Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Kraft Heinz Co., balance sheet: goodwill and intangible assets

US$ in millions

	Dec 28, 2019	Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
Goodwill	35,546)	36,503)	44,824)	44,125)	43,051)
Indefinite-lived intangible assets	43,400)	43,966)	53,655)	53,307)	55,824)
Trademarks	2,443)	2,474)	2,386)	2,337)	2,346)
Customer-related assets	4,113)	4,097)	4,231)	4,184)	4,218)
Other	14)	18)	14)	13)	15)
Definite-lived intangible assets, gross	6,570)	6,589)	6,631)	6,534)	6,579)
Accumulated amortization	(1,318)	(1,087)	(837)	(544)	(283)
Definite-lived intangible assets, net	5,252)	5,502)	5,794)	5,990)	6,296)
Intangible assets	48,652)	49,468)	59,449)	59,297)	62,120)
Goodwill and intangible assets	84,198)	85,971)	104,273)	103,422)	105,171)

Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

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Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Kraft Heinz Co. goodwill decreased from 2017 to 2018 and from 2018 to 2019.
Intangible assets	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Kraft Heinz Co. intangible assets decreased from 2017 to 2018 and from 2018 to 2019.
Goodwill and intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Kraft Heinz Co. goodwill and intangible assets decreased from 2017 to 2018 and from 2018 to 2019.

Kraft Heinz Co., adjustments to financial statements

US$ in millions

	Dec 28, 2019	Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported)	101,450)	103,461)	120,232)	120,480)	122,973)
Less: Goodwill	35,546)	36,503)	44,824)	44,125)	43,051)
Total assets (adjusted)	65,904)	66,958)	75,408)	76,355)	79,922)
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported)	51,623)	51,657)	66,034)	57,358)	57,685)
Less: Goodwill	35,546)	36,503)	44,824)	44,125)	43,051)
Shareholders’ equity (adjusted)	16,077)	15,154)	21,210)	13,233)	14,634)
Adjustment to Net Income (loss) Attributable To Kraft Heinz
Net income (loss) attributable to Kraft Heinz (as reported)	1,935)	(10,192)	10,999)	3,632)	634)
Add: Goodwill impairment losses	1,197)	7,008)	—)	—)	—)
Net income (loss) attributable to Kraft Heinz (adjusted)	3,132)	(3,184)	10,999)	3,632)	634)

Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

Kraft Heinz Co., Financial Data: Reported vs. Adjusted

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Kraft Heinz Co., adjusted financial ratios

	Dec 28, 2019	Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
Net Profit Margin
Reported net profit margin	7.75%	-38.80%	41.93%	13.71%	3.46%
Adjusted net profit margin	12.54%	-12.12%	41.93%	13.71%	3.46%
Total Asset Turnover
Reported total asset turnover	0.25	0.25	0.22	0.22	0.15
Adjusted total asset turnover	0.38	0.39	0.35	0.35	0.23
Financial Leverage
Reported financial leverage	1.97	2.00	1.82	2.10	2.13
Adjusted financial leverage	4.10	4.42	3.56	5.77	5.46
Return on Equity (ROE)
Reported ROE	3.75%	-19.73%	16.66%	6.33%	1.10%
Adjusted ROE	19.48%	-21.01%	51.86%	27.45%	4.33%
Return on Assets (ROA)
Reported ROA	1.91%	-9.85%	9.15%	3.01%	0.52%
Adjusted ROA	4.75%	-4.76%	14.59%	4.76%	0.79%

Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Kraft Heinz Co. adjusted net profit margin ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Kraft Heinz Co. adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Kraft Heinz Co. adjusted financial leverage ratio increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Kraft Heinz Co. adjusted ROE deteriorated from 2017 to 2018 but then improved from 2018 to 2019 not reaching 2017 level.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Kraft Heinz Co. adjusted ROA deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

Kraft Heinz Co., Financial Ratios: Reported vs. Adjusted

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	Dec 28, 2019	Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Kraft Heinz	1,935)	(10,192)	10,999)	3,632)	634)
Net sales	24,977)	26,268)	26,232)	26,487)	18,338)
Profitability Ratio
Net profit margin¹	7.75%	-38.80%	41.93%	13.71%	3.46%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Kraft Heinz	3,132)	(3,184)	10,999)	3,632)	634)
Net sales	24,977)	26,268)	26,232)	26,487)	18,338)
Profitability Ratio
Adjusted net profit margin²	12.54%	-12.12%	41.93%	13.71%	3.46%

Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ Net profit margin = 100 × Net income (loss) attributable to Kraft Heinz ÷ Net sales
= 100 × 1,935 ÷ 24,977 = 7.75%

² Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to Kraft Heinz ÷ Net sales
= 100 × 3,132 ÷ 24,977 = 12.54%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Kraft Heinz Co. adjusted net profit margin ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

	Dec 28, 2019	Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net sales	24,977)	26,268)	26,232)	26,487)	18,338)
Total assets	101,450)	103,461)	120,232)	120,480)	122,973)
Activity Ratio
Total asset turnover¹	0.25	0.25	0.22	0.22	0.15
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net sales	24,977)	26,268)	26,232)	26,487)	18,338)
Adjusted total assets	65,904)	66,958)	75,408)	76,355)	79,922)
Activity Ratio
Adjusted total asset turnover²	0.38	0.39	0.35	0.35	0.23

Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 24,977 ÷ 101,450 = 0.25

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 24,977 ÷ 65,904 = 0.38

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Kraft Heinz Co. adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

	Dec 28, 2019	Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets	101,450)	103,461)	120,232)	120,480)	122,973)
Shareholders’ equity	51,623)	51,657)	66,034)	57,358)	57,685)
Solvency Ratio
Financial leverage¹	1.97	2.00	1.82	2.10	2.13
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets	65,904)	66,958)	75,408)	76,355)	79,922)
Adjusted shareholders’ equity	16,077)	15,154)	21,210)	13,233)	14,634)
Solvency Ratio
Adjusted financial leverage²	4.10	4.42	3.56	5.77	5.46

Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ Financial leverage = Total assets ÷ Shareholders’ equity
= 101,450 ÷ 51,623 = 1.97

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 65,904 ÷ 16,077 = 4.10

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Kraft Heinz Co. adjusted financial leverage ratio increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.

	Dec 28, 2019	Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Kraft Heinz	1,935)	(10,192)	10,999)	3,632)	634)
Shareholders’ equity	51,623)	51,657)	66,034)	57,358)	57,685)
Profitability Ratio
ROE¹	3.75%	-19.73%	16.66%	6.33%	1.10%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Kraft Heinz	3,132)	(3,184)	10,999)	3,632)	634)
Adjusted shareholders’ equity	16,077)	15,154)	21,210)	13,233)	14,634)
Profitability Ratio
Adjusted ROE²	19.48%	-21.01%	51.86%	27.45%	4.33%

Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ ROE = 100 × Net income (loss) attributable to Kraft Heinz ÷ Shareholders’ equity
= 100 × 1,935 ÷ 51,623 = 3.75%

² Adjusted ROE = 100 × Adjusted net income (loss) attributable to Kraft Heinz ÷ Adjusted shareholders’ equity
= 100 × 3,132 ÷ 16,077 = 19.48%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Kraft Heinz Co. adjusted ROE deteriorated from 2017 to 2018 but then improved from 2018 to 2019 not reaching 2017 level.

	Dec 28, 2019	Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Kraft Heinz	1,935)	(10,192)	10,999)	3,632)	634)
Total assets	101,450)	103,461)	120,232)	120,480)	122,973)
Profitability Ratio
ROA¹	1.91%	-9.85%	9.15%	3.01%	0.52%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Kraft Heinz	3,132)	(3,184)	10,999)	3,632)	634)
Adjusted total assets	65,904)	66,958)	75,408)	76,355)	79,922)
Profitability Ratio
Adjusted ROA²	4.75%	-4.76%	14.59%	4.76%	0.79%

Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ ROA = 100 × Net income (loss) attributable to Kraft Heinz ÷ Total assets
= 100 × 1,935 ÷ 101,450 = 1.91%

² Adjusted ROA = 100 × Adjusted net income (loss) attributable to Kraft Heinz ÷ Adjusted total assets
= 100 × 3,132 ÷ 65,904 = 4.75%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Kraft Heinz Co. adjusted ROA deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

Kraft Heinz Co. (NASDAQ:KHC)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Kraft Heinz Co., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Kraft Heinz Co., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)