycles; and•design, implementation and use of effective control environment processes across our diverse operations and employee base.In addition, political and economic changes or volatility, geopolitical regional conflicts, terrorist activity, political unrest, civil strife, acts of war, publiccorruption, expropriation and other economic or political uncertainties could interrupt and negatively affect our business operations or customer demand.Slow economic growth or high unemployment in the markets in which we operate could constrain consumer spending, and declining consumer purchasingpower could adversely impact our profitability. All of these factors could result in increased costs or decreased sales, and could materially and adverselyaffect our product sales, financial condition, and results of operations.We must leverage our brand value to compete against retailer brands and other economy brands.In nearly all of our product categories, we compete with branded products as well as retailer and other economy brands, which are typically sold at lowerprices. Our products must provide higher value and/or quality to our consumers than alternatives, particularly during periods of economic uncertainty.Consumers may not buy our products if relative differences in value and/or quality between our products and retailer or other economy brands change infavor of competitors’ products or if consumers perceive this type of change. If consumers prefer retailer or other economy brands, then we could lose marketshare or sales volumes or shift our product mix to lower margin offerings. A change in consumer preferences could also cause us to increase capital,marketing, and other expenditures, which could materially and adversely affect our product sales, financial condition, and operating results.7Our financial success depends on our ability to correctly predict, identify, and interpret changes in consumer preferences and demand, to offer newproducts to meet those changes, and to respond to competitive innovation.Consumer preferences for food and beverage products change continually. Our success depends on our ability to predict, identify, and interpret the tastes anddietary habits of consumers and to offer products that appeal to consumer preferences, including with respect to health and wellness. If we do not offerproducts that appeal to consumers, our sales and market share will decrease, which could materially and adversely affect our product sales, financialcondition, and operating results.We must distinguish between short-term fads, mid-term trends, and long-term changes in consumer preferences. If we do not accurately predict which shifts inconsumer preferences will be long-term, or if we fail to introduce new and improved products to satisfy those preferences, our sales could decline. In addition,because of our varied consumer base, we must offer an array of products that satisfy a broad spectrum of consumer preferences. If we fail to expand ourproduct offerings successfully across product categories, or if we do not rapidly develop products in faster growing or more profitable categories, demand forour products could decrease, which could materially and adversely affect our product sales, financial condition, and operating results.Prolonged negative perceptions concerning the health implications of certain food and beverage products could influence consumer preferences andacceptance of some of our products and marketing programs. We strive to respond to consumer preferences and social expectations, but we may not besuccessful in our efforts. Continued negative perceptions and failure to satisfy consumer preferences could materially and adversely affect our product sales,financial condition, and operating results.In addition, achieving growth depends on our successful development, introduction, and marketing of innovative new products and line extensions. Thereare inherent risks associated with new product or packaging introductions, including uncertainties about trade and consumer acceptance or potential impactson our existing product offerings. We may be required to increase expenditures for new product development. Successful innovation depends on our abilityto correctly anticipate customer and consumer acceptance, to obtain, protect and maintain necessary intellectual property rights, and to avoid infringingupon the intellectual property rights of others. We must also be able to respond successfully to technological advances by and intellectual property rights ofour competitors, and failure to do so could compromise our competitive position and impact our product sales, financial condition, and operating results.We may be unable to drive revenue growth in our key product categories, increase our market share, or add products that are in faster growing andmore profitable categories.Our future results will depend on our ability to drive revenue growth in our key product categories and growth in the food and beverage industry in thecountries in which we operate. Our future results will also depend on our ability to enhance our portfolio by adding innovative new products in fastergrowing and more profitable categories and our ability to increase market share in our existing product categories. Our failure to drive revenue growth, limitmarket share decreases in our key product categories, or develop innovative products for new and existing categories could materially and adversely affectour product sales, financial condition, and operating results.An impairment of the carrying value of goodwill or other indefinite-lived intangible assets could negatively affect our consolidated operating results.We test goodwill and indefinite-lived intangible assets for impairment at least annually in the second quarter or when a triggering event occurs. Weperformed our annual impairment testing in the second quarter of 2017. The first step of the goodwill impairment test compares the reporting unit’s estimatedfair value with its carrying value. If the carrying value of a reporting unit’s net assets exceeds its fair value, the second step would be applied to measure thedifference between the carrying value and implied fair value of goodwill. If the carrying value of goodwill exceeds its implied fair value, the goodwill wouldbe considered impaired and would be reduced to its implied fair value. We test indefinite-lived intangible assets for impairment by comparing the fair valueof each intangible asset with its carrying value. If the carrying value exceeds fair value, the intangible asset would be considered impaired and would bereduced to its fair value.Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. Estimating thefair value of individual reporting units and indefinite-lived intangible assets requires us to make assumptions and estimates regarding our future plans, aswell as industry and economic conditions. These assumptions and estimates include projected revenues and income growth rates, terminal growth rates,competitive and consumer trends, market-based discount rates, and other market factors. If current expectations of future growth rates are not met or marketfactors outside of our control, such as discount rates, change significantly, then one or more reporting units or intangible assets might become impaired in thefuture. As goodwill and intangible assets associated with recently acquired businesses are recorded on the balance sheet at their estimated acquisition datefair values, those amounts are more susceptible to an impairment risk if business operating results or macroeconomic conditions deteriorate. Additionally,recently impaired intangible assets can also be more susceptible to future impairment as they are recorded on the balance sheet at their recently estimated fairvalues.8An impairment of the carrying value of goodwill or other indefinite-lived intangible assets could negatively affect our operating results or net worth.Commodity, energy, and other input prices are volatile and could negatively affect our consolidated operating results.We purchase and use large quantities of commodities, including dairy products, meat products, coffee beans, nuts, soybean and vegetable oils, sugar andother sweeteners, corn products, tomatoes, cucumbers, potatoes, onions, other fruits and vegetables, spices, flour, and wheat to manufacture our products. Inaddition, we purchase and use significant quantities of resins, cardboard, glass, plastic, metal, paper, fiberboard, and other materials to package our productsand we use other inputs, such as water and natural gas, to operate our facilities. We are also exposed to changes in oil prices, which influence both ourpackaging and transportation costs. Prices for commodities, energy, and other supplies are volatile and can fluctuate due to conditions that are difficult topredict, including global competition for resources, currency fluctuations, severe weather or global climate change, crop failures or shortages due to plantdisease or insect and other pest infestation, consumer, industrial or investment demand, and changes in governmental regulation and trade, alternativeenergy, including increased demand for biofuels, and agricultural programs. Additionally, we may be unable to maintain favorable arrangements with respectto the costs of procuring raw materials, packaging, services, and transporting products, which could result in increased expenses and negatively affect ouroperations. Furthermore, the cost of raw materials and finished products may fluctuate due to movements in cross-currency transaction rates. Risingcommodity, energy, and other input costs could materially and adversely affect our cost of operations, including the manufacture, transportation, anddistribution of our products, which could materially and adversely affect our financial condition and operating results.Although we monitor our exposure to commodity prices as an integral part of our overall risk management program, and seek to hedge against input priceincreases to the extent we deem appropriate, we do not fully hedge against changes in commodity prices, and our hedging strategies may not protect us fromincreases in specific raw materials costs. For example, hedging our costs for one of our key commodities, dairy products, is difficult because dairy futuresmarkets are not as developed as many other commodities futures markets. Continued volatility or sustained increases in the prices of commodities and othersupplies we purchase could increase the costs of our products, and our profitability could suffer. Moreover, increases in the prices of our products to coverthese increased costs may result in lower sales volumes. If we are not successful in our hedging activities, or if we are unable to price our products to coverincreased costs, then commodity and other input price volatility or increases could materially and adversely affect our financial condition and operatingresults.We rely on our management team and other key personnel.We depend on the skills, working relationships, and continued services of key personnel, including our experienced management team. In addition, ourability to achieve our operating goals depends on our ability to identify, hire, train, and retain qualified individuals. We compete with other companies bothwithin and outside of our industry for talented personnel, and we may lose key personnel or fail to attract, train, and retain other talented personnel. Any suchloss or failure could adversely affect our product sales, financial condition, and operating results.We may be unable to realize the anticipated benefits from streamlining actions to reduce fixed costs, simplify or improve processes, and improve ourcompetitiveness.We have implemented a number of cost savings initiatives, including our Integration Program (as defined below), that we believe are important to positionour business for future success and growth. We have evaluated changes to our organization structure to enable us to reduce costs, simplify or improveprocesses, and improve our competitiveness. Our future success may depend upon our ability to realize the benefits of our cost savings initiatives. Inaddition, certain of our initiatives may lead to increased costs in other aspects of our business such as increased conversion, outsourcing, or distribution costs.We must be efficient in executing our plans to achieve cost savings and operate efficiently in the highly competitive food and beverage industry, particularlyin an environment of increased competitive activity. To capitalize on our efforts, we must carefully evaluate investments in our business, and execute onthose areas with the most potential return on investment. If we are unable to realize the anticipated benefits from our efforts, we could be cost disadvantagedin the marketplace, and our competitiveness, production, and profitability could be adversely affected.9Changes in our relationships with significant customers or suppliers could adversely impact us.We derive significant portions of our sales from certain significant customers (see Sales and Customers within Item 1, Business, of this report). There can beno assurance that all of our significant customers will continue to purchase our products in the same mix or quantities or on the same terms as in the past,particularly as increasingly powerful retailers may demand lower pricing and focus on developing their own brands. The loss of a significant customer or amaterial reduction in sales or a change in the mix of products we sell to a significant customer could materially and adversely affect our product sales,financial condition, and operating results.Disputes with significant suppliers, including disputes related to pricing or performance, could adversely affect our ability to supply products to ourcustomers and could materially and adversely affect our product sales, financial condition, and operating results.In addition, the financial condition of such customers and suppliers is affected in large part by conditions and events that are beyond our control. Asignificant deterioration in the financial condition of significant customers and suppliers could materially and adversely affect our product sales, financialcondition, and operating results.We may not be able to successfully execute our international expansion strategy.We plan to drive additional growth and profitability through international markets. Consumer demands, behaviors, tastes and purchasing trends may differ ininternational markets and, as a result, our sales may not be successful or meet expectations, or the margins on those sales may be less than currentlyanticipated. We may also face difficulties integrating foreign business operations with our current sourcing, distribution, information technology systems,and other operations. Any of these challenges could hinder our success in new markets or new distribution channels. There can be no assurance that we willsuccessfully complete any planned international expansion or that any new business will be profitable or meet our expectations.Changes in tax laws and interpretations could adversely affect our business.We are subject to income and other taxes in the U.S. and in numerous foreign jurisdictions. Our domestic and foreign tax liabilities are dependent on thejurisdictions in which profits are determined to be earned and taxed. Additionally, the amount of taxes paid is subject to our interpretation of applicable taxlaws in the jurisdictions in which we operate. A number of factors influence our effective tax rate, including changes in tax laws and treaties as well as theinterpretation of existing laws and rules. Federal, state, and local governments and administrative bodies within the U.S., which represents a majority of ouroperations, and other foreign jurisdictions have implemented, or are considering, a variety of broad tax, trade, and other regulatory reforms that may impactus. For example, the Tax Cuts and Jobs Act (the “U.S. Tax Reform”) enacted on December 22, 2017 resulted in changes in our corporate tax rate, our deferredincome taxes, and the taxation of foreign earnings. We are still assessing the impact of the U.S. Tax Reform, and while a number of impacts are anticipated tobe positive, certain provisions may have adverse or uncertain effects. Relatedly, changes in tax laws resulting from the Organization for Economic Co-operation and Development’s (OECD) multi-jurisdictional plan of action to address “base erosion and profit sharing” could impact our effective tax rate. It isnot currently possible to accurately determine the potential impact of these proposed or future changes, but these changes could have a material impact onour business.Significant judgment, knowledge, and experience are required in determining our worldwide provision for income taxes. Our future effective tax rate isimpacted by a number of factors including changes in the valuation of our deferred tax assets and liabilities, increases in expenses not deductible for tax,including impairment of goodwill in connection with acquisitions, and changes in available tax credits. In the ordinary course of our business, there are manytransactions and calculations where the ultimate tax determination is uncertain. We are also regularly subject to audits by tax authorities. Although webelieve our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different from our historicalincome tax provisions and accruals. Economic and political pressures to increase tax revenue in various jurisdictions may make resolving tax disputes moredifficult. The results of an audit or litigation could adversely affect our financial statements in the period or periods for which that determination is made.Compliance with changes in laws, regulations, and related interpretations could impact our business.As a large, global food and beverage company, we operate in a highly-regulated environment with constantly-evolving legal and regulatory frameworks.Various laws and regulations govern production, storage, distribution, sales, advertising, labeling, including on-pack claims, information or disclosures,marketing, licensing, trade, labor, tax, and environmental matters, as well as health and safety practices. Government authorities regularly change laws andregulations and their interpretations. Our compliance with new or revised laws and regulations, or the interpretation and application of existing laws andregulations, could materially and adversely affect our product sales, financial condition, and results of operations. As a consequence of the legal andregulatory environment in which we operate, we are faced with a heightened risk of legal claims and regulatory enforcement actions.10Although we have implemented policies and procedures designed to ensure compliance with existing laws and regulations, there can be no assurance thatcourts or regulators will agree with our interpretations or that our employees, contractors, or agents will not violate our policies and procedures. Moreover, afailure to maintain effective control processes could lead to violations, unintentional or otherwise, of laws and regulations. Legal claims or regulatoryenforcement actions arising out of our failure or alleged failure to comply with applicable laws and regulations could subject us to civil and criminalpenalties that could materially and adversely affect our product sales, reputation, financial condition, and operating results. In addition, the costs and othereffects of defending potential and pending litigation and administrative actions against us may be difficult to determine and could adversely affect ourfinancial condition and operating results.Product recalls or other product liability claims could materially and adversely affect us.Selling products for human consumption involves inherent legal and other risks, including product contamination, spoilage, product tampering, allergens, orother adulteration. We could decide to, or be required to, recall products due to suspected or confirmed product contamination, adulteration, productmislabeling or misbranding, tampering, or other deficiencies. Product recalls or market withdrawals could result in significant losses due to their costs, thedestruction of product inventory, and lost sales due to the unavailability of the product for a period of time.We could be adversely affected if consumers lose confidence in the safety and quality of certain food products or ingredients, or the food safety systemgenerally. Adverse attention about these types of concerns, whether or not valid, may damage our reputation, discourage consumers from buying ourproducts, or cause production and delivery disruptions.We may also suffer losses if our products or operations violate applicable laws or regulations, or if our products cause injury, illness, or death. In addition, ourmarketing could face claims of false or deceptive advertising or other criticism. A significant product liability or other legal judgment or a related regulatoryenforcement action against us, or a significant product recall, may materially and adversely affect our reputation and profitability. Moreover, even if aproduct liability or fraud claim is unsuccessful, has no merit, or is not pursued, the negative publicity surrounding assertions against our products orprocesses could materially and adversely affect our product sales, financial condition, and operating results.Unanticipated business disruptions could adversely affect our ability to provide our products to our customers.We have a complex network of suppliers, owned manufacturing locations, co-manufacturing locations, distribution networks, and information systems thatsupport our ability to consistently provide our products to our customers. Factors that are hard to predict or beyond our control, such as weather, raw materialshortages, natural disasters, fire or explosion, political unrest, terrorism, generalized labor unrest, or health pandemics, could damage or disrupt our operationsor our suppliers’ or co-manufacturers’ operations. These disruptions may require additional resources to restore our supply chain or distribution network. If wecannot respond to disruptions in our operations, whether by finding alternative suppliers or replacing capacity at key manufacturing or distribution locations,or if we are unable to quickly repair damage to our information, production, or supply systems, we may be late in delivering, or be unable to deliver, productsto our customers and may also be unable to track orders, inventory, receivables, and payables. If that occurs, our customers’ confidence in us and long-termdemand for our products could decline. Any of these events could materially and adversely affect our product sales, financial condition, and operatingresults.We may not successfully identify or complete strategic acquisitions, alliances, divestitures or joint ventures.From time to time, we may evaluate acquisition candidates, alliances, or joint ventures that may strategically fit our business objectives or we may considerdivesting businesses that do not meet our strategic objectives or growth or profitability targets. These activities may present financial, managerial, andoperational risks including, but not limited to, diversion of management’s attention from existing core businesses, difficulties integrating or separatingpersonnel and financial and other systems, inability to effectively and immediately implement control environment processes across a diverse employeepopulation, adverse effects on existing or acquired customer and supplier business relationships, and potential disputes with buyers, sellers, or partners.Activities in such areas are regulated by numerous antitrust and competition laws in the United States, the European Union, and other jurisdictions, and wemay be required to obtain the approval of acquisition and joint venture transactions by competition authorities, as well as to satisfy other legal requirements.To the extent we undertake acquisitions, alliances, joint ventures, or other developments outside our core regions or in new categories, we may faceadditional risks related to such developments. For example, risks related to foreign operations include compliance with U.S. laws affecting operations outsideof the United States, such as the FCPA, currency rate fluctuations, compliance with foreign regulations and laws, including tax laws, and exposure topolitically and economically volatile developing markets. Any of these factors could materially and adversely affect our product sales, financial condition,and operating results.11Our performance may be adversely affected by economic and political conditions in the United States and in various other nations where we dobusiness.Our performance has been in the past and may continue in the future to be impacted by economic and political conditions in the United States and in othernations where we do business. Economic and financial uncertainties in our international markets, including uncertainties surrounding the United Kingdom'simpending withdrawal from the European Union (commonly referred to as “Brexit”) and changes to major international trade arrangements (e.g., the NorthAmerican Free Trade Agreement), could negatively impact our operations and sales. Other factors impacting our operations in the United States and ininternational locations where we do business include export and import restrictions, currency exchange rates, currency devaluation, cash repatriationrestrictions, recessionary conditions, foreign ownership restrictions, nationalization, the impact of hyperinflationary environments, terrorist acts, and politicalunrest. Such factors in either domestic or foreign jurisdictions could materially and adversely affect our product sales, financial condition, and operatingresults. For further information on Venezuela, see Note 13, Venezuela - Foreign Currency and Inflation, to the consolidated financial statements.Volatility of capital markets or macro-economic factors could adversely affect our business.Changes in financial and capital markets, including market disruptions, limited liquidity, and interest rate volatility, may increase the cost of financing aswell as the risks of refinancing maturing debt. In addition, our borrowing costs can be affected by short and long-term ratings assigned by ratingorganizations. A decrease in these ratings could limit our access to capital markets and increase our borrowing costs, which could materially and adverselyaffect our financial condition and operating results.Some of our customers and counterparties are highly leveraged. Consolidations in some of the industries in which our customers operate have created largercustomers, some of which are highly leveraged and facing increased competition and continued credit market volatility. These factors have caused somecustomers to be less profitable and increased our exposure to credit risk. A significant adverse change in the financial and/or credit position of a customer orcounterparty could require us to assume greater credit risk relating to that customer or counterparty and could limit our ability to collect receivables. Thiscould have an adverse impact on our financial condition and liquidity.Our results could be adversely impacted as a result of increased pension, labor, and people-related expenses.Inflationary pressures and any shortages in the labor market could increase labor costs, which could have a material adverse effect on our consolidatedoperating results or financial condition. Our labor costs include the cost of providing employee benefits in the United States, Canada, and other foreignjurisdictions, including pension, health and welfare, and severance benefits. Any declines in market returns could adversely impact the funding of pensionplans, the assets of which are invested in a diversified portfolio of equity and fixed-income securities and other investments. Additionally, the annual costs ofbenefits vary with increased costs of health care and the outcome of collectively-bargained wage and benefit agreements.Furthermore, we may be subject to increased costs or experience adverse effects to our operating results if we are unable to renew collectively bargainedagreements on satisfactory terms. Our financial condition and ability to meet the needs of our customers could be materially and adversely affected if strikesor work stoppages and interruptions occur as a result of delayed negotiations with union-represented employees both in and outside of the United States.Volatility in the market value of all or a portion of the derivatives we use to manage exposures to fluctuations in commodity prices may cause volatilityin our operating results and net income.We use commodity futures and options to partially hedge the price of certain input costs, including dairy products, coffee beans, meat products, wheat, cornproducts, soybean oils, sugar and natural gas. Changes in the values of these derivatives are currently recorded in net income, resulting in volatility in bothgross profits and net income. We report these gains and losses in cost of products sold in our consolidated statements of income to the extent we utilize theunderlying input in our manufacturing process. We report these gains and losses in general corporate expenses in our segment operating results until we sellthe underlying products, at which time we reclassify the gains and losses to segment operating results. We may experience volatile earnings as a result ofthese accounting treatments.12Our net sales and net income may be exposed to exchange rate fluctuations.We derive a substantial portion of our net sales from international operations. We hold assets and incur liabilities, earn revenue, and pay expenses in a varietyof currencies other than the U.S. dollar, primarily the British pound sterling, euro, Australian dollar, Canadian dollar, New Zealand dollar, Brazilian real,Indonesian rupiah, and Chinese renminbi. Since our consolidated financial statements are denominated in U.S. dollars, fluctuations in exchange rates fromperiod to period will have an impact on our reported results. We have implemented currency hedges intended to reduce our exposure to changes in foreigncurrency exchange rates. However, these hedging strategies may not be successful and any of our unhedged foreign exchange exposures will continue to besubject to market fluctuations. In addition, in certain circumstances, we may incur costs in one currency related to services or products for which we are paidin a different currency. As a result, factors associated with international operations, including changes in foreign currency exchange rates, could significantlyaffect our results of operations and financial condition.We are significantly dependent on information technology and we may be unable to protect our information systems against service interruption,misappropriation of data, or breaches of security.We rely on information technology networks and systems, including the Internet, to process, transmit, and store electronic and financial information, tomanage a variety of business processes and activities, and to comply with regulatory, legal, and tax requirements. We also depend on our informationtechnology infrastructure for digital marketing activities and for electronic communications among our locations, personnel, customers, and suppliers. Theseinformation technology systems, some of which are managed by third parties, may be susceptible to damage, invasions, disruptions, or shutdowns due tohardware failures, computer viruses, hacker attacks, and other cybersecurity risks, telecommunication failures, user errors, catastrophic events or other factors.If our information technology systems suffer severe damage, disruption, or shutdown, by unintentional or malicious actions of employees and contractors orby cyber-attacks, and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience business disruptions,reputational damage, transaction errors, processing inefficiencies, the leakage of confidential information, and the loss of customers and sales, causing ourproduct sales, financial condition, and operating results to be adversely affected and the reporting of our financial results to be delayed.In addition, if we are unable to prevent security breaches or disclosure of non-public information, we may suffer financial and reputational damage, litigationor remediation costs, fines, or penalties because of the unauthorized disclosure of confidential information belonging to us or to our partners, customers,consumers, or suppliers.Misuse, leakage, or falsification of information could result in violations of data privacy laws and regulations, damage to our reputation and credibility, lossof opportunities to acquire or divest of businesses or brands, and loss of ability to commercialize products developed through research and developmentefforts and, therefore, could have a negative impact on net sales. In addition, we may suffer financial and reputational damage because of lost ormisappropriated confidential information belonging to us, our current or former employees, or to our suppliers or consumers, and may become subject tolegal action and increased regulatory oversight. We could also be required to spend significant financial and other resources to remedy the damage caused bya security breach or to repair or replace networks and information systems.Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products and brands.We consider our intellectual property rights, particularly and most notably our trademarks, but also our patents, trade secrets, copyrights and licensingagreements, to be a significant and valuable aspect of our business. We attempt to protect our intellectual property rights through a combination of patent,trademark, copyright, and trade secret laws, as well as licensing agreements, third-party nondisclosure and assignment agreements, and policing of third-partymisuses of our intellectual property. Our failure to obtain or adequately protect our trademarks, products, new features of our products, or our technology, orany change in law or other changes that serve to lessen or remove the current legal protections of our intellectual property, may diminish our competitivenessand could materially harm our business.We may be unaware of intellectual property rights of others that may cover some of our technology, brands, or products. Any litigation regarding patents orother intellectual property could be costly and time-consuming and could divert the attention of our management and key personnel from our businessoperations. Third-party claims of intellectual property infringement might also require us to enter into costly license agreements. We also may be subject tosignificant damages or injunctions against development and sale of certain products.13Our results of operations could be affected by natural events in the locations in which we or our customers, suppliers or regulators operate.We may be impacted by severe weather and other geological events, including hurricanes, earthquakes, floods or tsunamis that could disrupt our operationsor the operations of our customers, suppliers, and regulators. Natural disasters or other disruptions at any of our facilities or our suppliers’ facilities mayimpair or delay the delivery of our products. Influenza or other pandemics could disrupt production of our products, reduce demand for certain of ourproducts, or disrupt the marketplace in the foodservice or retail environment with consequent material adverse effects on our results of operations. While weinsure against many of these events and certain business interruption risks, we cannot provide any assurance that such insurance will compensate us for anylosses incurred as a result of natural or other disasters. To the extent we are unable to, or cannot, financially mitigate the likelihood or potential impact ofsuch events, or effectively manage such events if they occur, particularly when a product is sourced from a single location, there could be a material adverseeffect on our business and results of operations, and additional resources could be required to restore our supply chain.Our level of indebtedness could adversely affect our business.We have a substantial amount of indebtedness, and are permitted to incur a substantial amount of additional indebtedness, including secured debt. Ourexisting debt, together with any incurrence of additional indebtedness, could have important consequences, including, but not limited to:•increasing our vulnerability to general adverse economic and industry conditions;•limiting our ability to obtain additional financing for working capital, capital expenditures, research and development, debt service requirements,acquisitions, and general corporate or other purposes;•resulting in a downgrade to our credit rating, which could adversely affect our cost of funds, liquidity, and access to capital markets;•restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;•limiting our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our competitors who are not ashighly leveraged;•making it more difficult for us to make payments on our existing indebtedness;•requiring a substantial portion of cash flows from operations to be dedicated to the payment of principal and interest on our indebtedness, therebyreducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities;•exposing us to risks related to fluctuations in foreign currency as we earn profits in a variety of currencies around the world and substantially all ofour debt is denominated in U.S. dollars; and•in the case of any additional indebtedness, exacerbating the risks associated with our substantial financial leverage.In addition, there can be no assurance that we will generate sufficient cash flow from operations or that future debt or equity financings will be available to usto enable us to pay our indebtedness or to fund other needs. As a result, we may need to refinance all or a portion of our indebtedness on or before maturity.There is no assurance that we will be able to refinance any of our indebtedness on favorable terms, or at all. Any inability to generate sufficient cash flow or torefinance our indebtedness on favorable terms could have a material adverse effect on our financial condition.The creditors who hold our debt could also accelerate amounts due in the event that we default, which could potentially trigger a default or acceleration ofthe maturity of our other debt. If our operating performance declines, we may in the future need to obtain waivers from the required creditors under ourindebtedness instruments to avoid being in default. If we breach the covenants under our indebtedness instruments and seek a waiver, we may not be able toobtain a waiver from the required creditors. If this occurs, we would be in default under our indebtedness instruments, the creditors could exercise their rights,as described above, and we could be forced into bankruptcy or liquidation.14The Sponsors have substantial control over us and may have conflicts of interest with us in the future.The Sponsors own approximately 51% of our common stock. Six of our 11 directors had been directors of Heinz prior to the closing of the 2015 Merger andremained directors of Kraft Heinz pursuant to the merger agreement. In addition, some of our executive officers, including Bernardo Hees, our ChiefExecutive Officer, are partners of 3G Capital, one of the Sponsors. As a result, the Sponsors have the potential to exercise influence over management andhave substantial control over decisions of our Board of Directors as well as over any action requiring the approval of the holders of our common stock,including adopting any amendments to our charter, electing directors, and approving mergers or sales of substantially all of our capital stock or our assets. Inaddition, to the extent that the Sponsors collectively hold a majority of our common stock, they together would have the power to take shareholder action bywritten consent to adopt amendments to our charter or take other actions, such as corporate transactions, that require the vote of holders of a majority of ouroutstanding common stock. The directors designated by the Sponsors may have significant authority to effect decisions affecting our capital structure,including the issuance of additional capital stock, incurrence of additional indebtedness, the implementation of stock repurchase programs and the decisionof whether or not to declare dividends. Additionally, the Sponsors are in the business of making investments in companies and may from time to time acquireand hold interests in businesses that compete directly or indirectly with us. The Sponsors may also pursue acquisition opportunities that may becomplementary to our business, and, as a result, those acquisition opportunities may not be available to us. So long as the Sponsors continue to own asignificant amount of our equity, they will continue to be able to strongly influence or effectively control our decisions.Future sales of our common stock in the public market could cause volatility in the price of our common stock or cause the share price to fall.Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the marketprice of our common stock, and could impair our ability to raise capital through the sale of additional equity securities.Kraft Heinz, 3G Capital, and Berkshire Hathaway entered into a registration rights agreement requiring us to register for resale under the Securities Act allregistrable shares held by 3G Capital and Berkshire Hathaway, which represents all shares of our common stock held by the Sponsors as of the date of theclosing of the 2015 Merger. As of the closing of the 2015 Merger, registrable shares represented approximately 51% of our outstanding common stock on afully diluted basis. Although the registrable shares are subject to certain holdback and suspension periods, the registrable shares are not subject to a “lock-up” or similar restriction under the registration rights agreement. Accordingly, sales of a large number of registrable shares may be made upon registration ofsuch shares with the SEC in accordance with the terms of the registration rights agreement. Registration and sales of our common stock effected pursuant tothe registration rights agreement will increase the number of shares being sold in the public market and may increase the volatility of the price of ourcommon stock.Our ability to pay regular dividends to our shareholders is subject to the discretion of the Board of Directors and may be limited by our debtagreements or limitations under Delaware law.Although it is currently anticipated that we will continue to pay regular quarterly dividends, any such determination to pay dividends will be at thediscretion of the Board of Directors and will be dependent on then-existing conditions, including our financial condition, income, legal requirements,including limitations under Delaware law, and other factors the Board of Directors deems relevant. The Board of Directors may, in its sole discretion, changethe amount or frequency of dividends or discontinue the payment of dividends entirely. For these reasons, shareholders will not be able to rely on dividendsto receive a return on investment. Accordingly, realization of any gain on shares of our common stock may depend on the appreciation of the price of ourcommon stock, which may never occur.15While we have remediated the previously-identified material weakness in our internal control over financial reporting, we may identify other materialweaknesses in the future.In November 2017, we restated our consolidated financial statements for the quarters ended April 1, 2017 and July 1, 2017 in order to correctly classify cashreceipts from the payments on sold receivables (which are cash receipts on the underlying trade receivables that have already been securitized) to cashprovided by investing activities (from cash provided by operating activities) within our condensed consolidated statements of cash flows. In connection withthese restatements, management identified a material weakness in our internal control over financial reporting related to the misapplication of AccountingStandards Update 2016-15. Specifically, we did not maintain effective controls over the adoption of new accounting standards, including communicationwith the appropriate individuals in coming to our conclusions on the application of new accounting standards. As a result of this material weakness, ourmanagement concluded that we did not maintain effective internal control over financial reporting as of April 1, 2017 and July 1, 2017. While we haveremediated the material weakness and our management has determined that our disclosure controls and procedures were effective as of December 30, 2017,there can be no assurance that our controls will remain adequate. The effectiveness of our internal control over financial reporting is subject to variousinherent limitations, including judgments used in decision-making, the nature and complexity of the transactions we undertake, assumptions about thelikelihood of future events, the soundness of our systems, cost limitations, and other limitations. If other material weaknesses or significant deficiencies in ourinternal control are discovered or occur in the future or we otherwise must restate our financial statements, it could materially and adversely affect ourbusiness and results of operations or financial condition, restrict our ability to access the capital markets, require us to expend significant resources to correctthe weaknesses or deficiencies, subject us to fines, penalties, investigations or judgments, harm our reputation, or otherwise cause a decline in investorconfidence.Item 1B. Unresolved Staff Comments.None.Item 2. Properties.Our corporate co-headquarters are located in Pittsburgh, Pennsylvania and Chicago, Illinois. Our co-headquarters are leased and house certain executiveoffices, our U.S. business units, and our administrative, finance, legal, and human resource functions. We maintain additional owned and leased officesthroughout the regions in which we operate.We manufacture our products in our network of manufacturing and processing facilities located throughout the world. As of December 30, 2017, we operated83 manufacturing and processing facilities. We own 80 and lease three of these facilities. Our manufacturing and processing facilities count by segment as ofDecember 30, 2017 was: Owned LeasedUnited States41 1Canada2 —Europe11 —Rest of World26 2We maintain all of our manufacturing and processing facilities in good condition and believe they are suitable and are adequate for our present needs. Wealso enter into co-manufacturing arrangements with third parties if we determine it is advantageous to outsource the production of any of our products.Item 3. Legal Proceedings.We are routinely involved in legal proceedings, claims, and governmental inquiries, inspections or investigations (“Legal Matters”) arising in the ordinarycourse of our business. While we cannot predict with certainty the results of Legal Matters in which we are currently involved or may in the future beinvolved, we do not expect that the ultimate costs to resolve any of the Legal Matters that are currently pending will have a material adverse effect on ourfinancial condition or results of operations.Item 4. Mine Safety Disclosures.Not applicable.16PART IIItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.Our common stock is listed on NASDAQ under the ticker symbol “KHC”. At February 10, 2018, there were approximately 53,000 holders of record of ourcommon stock.Our stock began publicly trading on July 6, 2015. Our quarterly highest and lowest market prices and dividends declared are: 2017 Quarters 2016 Quarters First Second Third Fourth First Second Third FourthMarket price-high$97.77 $93.88 $90.38 $82.48 $79.16 $89.40 $90.54 $90.15Market price-low85.41 85.45 77.40 75.21 68.18 76.64 84.25 79.69Dividends declared0.60 0.60 0.625 0.625 0.575 0.575 0.60 0.60Comparison of Cumulative Total ReturnThe following graph compares the cumulative total return on our common stock with the cumulative total return of the Standard & Poor's (“S&P”) 500 Indexand the S&P Consumer Staples Food Products, which we consider to be our peer group. This graph covers the period from July 6, 2015 (the first day ourcommon stock began trading on NASDAQ) through December 29, 2017 (the last trading day of our fiscal year). The graph shows total shareholder returnassuming $100 was invested on July 6, 2015 and the dividends were reinvested on a daily basis. Kraft Heinz S&P 500 S&P Consumer StaplesFood ProductsJuly 6, 2015$100.00 $100.00 $100.00December 31, 2015102.07 99.85 107.48December 30, 2016125.99 111.79 117.49December 29, 2017115.44 136.20 118.95Companies included in the S&P Consumer Staples Food Products index change periodically. During 2017, Mead Johnson Nutrition Company was removedfrom the index, therefore it is excluded from the table and chart above.The above performance graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to theliabilities of Section 18 of the Exchange Act.17Issuer Purchases of Equity Securities During the Three Months Ended December 30, 2017Our share repurchase activity in the three months ended December 30, 2017 was: Total Numberof Shares(a) Average Price Paid Per Share Total Number of SharesPurchased as Part ofPublicly Announced Plansor Programs(b) Dollar Value of Shares thatMay Yet Be PurchasedUnder the Plans or Programs10/1/2017 - 11/4/2017 648 $77.25 — $—11/5/2017 - 12/2/2017 — — — —12/3/2017 - 12/30/2017 1,428 80.46 — —For the Three Months Ended December 30, 2017 2,076 — (a) Includes the following types of share repurchase activity, when they occur: (1) shares repurchased in connection with the exercise of stock options (including periodic repurchasesusing option exercise proceeds), (2) shares withheld for tax liabilities associated with the vesting of RSUs, and (3) shares repurchased related to employee benefit programs(including our annual bonus swap program) or to offset the dilutive effect of equity issuances.(b) We do not have any publicly announced share repurchase plans or programs.Item 6. Selected Financial Data.Periods Presented:On June 7, 2013, H. J. Heinz Company was acquired by Heinz (formerly known as Hawk Acquisition Holding Corporation), a Delaware corporationcontrolled by the Sponsors, pursuant to the Agreement and Plan of Merger, dated February 13, 2013, as amended by the Amendment to Agreement and Planof Merger, dated March 4, 2013, by and among H. J. Heinz Company, Heinz, and Hawk Acquisition Sub, Inc. (“Hawk”).The 2013 Merger established a new accounting basis for Heinz. Accordingly, the consolidated financial statements present both predecessor and successorperiods, which relate to the accounting periods preceding and succeeding the completion of the 2013 Merger. The predecessor and successor periods areseparated by a vertical line to highlight the fact that the financial information for such periods has been prepared under two different historical-cost bases ofaccounting.Additionally, on October 21, 2013, our Board of Directors approved a change in our fiscal year-end from the Sunday closest to April 30 to the Sunday closestto December 31. In 2013, as a result of the change in fiscal year-end, the 2013 Merger, and the creation of Hawk, there are three 2013 reporting periods asdescribed below.The “Successor” (Heinz, renamed to The Kraft Heinz Company at the closing of the 2015 Merger) period includes:•The consolidated financial statements for the year ended December 30, 2017 (a 52-week period, including a full year of Kraft Heinz results);•The consolidated financial statements for the year ended December 31, 2016 (a 52-week period, including a full year of Kraft Heinz results);•The consolidated financial statements for the year ended January 3, 2016 (a 53-week period, including a full year of Heinz results and post-2015Merger results of Kraft);•The consolidated financial statements for the year ended December 28, 2014 (a 52-week period, including a full year of Heinz results); and•The period from February 8, 2013 through December 29, 2013 (the “2013 Successor Period”), reflecting:▪The creation of Hawk on February 8, 2013 and the activity from February 8, 2013 to June 7, 2013, which related primarily to the issuance ofdebt and recognition of associated issuance costs and interest expense; and▪All activity subsequent to the 2013 Merger. Therefore, the 2013 Successor Period includes 29 weeks of operating activity (June 8, 2013 toDecember 29, 2013). We indicate in the selected financial data table the weeks of operating activities in this period.The “Predecessor” (H. J. Heinz Company) period includes, but is not limited to:•The consolidated financial statements of H. J. Heinz Company prior to the 2013 Merger on June 7, 2013, which includes the period from April 29,2013 through June 7, 2013 (the “2013 Predecessor Period”); this represents six weeks of activity from April 29, 2013 through the 2013 Merger; and•The consolidated financial statements of H. J. Heinz Company for the fiscal year from April 30, 2012 to April 28, 2013 (“Fiscal 2013”).18Selected Financial Data:The following table presents selected consolidated financial data for 2017, 2016, 2015, 2014, the 2013 Successor Period, the 2013 Predecessor Period, andFiscal 2013. Successor Predecessor(H. J. Heinz Company) December 30,2017(52 weeks) December 31,2016(52 weeks)(a) January 3, 2016(53 weeks) December 28,2014(52 weeks) February 8 -December 29,2013(29 weeks) April 29 -June 7, 2013(6 weeks) April 28,2013(52 weeks) (in millions, except per share data)Period Ended: Net sales(b)(d)$26,232 $26,487 $18,338 $10,922 $6,240 $1,113 $11,529Income/(loss) from continuingoperations(b)10,990 3,642 647 672 (66) (191) 1,102Income/(loss) from continuing operationsattributable to common shareholders(b)10,999 3,452 (266) (63) (1,118) (194) 1,088Income/(loss) from continuing operationsper common share(b): Basic9.03 2.84 (0.34) (0.17) (2.97) (0.60) 3.39Diluted8.95 2.81 (0.34) (0.17) (2.97) (0.60) 3.37As of: Total assets(d)120,232 120,480 122,973 36,571 38,681 NA 12,920Long-term debt(c)(d)28,333 29,713 25,151 13,358 14,326 NA 3,830Redeemable preferred stock— — 8,320 8,320 8,320 NA —Cash dividends per common share2.45 2.35 1.70 — — — 2.06(a) On December 9, 2016, our Board of Directors approved a change to our fiscal year end from Sunday to Saturday. Effective December 31, 2016, we operate on a 52 or 53-weekfiscal year ending on the last Saturday in December in each calendar year. In prior years, we operated on a 52 or 53-week fiscal year ending the Sunday closest to December 31. Asa result, we occasionally have a 53rd week in a fiscal year. Our 2015 fiscal year includes a 53rd week of activity.(b)Amounts exclude the operating results and any associated impairment charges and losses on sale related to the Company's Shanghai LongFong Foods business in China and U.S.Foodservice frozen desserts business, which were divested in Fiscal 2013.(c)Amounts exclude the current portion of long-term debt. Additionally, amounts include interest rate swap hedge accounting adjustments of $123 million at April 28, 2013. Therewere no interest rate swaps requiring such hedge accounting adjustments at December 30, 2017, December 31, 2016, January 3, 2016, December 28, 2014, or December 29, 2013.(d)The increases in net sales, total assets, and long-term debt from December 28, 2014 to January 3, 2016 reflect the impact of the 2015 Merger. See Note 2, Merger and Acquisition,to the consolidated financial statements for additional information.Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.OverviewThe following discussion should be read in conjunction with the other sections of this Annual Report on Form 10-K, including the consolidated financialstatements and related notes contained in Item 8, Financial Statements and Supplementary Data.Description of the Company:We manufacture and market food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee,and other grocery products throughout the world.We manage and report our operating results through four segments. We have three reportable segments defined by geographic region: United States, Canada,and Europe. Our remaining businesses are combined and disclosed as “Rest of World”. Rest of World is comprised of two operating segments: Latin Americaand AMEA.In the third quarter of 2017, we announced our plans to reorganize certain of our international businesses to better align our global geographies. These plansinclude moving our Middle East and Africa businesses from the AMEA operating segment into the EMEA operating segment. The remaining AMEAbusinesses will become the APAC operating segment. We currently expect these changes to become effective in the first quarter of our fiscal year 2018. As aresult, we expect to restate our Europe and Rest of World segments to reflect these changes for historical periods presented as of March 31, 2018.19See Note 19, Segment Reporting, to the consolidated financial statements for our financial information by segment.Items Affecting Comparability of Financial ResultsThe 2015 Merger:We completed the 2015 Merger on July 2, 2015. As a result, 2016 was the first full year of combined Kraft and Heinz results, while 2015 included a full yearof Heinz results and post-2015 Merger results of Kraft. For comparability, we disclose in this report certain unaudited pro forma condensed combinedfinancial information, which presents 2015 as if the 2015 Merger had been consummated on December 30, 2013, the first business day of our 2014 fiscalyear, and combines the historical results of Heinz and Kraft. See the Supplemental Unaudited Pro Forma Condensed Combined Financial Informationsection at the end of this item for additional information.See Note 1, Background and Basis of Presentation, to the consolidated financial statements for additional information related to the 2015 Merger.Integration and Restructuring Expenses:In 2017, we substantially completed our multi-year program announced following the 2015 Merger (the “Integration Program”), for which we expect to incurcumulative pre-tax costs of approximately $2.1 billion. Approximately 60% of these costs will be cash expenditures. As of December 30, 2017, we haveincurred cumulative pre-tax costs of $2,055 million related to the Integration Program. These costs primarily included severance and employee benefit costs(including cash and non-cash severance), costs to exit facilities (including non-cash costs such as accelerated depreciation), and other costs incurred as adirect result of integration activities related to the 2015 Merger.Total expenses related to our restructuring activities, including the Integration Program, were $457 million in 2017, $1,012 million in 2016, and $1,023million in 2015. Integration Program costs included in these totals were $339 million in 2017, $887 million in 2016, and $829 million in 2015.We anticipate cumulative capital expenditures of approximately $1.4 billion related to the Integration Program. As of December 30, 2017, we have incurred$1.3 billion in capital expenditures since the inception of the Integration Program. The Integration Program was designed to reduce costs, integrate, andoptimize our combined organization. Since the inception of the Integration Program, our cumulative pre-tax savings achieved are approximately $1,725million, primarily benefiting the United States and Canada segments.See Note 3, Integration and Restructuring Expenses, to the consolidated financial statements for additional information.U.S. Tax Reform:On December 22, 2017, the Tax Cuts and Jobs Act (“U.S. Tax Reform”) was enacted by the U.S. federal government. The legislation significantly changedU.S. tax law by, among other things, lowering the federal corporate tax rate from 35.0% to 21.0%, effective January 1, 2018, implementing a territorial taxsystem, and imposing a one-time toll charge on deemed repatriated earnings of foreign subsidiaries as of December 30, 2017. The two material items thatimpacted us in 2017 were the corporate tax rate reduction and the one-time toll charge. While the corporate tax rate reduction is effective January 1, 2018, weaccounted for this anticipated rate change in 2017, the period of enactment.We have estimated the provisional tax impacts related to the toll charge, certain components of the revaluation of deferred tax assets and liabilities, includingdepreciation and executive compensation, and the change in our indefinite reinvestment assertion. As a result, we recognized a net tax benefit ofapproximately $7.0 billion, including a reasonable estimate of our deferred income tax benefit of approximately $7.5 billion related to the corporate ratechange, which was partially offset by a reasonable estimate of $312 million for the toll charge and approximately $125 million for other tax expenses,including a change in our indefinite reinvestment assertion.See Critical Accounting Policies within this item and Note 8, Income Taxes, to the consolidated financial statements for additional information.53rd Week:On December 9, 2016, our Board of Directors approved a change to our fiscal year end from Sunday to Saturday. Effective December 31, 2016, we operate ona 52 or 53-week fiscal year ending on the last Saturday in December in each calendar year. In prior years, we operated on a 52 or 53-week fiscal year endingthe Sunday closest to December 31. As a result, we occasionally have a 53rd week in a fiscal year. Our 2015 fiscal year included a 53rd week of activity.20Series A Preferred Stock:On June 7, 2016, we redeemed all outstanding shares of our Series A Preferred Stock. We funded this redemption primarily through the issuance of long-termdebt in May 2016, as well as other sources of liquidity, including our commercial paper program, U.S. securitization program, and cash on hand.See Equity and Dividends within this item, along with Note 16, Debt, and Note 17, Capital Stock, to the consolidated financial statements for additionalinformation.Results of OperationsDue to the size of Kraft’s business relative to the size of Heinz’s business prior to the 2015 Merger, and for purposes of comparability, the Results ofOperations include certain unaudited pro forma condensed combined financial information (the “pro forma financial information”) adjusted to assume thatKraft and Heinz were a combined company for the full year 2015. This pro forma financial information reflects combined historical results, final purchaseaccounting adjustments, and adjustments to align accounting policies. The pro forma adjustments impacted our consolidated results and all of our segments.There are no pro forma adjustments for 2017 or 2016 as Kraft and Heinz were a combined company for these periods. For more information, see SupplementalUnaudited Pro Forma Condensed Combined Financial Information.In addition, we disclose in this report certain non-GAAP financial measures, which, for 2015, are derived from the pro forma financial information. These non-GAAP financial measures assist management in comparing our performance on a consistent basis for purposes of business decision-making by removing theimpact of certain items that management believes do not directly reflect our underlying operations. For additional information and reconciliations from ourconsolidated financial statements see Supplemental Unaudited Pro Forma Condensed Combined Financial Information and Non-GAAP FinancialMeasures.Consolidated Results of OperationsSummary of Results: December 30,2017(52 weeks) December 31,2016(52 weeks) % Change December 31,2016(52 weeks) January 3,2016(53 weeks) % Change (in millions, except per share data) (in millions, except per share data) Net sales$26,232 $26,487 (1.0)% $26,487 $18,338 44.4%Operating income6,773 6,142 10.3 % 6,142 2,639 132.7%Net income/(loss) attributable to commonshareholders10,999 3,452 218.6 % 3,452 (266) nmDiluted earnings/(loss) per share8.95 2.81 218.5 % 2.81 (0.34) nmNet Sales: December 30,2017(52 weeks) December 31,2016(52 weeks) % Change December 31,2016(52 weeks) January 3,2016(53 weeks) % Change (in millions) (in millions) Net sales$26,232 $26,487 (1.0)% $26,487 $18,338 44.4 %Pro forma net sales(a)26,232 26,487 (1.0)% 26,487 27,447 (3.5)%Organic Net Sales(b)26,169 26,432 (1.0)% 26,817 26,728 0.3 %(a)There were no pro forma adjustments for 2017 or 2016, as Kraft and Heinz were a combined company for these periods. See the Supplemental Unaudited Pro Forma CondensedCombined Financial Information at the end of this item. (b)Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.21Year Ended December 30, 2017 compared to the Year Ended December 31, 2016:Net sales and Organic Net Sales decreased 1.0% to $26.2 billion in 2017 compared to 2016 due to unfavorable volume/mix (1.5 pp) partially offset by higherpricing (0.5 pp). Volume/mix was unfavorable in the United States and Canada, partially offset by growth in Europe and Rest of World. Higher pricing inRest of World and the United States was partially offset by lower pricing in Canada and Europe.Year Ended December 31, 2016 compared to the Year Ended January 3, 2016:Net sales increased 44.4% to $26.5 billion in 2016 compared to 2015, primarily driven by the 2015 Merger.Pro forma net sales decreased 3.5% primarily due to the unfavorable impacts of foreign currency (2.5 pp), 53rd week of shipments in 2015 (1.2 pp), anddivestitures (0.1 pp). Excluding these impacts, Organic Net Sales increased 0.3% due to higher net pricing (0.3 pp) and neutral volume/mix (0.0 pp). Netpricing was higher in Rest of World, United States, and Canada despite deflation in key commodities (which we define as dairy, meat, coffee and nuts) in theUnited States and Canada, primarily in dairy, coffee, and meats in the United States. These price increases were partially offset by lower net pricing in Europe.Neutral volume/mix was primarily due to declines in meats and foodservice in the United States, partially offset by growth of condiments and saucesglobally, and coffee and refrigerated meal combinations in the United States.Net Income: December 30,2017(52 weeks) December 31,2016(52 weeks) % Change December 31,2016(52 weeks) January 3,2016(53 weeks) % Change (in millions) (in millions) Operating income$6,773 $6,142 10.3% $6,142 $2,639 132.7%Net income/(loss) attributable to commonshareholders10,999 3,452 218.6% 3,452 (266) nmAdjusted EBITDA(a)7,930 7,778 1.9% 7,778 6,739 15.4%(a)Adjusted EBITDA is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.Year Ended December 30, 2017 compared to the Year Ended December 31, 2016:Operating income increased 10.3% to $6.8 billion in 2017 compared to $6.1 billion in 2016. This increase was primarily due to lower Integration Programand other restructuring expenses in the current period, savings from the Integration Program and other restructuring activities, and lower overhead costs,partially offset by higher input costs in local currency, lower Organic Net Sales, lower unrealized gains on commodity hedges in the current period, and theunfavorable impact of foreign currency (0.4 pp).Net income/(loss) attributable to common shareholders increased 218.6% to $11.0 billion in 2017 compared to $3.5 billion in 2016. The increase wasprimarily due to a lower effective tax rate in the current period, the operating income factors discussed above, and the absence of the Series A Preferred Stockdividend in the current period, partially offset by higher interest expense and higher other expense/(income), net, detailed as follows:•The effective tax rate was a 98.7% benefit in 2017 compared to 27.5% expense in 2016. The change in the effective tax rate was primarily driven bythe $7.0 billion tax benefit from U.S. Tax Reform, lower tax benefits associated with deferred tax effects of statutory rate changes, and taxes onincome of foreign subsidiaries in the current period. See Note 8, Income Taxes, to the consolidated financial statements for additional informationrelated to our effective tax rates.•The Series A Preferred Stock was fully redeemed on June 7, 2016. Accordingly, there were no dividends for 2017, compared to $180 million in theprior period. See Equity and Dividends within this item for additional information.•Interest expense increased to $1.2 billion in 2017 compared to $1.1 billion in 2016. This increase was primarily due to the May 2016 issuances oflong-term debt and borrowings under our commercial paper programs, which began in the second quarter of 2016.•Other expense/(income), net was an expense of $9 million in 2017 compared to income of $15 million in 2016. This increase was primarily due to a$36 million nonmonetary currency devaluation loss in the current period compared to $24 million in the prior period related to our Venezuelanoperations. See Note 13, Venezuela - Foreign Currency and Inflation, to the consolidated financial statements for additional information.22Adjusted EBITDA increased 1.9% to $7.9 billion in 2017 compared to 2016, primarily due to savings from the Integration Program and other restructuringactivities and lower overhead costs, partially offset by higher input costs in local currency, a decline in Organic Net Sales, and the unfavorable impact offoreign currency (0.4pp). Segment Adjusted EBITDA results were as follows:•United States Segment Adjusted EBITDA increased primarily driven by Integration Program savings and lower overhead costs in the current period,partially offset by unfavorable key commodity costs, primarily in dairy, meat, and coffee, and volume/mix declines.•Europe Segment Adjusted EBITDA was flat primarily driven by productivity savings that were offset by higher input costs in local currency and theunfavorable impact of foreign currency (1.6 pp).•Rest of World Segment Adjusted EBITDA decreased primarily due to higher input costs in local currency, increased commercial investments, andthe unfavorable impact of foreign currency (3.4 pp), partially offset by Organic Net Sales growth.•Canada Segment Adjusted EBITDA decreased primarily due to a decline in Organic Net Sales, partially offset by Integration Program savings, loweroverhead costs in the current period, and the favorable impact of foreign currency (1.7 pp).Year Ended December 31, 2016 compared to the Year Ended January 3, 2016:Operating income increased 132.7% to $6.1 billion in 2016 compared to $2.6 billion in 2015. This increase was primarily driven by the 2015 Merger, as wellas the following:•Savings from the Integration Program and other restructuring activities and favorable pricing net of key commodity costs in United States andCanada.•Non-cash costs of $347 million relating to the fair value adjustment of Kraft’s inventory in purchase accounting in the prior period.The increase in operating income was partially offset by unfavorable impacts of $188 million from foreign currency and $62 million from a 53rd week ofshipments in the prior period.Net income/(loss) attributable to common shareholders increased $3.7 billion to income of $3.5 billion in 2016 compared to a loss of $266 million in 2015.The increase was due to the growth in operating income, fewer Series A Preferred Stock dividend payments, lower other expense/(income), net, lower interestexpense, and a lower effective tax rate, detailed as follows:•Series A Preferred Stock dividend cash distributions decreased to $180 million in 2016 compared to $900 million in 2015. This decrease wasprimarily due to the redemption of the Series A Preferred Stock on June 7, 2016. In addition, due to the December 8, 2015 common stock dividenddeclaration, we were required to accelerate payment of the March 7, 2016 preferred dividend to December 8, 2015. This resulted in one Series APreferred Stock dividend payment in the current period compared to five in the prior period.•Other expense/(income), net improved to income of $15 million in 2016, compared to expense of $305 million in 2015. The decrease was primarilydue to a $234 million nonmonetary currency devaluation loss related to our Venezuelan subsidiary in the prior period and call premiums of $105million related to our 2015 debt refinancing activities.•Interest expense decreased to $1.1 billion in 2016 compared to $1.3 billion in 2015. This decrease was primarily due to a $236 million write-off ofdebt issuance costs related to 2015 debt refinancing activities and a $227 million loss released from accumulated other comprehensiveincome/(losses) due to the early termination of certain interest rate swaps in the prior period as well as lower interest rates following our debtrefinancing in connection with the 2015 Merger. These were partially offset by the assumption of $8.6 billion aggregate principal amount of Kraft’slong-term debt obligations in the 2015 Merger, the issuance of new long-term debt in conjunction with the redemption of our Series A PreferredStock, and new borrowings under our commercial paper program. See Note 16, Debt, and Note 17, Capital Stock, to the consolidated financialstatements for additional information.•The effective tax rate was 27.5% in 2016, compared to 36.2% in 2015. The change in effective tax rate was primarily driven by higher earningsrepatriation charges and the nondeductible nonmonetary currency devaluation loss related to our Venezuelan subsidiary in the prior period,partially offset by lower tax benefits associated with taxes on income of foreign subsidiaries, tax exempt income, and deferred tax effects of statutoryrate changes in the current period. See Note 8, Income Taxes, to the consolidated financial statements for a discussion of effective tax rates.23Adjusted EBITDA increased 15.4% to $7.8 billion in 2016 compared to 2015, primarily driven by savings from the Integration Program and otherrestructuring activities and favorable pricing net of key commodity costs, partially offset by the unfavorable impact of foreign currency (3.4 pp) and a 53rdweek of shipments in the prior period (approximately 1.5 pp). Segment Adjusted EBITDA results were as follows:•United States Segment Adjusted EBITDA growth was primarily driven by savings from the Integration Program and favorable pricing net of keycommodity costs, partially offset by volume/mix declines and the impact of a 53rd week of shipments (approximately 1.5 pp) in the prior period.•Canada Segment Adjusted EBITDA growth was primarily driven by savings from the Integration Program and favorable pricing net of keycommodity costs, partially offset by higher input costs in local currency, unfavorable impact of foreign currency (4.4 pp), and a 53rd week ofshipments (approximately 1.5 pp) in the prior period.•Europe Segment Adjusted EBITDA decreased primarily due to unfavorable impact of foreign currency (6.5 pp), lower pricing, impact of a 53rd weekof shipments (approximately 1.0 pp) in the prior period as well as an increase in marketing investments, partially offset by savings in manufacturingcosts.•Rest of World Segment Adjusted EBITDA decreased due to unfavorable impact of foreign currency (17.4 pp), increased marketing investments, anda 53rd week of shipments (approximately 1.0 pp) in the prior period, partially offset by organic sales growth.Diluted EPS: December 30,2017(52 weeks) December 31,2016(52 weeks) % Change December 31,2016(52 weeks) January 3,2016(53 weeks) % Change (in millions, except per share data) (in millions, except per share data) Diluted EPS$8.95 $2.81 218.5% $2.81 $(0.34) nmAdjusted EPS(a)3.55 3.33 6.6% 3.33 2.19 52.1%(a)Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.Year Ended December 30, 2017 compared to the Year Ended December 31, 2016:Diluted EPS increased 218.5% to $8.95 in 2017 compared to $2.81 in 2016, primarily driven by the net income/(loss) attributable to common shareholdersfactors discussed above. December 30,2017(52 weeks) December 31,2016(52 weeks) $ Change % ChangeDiluted EPS$8.95 $2.81 $6.14 218.5%Integration and restructuring expenses0.26 0.57 (0.31) Merger costs— 0.02 (0.02) Unrealized losses/(gains) on commodity hedges0.01 (0.02) 0.03 Impairment losses0.03 0.03 — Nonmonetary currency devaluation0.03 0.02 0.01 Preferred dividend adjustment— (0.10) 0.10 U.S. Tax Reform(5.73) — (5.73) Adjusted EPS(a)$3.55 $3.33 $0.22 6.6% Key drivers of change in Adjusted EPS(a): Results of operations $0.06 Change in preferred dividends 0.25 Change in interest expense (0.06) Change in other expense/(income), net (0.01) Change in effective tax rate and other (0.02) $0.22 (a)Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.24Adjusted EPS increased 6.6% to $3.55 in 2017 compared to $3.33 in 2016, primarily driven by the absence of Series A Preferred Stock dividends in thecurrent period and Adjusted EBITDA growth despite the unfavorable impact of foreign currency, partially offset by higher interest expense.Year Ended December 31, 2016 compared to the Year Ended January 3, 2016:Diluted EPS increased to earnings of $2.81 in 2016 compared to a loss of $0.34 in 2015. The increase in diluted earnings/(loss) per share was driven primarilyby the net income/(loss) attributable to common shareholders factors discussed above, partially offset by the effect of an increase in the weighted averageshares of common stock outstanding compared to the prior period and a 53rd week of shipments in the prior period. December 31,2016(52 weeks) January 3,2016(53 weeks) $ Change % ChangeDiluted EPS$2.81 $(0.34) $3.15 nmPro forma adjustments(a)— 1.04 (1.04) Pro forma diluted EPS2.81 0.70 2.11 301.4%Integration and restructuring expenses0.57 0.61 (0.04) Merger costs0.02 0.49 (0.47) Unrealized losses/(gains) on commodity hedges(0.02) (0.02) — Impairment losses0.03 0.03 — Losses/(gains) on sale of business— (0.01) 0.01 Nonmonetary currency devaluation0.02 0.24 (0.22) Preferred dividend adjustment(0.10) 0.15 (0.25) Adjusted EPS(c)$3.33 $2.19 $1.14 52.1% Key drivers of change in Adjusted EPS(b): Results of operations $0.77 Change in preferred dividends 0.34 Change in interest expense (0.04) Change in other expense/(income), net (0.03) 53rd week of shipments (0.03) Change in effective tax rate and other 0.13 $1.14 (a)There were no pro forma adjustments for 2016, as Kraft and Heinz were a combined company for the entire period. See the Supplemental Unaudited Pro Forma CondensedCombined Financial Information at the end of this item.(b)Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.Adjusted EPS increased 52.1% to $3.33 in 2016 compared to $2.19 in 2015, primarily driven by Adjusted EBITDA growth despite the unfavorable impact offoreign currency, fewer Series A Preferred Stock dividends and a lower effective tax rate, partially offset by higher interest expense, higher otherexpense/(income), net, and a 53rd week of shipments in the prior period.Results of Operations by SegmentManagement evaluates segment performance based on several factors, including net sales, Organic Net Sales, and segment adjusted earnings before interest,tax, depreciation, and amortization (“Segment Adjusted EBITDA”). Management uses Segment Adjusted EBITDA to evaluate segment performance andallocate resources. Segment Adjusted EBITDA is a tool that can assist management and investors in comparing our performance on a consistent basis byremoving the impact of certain items that management believes do not directly reflect our underlying operations. These items include depreciation andamortization (excluding integration and restructuring expenses; including amortization of postretirement benefit plans prior service credits), equity awardcompensation expense, integration and restructuring expenses, merger costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and lossesare recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results),impairment losses, gains/(losses) on the sale of a business, and nonmonetary currency devaluation (e.g., remeasurement gains and losses). In addition,consistent with the manner in which management evaluates segment performance and allocates resources, Segment Adjusted EBITDA includes the operatingresults of Kraft on a pro forma basis, as if Kraft had been acquired as of December 30, 2013.25Net Sales: December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks) (in millions)Net sales: United States$18,353 $18,641 $10,943Canada2,190 2,309 1,437Europe2,393 2,366 2,656Rest of World3,296 3,171 3,302Total net sales$26,232 $26,487 $18,338Pro Forma Net Sales: December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks) (in millions)Pro forma net sales(a): United States$18,353 $18,641 $18,932Canada2,190 2,309 2,386Europe2,393 2,366 2,657Rest of World3,296 3,171 3,472Total pro forma net sales$26,232 $26,487 $27,447(a)There were no pro forma adjustments for 2017 or 2016, as Kraft and Heinz were a combined company for these periods. See the Supplemental Unaudited Pro Forma CondensedCombined Financial Information at the end of this item.Organic Net Sales: 2017 Compared to 2016 2016 Compared to 2015 December 30,2017(52 weeks) December 31,2016(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks) (in millions)Organic Net Sales(a): United States$18,353 $18,641 $18,641 $18,699Canada2,148 2,309 2,393 2,359Europe2,385 2,366 2,520 2,588Rest of World3,283 3,116 3,263 3,082Total Organic Net Sales$26,169 $26,432 $26,817 $26,728(a)Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.26Drivers of the changes in pro forma net sales and Organic Net Sales were: Pro Forma NetSales(a) Impact ofCurrency Impact ofDivestitures Impact of 53rdWeek Organic Net Sales Price Volume/Mix2017 Compared to 2016 United States(1.5)% 0.0 pp 0.0 pp 0.0 pp (1.5)% 0.4 pp (1.9) ppCanada(5.2)% 1.8 pp 0.0 pp 0.0 pp (7.0)% (1.7) pp (5.3) ppEurope1.1 % 0.3 pp 0.0 pp 0.0 pp 0.8 % (0.9) pp 1.7 ppRest of World3.9 % (1.5) pp 0.0 pp 0.0 pp 5.4 % 4.6 pp 0.8 ppKraft Heinz(1.0)% 0.0 pp 0.0 pp 0.0 pp (1.0)% 0.5 pp (1.5) pp 2016 Compared to 2015 United States(1.5)% 0.0 pp 0.0 pp (1.2) pp (0.3)% 0.2 pp (0.5) ppCanada(3.2)% (3.5) pp 0.0 pp (1.1) pp 1.4 % 0.6 pp 0.8 ppEurope(11.0)% (5.8) pp (1.6) pp (1.0) pp (2.6)% (2.5) pp (0.1) ppRest of World(8.7)% (13.2) pp 0.0 pp (1.4) pp 5.9 % 3.2 pp 2.7 ppKraft Heinz(3.5)% (2.5) pp (0.1) pp (1.2) pp 0.3 % 0.3 pp 0.0 pp(a)There were no pro forma adjustments for 2017 or 2016, as Kraft and Heinz were a combined company for these periods. See the Supplemental Unaudited Pro Forma CondensedCombined Financial Information at the end of this item.Adjusted EBITDA: December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks) (in millions)Segment Adjusted EBITDA: United States$6,001 $5,862 $4,690Canada639 642 541Europe781 781 938Rest of World617 657 742General corporate expenses(108) (164) (172)Depreciation and amortization (excluding integration and restructuring expenses)(583) (536) (779)Integration and restructuring expenses(457) (1,012) (1,117)Merger costs— (30) (194)Amortization of inventory step-up— — (347)Unrealized gains/(losses) on commodity hedges(19) 38 41Impairment losses(49) (53) (58)Gains/(losses) on sale of business— — 21Nonmonetary currency devaluation— (4) (57)Equity award compensation expense (excluding integration and restructuring expenses)(49) (39) (61)Other pro forma adjustments— — (1,549)Operating income6,773 6,142 2,639Interest expense1,234 1,134 1,321Other expense/(income), net9 (15) 305Income/(loss) before income taxes$5,530 $5,023 $1,01327United States: 2017 Compared to 2016 2016 Compared to 2015 December 30,2017(52 weeks) December 31,2016(52 weeks) % Change December 31,2016(52 weeks) January 3,2016(53 weeks) % Change (in millions) (in millions) Net sales$18,353 $18,641 (1.5)% $18,641 $10,943 70.3 %Pro forma net sales(a)18,353 18,641 (1.5)% 18,641 18,932 (1.5)%Organic Net Sales(b)18,353 18,641 (1.5)% 18,641 18,699 (0.3)%Segment Adjusted EBITDA6,001 5,862 2.4 % 5,862 4,690 25.0 %(a)There were no pro forma adjustments for 2017 or 2016, as Kraft and Heinz were a combined company for these periods. See the Supplemental Unaudited Pro Forma CondensedCombined Financial Information at the end of this item.(b)Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.Year Ended December 30, 2017 compared to the Year Ended December 31, 2016:Net sales and Organic Net Sales decreased 1.5% to $18.4 billion due to unfavorable volume/mix (1.9 pp) partially offset by higher pricing (0.4 pp).Unfavorable volume/mix was primarily driven by distribution losses in nuts, cheese, and meat, and lower shipments in foodservice. The decline was partiallyoffset by gains in refrigerated meal combinations, boxed dinners, and frozen meals. Pricing was higher driven primarily by price increases in cheese.Segment Adjusted EBITDA increased 2.4% primarily driven by Integration Program savings and lower overhead costs, partially offset by unfavorable keycommodity costs, primarily in dairy, meat, and coffee, as well as unfavorable volume/mix.Year Ended December 31, 2016 compared to the Year Ended January 3, 2016:Net sales increased 70.3% to $18.6 billion primarily driven by the 2015 Merger. Pro forma net sales decreased 1.5% due to a 53rd week of shipments in theprior period (1.2 pp). Organic Net Sales decreased 0.3% due to unfavorable volume/mix (0.5 pp) partially offset by higher net pricing (0.2 pp). Unfavorablevolume/mix was primarily due to declines in meat, foodservice, ready-to-drink beverages, and nuts that were partially offset by gains in coffee andinnovation-related gains in refrigerated meal combinations and boxed dinners. Net pricing was higher despite deflation in key commodities, primarily indairy, coffee, and meat.Segment Adjusted EBITDA increased 25.0% primarily due to savings from the Integration Program and favorable pricing net of key commodity costs,partially offset by volume/mix declines across several categories and the impact of a 53rd week of shipments (approximately 1.5 pp) in the prior period.Canada: 2017 Compared to 2016 2016 Compared to 2015 December 30,2017(52 weeks) December 31,2016(52 weeks) % Change December 31,2016(52 weeks) January 3,2016(53 weeks) % Change (in millions) (in millions) Net sales$2,190 $2,309 (5.2)% $2,309 $1,437 60.7 %Pro forma net sales(a)2,190 2,309 (5.2)% 2,309 2,386 (3.2)%Organic Net Sales(b)2,148 2,309 (7.0)% 2,393 2,359 1.4 %Segment Adjusted EBITDA639 642 (0.5)% 642 541 18.7 %(a)There were no pro forma adjustments for 2017 or 2016, as Kraft and Heinz were a combined company for these periods. See the Supplemental Unaudited Pro Forma CondensedCombined Financial Information at the end of this item.(b)Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.Year Ended December 30, 2017 compared to the Year Ended December 31, 2016:Net sales decreased 5.2% to $2.2 billion, including the favorable impact of foreign currency (1.8 pp). Organic Net Sales decreased 7.0% due to unfavorablevolume/mix (5.3 pp) and lower pricing (1.7 pp). Volume/mix was unfavorable across several categories and was most pronounced in cheese, coffee, andboxed dinners, primarily due to delayed execution of go-to-market agreements with key retailers, retail distribution losses (primarily in cheese), and lowerinventory levels at retail versus the prior year. Lower pricing was due to higher promotional activity, primarily in cheese.28Segment Adjusted EBITDA decreased 0.5%, including favorable impact of foreign currency (1.7 pp). Excluding the currency impact, Segment AdjustedEBITDA decreased primarily due to lower Organic Net Sales partially offset by Integration Program savings and lower overhead costs in the current period.Year Ended December 31, 2016 compared to the Year Ended January 3, 2016:Net sales increased 60.7% to $2.3 billion primarily driven by the 2015 Merger. Pro forma net sales decreased 3.2% due to the unfavorable impact of foreigncurrency (3.5 pp) and a 53rd week of shipments in the prior period (1.1 pp). Organic Net Sales increased 1.4% driven by favorable volume/mix (0.8 pp) andhigher net pricing (0.6 pp). Favorable volume/mix reflected higher shipments of condiments and sauces and gains in foodservice that were partially offset bylower shipments in cheese versus the prior year. Price increases were driven by significant pricing actions taken to offset higher input costs in local currency.Segment Adjusted EBITDA increased 18.7% despite the unfavorable impact of foreign currency (4.4 pp). This increase was primarily driven by IntegrationProgram savings and favorable pricing net of key commodity costs, partially offset by higher input costs in local currency and the impact of a 53rd week ofshipments (approximately 1.5 pp) in the prior period.Europe: 2017 Compared to 2016 2016 Compared to 2015 December 30,2017(52 weeks) December 31,2016(52 weeks) % Change December 31,2016(52 weeks) January 3,2016(53 weeks) % Change (in millions) (in millions) Net sales$2,393 $2,366 1.1% $2,366 $2,656 (10.9)%Pro forma net sales(a)2,393 2,366 1.1% 2,366 2,657 (11.0)%Organic Net Sales(b)2,385 2,366 0.8% 2,520 2,588 (2.6)%Segment Adjusted EBITDA781 781 —% 781 938 (16.7)%(a)There were no pro forma adjustments for 2017 or 2016, as Kraft and Heinz were a combined company for these periods. See the Supplemental Unaudited Pro Forma CondensedCombined Financial Information at the end of this item.(b)Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.Year Ended December 30, 2017 compared to the Year Ended December 31, 2016:Net sales increased 1.1% to $2.4 billion, including favorable impact of foreign currency (0.3 pp). Organic Net Sales increased 0.8% driven by favorablevolume/mix (1.7 pp), partially offset by lower pricing (0.9 pp). Favorable volume/mix was primarily driven by higher shipments in foodservice and growth incondiments and sauces, partially offset by ongoing declines in infant nutrition in Italy. Lower pricing was primarily due to higher promotional activity in theUK and Italy versus the prior period.Segment Adjusted EBITDA was flat, including the unfavorable impact of foreign currency (1.6 pp). Excluding the currency impact, the increase was primarilydriven by productivity savings, partially offset by higher input costs in local currency.Year Ended December 31, 2016 compared to the Year Ended January 3, 2016:Net sales decreased 10.9% to $2.4 billion, reflecting the unfavorable impacts of foreign currency, divestitures, and a 53rd week of shipments in the priorperiod. Pro forma net sales decreased 11.0% partially due to the unfavorable impacts of foreign currency (5.8 pp), divestitures (1.6 pp), and a 53rd week ofshipments in the prior period (1.0 pp). Organic Net Sales decreased 2.6% due to lower net pricing (2.5 pp) and unfavorable volume/mix (0.1 pp). Lower netpricing was primarily due to increased promotional activity across most categories versus the prior period. Unfavorable volume/mix was primarily due tolower shipments across most categories in the UK partially offset by growth in condiments and sauces.Segment Adjusted EBITDA decreased 16.7% partially due to the unfavorable impact of foreign currency (6.5 pp). Excluding the currency impact, theSegment Adjusted EBITDA decline was primarily due to lower net pricing, the impact of a 53rd week of shipments (approximately 1.0 pp) in the prior periodas well as an increase in marketing investments, partially offset by savings in manufacturing costs.29Rest of World: 2017 Compared to 2016 2016 Compared to 2015 December 30,2017(52 weeks) December 31,2016(52 weeks) % Change December 31,2016(52 weeks) January 3,2016(53 weeks) % Change (in millions) (in millions) Net sales$3,296 $3,171 3.9 % $3,171 $3,302 (4.0)%Pro forma net sales(a)3,296 3,171 3.9 % 3,171 3,472 (8.7)%Organic Net Sales(b)3,283 3,116 5.4 % 3,263 3,082 5.9 %Segment Adjusted EBITDA617 657 (6.1)% 657 742 (11.5)%(a)There were no pro forma adjustments for 2017 or 2016, as Kraft and Heinz were a combined company for these periods. See the Supplemental Unaudited Pro Forma CondensedCombined Financial Information at the end of this item.(b)Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.Year Ended December 30, 2017 compared to the Year Ended December 31, 2016:Net sales increased 3.9% to $3.3 billion despite the unfavorable impact of foreign currency (1.5 pp). Organic Net Sales increased 5.4% driven by higherpricing (4.6 pp) and favorable volume/mix (0.8 pp). Higher pricing was primarily driven by pricing actions taken to offset higher input costs in localcurrency, primarily in Latin America. Favorable volume/mix was primarily driven by growth in condiments and sauces across all regions partially offset byvolume/mix declines in several markets associated with distributor network re-alignment.Segment Adjusted EBITDA decreased 6.1% including the unfavorable impact of foreign currency (3.4 pp). Excluding the currency impact, Segment AdjustedEBITDA decreased primarily due to higher input costs in local currency and higher commercial investments partially offset by Organic Net Sales growth.Year Ended December 31, 2016 compared to the Year Ended January 3, 2016:Net sales decreased 4.0% to $3.2 billion, reflecting the unfavorable impacts of foreign currency and a 53rd week of shipments in the prior period, which werepartially offset by the inclusion of twelve months of the Kraft business in the current period. Pro forma net sales decreased 8.7% due to the unfavorableimpacts of foreign currency (13.2 pp, including a 10.5 pp impact from the devaluation of the Venezuelan bolivar) and a 53rd week of shipments in the priorperiod (1.4 pp). Organic Net Sales increased 5.9% driven by higher net pricing (3.2 pp) and favorable volume/mix (2.7 pp). Higher net pricing was drivenprimarily by pricing actions to offset higher input costs in local currency, primarily in Latin America. Favorable volume/mix was primarily driven by growthin condiments and sauces across all regions, partially offset by declines in nutritional beverages in India.Segment Adjusted EBITDA decreased 11.5% primarily due to the unfavorable impact of foreign currency (17.4 pp, including a 14.0 pp impact from thedevaluation of the Venezuelan bolivar). Excluding the currency impact, Segment Adjusted EBITDA increased, primarily driven by organic sales growth thatwas partially offset by increased marketing investments and a 53rd week of shipments (approximately 1.0 pp) in the prior period.Critical Accounting PoliciesNote 1, Background and Basis of Presentation, to the consolidated financial statements includes a summary of the significant accounting policies we used toprepare our consolidated financial statements. The following is a review of the more significant assumptions and estimates, as well as the accounting policieswe used to prepare our consolidated financial statements.Principles of Consolidation:The consolidated financial statements include The Kraft Heinz Company, as well as our wholly-owned and majority-owned subsidiaries. All intercompanytransactions are eliminated.Revenue Recognition:We recognize revenues when title and risk of loss pass to our customers. We record revenues net of consumer incentives and trade promotions and include allshipping and handling charges billed to customers. We also record provisions for estimated product returns and customer allowances as reductions torevenues within the same period that the revenue is recognized. We base these estimates principally on historical and current period experience factors.30Advertising, Consumer Incentives, and Trade Promotions:We promote our products with advertising, consumer incentives, and trade promotions. Consumer incentives and trade promotions include, but are notlimited to, discounts, coupons, rebates, performance based in-store display activities, and volume-based incentives. Consumer incentive and trade promotionactivities are recorded as a reduction to revenues based on amounts estimated as being due to customers and consumers at the end of a period. We base theseestimates principally on historical utilization, redemption rates, or current period experience factors. We review and adjust these estimates each quarter basedon actual experience and other information.Advertising expenses are recorded in selling, general and administrative expenses (“SG&A”). For interim reporting purposes, we charge advertising tooperations as a percentage of estimated full year sales activity and marketing costs. We review and adjust these estimates each quarter based on actualexperience and other information. We recorded advertising expenses of $629 million in 2017, $708 million in 2016, and $464 million in 2015.Goodwill and Intangible Assets:The carrying value of goodwill and indefinite-lived intangible assets was $98.5 billion at December 30, 2017 and $97.4 billion at December 31, 2016. Thesebalances are largely attributable to asset valuations performed in connection with the 2013 Merger and the 2015 Merger. See Note 2, Merger andAcquisition, and Note 7, Goodwill and Intangible Assets, for additional information.We test goodwill and indefinite-lived intangible assets for impairment at least annually in the second quarter or when a triggering event occurs. The first stepof the goodwill impairment test compares the reporting unit’s estimated fair value with its carrying value. If the carrying value of a reporting unit’s net assetsexceeds its fair value, the second step would be applied to measure the difference between the carrying value and implied fair value of goodwill. If thecarrying value of goodwill exceeds its implied fair value, the goodwill would be considered impaired and would be reduced to its implied fair value. We testindefinite-lived intangible assets for impairment by comparing the fair value of each intangible asset with its carrying value. If the carrying value exceeds fairvalue, the intangible asset would be considered impaired and would be reduced to fair value.We performed our annual impairment testing in the second quarter of 2017. No impairment of goodwill was reported as a result of our 2017 annual goodwillimpairment test. Each of our goodwill reporting units had excess fair value over its carrying value of at least 10% as of April 2, 2017 (our goodwillimpairment testing date). Additionally, as a result of our annual indefinite-lived intangible asset impairment tests, we recognized a non-cash impairment lossof $49 million in SG&A in 2017. This loss was due to continued declines in nutritional beverages in India. The loss was recorded in our Europe segment asthe related trademark is owned by our Italian subsidiary. Each of our other brands had excess fair value over its carrying value of at least 10% as of April 2,2017.Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. Estimating thefair value of individual reporting units and indefinite-lived intangible assets requires us to make assumptions and estimates regarding our future plans, aswell as industry and economic conditions. These assumptions and estimates include projected revenues and income growth rates, terminal growth rates,competitive and consumer trends, market-based discount rates, and other market factors. If current expectations of future growth rates are not met or marketfactors outside of our control, such as discount rates, change significantly, then one or more of our reporting units or intangible assets might become impairedin the future. Additionally, as goodwill and intangible assets associated with recently acquired businesses are recorded on the balance sheet at their estimatedacquisition date fair values, those amounts are more susceptible to an impairment risk if business operating results or macroeconomic conditions deteriorate.Definite-lived intangible assets are amortized on a straight-line basis over the estimated periods benefited, and are reviewed when appropriate for possibleimpairment.31Postemployment Benefit Plans:We maintain various retirement plans for the majority of our employees. These include pension benefits, postretirement health care benefits, and definedcontribution benefits. The cost of these plans is charged to expense over the working life of the covered employees. We generally amortize net actuarial gainsor losses in future periods within cost of products sold and SG&A.For our postretirement benefit plans, our 2018 health care cost trend rate assumption will be 6.7%. We established this rate based upon our most recentexperience as well as our expectation for health care trend rates going forward. We anticipate the weighted average assumed ultimate trend rate will be 4.9%.The year in which the ultimate trend rate is reached varies by plan, ranging between the years 2018 and 2030. Assumed health care cost trend rates have asignificant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have hadthe following effects, increase/(decrease) in cost and obligation, as of December 30, 2017 (in millions): One-Percentage-Point Increase (Decrease)Effect on annual service and interest cost$4 $(3)Effect on postretirement benefit obligation55 (47)Our 2018 discount rate assumption will be 3.6% for service cost and 3.0% for interest cost for our postretirement plans. Our 2018 discount rate assumptionwill be 3.8% for service cost and 3.3% for interest cost for our U.S. pension plans and 3.0% for service cost and 2.2% for interest cost for our non-U.S. pensionplans. We model these discount rates using a portfolio of high quality, fixed-income debt instruments with durations that match the expected future cashflows of the plans. Changes in our discount rates were primarily the result of changes in bond yields year-over-year.In 2016, we changed the method we use to estimate the service cost and interest cost components of net pension cost/(benefit) and net postretirement benefitplan costs resulting in a decrease to these cost components. We now use a full yield curve approach to estimate service cost and interest cost by applying thespecific spot rates along the yield curve used to determine the benefit obligation to the relevant projected cash flows. Previously, we estimated service costand interest cost using a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of theperiod. We made this change to provide a more precise measurement of service cost and interest cost by improving the correlation between projected benefitcash flows and the corresponding spot yield curve rates. This change will not affect the measurement of our total benefit obligations. We accounted for thischange prospectively as a change in accounting estimate.Our 2018 expected return on plan assets will be 4.4% (net of applicable taxes) for our postretirement plans. Our 2018 expected rate of return on plan assetswill be 5.5% for our U.S. pension plans and 4.5% for our non-U.S. pension plans. We determine our expected rate of return on plan assets from the plan assets’historical long-term investment performance, current and future asset allocation, and estimates of future long-term returns by asset class. We attempt tomaintain our target asset allocation by re-balancing between asset classes as we make contributions and monthly benefit payments.While we do not anticipate further changes in the 2018 assumptions for our U.S. and non-U.S. pension and postretirement benefit plans, as a sensitivitymeasure, a 100-basis point change in our discount rate or a 100-basis-point change in the expected rate of return on plan assets would have had the followingeffects, increase/(decrease) in cost (in millions): U.S. Plans Non-U.S. Plans 100-Basis-Point 100-Basis-Point Increase Decrease Increase DecreaseEffect of change in discount rate on pension costs$9 $(19) $8 $(21)Effect of change in expected rate of return on plan assets on pension costs(46) 46 (41) 41Effect of change in discount rate on postretirement costs(4) (9) — (1)Effect of change in expected rate of return on plan assets on postretirement costs(11) 11 — —32Income Taxes:We compute our annual tax rate based on the statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we earnincome. Significant judgment is required in determining our annual tax rate and in evaluating the uncertainty of our tax positions. We recognize a benefit fortax positions that we believe will more likely than not be sustained upon examination. The amount of benefit recognized is the largest amount of benefit thatwe believe has more than a 50% probability of being realized upon settlement. We regularly monitor our tax positions and adjust the amount of recognizedtax benefit based on our evaluation of information that has become available since the end of our last financial reporting period. The annual tax rate includesthe impact of these changes in recognized tax benefits. When adjusting the amount of recognized tax benefits, we do not consider information that hasbecome available after the balance sheet date, however we do disclose the effects of new information whenever those effects would be material to ourfinancial statements. Unrecognized tax benefits represent the difference between the amount of benefit taken or expected to be taken in a tax return and theamount of benefit recognized for financial reporting. These unrecognized tax benefits are recorded primarily within other liabilities on the consolidatedbalance sheets.We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. When assessing the need for valuationallowances, we consider future taxable income and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a changein judgment about the realizability of deferred tax assets in future years, we would adjust related valuation allowances in the period that the change incircumstances occurs, along with a corresponding increase or charge to income. The resolution of tax reserves and changes in valuation allowances could bematerial to our results of operations for any period but is not expected to be material to our financial position.U.S. Tax Reform significantly changed U.S. tax law by, among other things, lowering the federal corporate tax rate from 35.0% to 21.0%, effective January 1,2018, implementing a territorial tax system, and imposing a one-time toll charge on deemed repatriated earnings of foreign subsidiaries as of December 30,2017. In addition, there are many new provisions, including changes to bonus depreciation, the deduction for executive compensation and interest expense, atax on global intangible low-taxed income provisions (“GILTI”), the base erosion anti-abuse tax (“BEAT”), and a deduction for foreign-derived intangibleincome (“FDII”). The two material items that impacted us in 2017 were the corporate tax rate reduction and the one-time toll charge. While the corporate taxrate reduction is effective January 1, 2018, we accounted for this anticipated rate change in 2017, the period of enactment.The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides us with up to one year to finalize accounting for the impacts of U.S. TaxReform. When the initial accounting for U.S Tax Reform impacts is incomplete, we may include provisional amounts when reasonable estimates can be madeor continue to apply the prior tax law if a reasonable estimate cannot be made. We have estimated the provisional tax impacts related to the toll charge,certain components of the revaluation of deferred tax assets and liabilities, including depreciation and executive compensation, and the change in ourindefinite reinvestment assertion. As a result, we recognized a net tax benefit of approximately $7.0 billion, including a reasonable estimate of our deferredincome tax benefit of approximately $7.5 billion related to the corporate rate change, which was partially offset by a reasonable estimate of $312 million forthe toll charge and approximately $125 million for other tax expenses, including a change in our indefinite reinvestment assertion. We have elected toaccount for the tax on GILTI as a period cost and thus have not adjusted any of the deferred tax assets and liabilities of our foreign subsidiaries for U.S. TaxReform. The ultimate impact may differ from these provisional amounts due to gathering additional information to more precisely compute the amount oftax, changes in interpretations and assumptions, additional regulatory guidance that may be issued, and actions we may take. We expect to finalizeaccounting for the impacts of U.S. Tax Reform when the 2017 U.S. corporate income tax return is filed in 2018.In connection with U.S. Tax Reform, we have also reassessed our international investment assertions and no longer consider the historic earnings of ourforeign subsidiaries as of December 30, 2017 to be indefinitely reinvested. We have made a reasonable estimate of local country withholding taxes thatwould be owed when our historic earnings are distributed. As a result, we have recorded deferred income taxes of $96 million on approximately $1.2 billionof historic earnings.New Accounting PronouncementsSee Note 1, Background and Basis of Presentation, to the consolidated financial statements for a discussion of new accounting pronouncements.ContingenciesSee Note 15, Commitments and Contingencies, to the consolidated financial statements for a discussion of our contingencies.33Commodity TrendsWe purchase and use large quantities of commodities, including dairy products, meat products, coffee beans, nuts, tomatoes, potatoes, soybean and vegetableoils, sugar and other sweeteners, corn products, and wheat to manufacture our products. In addition, we purchase and use significant quantities of resins,metals, and cardboard to package our products and natural gas to operate our facilities. We continuously monitor worldwide supply and cost trends of thesecommodities.We define our key commodities in the United States and Canada as dairy, meat, coffee, and nuts. In 2017, we experienced cost increases in our keycommodities, including dairy, meat, and coffee, while costs for nuts were flat. We manage commodity cost volatility primarily through pricing and riskmanagement strategies. As a result of these risk management strategies, our commodity costs may not immediately correlate with market price trends.Dairy commodities, primarily milk and cheese, are the most significant cost components of our cheese products. We purchase our dairy raw materialrequirements from independent third parties, such as agricultural cooperatives and independent processors. Market supply and demand, as well asgovernment programs, significantly influence the prices for milk and other dairy products. Significant cost components in our meat business include pork,beef, and poultry, which we primarily purchase from applicable local markets. Livestock feed costs and the global supply and demand for U.S. meatsinfluence the prices of these meat products. The most significant cost component of our coffee products is coffee beans, which we purchase on global markets.Quality and availability of supply, currency fluctuations, and consumer demand for coffee products impact coffee bean prices. The most significant costcomponents in our nut products include peanuts, cashews, and almonds, which we purchase on both domestic and global markets, where global marketsupply and demand is the primary driver of prices.Liquidity and Capital ResourcesWe believe that cash generated from our operating activities, securitization programs, commercial paper programs, and Senior Credit Facility (as definedbelow) will provide sufficient liquidity to meet our working capital needs, restructuring expenditures, planned capital expenditures, contributions to ourpostemployment benefit plans, future contractual obligations (including repayments of long-term debt), and payment of our anticipated quarterly commonstock dividends. We intend to use our cash on hand and our commercial paper programs for daily funding requirements. Overall, we do not expect anynegative effects on our funding sources that would have a material effect on our short-term or long-term liquidity.Cash Flow Activity for 2017 compared to 2016:Net Cash Provided by/Used for Operating Activities:Net cash provided by operating activities was $527 million for the year ended December 30, 2017 compared to $2.6 billion for the year ended December 31,2016. The decrease in cash provided by operating activities was primarily driven by the $1.2 billion pre-funding of our postretirement benefit plans in 2017,lower collections on receivables as more were non-cash exchanged for sold receivables, favorable changes in accounts payable from vendor payment termrenegotiations that were less pronounced than the prior year, and increased cash payments of employee bonuses in 2017. The decrease in cash provided byoperating activities was partially offset by lower cash payments for income taxes in 2017 driven by our pre-funding of postretirement plan benefits followingU.S. Tax Reform enactment on December 22, 2017.Net Cash Provided by/Used for Investing Activities:Net cash provided by investing activities was $1.2 billion for the year ended December 30, 2017 compared to $1.5 billion for the year ended December 31,2016. The decrease in cash provided by investing activities was primarily due to lower cash inflows from our accounts receivable securitization and factoringprograms, as well as lower proceeds from cash settlements on net investment hedges. Capital expenditures were flat in 2017 compared to 2016. We expect2018 capital expenditures to be approximately $850 million. The expected decrease is primarily attributed to the wind-up of footprint costs in the U.S. andCanada related to our Integration Program.Net Cash Provided by/Used for Financing Activities:Net cash used for financing activities was $4.2 billion for the year ended December 30, 2017 compared to $4.6 billion for the year ended December 31, 2016.The decrease was driven by the benefit of fewer dividend payments in 2017 compared to 2016, which more than offset higher net repayments of long-termdebt and commercial paper in 2017 compared to 2016, including cash outflows associated with the redemption of our Series A Preferred Stock in 2016.Dividend payments were lower in 2017 compared to 2016 due to the absence of the Series A Preferred Stock dividend and the impact of four common stockcash distributions in 2017 compared to five such distributions in 2016. See Equity and Dividends for additional information on cash distributions related tocommon stock and Series A Preferred Stock.34Cash Flow Activity for 2016 compared to 2015:Net Cash Provided by/Used for Operating Activities:Net cash provided by operating activities was $2.6 billion in 2016 compared to $1.3 billion in 2015. The increase in cash provided by operating activitieswas primarily due to an increase in operating income as a result of the 2015 Merger, as well as favorable changes in accounts payable due to payment termextensions from vendor renegotiations. The increase in cash provided by operating activities was partially offset by lower collections on receivables as morewere non-cash exchanged for sold receivables, as well as unfavorable changes in other current liabilities, and to a lesser degree, inventories. The change inother current liabilities was primarily driven by increased payments in 2016 related to income taxes.Net Cash Provided by/Used for Investing Activities:Net cash provided by investing activities was $1.5 billion in 2016 compared to net cash used for investing activities of $8.3 billion in 2015. The change wasprimarily driven by increased cash inflows from our accounts receivable securitization and factoring programs, partially offset by an increase in capitalexpenditures and lower proceeds from cash settlements on net investment hedges. Capital expenditures increased to $1.2 billion in 2016 primarily due tointegration and restructuring activities in the United States. The change also reflected cash paid to acquire Kraft in 2015. See Note 2, Merger and Acquisition,to the consolidated financial statements for additional information on the 2015 Merger.Net Cash Provided by/Used for Financing Activities:Net cash used for financing activities was $4.6 billion in 2016 compared to net cash provided by financing activities of $10.0 billion in 2015. This decreasein cash provided by financing activities was primarily driven by proceeds of $10.0 billion from our issuance of common stock to the Sponsors in connectionwith the 2015 Merger, the Series A Preferred Stock redemption in June 2016, and the impact of five common stock cash distributions in 2016 compared totwo such cash distributions in 2015. The decrease in cash provided by financing activities was partially offset by net proceeds from our long-term debtissuances in May 2016 and net proceeds from our issuance of commercial paper, which were our primary sources of funding for the Series A Preferred Stockredemption. Additionally, in the prior year we had a benefit from proceeds from the issuance of long-term debt, which were largely offset by repayments oflong-term debt. Our cash used for financing activities in 2016 also reflected the impact of one cash distribution related to our Series A Preferred Stock in 2016compared to five such cash distributions in 2015. See Equity and Dividends within this item for additional information on cash distributions related tocommon stock and Series A Preferred Stock.Cash Held by International Subsidiaries:Of the $1.6 billion cash and cash equivalents on our consolidated balance sheet at December 30, 2017, $1.1 billion was held by international subsidiaries.In the future, we could repatriate up to approximately $6.5 billion of international cash to the U.S. without incurring any additional significant income taxexpense. Our approximately $5.0 billion of unremitted historic earnings of our foreign subsidiaries was taxed via the U.S. Tax Reform toll charge in 2017. Inconnection with U.S. Tax Reform, we have also reassessed our international investment assertions and no longer consider these earnings to be indefinitelyreinvested. We have made a reasonable estimate of local country withholding taxes that would be owed when our historic earnings are distributed. As a result,we have recorded an estimate of $96 million related to deferred income taxes to reflect local country withholding taxes that will be owed when this cash isdistributed. The remaining amount of up to approximately $1.5 billion represents intercompany loans and previously taxed income which could berepatriated to the U.S. without incurring any additional significant income tax expense.Total Debt:In 2017, we obtained funding through our U.S. and European commercial paper programs. As of December 30, 2017, we had $448 million of commercialpaper outstanding, with a weighted average interest rate of 1.541%. As of December 31, 2016, we had $642 million of commercial paper outstanding, with aweighted average interest rate of 1.074%. The maximum amount of commercial paper outstanding during the year ended December 30, 2017 was $1.2billion.We maintain our $4.0 billion senior unsecured revolving credit facility (the “Senior Credit Facility”). Subject to certain conditions, we may increase theamount of revolving commitments and/or add additional tranches of term loans in a combined aggregate amount of up to $1.0 billion. Our Senior CreditFacility contains customary representations, covenants, and events of default. No amounts were drawn on our Senior Credit Facility at December 30, 2017, atDecember 31, 2016, or during the years ended December 30, 2017, December 31, 2016, and January 3, 2016.In August 2017, we repaid $600 million aggregate principal amount of our previously outstanding senior unsecured loan facility (the “Term Loan Facility”).Accordingly, there were no amounts outstanding on the Term Loan Facility at December 30, 2017. At December 31, 2016, $600 million aggregate principalamount of our Term Loan Facility was outstanding.35Our long-term debt, including the current portion, was $31.1 billion at December 30, 2017 and $31.8 billion at December 31, 2016. The decrease in long-term debt was primarily due to our June 2017 repayment of approximately $2.0 billion aggregate principal amount of senior notes that matured in the periodand our August 2017 repayment of the $600 million aggregate principal amount Term Loan Facility. The decrease was partially offset by approximately $1.5billion aggregate principal amount of long-term debt issued in August 2017. Our long-term debt contains customary representations, covenants, and eventsof default. We were in compliance with all such covenants at December 30, 2017. See Note 16, Debt, to the consolidated financial statements for additionalinformation.We have approximately $2.5 billion aggregate principal amount and $C200 million aggregate principal amount of senior notes that will mature in the thirdquarter of 2018. We expect to fund these long-term debt repayments primarily with new long-term debt issuances, cash on hand, and cash generated from ouroperating activities.Off-Balance Sheet Arrangements and Aggregate Contractual ObligationsOff-Balance Sheet Arrangements:We do not have guarantees or other off-balance sheet financing arrangements that we believe are reasonably likely to have a current or future effect on ourfinancial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources.See Note 14, Financing Arrangements, to the consolidated financial statements for a discussion of our accounts receivable securitization and factoringprograms and other financing arrangements.Aggregate Contractual Obligations:The following table summarizes our contractual obligations at December 30, 2017 (in millions): Payments Due 2018 2019-2020 2021-2022 2023 andThereafter TotalLong-term debt(a)3,939 5,653 6,200 32,779 48,571Capital leases(b)35 34 64 1 134Operating leases(c)103 164 99 165 531Purchase obligations(d)1,558 1,251 446 439 3,694Other long-term liabilities(e)80 106 94 280 560Total5,715 7,208 6,903 33,664 53,490(a) Amounts represent the expected cash payments of our long-term debt, including interest on variable and fixed rate long-term debt. Interest on variable rate long-term debt iscalculated based on interest rates at December 30, 2017.(b) Amounts represent the expected cash payments of our capital leases, including expected cash payments of interest expense.(c)Operating leases represent the minimum rental commitments under non-cancelable operating leases.(d)We have purchase obligations for materials, supplies, property, plant and equipment, and co-packing, storage and distribution services based on projected needs to be utilized in thenormal course of business. Other purchase obligations include commitments for marketing, advertising, capital expenditures, information technology, and professional services.Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, andapproximate timing of the transaction. A few of these obligations are long-term and are based on minimum purchase requirements. Certain purchase obligations contain variablepricing components, and, as a result, actual cash payments are expected to fluctuate based on changes in these variable components. Due to the proprietary nature of some of ourmaterials and processes, certain supply contracts contain penalty provisions for early terminations. We do not believe that a material amount of penalties is reasonably likely to beincurred under these contracts based upon historical experience and current expectations. We exclude amounts reflected on the consolidated balance sheet as accounts payable andaccrued liabilities from the table above.(e) Other long-term liabilities primarily consist of estimated payments for the one-time toll charge related to U.S. tax reform, as well as postretirement benefit commitments. Certainother long-term liabilities related to income taxes, insurance accruals, and other accruals included on the consolidated balance sheet are excluded from the above table as we areunable to estimate the timing of payments for these items. Future payments related to other long-term liabilities decreased primarily due to payments of $1.2 billion in 2017 to pre-fund a portion of our U.S. postretirement plan benefits. See Note 10, Postemployment Benefits, to the consolidated financial statements for additional information.During the second quarter of 2016, we redeemed all outstanding shares of our Series A Preferred Stock, therefore we no longer pay Series A Preferred Stockdividends. See Note 17, Capital Stock, to the consolidated financial statements for additional information.36Pension plan contributions were $330 million in 2017. We estimate that 2018 pension plan contributions will be approximately $50 million. Beyond 2018,we are unable to reliably estimate the timing of contributions to our pension plans. Our actual contributions and plans may change due to many factors,including the timing of regulatory approval for the windup of certain non-U.S. pension plans, 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. As such, estimated pensionplan contributions for 2018 have been excluded from the above table.Postretirement benefit plan contributions were $1.3 billion in 2017, including payments of $1.2 billion to pre-fund a portion of our U.S. postretirement planbenefits following enactment of U.S. Tax Reform on December 22, 2017. We estimate that 2018 postretirement benefit plan contributions will beapproximately $15 million. Beyond 2018, we are unable to reliably estimate the timing of contributions to our postretirement benefit plans. Our actualcontributions 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. As such, estimated postretirementbenefit plan contributions for 2018 have been excluded from the above table.At December 30, 2017, the amount of net unrecognized tax benefits for uncertain tax positions, including an accrual of related interest and penalties alongwith positions only impacting the timing of tax benefits, was approximately $428 million. The timing of payments will depend on the progress ofexaminations with tax authorities. We do not expect a significant tax payment related to these obligations within the next year. We are unable to make areasonably reliable estimate as to if or when any significant cash settlements with taxing authorities may occur; therefore, we have excluded the amount ofnet unrecognized tax benefits from the above table.Equity and DividendsSeries A Preferred Stock Dividends:On June 7, 2016, we redeemed all outstanding shares of our Series A Preferred Stock. Accordingly, we no longer pay any associated dividends, and there wereno such dividend payments in 2017.Prior to the redemption, we made cash distributions of $180 million in the second quarter of 2016 compared to $900 million in 2015. Our Series A PreferredStock entitled holders to a 9.00% annual dividend, to be paid in four dividends, in arrears on each March 7, June 7, and December 7, in cash. In 2015, therewere five dividend payments because, concurrent with the declaration of our common stock dividend on December 8, 2015, we also declared and paid theSeries A Preferred Stock dividend that would otherwise have been payable on March 7, 2016. Accordingly, there were no cash distributions related to ourSeries A Preferred Stock in the first quarter of 2016, resulting in only one dividend payment in 2016 prior to redemption.See Note 17, Capital Stock, to the consolidated financial statements for a discussion of the Series A Preferred Stock.Common Stock Dividends:We paid common stock dividends of $2.9 billion in 2017, $3.6 billion in 2016, and $1.3 billion in 2015. Additionally, on February 16, 2018, our Board ofDirectors declared a cash dividend of $0.625 per share of common stock, which is payable on March 23, 2018 to shareholders of record on March 9, 2018.The declaration of dividends is subject to the discretion of our Board of Directors and depends on various factors, including our net income, financialcondition, cash requirements, future prospects, and other factors that our Board of Directors deems relevant to its analysis and decision making.37Supplemental Unaudited Pro Forma Condensed Combined Financial InformationThe following unaudited pro forma condensed combined financial information is presented to illustrate the estimated effects of the 2015 Merger, which wasconsummated on July 2, 2015, and the related equity investments, based on the historical results of operations of Heinz and Kraft. See Note 1, Backgroundand Basis of Presentation, and Note 2, Merger and Acquisition, to the consolidated financial statements for additional information on the 2015 Merger.The following unaudited pro forma condensed combined statements of income for the year ended January 3, 2016 is based on the historical financialstatements of Heinz and Kraft after giving effect to the 2015 Merger, related equity investments, and the assumptions and adjustments described in theaccompanying notes to this unaudited pro forma condensed combined statement of income.The Kraft Heinz statement of income information for the year ended January 3, 2016 was derived from the consolidated financial statements includedelsewhere in this Form 10-K. The historical Kraft statement of income includes information for the six months ended June 27, 2015 derived from Kraft’sunaudited condensed consolidated financial statements included in our Current Report on Form 8-K filed with the SEC on July 7, 2016 and information forthe period from June 27, 2015 to July 2, 2015 derived from Kraft’s books and records.The unaudited pro forma condensed combined statements of income are presented as if the 2015 Merger had been consummated on December 30, 2013, thefirst business day of our 2014 fiscal year, and combine the historical results of Heinz and Kraft. This is consistent with internal management reporting. Theunaudited pro forma condensed combined statements of income set forth below primarily give effect to the following assumptions and adjustments:•Application of the acquisition method of accounting;•The issuance of Heinz common stock to the Sponsors in connection with the equity investments;•The pre-closing Heinz share conversion;•The exchange of one share of Kraft Heinz common stock for each share of Kraft common stock; and•Conformance of accounting policies.The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting, which requires, among otherthings, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the completion of the acquisition. Weutilized estimated fair values at the 2015 Merger Date to allocate the total consideration exchanged to the net tangible and intangible assets acquired andliabilities assumed. This allocation was final as of July 3, 2016.The unaudited pro forma condensed combined financial information has been prepared in accordance with SEC Regulation S-X Article 11 and is notnecessarily indicative of the results of operations that would have been realized had the transactions been completed as of the dates indicated, nor are theymeant to be indicative of our anticipated combined future results. In addition, the accompanying unaudited pro forma condensed combined statements ofincome do not reflect any additional anticipated synergies, operating efficiencies, cost savings, or any integration costs that may result from the 2015 Merger.The historical consolidated financial information has been adjusted in the accompanying unaudited pro forma condensed combined statements of income togive effect to unaudited pro forma events that are (1) directly attributable to the transaction, (2) factually supportable and (3) are expected to have acontinuing impact on the results of operations of the combined company. As a result, under SEC Regulation S-X Article 11, certain expenses such as dealcosts and non-cash costs related to the fair value step-up of inventory (“Inventory Step-up Costs”), if applicable, are eliminated from pro forma results in theperiods presented. In contrast, under the ASC 805 presentation in Note 2, Merger and Acquisition, to the consolidated financial statements, these expensesare required to be included in prior year pro forma results.The unaudited pro forma condensed combined financial information, including the related notes, should be read in conjunction with the historicalconsolidated financial statements and related notes of Kraft, and with our consolidated financial statements included elsewhere in this Form 10-K. Thehistorical SEC filings of Kraft are available to the public at the SEC’s website at www.sec.gov.38The Kraft Heinz CompanyPro Forma Condensed Combined Statements of IncomeFor the Year Ended January 3, 2016(in millions, except per share data)(Unaudited) Kraft Heinz Historical Kraft Pro FormaAdjustments Pro FormaNet sales$18,338 $9,109 $— $27,447Cost of products sold12,577 6,103 (381) 18,299Gross profit5,761 3,006 381 9,148Selling, general and administrative expenses3,122 1,532 (41) 4,613Operating income2,639 1,474 422 4,535Interest expense1,321 247 (40) 1,528Other expense/(income), net305 (16) — 289Income/(loss) before income taxes1,013 1,243 462 2,718Provision for/(benefit from) income taxes366 400 178 944Net income/(loss)647 843 284 1,774Net income/(loss) attributable to noncontrolling interest13 — — 13Net income/(loss) attributable to Kraft Heinz634 843 284 1,761Preferred dividends900 — — 900Net income/(loss) attributable to common shareholders$(266) $843 $284 $861 Basic common shares outstanding786 — 416 1,202Diluted common shares outstanding786 — 436 1,222 Per share data applicable to common shareholders: Basic earnings/(loss)$(0.34) $— $1.06 $0.72Diluted earnings/(loss)(0.34) — 1.04 0.7039The Kraft Heinz CompanySummary of Pro Forma Adjustments(in millions)(Unaudited) January 3,2016(53 weeks)Impact to cost of products sold: Postemployment benefit costs(a)$(34)Inventory step-up(b)(347)Impact to cost of products sold$(381) Impact to selling, general and administrative expenses: Depreciation and amortization(c)$84Compensation expense(d)31Postemployment benefit costs(a)11Deal costs(e)(167)Impact to selling, general and administrative expenses$(41) Impact to interest expense: Interest expense(f)$(40)Impact to interest expense$(40)Adjustments included in the accompanying unaudited pro forma condensed combined statements of income are as follows:(a)Represents the change to align Kraft's accounting policy to our accounting policy for postemployment benefit plans. Kraft historically elected a mark-to-market accounting policyand recognized net actuarial gains or losses and changes in the fair value of plan assets immediately in earnings upon remeasurement. Our policy is to initially record such items inother comprehensive income/(loss). Also represents the elimination of Kraft’s historical amortization of postemployment benefit plan prior service credits.(b)Represents the elimination of nonrecurring non-cash costs related to the fair value adjustment of Kraft’s inventory. See Note 2, Merger and Acquisition, to the consolidatedfinancial statements for additional information on the determination of fair values.(c)Represents incremental amortization resulting from the fair value adjustment of Kraft’s definite-lived intangible assets in connection with the 2015 Merger. The net change indepreciation expense resulting from the fair value adjustment of property, plant, and equipment was insignificant. See Note 2, Merger and Acquisition, to the consolidatedfinancial statements for additional information on the determination of fair values.(d)Represents the incremental compensation expense due to the fair value remeasurement of certain of Kraft’s equity awards in connection with the 2015 Merger. See Note 9,Employees’ Stock Incentive Plans, to the consolidated financial statements for additional information on the conversion of Kraft’s equity awards in connection with the 2015Merger.(e)Represents the elimination of non-recurring deal costs incurred in connection with the 2015 Merger.(f)Represents the incremental change in interest expense resulting from the fair value adjustment of Kraft’s long-term debt in connection with the 2015 Merger, including theelimination of the historical amortization of deferred financing fees and amortization of original issuance discount.We calculated the income tax effect of the pro forma adjustments using a 38.5% weighted average statutory tax rate for the periods presented.Additionally, for 2015, we calculated the unaudited pro forma weighted average number of basic shares outstanding by adding the Kraft Heinz weightedaverage number of basic shares outstanding (which included the Sponsors' shares and the converted Kraft shares weighted for the period from the 2015Merger through the year ended January 3, 2016) and the Sponsors' shares (as converted) and the converted Kraft shares (both weighted from the beginning ofthe year through the 2015 Merger Date). We calculated the unaudited pro forma weighted average number of diluted shares outstanding by adding the effectof dilutive securities to the unaudited pro forma weighted average number of basic shares outstanding, including dilutive securities related to Kraft Heinz.The Kraft Heinz diluted EPS calculation did not include these securities as Kraft Heinz was in a net loss position and such securities were anti-dilutive.40Non-GAAP Financial MeasuresThe non-GAAP financial measures we provide in this report should be viewed in addition to, and not as an alternative for, results prepared in accordance withaccounting principles generally accepted in the United States of America (“U.S. GAAP”).To supplement the consolidated financial statements prepared in accordance with U.S. GAAP, we have presented Organic Net Sales, Adjusted EBITDA, andAdjusted EPS, which are considered non-GAAP financial measures. The non-GAAP financial measures presented may differ from similarly titled non-GAAPfinancial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way. These measuresare not substitutes for their comparable U.S. GAAP financial measures, such as net sales, net income/(loss), diluted earnings per common share (“EPS”), orother measures prescribed by U.S. GAAP, and there are limitations to using non-GAAP financial measures.Management uses these non-GAAP financial measures to assist in comparing our performance on a consistent basis for purposes of business decision makingby removing the impact of certain items that management believes do not directly reflect our underlying operations. Management believes that presentingour non-GAAP financial measures (i.e., Organic Net Sales, Adjusted EBITDA, and Adjusted EPS) is useful to investors because it (i) provides investors withmeaningful supplemental information regarding financial performance by excluding certain items, (ii) permits investors to view performance using the sametools that management uses to budget, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplementalinformation that may be useful to investors in evaluating our results. We believe that the presentation of these non-GAAP financial measures, whenconsidered together with the corresponding U.S. GAAP financial measures and the reconciliations to those measures, provides investors with additionalunderstanding of the factors and trends affecting our business than could be obtained absent these disclosures.Organic Net Sales is defined as net sales excluding, when they occur, the impact of acquisitions, currency, divestitures, and a 53rd week of shipments. Wecalculate the impact of currency on net sales by holding exchange rates constant at the previous year’s exchange rate, with the exception of Venezuelafollowing our June 28, 2015 currency devaluation, for which we calculate the previous year’s results using the current year’s exchange rate. Organic Net Salesfor any period prior to the 2015 Merger Date includes the operating results of Kraft on a pro forma basis, as if Kraft had been acquired as of December 30,2013. Organic Net Sales is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact ofcertain items that management believes do not directly reflect our underlying operations.Adjusted EBITDA is defined as net income/(loss) from continuing operations before interest expense, other expense/(income), net, and provision for/(benefitfrom) income taxes; in addition to these adjustments, we exclude, when they occur, the impacts of depreciation and amortization (excluding integration andrestructuring expenses; including amortization of postretirement benefit plans prior service credits), 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). Adjusted EBITDA for anyperiod prior to the 2015 Merger Date includes the operating results of Kraft on a pro forma basis, as if Kraft had been acquired as of December 30, 2013.Adjusted EBITDA is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certainitems that management believes do not directly reflect our 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 anaccrual basis. Adjusted EPS for any period prior to the 2015 Merger Date includes the operating results of Kraft on a pro forma basis, as if Kraft had beenacquired as of December 30, 2013. We believe Adjusted EPS provides important comparability of underlying operating results, allowing investors andmanagement to assess operating performance on a consistent basis.41The Kraft Heinz CompanyReconciliation of Net Sales to Organic Net Sales(dollars in millions)(Unaudited) Net Sales Impact of Currency Organic Net Sales Price Volume/Mix2017 (52 weeks) United States$18,353 $— $18,353 Canada2,190 42 2,148 Europe2,393 8 2,385 Rest of World3,296 13 3,283 $26,232 $63 $26,169 2016 (52 weeks) United States$18,641 $— $18,641 Canada2,309 — 2,309 Europe2,366 — 2,366 Rest of World3,171 55 3,116 $26,487 $55 $26,432 Year-over-year growth rates United States(1.5)% 0.0 pp (1.5)% 0.4 pp (1.9) ppCanada(5.2)% 1.8 pp (7.0)% (1.7) pp (5.3) ppEurope1.1 % 0.3 pp 0.8 % (0.9) pp 1.7 ppRest of World3.9 % (1.5) pp 5.4 % 4.6 pp 0.8 ppKraft Heinz(1.0)% 0.0 pp (1.0)% 0.5 pp (1.5) pp42The Kraft Heinz CompanyReconciliation of Pro Forma Net Sales to Organic Net Sales(dollars in millions)(Unaudited) Pro Forma NetSales(a) Impact ofCurrency Impact ofDivestitures Impact of 53rdWeek Organic Net Sales Price Volume/Mix2016 (52 weeks) United States$18,641 $— $— $— $18,641 Canada2,309 (84) — — 2,393 Europe2,366 (154) — — 2,520 Rest of World3,171 (92) — — 3,263 $26,487 $(330) $— $— $26,817 2015 (53 weeks) United States$18,932 $— $— $233 $18,699 Canada2,386 — — 27 2,359 Europe2,657 — 42 27 2,588 Rest of World3,472 351 — 39 3,082 $27,447 $351 $42 $326 $26,728 Year-over-year growth rates United States(1.5)% 0.0 pp 0.0 pp (1.2) pp (0.3)% 0.2 pp (0.5) ppCanada(3.2)% (3.5) pp 0.0 pp (1.1) pp 1.4 % 0.6 pp 0.8 ppEurope(11.0)% (5.8) pp (1.6) pp (1.0) pp (2.6)% (2.5) pp (0.1) ppRest of World(8.7)% (13.2) pp 0.0 pp (1.4) pp 5.9 % 3.2 pp 2.7 ppKraft Heinz(3.5)% (2.5) pp (0.1) pp (1.2) pp 0.3 % 0.3 pp 0.0 pp(a)There were no pro forma adjustments for 2016, as Kraft and Heinz were a combined company for the entire period. See the Supplemental Unaudited Pro Forma CondensedCombined Financial Information at the end of this item.43The Kraft Heinz CompanyReconciliation of Pro Forma Net Income/(Loss) to Adjusted EBITDA(in millions)(Unaudited) December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Pro forma net income/(loss)(a)$10,990 $3,642 $1,774Interest expense1,234 1,134 1,528Other expense/(income), net9 (15) 289Provision for/(benefit from) income taxes(5,460) 1,381 944Operating income6,773 6,142 4,535Depreciation and amortization (excluding integration and restructuring expenses)583 536 779Integration and restructuring expenses457 1,012 1,117Merger costs— 30 194Unrealized losses/(gains) on commodity hedges19 (38) (41)Impairment losses49 53 58Losses/(gains) on sale of business— — (21)Nonmonetary currency devaluation— 4 57Equity award compensation expense (excluding integration and restructuring expenses)49 39 61Adjusted EBITDA$7,930 $7,778 $6,739(a)There were no pro forma adjustments for 2017 or 2016, as Kraft and Heinz were a combined company for these periods. See the Supplemental Unaudited Pro Forma CondensedCombined Financial Information at the end of this item.44The Kraft Heinz CompanyReconciliation of Pro Forma Diluted EPS to Adjusted EPS(Unaudited) December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Pro forma diluted EPS(a)$8.95 $2.81 $0.70Integration and restructuring expenses(b)(c)0.26 0.57 0.61Merger costs(b)(d)— 0.02 0.49Unrealized losses/(gains) on commodity hedges(b)(c)0.01 (0.02) (0.02)Impairment losses(b)(c)0.03 0.03 0.03Losses/(gains) on sale of business(b)(c)— — (0.01)Nonmonetary currency devaluation(b)(e)0.03 0.02 0.24Preferred dividend adjustment(f)— (0.10) 0.15U.S. Tax Reform(g)(5.73) — —Adjusted EPS$3.55 $3.33 $2.19(a)There were no pro forma adjustments for 2017 or 2016, as Kraft and Heinz were a combined company for these periods. See the Supplemental Unaudited Pro Forma CondensedCombined Financial Information at the end of this item.(b)Income tax expense associated with these items is based on applicable jurisdictional tax rates and deductibility assessments of individual items.(c)Refer to the reconciliation of pro forma net income/(loss) to Adjusted EBITDA for the related gross expenses.(d)Merger costs included the following gross expenses:•Expenses recorded in cost of products sold were $2 million in 2016 and $6 million in 2015 (there were no such expenses in 2017);•Expenses recorded in SG&A were $28 million in 2016 and $188 million in 2015 (there were no such expenses in 2017);•Expenses recorded in interest expense were $466 million in 2015 (there were no such expenses in 2017 or 2016); and,•Expenses recorded in other expense/(income), net, were $144 million in 2015 (there were no such expenses in 2017 or 2016).(e)Nonmonetary currency devaluation included the following gross expenses: •Expenses recorded in cost of products sold were $4 million in 2016 and $57 million in 2015 (there were no such expenses in 2017); and•Expenses recorded in other expense/(income), net, were $36 million in 2017, $24 million in 2016, and $234 million in 2015.(f) For Adjusted EPS, we present the impact of the Series A Preferred Stock dividend payments on an accrual basis. Accordingly, we included adjustments to EPS to exclude $180million of Series A Preferred Stock dividends from the fourth quarter of 2015 (to reflect the March 7, 2016 Series A Preferred Stock dividend that was paid in December 2015), toinclude such $180 million Series A Preferred Stock dividend payment in the first quarter of 2016, and to exclude $51 million of Series A Preferred Stock dividends from thesecond quarter of 2016 (to reflect that it was redeemed on June 7, 2016).(g)U.S. Tax Reform included a tax benefit of $7.0 billion in 2017 related to enactment of the Tax Cuts and Jobs Act by the U.S. government on December 22, 2017. There were nosuch expenses in 2016 or 2015. See Overview at the beginning of this item for additional information.45Item 7A. Quantitative and Qualitative Disclosures About Market Risk.We are exposed to market risks from adverse changes in commodity prices, foreign exchange rates, interest rates, and production costs. We monitor andmanage these exposures as part of our overall risk management program. Our risk management program focuses on the unpredictability of financial marketsand seeks to reduce the potentially adverse effects that volatility in these markets may have on our operating results. We maintain risk management policiesthat principally use derivative financial instruments to reduce significant, unanticipated fluctuations in earnings and cash flows that may arise fromvariations in commodity prices, foreign currency exchange rates, and interest rates. See Note 1, Background and Basis of Presentation, and Note11, Financial Instruments, to the consolidated financial statements for details of our market risk management policies and the financial instruments used tohedge those exposures.By policy, we do not engage in speculative or leveraged transactions, nor do we hold or issue financial instruments for trading purposes.Effect of Hypothetical 10% Fluctuation in Market Prices: The potential gain or loss on the fair value of our outstanding commodity contracts, foreign exchange contracts, cross-currency, and swap contracts, assuminga hypothetical 10% fluctuation in commodity prices, currency rates, and swap rates, would be (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks)Commodity contracts$23 $39Foreign currency contracts173 179Cross-currency swap contracts287 306It should be noted that any change in the fair value of the contracts, real or hypothetical, would be significantly offset by an inverse change in the value ofthe underlying hedged items. In relation to foreign currency contracts, this hypothetical calculation assumes that each exchange rate would change in thesame direction relative to the U.S. dollar. Our utilization of financial instruments in managing market risk exposures described above is consistent with theprior year. Changes in our portfolio of financial instruments are a function of our results of operations, debt repayment and debt issuances, market effects ondebt and foreign currency, and our acquisition and divestiture activities.46Item 8. Financial Statements and Supplementary Data.Report of Independent Registered Public Accounting FirmTo the Shareholders and Board of Directors of The Kraft Heinz CompanyOpinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of The Kraft Heinz Company and its subsidiaries as of December 30, 2017 and December 31,2016, and the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period endedDecember 30, 2017, including the related notes and the financial statement schedule listed in the index appearing under Item 15(a) (collectively referred to asthe “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 30, 2017, based oncriteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 30, 2017 and December 31, 2016, and the results of their operations and their cash flows for each of the three years in the period ended December30, 2017 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in allmaterial respects, effective internal control over financial reporting as of December 30, 2017, based on criteria established in Internal Control - IntegratedFramework (2013) issued by the COSO.Change in Accounting PrincipleAs discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it presents cash receipts relating to beneficialinterests obtained in securitized trade receivables in 2017.Basis for OpinionsThe Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, andfor its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over FinancialReporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company'sinternal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting OversightBoard (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internalcontrol over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financialstatements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internalcontrol over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.47Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPChicago, IllinoisFebruary 16, 2018We have served as the Company’s or its predecessor’s auditor since 1979.48The Kraft Heinz CompanyConsolidated Statements of Income(in millions, except per share data) December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Net sales$26,232 $26,487 $18,338Cost of products sold16,529 16,901 12,577Gross profit9,703 9,586 5,761Selling, general and administrative expenses2,930 3,444 3,122Operating income6,773 6,142 2,639Interest expense1,234 1,134 1,321Other expense/(income), net9 (15) 305Income/(loss) before income taxes5,530 5,023 1,013Provision for/(benefit from) income taxes(5,460) 1,381 366Net income/(loss)10,990 3,642 647Net income/(loss) attributable to noncontrolling interest(9) 10 13Net income/(loss) attributable to Kraft Heinz10,999 3,632 634Preferred dividends— 180 900Net income/(loss) attributable to common shareholders$10,999 $3,452 $(266)Per share data applicable to common shareholders: Basic earnings/(loss)$9.03 $2.84 $(0.34)Diluted earnings/(loss)8.95 2.81 (0.34)Dividends declared2.45 2.35 1.70See accompanying notes to the consolidated financial statements.49The Kraft Heinz CompanyConsolidated Statements of Comprehensive Income(in millions) December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Net income/(loss)$10,990 $3,642 $647Other comprehensive income/(loss), net of tax: Foreign currency translation adjustments1,184 (986) (1,604)Net deferred gains/(losses) on net investment hedges(353) 226 506Net actuarial gains/(losses) arising during the period69 (40) 23Prior service credits/(costs) arising during the period17 97 923Reclassification of net postemployment benefit losses/(gains)(309) (207) (85)Net deferred gains/(losses) on cash flow hedges(113) 46 (6)Net deferred losses/(gains) on cash flow hedges reclassified to net income85 (87) 120Total other comprehensive income/(loss)580 (951) (123)Total comprehensive income/(loss)11,570 2,691 524Comprehensive income/(loss) attributable to noncontrolling interest(3) 16 (13)Comprehensive income/(loss) attributable to Kraft Heinz$11,573 $2,675 $537See accompanying notes to the consolidated financial statements.50The Kraft Heinz CompanyConsolidated Balance Sheets(in millions, except per share data) December 30, 2017 December 31, 2016ASSETS Cash and cash equivalents$1,629 $4,204Trade receivables (net of allowances of $23 at December 30, 2017 and $20 at December 31, 2016)921 769Sold receivables353 129Income taxes receivable582 260Inventories2,815 2,684Other current assets966 707Total current assets7,266 8,753Property, plant and equipment, net7,120 6,688Goodwill44,824 44,125Intangible assets, net59,449 59,297Other assets1,573 1,617TOTAL ASSETS$120,232 $120,480LIABILITIES AND EQUITY Commercial paper and other short-term debt$460 $645Current portion of long-term debt2,743 2,046Trade payables4,449 3,996Accrued marketing680 749Accrued postemployment costs51 157Income taxes payable152 255Interest payable419 415Other current liabilities1,178 1,238Total current liabilities10,132 9,501Long-term debt28,333 29,713Deferred income taxes14,076 20,848Accrued postemployment costs427 2,038Other liabilities1,017 806TOTAL LIABILITIES53,985 62,906Commitments and Contingencies (Note 15) Redeemable noncontrolling interest6 —Equity: Common stock, $0.01 par value (5,000 shares authorized; 1,221 shares issued and 1,219 shares outstanding atDecember 30, 2017; 1,219 shares issued and 1,217 shares outstanding at December 31, 2016)12 12Additional paid-in capital58,711 58,593Retained earnings/(deficit)8,589 588Accumulated other comprehensive income/(losses)(1,054) (1,628)Treasury stock, at cost (2 shares at December 30, 2017 and 2 shares at December 31, 2016)(224) (207)Total shareholders' equity66,034 57,358Noncontrolling interest207 216TOTAL EQUITY66,241 57,574TOTAL LIABILITIES AND EQUITY$120,232 $120,480See accompanying notes to the consolidated financial statements.51The Kraft Heinz CompanyConsolidated Statements of Equity(in millions) CommonStock Warrants AdditionalPaid-inCapital RetainedEarnings/(Deficit) Accumulated OtherComprehensiveIncome/(Losses) TreasuryStock NoncontrollingInterest Total EquityBalance at December 28, 2014$4 $367 $7,320 $— $(574) $— $219 $7,336Net income/(loss) excluding redeemablenoncontrolling interest— — — 634 — — 13 647Other comprehensive income/(loss) excludingredeemable noncontrolling interest— — — — (97) — (18) (115)Dividends declared-Series A Preferred Stock— — (360) (540) — — — (900)Dividends declared-common stock— — (1,972) (92) — — — (2,064)Dividends declared-noncontrolling interest— — — — — — (6) (6)Exercise of warrants— (367) 367 — — — — —Issuance of common stock to Sponsors2 — 9,998 — — — — 10,000Acquisition of Kraft Foods Group, Inc.6 — 42,849 — — — — 42,855Exercise of stock options, issuance of otherstock awards, and other— — 173 (2) — (31) — 140Balance at January 3, 201612 — 58,375 — (671) (31) 208 57,893Net income/(loss) excluding redeemablenoncontrolling interest— — — 3,632 — — 10 3,642Other comprehensive income/(loss) excludingredeemable noncontrolling interest— — — — (957) — 6 (951)Dividends declared-Series A Preferred Stock— — — (180) — — — (180)Dividends declared-common stock— — — (2,862) — — — (2,862)Dividends declared-noncontrolling interest— — — — — — (8) (8)Exercise of stock options, issuance of otherstock awards, and other— — 218 (2) — (176) — 40Balance at December 31, 201612 — 58,593 588 (1,628) (207) 216 57,574Net income/(loss) excluding redeemablenoncontrolling interest— — — 10,999 — — (5) 10,994Other comprehensive income/(loss) excludingredeemable noncontrolling interest— — — — 574 — 6 580Dividends declared-common stock— — — (2,988) — — — (2,988)Dividends declared-noncontrolling interest— — — — — — (10) (10)Exercise of stock options, issuance of otherstock awards, and other— — 118 (10) — (17) — 91Balance at December 30, 2017$12 $— $58,711 $8,589 $(1,054) $(224) $207 $66,241See accompanying notes to the consolidated financial statements.52The Kraft Heinz CompanyConsolidated Statements of Cash Flows(in millions) December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss)$10,990 $3,642 $647Adjustments to reconcile net income/(loss) to operating cash flows: Depreciation and amortization1,036 1,337 740Amortization of postretirement benefit plans prior service costs/(credits)(328) (333) (112)Amortization of inventory step-up— — 347Equity award compensation expense46 46 133Deferred income tax provision/(benefit)(6,467) (29) (317)Pension and postretirement benefit plan contributions(1,518) (344) (286)Impairment losses on indefinite-lived intangible assets49 — 58Nonmonetary currency devaluation36 24 234Write-off of debt issuance costs2 — 236Other items, net76 (134) 225Changes in current assets and liabilities: Trade receivables(2,629) (2,055) (915)Inventories(251) (130) 25Accounts payable464 943 (119)Other current assets(67) (42) 114Other current liabilities(912) (276) 262Net cash provided by/(used for) operating activities527 2,649 1,272CASH FLOWS FROM INVESTING ACTIVITIES: Cash receipts on sold receivables2,286 2,589 1,331Capital expenditures(1,217) (1,247) (648)Payments to acquire Kraft Foods Group, Inc., net of cash acquired— — (9,468)Proceeds from net investment hedges6 91 488Other investing activities, net81 19 (12)Net cash provided by/(used for) investing activities1,156 1,452 (8,309)CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of long-term debt(2,644) (86) (12,314)Proceeds from issuance of long-term debt1,496 6,981 14,834Debt prepayment and extinguishment costs— — (105)Debt issuance costs(6) (53) (98)Proceeds from issuance of commercial paper6,043 6,680 —Repayments of commercial paper(6,249) (6,043) —Proceeds from issuance of common stock to Sponsors— — 10,000Dividends paid-Series A Preferred Stock— (180) (900)Dividends paid-common stock(2,888) (3,584) (1,302)Redemption of Series A Preferred Stock— (8,320) —Other financing activities, net22 (16) (68)Net cash provided by/(used for) financing activities(4,226) (4,621) 10,047Effect of exchange rate changes on cash, cash equivalents, and restricted cash57 (137) (408)Cash, cash equivalents, and restricted cash Net increase/(decrease)(2,486) (657) 2,602Balance at beginning of period4,255 4,912 2,310Balance at end of period$1,769 $4,255 $4,912See accompanying notes to the consolidated financial statements.53The Kraft Heinz CompanyConsolidated Statements of Cash Flows(in millions) December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Non-cash investing activities: Beneficial interest obtained in exchange for securitized trade receivables$2,519 $2,213 $1,609Cash paid during the period for: Interest$1,269 $1,176 $704Income taxes1,206 1,619 577See accompanying notes to the consolidated financial statements.54The Kraft Heinz CompanyNotes to Consolidated Financial StatementsNote 1. Background and Basis of PresentationDescription of the CompanyWe manufacture and market food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee,and other grocery products throughout the world.OrganizationOn July 2, 2015 (the “2015 Merger Date”), through a series of transactions, we consummated the merger of Kraft Foods Group, Inc. (“Kraft”) with and into awholly-owned subsidiary of H.J. Heinz Holding Corporation (“Heinz”) (the “2015 Merger”). At the closing of the 2015 Merger, Heinz was renamed TheKraft Heinz Company (“Kraft Heinz”). Before the consummation of the 2015 Merger, Heinz was controlled by Berkshire Hathaway Inc. ("BerkshireHathaway") and 3G Global Food Holdings, L.P. (“3G Capital”) (together, the "Sponsors"), following their acquisition of H. J. Heinz Company (the “2013Merger”) on June 7, 2013. See Note 2, Merger and Acquisition, for additional information on the 2015 Merger.Immediately prior to the consummation of the 2015 Merger, each share of Heinz issued and outstanding common stock was reclassified and changed into0.443332 of a share of Kraft Heinz common stock. All share and per share amounts in this Annual Report on Form 10-K, including the consolidated financialstatements and related notes have been retroactively adjusted for all historical periods presented prior to the 2015 Merger Date to give effect to thisconversion, including reclassifying an amount equal to the change in value of common stock to additional paid-in capital. In the 2015 Merger, alloutstanding shares of Kraft common stock were converted into the right to receive, on a one-for-one basis, shares of Kraft Heinz common stock. Deferredshares and restricted shares of Kraft were converted to deferred shares and restricted shares of Kraft Heinz, as applicable. In addition, upon the completion ofthe 2015 Merger, the Kraft shareholders of record immediately prior to the closing of the 2015 Merger received a special cash dividend of $16.50 per share.The Sponsors initially owned 850 million shares of common stock in Heinz. Berkshire Hathaway also held a warrant to purchase 46 million additional sharesof common stock, which it exercised in June 2015. Additionally, in connection with the 2013 Merger, we issued an $8.0 billion preferred stock investment inHeinz which entitled Berkshire Hathaway to a 9.00% annual dividend. Prior to, but in connection with, the 2015 Merger, the Sponsors made equityinvestments whereby they purchased an additional 500 million newly issued shares of Heinz common stock for an aggregate purchase price of $10.0 billion.Significant Accounting PoliciesPrinciples of Consolidation:The consolidated financial statements include The Kraft Heinz Company, as well as our wholly-owned and majority-owned subsidiaries. All intercompanytransactions are eliminated.Use of Estimates:We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S.GAAP”), which requires us to make accounting policy elections, estimates, and assumptions that affect a number of amounts in our consolidated financialstatements. We base our estimates on historical experience and other assumptions that we believe are reasonable. If actual amounts differ from estimates, weinclude the revisions in our consolidated results of operations in the period the actual amounts become known. Historically, the aggregate differences, if any,between our estimates and actual amounts in any year have not had a material effect on our consolidated financial statements.Translation of Foreign Currencies:For all significant foreign operations, the functional currency is the local currency. Assets and liabilities of these operations are translated at the exchangerate in effect at each period end. Income statement accounts are translated at the average rate of exchange prevailing during the period. Translationadjustments arising from the use of differing exchange rates from period to period are included as a component of accumulated other comprehensiveincome/(losses) on the balance sheet. Gains and losses from foreign currency transactions are included in net income/(loss) for the period.55Highly Inflationary Accounting:We apply highly inflationary accounting if the cumulative inflation rate in an economy for a three-year period meets or exceeds 100 percent. Under highlyinflationary accounting, the financial statements of a subsidiary are remeasured into our reporting currency (U.S. dollars) based on the legally availableexchange rate at which we expect to settle the underlying transactions. Exchange gains and losses from the remeasurement of monetary assets and liabilitiesare reflected in net income/(loss), rather than accumulated other comprehensive income/(losses) on the balance sheet, until such time as the economy is nolonger considered highly inflationary. Certain non-monetary assets and liabilities are recorded at the applicable historical exchange rates. We apply highlyinflationary accounting to the results of our Venezuelan subsidiary.Cash and Cash Equivalents:Cash equivalents include demand deposits with banks and all highly liquid investments with original maturities of three months or less.Inventories:Inventories are stated at the lower of cost or net realizable value. We value inventories primarily using the average cost method.Property, Plant and Equipment:Property, plant and equipment are stated at historical cost and depreciated on the straight-line method over the estimated useful lives of the assets. Machineryand equipment are depreciated over periods ranging from three to 20 years and buildings and improvements over periods up to 40 years. Capitalized softwarecosts are included in property, plant and equipment and amortized on a straight-line basis over the estimated useful lives of the software, which do not exceedseven years. We review long-lived assets for impairment when conditions exist that indicate the carrying amount of the assets may not be fully recoverable.Such conditions include significant adverse changes in the business climate, current-period operating or cash flow losses, significant declines in forecastedoperations, or a current expectation that an asset group will be disposed of before the end of its useful life. We perform undiscounted operating cash flowanalyses to determine if an impairment exists. When testing for impairment of assets held for use, we group assets and liabilities at the lowest level for whichcash flows are separately identifiable. If an impairment is determined to exist, the loss is calculated based on estimated fair value. Impairment losses on assetsto be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal.Goodwill and Intangible Assets:We test goodwill and indefinite-lived intangible assets for impairment at least annually in the second quarter or when a triggering event occurs. The first stepof the goodwill impairment test compares the reporting unit’s estimated fair value with its carrying value. If the carrying value of a reporting unit’s net assetsexceeds its fair value, the second step would be applied to measure the difference between the carrying value and implied fair value of goodwill. If thecarrying value of goodwill exceeds its implied fair value, the goodwill would be considered impaired and would be reduced to its implied fair value. We testindefinite-lived intangible assets for impairment by comparing the fair value of each intangible asset with its carrying value. If the carrying value exceeds fairvalue, the intangible asset would be considered impaired and would be reduced to fair value.Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. Estimating thefair value of individual reporting units and indefinite-lived intangible assets requires us to make assumptions and estimates regarding our future plans, aswell as industry and economic conditions. These assumptions and estimates include projected revenues and income growth rates, terminal growth rates,competitive and consumer trends, market-based discount rates, and other market factors. If current expectations of future growth rates are not met or marketfactors outside of our control, such as discount rates, change significantly, then one or more of our reporting units or intangible assets might become impairedin the future. Additionally, as goodwill and intangible assets associated with recently acquired businesses are recorded on the balance sheet at their estimatedacquisition date fair values, those amounts are more susceptible to an impairment risk if business operating results or macroeconomic conditions deteriorate.We performed our annual impairment testing in the second quarter of 2017. See Note 7, Goodwill and Intangible Assets, for additional information.Definite-lived intangible assets are amortized on a straight-line basis over the estimated periods benefited, and are reviewed when appropriate for possibleimpairment.Revenue Recognition:We recognize revenues when title and risk of loss pass to our customers. We record revenues net of consumer incentives and trade promotions and include allshipping and handling charges billed to customers. We also record provisions for estimated product returns and customer allowances as reductions torevenues within the same period that the revenue is recognized. We base these estimates principally on historical and current period experience factors.56Advertising, Consumer Incentives, and Trade Promotions:We promote our products with advertising, consumer incentives, and trade promotions. Consumer incentives and trade promotions include, but are notlimited to, discounts, coupons, rebates, performance based in-store display activities, and volume-based incentives. Consumer incentive and trade promotionactivities are recorded as a reduction to revenues based on amounts estimated as being due to customers and consumers at the end of a period. We base theseestimates principally on historical utilization, redemption rates, or current period experience factors. We review and adjust these estimates each quarter basedon actual experience and other information.Advertising expenses are recorded in selling, general and administrative expenses (“SG&A”). For interim reporting purposes, we charge advertising tooperations as a percentage of estimated full year sales activity and marketing costs. We review and adjust these estimates each quarter based on actualexperience and other information. We recorded advertising expenses of $629 million in 2017, $708 million in 2016, and $464 million in 2015.Research and Development Expense:We expense costs as incurred for product research and development within SG&A. Research and development expense was approximately $93 million in2017, $120 million in 2016, and $105 million in 2015.Postemployment Benefit Plans:We maintain various retirement plans for the majority of our employees. These include pension benefits, postretirement health care benefits, and definedcontribution benefits. The cost of these plans is charged to expense over the working life of the covered employees. We generally amortize net actuarial gainsor losses in future periods within cost of products sold and SG&A.Financial Instruments:As we source our commodities on global markets and periodically enter into financing or other arrangements abroad, we use a variety of risk managementstrategies and financial instruments to manage commodity price, foreign currency exchange rate, and interest rate risks. Our risk management program focuseson the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on our operatingresults. One way we do this is through actively hedging our risks through the use of derivative instruments. As a matter of policy, we do not use highlyleveraged derivative instruments, nor do we use financial instruments for speculative purposes.Derivatives are recorded on our consolidated balance sheets at fair value, which fluctuates based on changing market conditions.Certain derivatives are designated as cash flow hedges and qualify for hedge accounting treatment, while others are not designated as hedging instrumentsand are marked to market through earnings. The effective portion of gains and losses on cash flow hedges are deferred as a component of accumulated othercomprehensive income/(losses) and are recognized in earnings at the time the hedged item affects earnings, in the same line item as the underlying hedgeditem. We also designate certain derivatives and non-derivatives as net investment hedges to hedge the net assets of certain foreign subsidiaries which areexposed to volatility in foreign currency exchange rates. The fair value of these derivatives and remeasurements of our non-derivatives designated as netinvestment hedges are calculated each period with changes reported in foreign currency translation adjustment within accumulated other comprehensiveincome/(losses). Such amounts will remain in accumulated other comprehensive income/(losses) until the complete or substantially complete liquidation ofour investment in the underlying foreign operations. The income statement classification of gains and losses related to derivative instruments not designatedas hedging instruments is determined based on the underlying intent of the contracts. Cash flows related to the settlement of derivative instrumentsdesignated as net investment hedges of foreign operations are classified in the consolidated statements of cash flows within investing activities. All othercash flows related to derivative instruments are generally classified within operating activities. For additional information on derivative activity within ouroperating results, see Note 11, Financial Instruments.To qualify for hedge accounting, a specified level of hedging effectiveness between the hedging instrument and the item being hedged must be achieved atinception and maintained throughout the hedged period. Any hedging ineffectiveness is recognized in net earnings when the change in the value of thehedge does not offset the change in the value of the underlying hedged item. We formally document our risk management objectives, strategies forundertaking the various hedge transactions, the nature of and relationships between the hedging instruments and hedged items, and method for assessinghedge effectiveness. Additionally, for qualified hedges of forecasted transactions, we specifically identify the significant characteristics and expected termsof the forecasted transactions. If it becomes probable that a forecasted transaction will not occur, the hedge will no longer be effective and all of thederivative gains or losses would be recognized in earnings in the current period.Unrealized gains and losses on our commodity derivatives not designated as hedging instruments are recorded in general corporate expenses until realized.Once realized, the gains and losses are recorded within the applicable segment operating results.57When we use financial instruments, we are exposed to credit risk that a counterparty might fail to fulfill its performance obligations under the terms of ouragreement. We minimize our credit risk by entering into transactions with counterparties with investment grade credit ratings, limiting the amount ofexposure we have with each counterparty, and monitoring the financial condition of our counterparties. We also maintain a policy of requiring that allsignificant, non-exchange traded derivative contracts with a duration of greater than one year be governed by an International Swaps and DerivativesAssociation master agreement. We are also exposed to market risk as the value of our financial instruments might be adversely affected by a change in foreigncurrency exchange rates, commodity prices, or interest rates. We manage market risk by incorporating monitoring parameters within our risk managementstrategy that limit the types of derivative instruments and derivative strategies we use and the degree of market risk that we hedge with derivativeinstruments.Foreign currency cash flow hedges:We use various financial instruments to mitigate our exposure to changes in exchange rates from third-party and intercompany actual and forecastedtransactions. Our principal foreign currency exposures that are hedged include the British pound sterling, euro, and Canadian dollar. These instrumentsinclude forward foreign exchange contracts. Substantially all of these derivative instruments are highly effective and qualify for hedge accounting treatment.We exclude forward points from the assessment and measurement of hedge ineffectiveness and report such amounts in current period net income as interestexpense.Net investment hedges:We have numerous investments in our foreign subsidiaries, the net assets of which are exposed to volatility in foreign currency exchange rates. We managethis risk by utilizing derivative and non-derivative instruments, including cross-currency swap contracts and certain foreign denominated debt designated asnet investment hedges.Interest rate cash flow hedges: From time to time, we have used derivative instruments, including interest rate swaps, as part of our interest rate risk management strategy. We have primarilyused interest rate swaps to hedge the variability of interest payment cash flows on a portion of our future debt obligations. Substantially all of thesederivative instruments have been highly effective and have qualified for hedge accounting treatment.Commodity derivatives:We are exposed to price risk related to forecasted purchases of certain commodities that we primarily use as raw materials. We enter into commodity purchasecontracts primarily for coffee beans, meat products, sugar, wheat products, corn products, vegetable oils, cocoa products, and dairy products. Thesecommodity purchase contracts generally are not subject to the accounting requirements for derivative instruments and hedging activities under the normalpurchases exception. We also use commodity futures and options to economically hedge the price of certain commodity costs, including coffee beans, meatproducts, sugar, wheat products, corn products, vegetable oils, cocoa products, dairy products, diesel fuel, and packaging products. We do not designate thesecommodity contracts as hedging instruments. We also sell commodity futures to unprice future purchase commitments, and we occasionally use relatedfutures to economically cross hedge a commodity exposure.Income Taxes:We recognize income taxes based on amounts refundable or payable for the current year and record deferred tax assets or liabilities for any difference betweenU.S. GAAP accounting and tax reporting. We also recognize deferred tax assets for temporary differences, operating loss carryforwards, and tax creditcarryforwards. Inherent in determining our annual tax rate are judgments regarding business plans, planning opportunities, and expectations about futureoutcomes. Realization of certain deferred tax assets, primarily net operating loss and other carryforwards, is dependent upon generating sufficient taxableincome in the appropriate jurisdiction prior to the expiration of the carryforward periods.We apply a more-likely-than-not threshold to the recognition and derecognition of uncertain tax positions. Accordingly, we recognize the amount of taxbenefit that has a greater than 50 percent likelihood of being ultimately realized upon settlement. Future changes in judgment related to the expectedultimate resolution of uncertain tax positions will affect income in the quarter of such change.We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. When assessing the need for valuationallowances, we consider future taxable income and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a changein judgment about the realizability of deferred tax assets in future years, we would adjust related valuation allowances in the period that the change incircumstances occurs, along with a corresponding increase or charge to income. The resolution of tax reserves and changes in valuation allowances could bematerial to our results of operations for any period, but is not expected to be material to our financial position.58Common Stock and Preferred Stock Dividends:Dividends are recorded as a reduction to retained earnings. When we have an accumulated deficit, dividends are recorded as a reduction of additional paid-incapital.New Accounting PronouncementsAccounting Standards Adopted in the Current Year:In March 2016, the Financial Accounting Standards Board (the “FASB”) issued accounting standards update (“ASU”) 2016-09 related to equity-based awardaccounting and presentation. Under this guidance, excess tax benefits upon the exercise of share- based payment awards are recognized in our tax provisionrather than within equity. Cash flows related to excess tax benefits are classified as operating activities rather than financing activities. Additionally, cashflows related to employee tax withholdings on restricted share vesting are classified as financing activities. This ASU became effective in the first quarter of2017. We adopted the guidance related to excess tax benefits on a prospective basis. As a result, we recognized a tax benefit of $22 million in ourconsolidated statement of income for 2017 related to our excess tax benefits upon the exercise of share-based payment awards. We retrospectively adoptedthe guidance related to cash flow classification of employee tax withholdings on restricted share vesting. This guidance did not have a material impact on ourconsolidated statement of cash flows for 2016. The impact on our consolidated statement of cash flows for 2015 was a $31 million decrease to cash flowsprovided by financing activities and a corresponding increase to cash flows provided by operating activities. Our equity award compensation cost continuesto reflect estimated forfeitures.In August 2016, the FASB issued ASU 2016-15 related to the classification of certain cash payments and cash receipts on the statement of cash flows. ThisASU provided guidance on eight specific cash flow classification matters, which must be adopted in the same period using a retrospective transitionmethod. We early adopted this ASU in the first quarter of 2017. We now classify consideration received for beneficial interest obtained for transferring tradereceivables in securitization transactions as investing activities instead of operating activities. Accordingly, we reclassified cash receipts from the paymentson sold receivables (which are cash receipts on the underlying trade receivables that have already been securitized) to cash provided by investing activities(from cash provided by operating activities). The impact on our consolidated statement of cash flows was $2.6 billion for 2016, and $1.3 billion for 2015. Inconnection with the adoption of ASU 2016-15, we also corrected other immaterial cash flow misstatements within operating activities, which had misstatedthe amount of beneficial interest obtained in the non-cash exchange from the securitization of trade receivables. Additionally, we now classify cash paymentsfor debt prepayment and debt extinguishment costs as cash outflows from financing activities rather than cash outflows from operating activities. The impacton our consolidated statement of cash flows for 2015 was a $105 million decrease to cash provided by financing activities and a corresponding increase tocash provided by operating activities. There was no impact on our consolidated statement of cash flows for 2016.In November 2016, the FASB issued ASU 2016-18 requiring the statement of cash flows to explain the change in restricted cash and restricted cashequivalents, in addition to cash and cash equivalents. We early adopted this ASU in the first quarter of 2017. Accordingly, we restated our cash and cashequivalents balances in the consolidated statements of cash flows to include restricted cash of $51 million at December 31, 2016, $75 million at January 3,2016, and $12 million at December 28, 2014. Additionally, cash provided by investing activities in 2016 decreased by $24 million and cash used forinvesting activities in 2015 decreased by $64 million. As required by the ASU, we have provided a reconciliation from cash and cash equivalents aspresented on our condensed consolidated balance sheets to cash, cash equivalents, and restricted cash as reported on our condensed consolidated statementsof cash flows. See Note 4, Restricted Cash, for this reconciliation, as well as a discussion of the nature of our restricted cash balances.Accounting Standards Not Yet Adopted:In May 2014, the FASB issued ASU 2014-09, which superseded previously existing revenue recognition guidance. Under this ASU, companies will apply aprinciples-based five step model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects theconsideration for which the company expects to be entitled to in exchange for those goods or services. This ASU will be effective beginning in the firstquarter of our fiscal year 2018. The ASU may be applied using a full retrospective method or a modified retrospective transition method, with a cumulative-effect adjustment as of the date of adoption. The ASU also provides for certain practical expedients, including the option to expense as incurred theincremental costs of obtaining a contract, if the contract period is for one year or less. We plan to use this practical expedient upon adoption of this ASU; theimpact is expected to be insignificant as this expedient aligns with our current practice. Additionally, we plan to make the following policy elections uponadoption of this ASU in the first quarter of 2018: (i) we will account for shipping and handling costs as contract fulfillment costs, and (ii) we will excludetaxes imposed on and collected from customers in revenue producing transactions (e.g, sales, use, and value added taxes) from the transaction price. Weexpect that the impact of adopting this guidance will be immaterial to our financial statements and related disclosures. There will be no impact to net incomeupon adoption of this ASU. We will adopt this ASU using the full retrospective method on the first day of our fiscal year 2018.59In February 2016, the FASB issued ASU 2016-02, which superseded previously existing leasing guidance. The ASU is intended to establish the principlesthat lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flowsarising from a lease. The new guidance requires lessees to reflect most leases on their balance sheets as assets and obligations. This ASU will be effectivebeginning in the first quarter of our fiscal year 2019. Early adoption is permitted. The new guidance must be adopted using a modified retrospectivetransition, and provides for certain practical expedients. While we are still evaluating the impact this ASU will have on our financial statements and relateddisclosures, we have completed our scoping reviews and have made progress in our assessment phase. We have identified our significant leases by geographyand by asset type as well as our leasing processes which will be impacted by the new standard. Furthermore, we have developed a data extraction strategy,made significant progress on lease data collection efforts, and identified an accounting system to support the future state leasing process. We have also madeprogress in developing the policy elections we will make upon adoption. We expect that our financial statement disclosures will be expanded to presentadditional details of our leasing arrangements. At this time, we are unable to reasonably estimate the expected increase in assets and liabilities on ourcondensed consolidated balance sheets upon adoption. We will adopt this ASU on the first day of our fiscal year 2019.In October 2016, the FASB issued ASU 2016-16 related to the income tax accounting impacts of intra-entity transfers of assets other than inventory, such asintellectual property and property, plant and equipment. Under the new accounting guidance, current and deferred income taxes should be recognized upontransfer of the assets. Previously, recognition of current and deferred income taxes was prohibited until the asset was sold to an external party. This ASU willbe effective beginning in the first quarter of our fiscal year 2018. The new guidance must be adopted on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the adoption period. We will adopt this ASU on the first day of our fiscal year 2018. While weare still evaluating the impact of this ASU, we currently anticipate a cumulative effect adjustment to retained earnings of approximately $100 million uponadoption.In January 2017, the FASB issued ASU 2017-04 related to goodwill impairment testing. This ASU eliminates Step 2 from the goodwill impairment test. Underthe new guidance, if a reporting unit’s carrying amount exceeds its fair value, the entity will record an impairment charge based on that difference. Theimpairment charge will be limited to the amount of goodwill allocated to that reporting unit. Previously, if the fair value of a reporting unit was lower than itscarrying amount (Step 1), an entity was required to calculate any impairment charge by comparing the implied fair value of goodwill with its carrying amount(Step 2). Additionally, under the new standard, entities that have reporting units with zero or negative carrying amounts will no longer be required to performthe qualitative assessment to determine whether to perform Step 2 of the goodwill impairment test. As a result, reporting units with zero or negative carryingamounts will generally be expected to pass the simplified impairment test; however, additional disclosure will be required of those entities. This ASU will beeffective beginning in the first quarter of our fiscal year 2020. Early adoption is permitted for annual and interim goodwill impairment testing dates afterJanuary 1, 2017. The new guidance must be adopted on a prospective basis. While we are still evaluating the timing of adoption, we currently do not expectthis ASU to have a material impact on our financial statements and related disclosures.In January 2017, the FASB issued ASU 2017-01 clarifying the definition of a business used in determining whether transactions should be accounted for asacquisitions (or disposals) of assets or businesses. The ASU provides a screen for entities to determine if an integrated set of assets and activities (“set”) is nota business. If substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similaridentifiable assets, the set is not a business. If this screen is not met, the entity then determines if the set meets the minimum requirement of a business. For aset to be a business, it must include an input and a substantive process which together significantly contribute to the ability to create outputs. The currentguidance does not specify the minimum processes that are required for a set be a business. The ASU also updates the definition of outputs to be the result ofinputs and processes applied to those inputs that provide goods or services to customers, investment income (such as dividends or interest), or other revenues.This ASU will be effective beginning in the first quarter of our fiscal year 2018 and must be adopted on a prospective basis. We will adopt this ASU on thefirst day of our fiscal year 2018. We currently expect the adoption of this ASU to result in more transactions accounted for as asset acquisitions or disposals.We currently cannot reasonably estimate the impact that adoption of this ASU will have on our financial statements and related disclosures as it will dependon the facts and circumstances of individual transactions.60In March 2017, the FASB issued ASU 2017-07 related to the presentation of net periodic benefit cost (pension and postretirement cost). This ASU will beeffective beginning in the first quarter of our fiscal year 2018. Under the new guidance, the service cost component of net periodic benefit cost must bepresented in the same statement of income line item as other employee compensation costs arising from services rendered by employees during the period.Other components of net periodic benefit cost must be disaggregated from the service cost component in the statements of income and must be presentedoutside the operating income subtotal. Additionally, only the service cost component will be eligible for capitalization in assets. The new guidance must beapplied retrospectively for the statement of income presentation of service cost components and other net periodic benefit cost components andprospectively for the capitalization of service cost components. There is a practical expedient that allows us to use historical amounts disclosed in ourPostemployment Benefits footnote as an estimation basis for retrospectively applying the statement of income presentation requirements. We plan to use thispractical expedient when we adopt this ASU on the first day of our fiscal year 2018. The retrospective impact of adopting ASU 2017-07 in 2018 is expectedto be (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Increase/(decrease) to cost of products sold$558 $373 $202Increase/(decrease) to selling, general and administrative expenses78 93 (30)Increase/(decrease) to operating income(a)(636) (466) (172)(a)Includes amortization of prior service costs/(credits), curtailments, special/contractual termination benefits, and certain settlements. These components of net pension andpostretirement cost/(benefit) are excluded from Segment Adjusted EBITDA and totaled approximately $(480) million in 2017, $(340) million in 2016, and $(120) million in2015.In August 2017, the FASB issued ASU 2017-12 related to accounting for hedging activities. This guidance will impact the accounting for our financial (i.e.,foreign exchange and interest rate) and non-financial (i.e., commodity) hedging activities. Key components of this ASU that could impact us are as follows:•Grants the ability to hedge the risk associated with the change in a contractually specified component of the purchase or sale of a non-financial iteminstead of the total contractual price, which could allow more commodity contracts to qualify for hedge accounting;•Requires us to defer the entire change in value of the derivative, including the effective and ineffective portion, into other comprehensive incomeuntil the hedged item impacts net income. When released, the deferred hedge gains and losses, including the ineffective portion, will be recognizedin the same statement of income line affected by the hedged item;•Allows us to recognize changes in the fair value of excluded components in other comprehensive income (which will be amortized into net incomeover the life of the derivative) or in net income in the related period;•Changes hedge effectiveness testing, including timing and allowable methods of testing; and,•Requires additional tabular disclosures in the footnotes to the financial statements.The method for adopting the revised standard is modified retrospective. This ASU will be effective beginning in the first quarter of our fiscal year 2019. Earlyadoption is permitted, including in an interim period. We are currently evaluating the timing of adoption and the impact this ASU will have on our financialstatements and related disclosures.Note 2. Merger and AcquisitionTransaction Overview:As discussed in Note 1, Background and Basis of Presentation, Heinz merged with Kraft on July 2, 2015. The Kraft businesses manufacture and market foodand beverage products, including cheese, meats, refreshment beverages, coffee, packaged dinners, refrigerated meals, snack nuts, dressings, and other groceryproducts, primarily in the United States and Canada. Following the 2015 Merger Date, the operating results of the Kraft businesses have been included in ourconsolidated financial statements. For the period from the 2015 Merger Date through January 3, 2016, Kraft's net sales were $8.5 billion and net income was$478 million.The 2015 Merger was accounted for under the acquisition method of accounting for business combinations and Heinz was considered to be the acquiringcompany. Under the acquisition method of accounting, total consideration exchanged was (in millions):Aggregate fair value of Kraft common stock$42,502$16.50 per share special cash dividend9,782Fair value of replacement equity awards353Total consideration exchanged$52,63761Valuation Assumptions and Purchase Price Allocation:We utilized estimated fair values at the 2015 Merger Date to allocate the total consideration exchanged to the net tangible and intangible assets acquired andliabilities assumed. This allocation was final as of July 3, 2016.The final purchase price allocation to assets acquired and liabilities assumed in the transaction was (in millions):Cash$314Other current assets3,423Property, plant and equipment4,179Identifiable intangible assets47,771Other non-current assets214Trade and other payables(3,026)Long-term debt(9,286)Net postemployment benefits and other non-current liabilities(4,739)Deferred income tax liabilities(16,675)Net assets acquired22,175Goodwill on acquisition30,462Total consideration52,637Fair value of shares exchanged and equity awards42,855Total cash consideration paid to Kraft shareholders9,782Cash and cash equivalents of Kraft at the 2015 Merger Date314Acquisition of business, net of cash on hand$9,468The 2015 Merger resulted in $30.5 billion of non tax deductible goodwill relating principally to synergies expected to be achieved from the combinedoperations and planned growth in new markets. Goodwill has been allocated to our segments as shown in Note 7, Goodwill and Intangible Assets.The purchase price allocation to identifiable intangible assets acquired was: Fair Value Weighted Average Life (in millions of dollars) (in years)Indefinite-lived trademarks$43,104 Definite-lived trademarks1,690 24Customer-related assets2,977 29Total$47,771 We valued trademarks using either the excess earnings method or relief from royalty method, which are both variations of the income approach. We used theexcess earnings method for our most significant trademarks due to their impact on the cash flows of the business and used the relief from royalty method forthe remaining trademarks and licenses. For customer relationships, we used the distributor method, a variation of the excess earnings method that usesdistributor-based inputs for margins and contributory asset charges.Some of the more significant assumptions inherent in developing the valuations included the estimated annual net cash flows for each indefinite-lived ordefinite-lived intangible asset (including net sales, cost of products sold, selling and marketing costs, and working capital/contributory asset charges), thediscount rate that appropriately reflects the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, and competitive trends, aswell as other factors. We determined the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated marketconditions, estimated product category growth rates, management plans, and market comparables.We used carrying values as of July 2, 2015 to value trade receivables and payables, as well as certain other current and non-current assets and liabilities, as wedetermined that they represented the fair value of those items at the 2015 Merger Date.We valued finished goods and work-in-process inventory using a net realizable value approach, which resulted in a step-up of $347 million that wasrecognized in cost of products sold in the period from the 2015 Merger Date to September 27, 2015 as the related inventory was sold. Raw materials andpackaging inventory was valued using the replacement cost approach.62We valued property, plant and equipment using a combination of the income approach, the market approach and the cost approach, which is based on currentreplacement and/or reproduction cost of the asset as new, less depreciation attributable to physical, functional, and economic factors.Deferred income tax assets and liabilities as of the 2015 Merger Date represented the expected future tax consequences of temporary differences between thefair values of the assets acquired and liabilities assumed and their tax bases.Pro Forma Results:Our unaudited pro forma results, prepared in accordance with ASC 805, as if Kraft had been acquired as of December 30, 2013 were (in millions, except pershare data): January 3,2016(53 weeks)Net sales$27,447Net income1,761Basic earnings per share0.72Diluted earnings per share0.70The unaudited pro forma results include certain purchase accounting adjustments. We have made pro forma adjustments to exclude deal costs of $166million ($102 million net of tax) and $347 million ($213 million net of tax) of non-cash costs related to the fair value step-up of inventory (“Inventory Step-up Costs”) from 2015, because such costs are non-recurring and are directly attributable to the 2015 Merger.The unaudited pro forma results do not include any anticipated cost savings or other effects of future restructuring efforts. Unaudited pro forma amounts arenot necessarily indicative of results had the 2015 Merger occurred on December 30, 2013 or of future results.Note 3. Integration and Restructuring ExpensesAs part of our restructuring activities, we incur expenses that qualify as exit and disposal costs under U.S. GAAP. These include severance and employeebenefit costs and other exit costs. Severance and employee benefit costs primarily relate to cash severance, non-cash severance, including accelerated equityaward compensation expense, and pension and other termination benefits. Other exit costs primarily relate to lease and contract terminations. We also incurexpenses that are an integral component of, and directly attributable to, our restructuring activities, which do not qualify as exit and disposal costs under U.S.GAAP. These include asset-related costs and other implementation costs. Asset-related costs primarily relate to accelerated depreciation and asset impairmentcharges. Other implementation costs primarily relate to start-up costs of new facilities, professional fees, asset relocation costs, and costs to exit facilities.Employee severance and other termination benefit packages are primarily determined based on established benefit arrangements, local statutoryrequirements, or historical benefit practices. We recognize the contractual component of these benefits when payment is probable and estimable; additionalelements of severance and termination benefits associated with non-recurring benefits are recognized ratably over each employee’s required future serviceperiod. Charges for accelerated depreciation are recognized on long-lived assets that will be taken out of service before the end of their normal service, inwhich case depreciation estimates are revised to reflect the use of the asset over its shortened useful life. Asset impairments establish a new fair value basis forassets held for disposal or sale and those assets are written down to expected net realizable value if carrying value exceeds fair value. All other costs arerecognized as incurred.63Integration Program:Following the 2015 Merger, we announced a multi-year program (the “Integration Program”) designed to reduce costs, streamline and simplify our operatingstructure as well as optimize our production and supply chain network across our businesses in the United States and Canada segments.We expect to incur pre-tax costs of approximately $2.1 billion related to the Integration Program. These pre-tax costs are comprised of the followingcategories:•Organization costs (approximately $400 million) associated with streamlining and simplifying our operating structure, resulting in workforcereduction (primarily severance and employee benefit costs).•Footprint costs (approximately $1.3 billion) associated with optimizing our production and supply chain network, resulting in workforce reductionand facility closures and consolidations (primarily asset-related costs and severance and employee benefit costs).•Other costs (approximately $400 million) incurred as a direct result of integration activities, including other exit costs (primarily lease and contractterminations) and other implementation costs (primarily professional services and other third-party fees).Approximately 60% of the Integration Program costs will be reflected in cost of products sold and approximately 60% will be cash expenditures.In 2017, we substantially completed our Integration Program. Overall, as part of the Integration Program, we have closed net six factories and consolidatedour distribution network. We expect to eliminate approximately 5,200 positions, 4,900 of whom have left the Company as of December 30, 2017. TheIntegration Program liability at December 30, 2017 related primarily to the elimination of general salaried and factory positions across the United States andCanada.As of December 30, 2017, we have incurred cumulative costs of $2,055 million, including $339 million in 2017, $887 million in 2016, and $829 million in2015. The $2,055 million of cumulative costs included $539 million of severance and employee benefit costs, $858 million of non-cash asset-related costs,$550 million of other implementation costs, and $108 million of other exit costs. The related amounts incurred in 2017 were a $142 million credit related toseverance and employee benefit costs, $208 million of non-cash asset-related costs, $260 million of other implementation costs, and $13 million of other exitcosts.We expect to incur further Integration Program costs in 2018.Our liability balance for Integration Program costs that qualify as exit and disposal costs under U.S. GAAP (i.e., severance and employee benefit costs andother exit costs), was (in millions): Severance andEmployee BenefitCosts Other Exit Costs(a) TotalBalance at December 31, 2016$99 $10 $109Charges/(credits)(142) 13 (129)Cash payments(70) (7) (77)Non-cash utilization137 6 143Balance at December 30, 2017$24 $22 $46(a) Other exit costs primarily consist of lease and contract terminations.We expect that a substantial portion of the liability for severance and employee benefit costs as of December 30, 2017 to be paid in 2018. The liability forother exit costs primarily relates to lease obligations. The cash impact of these obligations will continue for the duration of the lease terms, which expirebetween 2019 and 2026.Restructuring Activities:In addition to our Integration Program in North America, we have a small number of other restructuring programs globally, which are focused primarily onworkforce reduction and factory closure and consolidation. Related to these programs, approximately 600 employees left the Company in 2017. Theseprograms resulted in expenses of $118 million in 2017, including $50 million of severance and employee benefit costs, $10 million of non-cash asset-relatedcosts, $48 million of other implementation costs, and $10 million of other exit costs. Other restructuring program expenses totaled $125 million in 2016 and$194 million in 2015.64Our liability balance for restructuring project costs that qualify as exit and disposal costs under U.S. GAAP (i.e., severance and employee benefit costs andother exit costs), was (in millions): Severance andEmployee BenefitCosts Other Exit Costs(a) TotalBalance at December 31, 2016$12 $25 $37Charges/(credits)50 10 60Cash payments(38) (9) (47)Non-cash utilization(8) (1) (9)Balance at December 30, 2017$16 $25 $41(a) Other exit costs primarily consist of lease and contract terminations.We expect that a substantial portion of the liability for severance and employee benefit costs as of December 30, 2017 to be paid in 2018. The liability forother exit costs primarily relates to lease obligations. The cash impact of these obligations will continue for the duration of the lease terms, which expirebetween 2018 and 2026.Total Integration and Restructuring:Total expenses related to the Integration Program and restructuring activities recorded in cost of products sold and SG&A were (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Severance and employee benefit costs - COGS$(130) $53 $119Severance and employee benefit costs - SG&A38 104 519Asset-related costs - COGS190 496 186Asset-related costs - SG&A28 41 7Other costs - COGS264 162 99Other costs - SG&A67 156 93 $457 $1,012 $1,023We do not include Integration Program and restructuring expenses within Segment Adjusted EBITDA (as defined in Note 19, Segment Reporting). The pre-tax impact of allocating such expenses to our segments would have been (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)United States$292 $759 $790Canada34 45 47Europe54 85 142Rest of World14 6 12General corporate expenses63 117 32 $457 $1,012 $1,02365Note 4. Restricted CashThe following table provides a reconciliation of cash and cash equivalents, as reported on our consolidated balance sheets, to cash, cash equivalents, andrestricted cash, as reported on our consolidated statements of cash flows (in millions): December 30, 2017 December 31, 2016Cash and cash equivalents$1,629 $4,204Restricted cash included in other assets (current)140 42Restricted cash included in other assets (noncurrent)— 9Cash, cash equivalents, and restricted cash$1,769 $4,255Our restricted cash primarily relates to withholding taxes on our common stock dividends to our only significant international shareholder, 3G Capital.Note 5. InventoriesInventories consisted of the following (in millions): December 30, 2017 December 31, 2016Packaging and ingredients$560 $542Work in process439 388Finished product1,816 1,754Inventories$2,815 $2,684Note 6. Property, Plant and EquipmentProperty, plant and equipment consisted of the following (in millions): December 30, 2017 December 31, 2016Land$250 $264Buildings and improvements2,232 1,884Equipment and other5,364 4,770Construction in progress1,368 1,600 9,214 8,518Accumulated depreciation(2,094) (1,830)Property, plant and equipment, net$7,120 $6,688Note 7. Goodwill and Intangible AssetsGoodwill:Changes in the carrying amount of goodwill, by segment, were (in millions): United States Canada Europe Rest of World TotalBalance at December 31, 2016$33,696 $4,913 $2,778 $2,738 $44,125Translation adjustments and other4 333 281 81 699Balance at December 30, 2017$33,700 $5,246 $3,059 $2,819 $44,824We test goodwill for impairment at least annually in the second quarter or when a triggering event occurs. We performed our 2017 annual impairment test asof April 2, 2017. As a result of our 2017 annual impairment test, there was no impairment of goodwill. Each of our goodwill reporting units had excess fairvalue over its carrying value of at least 10% as of April 2, 2017.66Our goodwill balance consists of 18 reporting units and had an aggregate carrying value of $44.8 billion as of December 30, 2017. As a majority of ourgoodwill was recently recorded in connection with the 2013 Merger and the 2015 Merger, representing fair values as of those merger dates, there was not asignificant excess of fair values over carrying values as of April 2, 2017. We have a risk of future impairment to the extent that individual reporting unitperformance does not meet our projections. Additionally, if our current assumptions and estimates, including projected revenues and income growth rates,terminal growth rates, competitive and consumer trends, market-based discount rates, and other market factors, are not met, or if valuation factors outside ofour control change unfavorably, the estimated fair value of our goodwill could be adversely affected, leading to a potential impairment in the future. Noevents occurred during the period ended December 30, 2017 that indicated it was more likely than not that our goodwill was impaired. There were noaccumulated impairment losses to goodwill as of December 30, 2017.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 31, 2016$53,307Translation adjustments397Impairment losses on indefinite-lived intangible assets(49)Balance at December 30, 2017$53,655We test indefinite-lived intangible assets for impairment at least annually in the second quarter or when a triggering event occurs. We performed our 2017annual impairment test as of April 2, 2017. As a result of our 2017 annual impairment test, we recognized a non-cash impairment loss of $49 million in SG&Ain 2017. This loss was due to continued declines in nutritional beverages in India. The loss was recorded in our Europe segment as the related trademark isowned by our Italian subsidiary. Each of our other brands had excess fair value over its carrying value of at least 10% as of April 2, 2017.Our indefinite-lived intangible assets primarily consist of a large number of individual brands and had an aggregate carrying value of $53.7 billion as ofDecember 30, 2017. As a majority of our indefinite-lived intangible assets were recently recorded in connection with the 2013 Merger and the 2015 Merger,representing fair values as of those merger dates, there was not a significant excess of fair values over carrying values as of April 2, 2017. We have a risk offuture impairment to the extent individual brand performance does not meet our projections. Additionally, if our current assumptions and estimates,including projected revenues and income growth rates, terminal growth rates, competitive and consumer trends, market-based discount rates, and othermarket factors, are not met, or if valuation factors outside of our control change unfavorably, the estimated fair values of our indefinite-lived intangible assetscould be adversely affected, leading to potential impairments in the future. No events occurred during the period ended December 30, 2017 that indicated itwas more likely than not that our indefinite-lived intangible assets were impaired.There was no impairment of indefinite-lived intangible assets as a result of our 2016 testing. In 2015, we recognized non-cash impairment losses of $58million in SG&A, primarily related to declines within frozen soup in the United States, frozen meals and snacks primarily in the United Kingdom, and pastasauce in the United States and Canada.Definite-lived intangible assets:Definite-lived intangible assets were (in millions): December 30, 2017 December 31, 2016 Gross AccumulatedAmortization Net Gross AccumulatedAmortization NetTrademarks$2,386 $(288) $2,098 $2,337 $(172) $2,165Customer-related assets4,231 (544) 3,687 4,184 (369) 3,815Other14 (5) 9 13 (3) 10 $6,631 $(837) $5,794 $6,534 $(544) $5,990Amortization expense for definite-lived intangible assets was $279 million in 2017, $268 million in 2016, and $178 million in 2015. Aside fromamortization expense, the changes in definite-lived intangible assets from December 31, 2016 to December 30, 2017 primarily reflect the impact of foreigncurrency. We estimate that amortization expense related to definite-lived intangible assets will be approximately $272 million for the next twelve monthsand approximately $270 million for each of the four years thereafter.67Note 8. Income TaxesOn December 22, 2017, the Tax Cuts and Jobs Act (“U.S. Tax Reform”) was enacted by the U.S. federal government. The legislation significantly changedU.S. tax law by, among other things, lowering the federal corporate tax rate from 35.0% to 21.0%, effective January 1, 2018, implementing a territorial taxsystem, and imposing a one-time toll charge on deemed repatriated earnings of foreign subsidiaries as of December 30, 2017. In addition, there are many newprovisions, including changes to bonus depreciation, the deduction for executive compensation and interest expense, a tax on global intangible low-taxedincome provisions (“GILTI”), the base erosion anti-abuse tax (“BEAT”), and a deduction for foreign-derived intangible income (“FDII”). The two materialitems that impacted us in 2017 were the corporate tax rate reduction and the one-time toll charge. While the corporate tax rate reduction is effective January1, 2018, we accounted for this anticipated rate change in 2017, the period of enactment.The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides us with up to one year to finalize accounting for the impacts of U.S. TaxReform. When the initial accounting for U.S Tax Reform impacts is incomplete, we may include provisional amounts when reasonable estimates can be madeor continue to apply the prior tax law if a reasonable estimate cannot be made. We have estimated the provisional tax impacts related to the toll charge,certain components of the revaluation of deferred tax assets and liabilities, including depreciation and executive compensation, and the change in ourindefinite reinvestment assertion. As a result, we recognized a net tax benefit of approximately $7.0 billion, including a reasonable estimate of our deferredincome tax benefit of approximately $7.5 billion related to the corporate rate change, which was partially offset by a reasonable estimate of $312 million forthe toll charge and approximately $125 million for other tax expenses, including a change in our indefinite reinvestment assertion. We have elected toaccount for the tax on GILTI as a period cost and thus have not adjusted any of the deferred tax assets and liabilities of our foreign subsidiaries for U.S. TaxReform. The ultimate impact may differ from these provisional amounts due to gathering additional information to more precisely compute the amount oftax, changes in interpretations and assumptions, additional regulatory guidance that may be issued, and actions we may take. We expect to finalizeaccounting for the impacts of U.S. Tax Reform when the 2017 U.S. corporate income tax return is filed in 2018.In connection with U.S. Tax Reform, we have also reassessed our international investment assertions and no longer consider the historic earnings of ourforeign subsidiaries as of December 30, 2017 to be indefinitely reinvested. We have made a reasonable estimate of local country withholding taxes thatwould be owed when our historic earnings are distributed. As a result, we have recorded deferred income taxes of $96 million on approximately $1.2 billionof historic earnings.Income/(loss) before income taxes and the provision for/(benefit from) income taxes, consisted of the following (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Income/(loss) before income taxes: United States$3,876 $3,358 $(13)International1,654 1,665 1,026Total$5,530 $5,023 $1,013 Provision for/(benefit from) income taxes: Current: U.S. federal$757 $1,095 $427U.S. state and local(46) 76 22International296 239 234 1,007 1,410 683Deferred: U.S. federal(6,570) 31 (173)U.S. state and local101 (60) (70)International2 — (74) (6,467) (29) (317)Total provision for/(benefit from) income taxes$(5,460) $1,381 $36668Tax benefits related to the exercise of stock options and other equity instruments recorded directly to additional paid-in capital totaled $30 million in 2016and $10 million in 2015. In the first quarter of 2017, we prospectively adopted ASU 2016-09. We now record tax benefits related to the exercise of stockoptions and other equity instruments within our tax provision, rather than within equity. Accordingly, we recognized a tax benefit of $22 million within our2017 statement of income related to tax benefits upon the exercise of stock options and other equity instruments.The effective tax rate on income/(loss) before income taxes differed from the U.S. federal statutory tax rate for the following reasons: December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)U.S. federal statutory tax rate35.0 % 35.0 % 35.0 %Increase/(decrease) resulting from: Tax on income of foreign subsidiaries(4.7)% (3.6)% (11.8)%Domestic manufacturing deduction(1.5)% (1.9)% (2.9)%U.S. state and local income taxes, net of federal tax benefit1.1 % 0.8 % (0.6)%Earnings repatriation0.4 % 0.4 % 21.9 %Tax exempt income(0.7)% (3.3)% (10.9)%Deferred tax effect of statutory tax rate changes0.3 % (2.0)% (10.4)%Audit settlements and changes in uncertain tax positions(0.1)% 1.8 % 6.2 %Venezuela nondeductible devaluation loss— % 0.2 % 9.9 %Impact of U.S. Tax Reform(127.3)% — % — %Other(1.2)% 0.1 % (0.2)%Effective tax rate(98.7)% 27.5 % 36.2 %The provision for income taxes consists of provisions for federal, state and foreign 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 calculationof the percentage point impact of U.S. Tax Reform, domestic manufacturing deductions, tax exempt income, uncertain tax positions and other items on theeffective tax rate shown in the table above are affected by income/(loss) before income taxes. Fluctuations in the amount of income generated acrosslocations around the world could impact comparability of reconciling items between periods.The tax provision for the 2017 tax year benefited from U.S. Tax Reform enacted on December 22, 2017. The related income tax benefit of 127.3% in 2017primarily reflects adjustments to our deferred tax positions for the lower federal income tax rate, partially offset by our provision for the one-time toll charge.Due to the 2015 Merger, the tax provision for 2016 reflected a much greater percentage of U.S. income, which unfavorably impacted the effective tax ratecompared to 2015. The tax provision for the 2015 tax year benefited from a favorable jurisdictional income mix and from impairment losses recorded in theU.S.The 2016 and 2015 tax years included a benefit related to the tax effect of statutory tax rate changes. Small movements in tax rates due to a change in tax lawor a change in tax rates that causes us to revalue our deferred tax balances produces volatility in our effective tax rate. In addition:•The 2016 tax year included a benefit related to the impact on deferred taxes of a 10 basis point reduction in the state tax rate and a 100 basis pointstatutory rate reduction in the United Kingdom.•The 2015 tax year included a benefit related to the impact on deferred taxes of a 200 basis point statutory rate reduction in the United Kingdom.69The tax effects of temporary differences and carryforwards that gave rise to deferred income tax assets and liabilities consisted of the following (in millions): December 30,2017 December 31,2016Deferred income tax liabilities: Intangible assets, net$13,637 $20,946Property, plant and equipment, net641 1,035Other293 532Deferred income tax liabilities14,571 22,513Deferred income tax assets: Benefit plans(212) (1,025)Other(428) (782)Deferred income tax assets(640) (1,807)Valuation allowance80 89Net deferred income tax liabilities$14,011 $20,795The $9 million decrease in our valuation allowance in 2017 reflects the impact of releasing valuation allowances for foreign net operating losses and foreigntax credits that we anticipate being able to utilize.At December 30, 2017, foreign operating loss carryforwards totaled $336 million. Of that amount, $41 million expire between 2018 and 2037; the other $295million do not expire. We have recorded $84 million of deferred tax assets related to these foreign operating loss carryforwards. Additionally, we have foreignoperating loss carryforwards of $1.0 billion for which the realization of a tax benefit is considered remote and, as a result, we have recorded a full valuationallowance for the tax benefits. However, due to the remote likelihood of utilizing these losses, neither the deferred tax asset nor the offsetting valuationallowance has been presented in the table above. Deferred tax assets of $39 million have been recorded for U.S. state and local operating loss carryforwards.These losses expire between 2018 and 2037.Deferred tax assets of $7 million have been recorded for U.S. foreign tax credit carryforwards. These credit carryforwards expire between 2020 and 2025.At December 30, 2017, our unrecognized tax benefits for uncertain tax positions were $408 million. If we had recognized all of these benefits, the impact onour effective tax rate would have been $316 million. It is reasonably possible that our unrecognized tax benefits will decrease by as much as $105 million inthe next 12 months primarily due to the progression of federal, state, and foreign audits in process. Our unrecognized tax benefits for uncertain tax positionsare included in income taxes payable (current liabilities) and other liabilities (long-term) on our consolidated balance sheets.The changes in our unrecognized tax benefits were (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Balance at the beginning of the period$389 $353 $71Increases for tax positions of prior years2 59 25Decreases for tax positions of prior years(35) (18) (9)Increases based on tax positions related to the current year135 62 33Increases due to acquisitions of businesses— — 242Decreases due to settlements with taxing authorities(59) (62) —Decreases due to lapse of statute of limitations(24) (5) (9)Balance at the end of the period$408 $389 $353Our unrecognized tax benefits increased during 2017 as a result of evaluating tax positions taken or expected to be taken on our federal, state, and foreignincome tax returns. This increase was partially offset primarily as a result of audit settlements with federal, state and foreign taxing authorities and statute oflimitations expirations.In the third quarter of 2016, we reached an agreement with the IRS resolving all Kraft open matters related to the audits of taxable years 2012 through2014. This settlement reduced our reserves for uncertain tax positions and resulted in a non-cash tax benefit of $42 million.70The gross unrecognized tax balance increased substantially for the year ended January 3, 2016 as a result of the 2015 Merger purchase accounting.We include interest and penalties related to uncertain tax positions in our tax provision. Our provision for/(benefit from) income taxes included a $24 millionbenefit in 2017, $8 million expense in 2016, and $18 million expense in 2015 related to interest and penalties. Accrued interest and penalties were $57million as of December 30, 2017 and $81 million as of December 31, 2016.In the normal course of business, we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia,Canada, Italy, the Netherlands, the United Kingdom, and the United States. We have substantially concluded all national income tax matters through 2015for the Netherlands, through 2014 for the United States, through 2012 for the United Kingdom, through 2011 for Australia, and through 2010 for Canada andItaly. We have substantially concluded all state income tax matters through 2007.We have a tax sharing agreement with Mondelēz International, Inc. (“Mondelēz International”), which generally provides that (i) we are liable for U.S. stateincome taxes and Canadian federal and provincial income taxes for Kraft periods prior to October 1, 2012 and (ii) Mondelēz International is responsible forU.S. federal income taxes and substantially all non-U.S. income taxes, excluding Canadian income taxes, for Kraft periods prior to October 1, 2012.Kraft's U.S. operations were included in Mondelēz International's U.S. federal consolidated income tax returns for tax periods through October 1, 2012. InDecember 2016, Mondelēz International reached a final resolution on a U.S. federal income tax audit of the 2010-2012 tax years. As noted above, we areindemnified for U.S. federal income taxes related to these periods.Note 9. Employees’ Stock Incentive PlansStock Incentive PlansWe issued equity-based awards from the following plans in 2017, 2016, and 2015:2016 Omnibus Incentive Plan:In April 2016, our Board of Directors approved the 2016 Omnibus Incentive Plan (“2016 Omnibus Plan”), which authorized grants of options, stockappreciation rights, restricted stock units (“RSUs”), deferred stock, performance awards, investment rights, other stock-based awards, and cash-based awards.This plan authorizes the issuance of up to 18 million shares of our common stock. We grant non-qualified stock options under the 2016 Omnibus Plan toselect employees with a five-year cliff vesting. Such options have a maximum exercise term of 10 years.2013 Omnibus Incentive Plan:In October 2013, our Board of Directors adopted the 2013 Omnibus Incentive Plan (“2013 Omnibus Plan”), which authorized the issuance of shares of capitalstock. Each Heinz stock option that was outstanding under the 2013 Omnibus Plan immediately prior to the completion of the 2015 Merger was convertedinto 0.443332 of a Kraft Heinz stock option. Following this conversion, the 2013 Omnibus Plan authorized the issuance of up to 17,555,947 shares of ourcommon stock. All Heinz stock option amounts have been retrospectively adjusted for the Successor periods presented to give effect to this conversion. Wegrant non-qualified stock options under the 2013 Omnibus Plan to select employees with a five-year cliff vesting. Such options have a maximum exerciseterm of 10 years. If a participant is involuntarily terminated without cause, 20% of their options will vest, on an accelerated basis, for each full year of serviceafter the grant date.Kraft 2012 Performance Incentive Plan:Prior to the 2015 Merger, Kraft issued equity-based awards, including stock options and RSUs, under its 2012 Performance Incentive Plan. As a result of the2015 Merger, each outstanding Kraft stock option was converted into an option to purchase a number of shares of our common stock based upon an optionadjustment ratio, and each outstanding Kraft RSU was converted into one Kraft Heinz RSU. These Kraft Heinz stock awards will continue to vest and becomeexercisable in accordance with the terms and conditions that were applicable immediately prior to the completion of the 2015 Merger. These optionsgenerally become exercisable in three annual installments beginning on the first anniversary of the original grant date, and have a maximum exercise term of10 years. RSUs generally cliff vest on the third anniversary of the original grant date. In accordance with the terms of the 2012 Performance Incentive Plan,vesting generally accelerates for holders of Kraft awards who are terminated without cause within two years of the 2015 Merger Date.In addition, prior to the 2015 Merger, Kraft issued performance based long-term incentive awards (“Performance Shares”), which vested based on varyingperformance, market, and service conditions. In connection with the 2015 Merger, all outstanding Performance Shares were converted into cash awards,payable in two installments: (i) a 2015 pro-rata payment based upon the portion of the Performance Share cycle completed prior to the 2015 Merger and (ii)the remaining value of the award to be paid on the earlier of the first anniversary of the closing of the 2015 Merger and a participant's termination withoutcause.71Stock OptionsWe use the Black-Scholes model to estimate the fair value of stock option grants. We used the Hull-White II Lattice (“Lattice”) model to estimate the fairvalue of Kraft converted stock options. We believe the Lattice model provided an appropriate estimate of fair value of Kraft converted options as it took intoaccount each option’s distinct in-the-money level and remaining terms. The grant date fair value of options is amortized to expense over the vesting period.Our weighted average Black-Scholes fair value assumptions were: December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Risk-free interest rate2.25% 1.63% 1.70%Expected term7.5 years 7.5 years 6.3 yearsExpected volatility19.6% 22.0% 22.9%Expected dividend yield2.8% 3.1% 1.5%Weighted average grant date fair value per share$14.24 $12.48 $9.60The risk-free interest rate represented the constant maturity U.S. Treasury rate in effect at the grant date, with a remaining term equal to the expected life of theoptions. The expected life is the period over which our employees are expected to hold their options. Due to the lack of historical data for 2017 and 2016, wecalculated expected life using the Safe Harbor method, which uses the weighted average vesting period and the contractual term of the options. In 2015, theweighted average expected life of options was based on consideration of historical exercise patterns adjusted for changes in the contractual term and exerciseperiods of the awards. In 2017 and 2016, volatility was estimated using a blended approach of implied volatility and peer volatility. Peer volatility wascalculated as the average of the term-matched, leverage-adjusted historical volatilities of Colgate-Palmolive Co., The Coca-Cola Company, MondelēzInternational, Altria Group, Inc., PepsiCo, Inc., and Unilever plc. In 2015, volatility was estimated based on a review of the equity volatilities of publicly-traded peer companies for a period commensurate with the expected life of the options. In 2017 and 2016, the expected dividend yield was estimated usingthe quarterly dividend divided by the three-month average stock price, annualized and continuously compounded. In 2015, dividend yield was estimatedover the expected life of the options based on our stated dividend policy.Our Lattice model fair value assumptions for the Kraft converted options were: January 3,2016(53 weeks)Risk-free interest rate1.72%Expected volatility20.10%Expected dividend yield3.00%Weighted average fair value on conversion date$35.65The risk-free interest rate represented the constant maturity U.S. Treasury rate in effect at the conversion date, with a remaining term equal to the expected lifeof the options. The expected volatility was calculated as the average leverage-adjusted historical volatility of several peer companies, matched to theremaining term of each option. Dividend yield was estimated based on our stated dividend policy and conversion date stock price.Our stock option activity and related information was: Number of StockOptions Weighted AverageExercise Price(per share) Aggregate IntrinsicValue(in millions) Average RemainingContractual TermOutstanding at December 31, 201620,560,140 $37.39 Granted1,579,040 88.98 Forfeited(661,762) 52.50 Exercised(2,187,854) 32.73 Outstanding at December 30, 201719,289,564 41.63 716 6 yearsExercisable at December 30, 20177,462,422 38.78 291 5 years72The aggregate intrinsic value of stock options exercised during the period was $124 million in 2017, $186 million in 2016, and $21 million in 2015.Cash received from options exercised was $66 million in 2017, $140 million in 2016, and $29 million in 2015. The tax benefit realized from stock optionsexercised was $44 million in 2017, $68 million in 2016, and $12 million in 2015.Our unvested stock options and related information was: Number of Stock Options Weighted Average GrantDate Fair Value (per share)Unvested options at December 31, 201611,899,949 $8.26Granted1,579,040 14.24Vested(1,001,730) 15.09Forfeited(650,117) 9.89Unvested options at December 30, 201711,827,142 8.36Restricted Stock UnitsRestricted stock units represent a right to receive one share or the value of one share upon the terms and conditions set forth in the plan and the applicableaward agreement. Our RSUs include performance share units (“PSUs”) that are subject to achievement or satisfaction of performance conditions specified bythe Compensation Committee of our Board of Directors.We used the stock price on the grant date to estimate the fair value of our RSUs and PSUs. Additionally, the fair value of our PSUs is discounted based on thedividend yield as they are not dividend eligible during the vesting period. The grant date fair value of RSUs and PSUs is amortized to expense over thevesting period.The weighted average grant date fair value per share of our RSUs and PSUs granted during the year was $85.03 in 2017, $77.53 in 2016, and $26.24 in 2015.In 2017, our expected dividend yield was 2.7%. Dividend yield was estimated using the quarterly dividend divided by the three-month average stock price,annualized and continuously compounded. There were no PSUs granted in 2016 or 2015; therefore there was no expected dividend yield for these periods.Our RSU activity and related information was: Number of Units Weighted AverageGrant Date FairValue(per share)Outstanding at December 31, 2016806,744 $71.95Granted1,686,254 85.03Forfeited(251,604) 83.00Vested(141,749) 73.01Outstanding at December 30, 20172,099,645 81.05The aggregate fair value of RSUs that vested during the period was $12 million in 2017, $40 million in 2016, and $76 million in 2015.Total Equity AwardsThe compensation cost related to equity awards was primarily recognized in general corporate expenses within SG&A. Equity award compensation cost andthe related tax benefit was (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Pre-tax compensation cost$46 $46 $133Related tax benefit(14) (15) (48)After-tax compensation cost$32 $31 $85Unrecognized compensation cost related to unvested equity awards was $151 million at December 30, 2017 and is expected to be recognized over aweighted average period of four years.73Note 10. Postemployment BenefitsWe maintain various retirement plans for the majority of our employees. Current defined benefit pension plans are provided primarily for certain domesticunion and foreign employees. Local statutory requirements govern many of these plans. The pension benefits of our unionized workers are in accordancewith the applicable collective bargaining agreement covering their employment. Defined contribution plans are provided for certain domestic unionized,non-union hourly, and salaried employees as well as certain employees in foreign locations.We provide health care and other postretirement benefits to certain of our eligible retired employees and their eligible dependents. Certain of our U.S. andCanadian employees may become eligible for such benefits. We may modify plan provisions or terminate plans at our discretion. The postretirement benefitsof our unionized workers are in accordance with the applicable collective bargaining agreement covering their employment.Prior to the 2015 Merger, Kraft provided a range of benefits to its employees and retirees, including pension benefits and postretirement health care benefits.As part of the 2015 Merger, we assumed the assets and liabilities associated with these plans.We remeasure our postemployment benefit plans at least annually.Pension PlansObligations and Funded Status:The projected benefit obligations, fair value of plan assets, and funded status of our pension plans were (in millions): U.S. Plans Non-U.S. Plans December 30, 2017 December 31, 2016 December 30, 2017 December 31, 2016Benefit obligation at beginning of year$5,157 $5,990 $3,099 $2,892Service cost11 13 19 25Interest cost178 203 66 87Participants' contributions— — — 3Benefits paid(224) (268) (161) (158)Actuarial losses/(gains)270 195 120 540Plan amendments— — (2) —Currency— — 264 (281)Settlements(692) (966) (1) (12)Special/contractual termination benefits19 — 9 3Other— (10) 51 —Benefit obligation at end of year4,719 5,157 3,464 3,099Fair value of plan assets at beginning of year4,788 5,282 3,628 3,428Actual return on plan assets613 435 289 712Participants' contributions— — — 3Employer contributions300 311 30 33Benefits paid(224) (268) (161) (158)Currency— — 322 (378)Settlements(692) (966) (1) (12)Other— (6) 49 —Fair value of plan assets at end of year4,785 4,788 4,156 3,628Net pension liability/(asset) recognized at end of year$(66) $369 $(692) $(529)The accumulated benefit obligation, which represents benefits earned to the measurement date, was $4.7 billion at December 30, 2017 and $5.2 billion atDecember 31, 2016 for the U.S. pension plans. The accumulated benefit obligation for the non-U.S. pension plans was $3.3 billion at December 30, 2017 and$3.0 billion at December 31, 2016.74The combined U.S. and non-U.S. pension plans resulted in a net pension asset of $758 million at December 30, 2017 and a net pension asset of $160 millionat December 31, 2016. We recognized these amounts on our consolidated balance sheets as follows (in millions): December 30, 2017 December 31, 2016Other assets (long-term assets)$871 $641Accrued postemployment costs (current liabilities)(41) (3)Accrued postemployment costs (long-term liabilities)(72) (478)Net pension asset/(liability) recognized$758 $160For certain of our U.S. and non-U.S. plans that were underfunded based on accumulated benefit obligations in excess of plan assets, the projected benefitobligations, accumulated benefit obligations, and the fair value of plan assets were (in millions): U.S. Plans Non-U.S. Plans December 30, 2017 December 31, 2016 December 30, 2017 December 31, 2016Projected benefit obligation$— $3,669 $1,368 $527Accumulated benefit obligation— 3,669 1,360 527Fair value of plan assets— 3,282 1,254 437All of our U.S. plans were overfunded based on plan assets in excess of accumulated benefit obligations as of December 30, 2017.For certain of our U.S. and non-U.S. plans that were underfunded based on projected benefit obligations in excess of plan assets, the projected benefitobligations, accumulated benefit obligations, and the fair value of plan assets were (in millions): U.S. Plans Non-U.S. Plans December 30, 2017 December 31, 2016 December 30, 2017 December 31, 2016Projected benefit obligation$— $3,669 $1,400 $539Accumulated benefit obligation— 3,669 1,392 534Fair value of plan assets— 3,282 1,287 445All of our U.S. plans were overfunded based on plan assets in excess of projected benefit obligations as of December 30, 2017.We used the following weighted average assumptions to determine our projected benefit obligations under the pension plans: U.S. Plans Non-U.S. Plans December 30, 2017 December 31, 2016 December 30, 2017 December 31, 2016Discount rate3.7% 4.2% 2.4% 2.9%Rate of compensation increase4.1% 4.1% 3.9% 4.0%75Components of Net Pension Cost/(Benefit):Net pension cost/(benefit) consisted of the following (in millions): U.S. Plans Non-U.S. Plans December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks) December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Service cost$11 $13 $45 $19 $25 $26Interest cost178 203 164 66 87 103Expected return on plan assets(262) (290) (179) (180) (182) (194)Amortization of unrecognizedlosses/(gains)— — 3 1 — —Settlements2 23 102 — 2 17Curtailments— — (96) — — (47)Special/contractual termination benefits19 — 4 9 3 6Other2 — — (15) — —Net pension cost/(benefit)$(50) $(51) $43 $(100) $(65) $(89)We capitalized a portion of net pension cost/(benefit) into inventory based on our production activities. The amounts capitalized into inventory as ofDecember 30, 2017 and December 31, 2016 are included in the table above.In 2016, we approved the wind up of our Canadian salaried and Canadian hourly defined benefit pension plans effective December 31, 2016. This actionresulted in an increase to our projected benefit obligations of approximately $85 million at December 31, 2016. This action had no impact on theconsolidated statements of income or consolidated statements of cash flows for the year ended December 31, 2016.In 2015, we recorded net settlement losses for the U.S. and non-U.S. plans primarily related to certain plan terminations. We also recorded net curtailmentgains for the U.S. and non-U.S. plans primarily related to certain plan freezes and work force reductions under our integration and restructuring activities.We used the following weighted average assumptions to determine our net pension costs: U.S. Plans Non-U.S. Plans December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks) December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Discount rate - Service Cost4.2% 4.5% 4.4% 3.2% 4.2% 3.7%Discount rate - Interest Cost3.6% 3.5% 4.4% 2.1% 3.3% 3.7%Expected rate of return on plan assets5.7% 5.7% 5.6% 4.8% 5.6% 6.4%Rate of compensation increase4.1% 4.1% 4.0% 4.0% 3.4% 3.3%Discount rates for our U.S. and non-U.S. plans were developed from a model portfolio of high quality, fixed-income debt instruments with durations thatmatch the expected future cash flows of the plans. We determine our expected rate of return on plan assets from the plan assets' historical long-terminvestment performance, target asset allocation, and estimates of future long-term returns by asset class.Plan Assets:The underlying basis of the investment strategy of our defined benefit plans is to ensure that pension funds are available to meet the plans’ benefitobligations when they are due. Our investment objectives include: investing plan assets in a high-quality, diversified manner in order to maintain thesecurity of the funds; achieving an optimal return on plan assets within specified risk tolerances; and investing according to local regulations andrequirements specific to each country in which a defined benefit plan operates. The investment strategy expects equity investments to yield a higher returnover the long term than fixed-income securities, while fixed-income securities are expected to provide certain matching characteristics to the plans’ benefitpayment cash flow requirements. Our investment policy specifies the type of investment vehicles appropriate for the applicable plan, asset allocationguidelines, criteria for the selection of investment managers, procedures to monitor overall investment performance as well as investment managerperformance. It also provides guidelines enabling the applicable plan fiduciaries to fulfill their responsibilities.76Our weighted average asset allocations were: U.S. Plans Non-U.S. Plans December 30, 2017 December 31, 2016 December 30, 2017 December 31, 2016Fixed-income securities62% 67% 39% 49%Equity securities27% 30% 27% 31%Real estate—% —% 6% 7%Cash and cash equivalents11% 3% 4% 8%Certain insurance contracts—% —% 24% 5%Total100% 100% 100% 100%Our pension asset strategy for U.S. plans is designed to align our pension assets with our projected benefit obligation to reduce volatility by targeting aninvestment of approximately 70% of our U.S. plan assets in fixed-income securities and approximately 30% in return-seeking assets, primarily equitysecurities.For pension plans outside the U.S., our investment strategy is subject to local regulations and the asset/liability profiles of the plans in each individualcountry. In aggregate, the long-term asset allocation targets of our non-U.S. plans are broadly characterized as a mix of approximately 65% fixed-incomesecurities and annuity contracts, and approximately 35% in return-seeking assets, primarily equity securities and real estate.The fair value of pension plan assets at December 30, 2017 was determined using the following fair value measurements (in millions):Asset CategoryTotal Fair Value Quoted Prices in ActiveMarkets for IdenticalAssets (Level 1) Significant OtherObservable Inputs (Level 2) Significant UnobservableInputs (Level 3)Government bonds$467 $467 $— $—Corporate bonds and other fixed-income securities2,606 — 2,606 —Total fixed-income securities3,073 467 2,606 —Equity securities1,044 1,044 — —Real estate262 — — 262Cash and cash equivalents208 205 3 —Certain insurance contracts983 — — 983Fair value excluding investments measured at net assetvalue5,570 1,716 2,609 1,245Investments measured at net asset value(a)3,371 Total plan assets at fair value$8,941 (a) Amount includes cash collateral of $278 million associated with our securities lending program, which is reflected as an asset, and a correspondingsecurities lending payable of $278 million, which is reflected as a liability. The net impact on total plan assets at fair value is zero.77The fair value of pension plan assets at December 31, 2016 was determined using the following fair value measurements (in millions):Asset CategoryTotal Fair Value Quoted Prices in ActiveMarkets for IdenticalAssets (Level 1) Significant OtherObservable Inputs (Level 2) Significant UnobservableInputs (Level 3)Government bonds$484 $410 $74 $—Corporate bonds and other fixed-income securities2,952 — 2,952 —Total fixed-income securities3,436 410 3,026 —Equity securities765 765 — —Real estate234 — — 234Cash and cash equivalents49 31 18 —Certain insurance contracts189 — — 189Fair value excluding investments measured at net assetvalue4,673 1,206 3,044 423Investments measured at net asset value3,743 Total plan assets at fair value$8,416 The following section describes the valuation methodologies used to measure the fair value of pension plan assets, including an indication of the level in thefair value hierarchy in which each type of asset is generally classified.Government Bonds. These securities consist of direct investments in publicly traded U.S. and non-U.S. fixed interest obligations (principally debentures).Such investments are valued using quoted prices in active markets. These securities are principally included in Level 1.Corporate Bonds and Other Fixed-Income Securities. These securities consist of publicly traded U.S. and non-U.S. fixed interest obligations (principallycorporate bonds). Such investments are valued through consultation and evaluation with brokers in the institutional market using quoted prices and otherobservable market data. As such, these securities are included in Level 2.Equity Securities. These securities consist of direct investments in the stock of publicly traded companies. Such investments are valued based on the closingprice reported in an active market on which the individual securities are traded. As such, the direct investments are classified as Level 1.Real Estate. These holdings consist of real estate investments. Direct investments of real estate are valued by investment managers based on the most recentfinancial information available, which typically represents significant unobservable data. As such, these investments are generally classified as Level 3.Cash and Cash Equivalents. This consists of direct cash holdings and institutional short-term investment vehicles. Direct cash holdings are valued based oncost, which approximates fair value and are classified as Level 1. Certain institutional short-term investment vehicles are valued daily and are classified asLevel 1. Other cash equivalents that are not traded on an active exchange, such as bank deposits, are classified as Level 2.Certain Insurance Contracts. This category consists of group annuity contracts that have been purchased to cover a portion of the plan members. The fairvalue of non-participating annuity buy-in contracts fluctuates based on fluctuations in the obligation associated with the covered plan members. The fairvalue of certain participating annuity contracts are reported at contract value. These values have been classified as Level 3.Investments Measured at Net Asset Value. This category consists of pooled funds, short-term investments and partnership/corporate feeder interests.Pooled funds. The fair values of participation units held in collective trusts are based on their net asset values, as reported by the managers of the collectivetrusts and as supported by the unit prices of actual purchase and sale transactions occurring as of or close to the financial statement date. The fair value ofthese investments measured at net asset value is excluded from the fair value hierarchy. Investments in the collective trusts can be redeemed on each businessday based upon the applicable net asset value per unit. Investments in the international large/mid cap equity collective trust can be redeemed on the lastbusiness date of each month and at least one business day during the month.78The mutual fund investments are not traded on an exchange and a majority of these funds are held in a separate account managed by a fixed incomemanager. The fair values of the mutual fund investments that are not traded on an exchange are based on their net asset values, as reported by the managersand as supported by the unit prices of actual purchase and sale transactions occurring as of or close to the financial statement date. The fair value of theseinvestments measured at net asset value is excluded from the fair value hierarchy. The objective of the account is to provide superior return with reasonablerisk, where performance is expected to exceed Barclays Long U.S. Credit Index. Investments in this account can be redeemed with a written notice to theinvestment manager.Short-term investments: Short-term investments largely consisted of a money market fund, the fair value of which is based on the net asset value reported bythe manager of the fund and supported by the unit prices of actual purchase and sale transactions. The fair value of these investments measured at net assetvalue is excluded from the fair value hierarchy. The money market fund is designed to provide safety of principal, daily liquidity, and a competitive yield byinvesting in high quality money market instruments. The investment objective of the money market fund is to provide the highest possible level of currentincome while still maintaining liquidity and preserving capital.Partnership/corporate feeder interests: Fair value estimates of the equity partnership are based on their net asset values, as reported by the manager of thepartnership. The fair value of these investments measured at net asset value is excluded from the fair value hierarchy. Investments in the equity partnershipmay be redeemed once per month upon 10 days’ prior written notice to the General Partner, subject to the discretion of the General Partner. The investmentobjective of the equity partnership is to seek capital appreciation by investing primarily in equity securities.The fair values of the corporate feeder are based upon the net asset values of the equity master fund in which it invests. The fair value of these investmentsmeasured at net asset value is excluded from the fair value hierarchy. Investments in the corporate feeder can be redeemed quarterly with at least 90 days’notice. The investment objective of the corporate feeder is to generate long-term returns by investing in large, liquid equity securities with attractivefundamentals.Changes in our Level 3 plan assets for the year ended December 30, 2017 included (in millions):Asset CategoryDecember 31,2016(52 weeks) Additions Net RealizedGain/(Loss) Net UnrealizedGain/(Loss) Net Purchases,Issuances andSettlements TransfersInto/(Out of) Level3 December 30,2017(52 weeks)Real estate$234 $— $14 $14 $— $— $262Certain insurancecontracts189 797 — 36 (39) — 983Total Level 3investments$423 $797 $14 $50 $(39) $— $1,245Additions of $797 million were principally related to insurance contracts entered into in Canada in connection with the wind-up of our Canadian salariedand hourly defined benefit pension plans.Changes in our Level 3 plan assets for the year ended December 31, 2016 included (in millions):Asset CategoryJanuary 3,2016(53 weeks) Net RealizedGain/(Loss) Net UnrealizedGain/(Loss) Net Purchases,Issuances andSettlements TransfersInto/(Out of)Level 3 December 31,2016(52 weeks)Equity securities$1 $— $— $(1) $— $—Real estate288 6 (37) (23) — 234Certain insurance contracts236 — 13 (49) (11) 189Total Level 3 investments$525 $6 $(24) $(73) $(11) $423Employer Contributions:In 2017, we contributed $300 million to our U.S. pension plans and $30 million to our non-U.S. pension plans. We estimate that 2018 pension contributionswill be approximately $50 million to our non-U.S. plans. We do not plan to contribute to our U.S. pension plans in 2018. Our actual contributions and plansmay change due to many factors, including the timing of regulatory approval for the windup of certain non-U.S. pension plans, changes in tax, employeebenefit, or other laws and regulations, tax deductibility, significant differences between expected and actual pension asset performance or interest rates, orother factors.79Future Benefit Payments:The estimated future benefit payments from our pension plans at December 30, 2017 were (in millions): U.S. Plans Non-U.S. Plans2018$367 $1,3432019331 722020334 732021337 762022357 852023-20271,531 452Postretirement PlansObligations and Funded Status:The accumulated benefit obligation, fair value of plan assets, and funded status of our postretirement benefit plans were (in millions): December 30, 2017 December 31, 2016Benefit obligation at beginning of year$1,714 $1,945Service cost10 11Interest cost49 51Benefits paid(142) (150)Actuarial losses/(gains)(70) 5Plan amendments(24) (158)Currency13 6Other3 4Benefit obligation at end of year1,553 1,714Fair value of plan assets at beginning of year— —Employer contributions1,329 —Benefits paid(142) —Other1 —Fair value of plan assets at end of year1,188 —Net postretirement benefit liability/(asset) recognized at end of year$365 $1,714We recognized the net postretirement benefit asset/(liability) on our consolidated balance sheets as follows (in millions): December 30, 2017 December 31, 2016Accrued postemployment costs (current liabilities)(10) (153)Accrued postemployment costs (long-term liabilities)(355) (1,561)Net postretirement benefit asset/(liability) recognized$(365) $(1,714)For certain of our postretirement benefit plans that were underfunded based on accumulated postretirement benefit obligations in excess of plan assets, theaccumulated benefit obligations and the fair value of plan assets were (in millions): December 30,2017 December 31,2016Accumulated benefit obligation$1,553 $1,714Fair value of plan assets1,188 —80We used the following weighted average assumptions to determine our postretirement benefit obligations: December 30, 2017 December 31, 2016Discount rate3.5% 3.8%Health care cost trend rate assumed for next year6.7% 6.3%Ultimate trend rate4.9% 4.9%Discount rates for our plans were developed from a model portfolio of high-quality, fixed-income debt instruments with durations that match the expectedfuture cash flows of the plans. Our expected health care cost trend rate is based on historical costs and our expectation for health care cost trend rates goingforward.The year that the health care cost trend rate reaches the ultimate trend rate varies by plan and ranges between 2018 and 2030 as of December 30, 2017.Assumed health care costs trend rates have a significant impact on the amounts reported for the postretirement benefit plans. A one-percentage-point changein assumed health care cost trend rates would have the following effects, increase/(decrease) in cost and obligation, as of December 30, 2017 (in millions): One-Percentage-Point Increase (Decrease)Effect on annual service and interest cost$4 $(3)Effect on postretirement benefit obligation55 (47)Plan Assets:In December 2017, we made a cash contribution of approximately $1.2 billion to pre-fund a portion of our U.S. postretirement plan benefits followingenactment of U.S. Tax Reform on December 22, 2017. The underlying basis of the investment strategy of our U.S. postretirement plans is to ensure that fundsare available to meet the plans’ benefit obligations when they are due by investing plan assets in a high-quality, diversified manner in order to maintain thesecurity of the funds. The investment strategy expects equity investments to yield a higher return over the long term than fixed-income securities, whilefixed-income securities are expected to provide certain matching characteristics to the plans’ benefit payment cash flow requirements.Our postretirement benefit plan asset allocation at December 30, 2017 was 100% short-term investments. Our postretirement benefit plan investment strategyis subject to local regulations and the asset/liability profiles of the plans in each individual country. Our investment strategy is designed to align ourpostretirement benefit plan assets with our postretirement benefit obligation to reduce volatility. In aggregate, our long-term asset allocation targets arebroadly characterized as a mix of approximately 70% in fixed-income securities and approximately 30% in return-seeking assets, primarily equity securities.The fair value of our postretirement benefit plan assets, which were all classified as short-term investments, was $1.2 billion at December 30, 2017. There wereno postretirement benefit plan assets and no associated fair value at December 31, 2016.Short-term investments consist of a money market mutual fund, the fair value of which is based on the closing price reported in an active market on which themutual fund is traded. As such, these investments are classified as Level 1 in the fair value hierarchy. The money market mutual fund is designed to providesafety of principal, daily liquidity, and a competitive yield by investing in high quality money market instruments. The investment objective of the moneymarket mutual fund is to provide the highest possible level of current income while still maintaining liquidity and preserving capital.81Components of Net Postretirement Cost/(Benefit):Net postretirement cost/(benefit) consisted of the following (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Service cost$10 $11 $13Interest cost49 51 56Amortization of prior service costs/(credits)(328) (362) (112)Amortization of unrecognized losses/(gains)— (1) —Curtailments(177) — 1Net postretirement cost/(benefit)$(446) $(301) $(42)We capitalized a portion of net postretirement cost/(benefit) into inventory based on our production activities. The amounts capitalized into inventory as ofDecember 30, 2017 and December 31, 2016 are included in the table above.In 2017, we remeasured certain of our postretirement plans and recognized a curtailment gain of $177 million. The curtailment was triggered by the numberof cumulative headcount reductions after the closure of certain U.S. factories during the year. The resulting gain is attributed to accelerating a portion of thepreviously deferred actuarial gains and prior service credits. The headcount reductions and factory closures were part of our ongoing Integration Program. SeeNote 3, Integration and Restructuring Expenses, for additional information.The amortization of prior service credits was primarily driven by the 2015 plan amendments. Amortization of prior service credits in 2017 and 2016 included12 months of amortization related to the 2015 plan amendments, and 2015 included four months of such amortization.We used the following weighted average assumptions to determine our net postretirement benefit plans cost: December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Discount rate - Service Cost4.0% 4.3% 4.2%Discount rate - Interest Cost3.0% 3.0% 4.2%Health care cost trend rate6.3% 6.5% 6.7%Employer Contributions:In 2017, we contributed $1.3 billion to our postretirement benefit plans. This amount includes certain benefit payments of $142 million which are paid asincurred rather than pre-funded. We estimate that 2018 postretirement benefit plan contributions will be approximately $15 million. Our actualcontributions 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.Future Benefit Payments:Our estimated future benefit payments for our postretirement plans at December 30, 2017 were (in millions):2018$14720191402020133202112620221202023-2027504Other CostsWe sponsor and contribute to employee savings plans that cover eligible salaried, non-union, and union employees. Our contributions and costs aredetermined by the matching of employee contributions, as defined by the plans. Amounts charged to expense for defined contribution plans totaled $78million in 2017, $74 million in 2016, and $52 million in 2015.82Accumulated Other Comprehensive Income/(Losses):Our accumulated other comprehensive income/(losses) pension and postretirement benefit plans balances, before tax, consisted of the following (in millions): Pension Benefits Postretirement Benefits Total December 30, 2017 December 31, 2016 December 30, 2017 December 31,2016 December 30, 2017 December 31,2016Net actuarial gain/(loss)$13 $(35) $111 $64 $124 $29Prior service credit/(cost)1 — 748 1,205 749 1,205 $14 $(35) $859 $1,269 $873 $1,234The net postemployment benefits recognized in other comprehensive income/(loss), consisted of the following (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Net postemployment benefit gains/(losses) arising during the period: Net actuarial gains/(losses) arising during the period - Pension Benefits$45 $(73) $3Net actuarial gains/(losses) arising during the period - Postretirement Benefits71 (5) 62Prior service credits/(costs) arising during the period - Pension Benefits1 — (7)Prior service credits/(costs) arising during the period - Postretirement Benefits24 158 1,507 141 80 1,565Tax benefit/(expense)(55) (23) (619) $86 $57 $946 Reclassification of net postemployment benefit losses/(gains) to net income/(loss): Amortization of unrecognized losses/(gains) - Pension Benefits$1 $— $3Amortization of unrecognized losses/(gains) - Postretirement Benefits— (1) —Amortization of prior service costs/(credits) - Postretirement Benefits(328) (362) (112)Net settlement and curtailment losses/(gains) - Pension Benefits2 25 (24)Net settlement and curtailment losses/(gains) - Postretirement Benefits(177) — 1 (502) (338) (132)Tax benefit/(expense)193 131 47 $(309) $(207) $(85)As of December 30, 2017, we expect to amortize $311 million of postretirement benefit plans prior service credits from accumulated other comprehensiveincome/(losses) into net postretirement benefit plans costs/(benefits) during 2018. We do not expect to amortize any other significant postemploymentbenefit losses/(gains) into net pension or net postretirement benefit plan costs/(benefits) during 2018.Note 11. Financial InstrumentsDerivative Volume:The notional values of our outstanding derivative instruments were (in millions): Notional Amount December 30, 2017 December 31, 2016Commodity contracts$272 $459Foreign exchange contracts2,876 2,997Cross-currency contracts3,161 3,17383Fair Value of Derivative Instruments:Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants atthe measurement date. The fair values and the levels within the fair value hierarchy of derivative instruments recorded on the consolidated balance sheetswere (in millions): December 30, 2017 Quoted Prices in Active Marketsfor Identical Assets and Liabilities(Level 1) Significant Other ObservableInputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value Assets Liabilities Assets Liabilities Assets Liabilities Assets LiabilitiesDerivatives designated ashedging instruments: Foreign exchange contracts$— $— $8 $42 $— $— $8 $42Cross-currency contracts— — 344 — — — 344 —Derivatives not designatedas hedging instruments: Commodity contracts4 8 — — — — 4 8Foreign exchange contracts— — 17 3 — — 17 3Cross-currency contracts— — 19 — — — 19 —Total fair value$4 $8 $388 $45 $— $— $392 $53 December 31, 2016 Quoted Prices in Active Marketsfor Identical Assets and Liabilities(Level 1) Significant Other ObservableInputs(Level 2) Significant Unobservable Inputs(Level 3) Total Fair Value Assets Liabilities Assets Liabilities Assets Liabilities Assets LiabilitiesDerivatives designated ashedging instruments: Foreign exchange contracts$— $— $69 $13 $— $— $69 $13Cross-currency contracts— — 580 36 — — 580 36Derivatives not designatedas hedging instruments: Commodity contracts28 7 — — — — 28 7Foreign exchange contracts— — 35 30 — — 35 30Cross-currency contracts— — 44 — — — 44 —Total fair value$28 $7 $728 $79 $— $— $756 $86Our derivative financial instruments are subject to master netting arrangements that allow for the offset of assets and liabilities in the event of default or earlytermination of the contract. We elect to record the gross assets and liabilities of our derivative financial instruments on the consolidated balance sheets. If thederivative financial instruments had been netted on the consolidated balance sheets, the asset and liability positions each would have been reduced by $23million at December 30, 2017 and $67 million at December 31, 2016. No material amounts of collateral were received or posted on our derivative assets andliabilities at December 30, 2017.Level 1 financial assets and liabilities consist of commodity future and options contracts and are valued using quoted prices in active markets for identicalassets and liabilities.Level 2 financial assets and liabilities consist of commodity swaps, foreign exchange forwards and swaps, and cross-currency swaps. Commodity swaps arevalued using an income approach based on the observable market commodity index prices less the contract rate multiplied by the notional amount. Foreignexchange forwards and swaps are valued using an income approach based on observable market forward rates less the contract rate multiplied by the notionalamount. Cross-currency swaps are valued based on observable market spot and swap rates.Our calculation of the fair value of financial instruments takes into consideration the risk of nonperformance, including counterparty credit risk.There have been no transfers between Levels 1, 2, and 3 in any period presented.84The fair values of our derivative assets are recorded within other current assets and other assets. The fair values of our liability derivatives are recorded withinother current liabilities and other liabilities.Net Investment Hedging:At December 30, 2017, the principal amounts of foreign denominated debt designated as net investment hedges totaled €2,550 million and £400 million.At December 30, 2017, our cross-currency swaps designated as net investment hedges consisted of:Instrument Notional(local)(in billions) Notional(USD)(in billions) MaturityCross-currency swap £0.8 $1.4 October 2019Cross-currency swap C$1.8 $1.6 December 2019We also periodically enter into shorter-dated foreign exchange contracts that are designated as net investment hedges. At December 30, 2017, we hadChinese renminbi foreign exchange contracts with an aggregate USD notional amount of $213 million.The component of the gains and losses on our net investment in these designated foreign operations, driven by changes in foreign exchange rates, areeconomically offset by movements in the fair values of our cross-currency swap contracts and remeasurement of our foreign denominated debt.Interest Rate Hedging:In 2015, we de-designated all of our outstanding interest rate swaps (total notional amount of $7.9 billion) from hedging relationships in connection with therepayment of the Term B-1 and Term B-2 loans. We determined that the related forecasted future cash flows were probable of not occurring, and as a result, wereclassified $227 million of deferred losses initially reported in accumulated other comprehensive income/(losses) to net income/(loss) as interest expense.Hedge Coverage:At December 30, 2017, we had entered into contracts designated as hedging instruments, which hedge transactions for the following durations:•foreign exchange contracts for periods not exceeding the next 18 months; and•cross-currency contracts for periods not exceeding the next 24 months.At December 30, 2017, we had entered into contracts not designated as hedging instruments, which hedge economic risks for the following durations:•commodity contracts for periods not exceeding the next 12 months; and•foreign exchange contracts for periods not exceeding the next six months.•cross-currency contracts for periods not exceeding the next 22 months.Hedge Ineffectiveness:We record pre-tax gains or losses reclassified from accumulated other comprehensive income/(losses) due to ineffectiveness for foreign exchange contractsrelated to forecasted transactions in other expense/(income), net.Deferred Hedging Gains and Losses:Based on our valuation at December 30, 2017 and assuming market rates remain constant through contract maturities, we expect transfers to net income/(loss)of unrealized losses for foreign currency cash flow hedges during the next 12 months to be $13 million. Additionally, we expect transfers to net income/(loss)of unrealized losses for interest rate cash flow hedges during the next 12 months to be insignificant.Concentration of Credit Risk:Counterparties to our foreign exchange derivatives consist of major international financial institutions. We continually monitor our positions and the creditratings of the counterparties involved and, by policy, limit the amount of our credit exposure to any one party. While we may be exposed to potential lossesdue to the credit risk of non-performance by these counterparties, losses are not anticipated. We closely monitor the credit risk associated with ourcounterparties and customers and to date have not experienced material losses.85Economic Hedging:We enter into certain derivative contracts not designated as hedging instruments in accordance with our risk management strategy which have an economicimpact of largely mitigating commodity price risk and foreign currency exposures. Gains and losses are recorded in net income/(loss) as a component of costof products sold for our commodity contracts and other expense/(income), net for our cross currency and foreign exchange contracts.Derivative Impact on the Statements of Income and Statements of Comprehensive Income:The following tables present the pre-tax effect of derivative instruments on the consolidated statements of income and statements of comprehensive income: December 30,2017(52 weeks) December 31,2016(52 weeks) CommodityContracts ForeignExchangeContracts Cross-CurrencyContracts Interest RateContracts CommodityContracts ForeignExchangeContracts Cross-CurrencyContracts Interest RateContracts (in millions)Derivatives designated as hedginginstruments: Cash flow hedges: Gains/(losses) recognized in othercomprehensive income/(loss)(effective portion)$— $(123) $— $— $— $48 $— $(8) Net investment hedges: Gains/(losses) recognized in othercomprehensive income/(loss)(effective portion)— (23) (184) — — 45 147 —Total gains/(losses) recognizedin other comprehensiveincome/(loss) (effective portion)$— $(146) $(184) $— $— $93 $147 $(8) Cash flow hedges reclassified to netincome/(loss): Net sales$— $— $— $— $— $6 $— $—Cost of products sold (effectiveportion)— — — — — 41 — —Other expense/(income), net— (81) — — — 38 — —Interest expense— — — (4) — — — (4) — (81) — (4) — 85 — (4)Derivatives not designated ashedging instruments: Gains/(losses) on derivativesrecognized in cost of productssold(37) — — — 9 — — —Gains/(losses) on derivativesrecognized in otherexpense/(income), net— 54 (2) — — (63) (3) — (37) 54 (2) — 9 (63) (3) —Total gains/(losses) recognized instatements of income$(37) $(27) $(2) $(4) $9 $22 $(3) $(4)86 January 3,2016(53 weeks) CommodityContracts ForeignExchangeContracts Cross-CurrencyContracts Interest RateContracts (in millions)Derivatives designated as hedging instruments: Cash flow hedges: Gains/(losses) recognized in other comprehensive income/(loss) (effective portion)$— $73 $— $(111) Net investment hedges: Gains/(losses) recognized in other comprehensive income/(loss) (effective portion)— — 736 —Total gains/(losses) recognized in other comprehensive income/(loss) (effective portion)$— $73 $736 $(111) Cash flow hedges reclassified to net income/(loss): Net sales$— $(2) $— $—Cost of products sold (effective portion)— 45 — —Other expense/(income), net— 1 — —Interest expense— — — (239) — 44 — (239)Derivatives not designated as hedging instruments: Gains/(losses) on derivatives recognized in cost of products sold(57) — — —Gains/(losses) on derivatives recognized in other expense/(income), net— 92 53 8 (57) 92 53 8Total gains/(losses) recognized in statements of income$(57) $136 $53 $(231)Related to our non-derivative, foreign denominated debt instruments designated as net investment hedges, we recognized a pre-tax loss of $425 million in2017, and pre-tax gains of $234 million in 2016 and $65 million in 2015. These amounts were recognized in other comprehensive income/(loss) for theperiods then ended.87Note 12. Accumulated Other Comprehensive Income/(Losses)The components of, and changes in, accumulated other comprehensive income/(losses), net of tax, were as follows (in millions): Foreign CurrencyTranslationAdjustments Net PostemploymentBenefit PlanAdjustments Net Cash Flow HedgeAdjustments TotalBalance as of December 28, 2014$(574) $61 $(61) $(574)Foreign currency translation adjustments(1,578) — — (1,578)Net deferred gains/(losses) on net investment hedges506 — — 506Net postemployment benefit gains/(losses) arising during the period— 946 — 946Reclassification of net postemployment benefit losses/(gains)— (85) — (85)Net deferred gains/(losses) on cash flow hedges— — (6) (6)Net deferred losses/(gains) on cash flow hedges reclassified to netincome— — 120 120Total other comprehensive income/(loss)(1,072) 861 114 (97)Balance as of January 3, 2016$(1,646) $922 $53 $(671)Foreign currency translation adjustments(992) — — (992)Net deferred gains/(losses) on net investment hedges226 — — 226Net postemployment benefit gains/(losses) arising during the period— 57 — 57Reclassification of net postemployment benefit losses/(gains)— (207) — (207)Net deferred gains/(losses) on cash flow hedges— — 46 46Net deferred losses/(gains) on cash flow hedges reclassified to netincome— — (87) (87)Total other comprehensive income/(loss)(766) (150) (41) (957)Balance as of December 31, 2016$(2,412) $772 $12 $(1,628)Foreign currency translation adjustments1,178 — — 1,178Net deferred gains/(losses) on net investment hedges(353) — — (353)Net postemployment benefit gains/(losses) arising during the period— 86 — 86Reclassification of net postemployment benefit losses/(gains)— (309) — (309)Net deferred gains/(losses) on cash flow hedges— — (113) (113)Net deferred losses/(gains) on cash flow hedges reclassified to netincome— — 85 85Total other comprehensive income/(loss)825 (223) (28) 574Balance as of December 30, 2017$(1,587) $549 $(16) $(1,054)Reclassification of net postemployment benefit losses/(gains) included amounts reclassified to net income and amounts reclassified into inventory(consistent with our capitalization policy).88The gross amount and related tax benefit/(expense) recorded in, and associated with, each component of other comprehensive income/(loss) were as follows(in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks) Before TaxAmount Tax Net of TaxAmount Before TaxAmount Tax Net of TaxAmount Before TaxAmount Tax Net of TaxAmountForeign currency translation adjustments$1,178 $— $1,178 $(992) $— $(992) $(1,578) $— $(1,578)Net deferred gains/(losses) on net investmenthedges(632) 279 (353) 426 (200) 226 801 (295) 506Net actuarial gains/(losses) arising duringthe period116 (47) 69 (78) 38 (40) 65 (42) 23Prior service credits/(costs) arising duringthe period25 (8) 17 158 (61) 97 1,500 (577) 923Reclassification of net postemploymentbenefit losses/(gains)(502) 193 (309) (338) 131 (207) (132) 47 (85)Net deferred gains/(losses) on cash flowhedges(123) 10 (113) 40 6 46 (38) 32 (6)Net deferred losses/(gains) on cash flowhedges reclassified to net income85 — 85 (81) (6) (87) 195 (75) 120The amounts reclassified from accumulated other comprehensive income/(losses) were as follows (in millions):Accumulated Other Comprehensive Income/(Losses) Component Reclassified from Accumulated Other ComprehensiveIncome/(Losses) Affected Line Item in the StatementWhere Net Income/(Loss) is Presented December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks) Losses/(gains) on cash flow hedges: Foreign exchange contracts $— $(6)$2 Net salesForeign exchange contracts — (41)(45) Cost of products soldForeign exchange contracts 81 (38) (1) Other expense/(income), netInterest rate contracts 4 4239 Interest expenseLosses/(gains) on cash flow hedges before income taxes 85 (81)195 Losses/(gains) on cash flow hedges, income taxes — (6)(75) Losses/(gains) on cash flow hedges $85 $(87)$120 Losses/(gains) on postemployment benefits: Amortization of unrecognized losses/(gains) $1 $(1) $3 (a)Amortization of prior service costs/(credits) (328) (362)(112) (a)Settlement and curtailment losses/(gains) (175) 25(23) (a)Losses/(gains) on postemployment benefits before incometaxes (502) (338)(132) Losses/(gains) on postemployment benefits, income taxes 193 13147 Losses/(gains) on postemployment benefits $(309) $(207)$(85) (a)These components are included in the computation of net periodic postemployment benefit costs. See Note 10, Postemployment Benefits, for additional information.In this note we have excluded activity and balances related to noncontrolling interest (which was primarily comprised of foreign currency translationadjustments) due to its insignificance.89Note 13. Venezuela - Foreign Currency and InflationWe have a subsidiary in Venezuela that manufactures and sells a variety of products, primarily in the condiments and sauces and infant and nutritioncategories. We apply highly inflationary accounting to the results of our Venezuelan subsidiary and include these results in our consolidated financialstatements. Our results of operations in Venezuela reflect a controlled subsidiary. We continue to have sufficient currency liquidity and pricing flexibility tocontrol our operations. However, the continuing economic uncertainty, strict labor laws, and evolving government controls over imports, prices, currencyexchange, and payments present a challenging operating environment. Increased restrictions imposed by the Venezuelan government or further deteriorationof the economic environment could impact our ability to control our Venezuelan operations and could lead us to deconsolidate our Venezuelan subsidiary inthe future. We currently do not expect to make any new investments or contributions into Venezuela.At December 30, 2017, there were two exchange rates legally available to us for converting Venezuelan bolivars to U.S. dollars, including:•the official exchange rate of BsF10 per U.S. dollar available through the Sistema de Divisa Protegida (“DIPRO”) for purchases and sales of essentialitems, including food products; and•an alternative exchange rate available through the Sistema de Divisa Complementaria (“DICOM”) for all transactions not covered by DIPRO. Thepublished DICOM rate was BsF3,345 per U.S. dollar at December 30, 2017.We have had no settlements at the DIPRO rate in 2017. At December 30, 2017, we had outstanding requests of $26 million for payment of invoices for thepurchase of ingredients and packaging materials for the years 2012 through 2015, all of which were requested for payment at BsF6.30 per U.S. dollar (theofficial exchange rate until March 10, 2016).We have had access to U.S. dollars at DICOM rates in 2017. However, since September 2017 the Venezuelan government has not held any auctions throughwhich we obtain U.S. dollars at DICOM rates. Accordingly, we did not have access to U.S. dollars at DICOM rates in the fourth quarter of 2017.In addition to DIPRO and DICOM, there is an unofficial market for obtaining U.S. dollars with Venezuelan bolivars. The exact exchange rate is widelydebated but is generally accepted to be substantially higher than the latest published DICOM rate. We have not transacted at any unofficial market rates in2017 and have no plans to transact at unofficial market rates in the foreseeable future.Outside of accessing the DICOM market, our Venezuelan subsidiary obtains U.S. dollars through exports. These U.S. dollars are primarily used for purchasesof tomato paste and spare parts for manufacturing, as well as a limited amount of other operating costs. As of December 30, 2017, our Venezuelan subsidiaryhas sufficient U.S. dollars to fund these operational needs in the foreseeable future. However, further deterioration of the economic environment or regulationchanges could jeopardize our export business. Our Venezuelan subsidiary has increasingly sourced production inputs locally, including tomato paste andsugar, in order to reduce reliance on U.S. dollars, which we expect to continue in the foreseeable future.As of December 30, 2017, we believe the DICOM rate is the most appropriate legally available rate at which to translate the results of our Venezuelansubsidiary. We continue to monitor the DICOM rate, and the nonmonetary assets supported by the underlying operations in Venezuela, for impairment.We remeasure the monetary assets and liabilities, as well as the operating results, of our Venezuelan subsidiary at DICOM rates. These remeasurementsresulted in a nonmonetary currency devaluation loss of $36 million in 2017, $24 million in 2016, and $234 million in 2015. These amounts were recorded inother expense/(income), net, in the consolidated statements of income.In the second quarter of 2016, we assessed the nonmonetary assets of our Venezuelan subsidiary for impairment, resulting in a $53 million loss to write downproperty, plant and equipment, net, and prepaid spare parts, which was recorded within cost of products sold in the consolidated statement of income.In the second quarter of 2015, we reevaluated the rate used to remeasure the monetary assets and liabilities of our Venezuelan subsidiary and determined thatthe DICOM rate was the most appropriate legally available rate. Prior to DICOM, we used the official exchange rate of BsF6.30 per U.S. dollar. This changeresulted in a nonmonetary currency devaluation loss of $234 million. Additionally, we assessed the nonmonetary assets of our Venezuelan subsidiary forimpairment, which resulted in a $49 million loss to write down inventory to the lower of cost or net realizable value. This amount was recorded in cost ofproducts sold in the consolidated statement of income.90Note 14. Financing ArrangementsWe utilize accounts receivable securitization and factoring programs (the “Programs”) globally for our working capital needs and to provide efficientliquidity. We operate these Programs such that we generally utilize the majority of the available aggregate cash consideration limits. We account for transfersof receivables pursuant to the Programs as a sale and remove them from our condensed consolidated balance sheets. Under the Programs, we generally receivecash consideration up to a certain limit and record a non-cash exchange for sold receivables for the remainder of the purchase price. We maintain a“beneficial interest,” or a right to collect cash, in the sold receivables. Cash receipts from the payments on sold receivables (which are cash receipts on theunderlying trade receivables that have already been securitized in these Programs) are classified as investing activities and presented as cash receipts on soldreceivables on our condensed consolidated statements of cash flows.At December 30, 2017, we had accounts receivable securitization and factoring programs in place in the U.S. and in various countries across the globe.Generally, each of these programs automatically renews annually until terminated by either party, except our U.S. securitization program, which expires inMay 2018. Additionally, our U.S. securitization program utilizes a bankruptcy-remote special-purpose entity (“SPE”). The SPE is wholly-owned by asubsidiary of Kraft Heinz and its sole business consists of the purchase or acceptance, through capital contributions of receivables and related assets, from aKraft Heinz subsidiary and subsequent transfer of such receivables and related assets to a bank. Although the SPE is included in our consolidated financialstatements, it is a separate legal entity with separate creditors who will be entitled, upon its liquidation, to be satisfied out of the SPE's assets prior to anyassets or value in the SPE becoming available to Kraft Heinz or its subsidiaries.The carrying value of trade receivables removed from our condensed consolidated balance sheets in connection with the Programs was $1.0billion at December 30, 2017 and $1.0 billion at December 31, 2016. In exchange for the sale of trade receivables, we received cash of $673 million atDecember 30, 2017 and $904 million at December 31, 2016 and recorded sold receivables of $353 million at December 30, 2017 and $129million at December 31, 2016. The carrying value of sold receivables approximated the fair value at December 30, 2017 and December 31, 2016.We act as servicer for certain of the Programs and did not record any related servicing assets or liabilities as of December 30, 2017 or December 31,2016 because they were not material to the financial statements.Additionally, we enter into various structured payable arrangements to facilitate supply from our vendors. Balance sheet classification is based on the natureof the agreements with our various vendors. For certain arrangements, we classify amounts outstanding within other current liabilities on our consolidatedbalance sheets. We had approximately $188 million on our consolidated balance sheets at December 30, 2017 related to these arrangements. There were noamounts related to these arrangements on our consolidated balance sheets at December 31, 2016.Note 15. Commitments and ContingenciesLegal Proceedings:We are routinely involved in legal proceedings, claims, and governmental inquiries, inspections or investigations (“Legal Matters”) arising in the ordinarycourse of our business. While we cannot predict with certainty the results of Legal Matters in which we are currently involved or may in the future beinvolved, we do not expect that the ultimate costs to resolve any of the Legal Matters that are currently pending will have a material adverse effect on ourfinancial condition or results of operations.Leases:Rental expenses for leases of warehouse, production, and office facilities and equipment were $183 million in 2017, $149 million in 2016, and $160 millionin 2015.Minimum rental commitments under non-cancelable operating leases in effect at December 30, 2017 were (in millions):2018$103201991202073202154202245Thereafter165Total$53191Purchase Obligations:We have purchase obligations for materials, supplies, property, plant and equipment, and co-packing, storage and distribution services based on projectedneeds to be utilized in the normal course of business. Other purchase obligations include commitments for marketing, advertising, capital expenditures,information technology, and professional services.As of December 30, 2017, our take-or-pay purchase obligations were as follows (in millions):2018$1,5582019724202052720212352022211Thereafter439Total$3,694Redeemable Noncontrolling Interest:In 2017, we commenced operations of a joint venture with a minority partner to manufacture, package, market, and distribute refrigerated soups and mealsides. We control operations and include this business in our consolidated results. Our minority partner has put options that, if it chooses to exercise them,would require us to purchase portions of its equity interest at a future date. These put options will become exercisable beginning in 2025 (on the eighthanniversary of the product launch date) at a price to be determined at that time based upon an independent third party valuation. The minority partner’s putoptions are reflected on our consolidated balance sheets as a redeemable noncontrolling interest. We accrete the redeemable noncontrolling interest to itsestimated redemption value over the term of the put options. As of December 30, 2017, we estimate the redemption value to be approximately $100 million.Note 16. DebtBorrowing Arrangements:On July 6, 2015, together with Kraft Heinz Foods Company, our wholly owned operating subsidiary, we entered into a credit agreement (as amended, the“Credit Agreement”), which provides for a $4.0 billion senior unsecured revolving credit facility (the “Senior Credit Facility”), which matures on July 6,2021.No amounts were drawn on our Senior Credit Facility at December 30, 2017, at December 31, 2016, or during the years ended December 30, 2017,December 31, 2016, and January 3, 2016.The Senior Credit Facility includes a $1.0 billion sub-limit for borrowings in alternative currencies (i.e., euro, sterling, Canadian dollars, or other lawfulcurrencies readily available and freely transferable and convertible into U.S. dollars), as well as a letter of credit sub-facility of up to $300 million. Subject tocertain conditions, we may increase the amount of revolving commitments and/or add additional tranches of term loans in a combined aggregate amount ofup to $1.0 billion.Any committed borrowings under the Senior Credit Facility bear interest at a variable annual rate based on LIBOR/EURIBOR/CDOR loans or an alternatebase rate/Canadian prime rate, in each case subject to an applicable margin based upon the long-term senior unsecured, non-credit enhanced debt ratingassigned to us. The borrowings under the Senior Credit Facility have interest rates based on, at our election, base rate, LIBOR, EURIBOR, CDOR, orCanadian prime rate plus a spread ranging from 87.5-175 basis points for LIBOR, EURIBOR, and CDOR loans, and 0-75 basis points for base rate orCanadian prime rate loans.The Senior Credit Facility contains representations, warranties, and covenants that are typical for these types of facilities. Our Senior Credit Facility requiresus to maintain a minimum shareholders’ equity (excluding accumulated other comprehensive income/(losses)) of at least $35 billion. We were in compliancewith this covenant as of December 30, 2017.The obligations under the Credit Agreement are guaranteed by Kraft Heinz Foods Company in the case of indebtedness and other liabilities of any subsidiaryborrower and by Kraft Heinz in the case of indebtedness and other liabilities of any subsidiary borrower and Kraft Heinz Foods Company.In August 2017, we repaid $600 million aggregate principal amount of our previously outstanding senior unsecured loan facility (the “Term Loan Facility”).Accordingly, there were no amounts outstanding on the Term Loan Facility at December 30, 2017. At December 31, 2016, $600 million aggregate principalamount of our Term Loan Facility was outstanding.92In 2017, we obtained funding through our U.S. and European commercial paper programs. At December 30, 2017 we had $448 million of commercial paperoutstanding, with a weighted average interest rate of 1.541%. At December 31, 2016, we had $642 million of commercial paper outstanding, with a weightedaverage interest rate of 1.074%.Long-Term Debt:Our long-term debt consists of the following: Priority 1 Maturity Dates Interest Rates 2 Carrying Values December 30,2017 December 31,2016 (in millions)U.S. dollar notes: 2025 Notes(a) Senior Secured Notes February 15, 2025 4.875% $1,192 $1,191Other U.S. dollar notes(b)(c) Senior Notes 2018-2046 1.823% - 7.125% 25,165 25,761Euro notes(b) Senior Notes 2023-2028 1.500% - 2.250% 3,037 2,656Canadian dollar notes(b) Senior Notes 2018-2020 2.214% - 2.700% 794 743British pound sterling notes(b)(d) Senior Notes 2027-2030 4.125% - 6.250% 712 650Term Loan Facility(e) Senior Unsecured Loan — 596Other long-term debt Various 2018-2035 0.500% - 5.800% 56 54Capital lease obligations 120 108Total long-term debt 31,076 31,759Current portion of long-term debt 2,743 2,046Long-term debt, excluding current portion $28,333 $29,7131 Priority of debt indicates the order which debt would be paid if all debt obligations were due on the same day. Senior secured debt takes priority over unsecured debt. Seniordebt has greater seniority than subordinated debt.2 Floating interest rates are stated as of December 30, 2017.(a) The 4.875% Second Lien Senior Secured Notes due February 15, 2025 (the “2025 Notes”) are senior in right of payment of existing and future unsecured and subordinatedindebtedness.(b) We fully and unconditionally guarantee these notes, which were issued by Kraft Heinz Foods Company.(c) Includes current year issuances (the “New Notes”) described below.(d) Includes £125 million aggregate principal amount of 6.250% Pound Sterling Notes due February 18, 2030 (the “2030 Notes”) previously issued by H.J. Heinz Finance UK Plc andguaranteed by Kraft Heinz Foods Company, which we became guarantor of in connection with the 2015 Merger.(e)We repaid the Term Loan Facility in 2017; therefore, no amounts were outstanding, nor was there an applicable maturity date or interest rate, at December 30, 2017.Our long-term debt contains customary representations, covenants, and events of default, and we were in compliance with all such covenants at December 30,2017.At December 30, 2017, aggregate principal maturities of our long-term debt excluding capital leases were (in millions):2018$2,697201935520203,042202169120223,507Thereafter20,273Debt Issuances:In the third quarter of 2017, Kraft Heinz Foods Company, our wholly owned operating subsidiary, issued New Notes, including $350 million aggregateprincipal amount of floating rate senior notes due 2019, $650 million aggregate principal amount of floating rate senior notes due 2021, and $500 millionaggregate principal amount of floating rate senior notes due 2022.We used the net proceeds from the New Notes primarily to repay all amounts outstanding under our $600 million Term Loan Facility together with accruedinterest thereon, to refinance a portion of our commercial paper program, and for other general corporate purposes.93Debt Issuance Costs:Debt issuance costs are reflected as a direct deduction of our long-term debt balance on the consolidated balance sheets. We incurred debt issuance costs of$53 million in 2016 and $99 million in 2015. Debt issuance costs in 2017 were insignificant. Unamortized debt issuance costs were $114 million atDecember 30, 2017, $124 million at December 31, 2016, and $85 million at January 3, 2016. Amortization of debt issuance costs was $16 million in 2017,$14 million in 2016, and $27 million in 2015.Debt Premium:Unamortized debt premiums are presented on the consolidated balance sheets as a direct addition to the carrying amount of debt. Unamortized debt premium,net was $505 million at December 30, 2017 and $585 million at December 31, 2016. Amortization of our debt premium, net was $81 million in 2017, $88million in 2016, and $45 million in 2015.Debt Repayments:In June 2017, we repaid $2.0 billion aggregate principal amount of senior notes that matured in the period. We funded these long-term debt repaymentsprimarily with cash on hand and our commercial paper programs. Additionally, we repaid our $600 million aggregate principal amount Term Loan Facility inAugust 2017.In 2015, we recorded a $341 million loss on extinguishment of debt, which was comprised of a write-off of debt issuance costs and unamortized debtdiscounts of $236 million in interest expense as well as call premiums of $105 million in other expense/(income), net.Fair Value of Debt:At December 30, 2017, the aggregate fair value of our total debt was $33.0 billion as compared with a carrying value of $31.5 billion. At December 31, 2016,the aggregate fair value of our total debt was $33.2 billion as compared with a carrying value of $32.4 billion. We determined the fair value of our long-termdebt using Level 2 inputs. Fair values are generally estimated based on quoted market prices for identical or similar instruments.Note 17. Capital StockPreferred Stock and WarrantsOur Amended and Restated Certificate of Incorporation authorizes the issuance of up to 920,000 shares of preferred stock.On June 7, 2016, we redeemed all 80,000 outstanding shares of our 9.00% cumulative compounding preferred stock, Series A (“Series A Preferred Stock”) for$8.3 billion. We funded this redemption primarily through the issuance of long-term debt in May 2016, as well as other sources of liquidity, including ourcommercial paper program, U.S. securitization program, and cash on hand. In connection with the redemption, all Series A Preferred Stock was canceled andautomatically retired.The 80,000 shares of Series A Preferred Stock were issued in connection with the 2013 Merger, along with warrants to purchase 46 million Heinz commonshares, at an exercise price of $0.01 per common share (the “Warrants”), for an aggregate purchase price of $8.0 billion. We allocated the proceeds to theSeries A Preferred Stock ($7.6 billion) and the Warrants ($367 million) on a relative fair value basis. In June 2015, Berkshire Hathaway exercised the Warrantsto purchase the additional 46 million Heinz common shares, which were subsequently reclassified and changed into approximately 20 million shares of KraftHeinz common stock.Common StockOur Amended and Restated Certificate of Incorporation authorizes the issuance of up to 5.0 billion shares of common stock.Immediately prior to the consummation of the 2015 Merger, each share of Heinz issued and outstanding common stock was reclassified and changed into0.443332 of a share of Kraft Heinz common stock. All share and per share amounts have been retroactively adjusted for all historical periods presented priorto the 2015 Merger Date to give effect to this conversion. In the 2015 Merger, all outstanding shares of Kraft common stock were converted into the right toreceive, on one-for-one basis, shares of Kraft Heinz common stock.94Shares of common stock issued, in treasury, and outstanding were (in millions of shares): Shares Issued Treasury Shares SharesOutstandingBalance at December 28, 2014377 — 377Exercise of warrants20 — 20Issuance of common stock to Sponsors222 — 222Acquisition of Kraft Foods Group, Inc.593 — 593Exercise of stock options, issuance of other stock awards, and other2 — 2Balance at January 3, 20161,214 — 1,214Exercise of stock options, issuance of other stock awards, and other5 (2) 3Balance at December 31, 20161,219 (2) 1,217Exercise of stock options, issuance of other stock awards, and other2 — 2Balance at December 30, 20171,221 (2) 1,219Note 18. Earnings Per ShareAs a result of the stock conversion prior to the 2015 Merger, all per share data, numbers of shares, and numbers of equity awards outstanding wereretroactively adjusted for all historical periods presented prior to the 2015 Merger Date. See Note 1, Background and Basis of Presentation, for additionalinformation.Our earnings per common share (“EPS”) were: December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks) (in millions, except per share data)Basic Earnings Per Common Share: Net income/(loss) attributable to common shareholders$10,999 $3,452 $(266)Weighted average shares of common stock outstanding1,218 1,217 786Net earnings/(loss)$9.03 $2.84 $(0.34)Diluted Earnings Per Common Share: Net income/(loss) attributable to common shareholders$10,999 $3,452 $(266)Weighted average shares of common stock outstanding1,218 1,217 786Effect of dilutive equity awards10 9 —Weighted average shares of common stock outstanding, including dilutive effect1,228 1,226 786Net earnings/(loss)$8.95 $2.81 $(0.34)We use the treasury stock method to calculate the dilutive effect of outstanding equity awards in the denominator for diluted EPS. Due to the net lossattributable to common shareholders in 2015, the dilutive effects of equity awards and warrants were excluded because their inclusion would have had ananti-dilutive effect on earnings per share. Anti-dilutive shares were 2 million in 2017, 3 million in 2016, and 17 million in 2015.Note 19. Segment ReportingWe manufacture and market food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee,and other grocery products, throughout the world.We manage and report our operating results through four segments. We have three reportable segments defined by geographic region: United States, Canada,and Europe. Our remaining businesses are combined and disclosed as “Rest of World”. Rest of World is comprised of two operating segments: Latin America;and Asia Pacific, Middle East, and Africa (“AMEA”).In the third quarter of 2017, we announced our plans to reorganize certain of our international businesses to better align our global geographies. These plansinclude moving our Middle East and Africa businesses from the AMEA segment into the Europe segment, forming the Europe, Middle East, and Africa(“EMEA”) segment. The remaining AMEA businesses will become the Asia Pacific (“APAC”) segment, which will remain in Rest of World. We expect thesechanges to become effective in the first quarter of 2018. As a result, we expect to restate our Europe and Rest of World segments to reflect these changes forhistorical periods presented in the first quarter of 2018.95Management evaluates segment performance based on several factors, including net sales and segment adjusted earnings before interest, tax, depreciation,and amortization (“Segment Adjusted EBITDA”). Management uses Segment Adjusted EBITDA to evaluate segment performance and allocate resources.Segment Adjusted EBITDA is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact ofcertain items that management believes do not directly reflect our underlying operations. These items include depreciation and amortization (excludingintegration and restructuring expenses; including amortization of postretirement benefit plans prior service credits), equity award compensation expense,integration and restructuring expenses, merger costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in generalcorporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results), impairment losses,gains/(losses) on the sale of a business, and nonmonetary currency devaluation (e.g., remeasurement gains and losses). In addition, consistent with the mannerin which management evaluates segment performance and allocates resources, Segment Adjusted EBITDA includes the operating results of Kraft on a proforma basis, as if Kraft had been acquired as of December 30, 2013. There are no pro forma adjustments to any of the numbers disclosed in this note to theconsolidated financial statements except for the Segment Adjusted EBITDA reconciliation.Management does not use assets by segment to evaluate performance or allocate resources. Therefore, we do not disclose assets by segment.Net sales by segment were (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Net sales: United States$18,353 $18,641 $10,943Canada2,190 2,309 1,437Europe2,393 2,366 2,656Rest of World3,296 3,171 3,302Total net sales$26,232 $26,487 $18,338Segment Adjusted EBITDA was (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Segment Adjusted EBITDA: United States$6,001 $5,862 $4,690Canada639 642 541Europe781 781 938Rest of World617 657 742General corporate expenses(108) (164) (172)Depreciation and amortization (excluding integration and restructuring expenses)(583) (536) (779)Integration and restructuring expenses(457) (1,012) (1,117)Merger costs— (30) (194)Amortization of inventory step-up— — (347)Unrealized gains/(losses) on commodity hedges(19) 38 41Impairment losses(49) (53) (58)Gains/losses on sale of business— — 21Nonmonetary currency devaluation— (4) (57)Equity award compensation expense (excluding integration and restructuring expenses)(49) (39) (61)Other pro forma adjustments— — (1,549)Operating income6,773 6,142 2,639Interest expense1,234 1,134 1,321Other expense/(income), net9 (15) 305Income/(loss) before income taxes$5,530 $5,023 $1,01396Total depreciation and amortization expense by segment was (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Depreciation and amortization expense: United States$661 $966 $484Canada48 56 36Europe96 84 86Rest of World101 87 85General corporate expenses130 144 49Total depreciation and amortization expense$1,036 $1,337 $740The decrease in depreciation and amortization expense in 2017 compared to 2016 was primarily driven by accelerated depreciation recognized in 2016resulting from factory closures as part of our Integration Program. See Note 3, Integration and Restructuring Expenses, for additional information.Total capital expenditures by segment were (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Capital expenditures: United States$764 $843 $377Canada42 30 19Europe125 109 106Rest of World209 102 99General corporate expenses77 163 47Total capital expenditures$1,217 $1,247 $648Concentration of risk:Our largest customer, Walmart Inc., represented approximately 21% of our net sales in 2017, 22% of our net sales in 2016, and approximately 20% of our netsales in 2015. All of our segments have sales to Walmart Inc.In the first quarter of 2017, we reorganized the products within our product categories to reflect how we manage our business. We have reflected this changefor all historical periods presented. Our net sales by product category were (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Condiments and sauces$6,439 $6,475 $5,877Cheese and dairy5,482 5,619 2,795Ambient meals2,310 2,345 1,859Frozen and chilled meals2,578 2,548 2,179Meats and seafood2,609 2,703 1,480Refreshment beverages1,508 1,524 665Coffee1,423 1,494 710Infant and nutrition755 761 902Desserts, toppings and baking956 981 521Nuts and salted snacks937 1,050 562Other1,235 987 788Total net sales$26,232 $26,487 $18,33897Geographic Financial Information:We had significant sales in the United States, Canada, and the United Kingdom. Our net sales by geography were (in millions): December 30,2017(52 weeks) December 31,2016(52 weeks) January 3,2016(53 weeks)Net sales: United States$18,353 $18,641 $10,943Canada2,190 2,309 1,437United Kingdom1,021 1,055 1,334Other4,668 4,482 4,624Total net sales$26,232 $26,487 $18,338Other net sales in the table above included net sales to Puerto Rico of $94 million in 2017, $87 million in 2016, and $37 million in 2015.We had significant long-lived assets in the United States, Canada, and United Kingdom. Long-lived assets include property, plant and equipment, goodwill,trademarks, and other intangible assets, net of related depreciation and amortization. Our long-lived assets by geography were (in millions): December 30,2017 December 31,2016Long-lived assets: United States$92,129 $92,243Canada6,592 6,172United Kingdom6,219 5,669Other6,453 6,026Total long-lived assets$111,393 $110,110Note 20. Quarterly Financial Data (Unaudited)Our quarterly financial data for 2017 and 2016 was: 2017 Quarters First Second Third Fourth (in millions, except per share data)Net sales$6,364 $6,677 $6,314 $6,877Gross profit2,301 2,681 2,314 2,407Net income/(loss)891 1,160 943 7,996Net income/(loss) attributable to Kraft Heinz893 1,159 944 8,003Net income/(loss) attributable to common shareholders893 1,159 944 8,003Per share data applicable to common shareholders: Basic earnings/(loss)0.73 0.95 0.78 6.57Diluted earnings/(loss)0.73 0.94 0.77 6.52 2016 Quarters First Second Third Fourth (in millions, except per share data)Net sales$6,570 $6,793 $6,267 $6,857Gross profit2,378 2,531 2,218 2,459Net income/(loss)900 955 843 944Net income/(loss) attributable to Kraft Heinz896 950 842 944Net income/(loss) attributable to common shareholders896 770 842 944Per share data applicable to common shareholders: Basic earnings/(loss)0.74 0.63 0.69 0.78Diluted earnings/(loss)0.73 0.63 0.69 0.7798Basic and diluted EPS are computed independently for each of the periods presented. Accordingly, the sum of the quarterly EPS amounts may not equal thetotal for the year.Note 21. Supplemental Financial InformationWe fully and unconditionally guarantee the notes issued by our 100% owned operating subsidiary, Kraft Heinz Foods Company. See Note 16, Debt, foradditional descriptions of these guarantees. None of our other subsidiaries guarantee these notes.Set forth below are the condensed consolidating financial statements presenting the results of operations, financial position and cash flows of Kraft Heinz (asparent guarantor), Kraft Heinz Foods Company (as subsidiary issuer of the notes), and the non-guarantor subsidiaries on a combined basis and eliminationsnecessary to arrive at the total reported information on a consolidated basis. This condensed consolidating financial information has been prepared andpresented pursuant to the Securities and Exchange Commission Regulation S-X Rule 3-10, “Financial Statements of Guarantors and Issuers of GuaranteedSecurities Registered or being Registered.” This information is not intended to present the financial position, results of operations, and cash flows of theindividual companies or groups of companies in accordance with U.S. GAAP. Eliminations represent adjustments to eliminate investments in subsidiaries andintercompany balances and transactions between or among the parent guarantor, subsidiary issuer, and the non-guarantor subsidiaries.99The Kraft Heinz CompanyCondensed Consolidating Statements of IncomeFor the Year Ended December 30, 2017(in millions)(Unaudited) Parent Guarantor Subsidiary Issuer Non-GuarantorSubsidiaries Eliminations ConsolidatedNet sales$— $17,507 $9,293 $(568) $26,232Cost of products sold— 10,710 6,387 (568) 16,529Gross profit— 6,797 2,906 — 9,703Selling, general and administrative expenses— 652 2,278 — 2,930Intercompany service fees and other recharges— 4,308 (4,308) — —Operating income— 1,837 4,936 — 6,773Interest expense— 1,190 44 — 1,234Other expense/(income), net— (10) 19 — 9Income/(loss) before income taxes— 657 4,873 — 5,530Provision for/(benefit from) income taxes— (221) (5,239) — (5,460)Equity in earnings of subsidiaries10,999 10,121 — (21,120) —Net income/(loss)10,999 10,999 10,112 (21,120) 10,990Net income/(loss) attributable to noncontrolling interest— — (9) — (9)Net income/(loss) excluding noncontrolling interest$10,999 $10,999 $10,121 $(21,120) $10,999 Comprehensive income/(loss) excluding noncontrollinginterest$11,573 $11,573 $7,726 $(19,299) $11,573100The Kraft Heinz CompanyCondensed Consolidating Statements of IncomeFor the Year Ended December 31, 2016(in millions)(Unaudited) Parent Guarantor Subsidiary Issuer Non-GuarantorSubsidiaries Eliminations ConsolidatedNet sales$— $17,809 $9,310 $(632) $26,487Cost of products sold— 11,156 6,377 (632) 16,901Gross profit— 6,653 2,933 — 9,586Selling, general and administrative expenses— 970 2,474 — 3,444Intercompany service fees and other recharges— 4,624 (4,624) — —Operating income— 1,059 5,083 — 6,142Interest expense— 1,076 58 — 1,134Other expense/(income), net— 144 (159) — (15)Income/(loss) before income taxes— (161) 5,184 — 5,023Provision for/(benefit from) income taxes— (372) 1,753 — 1,381Equity in earnings of subsidiaries3,632 3,421 — (7,053) —Net income/(loss)3,632 3,632 3,431 (7,053) 3,642Net income/(loss) attributable to noncontrolling interest— — 10 — 10Net income/(loss) excluding noncontrolling interest$3,632 $3,632 $3,421 $(7,053) $3,632 Comprehensive income/(loss) excluding noncontrollinginterest$2,675 $2,675 $5,717 $(8,392) $2,675101The Kraft Heinz CompanyCondensed Consolidating Statements of IncomeFor the Year Ended January 3, 2016(in millions)(Unaudited) Parent Guarantor Subsidiary Issuer Non-GuarantorSubsidiaries Eliminations ConsolidatedNet sales$— $10,580 $8,145 $(387) $18,338Cost of products sold— 7,298 5,666 (387) 12,577Gross profit— 3,282 2,479 — 5,761Selling, general and administrative expenses— 1,449 1,673 — 3,122Intercompany service fees and other recharges— 929 (929) — —Operating income— 904 1,735 — 2,639Interest expense— 1,221 100 — 1,321Other expense/(income), net— 140 165 — 305Income/(loss) before income taxes— (457) 1,470 — 1,013Provision for/(benefit from) income taxes— (192) 558 — 366Equity in earnings of subsidiaries634 899 — (1,533) —Net income/(loss)634 634 912 (1,533) 647Net income/(loss) attributable to noncontrolling interest— — 13 — 13Net income/(loss) excluding noncontrolling interest$634 $634 $899 $(1,533) $634 Comprehensive income/(loss) excluding noncontrollinginterest$537 $537 $(734) $197 $537102The Kraft Heinz CompanyCondensed Consolidating Balance SheetsAs of December 30, 2017(in millions)(Unaudited) Parent Guarantor Subsidiary Issuer Non-GuarantorSubsidiaries Eliminations ConsolidatedASSETS Cash and cash equivalents$— $509 $1,120 $— $1,629Trade receivables— 91 830 — 921Receivables due from affiliates— 716 207 (923) —Dividends due from affiliates135 — — (135) —Sold receivables— — 353 — 353Income taxes receivable— 1,904 97 (1,419) 582Inventories— 1,846 969 — 2,815Short-term lending due from affiliates— 1,598 3,816 (5,414) —Other current assets— 493 473 — 966Total current assets135 7,157 7,865 (7,891) 7,266Property, plant and equipment, net— 4,577 2,543 — 7,120Goodwill— 11,067 33,757 — 44,824Investments in subsidiaries66,034 80,426 — (146,460) —Intangible assets, net— 3,222 56,227 — 59,449Long-term lending due from affiliates— 1,700 2,029 (3,729) —Other assets— 515 1,058 — 1,573TOTAL ASSETS$66,169 $108,664 $103,479 $(158,080) $120,232LIABILITIES AND EQUITY Commercial paper and other short-term debt$— $448 $12 $— $460Current portion of long-term debt— 2,577 166 — 2,743Short-term lending due to affiliates— 3,816 1,598 (5,414) —Trade payables— 2,718 1,731 — 4,449Payables due to affiliates— 207 716 (923) —Accrued marketing— 236 444 — 680Accrued postemployment costs— — 51 — 51Income taxes payable— — 1,571 (1,419) 152Interest payable— 404 15 — 419Dividends due to affiliates— 135 — (135) —Other current liabilities135 473 570 — 1,178Total current liabilities135 11,014 6,874 (7,891) 10,132Long-term debt— 27,442 891 — 28,333Long-term borrowings due to affiliates— 2,029 1,919 (3,948) —Deferred income taxes— 1,245 12,831 — 14,076Accrued postemployment costs— 184 243 — 427Other liabilities— 716 301 — 1,017TOTAL LIABILITIES135 42,630 23,059 (11,839) 53,985Redeemable noncontrolling interest— — 6 — 6Total shareholders’ equity66,034 66,034 80,207 (146,241) 66,034Noncontrolling interest— — 207 — 207TOTAL EQUITY66,034 66,034 80,414 (146,241) 66,241TOTAL LIABILITIES AND EQUITY$66,169 $108,664 $103,479 $(158,080) $120,232103The Kraft Heinz CompanyCondensed Consolidating Balance SheetsAs of December 31, 2016(in millions)(Unaudited) Parent Guarantor Subsidiary Issuer Non-GuarantorSubsidiaries Eliminations ConsolidatedASSETS Cash and cash equivalents$— $2,830 $1,374 $— $4,204Trade receivables— 12 757 — 769Receivables due from affiliates— 712 111 (823) —Dividends due from affiliates39 — — (39) —Sold receivables— — 129 — 129Income taxes receivable— 1,959 10 (1,709) 260Inventories— 1,759 925 — 2,684Short-term lending due from affiliates— 1,722 2,956 (4,678) —Other current assets— 270 437 — 707Total current assets39 9,264 6,699 (7,249) 8,753Property, plant and equipment, net— 4,447 2,241 — 6,688Goodwill— 11,067 33,058 — 44,125Investments in subsidiaries57,358 70,877 — (128,235) —Intangible assets, net— 3,364 55,933 — 59,297Long-term lending due from affiliates— 1,700 2,000 (3,700) —Other assets— 501 1,116 — 1,617TOTAL ASSETS$57,397 $101,220 $101,047 $(139,184) $120,480LIABILITIES AND EQUITY Commercial paper and other short-term debt$— $642 $3 $— $645Current portion of long-term debt— 2,032 14 — 2,046Short-term lending due to affiliates— 2,956 1,722 (4,678) —Trade payables— 2,376 1,620 — 3,996Payables due to affiliates— 111 712 (823) —Accrued marketing— 277 472 — 749Accrued postemployment costs— 144 13 — 157Income taxes payable— — 1,964 (1,709) 255Interest payable— 401 14 — 415Dividends due to affiliates— 39 — (39) —Other current liabilities39 588 611 — 1,238Total current liabilities39 9,566 7,145 (7,249) 9,501Long-term debt— 28,736 977 — 29,713Long-term borrowings due to affiliates— 2,000 1,902 (3,902) —Deferred income taxes— 1,382 19,466 — 20,848Accrued postemployment costs— 1,754 284 — 2,038Other liabilities— 424 382 — 806TOTAL LIABILITIES39 43,862 30,156 (11,151) 62,906Redeemable noncontrolling interest— — — — —Total shareholders’ equity57,358 57,358 70,675 (128,033) 57,358Noncontrolling interest— — 216 — 216TOTAL EQUITY57,358 57,358 70,891 (128,033) 57,574TOTAL LIABILITIES AND EQUITY$57,397 $101,220 $101,047 $(139,184) $120,480104The Kraft Heinz CompanyCondensed Consolidating Statements of Cash FlowsFor the Year Ended December 30, 2017(in millions)(Unaudited) Parent Guarantor Subsidiary Issuer Non-GuarantorSubsidiaries Eliminations ConsolidatedCASH FLOWS FROM OPERATING ACTIVITIES Net cash provided by/(used for) operating activities$2,888 $1,499 $(972) $(2,888) $527CASH FLOWS FROM INVESTING ACTIVITIES Cash receipts on sold receivables— — 2,286 — 2,286Capital expenditures— (757) (460) — (1,217)Proceeds from net investment hedges— 6 — — 6Net proceeds from/(payments on) intercompany lendingactivities— 641 (542) (99) —Additional investments in subsidiaries(22) — — 22 —Other investing activities, net— 58 23 — 81Net cash provided by/(used for) investing activities(22) (52) 1,307 (77) 1,156CASH FLOWS FROM FINANCING ACTIVITIES Repayments of long-term debt— (2,632) (12) — (2,644)Proceeds from issuance of long-term debt— 1,496 — — 1,496Debt issuance costs— (6) — — (6)Net proceeds from/(payments on) intercompany borrowingactivities— 542 (641) 99 —Proceeds from issuance of commercial paper— 6,043 — — 6,043Repayments of commercial paper— (6,249) — — (6,249)Dividends paid-Series A Preferred Stock— — — — —Dividends paid-common stock(2,888) (2,888) — 2,888 (2,888)Redemption of Series A Preferred Stock— — — — —Other intercompany capital stock transactions— 22 — (22) —Other financing activities, net22 — — — 22Net cash provided by/(used for) financing activities(2,866) (3,672) (653) 2,965 (4,226)Effect of exchange rate changes on cash, cash equivalents, andrestricted cash— — 57 — 57Cash, cash equivalents, and restricted cash: Net increase/(decrease)— (2,225) (261) — (2,486)Balance at beginning of period— 2,869 1,386 — 4,255Balance at end of period$— $644 $1,125 $— $1,769105The Kraft Heinz CompanyCondensed Consolidating Statements of Cash FlowsFor the Year Ended December 31, 2016(in millions)(Unaudited) Parent Guarantor Subsidiary Issuer Non-GuarantorSubsidiaries Eliminations ConsolidatedCASH FLOWS FROM OPERATING ACTIVITIES Net cash provided by/(used for) operating activities$3,097 $4,369 $(1,705) $(3,112) $2,649CASH FLOWS FROM INVESTING ACTIVITIES Cash receipts on sold receivables— — 2,589 — 2,589Capital expenditures— (923) (324) — (1,247)Proceeds from net investment hedges— 104 (13) — 91Net proceeds from/(payments on) intercompany lendingactivities— 690 37 (727) —Additional investments in subsidiaries55 (10) — (45) —Return of capital8,987 — — (8,987) —Other investing activities, net— 25 (6) — 19Net cash provided by/(used for) investing activities9,042 (114) 2,283 (9,759) 1,452CASH FLOWS FROM FINANCING ACTIVITIES Repayments of long-term debt— (72) (14) — (86)Proceeds from issuance of long-term debt— 6,978 3 — 6,981Debt issuance costs— (53) — — (53)Net proceeds from/(payments on) intercompany borrowingactivities— (37) (690) 727 —Proceeds from issuance of commercial paper— 6,680 — — 6,680Repayments of commercial paper— (6,043) — — (6,043)Dividends paid-Series A Preferred Stock(180) — — — (180)Dividends paid-common stock(3,584) (3,764) (16) 3,780 (3,584)Redemption of Series A Preferred Stock(8,320) — — — (8,320)Other intercompany capital stock transactions— (8,374) 10 8,364 —Other financing activities, net(55) 47 (8) — (16)Net cash provided by/(used for) financing activities(12,139) (4,638) (715) 12,871 (4,621)Effect of exchange rate changes on cash, cash equivalents, andrestricted cash— — (137) — (137)Cash, cash equivalents, and restricted cash: Net increase/(decrease)— (383) (274) — (657)Balance at beginning of period— 3,252 1,660 — 4,912Balance at end of period$— $2,869 $1,386 $— $4,255106The Kraft Heinz CompanyCondensed Consolidating Statements of Cash FlowsFor the Year Ended January 3, 2016(in millions)(Unaudited) Parent Guarantor Subsidiary Issuer Non-GuarantorSubsidiaries Eliminations ConsolidatedCASH FLOWS FROM OPERATING ACTIVITIES Net cash provided by/(used for) operating activities$632 $1,363 $64 $(787) $1,272CASH FLOWS FROM INVESTING ACTIVITIES Cash receipts on sold receivables— — 1,331 — 1,331Capital expenditures— (400) (248) — (648)Proceeds from net investment hedges— 488 — — 488Net proceeds from/(payments on) intercompany lendingactivities— 737 (721) (16) —Payments to acquire Kraft Foods Group, Inc., net of cashacquired— (9,535) 67 — (9,468)Additional investments in subsidiaries(10,000) — — 10,000 —Return of capital1,570 5 — (1,575) —Other investing activities, net— (2) (10) — (12)Net cash provided by/(used for) investing activities(8,430) (8,707) 419 8,409 (8,309)CASH FLOWS FROM FINANCING ACTIVITIES Repayments of long-term debt— (12,284) (30) — (12,314)Proceeds from issuance of long-term debt— 14,032 802 — 14,834Debt prepayment and extinguishment costs— (105) — — (105)Debt issuance costs— (94) (4) — (98)Net proceeds from/(payments on) intercompany borrowingactivities— 721 (737) 16 —Proceeds from issuance of common stock to Sponsors10,000 — — — 10,000Dividends paid-Series A Preferred Stock(900) — — — (900)Dividends paid-common stock(1,302) (2,202) (155) 2,357 (1,302)Other intercompany capital stock transactions— 10,000 (5) (9,995) —Other financing activities, net— (12) (56) — (68)Net cash provided by/(used for) financing activities7,798 10,056 (185) (7,622) 10,047Effect of exchange rate changes on cash, cash equivalents, andrestricted cash— — (408) — (408)Cash, cash equivalents, and restricted cash: Net increase/(decrease)— 2,712 (110) — 2,602Balance at beginning of period— 540 1,770 — 2,310Balance at end of period$— $3,252 $1,660 $— $4,912107The following tables provide a reconciliation of cash and cash equivalents, as reported on our unaudited condensed consolidating balance sheets, to cash,cash equivalents, and restricted cash, as reported on our unaudited condensed consolidating statements of cash flows (in millions): December 30, 2017 Parent Guarantor Subsidiary Issuer Non-GuarantorSubsidiaries Eliminations ConsolidatedCash and cash equivalents$— $509 $1,120 $— $1,629Restricted cash included in other assets (current)— 135 5 — 140Cash, cash equivalents, and restricted cash$— $644 $1,125 $— $1,769 December 31, 2016 Parent Guarantor Subsidiary Issuer Non-GuarantorSubsidiaries Eliminations ConsolidatedCash and cash equivalents$— $2,830 $1,374 $— $4,204Restricted cash included in other assets (current)— 39 3 — 42Restricted cash included in other assets (noncurrent)— — 9 — 9Cash, cash equivalents, and restricted cash$— $2,869 $1,386 $— $4,255108Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.None.Item 9A. Controls and Procedures.Evaluation of Disclosure Controls and ProceduresOur management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls andprocedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concludedthat our disclosure controls and procedures, as of December 30, 2017, were effective and provided reasonable assurance that the information required to bedisclosed by us in reports filed or submitted under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized, and reported within the timeperiods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including the Chief Executive Officer and ChiefFinancial Officer, as appropriate to allow timely decisions regarding required disclosure.Remediation of Previously Disclosed Material WeaknessA material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility thata material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. As previously disclosedconcurrently with the filing of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, we concluded that we had a material weaknessin internal control over financial reporting related to the misapplication of Accounting Standards Update 2016-15. Specifically, we did not maintain effectivecontrols over the adoption of new accounting standards, including communication with the appropriate individuals in coming to our conclusions on theapplication of new standards. Our management determined that the control deficiency constituted a material weakness.During the fourth quarter of 2017, management implemented steps to improve the evaluation and documentation of new accounting standards’ impacts andcommunication with the appropriate individuals. Changes in Internal Control Over Financial ReportingOur Chief Executive Officer and Chief Financial Officer, with other members of management, evaluated the changes in our internal control over financialreporting during the three months ended December 30, 2017. During the three months ended December 30, 2017, management implemented steps to improvethe evaluation and documentation of new accounting standards’ impacts and communication with the appropriate individuals. These changes have beendesigned to ensure enhanced subject matter expert input in relation to new accounting standard pronouncements.We determined that, except for the remediation activities described above, there were no changes in our internal control over financial reporting duringthe three months ended December 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financialreporting.Management's Report on Internal Control Over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under theExchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. Ourinternal control over financial reporting includes those written policies and procedures that:•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets;•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles;•provide reasonable assurance that receipts and expenditures are being made only in accordance with management and director authorization; and•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have amaterial effect on the consolidated financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.109Management assessed the effectiveness of our internal control over financial reporting as of December 30, 2017. Management based this assessment oncriteria described in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO).Based on this assessment, management determined that as of December 30, 2017, we maintained effective internal control over financial reporting.PricewaterhouseCoopers LLP, an independent registered public accounting firm, who audited the consolidated financial statements included in this AnnualReport on Form 10-K, has also audited the effectiveness of our internal control over financial reporting as of December 30, 2017, as stated in their reportwhich appears herein under Item 8.Item 9B. Other Information.Not applicable.PART IIIItem 10. Directors, Executive Officers and Corporate Governance.We have a written code of conduct that applies to all of our employees, including our principal executive officer, principal financial officer, principalaccounting officer or controller, and persons performing similar functions. Our code of conduct is available free of charge on our websiteat www.kraftheinzcompany.com and will be provided free of charge to any shareholder submitting a written request to: Corporate Secretary, 200 EastRandolph Street, Suite 7600; Chicago, Illinois 60601. Any amendment to our code of conduct and any waiver applicable to our executive officers or seniorfinancial officers will be posted on our Web site within the time period required by the SEC and applicable NASDAQ rules. The information on our Web siteis not, and shall not be deemed to be, a part of this Annual Report on Form 10-K or incorporated into any other filings we make with the SEC. Additionalinformation required by this Item 10 is included under the headings “Company Proposals - Proposal 1. Election of Directors,” “Corporate Governance andBoard Matters – Section 16(a) Beneficial Ownership Reporting Compliance,” “Corporate Governance and Board Matters – Governance Guidelines andCodes of Conduct,” and “Board Committees and Membership – Audit Committee” in our definitive Proxy Statement for our Annual Meeting of Shareholdersscheduled to be held on April 23, 2018 (“2018 Proxy Statement”). This information is incorporated by reference into this Annual Report on Form 10-K.Item 11. Executive Compensation.Information required by this Item 11 is included under the headings “Pay Ratio Disclosure,” “Board Committees and Membership – CompensationCommittee,” “Compensation of Non-Employee Directors,” “Compensation Discussion and Analysis,” and “Executive Compensation Tables,” in our 2018Proxy Statement. This information is incorporated by reference into this Annual Report on Form 10-K.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.The number of shares to be issued upon exercise or vesting of awards issued under, and the number of shares remaining available for future issuance under,our equity compensation plans at December 30, 2017, were: Number of securities tobe issued upon exerciseof outstanding options,warrants and rights(1) Weighted average exercise price per shareof outstanding options, warrants and rights Number of securitiesremaining available forfuture issuance underequity compensation plans(excluding securitiesreflected in column (a))Plan Category(a) (b) (c)Equity compensation plans approvedby security holders21,396,351 $41.63 48,723,411Equity compensation plans notapproved by security holders— — —Total21,396,351 48,723,411(1) Includes the vesting of RSUs.Information related to the security ownership of certain beneficial owners and management is included in our 2018 Proxy Statement under the heading“Ownership of Equity Securities” and is incorporated by reference into this Annual Report on Form 10-K.110Item 13. Certain Relationships and Related Transactions, and Director Independence.Information required by this Item 13 is included under the heading “Corporate Governance and Board Matters - Independence and Related PersonTransactions” in our 2018 Proxy Statement. This information is incorporated by reference into this Annual Report on Form 10-K.Item 14. Principal Accountant Fees and Services.Information required by this Item 14 is included under the heading “Board Committees and Membership – Audit Committee” in our 2018 Proxy Statement.This information is incorporated by reference into this Annual Report on Form 10-K.PART IVItem 15. Exhibits and Financial Statement Schedules.(a) Index to Consolidated Financial Statements and Schedules Page No.Report of Independent Registered Public Accounting Firm47Consolidated Statements of Income for the Years Ended December 30, 2017, December 31, 2016, and January 3, 201649Consolidated Statements of Comprehensive Income for the Years Ended December 30, 2017, December 31, 2016, and January 3, 201650Consolidated Balance Sheets at December 30, 2017 and December 31, 201651Consolidated Statements of Equity for the Years Ended December 30, 2017, December 31, 2016, and January 3, 201652Consolidated Statements of Cash Flows for the Years Ended December 30, 2017, December 31, 2016, and January 3, 201653Notes to the Consolidated Financial Statements55Financial Statement Schedule - Valuation and Qualifying Accounts for the Years Ended December 30, 2017, December 31, 2016, and January3, 2016S-1Schedules other than those listed above have been omitted either because such schedules are not required or are not applicable.(b) The following exhibits are filed as part of, or incorporated by reference into, this Annual Report:Exhibit No. Descriptions2.1 Separation and Distribution Agreement between Mondelēz International, Inc. (formerly known as Kraft Foods Inc.) and Kraft FoodsGroup, Inc., dated as of September 27, 2012 (incorporated by reference to Exhibit 2.1 to Amendment No. 1 to Kraft Foods Group, Inc.’sRegistration Statement on Form S-4 (File No. 333-184314), filed on October 26, 2012).+2.2 Canadian Asset Transfer Agreement between Mondelēz Canada Inc. and Kraft Canada Inc., dated as of September 29, 2012(incorporated by reference to Exhibit 2.2 to Amendment No. 2 to Kraft Foods Group, Inc.’s Registration Statement on Form S-4 (File No.333-184314), filed on December 4, 2012).+2.3 Master Ownership and License Agreement Regarding Patents, Trade Secrets and Related Intellectual Property between Kraft FoodsGlobal Brands LLC, Kraft Foods Group Brands LLC, Kraft Foods UK Ltd. and Kraft Foods R&D Inc., dated as of October 1, 2012(incorporated by reference to Exhibit 2.3 to Amendment No. 2 to Kraft Foods Group, Inc.’s Registration Statement on Form S-4 (File No.333-184314), filed on December 4, 2012).+2.4 Master Ownership and License Agreement Regarding Trademarks and Related Intellectual Property between Kraft Foods Global BrandsLLC and Kraft Foods Group Brands LLC., dated as of September 27, 2012 (incorporated by reference to Exhibit 2.4 to Amendment No.2 to Kraft Foods Group, Inc.’s Registration Statement on Form S-4 (File No. 333-184314), filed on December 4, 2012).+2.5 Agreement and Plan of Merger, dated as of March 24, 2015, by and among H.J. Heinz Holding Corporation, Kite Merger Sub Corp., KiteMerger Sub LLC and Kraft Foods Group, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statementon Form S-4 (File No. 333-203364), filed on April 10, 2015).+2.6 First Amendment to the Master Ownership and License Agreement Regarding Trademarks and Related Intellectual Property, by andbetween Intercontinental Great Brands LLC and Kraft Foods Group Brands LLC, effective as of July 15, 2013 (incorporated by referenceto Exhibit 2.2 to Kraft Foods Group, Inc.’s Quarterly Report on Form 10-Q (File No. 1-35491), filed on April 28, 2015).1112.7 Second Amendment to the Master Ownership and License Agreement Regarding Trademarks and Related Intellectual Property, by andbetween Intercontinental Great Brands LLC and Kraft Foods Group Brands LLC, effective as of October 1, 2014 (incorporated byreference to Exhibit 2.3 to Kraft Foods Group, Inc.’s Quarterly Report on Form 10-Q (File No. 1-35491), filed on April 28, 2015).2.8 Amendment to the Master Ownership and License Agreement regarding Trademarks and Related Intellectual Property, by and betweenIntercontinental Great Brands LLC and Kraft Foods Group Brands LLC, effective as of September 28, 2016 (incorporated by reference toExhibit 2.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-37482), filed on August 4, 2017).2.9 Addendum to Master Ownership and License Agreement Regarding Patents, Trade Secrets, and Related Intellectual Property, by andbetween Intercontinental Great Brands LLC, Mondelçz UK LTD, Kraft Foods R&D Inc., and Kraft Foods Group Brands LLC, dated as ofMay 9, 2017 (incorporated by reference to Exhibit 2.2 to the Company’s Quarterly Report on Form 10-Q (File No. 1-37482), filed onAugust 4, 2017).3.1 Second Amended and Restated Certificate of Incorporation of H.J. Heinz Holding Corporation (incorporated by reference to Exhibit 3.1of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 2, 2015).3.2 Amended and Restated Bylaws of The Kraft Heinz Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Reporton Form 8-K (File No. 1-37482), filed on October 27, 2017).4.1 Amended and Restated Registration Rights Agreement, dated as of July 2, 2015, by and among the Company, 3G Global Food HoldingsLP and Berkshire Hathaway Inc. (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 2, 2015).4.2 Indenture dated as of July 1, 2015, governing debt securities by and among H. J. Heinz Company, as issuer, H.J. Heinz HoldingCorporation, as guarantor, and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 of theCompany’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).4.3 First Supplemental Indenture dated as of July 1, 2015, governing the 2.000% Senior Notes due 2023, by and among H. J. HeinzCompany, as issuer, H.J. Heinz Holding Corporation, as guarantor, Wells Fargo Bank, National Association, as trustee, and SociétéGénérale Bank & Trust, as paying agent, security registrar, and transfer agent (incorporated by reference to Exhibit 4.2 of the Company’sCurrent Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).4.4 Second Supplemental Indenture dated as of July 1, 2015, governing the 4.125% Senior Notes due 2027, by and among H. J. HeinzCompany, as issuer, H.J. Heinz Holding Corporation, as guarantor, Wells Fargo Bank, National Association, as trustee, and SociétéGénérale Bank & Trust, as paying agent, security registrar, and transfer agent (incorporated by reference to Exhibit 4.4 of the Company’sCurrent Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).4.5 Third Supplemental Indenture dated as of July 2, 2015, governing the 1.60% Senior Notes due 2017, the 2.00% Senior Notes due 2018,the 2.80% Senior Notes due 2020, the 3.50% Senior Notes due 2022, the 3.95% Senior Notes due 2025, the 5.00% Senior Notes due2035 and the 5.20% Senior Notes due 2045, by and among H. J. Heinz Company, as issuer, H.J. Heinz Holding Corporation, asguarantor, and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.6 of the Company’s CurrentReport on Form 8-K (File No. 1-37482), filed on July 6, 2015).4.6 Indenture dated as of July 6, 2015, governing debt securities by and among Kraft Canada Inc., as issuer, The Kraft Heinz Company andKraft Heinz Foods Company, as guarantors, and Computershare Trust Company of Canada, as trustee (incorporated by reference toExhibit 4.9 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).4.7 First Supplemental Indenture dated as of July 6, 2015, governing the Floating Rate Senior Notes due 2018, by and among Kraft CanadaInc., as issuer, The Kraft Heinz Company and Kraft Heinz Foods Company, as guarantors, and Computershare Trust Company of Canada,as trustee (incorporated by reference to Exhibit 4.10 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6,2015).4.8 Second Supplemental Indenture dated as of July 6, 2015, governing the Floating Rate Senior Notes due 2020, by and among KraftCanada Inc., as issuer, The Kraft Heinz Company and Kraft Heinz Foods Company, as guarantors, and Computershare Trust Company ofCanada, as trustee (incorporated by reference to Exhibit 4.12 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed onJuly 6, 2015).4.9 Third Supplemental Indenture dated as of July 6, 2015, governing the 2.70% Senior Notes due 2020, by and among Kraft Canada Inc.,as issuer, The Kraft Heinz Company and Kraft Heinz Foods Company, as guarantors, and Computershare Trust Company of Canada, astrustee (incorporated by reference to Exhibit 4.14 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6,2015).4.10 Form of the 2.70% Senior Notes due 2020 (included in Exhibit 4.9).4.11 Guarantee Agreement dated as of July 6, 2015, by and among The Kraft Heinz Company and Kraft Heinz Foods Company, asguarantors, and Computershare Trust Company of Canada, as trustee (incorporated by reference to Exhibit 4.16 of the Company’sCurrent Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).1124.12 Indenture by and between Kraft Foods Group, Inc. and Deutsche Bank Trust Company Americas, as trustee, dated as of June 4, 2012(incorporated by reference to Exhibit 10.4 to Kraft Foods Group, Inc.’s Registration Statement on Form 10 (File No. 1-35491), filed onJune 21, 2012).4.13 Supplemental Indenture No. 1 by and between Kraft Foods Group, Inc., Mondelēz International, Inc. (formerly known as Kraft FoodsInc.), as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated as of June 4, 2012 (incorporated by reference toExhibit 10.5 to Kraft Foods Group, Inc.’s Registration Statement on Form 10 (File No. 1-35491), filed on June 21, 2012).4.14 Supplemental Indenture No. 2 by and between Kraft Foods Group, Inc., Mondelēz International, Inc. (formerly known as Kraft FoodsInc.), as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated as of July 18, 2012 (incorporated by reference toExhibit 10.27 to Kraft Foods Group, Inc.’s Registration Statement on Form 10 (File No. 1-35491), filed on August 6, 2012).4.15 Supplemental Indenture No. 3 dated as of July 2, 2015, governing the 2.250% Notes due 2017, 6.125% Notes due 2018, 5.375% Notesdue 2020, 3.500% Notes due 2022, 6.875% Notes due 2039, 6.500% Notes due 2040 and 5.000% Notes due 2042, by and among KraftFoods Group, Inc., as issuer, H. J. Heinz Company, as successor, H.J. Heinz Holding Corporation, as parent guarantor, and DeutscheBank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.17 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).4.16 Third Supplemental Indenture dated July 2, 2015, governing the 6.75% Debentures due 2032 and 7.125% Debentures due 2039 by andamong H.J. Heinz Holding Corporation, H. J. Heinz Company and The Bank of New York Mellon (as successor trustee to Bank One,National Association) (incorporated by reference to Exhibit 4.18 of the Company’s Current Report on Form 8-K (File No. 1-37482),filed on July 6, 2015).4.17 Third Supplemental Indenture dated July 2, 2015, governing the 6.375% Debentures due 2028 by and among H.J. Heinz HoldingCorporation, H. J. Heinz Company and The Bank of New York Mellon (as successor trustee to Bank One, National Association)(incorporated by reference to Exhibit 4.19 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).4.18 Indenture among H. J. Heinz Corporation II, H. J. Heinz Finance Company, and The Bank of New York Mellon (as successor trustee)dated as of July 6, 2001 governing the 6.75% Guaranteed Notes due 2032 and the 7.125% Guaranteed Notes due 2039 (incorporatedherein by reference to Exhibit 4(c) to H. J. Heinz Company’s Annual Report on Form 10-K for the fiscal year ended May 1, 2002 (FileNo. 1-3385), filed on July 30, 2002).4.19 Indenture among H. J. Heinz Company and MUFG Union Bank, N.A. (as successor trustee) dated as of July 15, 2008 governing the2.000% Notes due 2016, the 3.125% Notes due 2021, the 1.50% Notes due 2017, and the 2.85% Notes due 2022 (incorporated hereinby reference to Exhibit 4(d) to H. J. Heinz Company’s Annual Report on Form 10-K for the fiscal year ended April 29, 2009 (File No. 1-3385), filed on June 17, 2009).4.20 Supplemental Indenture No. 4, dated as of November 11, 2015, to the Indenture, by and between Kraft Foods Group, Inc. and DeutscheBank Trust Company Americas, as trustee, dated as of June 4, 2012 (incorporated by reference to Exhibit 4.21 to the Company’s AnnualReport on Form 10-K for the fiscal year ended January 3, 2016 (File No. 1-37482), filed on March 3, 2016).4.21 Second Lien Security Agreement, dated as of June 7, 2013, by and among Hawk Acquisition Intermediate Corporation II, and certain ofits subsidiaries, collectively, as the Initial Grantors, and Wells Fargo Bank, National Association, as Collateral Agent (incorporated byreference to Exhibit 10.6 to H. J. Heinz Company’s Current Report on Form 8-K (File No. 1-3385), dated June 13, 2013).4.22 Second Lien Intellectual Property Security Agreement, dated June 7, 2013 by the persons listed on the signature pages thereof in favorof Wells Fargo Bank, National Association, as collateral agent for the Secured Parties (incorporated by reference to Exhibit 10.7 to H. J.Heinz Company’s Current Report on Form 8-K (File No. 1-3385), dated June 13, 2013).4.23 Indenture dated as of January 30, 2015, by and among H. J. Heinz Corporation II, the Guarantors party hereto, Wells Fargo Bank,National Association, as Collateral Agent and MUFG Union Bank, N.A. as Trustee, relating to H. J. Heinz Corporation II’s$2,000,000,000 4.875% Second Lien Senior Secured Notes due 2025 (incorporated by reference to Exhibit 4.1 of H. J. HeinzCorporation II’s Current Report on Form 8-K (File No. 444-194441), dated February 5, 2015).4.24 Indenture by and between H. J. Heinz Company (as successor issuer), and The Bank of New York Mellon (as successor trustee) dated asof July 15, 1992 (incorporated by reference to Exhibit 4(a) to H. J. Heinz Company’s Registration Statement on Form S-3 (File No. 333-48017), filed on March 16, 1998).4.25 Fourth Supplemental Indenture, dated as of May 24, 2016, governing the 3.000% Senior Notes due 2026 and the 4.375% Senior Notesdue 2046, by and among Kraft Heinz Foods Company, as issuer, The Kraft Heinz Company, as guarantor, and Deutsche Bank TrustCompany Americas, as trustee (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on May 25, 2016).4.26 Form of the 3.000% Senior Notes due 2026 and the 4.375% Senior Notes due 2046 (included in Exhibit 4.25).1134.27 Fifth Supplemental Indenture, dated as of May 25, 2016, governing the 1.500% Senior Notes due 2024 and the 2.250% Senior Notesdue 2028, by and among Kraft Heinz Foods Company, as issuer, The Kraft Heinz Company, as guarantor, and Deutsche Bank TrustCompany Americas, as trustee, paying agent, security registrar, and transfer agent (incorporated by reference to Exhibit 4.3 of theCompany’s Current Report on Form 8-K (File No. 1-37482), filed on May 25, 2016).4.28 Form of the 1.500% Senior Notes due 2024 and the 2.250% Senior Notes due 2028 (included in Exhibit 4.25).4.29 Sixth Supplemental Indenture, dated as of August 10, 2017, governing the floating rate Senior Notes due 2019, the floating rate SeniorNotes due 2021 and the floating rate Senior Notes due 2022, by and among Kraft Heinz Foods Company, as issuer, The Kraft HeinzCompany, as guarantor, and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 to theCompany’s Current Report on Form 8-K (File No. 1-37482), filed on August 10, 2017).4.30 Forms of floating rate Senior Notes due 2019, the floating rate Senior Notes due 2021 and the floating rate Senior Notes due 2022(included in Exhibit 4.29).10.1 Tax Sharing and Indemnity Agreement by and between Mondelēz International, Inc. (formerly known as Kraft Foods Inc.) and KraftFoods Group, Inc., dated as of September 27, 2012 (incorporated by reference to Exhibit 10.3 to Amendment No. 1 to Kraft FoodsGroup, Inc.’s Registration Statement on Form S-4 (File No. 333-184314), filed on October 26, 2012).10.2 Form of (Kraft Foods Group, Inc.) Global Stock Option Award Agreement (incorporated by reference to Exhibit 10.1 to Kraft FoodsGroup, Inc.’s Quarterly Report on Form 10-Q (File No. 333-35491), filed on May 2, 2014).++10.3 Form of (Kraft Foods Group, Inc.) Global Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 to Kraft FoodsGroup, Inc.’s Quarterly Report on Form 10-Q (File No. 333-35491) filed on May 2, 2014).++10.4 H. J. Heinz Holding Corporation 2013 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to Amendment No. 4 to H.J.Heinz Holding Corporation’s Registration Statement on Form S-4 (File No. 333-203364), filed on May 29, 2015).++10.5 Amendment, effective July 2, 2015 to the H. J. Heinz Holding Corporation 2013 Omnibus Incentive Plan (incorporated herein byreference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2016 (File No. 1-37482),filed on March 3, 2016).++10.6 Form of H. J. Heinz Holding Corporation 2013 Omnibus Incentive Plan Non-Qualified Stock Option Award Agreement (incorporated byreference to Exhibit 10.2 to Amendment No. 4 to H.J. Heinz Holding Corporation’s Registration Statement on Form S-4 (File No. 333-203364), filed on May 29, 2015).++10.7 Kraft Foods Group, Inc. Deferred Compensation Plan For Non-Management Directors (incorporated by reference to Exhibit 4.3 to KraftFoods Group, Inc.’s Registration Statement on Form S-8 (File No. 333-183867) filed on September 12, 2012).++10.8 Kraft Foods Group, Inc. 2012 Performance Incentive Plan (incorporated by reference to Exhibit 4.3 to Kraft Foods Group, Inc.’sRegistration Statement on Form S-8 (File No. 333-183868) filed on September 12, 2012). ++10.9 Settlement Agreement, dated June 22, 2015, between Mondelēz International, Inc. and Kraft Foods Group, Inc. (incorporated byreference to Exhibit 10.1 of Kraft Foods Group, Inc.’s Current Report on Form 8-K (File No. 1-35491), filed on June 24, 2015).10.10 Subscription Agreement, dated as of July 1, 2015, by and among H.J. Heinz Holding Corporation, 3G Global Food Holdings LP andBerkshire Hathaway Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 1-37482),filed on July 2, 2015).10.11 Credit Agreement dated as of July 6, 2015, by and among Kraft Heinz Foods Company (formerly known as H. J. Heinz Company), TheKraft Heinz Company (formerly known as H.J. Heinz Holding Corporation), the lenders party thereto, JPMorgan Chase Bank, N.A., asAdministrative Agent and JPMorgan Europe Limited, as London Agent (incorporated by reference to Exhibit 10.1 of the Company’sCurrent Report on Form 8-K (File No. 1-37482), filed on July 6, 2015).10.12 First Amendment to Credit Agreement, entered into as of May 4, 2016, to the Credit Agreement dated as of July 6, 2015, by and amongThe Kraft Heinz Company, Kraft Heinz Foods Company, the banks, financial institutions and other institutional lenders party thereto,the issuing banks, JPMorgan Chase Bank, N.A., as Administrative Agent and J.P. Morgan Europe Limited, as London agent for thelenders (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 1-37482), filed on May 6,2016).10.13 Consulting Agreement, dated as of November 2, 2017, by and between The Kraft Heinz Company and John T. Cahill.++10.14 The Kraft Heinz Company 2016 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Reporton Form 10-Q (File No. 1-37482), filed on May 5, 2016).++11410.15 Form of The Kraft Heinz Company 2016 Omnibus Incentive Plan Non-Qualified Stock Option Award Agreement (incorporated byreference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 1-37482), filed on May 5, 2016).++10.16 Form of The Kraft Heinz Company 2016 Omnibus Incentive Plan Matching Restricted Stock Unit Award Agreement (incorporated byreference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 1-37482), filed on May 5, 2016).++10.17 Form of The Kraft Heinz Company 2016 Omnibus Incentive Plan Matching Restricted Stock Unit Award Agreement.++10.18 Form of The Kraft Heinz Company 2016 Omnibus Incentive Plan Performance Share Award Notice (incorporated by reference to Exhibit10.17 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (File No. 1-37482), filed on February23, 2017).++10.19 Form of The Kraft Heinz Company 2016 Omnibus Incentive Plan Performance Share Award Notice.++10.20 Employment Agreement between The Kraft Heinz Company and George Zoghbi, dated as of December 16, 2016 (incorporated byreference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (File No. 1-37482), filed on February 23, 2017).++21.1 List of subsidiaries of The Kraft Heinz Company23.1 Consent of PricewaterhouseCoopers LLP24.1 Power of Attorney31.1 Certification of Chief Executive Officer pursuant to Rule 13a 14(a)/15d 14(a) of the Securities Exchange Act of 1934.31.2 Certification of Chief Financial Officer pursuant to Rule 13a 14(a)/15d 14(a) of the Securities Exchange Act of 1934.32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002.32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002.101.1 The following materials from The Kraft Heinz Company’s Annual Report on Form 10-K for the year ended December 30, 2017 formattedin XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements ofComprehensive Income, (iii) the Consolidated Statements of Equity, (iv) the Consolidated Balance Sheets, (v) the ConsolidatedStatements of Cash Flows, (vi) Notes to Consolidated Financial Statements, and (vii) document and entity information. + The Company agrees to furnish supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request.++ Indicates a management contract or compensatory plan or arrangement.Item 16. Form 10-K Summary.None.115Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. The Kraft Heinz CompanyDate:February 16, 2018 By: /s/ David H. Knopf David H. Knopf Executive Vice President and Chief Financial Officer (Principal Financial Officer)Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the date indicated:Signature Title Date /s/ Bernardo Hees Chief Executive Officer February 16, 2018Bernardo Hees (Principal Executive Officer) /s/ David H. Knopf Executive Vice President and Chief Financial Officer February 16, 2018David H. Knopf (Principal Financial Officer) /s/ Christopher R. Skinger Vice President, Global Controller February 16, 2018Christopher R. Skinger (Principal Accounting Officer) Alexandre Behring* Chairman of the Board John T. Cahill* Vice Chairman of the Board Gregory E. Abel* Director Warren E. Buffett* Director Tracy Britt Cool* Director Feroz Dewan* Director Jeanne P. Jackson* Director Jorge Paulo Lemann* Director Mackey J. McDonald* Director John C. Pope* Director Marcel Herrmann Telles* Director*By:/s/ David H. Knopf David H. Knopf Attorney-In-Fact February 16, 2018The Kraft Heinz CompanyValuation and Qualifying AccountsFor the Years Ended December 30, 2017, December 31, 2016 and January 3, 2016(in millions) Additions Deductions DescriptionBalance at Beginningof Period Charged to Costs andExpenses Charged to OtherAccounts(a) Write-offs andReclassifications Balance at End ofPeriodYear ended December 30, 2017 Allowances related to trade accountsreceivable$20 $8 $1 $(6) $23Allowances related to deferred taxes89 (9) — — 80 $109 $(1) $1 $(6) $103Year ended December 31, 2016 Allowances related to trade accountsreceivable$32 $6 $(4) $14 $20Allowances related to deferred taxes83 6 — — 89 $115 $12 $(4) $14 $109Year ended January 3, 2016 Allowances related to trade accountsreceivable$8 $5 $20 $1 $32Allowances related to deferred taxes64 10 12 3 83 $72 $15 $32 $4 $115(a) Primarily relates to acquisitions and currency translation.S-1Exhibit 10.13November 2, 2017Re: Consulting AgreementDear John,This letter sets forth the terms of the consulting arrangement between you and The Kraft Heinz Company (“Kraft Heinz” or the“Company), effective November 1, 2017 (the “Agreement”).1. Consulting Services. You agree to provide advisory and consulting services (the “Services”) to CEO Bernardo Hees andChairman Alex Behring related to the current and historical finances of the Company; relationships with licensors, customers andvendors; employee matters; product development, marketing and distribution; government affairs and strategic opportunities (includingpotential mergers, divestitures, or acquisitions). You will participate in reviews of performance. You will also attend site visits and otherCompany meetings/events as requested from time to time. The Services are distinct from the duties you provide as a member of theBoard of Directors of Kraft Heinz or any committee thereof.2. Payment for Services. You will be paid for the Services at the rate of $500,000 per year, payable monthly in arrears. Youwill be provided with certain administrative support, and expenses incurred while performing the Services will be covered in a mannermost administratively convenient for the Company3. Termination. Either party may terminate the Agreement at any time by providing 30 days notice to the other party. Upontermination, Kraft Heinz will have no further payment obligations, and you will have no further Services obligations, under theAgreement.4. Confidentiality. You agree to keep confidential and not to disclose in any manner any confidential or proprietaryinformation obtained in performance of the Services under this Agreement without the prior written consent of Kraft Heinz. Youragreement with respect to confidential and proprietary information shall survive termination or expiration of this Agreement. Upontermination or expiration of this Agreement for any reason, you agree to return to the General Counsel of Kraft Heinz all papers,records or other documents, and any electronic information that The Kraft Heinz Company has made available to you in connectionwith the performance of the Services, including all copies thereof.By signing below, you acknowledge that you understand and accept the terms and conditions of this Consulting Agreement.By:/s/ John T. Cahill John T. CahillON BEHALF OF THE KRAFT HEINZ COMPANYBy:/s/ Bernardo Hees By:/s/ James J. Savina Bernardo Hees James J. Savina Chief Executive Officer SVP, General Counsel and Corporate SecretaryExhibit 10.17THE KRAFT HEINZ COMPANYOMNIBUS INCENTIVE PLANRESTRICTED STOCK UNIT AWARD AGREEMENTUnless defined in this award agreement (together with all exhibits and appendices attached thereto, this "Award Agreement"),capitalized terms will have the same meanings ascribed to them in The Kraft Heinz Company 2016 Omnibus Incentive Plan (as may beamended from time to time, the "Plan").Subject to your acceptance of this Award Agreement, you are hereby being granted an award of Restricted Stock Units (the"RSUs") as of the Grant Date set forth below (the "Grant Date"). Each RSU is a bookkeeping entry representing the right to receiveone (1) share of The Kraft Heinz Company's (the "Company") common stock on the following terms and subject to the provisions ofthe Plan, which is incorporated herein by reference. In the event of a conflict between the provisions of the Plan and this AwardAgreement, the provisions of the Plan will govern.Number of RSUs: Grant Date: Vesting Date: Termination Without Cause, death and Disability:Dividend Equivalents: By agreeing to this Award Agreement, you agree that the RSUs are granted under and governed by the terms and conditions ofthis Award Agreement (including, without limitation, the terms and conditions set forth on Exhibit A, the Restrictive CovenantsAgreement attached as Exhibit B and the terms and conditions set forth on Appendix I) and the Plan. THE KRAFT HEINZ COMPANYEXHIBIT ATERMS AND CONDITIONS OF THERESTRICTED STOCK UNITSVestingThe RSUs will vest on the "Vesting Date" set forth in this Award Agreement subject to your continued Service (including, forthe avoidance of doubt, service as a consultant or advisor) with the Company or one of its Subsidiaries, except as otherwise set forth inthe Plan or this Award Agreement (including, without limitation, the section below titled "Termination"). Prior to the vesting andsettlement of the RSUs, you will not have any rights of a shareholder with respect to the RSUs or the Shares subject thereto.Shares due to you upon vesting and settlement of the RSUs will be delivered in accordance with the provisions of the section belowtitled "Settlement of Vested RSUs." However, no Shares will be delivered pursuant to the vesting of the RSUs prior to the fulfillment ofall of the following conditions: (i) you have complied with your obligations under this Award Agreement and the Plan, (ii) the vestingof the RSUs and the delivery of such Shares complies with applicable law, (iii) full payment (or satisfactory provision therefor) of anyTax-Related Items (as defined below), (iv) the admission of the Shares to listing on all stock exchanges on which the Shares are thenlisted, (v) the completion of any registration or other qualification of the Shares under any state or federal law or under rulings orregulations of the Securities and Exchange Commission (the "Commission") or other governmental regulatory body, which theCommittee shall, in its sole and absolute discretion, deem necessary and advisable, or if the offering of the Shares is not so registered, adetermination by the Company that the issuance of the Shares would be exempt from any such registration or qualificationrequirements, (vi) the obtaining of any approval or other clearance from any state, federal or foreign governmental agency that theCommittee shall, in its absolute discretion, determine to be necessary or advisable and (vii) the lapse of any such reasonable period oftime following the date the RSUs become payable as the Committee may from time to time establish for reasons of administrativeconvenience, subject to compliance with Section 409A of the Code.Until such time as the Shares are delivered to you (as evidenced by the appropriate entry on the books of the Company or of aduly authorized transfer agent of the Company), you will have no right to vote or receive dividends or any other rights as a shareholderwith respect to such Shares, notwithstanding the vesting of the RSUs.TerminationEffect of a Termination of Service on VestingOther than as set forth below, upon a termination of your Service for any reason prior to the Vesting Date, you will forfeit theRSUs, without any consideration due to you.If prior to the Vesting Date, but more than three years after the Grant Date, the Company terminates your Service Without Cause(as defined below) or your Service terminates by reason of your death, Retirement or Disability (as defined below), your RSUs shall bevested as if 30% of the RSUs had previously vested on the third anniversary of the Grant Date on which you were providing Serviceand 60% of the RSUs has previously vested on the fourth anniversary of the Grant Date on which you were providing Service.Settlement of Vested RSUsTo the extent the RSUs become vested pursuant to the terms of this Award Agreement, the Company will issue and deliver toyou, or, as applicable, your Beneficiary or the personal representative of your estate, the number of Shares equal to the number ofvested RSUs. Such delivery of Shares will occur within the settlement period set forth in the table below, which will vary depending onthe applicable vesting event.Vesting EventSettlement PeriodVesting DateAs soon as practicable and no later than 60 days following theVesting DateTermination of Service Without CauseWithin 60 days of your termination date*RetirementWithin 60 days of your termination date*DisabilityWithin 60 days of your termination date*DeathWithin 60 days of the date of death*If you are subject to U.S. federal income tax and the RSUs constitute an item of non-qualified deferred compensation, within themeaning of Section 409A of the Code, as determined by the Company ("Deferred Compensation"), settlement will occur withinthis period only if your termination of Service constitutes a "separation from service" within the meaning of Section 409A of theCode ("Separation from Service"); otherwise, settlement will occur in accordance with the original vesting schedule (i.e., as soonas practicable and no later than sixty (60) days following the Vesting Date).Notwithstanding the foregoing, if you are subject to U.S. federal income tax and the Company determines that you are a"specified employee" within the meaning of Section 409A of the Code, any RSUs that are Deferred Compensation and are subject tosettlement upon your Separation from Service will instead be settled on the date that is the first business day following the six (6) monthanniversary of such Separation from Service, or, if earlier, upon your death, to the extent required pursuant to Section 409A of theCode.Applicable DefinitionsAll capitalized terms used in this Agreement without definition shall have the meanings ascribed in the Plan. For purposes ofthis Award Agreement, the following terms shall have the following meanings:"Disability" means (i) a physical or mental condition entitling you to benefits under the long-term disability policy of theCompany covering you or (ii) in the absence of any such policy, a physical or mental condition rendering you unable to perform yourduties for the Company or any of its Subsidiaries or Affiliates for a period of six (6) consecutive months or longer; provided that if youare a party to an Employment Agreement at the time of termination of your Service and such Employment Agreement contains adifferent definition of "disability" (or any derivation thereof), the definition in such Employment Agreement will control for purposes ofthis Award Agreement."Employment Agreement" means an individual written employment agreement between you and the Company or any of itsAffiliates, including an offer letter."Retirement" means a termination of Service by you on or after the later of (i) your 65th birthday and (ii) your completion offive (5) years of Service with the Company, its Subsidiaries or its Affiliates."Without Cause" means (i) a termination of your Service by the Company or its Subsidiaries or Affiliates other than for Cause(as defined in the Plan) and other than due to your death, Disability or Retirement or (ii) (A) if you are a party to an EmploymentAgreement, (B) such Employment Agreement is in effect upon the date of your termination of Service and (C) such EmploymentAgreement defines "Good Reason", then "Without Cause" shall also include resignation of your Service for "Good Reason" inaccordance with such Employment Agreement.Special Termination ProvisionsIn the event that there is a conflict between the terms of this Award Agreement regarding the effect of a termination of yourService on the RSUs and the terms of any Employment Agreement, the terms of this Award Agreement will govern.If you are terminated Without Cause or due to your resignation and, within the twelve (12) month period subsequent to suchtermination of your Service, the Company determines that your Service could have been terminated for Cause, subject to anything tothe contrary that may be contained in your Employment Agreement at the time of termination of your Service, your Service will, at theelection of the Company, be deemed to have been terminated for Cause for purposes of this Award Agreement and the Plan, effectiveas of the date the events giving rise to Cause occurred and any consequences following from a termination for Cause shall beretroactively applied (including your obligation to repay gains that would not have been realized had your Service been terminated forCause).Effect of a Change in ControlThe treatment of the RSUs upon a Change in Control shall be governed by the Plan, provided, however, that to the extent thatthe RSUs constitute Deferred Compensation, settlement of any portion of the RSUs that may vest in connection with a Change inControl will occur within sixty (60) days following the Vesting Date. In the event that there is a conflict between the terms of thisAward Agreement regarding the effect of a Change in Control on the RSUs and the terms of any Employment Agreement, the terms ofthis Award Agreement will govern.Restrictive CovenantsYour Service will provide you with specialized training and unique knowledge and access to confidential information and keybusiness relationships, which, if used in competition with the Company, its Subsidiaries and/or its Affiliates, would cause harm to suchentities. As such, in partial consideration of the RSUs granted under this Award Agreement, you agree to comply with the Company'sRestrictive Covenants Agreement, attached (and incorporated into this Award Agreement) as Exhibit B. The restrictions and obligationscontained in the Restrictive Covenants Agreement are in addition to any restrictions imposed by, or obligations you may have to, theCompany, its Subsidiaries or Affiliates under any Employment Agreement or otherwise.TaxesYou acknowledge that, regardless of any action the Company or your employer (the “Employer”) takes with respect to any orall income tax, social security or insurance, payroll tax, fringe benefits tax, payment on account or other tax-related withholding ("Tax-Related Items"), the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that theCompany and/or its Subsidiaries or Affiliates (i) make no representations or undertakings regarding the treatment of any Tax-RelatedItems in connection with any aspect of the RSU grant, including the grant, vesting or settlement of the RSUs, the subsequent sale ofShares acquired pursuant to such settlement and the receipt of any dividends or Dividend Equivalents and (ii) do not commit tostructure the terms of the grant or any aspect of the RSUs to reduce or eliminate your liability for Tax-Related Items.Prior to vesting of the RSUs, you will pay or make adequate arrangements satisfactory to the Committee to satisfy all Tax-Related Items. In this regard, you authorize the withholding of all applicable Tax-Related Items legally payable by you from yourwages or other cash compensation paid to you by the Company and/or its Subsidiaries or Affiliates or from proceeds of the sale ofShares. Alternatively, or in addition, if permissible under local law, the Company may in its sole and absolute discretion (A) sell orarrange for the sale of Shares that you acquire to meet the obligation for Tax-Related Items, and/or (B) withhold the amount of Sharesnecessary to satisfy the minimum withholding amount, or to the extent permitted by applicable accounting principles, withhold Sharesbased on a rate of up to the maximum applicable withholding rate. Notwithstanding the foregoing, if you are subject to the short-swingprofit rules of Section 16(b) of the Act, you may elect the form of withholding in advance of any Tax-Related Items withholding event,and in the absence of your election, the Company shall deduct the number of Shares having an aggregate value equal to the amount ofTax-Related Items withholding due from the vesting of the RSUs, or the Committee may determine that a particular method be used tosatisfy any Tax Related Items withholding.Further, the Company is authorized to satisfy the withholding for any or all Tax-Related Items arising from the granting, vesting,or payment of the RSUs or sale of Shares issued in settlement of the RSUs, as the case may be, by deducting the number of Shareshaving an aggregate value equal to the amount of the Tax-Related Items withholding due or otherwise becoming subject to currenttaxation. If the Company satisfies the Tax-Related Items obligation by withholding a number of Shares as described herein, for taxpurposes, you shall be deemed to have been issued the full number of Shares due to you at vesting, notwithstanding that a number ofShares is held back solely for the purpose of such Tax-Related Items withholding.Furthermore, the Company and/or the Employer are authorized to satisfy the Tax-Related Items withholding arising from thegranting, vesting, or payment of this Performance Share Award, or sale of Shares issued pursuant to the Performance Share Award, asthe case may be, by withholding from the Participant’s wages, or other cash compensation paid to you by the Company and/or theEmployer.Finally, you will pay to the Company and/or its Subsidiaries or Affiliates any amount of Tax-Related Items that the Company orits Subsidiaries or Affiliates may be required to withhold as a result of your participation in the Plan that cannot be satisfied by themeans previously described. The Company may refuse to deliver the Shares if you fail to comply with your obligations in connectionwith the Tax-Related Items as described in this section.No Guarantee of Continued ServiceYou acknowledge and agree that the vesting of the RSUs on the Vesting Date (or such earlier date as set forth in the sectionabove titled "Termination") is earned only by performing continuing Service (not through the act of being hired or being granted thisAward). You further acknowledge and agree that this Award Agreement, the transactions contemplated hereunder and the Vesting Dateshall not be construed as giving you the right to be retained in the employ of, or to continue to provide Service to, the Company or itsSubsidiaries. Further, the Company or the applicable Subsidiary may at any time dismiss you, free from any liability, or any claim underthe Plan, unless otherwise expressly provided in any other agreement binding you, the Company or the applicable Subsidiary. Thereceipt of this Award is not intended to confer any rights on you except as set forth in this Award Agreement.Company's Right of OffsetIf you become entitled to a distribution of benefits under this Award, and if at such time you have any outstanding debt,obligation, or other liability representing an amount owing to the Company, its Subsidiaries or any of its Affiliates, then the Company,its Subsidiaries or its Affiliates, upon a determination by the Committee, and to the extent permitted by applicable law and it would notcause a violation of Section 409A of the Code, may offset such amount so owing against the amount of benefits otherwise distributable.Such determination shall be made by the Committee.Acknowledgment of Nature of AwardIn accepting the RSUs, you understand, acknowledge and agree that:(a) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspendedor terminated by the Company at any time, as provided in the Plan and this Award Agreement;(b) the award of the RSUs is voluntary, occasional and discretionary and does not create any contractual or other right toreceive future RSU awards, or benefits in lieu of RSUs even if RSUs have been awarded in the past;(c) all decisions with respect to future awards, if any, will be at the sole discretion of the Company, including, but not limitedto, the form and timing of the RSUs, the number of Shares subject to the RSUs, and the vesting provisions applicable to the RSUs;(d) your participation in the Plan is voluntary;(e) the RSUs are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered tothe Company or its Subsidiaries;(f) the RSUs, any Shares acquired under the Plan, and the income and value of same are not part of normal or expectedcompensation or salary for purposes of calculating any severance, resignation, termination, redundancy, end of service payments,bonuses, long-service awards, pension or retirement benefits or similar payments;(g) the future value of the underlying Shares is unknown, indeterminable, and cannot be predicted with certainty;(h) unless otherwise agreed with the Company in writing, the RSUs, any Shares acquired under the Plan, and the income andvalue of same, are not granted as consideration for, or in connection with, any Service you may provide as a director of a Subsidiary orAffiliate;(i) no claim or entitlement to compensation or damages shall arise from forfeiture of the RSU resulting from termination ofyour Service (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdictionwhere you provide Service or the terms of your Employment Agreement, if any), and in consideration of the grant of the RSU to whichyou are otherwise not entitled, you irrevocably agree never to institute any claim against the Company, any of its Subsidiaries orAffiliates, waive your ability, if any, to bring any such claim, and release the Company, and its Subsidiaries and Affiliates from anysuch claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating inthe Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documentsnecessary to request dismissal or withdrawal of such claim; and(j) the RSUs are subject to the terms of the Plan (including, without limitation, certain provisions regarding Adjustments,Repurchases and Transfers).Securities LawsBy accepting the RSUs, you acknowledge that U.S. federal, state or foreign securities laws and/or the Company's policiesregarding trading in its securities may limit or restrict your right to buy or sell Shares, including, without limitation, sales of Sharesacquired in connection with the RSUs. You agree to comply with such securities law requirements and Company policies, as such lawsand policies are amended from time to time.Data PrivacyYou hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of yourpersonal data as described in this Award Agreement by and among, as applicable, the Company, its Subsidiaries and its Affiliates orany third party administrator as designated by the Committee or its designee in its sole and absolute discretion for the exclusivepurpose of implementing, administering and managing your participation in the Plan.You understand that the Company, its Subsidiaries and its Affiliates and/or any other third party administrator as designatedby the Committee or its designee in its sole and absolute discretion may hold certain personal information about you, including, butnot limited to, your name, home address and telephone number, email address, date of birth, social insurance, passport or socialsecurity number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company,details of the RSUs or any other entitlement to Shares awarded, canceled, vested, unvested or outstanding in your favor ("Data"), forthe purpose of implementing, administering and managing the Plan. You understand that Data may be transferred to any third partiesassisting in the implementation, administration and management of the Plan, that these recipients may be located in your country, orelsewhere, and that the recipient's country may have different data privacy laws and protections than your country. You understandthat if you reside outside the United States, you may request a list with the names and addresses of any potential recipients of the Databy contacting your local human resources representative. You authorize the recipients to receive, possess, use, retain and transfer theData, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan,including any requisite transfer of such Data as may be required to a broker, escrow agent or other third party with whom the Sharesreceived upon settlement of the RSUs may be deposited. You understand that Data will be held only as long as is necessary toimplement, administer and manage your participation in the Plan. You understand that if you reside outside the United States youmay, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments toData or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resourcesrepresentative. You understand that refusal or withdrawal of consent may affect your ability to participate in the Plan. Further, youunderstand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek torevoke your consent, your employment status or Service will not be affected; the only consequence of refusing or withdrawing yourconsent is that the Company would not be able to grant you RSUs or other Awards or administer or maintain such Awards. For moreinformation on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your localhuman resources representative.Limits on Transferability; BeneficiariesThe RSUs shall not be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability to any party,or Transferred, otherwise than by your will or the laws of descent and distribution or to a Beneficiary upon your death. A Beneficiaryor other person claiming any rights under this Award Agreement shall be subject to all terms and conditions of the Plan and this AwardAgreement, except as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary orappropriate by the Committee.No Transfer to any executor or administrator of your estate or to any Beneficiary by will or the laws of descent and distributionof any rights in respect of the RSUs shall be effective to bind the Company unless the Committee shall have been furnished with (i)written notice thereof and with a copy of the will and/or such evidence as the Committee may deem necessary to establish the validityof the Transfer and (ii) the written agreement of the Transferee to comply with the terms and conditions of this Award Agreement, tothe extent applicable, as determined by the Company.Repayment/ForfeitureAs an additional condition of receiving the RSUs and without prejudice to the terms of the Company's Restrictive CovenantsAgreement (attached as Exhibit B), you agree that the RSUs and any proceeds or other benefits you may receive hereunder shall besubject to forfeiture and/or repayment to the Company to the extent required (i) under the terms of any policy adopted by the Companyas may be amended from time to time (and such requirements shall be deemed incorporated into this Award Agreement without yourconsent) or (ii) to comply with any requirements imposed under applicable laws and/or the rules and regulations of the securitiesexchange or inter-dealer quotation system on which the Shares are listed or quoted, including, without limitation, pursuant to Section954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Further, if you receive any amount in excess of whatyou should have received under the terms of the RSUs for any reason (including without limitation by reason of a financial restatement,mistake in calculations or administrative error), all as determined by the Committee, then you shall be required to promptly repay anysuch excess amount to the Company. Nothing in or about this Agreementprohibits you from: (i) filing and, as provided for under Section 21F of the Act, maintaining the confidentiality of a claim with theCommission, (ii) providing the Commission with information that would otherwise violate the non-disclosure restrictions in thisAgreement, to the extent permitted by Section 21F of the Act; (iii) cooperating, participating or assisting in a Commission investigationor proceeding without notifying the Company; or (iv) receiving a monetary award as set forth in Section 21F of the Act. Furthermore,you are advised that you shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of anyConfidential Information (as defined in Exhibit B) that constitutes a trade secret to which the Defend Trade Secrets Act (18 U.S.C.Section 1833(b)) applies that is made (i) in confidence to a federal, state or local government official, either directly or indirectly, or toan attorney, in each case, solely for the purpose of reporting or investigating a suspected violation of law; or (ii) in a complaint or otherdocument filed in a lawsuit or proceeding, if such filings are made under seal.Section 409AIt is intended that the RSUs awarded pursuant to this Award Agreement be exempt from or compliant with Section 409A of theCode ("Section 409A") and the Award Agreement shall be interpreted, construed and operated to reflect this intent. Notwithstanding theforegoing, this Award Agreement and the Plan may be amended at any time, without the consent of any party, to the extent that isnecessary or desirable to exempt the RSUs from Section 409A or satisfy any of the requirements under Section 409A, but the Companyshall not be under any obligation to make any such amendment. Further, the Company, its Subsidiaries and Affiliates do not make anyrepresentation to you that the RSUs awarded pursuant to this Award Agreement shall be exempt from or satisfy the requirements ofSection 409A, and the Company, its Subsidiaries and Affiliates shall have no liability or other obligation to indemnify or hold harmlessyou or any Beneficiary, Transferee or other party for any tax, additional tax, interest or penalties that you or any Beneficiary, Transfereeor other party may incur in the event that any provision of this Award Agreement, or any amendment or modification thereof or anyother action taken with respect thereto, is deemed to violate any of the requirements of Section 409A.Entire Agreement; ModificationThe Plan, this Award Agreement and, to the extent applicable, your Employment Agreement or any separation agreementconstitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all priorundertakings, representations and agreements (whether oral or written) of the Company, its Subsidiaries and/or Affiliates and you withrespect to the subject matter hereof. This Award Agreement may not be modified in a manner that adversely affects your rightsheretofore granted under the Plan, except with your consent or to comply with applicable law or to the extent permitted under otherprovisions of the Plan.Governing Law; Jurisdiction; Waiver of Jury TrialThis Award Agreement (together with all exhibits and appendices attached thereto) is governed by the laws of the State ofDelaware, without regard to its principles of conflict of laws, and any disputes shall be settled in accordance with the Plan.To the extent not prohibited by applicable law, each of the parties hereto waives any right it may have to trial by jury in respectof any litigation based on, arising out of, under or in connection with this Award Agreement (together with all exhibits and appendicesattached thereto) or the Plan.Electronic Signatures and Delivery and AcceptanceThe Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan,including this Award Agreement, by electronic means or request your consent to participate in the Plan by electronic means. Youhereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronicsystem established and maintained by the Company or a third party designated by the Company. The Award Agreement if delivered byelectronic means with electronic signatures shall be treated in all manner and respects as an original executed document and shall beconsidered to have the same binding legal effect as if it were the original signed versions thereof delivered in person.Agreement SeverableThis Award Agreement shall be enforceable to the fullest extent allowed by law. In the event that any provision of this AwardAgreement is determined to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, thenthat provision shall be reduced, modified or otherwise conformed to the relevant law, judgment or determination to the degreenecessary to render it valid and enforceable without affecting the validity, legality or enforceability of any other provision of this AwardAgreement or the validity, legality or enforceability of such provision in any other jurisdiction. Any provision of this Award Agreementthat is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be deemed severable from the remainder of thisAward Agreement, and the remaining provisions contained in this Award Agreement shall be construed to preserve to the maximumpermissible extent the intent and purposes of this Award Agreement.InterpretationThe Committee shall have the right to resolve all questions that may arise in connection with the Award or this AwardAgreement, including whether you are actively employed. Any interpretation, determination or other action made or taken by theCommittee regarding the Plan or this Award Agreement shall be final, binding and conclusive. This Award Agreement shall be bindingupon and inure to the benefit of any successor or successors of the Company and any person or persons who shall acquire any rightshereunder in accordance with this Award Agreement or the Plan.LanguageIf you have received this Award Agreement or any other document related to the Plan translated into a language other thanEnglish and if the meaning of the translated version is different than the English version, the English version will control.AcknowledgmentsBy signing this Award Agreement, you acknowledge receipt of a copy of the Plan and represent that you are familiar with theterms and conditions of the Plan, and hereby accept the RSUs subject to all provisions in this Award Agreement and in the Plan. Youhereby agree to accept as final, conclusive and binding all decisions or interpretations of the Committee upon any questions arisingunder the Plan or this Award Agreement.Appendix INotwithstanding any provision in this Award Agreement, if you work or reside outside the U.S., the RSUs shall be subject to thegeneral non-U.S. terms and conditions and the special terms and conditions for your country set forth in Appendix I. Moreover, if yourelocate from the U.S. to one of the countries included in Appendix I or you move between countries included in Appendix I, thegeneral non-U.S. terms and conditions and the special terms and conditions for such country will apply to you, to the extent theCompany determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. TheAppendix I constitutes part of this Award Agreement.EXHIBIT BRESTRICTIVE COVENANTS AGREEMENTI understand that I am or will be an employee to or other service-provider of The Kraft Heinz Company and/or its Subsidiariesand/or its Affiliates (collectively the "Company"), and will learn and have access to the Company's confidential, trade secret andproprietary information and key business relationships. I understand that the products and services that the Company develops,provides and markets are unique. Further, I know that my promises in this Restrictive Covenants Agreement (the "Agreement") are animportant way for the Company to protect its proprietary interests and that The Kraft Heinz Company would not have granted me RSUsor other equity grants unless I made such promises.In addition to other good and valuable consideration, I am expressly being given RSUs or other equity grants in exchange formy agreeing to the terms of this Agreement. In consideration of the foregoing, I (the "Executive") agree as follows:1.NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. During the course of Executive's Service, Executive will haveaccess to Confidential Information. For purposes of this Agreement, "Confidential Information" means all data, information, ideas,concepts, discoveries, trade secrets, inventions (whether or not patentable or reduced to practice), innovations, improvements,know-how, developments, techniques, methods, processes, treatments, drawings, sketches, specifications, designs, plans, patterns,models, plans and strategies, and all other confidential or proprietary information or trade secrets in any form or medium (whethermerely remembered or embodied in a tangible or intangible form or medium) whether now or hereafter existing, relating to orarising from the past, current or potential business, activities and/or operations of the Company, including, without limitation, anysuch information relating to or concerning finances, sales, marketing, advertising, transition, promotions, pricing, personnel,customers, suppliers, vendors, raw partners and/or competitors of the Company. Executive agrees that Executive shall not, directlyor indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of Executive'sassigned duties and for the benefit of the Company, either during the period of Executive's Service or at any time thereafter, anyConfidential Information or other confidential or proprietary information received from third parties subject to a duty on theCompany's part to maintain the confidentiality of such information, and to use such information only for certain limited purposes, ineach case, which shall have been obtained by Executive during Executive's Service. The foregoing shall not apply to informationthat (i) was known to the public prior to its disclosure to Executive; (ii) becomes generally known to the public subsequent todisclosure to Executive through no wrongful act of Executive or any representative of Executive; or (iii) Executive is required todisclose by applicable law, regulation or legal process (provided that, to the extent permitted by law, Executive provides theCompany with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protectiveorder or other appropriate protection of such information).Pursuant to the U.S. Defend Trade Secrets Act of 2016, Executive shall not be held criminally, or civilly, liable under any Federal orState Trade secret law for the disclosure of a trade secret that is made in confidence either directly or indirectly to a Federal, State, orlocal government official, or an attorney, for the sole purpose of reporting, or investigating, a violation of law. Moreover, Executivemay disclose trade secrets in a complaint, or other document, filed in a lawsuit, or other proceeding, if such filing is made underseal. Finally, if Executive files a lawsuit alleging retaliation by the Company for reporting a suspected violation of the law,Executive may disclose the trade secret to Executive's attorney and use the trade secret in the court proceeding, if Executive filesany document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.No Company policies or practices, including this Non-Disclosure of Confidential Information provision, is intended to or shall limit,prevent, impede or interfere in any way with Executive's right, without prior notice to the Company, to provide information to thegovernment, participate in investigations, testify in proceedings regarding the Company's past or future conduct, or engage in anyactivities protected under whistle blower statutes.2.NON-COMPETITION. Executive acknowledges that (i) Executive performs services of a unique nature for the Company that areirreplaceable, and that Executive's performance of such services to a competing business will result in irreparable harm to theCompany, (ii) Executive has had and will continue to have access to Confidential Information which, if disclosed, would unfairlyand inappropriately assist in competition against the Company, (iii) in the course of Executive's employment by or service to acompetitor, Executive would inevitably use or disclose such Confidential Information, (iv) the Company has substantialrelationships with its customers and Executive has had and will continue to have access to these customers, (v) Executive hasreceived and will receive specialized training from the Company, and (vi) Executive has generated and will continue to generategoodwill for the Company in the course of Executive's Service. Accordingly, during Executive's Service and for eighteen (18)months following a termination of Executive's Service for any reason (the "Restricted Period"), Executive will not engage in anybusiness activities, directly or indirectly (whether as an employee, consultant, officer, director, partner, joint venturer, manager,member, principal, agent, or independent contractor, individually, in concert with others, or in any other manner) within the sameline or lines of business for which the Executive performed services for the Company and in a capacity that is similar to the capacityin which the Executive was employed by the Company with any person or entity that competes with the Company in the consumerpackaged food and beverage industry ("Competitive Business") anywhere within the same geographic territory(ies) for which theExecutive performed services for the Company (the "Restricted Territory"). Notwithstanding the foregoing, nothing herein shallprohibit Executive from being a passive owner of not more than three percent (3%) of the equity securities of a publicly tradedcorporation engaged in a business that is in competition with the Company, so long as Executive has no active participation in thebusiness of such corporation.3.NON-SOLICITATION. During the Restricted Period, Executive agrees that Executive shall not, except in the furtherance ofExecutive's duties to the Company, directly or indirectly, individually or on behalf of any other person, firm, corporation or otherentity, solicit, aid, induce, assist in the solicitation of, or accept any business (other than on behalf of the Company) from, anycustomer or potential customer of the Company to purchase goods or services then sold by the Company from another person, firm,corporation or other entity or, directly or indirectly, in any way request, suggest or advise any such customer to withdraw or cancelany of their business or refuse to continue to do business with the Company. This restriction shall apply to customers or potentialcustomers who, during the two (2) years immediately preceding the Executive's termination, had been assigned to the Executive bythe Company, or with which the Executive had contact on behalf of the Company while an Executive of the Company, or aboutwhich the Executive had access to confidential information by virtue of Executive's employment with the Company.4.NON-INTERFERENCE. During the Restricted Period, Executive agrees that Executive shall not, except in the furtherance ofExecutive's duties to the Company, directly or indirectly, individually or on behalf of any other person, firm, corporation or otherentity, (A) solicit, aid or induce any employee, representative or agent of the Company to leave such employment or retention or toaccept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with theCompany or hire or retain any such employee, representative or agent, or take any action to materially assist or aid any otherperson, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent, or (B)interfere, or aid or induce any other person or entity in interfering, with the relationship between the Company and its vendors,suppliers or customers. As used herein, the term "solicit, aid or induce" includes, but is not limited to, (i) initiating communicationswith a Company employee relating to possible employment, (ii) offering bonuses or other compensation to encourage a Companyemployee to terminate his or her employment with the Company and accept employment with any entity, (iii) recommending aCompany employee to any entity, and (iv) aiding an entity in recruitment of a Company employee. An employee, representative oragent shall be deemed covered by this Section 4 while so employed or retained and for a period of six (6) months thereafter.5.NON-DISPARAGEMENT. Executive agrees not to make negative comments or otherwise disparage the Company or its officers,directors, employees, shareholders, agents or products or services. The foregoing shall not be violated by truthful statements madein (a) response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including,without limitation, depositions in connection with such proceedings) or (b) the good faith performance of Executive's duties to theCompany.6.INVENTIONS.a.Executive acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements, work products,developments, software, know-how, processes, techniques, methods, works of authorship and other work product("Inventions"), whether patentable or unpatentable, (A) that are reduced to practice, created, invented, designed, developed,contributed to, or improved with the use of any Company resources and/or within the scope of Executive's work with theCompany or that relate to the business, operations or actual or demonstrably anticipated research or development of theCompany, and that are made or conceived by Executive, solely or jointly with others, during Executive's Service, or (B)suggested by any work that Executive performs in connection with the Company, either while performing Executive's dutieswith the Company or on Executive's own time, but only insofar as the Inventions are related to Executive's work as anemployee or other service provider to the Company, shall belong exclusively to the Company (or its designee), whether ornot patent or other applications for intellectual property protection are filed thereon. Executive will keep full and completewritten records (the "Records"), in the manner prescribed by the Company, of all Inventions, and will promptly disclose allInventions completely and in writing to the Company. The Records shall be the sole and exclusive property of theCompany, and Executive will surrender them upon the termination of Service, or upon the Company's request. Executiveirrevocably conveys, transfers and assigns to the Company the Inventions and all patents or other intellectual property rightsthat may issue thereon in any and all countries, whether during or subsequent to Executive's Service, together with the rightto file, in Executive's name or in the name of the Company (or its designee), applications for patents and equivalent rights(the "Applications"). Executive will, at any time during and subsequent to Executive's Service, make such applications, signsuch papers, take all rightful oaths, and perform all other acts as may be requested from time to time by the Company toperfect, record, enforce, protect, patent or register the Company's rights in the Inventions, all without additionalcompensation to Executive from the Company. Executive will also execute assignments to the Company (or its designee) ofthe Applications, and give the Company and its attorneys all reasonable assistance (including the giving of testimony) toobtain the Inventions for the Company's benefit, all without additional compensation to Executive from the Company, butentirely at the Company's expense.b.In addition, the Inventions will be deemed Work for Hire, as such term is defined under the copyright laws of the UnitedStates, on behalf of the Company and Executive agrees that the Company will be the sole owner of the Inventions, and allunderlying rights therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity withoutany further obligations to Executive. If the Inventions, or any portion thereof, are deemed not to be Work for Hire, or therights in such Inventions do not otherwise automatically vest in the Company, Executive hereby irrevocably conveys,transfers and assigns to the Company, all rights, in all media now known or hereinafter devised, throughout the universe andin perpetuity, in and to the Inventions, including, without limitation, all of Executive's right, title and interest in thecopyrights (and all renewals, revivals and extensions thereof) to the Inventions, including, without limitation, all rights ofany kind or any nature now or hereafter recognized, including, without limitation, the unrestricted right to makemodifications, adaptations and revisions to the Inventions, to exploit and allow others to exploit the Inventions and all rightsto sue at law or in equity for any infringement, or other unauthorized use or conduct in derogation of the Inventions, knownor unknown, prior to the date hereof, including, without limitation, the right to receive all proceeds and damages therefrom.In addition, Executive hereby waives any so-called "moral rights" with respect to the Inventions. To the extent thatExecutive has any rights in the results and proceeds of Executive's service to the Company that cannot be assigned in themanner described herein, Executive agrees to unconditionally waive the enforcement of such rights. Executive herebywaives any and all currently existing and future monetary rights in and to the Inventions and all patents and otherregistrations for intellectual property that may issue thereon, including, without limitation, any rights that would otherwiseaccrue to Executive's benefit by virtue of Executive being an employee of or other service provider to the Company.7.RETURN OF COMPANY PROPERTY. On the date of Executive's termination of Service with the Company for any reason (or atany time prior thereto at the Company's request), Executive shall return all property belonging to the Company (including, but notlimited to, any Company-provided laptops, computers, cell phones, wireless electronic mail devices or other equipment, ordocuments and property belonging to the Company).8.REASONABLENESS OF COVENANTS. In signing this Agreement, including by electronic means, Executive gives the Companyassurance that Executive has carefully read and considered all of the terms and conditions of this Agreement, including therestraints imposed by it. Executive agrees that these restraints are necessary for the reasonable and proper protection of theCompany and its Confidential Information and that each and every one of the restraints is reasonable in respect to subject matter,length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent Executive fromobtaining other suitable employment during the period in which Executive is bound by the restraints. Executive acknowledges thateach of these covenants has a unique, very substantial and immeasurable value to the Company and that Executive has sufficientassets and skills to provide a livelihood while such covenants remain in force. Executive further covenants that Executive will notchallenge the reasonableness or enforceability of any of the covenants set forth in this Agreement, and that Executive will reimbursethe Company for all costs (including reasonable attorneys' fees) incurred in connection with any action to enforce any of theprovisions of this Agreement if either the Company prevails on any material issue involved in such dispute or if Executivechallenges the reasonableness or enforceability of any of the provisions of this Agreement. It is also agreed that the "Company"as used in this Agreement refers to each of the Company's Subsidiaries and Affiliates and that each of the Company's sSubsidiaries and Affiliates will have the right to enforce all of Executive's obligations to that Subsidiary or Affiliate under thisAgreement, as applicable, subject to any limitation or restriction on such rights of the Subsidiary or Affiliate under applicablelaw.9.REFORMATION. If it is determined by a court of competent jurisdiction in any state or country that any restriction in thisAgreement is excessive in duration or scope or is unreasonable or unenforceable under applicable law, it is the intention of theparties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted bythe laws of that state or country.10.REMEDIES. Executive acknowledges and agrees that the Company's remedies at law for a breach or threatened breach of any ofthe provisions of Agreement would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such abreach or threatened breach, in addition to any remedies at law, the Company, without posting any bond or other security, shall beentitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanentinjunction or any other equitable remedy which may then be available, without the necessity of showing actual monetary damages,in addition to any other equitable relief (including without limitation an accounting and/or disgorgement) and/or any other damagesas a matter of law.11.REPURCHASE. Executive acknowledges and agrees that a breach of this Agreement would constitute a "Covenant Breach" assuch term is used in the Plan and therefore, in the event of a Covenant Breach, Executive's RSU and the Award Stock issuedtherefor (as such terms are defined in the Plan) shall be subject to repurchase by The Kraft Heinz Company in accordance with theterms of the Plan.12.TOLLING. In the event of any violation of the provisions of this Agreement, Executive acknowledges and agrees that the post-termination restrictions contained in this Agreement shall be extended by a period of time equal to the period of such violation, itbeing the intention of the parties hereto that the running of the applicable post-termination restriction period shall be tolled duringany period of such violation.13.SURVIVAL OF PROVISIONS. The obligations contained in this Agreement hereof shall survive the termination or expiration ofthe Executive's Service with the Company and shall be fully enforceable thereafter.14.VENUE, PERSONAL JURISDICTION, AND COVENANT NOT TO SUE. Executive expressly agrees to submit to theexclusive jurisdiction and exclusive venue of courts located in the State of Delaware in connection with any litigation which may bebrought with respect to a dispute between the Company and Executive in relation to this Restrictive Covenants Agreement,regardless of where Executive resides or where Executive performs services for the Company. Executive hereby irrevocably waivesExecutive's rights, if any, to have any disputes between the Company and Executive related to this Restrictive CovenantsAgreement decided in any jurisdiction or venue other than a court in the State of Delaware. Executive hereby waives, to the fullestextent permitted by applicable law, any objection which Executive now or hereafter may have to personal jurisdiction or to thelaying of venue of any such suit, action or proceeding, and Executive agrees not to plead or claim the same. Executive furtherirrevocably covenants not to sue the Company related to this Restrictive Covenants Agreement in any jurisdiction or venue otherthan a court in the State of Delaware. All matters relating to the interpretation, construction, application, validity, and enforcementof this Agreement, and any disputes or controversies arising hereunder, will be governed by the laws of the State of Delawarewithout giving effect to any choice or conflict of law provision or rule, whether of the State of Delaware or any other jurisdiction,that would cause the application of laws of any jurisdiction other than the State of Delaware.APPENDIX IADDITIONAL TERMS AND CONDITIONS OFTHE KRAFT HEINZ COMPANY2016 OMNIBUS INCENTIVE PLANRESTRICTED STOCK UNIT AWARD AGREEMENT FOR NON-U.S. PARTICIPANTSTERMS AND CONDITIONSThis Appendix I includes additional terms and conditions that govern the RSUs granted to you under the Plan if you work or resideoutside the U.S. and/or in one of the countries listed below. These terms and conditions are in addition to, or if so indicated, in place ofthe terms and conditions set forth in the Award Agreement. Certain capitalized terms used but not defined in this Appendix I have themeanings set forth in the Plan and/or the Award Agreement.If you are a citizen or resident of a country other than the one in which you are currently working, transfer employment and/orresidency to another country after the RSUs are granted to you, or are considered a resident of another country for local law purposes,the terms and conditions contained herein may not be applicable to you, and the Company shall, in its discretion, determine to whatextent the terms and conditions contained herein shall apply to you.NOTIFICATIONSThis Appendix I also includes information regarding exchange controls and certain other issues of which you should be aware withrespect to participation in the Plan. The information is based on the securities, exchange control, and other laws in effect in therespective countries as of January 2017. Such laws are often complex and change frequently. As a result, the Company stronglyrecommends that you not rely on the information in this Appendix I as the only source of information relating to the consequences ofyour participation in the Plan because the information may be out of date at the time you vest in the RSUs or sell Shares acquired underthe Plan.In addition, the information contained herein is general in nature and may not apply to your particular situation, and the Company is notin a position to assure you of a particular result. Accordingly, you should seek appropriate professional advice as to how the relevantlaws in your country may apply to your situation.Finally, if you are a citizen or resident of a country other than the one in which you are currently working, transfer employment and/orresidency after the RSUs are granted or are considered a resident of another country for local law purposes, the notifications containedherein may not be applicable to you in the same manner.GENERAL NON-U.S. TERMS AND CONDITIONSTERMS AND CONDITIONSThe following terms and conditions apply to you if you are located outside of the U.S.Entire Agreement.The following provisions supplement the entire Award Agreement, generally:If you are located outside the U.S., in no event will any aspect of the RSUs be determined in accordance with your EmploymentAgreement (or other Service contract). The terms and conditions of the RSUs will be solely determined in accordance with theprovisions of the Plan and the Award Agreement, including this Appendix I, which supersede and replace any prior agreement, eitherwritten or verbal (including your Employment Agreement, if applicable) in relation to the RSUs.Vesting.If you are resident or employed outside of the United States, the Company may, in its sole discretion, settle the RSUs in the form of acash payment to the extent settlement in Shares: (i) is prohibited under local law, (ii) would require you, the Company or one of itsSubsidiaries or Affiliates to obtain the approval of any governmental or regulatory body in your country of residence (or your countryof employment, if different), (iii) would result in adverse tax consequences for you, the Company or one of its Subsidiaries or Affiliates,or (iv) is administratively burdensome. Alternatively, the Company may, in its sole discretion settle the RSUs in the form of Shares butrequire you to sell such Shares immediately or within a specified period following your termination of Service (in which case, thisAward Agreement shall give the Company the authority to issue sales instructions on your behalf).Termination.The following provisions supplement the Termination section of the Award Agreement, provided, however, that for purposes of thesection of the Award Agreement titled "Settlement of Vested RSUs," if you are subject to U.S. federal income tax and the RSUsconstitute Deferred Compensation, your termination of Service date will be the date of your Separation from Service:For purposes of the RSU, your employment or Service relationship will be considered terminated as of the date you are no longeractively providing Services to the Company or one of its Subsidiaries or Affiliates (regardless of the reason for such termination andwhether or not later found to be invalid or in breach of employment laws in the jurisdiction where you provide Service or the terms ofyour Employment Agreement, if any), and unless otherwise expressly provided in this Award Agreement or determined by theCompany, your right to vest in the RSU under the Plan, if any, will terminate as of such date and will not be extended by any noticeperiod (e.g., your period of Service would not include any contractual notice period or any period of "garden leave" or similar periodmandated under employment laws in the jurisdiction where you provide Service or the terms of your Employment Agreement, if any);the Committee shall have the exclusive discretion to determine when you are no longer actively providing Service for purposes of theRSUs (including whether you may still be considered to be providing Service while on a leave of absence).Notwithstanding the provisions governing the treatment of the RSUs upon termination due to Retirement set forth in the Terminationsection of the Award Agreement, if the Company receives an opinion of counsel that there has been a legal judgment and/or legaldevelopment in a particular jurisdiction that would likely result in the treatment in case of a termination due to Retirement as set forth inthe Award Agreement being deemed unlawful and/or discriminatory, then the Company will not apply the provisions for terminationdue to Retirement at the time you cease to provide Service and the RSUs will be treated as it would under the rules that apply if yourService ends for resignation.Termination for Cause.The implications upon a termination for Cause as set forth in the Award Agreement and Plan shall only be enforced, to the extentdeemed permissible under applicable local law, as determined in the sole discretion of the Committee.Taxes.The following provisions supplement the Taxes section of the Award Agreement:You acknowledge that your liability for Tax-Related Items may exceed the amount withheld by the Company, its Subsidiaries and/or itsAffiliates (as applicable).If you have become subject to tax in more than one jurisdiction, you acknowledge that the Company, its Subsidiaries and Affiliates maybe required to withhold or account for Tax-Related Items in more than one jurisdiction.Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicableminimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case youmay receive a refund of any over-withheld amount in cash and will have no entitlement to the Share equivalent. If the obligation forTax-Related Items is satisfied by withholding in Shares, for tax purposes, you are deemed to have been issued the full number of Sharessubject to the vested RSUs, notwithstanding that a number of Shares are held back solely for the purpose of paying the Tax-RelatedItems due as a result of any aspect of your participation in the Plan.Limits on Transferability; Beneficiaries.The following provision supplements the Limits on Transferability; Beneficiaries section of the Award Agreement:If you are located outside the U.S., the RSUs may not be Transferred to a designated Beneficiary and may only be Transferred uponyour death to your legal heirs in accordance with applicable laws of descent and distribution. In no case may the RSUs be Transferredto another individual during your lifetime.Acknowledgment of Nature of Award.The following provisions supplement the Acknowledgment of Nature of Award section of the Award Agreement:You acknowledge the following with respect to the RSUs:(a) The RSUs, any Shares acquired under the Plan, and the income and value of same, are not intended to replace any pensionrights or compensation.(b) In no event should the RSUs, any Shares acquired under the Plan, and the income and value of same, be considered ascompensation for, or relating in any way to, past services for the Company, its Subsidiaries or any Affiliate.(c) The RSU, any Shares acquired under the Plan and the income and value of same are not part of normal or expectedcompensation or salary for any purpose.(d) Neither the Company, its Subsidiaries nor any Affiliate shall be liable for any foreign exchange rate fluctuation betweenyour local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to you pursuant to vestingof the RSUs or the subsequent sale of any Shares acquired upon vesting.Not a Public Offering in Non-U.S. Jurisdictions.If you are resident or employed outside of the United States, neither the grant of the RSUs under the Plan nor the issuance of theunderlying Shares upon vesting of the RSUs is intended to be a public offering of securities in your country of residence (and countryof employment, if different). The Company has not submitted any registration statement, prospectus or other filings to the localsecurities authorities in jurisdictions outside of the United States unless otherwise required under local law.Language Consent.If you are resident or employed outside of the United States, you acknowledge and agree that it is your express intent that this AwardAgreement, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the RSUs, bedrawn up in English.Insider Trading and Market Abuse Laws.Depending on your country, you may be subject to insider trading restrictions and/or market abuse laws, which may affect your abilityto acquire or sell Shares or rights to Shares under the Plan during such times as you are considered to have "inside information"regarding the Company (as defined by the laws in your country). Any restrictions under these laws or regulations are separate from andin addition to any restrictions that may be imposed under any applicable Company insider trading policy. You acknowledge that it isyour responsibility to comply with any applicable restrictions, and you should speak to your personal advisor on this matter.Foreign Asset/Account, Exchange Control and Tax Reporting.You may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the acquisition, holdingand/or transfer of Shares or cash (including dividends, dividend equivalents and the proceeds arising from the sale of Shares) derivedfrom your participation in the Plan, to and/or from a brokerage/bank account or legal entity located outside your country. Theapplicable laws of your country may require that you report such accounts, assets, the balances therein, the value thereof and/or thetransactions related thereto to the applicable authorities in such country. You acknowledge that you are responsible for ensuringcompliance with any applicable foreign asset/account, exchange control and tax reporting requirements and should consult yourpersonal legal advisor on this matter.No Advice Regarding Award.The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding yourparticipation in the Plan, or your acquisition or sale of the underlying Shares. You are hereby advised to consult with your own personaltax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.Imposition of Other Requirements.The Company reserves the right to impose other requirements on your participation in the Plan, on the RSUs and on any Sharespurchased upon vesting of the RSUs, to the extent the Company determines it is necessary or advisable for legal or administrativereasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.Waiver.You acknowledge that a waiver by the Company or breach of any provision of the Award Agreement shall not operate or be construedas a waiver of any other provision of the Award Agreement, or of any subsequent breach of the Award Agreement.COUNTRY-SPECIFIC TERMS AND CONDITIONS/NOTIFICATIONSExhibit 10.19THE KRAFT HEINZ COMPANYOMNIBUS INCENTIVE PLANFORM OF PERFORMANCE SHARE AWARD NOTICEUnless defined in this award notice (together with all exhibits and appendices attached thereto, this “Award Notice”), capitalized terms will have thesame meanings ascribed to them in The Kraft Heinz Company Performance Share Award Agreement, which is included as Exhibit A (the “Award Agreement”or “Agreement”) and The Kraft Heinz Company 2016 Omnibus Incentive Plan (the “Omnibus Plan”) (together with the Agreement, as may be amended fromtime to time, the “Plan”).Subject to your acceptance of this Award Notice, you are hereby being granted an award of Performance Share Units (the “PSUs”) as of the GrantDate set forth below (the “Grant Date”). Each PSU is a bookkeeping entry representing the right to receive one (1) share of The Kraft Heinz Company’s (the“Company”) common stock on the following terms and subject to the provisions of the Omnibus Plan, which are incorporated herein by reference. In theevent of a conflict between the provisions of the Omnibus Plan and this Award Notice, the provisions of the Omnibus Plan will govern.Number of PSUs: Grant Date: Vesting Date: Performance Period: Performance Target/Payout: Termination Without Cause, death and Disability: Dividends: AcknowledgmentsBy signing this Award Notice, you agree that the PSUs are granted under and governed by the terms and conditions of this Award Notice (including,without limitation, the terms and conditions set forth on Exhibit A, the Restrictive Covenants Agreement attached as Exhibit B and the terms and conditionsset forth on Appendix I) and the Omnibus Plan.EXHIBIT ATHE KRAFT HEINZ COMPANYPERFORMANCE SHARE AWARD AGREEMENT1.Grant of Performance Share Award.(a)Performance Share Award. In consideration of the Participant’s agreement to provide services to The Kraft Heinz Company, a corporationorganized under the laws of Delaware (the “Company”), or any of its Affiliates, and, as applicable, in consideration for the Participant’sagreement to the non-competition and non-solicitation covenants provided in the attached Exhibit B, and for other good and valuableconsideration, the Company hereby grants as of the date set forth in the Performance Share Award Notice (referred to as the “Notice”) to theParticipant named in the Notice (the “Participant”) a Performance Share Award with respect to the Performance Period set forth in theNotice, subject to the terms and provisions of the Notice, this Performance Share Award Agreement, including any appendices (this“Agreement”), and the Company’s 2016 Omnibus Incentive Plan, as amended from time to time (the “Omnibus Plan”). Unless and untilthe Performance Share Award becomes payable in the manner set forth in Section 3 hereof, the Participant shall have no right to payment ofthe Performance Share Award. Prior to payment of the Performance Share Award, the Performance Share Award shall represent an unsecuredobligation of the Company, payable (if at all) from the general assets of the Company.(b) Omnibus Plan.(i)Incorporation of Terms and Conditions. The Performance Share Award and this Agreement are subject to the terms and conditionsof the Omnibus Plan, which are incorporated herein by reference. In the event of any inconsistency between the Omnibus Plan andthis Agreement, the terms of the Omnibus Plan shall control.(ii)Performance Targets. The Committee, in its sole discretion, shall have the authority to determine, establish and adjust PerformancePeriods, establish the applicable Performance Targets, adjust the applicable Performance Targets and certify the attainment ofPerformance Targets.2.Definitions. All capitalized terms used in this Agreement without definition shall have the meanings ascribed in the Omnibus Plan and the Notice.The following terms shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include theplural where the context so indicates.(a)“Disability” means (i) a physical or mental condition entitling you to benefits under the long-term disability policy of the Companycovering you or (ii) in the absence of any such policy, a physical or mental condition rendering you unable to perform your duties for theCompany or any of its Subsidiaries or Affiliates for a period of six (6) consecutive months or longer; provided that if you are a party to anEmployment Agreement at the time of termination of your Service and such Employment Agreement contains a different definition of“disability” (or any derivation thereof), the definition in such Employment Agreement shall control for purposes of this Agreement.(b)“Employment Agreement” means an individual written employment agreement between the Participant and the Company or any of itsAffiliates, including an offer letter.(c)“Performance Share Award Share Payout” means an amount equal to the Payout or other calculation included in the Notice orEmployment Agreement.(d)“Performance Share Award Target” shall mean the target number of Shares subject to this Performance Share Award set forth in the Noticeor Employment Agreement.(e)“Retirement” means a termination of Service by you on or after the later of (i) your 65th birthday and (ii) your completion of five (5) yearsof Service with the Company, its Subsidiaries or its Affiliates.(f)“Without Cause” means (i) a termination of your Service by the Company or its Subsidiaries or Affiliates other than for Cause (as defined inthe Omnibus Plan) and other than due to your death, Disability or Retirement or (ii) (A) if you are a party to an Employment Agreement , (B)such Employment Agreement is in effect upon the date of your termination of Service and (C) such Employment Agreement defines “GoodReason”, then “Without Cause” shall also include resignation of your Service for “Good Reason” in accordance with such EmploymentAgreement .3.Payment.(a)Form and Time of Payment.(i)Vesting. The Performance Share Award will vest on the “Vesting Date” set forth in the Notice subject to your continued Servicewith the Company or one of its Subsidiaries, except as otherwise set forth in the Omnibus Plan or this Award Agreement. Prior tothe vesting and settlement of the Performance Share Award, you will not have any rights of a shareholder with respect to thePerformance Share Award or the Shares subject thereto. No Shares will be delivered pursuant to the vesting of the PerformanceShare Award unless (i) you have complied with your obligations under this Award Agreement and the Omnibus Plan and (ii) thevesting of the Performance Share Award and the delivery of such Shares complies with applicable law. Until such time as the Sharesare delivered to you (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent ofthe Company), you will have no right to vote or receive dividends or any other rights as a shareholder with respect to such Shares,notwithstanding the vesting of the Performance Share Award.(ii)Performance Share Award Payment. Subject to the terms of the Omnibus Plan and this Agreement, any Performance Share Awardthat becomes payable shall be made in whole Shares, which shall be issued in book-entry form, registered in the Participant’s name.In the event the Performance Share Award Share Payout is to be made in Shares results in less than a whole number of Shares, thePerformance Share Award Share Payout shall be rounded up or down to the next whole Share (no fractional Shares shall be issued inpayment of a Performance Share Award). Any Shares issued in respect of a Performance Share Award Share Payout shall be issuedpursuant to the terms and conditions of the Omnibus Plan and shall reduce the number of Shares available for issuance thereunder.(iii)Dividends. Any cash dividend the Board declares with respect to the Shares during the Performance Period shall be treated inaccordance with the Notice.(iv)Payment Timing. Except as otherwise provided in Section 21 hereof or in the Notice, as applicable, (A) the Performance ShareAward payment shall be made as soon as practicable following the Vesting Date, but in any event no later than March 15 of thetaxable year following such date and (B) a Performance Share Award that becomes payable due to a termination Without Cause, ortermination due to your Retirement, death or Disability, shall be paid no later than 60 days after the Vesting Date.(v)Payout Upon Termination. The Notice shall set forth the effect of termination upon the Performance Share Award. If you areterminated Without Cause or due to your resignation and, within the twelve (12) month period subsequent to such termination ofyour Service, the Company determines that your Service could have been terminated for Cause, subject to anything to the contrarythat may be contained in the Notice at the time of termination of your Service, your Service will, at the election of the Company, bedeemed to have been terminated for Cause for purposes of this Award Agreement and the Omnibus Plan, effective as of the date theevents giving rise to Cause occurred and any consequences following from a termination for Cause shall be retroactively applied(including your obligation to repay gains that would not have been realized had your Service been terminated for Cause).(b)Conditions to Payment of Performance Share Award. Notwithstanding any other provision of this Agreement:(i)The Performance Share Award shall not become payable to the Participant or his or her legal representative unless and until theParticipant or his or her legal representative shall have satisfied all applicable withholding obligations for Tax-Related Items (asdefined in Section 5 below), if any, in accordance with Section 5 hereof.(ii)The Company shall not be required to issue or deliver any Shares in payment of the Performance Share Award prior to thefulfillment of all of the following conditions: (A) the admission of the Shares to listing on all stock exchanges on which the Sharesare then listed, (B) the completion of any registration or other qualification of the Shares under any state or federal law or underrulings or regulations of the Securities and Exchange Commission (the “Commission”) or other governmental regulatory body,which the Committee shall, in its sole and absolute discretion, deem necessary and advisable, or if the offering of the Shares is notso registered, a determination by the Company that the issuance of the Shares would be exempt from any such registration orqualification requirements, (C) the obtaining of any approval or other clearance from any state, federal or foreign governmentalagency that the Committee shall, in its absolute discretion, determine to be necessary or advisable and (D) the lapse of any suchreasonable period of time following the date the Performance Share Award becomes payable as the Committee may from time totime establish for reasons of administrative convenience, subject to compliance with Section 409A of the Code.(c)Committee Discretion. Anything to the contrary in this Section 3 notwithstanding, the Committee may, in its sole discretion, provide for fullor partial payment of the Performance Share Award upon termination of a Participant’s active employment for any reason prior to thecompletion of a Performance Period to which a Performance Share Award relates; provided that the Committee shall not exercise suchdiscretion if doing so would cause other Performance Share Awards that are intended to qualify as Qualified Performance-BasedCompensation not to qualify.4.Withholding Taxes. Regardless of any action the Company or the Participant’s employer (the “Employer”) takes with respect to any or all incometax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Omnibus Plan andlegally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Itemslegally due by the Participant is and remains his or her responsibility and may exceed the amount actually withheld by the Company or theEmployer. Furthermore, the Participant acknowledges that the Company and/or the Employer (a) make no representations or undertakings regardingthe treatment of any Tax-Related Items in connection with any aspect of the Performance Share Award, including, but not limited to, the grant,vesting, or payment of this Performance Share Award or the subsequent sale of Shares issued in payment of the Performance Share Award; and (b) donot commit to and are under no obligation to structure the terms of the grant of the Performance Share Award or any aspect of the Participant’sparticipation in the Omnibus Plan to reduce or eliminate his or her liability for Tax-Related Items or achieve any particular tax result. If theParticipant becomes subject to Tax-Related Items in more than one jurisdiction between the date of grant and the date of any relevant taxable or taxwithholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may berequired to withhold or account for (including report) Tax-Related Items in more than one jurisdiction.The Company is authorized to satisfy the withholding for any or all Tax-Related Items arising from the granting, vesting, or payment of thePerformance Share Award or sale of Shares issued pursuant to the Performance Share Award, as the case may be, by deducting the number of Shareshaving an aggregate value equal to the amount of Tax-Related Items withholding due from a Performance Share Award Share Payout or otherwisebecoming subject to current taxation. If the Company satisfies the Tax-Related Items obligation by withholding a number of Shares as describedherein, for tax purposes, the Participant shall be deemed to have been issued the full number of Shares due to the Participant at vesting,notwithstanding that a number of Shares is held back solely for the purpose of such Tax-Related Items withholding.The Company is also authorized to satisfy the actual Tax-Related Items withholding arising from the granting, vesting or payment of thisPerformance Share Award, the sale of Shares issued pursuant to the Performance Share Award or hypothetical withholding tax amounts if theParticipant is covered under a Company tax equalization policy, as the case may be, by the remittance of the required amounts from any proceedsrealized upon the open-market sale of the Shares received in payment of the vested Performance Share Award by the Participant. Such open-marketsale is on the Participant’s behalf and at the Participant’s direction pursuant to this authorization.Furthermore, the Company and/or the Employer are authorized to satisfy the Tax-Related Items withholding arising from the granting, vesting, orpayment of this Performance Share Award, or sale of Shares issued pursuant to the Performance Share Award, as the case may be, by withholdingfrom the Participant’s wages, or other cash compensation paid to the Participant by the Company and/or the Employer.If the Participant is subject to the short-swing profit rules of Section 16(b) of the Act, the Participant may elect the form of withholding in advance ofany Tax-Related Items withholding event, and in the absence of the Participant’s election, the Company shall deduct the number of Shares havingan aggregate value equal to the amount of Tax-Related Items withholding due from the Performance Share Award Share Payout, or the Committeemay determine that a particular method be used to satisfy any Tax Related Items withholding.Shares deducted from the payment of this Performance Share Award in satisfaction of Tax-Related Items withholding shall be valued at the FairMarket Value of the Shares received in payment of the vested Performance Share Award on the date as of which the amount giving rise to thewithholding requirement first became includible in the gross income of the Participant under applicable tax laws. The Company may refuse to issueor deliver the Shares if the Participant fails to comply with his or her Tax-Related Items obligations. To avoid negative accounting treatment, theCompany may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicablewithholding rates.The Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required towithhold that cannot be satisfied by the means previously described. If the Participant is covered by a Company tax equalization policy, theParticipant also agrees to pay to the Company any additional hypothetical tax obligation calculated and paid under the terms and conditions ofsuch tax equalization policy.5.Nature of Grant. By participating in the Omnibus Plan and in exchange for receiving the Performance Share Award, the Participant acknowledges,understands and agrees that:(a)the Omnibus Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended orterminated by the Company at any time, unless otherwise provided in the Omnibus Plan;(b)the grant of the Performance Share Award is voluntary and occasional and does not create any contractual or other right to receive futuregrants of Performance Share Awards, or benefits in lieu of Performance Share Awards, even if Performance Share Awards have been grantedrepeatedly in the past;(c)all decisions with respect to future Performance Share Award grants, if any, shall be at the sole discretion of the Board of Directors of theCompany or the Committee;(d)the Participant is voluntarily participating in the Omnibus Plan;(e)the Performance Share Award and any Shares subject to the Performance Share Award are not part of or included in any calculation ofseverance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension, retirement orwelfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services forthe Company, the Employer, or any Affiliate;(f)the Performance Share Award grant shall not be interpreted to form an employment or service contract or relationship with the Company orany Affiliate;(g)the future value of the underlying Shares is unknown and cannot be predicted with certainty;(h)the Performance Share Award and the benefits evidenced by this Agreement do not create any entitlement, not otherwise specificallydetermined by the Company in its discretion, to have the Performance Share Award or any such benefits transferred to, or assumed by,another company, or to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares; andFor Participants who reside outside the U.S., the following additional provisions shall apply:(i)the Performance Share Award and the Shares subject to the Performance Share Award are not intended to replace any pension rights orcompensation;(j)the Performance Share Award and the Shares subject to the Performance Share Award are extraordinary items that do not constitutecompensation of any kind for services of any kind rendered to the Company or the Employer, and are outside the scope of the Participant’semployment or service contract, if any;(k)the Performance Share Award and the Shares subject to the Performance Share Award are not part of normal compensation or salary from theEmployer and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employeror any Affiliate of the Company;(l)no claim or entitlement to compensation or damages shall arise from forfeiture of the Performance Share Award resulting from failure toreach Performance Goals or termination of the Participant’s employment by the Company or the Employer (for any reason whatsoever andwhether or not in breach of any employment laws in the country where the Participant resides or later found to be invalid), and inconsideration of the grant of the Performance Share Award to which the Participant is otherwise not entitled, the Participant irrevocablyagrees never to institute any claim against the Company or the Employer, waives his or her ability, if any, to bring any such claim, andreleases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court ofcompetent jurisdiction, then, by participating in the Omnibus Plan, the Participant shall be deemed irrevocably to have agreed not topursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claims; and(m)neither the Company, the Employer nor any Affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’slocal currency and the United States Dollar that may affect the value of the Performance Share Award, any Shares paid to the Participant orany proceeds resulting from the Participant’s sale of such Shares.6.Data Privacy. By participating in the Omnibus Plan and in exchange for receiving the Performance Share Award, the Participant hereby explicitlyand unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in thisAgreement and any other Performance Share Award grant materials by and among, as applicable, the Employer, the Company and its Affiliatesfor the exclusive purpose of implementing, administering and managing the Participant’s receipt of the Performance Share Award.The Participant understands that the Company and the Employer may hold certain personal information about the Participant, including, but notlimited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number,salary, nationality, job title, any Shares of stock or directorships held in the Company, details of all Performance Share Awards or any otherentitlement to Shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the exclusive purpose ofimplementing, administering and managing the Performance Share Award (“Data”).The Participant understands that Data will be transferred to UBS Financial Services (“UBS”), or such other stock plan service provider as may beselected by the Company in the future, which is assisting the Company with the implementation, administration and management of thePerformance Share Award. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and thatthe recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. If theParticipant resides outside the United States, the Participant understands that he or she may request a list with the names and addresses of anypotential recipients of the Data by contacting his or her local human resources representative. The Participant authorizes the Company, UBS andany other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing thePerformance Share Award to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing,administering and managing his or her participation in the Performance Share Award. The Participant understands that Data will be held only aslong as is necessary to implement, administer and manage the Participant’s receipt of the Performance Share Award. If the Participant residesoutside the United States, the Participant understands that he or she may, at any time, view Data, request additional information about the storageand processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, bycontacting in writing his or her local human resources representative. The Participant understands, however, that refusing or withdrawing his orher consent may affect the Participant’s ability to receive the Performance Share Award. For more information on the consequences of theParticipant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resourcesrepresentative.7.Nontransferability of Performance Share Award. The Performance Share Award or the interests or rights therein may not be transferred in any mannerother than by will or by the laws of descent and distribution, and may not be assigned, hypothecated or otherwise pledged and shall not be subject toexecution, attachment or similar process. Upon any attempt to effect any such disposition, or upon the levy of any such process, in violation of theprovisions herein, the Performance Share Award shall immediately become null and void and any rights to receive a payment under the PerformanceShare Award shall be forfeited.8.Rights as Shareholder. Neither the Participant nor any person claiming under or through the Participant shall have any of the rights or privileges of ashareholder of the Company in respect of any Shares issuable hereunder unless and until certificates representing such Shares (which may be inuncertificated form) will have been issued and recorded on the books and records of the Company or its transfer agents or registrars, and delivered tothe Participant (including through electronic delivery to a brokerage account). After such issuance, recordation and delivery, the Participant shallhave all the rights of a shareholder of the Company, including with respect to the right to vote the Shares and the right to receive any cash or Sharedividends or other distributions paid to or made with respect to the Shares.9.Repayment/Forfeiture. The Award shall be canceled and forfeited, if, without the consent of the Company, while employed by or providing servicesto the Company or any Subsidiary or after termination of such employment or service, Participant (i) violates a non-competition, non-solicitation ornon-disclosure covenant or agreement, (ii) otherwise engages in activity that is in conflict with or adverse to the interest of the Company or anySubsidiary, including fraud or conduct contributing to any financial restatements or irregularities, as determined by the Committee in its solediscretion. In addition, any payments or benefits the Participant may receive hereunder shall be subject to repayment or forfeiture as may be requiredto comply with the requirements under the Securities Act, the Act, rules promulgated by the Commission or any other applicable law, including therequirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or any securities exchange on which the Shares are listed ortraded, as may be in effect from time to time as well as any policy relating to the repayment or forfeiture of compensation that the Company mayadopt from time-to-time. Further, if you receive any amount in excess of what you should have received under the terms of the Performance ShareAward for any reason (including without limitation by reason of a financial restatement, mistake in calculations or administrative error), all asdetermined by the Committee, then you shall be required to promptly repay any such excess amount to the Company. Nothing in or about thisAgreement prohibits Participant from: (i) filing and, as provided for under Section 21F of the Act, maintaining the confidentiality of a claim with theCommission, (ii) providing the Commission with information that would otherwise violate the non-disclosure restrictions in this Agreement, to theextent permitted by Section 21F of the Act; (iii) cooperating, participating or assisting in a Commission investigation or proceeding withoutnotifying the Company; or (iv) receiving a monetary award as set forth in Section 21F of the Act. Furthermore, Participant is advised that Participantshall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of any Confidential Information (as definedin Exhibit B) that constitutes a trade secret to which the Defend Trade Secrets Act (18 U.S.C. Section 1833(b)) applies that is made (i) in confidenceto a federal, state or local government official, either directly or indirectly, or to an attorney, in each case, solely for the purpose of reporting orinvestigating a suspected violation of law; or (ii) in a complaint or other document filed in a lawsuit or proceeding, if such filings are made underseal.10.Restrictions on Resale. The Participant hereby agrees not to sell any Shares issued in payment of the Performance Share Award at a time whenapplicable laws or Company policies prohibit a sale. This restriction shall apply as long as the Participant’s employment continues and for suchperiod of time after the termination of the Participant’s employment as the Company may specify.11.Language. If you have received this Award Agreement or any other document related to the Omnibus Plan translated into a language other thanEnglish and if the meaning of the translated version is different than the English version, the English version will control.12.Effect of a Change in Control. The treatment of a Performance Share Award upon a Change in Control shall be governed by the Omnibus Plan,provided, however, that to the extent that the Performance Share Award constitute Deferred Compensation, settlement of any portion of thePerformance Share Award that may vest in connection with a Change in Control will occur within sixty (60) days following the Vesting Date. In theevent that there is a conflict between the terms of this Award Agreement regarding the effect of a Change in Control on the Performance Share Awardand the terms of any Employment Agreement, the terms of this Award Agreement will govern.13.Securities Laws and Clawback. By accepting a Performance Share Award, you acknowledge that U.S. federal, state or foreign securities laws and/orthe Company’s policies regarding trading in its securities may limit or restrict your right to buy or sell Shares, including, without limitation, sales ofShares acquired in connection with the Performance Share Award. You agree to comply with such securities law requirements and Company policies,as such laws and policies are amended from time to time. You also acknowledge that the Performance Share Award may be forfeited if you engage inactivity that is in conflict with or adverse to the interest of the Company or any Subsidiary, including fraud or conduct contributing to any financialrestatements or irregularities, as determined by the Committee in its sole discretion or to the extent that you otherwise violate any policy adopted bythe Company relating to the recovery of compensation granted, paid, delivered, awarded or otherwise provided to you by the Company as suchpolicy is in effect on the date of grant of the applicable Award or, to the extent necessary to address the requirements of applicable law (includingSection 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as codified in Section 10D of the Act, Section 304 of theSarbanes-Oxley Act of 2002 or any other applicable law), as may be amended from time to time.14.Adjustments. The Performance Goals, as well as the manner in which the Performance Share Award payment is calculated is subject to adjustment inthe Committee’s sole discretion in accordance with Section 10(b) of the Omnibus Plan and the Notice. The Participant shall be notified of suchadjustment and such adjustment shall be binding upon the Company and the Participant.15.NO GUARANTEE OF CONTINUED EMPLOYMENT. THE PARTICIPANT HEREBY ACKNOWLEDGES AND AGREES THAT THE VESTING OFTHE PERFORMANCE SHARE AWARD PURSUANT TO THE PROVISIONS OF THIS AGREEMENT IS EARNED ONLY IF THE PERFORMANCEGOALS ARE ATTAINED AND THE OTHER TERMS AND CONDITIONS SET FORTH HEREIN ARE SATISFIED AND BY THE PARTICIPANTCONTINUING TO BE EMPLOYED (SUBJECT TO THE PROVISIONS OF SECTION 3(b) HEREOF) AT THE WILL OF THE COMPANY OR ANAFFILIATE (AND NOT THROUGH THE ACT OF BEING EMPLOYED BY THE COMPANY OR AN AFFILIATE, BEING GRANTED APERFORMANCE SHARE AWARD, OR RECEIVING SHARES HEREUNDER). THE PARTICIPANT FURTHER ACKNOWLEDGES AND AGREESTHAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE RIGHT TO EARN A PAYMENT UNDER THEPERFORMANCE SHARE AWARD SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUEDEMPLOYMENT DURING THE PERFORMANCE PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH THEPARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY OR AN AFFILIATE TO TERMINATE THE PARTICIPANT’S EMPLOYMENT ATANY TIME, WITH OR WITHOUT CAUSE, AND IN ACCORDANCE WITH APPLICABLE EMPLOYMENT LAWS OF THE COUNTRY WHERETHE PARTICIPANT RESIDES.16.Entire Agreement: Governing Law. The Notice, the Omnibus Plan and this Agreement, including any appendices, constitute the entire agreement ofthe parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and theParticipant with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except as provided in the Notice,the Omnibus Plan or this Agreement or by means of a writing signed by the Company and the Participant. Nothing in the Notice, the Omnibus Planand this Agreement (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties. TheNotice, the Omnibus Plan and this Agreement are to be construed in accordance with and governed by the substantive laws of Delaware, U.S.A.,without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the substantive laws ofDelaware to the rights and duties of the parties. Unless otherwise provided in the Notice, the Omnibus Plan or this Agreement, the Participant isdeemed to submit to the exclusive jurisdiction of Delaware, U.S.A., and agrees that such litigation shall be conducted in the courts of WilmingtonCounty, Delaware, or the federal courts for the United States for the Eastern District of Delaware, where this grant is made and/or to be performed.17.Conformity to Securities Laws. The Participant acknowledges that the Notice, the Omnibus Plan and this Agreement are intended to conform to theextent necessary with all provisions of the Securities Act and the Act, and any and all regulations and rules promulgated thereunder by theCommission, including, without limitation, Rule 16b-3. Notwithstanding anything herein to the contrary, the Notice, the Omnibus Plan and thisAgreement shall be administered, and the Performance Share Award is granted, only in such a manner as to conform to such laws, rules andregulations. To the extent permitted by applicable law, the Notice, the Omnibus Plan and this Agreement shall be deemed amended to the extentnecessary to conform to such laws, rules and regulations.18.Administration and Interpretation. The Performance Share Award, the vesting of the Performance Share Award and any payment of the PerformanceShare Award are subject to, and shall be administered in accordance with, the provisions of this Agreement, as the same may be amended from timeto time. Any question or dispute regarding the administration or interpretation of the Notice, the Omnibus Plan and this Agreement shall besubmitted by the Participant or by the Company to the Committee. The resolution of such question or dispute by the Committee shall be final andbinding on all persons.19.Headings. The captions used in the Notice and this Agreement are inserted for convenience and shall not be deemed a part of the Performance ShareAward for construction or interpretation.20.Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, upondeposit for delivery by an internationally recognized express mail courier service or upon deposit in the United States mail by certified mail (if theparties are within the United States), with postage and fees prepaid, addressed to the other party at its address as shown in these instruments, or tosuch other address as such party may designate in writing from time to time to the other part.21.Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shallinure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall bebinding upon the Participant and his or her heirs, executors, administrators, successors and assign.22.Severability. Whenever feasible, each provision of the Notice, this Agreement, and the Omnibus Plan shall be interpreted in such manner as to beeffective and valid under applicable law, but if any provision in the Notice, Omnibus Plan or this Agreement is held to be prohibited by or invalidunder applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder ofthe Notice, the Omnibus Plan or this Agreement.23.Code Section 409A. This Performance Share Award is intended to be exempt from or to comply with Section 409A of the Code and shall beinterpreted, operated and administered in a manner consistent with such intent. To the extent this Agreement provides for the Performance ShareAward to become vested and be settled upon the Participant’s termination of employment, the applicable Shares shall be transferred to theParticipant or his or her beneficiary upon the Participant’s “separation from service,” within the meaning of Section 409A of the Code; provided thatif the Participant is a “specified employee,” within the meaning of Section 409A of the Code, then to the extent the Performance Share Awardconstitutes nonqualified deferred compensation, within the meaning of Section 409A of the Code, such Shares shall be transferred to the Participantor his or her beneficiary upon the earlier to occur of (i) the six-month anniversary of such separation from service and (ii) the date of the Participant’sdeath.This Agreement may be amended at any time, without the consent of any party, to avoid the application of Section 409A of the Code in a particularcircumstance or that is necessary or desirable to satisfy any of the requirements under Section 409A of the Code, but the Company shall not be underany obligation to make any such amendment. Nothing in the Agreement shall provide a basis for any person to take action against the Company orany Affiliate based on matters covered by Section 409A of the Code, including the tax treatment of any amount paid under the Performance ShareAward granted hereunder, and neither the Company nor any of its Affiliates shall under any circumstances have any liability to the Participant or hisestate or any other party for any taxes, penalties or interest due on amounts paid or payable under this Agreement, including taxes, penalties orinterest imposed under Section 409A of the Code.24.No Advice Regarding Performance Share Award. The Company is not providing any tax, legal or financial advice, nor is the Company making anyrecommendations regarding the Participant’s acquisition or sale of any Shares issued in payment of the Performance Share Award. The Participant ishereby advised to consult with his or her own personal tax, legal and financial advisors before taking any action related to the Performance ShareAward.25.Language. If the Participant has received this Agreement or any other document related to the Omnibus Plan translated into a language other thanEnglish and if the meaning of the translated version is different than the English version, the English version shall control.26.Appendix I. Notwithstanding any provisions in this Agreement, the Performance Share Award grant shall be subject to any special terms andconditions set forth in Appendix I to this Agreement for the Participant’s country. Moreover, if the Participant relocates to one of the countriesincluded in Appendix I, the special terms and conditions for such country shall apply to the Participant, to the extent the Company determines thatthe application of such terms and conditions is necessary or advisable in order to comply with laws in the country where the Participant residesregarding the issuance of Shares, or to facilitate the administration of the Performance Share Award. Appendix I constitutes part of this Agreement.27.Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or futurePerformance Share Awards by electronic means or to request the Participant’s consent to participate in the Omnibus Plan by electronic means. TheParticipant hereby consents to receive such documents by electronic delivery and agrees to participate in the Omnibus Plan through an on-line orelectronic system established and maintained by the Company or a third party designated by the Company.28.Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the OmnibusPlan or on the Performance Share Award and on any Shares issued in payment of the Performance Share Award, to the extent the Companydetermines it is necessary or advisable in order to comply with laws in the country where the Participant resides regarding the issuance of Shares, orto facilitate the administration of the Performance Share Award, and to require the Participant to sign any additional agreements or undertakings thatmay be necessary to accomplish the foregoing.EXHIBIT BRESTRICTIVE COVENANTS AGREEMENTI understand that I am or will be an employee to or other service-provider of The Kraft Heinz Company and/or its Subsidiaries and/or its Affiliates(collectively the "Company"), and will learn and have access to the Company's confidential, trade secret and proprietary information and key businessrelationships. I understand that the products and services that the Company develops, provides and markets are unique. Further, I know that my promises inthis Restrictive Covenants Agreement (the "Agreement") are an important way for the Company to protect its proprietary interests and that The Kraft HeinzCompany would not have granted me Performance Share Units (“PSUs”) or other equity grants unless I made such promises.In addition to other good and valuable consideration, I am expressly being given PSUs or other equity grants in exchange for my agreeing to theterms of this Agreement. In consideration of the foregoing, I (the "Executive") agree as follows:1.NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. During the course of Executive's Service, Executive will have access to ConfidentialInformation. For purposes of this Agreement, "Confidential Information" means all data, information, ideas, concepts, discoveries, trade secrets,inventions (whether or not patentable or reduced to practice), innovations, improvements, know-how, developments, techniques, methods, processes,treatments, drawings, sketches, specifications, designs, plans, patterns, models, plans and strategies, and all other confidential or proprietary informationor trade secrets in any form or medium (whether merely remembered or embodied in a tangible or intangible form or medium) whether now or hereafterexisting, relating to or arising from the past, current or potential business, activities and/or operations of the Company, including, without limitation, anysuch information relating to or concerning finances, sales, marketing, advertising, transition, promotions, pricing, personnel, customers, suppliers,vendors, raw partners and/or competitors of the Company. Executive agrees that Executive shall not, directly or indirectly, use, make available, sell,disclose or otherwise communicate to any person, other than in the course of Executive's assigned duties and for the benefit of the Company, eitherduring the period of Executive's Service or at any time thereafter, any Confidential Information or other confidential or proprietary information receivedfrom third parties subject to a duty on the Company's part to maintain the confidentiality of such information, and to use such information only forcertain limited purposes, in each case, which shall have been obtained by Executive during Executive's Service. The foregoing shall not apply toinformation that (i) was known to the public prior to its disclosure to Executive; (ii) becomes generally known to the public subsequent to disclosure toExecutive through no wrongful act of Executive or any representative of Executive; or (iii) Executive is required to disclose by applicable law,regulation or legal process (provided that, to the extent permitted by law, Executive provides the Company with prior notice of the contemplateddisclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).Pursuant to the U.S. Defend Trade Secrets Act of 2016, Executive shall not be held criminally, or civilly, liable under any Federal or State Trade secretlaw for the disclosure of a trade secret that is made in confidence either directly or indirectly to a Federal, State, or local government official, or anattorney, for the sole purpose of reporting, or investigating, a violation of law. Moreover, Executive may disclose trade secrets in a complaint, or otherdocument, filed in a lawsuit, or other proceeding, if such filing is made under seal. Finally, if Executive files a lawsuit alleging retaliation by theCompany for reporting a suspected violation of the law, Executive may disclose the trade secret to Executive's attorney and use the trade secret in thecourt proceeding, if Executive files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to courtorder.No Company policies or practices, including this Non-Disclosure of Confidential Information provision, is intended to or shall limit, prevent, impede orinterfere in any way with Executive's right, without prior notice to the Company, to provide information to the government, participate in investigations,testify in proceedings regarding the Company's past or future conduct, or engage in any activities protected under whistle blower statutes.2.NON-COMPETITION. Executive acknowledges that (i) Executive performs services of a unique nature for the Company that are irreplaceable, and thatExecutive's performance of such services to a competing business will result in irreparable harm to the Company, (ii) Executive has had and willcontinue to have access to Confidential Information which, if disclosed, would unfairly and inappropriately assist in competition against the Company,(iii) in the course of Executive's employment by or service to a competitor, Executive would inevitably use or disclose such Confidential Information,(iv) the Company has substantial relationships with its customers and Executive has had and will continue to have access to these customers, (v)Executive has received and will receive specialized training from the Company, and (vi) Executive has generated and will continue to generate goodwillfor the Company in the course of Executive's Service. Accordingly, during Executive's Service and for eighteen (18) months following a termination ofExecutive's Service for any reason (the "Restricted Period"), Executive will not engage in any business activities, directly or indirectly (whether as anemployee, consultant, officer, director, partner, joint venturer, manager, member, principal, agent, or independent contractor, individually, in concertwith others, or in any other manner) within the same line or lines of business for which the Executive performed services for the Company and in acapacity that is similar to the capacity in which the Executive was employed by the Company with any person or entity that competes with the Companyin the consumer packaged food and beverage industry ("Competitive Business") anywhere within the same geographic territory(ies) for which theExecutive performed services for the Company (the "Restricted Territory"). Notwithstanding the foregoing, nothing herein shall prohibit Executivefrom being a passive owner of not more than three percent (3%) of the equity securities of a publicly traded corporation engaged in a business that is incompetition with the Company, so long as Executive has no active participation in the business of such corporation.3.NON-SOLICITATION. During the Restricted Period, Executive agrees that Executive shall not, except in the furtherance of Executive's duties to theCompany, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, solicit, aid, induce, assist in thesolicitation of, or accept any business (other than on behalf of the Company) from, any customer or potential customer of the Company to purchasegoods or services then sold by the Company from another person, firm, corporation or other entity or, directly or indirectly, in any way request, suggestor advise any such customer to withdraw or cancel any of their business or refuse to continue to do business with the Company. This restriction shallapply to customers or potential customers who, during the two (2) years immediately preceding the Executive's termination, had been assigned to theExecutive by the Company, or with which the Executive had contact on behalf of the Company while an Executive of the Company, or about which theExecutive had access to confidential information by virtue of Executive's employment with the Company.4.NON-INTERFERENCE. During the Restricted Period, Executive agrees that Executive shall not, except in the furtherance of Executive's duties to theCompany, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, (A) solicit, aid or induce any employee,representative or agent of the Company to leave such employment or retention or to accept employment with or render services to or with any otherperson, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, representative or agent, or take any action tomaterially assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent,or (B) interfere, or aid or induce any other person or entity in interfering, with the relationship between the Company and its vendors, suppliers orcustomers. As used herein, the term "solicit, aid or induce" includes, but is not limited to, (i) initiating communications with a Company employeerelating to possible employment, (ii) offering bonuses or other compensation to encourage a Company employee to terminate his or her employmentwith the Company and accept employment with any entity, (iii) recommending a Company employee to any entity, and (iv) aiding an entity inrecruitment of a Company employee. An employee, representative or agent shall be deemed covered by this Section 4 while so employed or retained andfor a period of six (6) months thereafter.5.NON-DISPARAGEMENT. Executive agrees not to make negative comments or otherwise disparage the Company or its officers, directors, employees,shareholders, agents or products or services. The foregoing shall not be violated by truthful statements made in (a) response to legal process, requiredgovernmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with suchproceedings) or (b) the good faith performance of Executive's duties to the Company.6.INVENTIONS.a.Executive acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements, work products, developments, software,know-how, processes, techniques, methods, works of authorship and other work product ("Inventions"), whether patentable or unpatentable, (A)that are reduced to practice, created, invented, designed, developed, contributed to, or improved with the use of any Company resources and/orwithin the scope of Executive's work with the Company or that relate to the business, operations or actual or demonstrably anticipated researchor development of the Company, and that are made or conceived by Executive, solely or jointly with others, during Executive's Service, or (B)suggested by any work that Executive performs in connection with the Company, either while performing Executive's duties with the Companyor on Executive's own time, but only insofar as the Inventions are related to Executive's work as an employee or other service provider to theCompany, shall belong exclusively to the Company (or its designee), whether or not patent or other applications for intellectual propertyprotection are filed thereon. Executive will keep full and complete written records (the "Records"), in the manner prescribed by the Company, ofall Inventions, and will promptly disclose all Inventions completely and in writing to the Company. The Records shall be the sole and exclusiveproperty of the Company, and Executive will surrender them upon the termination of Service, or upon the Company's request. Executiveirrevocably conveys, transfers and assigns to the Company the Inventions and all patents or other intellectual property rights that may issuethereon in any and all countries, whether during or subsequent to Executive's Service, together with the right to file, in Executive's name or inthe name of the Company (or its designee), applications for patents and equivalent rights (the "Applications").Executive will, at any time during and subsequent to Executive's Service, make such applications, sign such papers, take all rightful oaths, andperform all other acts as may be requested from time to time by the Company to perfect, record, enforce, protect, patent or register the Company'srights in the Inventions, all without additional compensation to Executive from the Company. Executive will also execute assignments to theCompany (or its designee) of the Applications, and give the Company and its attorneys all reasonable assistance (including the giving oftestimony) to obtain the Inventions for the Company's benefit, all without additional compensation to Executive from the Company, butentirely at the Company's expense.b.In addition, the Inventions will be deemed Work for Hire, as such term is defined under the copyright laws of the United States, on behalf of theCompany and Executive agrees that the Company will be the sole owner of the Inventions, and all underlying rights therein, in all media nowknown or hereinafter devised, throughout the universe and in perpetuity without any further obligations to Executive. If the Inventions, or anyportion thereof, are deemed not to be Work for Hire, or the rights in such Inventions do not otherwise automatically vest in the Company,Executive hereby irrevocably conveys, transfers and assigns to the Company, all rights, in all media now known or hereinafter devised,throughout the universe and in perpetuity, in and to the Inventions, including, without limitation, all of Executive's right, title and interest inthe copyrights (and all renewals, revivals and extensions thereof) to the Inventions, including, without limitation, all rights of any kind or anynature now or hereafter recognized, including, without limitation, the unrestricted right to make modifications, adaptations and revisions to theInventions, to exploit and allow others to exploit the Inventions and all rights to sue at law or in equity for any infringement, or otherunauthorized use or conduct in derogation of the Inventions, known or unknown, prior to the date hereof, including, without limitation, theright to receive all proceeds and damages therefrom. In addition, Executive hereby waives any so-called "moral rights" with respect to theInventions. To the extent that Executive has any rights in the results and proceeds of Executive's service to the Company that cannot beassigned in the manner described herein, Executive agrees to unconditionally waive the enforcement of such rights. Executive hereby waivesany and all currently existing and future monetary rights in and to the Inventions and all patents and other registrations for intellectual propertythat may issue thereon, including, without limitation, any rights that would otherwise accrue to Executive's benefit by virtue of Executive beingan employee of or other service provider to the Company.7.RETURN OF COMPANY PROPERTY. On the date of Executive's termination of Service with the Company for any reason (or at any time prior theretoat the Company's request), Executive shall return all property belonging to the Company (including, but not limited to, any Company-provided laptops,computers, cell phones, wireless electronic mail devices or other equipment, or documents and property belonging to the Company).8.REASONABLENESS OF COVENANTS. In signing this Agreement, including by electronic means, Executive gives the Company assurance thatExecutive has carefully read and considered all of the terms and conditions of this Agreement, including the restraints imposed by it. Executive agreesthat these restraints are necessary for the reasonable and proper protection of the Company and its Confidential Information and that each and every oneof the restraints is reasonable in respect to subject matter, length of time and geographic area, and that these restraints, individually or in the aggregate,will not prevent Executive from obtaining other suitable employment during the period in which Executive is bound by the restraints. Executiveacknowledges that each of these covenants has a unique, very substantial and immeasurable value to the Company and that Executive has sufficientassets and skills to provide a livelihood while such covenants remain in force. Executive further covenants that Executive will not challenge thereasonableness or enforceability of any of the covenants set forth in this Agreement, and that Executive will reimburse the Company for all costs(including reasonable attorneys' fees) incurred in connection with any action to enforce any of the provisions of this Agreement if either the Companyprevails on any material issue involved in such dispute or if Executive challenges the reasonableness or enforceability of any of the provisions of thisAgreement. It is also agreed that the "Company" as used in this Agreement refers to each of the Company's Subsidiaries and Affiliates and that eachof the Company's s Subsidiaries and Affiliates will have the right to enforce all of Executive's obligations to that Subsidiary or Affiliate under thisAgreement, as applicable, subject to any limitation or restriction on such rights of the Subsidiary or Affiliate under applicable law.9.REFORMATION. If it is determined by a court of competent jurisdiction in any state or country that any restriction in this Agreement is excessive induration or scope or is unreasonable or unenforceable under applicable law, it is the intention of the parties that such restriction may be modified oramended by the court to render it enforceable to the maximum extent permitted by the laws of that state or country.10.REMEDIES. Executive acknowledges and agrees that the Company's remedies at law for a breach or threatened breach of any of the provisions ofAgreement would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition toany remedies at law, the Company, without posting any bond or other security, shall be entitled to obtain equitable relief in the form of specificperformance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available, without thenecessity of showing actual monetary damages, in addition to any other equitable relief (including without limitation an accounting and/ordisgorgement) and/or any other damages as a matter of law.11.REPURCHASE. Executive acknowledges and agrees that a breach of this Agreement would constitute a "Covenant Breach" as such term is used in theOmnibus Plan and therefore, in the event of a Covenant Breach, Executive's PSUs and the Shares issued in payment thereof (as such terms are defined inthe Omnibus Plan) shall be subject to repurchase by The Kraft Heinz Company in accordance with the terms of the Omnibus Plan.12.TOLLING. In the event of any violation of the provisions of this Agreement, Executive acknowledges and agrees that the post-termination restrictionscontained in this Agreement shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto thatthe running of the applicable post-termination restriction period shall be tolled during any period of such violation.13.SURVIVAL OF PROVISIONS. The obligations contained in this Agreement hereof shall survive the termination or expiration of the Executive'sService with the Company and shall be fully enforceable thereafter.14.VENUE, PERSONAL JURISDICTION, AND COVENANT NOT TO SUE. Executive expressly agrees to submit to the exclusive jurisdiction andexclusive venue of courts located in the State of Delaware in connection with any litigation which may be brought with respect to a dispute between theCompany and Executive in relation to this Restrictive Covenants Agreement, regardless of where Executive resides or where Executive performs servicesfor the Company. Executive hereby irrevocably waives Executive's rights, if any, to have any disputes between the Company and Executive related tothis Restrictive Covenants Agreement decided in any jurisdiction or venue other than a court in the State of Delaware. Executive hereby waives, to thefullest extent permitted by applicable law, any objection which Executive now or hereafter may have to personal jurisdiction or to the laying of venue ofany such suit, action or proceeding, and Executive agrees not to plead or claim the same. Executive further irrevocably covenants not to sue theCompany related to this Restrictive Covenants Agreement in any jurisdiction or venue other than a court in the State of Delaware. All matters relating tothe interpretation, construction, application, validity, and enforcement of this Agreement, and any disputes or controversies arising hereunder, will begoverned by the laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule, whether of the State of Delaware orany other jurisdiction, that would cause the application of laws of any jurisdiction other than the State of Delaware.A-7Exhibit 21.1The Kraft Heinz CompanyList of SubsidiariesSubsidiary State or CountryAlimentos Heinz de Costa Rica S.A. Costa RicaAlimentos Heinz, C.A. VenezuelaAsian Restaurants Limited United KingdomBattery Properties, Inc. DelawareBoca Foods Company DelawareCairo Food Industries, S.A.E. EgyptCapri Sun, Inc. DelawareCarlton Bridge Limited United KingdomChurny Company, Inc. DelawareClaussen Pickle Co. DelawareComercializadora Heinz de Panama SCA PanamaCountry Ford Development Limited ChinaDelimex de Mexico S.A. de C.V. MexicoDelta Incorporated Limited British Virgin IslandsDevour Foods LLC DelawareDistribuidora Heinz Caracas, C.A. VenezuelaDistribuidora Heinz Maracaibo, C.A. VenezuelaFall Ridge Partners LLP United KingdomFoodstar (China) Investments Company Limited ChinaFoodstar (Shanghai) Foods Co. Ltd. ChinaFoodstar Holdings Pte Ltd. SingaporeFundacion Heinz VenezuelaGarland BBQ Company DelawareGevalia Kaffe LLC DelawareGolden Circle Limited AustraliaGuangzhou United Logistics Company Limited ChinaH. J. Heinz Belgium S.A. BelgiumH. J. Heinz Company Brands LLC DelawareH. J. Heinz Global Holding B.V. NetherlandsH. J. Heinz Nigeria Limited NigeriaH.J HEINZ GLOBAL HOLDING LLC DelawareH.J. Heinz Asset Leasing Limited United KingdomH.J. Heinz B.V. NetherlandsH.J. Heinz Company (New Zealand) Limited New ZealandH.J. Heinz Company Australia Limited AustraliaH.J. Heinz Company Limited United KingdomH.J. Heinz cr/sr a.s., v likvidaci Czech RepublicH.J. Heinz European Holding B.V. NetherlandsH.J. Heinz Finance UK PLC United KingdomH.J. Heinz Foods Spain S.L.U. SpainH.J. Heinz Foods UK Limited United KingdomH.J. Heinz France SAS FranceH.J. Heinz Frozen & Chilled Foods Limited United KingdomH.J. Heinz Global Holding C.V. NetherlandsH.J. Heinz GmbH GermanyH.J. Heinz Group B.V. NetherlandsH.J. Heinz Holding B.V. NetherlandsH.J. Heinz Investments Coöperatief U.A. NetherlandsH.J. Heinz Ireland Holdings IrelandH.J. Heinz Manufacturing Belgium BVBA BelgiumH.J. Heinz Manufacturing Ireland Limited IrelandH.J. Heinz Manufacturing Spain S.L.U. SpainH.J. Heinz Manufacturing UK Limited United KingdomH.J. Heinz Nederland B.V. NetherlandsH.J. Heinz Netherlands Holdings C.V. NetherlandsH.J. Heinz Polska Sp. z o.o. PolandH.J. Heinz Supply Chain Europe B.V. NetherlandsH.J. Heinz US Brands LLC DelawareHeinz (China) Investment Company Limited ChinaHeinz (China) Sauces & Condiments Co. Ltd. ChinaHeinz Africa and Middle East FZE United Arab EmiratesHeinz Africa FZE United Arab EmiratesHeinz ASEAN Pte. Ltd. SingaporeHeinz Brasil Alimentos Ltda. BrazilHeinz Brasil, S.A. BrazilHeinz Colombia SAS ColombiaHeinz Credit LLC DelawareHeinz Egypt LLC EgyptHeinz Egypt Trading LLC EgyptHeinz Europe Unlimited United KingdomHeinz Finance (Luxembourg) S.à r.l LuxembourgHeinz Foods South Africa (Proprietary) Limited South AfricaHeinz Foreign Investment Company IdahoHeinz Frozen & Chilled Foods B.V. NetherlandsHeinz Gida Anonim Sirketi TurkeyHeinz Hong Kong Limited ChinaHeinz India Private Ltd. IndiaHeinz Investments (Cyprus) Limited CyprusHeinz Israel Limited IsraelHeinz Italia S.p.A. ItalyHeinz Japan Ltd. JapanHeinz Korea Ltd. South KoreaHeinz Mexico, S.A. de C.V. MexicoHeinz Nutrition Foundation India IndiaHeinz Pakistan (Pvt.) Limited PakistanHeinz Panama, S.A. PanamaHeinz Produzioni Alimentari SRL ItalyHeinz Purchasing Company DelawareHeinz Qingdao Food Co., Ltd. ChinaHeinz Receivables LLC DelawareHeinz Sales & Marketing (MALAYSIA) SDN. BHD. MalaysiaHeinz Shanghai Enterprise Services Co, Ltd. ChinaHeinz Single Service Limited United KingdomHeinz South Africa (Pty.) Ltd. South AfricaHeinz Thailand Limited DelawareHeinz Transatlantic Holding LLC DelawareHeinz UFE Ltd. ChinaHeinz Vietnam Company Limited VietnamHeinz Wattie's Limited New ZealandHeinz Wattie's Pty Ltd AustraliaHeinz-Noble, Inc. ArizonaHelco Services Limited United KingdomHighview Atlantic Finance (Barbados) SRL BarbadosHJH Development Corporation DelawareHJH Overseas L.L.C. DelawareHorizon FZCO United Arab EmiratesHorizon UAE FZCO United Arab EmiratesHP Foods Holdings Limited United KingdomHP Foods International Limited United KingdomHP Foods Limited United KingdomHugo Canning Company Pty Limited Papua New GuineaHZ.I.L. Ltd. IsraelIndustria Procesadora de Alimentos de Barcelona C.A. VenezuelaInternational Gourmet Specialties LLC DelawareInternational Spirits Recipes, LLC DelawareIstituto Scotti Bassani per la Ricerca e l'Informazione Scientifica e Nutrizionale ItalyJacobs Road Limited Cayman IslandsKaiping Guanghe Fermented Bean Curd Co. Ltd. ChinaKaiping Jiashili Dried Fruit and Nuts Co. Ltd. ChinaKaiping Weishida Seasonings Co. Ltd. ChinaKFG Management Services LLC DelawareKHFC Luxembourg Holdings S.à r.l LuxembourgKoninklijke De Ruijter B.V. NetherlandsKraft Foods Group Brands LLC DelawareKraft Foods Group Exports LLC DelawareKraft Foods Group Netherlands Holding B.V. NetherlandsKraft Foods Group Puerto Rico LLC Puerto RicoKraft Heinz (Barbados) SRL BarbadosKraft Heinz (Ireland) Ltd IrelandKraft Heinz Argentina S.R.L. ArgentinaKraft Heinz Australia Pty Limited AustraliaKraft Heinz Brasil Participações LTDA BrazilKraft Heinz Canada ULC CanadaKRAFT HEINZ CHILE LIMITADA ChileKraft Heinz Foods Company PennsylvaniaKraft Heinz Foods Company L.P. CanadaKraft Heinz Foods Luxembourg Holdings S.à r.l LuxembourgKraft Heinz Global Finance B.V. NetherlandsKraft Heinz Holding LLC DelawareKraft Heinz Holding C.V. NetherlandsKraft Heinz Ingredients Corp. DelawareKraft Heinz Intermediate Corporation I DelawareKraft Heinz Intermediate Corporation II DelawareKraft Heinz International B.V. NetherlandsKraft Heinz Receivables LLC DelawareKraft Heinz Sewickley C.V. NetherlandsKraft Heinz UK Limited United KingdomKraft Heinz Yangjiang Foods Co., Ltd. ChinaKraft New Services LLC DelawareLa Bonne Cuisine Limited New ZealandLangtech Citrus Pty. Limited AustraliaLea & Perrins Limited United KingdomLea & Perrins LLC DelawareLLC Heinz-Georgievsk RussiaLLC Ivanovsky Kombinat Detskogo Pitaniya RussiaMaster Chef Limited New ZealandMealtime Stories, LLC DelawareMILKSUN, spol. s.r.o. SlovakiaNanjing Jilun Seasoning Products Pte. Ltd. ChinaNature's Delicious Foods Group LLC DelawareNoble Insurance Company Limited IrelandO.R.A. LLC CaliforniaP.T. Heinz ABC Indonesia IndonesiaPetroproduct-Otradnoye Ltd. RussiaPhenix Management Corporation DelawarePollio Italian Cheese Company DelawarePPK Ltd. RussiaPro-Share Limited United KingdomPudliszki Sp. z o.o. PolandRenee's Gourmet Foods Inc. CanadaRINC Ltd. IsraelSeven Seas Foods, Inc. DelawareSewickley LLC DelawareThe Kraft Heinz Company Foundation IllinoisThe Yuban Coffee Company DelawareThompson & Hills Limited New ZealandTNCOR Ltd. IsraelTop Taste Company Limited New ZealandTsai Weng Ping Incorporated Limited British Virgin IslandsWeishida (Nanjing) Foods Co. Ltd. ChinaWexford LLC DelawareWW Foods, LLC DelawareExhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-213290) and Form S-8 (Nos. 333-205481 and 333-211147) of The Kraft Heinz Company of our report dated February 16, 2018 relating to the financial statements, financial statement schedule andeffectiveness of internal control over financial reporting, which appears in this Form 10-K./s/ PricewaterhouseCoopers LLPChicago, IllinoisFebruary 16, 2018 Exhibit 24.1POWER OF ATTORNEYKNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Bernardo Hees, David H. Knopf, andChristopher R. Skinger his or her true and lawful attorney-in-fact, for him or her and in his or her name, place and stead to affix his or her signature as directoror officer or both, as the case may be, of the registrant, to sign the Annual Report on Form 10-K of The Kraft Heinz Company for its fiscal year endedDecember 30, 2017 and any and all amendments thereto, and to file the same with all exhibits thereto, and other documents in connection therewith, with theSecurities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thingrequisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifyingand confirming all that said attorney-in-fact and agent, or his or her substitute, may lawfully do or cause to be done by virtue hereof.Pursuant to the requirements of the Securities Act, this Annual Report on Form 10-K has been signed by the following persons in the capacities and on thedates indicated.SignatureTitleDate /s/ Bernardo HeesChief Executive OfficerJanuary 31, 2018Bernardo Hees(Principal Executive Officer) /s/ David H. KnopfExecutive Vice President and Chief Financial OfficerJanuary 31, 2018David H. Knopf(Principal Financial Officer) /s/ Christopher R. SkingerVice President, Global ControllerJanuary 31, 2018Christopher R. Skinger(Principal Accounting Officer) /s/ Alexandre BehringChairman of the BoardJanuary 31, 2018Alexandre Behring /s/ John T. CahillVice Chairman of the BoardJanuary 31, 2018John T. Cahill /s/ Gregory E. AbelDirectorJanuary 31, 2018Gregory E. Abel /s/ Warren E. BuffettDirectorJanuary 31, 2018Warren E. Buffett /s/ Tracy Britt CoolDirectorJanuary 31, 2018Tracy Britt Cool /s/ Feroz DewanDirectorJanuary 31, 2018Feroz Dewan /s/ Jeanne P. JacksonDirectorJanuary 31, 2018Jeanne P. Jackson /s/ Jorge Paulo LemannDirectorJanuary 31, 2018Jorge Paulo Lemann /s/ Mackey J. McDonaldDirectorJanuary 31, 2018Mackey J. McDonald /s/ John C. PopeDirectorJanuary 31, 2018John C. Pope /s/ Marcel Herrmann TellesDirectorJanuary 31, 2018Marcel Herrmann Telles Exhibit 31.1I, Bernardo Hees, certify that:1.I have reviewed this Annual Report on Form 10-K for the period ended December 30, 2017 of The Kraft Heinz Company;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.By:/s/ Bernardo Hees Bernardo Hees Chief Executive OfficerDate: February 16, 2018Exhibit 31.2I, David H. Knopf, certify that:1.I have reviewed this Annual Report on Form 10-K for the period ended December 30, 2017 of The Kraft Heinz Company;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.By:/s/ David H. Knopf David H. Knopf Executive Vice President and Chief Financial OfficerDate: February 16, 2018Exhibit 32.118 U.S.C. SECTION 1350 CERTIFICATIONI, Bernardo Hees, Chief Executive Officer of The Kraft Heinz Company (the “Company”), hereby certify that, pursuant to Section 906 of the Sarbanes-OxleyAct of 2002, 18 U.S.C. Section 1350, to my knowledge:1.The Company’s Annual Report on Form 10-K for the period ended December 30, 2017 (the “Form 10-K”) fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934; and2.The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of theCompany.By:/s/ Bernardo HeesName:Bernardo HeesTitle:Chief Executive OfficerDate: February 16, 2018The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form 10-K or as a separatedisclosure document.A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signaturethat appears in typed form within the electronic version of this written statement required by Section 906, has been provided to The Kraft Heinz Companyand will be retained by The Kraft Heinz Company and furnished to the Securities and Exchange Commission or its staff upon request.Exhibit 32.218 U.S.C. SECTION 1350 CERTIFICATIONI, David H. Knopf, Executive Vice President and Chief Financial Officer of The Kraft Heinz Company (the “Company”), hereby certify that, pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, to my knowledge:1.The Company’s Annual Report on Form 10-K for the period ended December 30, 2017 (the “Form 10-K”) fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934; and2.The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of theCompany.By:/s/ David H. KnopfName:David H. KnopfTitle:Executive Vice President and Chief Financial OfficerDate: February 16, 2018The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form 10-K or as a separatedisclosure document.A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signaturethat appears in typed form within the electronic version of this written statement required by Section 906, has been provided to The Kraft Heinz Companyand will be retained by The Kraft Heinz Company and furnished to the Securities and Exchange Commission or its staff upon request.

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