Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Kraft Heinz Co. (NASDAQ:KHC)

Analysis of Income Taxes

Advanced level


Income Tax Expense (Benefit)

Kraft Heinz Co., income tax expense (benefit), continuing operations

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 31, 2015
U.S. federal 466  444  757  1,095  427 
U.S. state and local 116  134  (46) 76  22 
International 439  322  296  239  234 
Current 1,021  900  1,007  1,410  683 
U.S. federal (209) (1,843) (6,570) 31  (173)
U.S. state and local (7) (121) 101  (60) (70)
International (77) (3) —  (74)
Deferred (293) (1,967) (6,467) (29) (317)
Provision for (benefit from) income taxes 728  (1,067) (5,460) 1,381  366 

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Kraft Heinz Co.’s current decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Kraft Heinz Co.’s deferred increased from 2017 to 2018 and from 2018 to 2019.
Provision for (benefit from) income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Kraft Heinz Co.’s provision for (benefit from) income taxes increased from 2017 to 2018 and from 2018 to 2019.

Effective Income Tax Rate (EITR)

Kraft Heinz Co., effective income tax rate (EITR) reconciliation

Microsoft Excel LibreOffice Calc
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 31, 2015
U.S. federal statutory tax rate 21.00% 21.00% 35.00% 35.00% 35.00%
Tax on income of foreign subsidiaries -7.50% 3.40% -4.70% -3.60% -11.80%
Domestic manufacturing deduction 0.00% 0.00% -1.50% -1.90% -2.90%
U.S. state and local income taxes, net of federal tax benefit 1.10% 1.60% 1.10% 0.80% -0.60%
Earnings repatriation 0.00% 0.00% 0.40% 0.40% 21.90%
Tax exempt income 0.00% 0.00% -0.70% -3.30% -10.90%
Deferred tax effect of statutory tax rate changes 0.00% 0.00% 0.30% -2.00% -10.40%
Audit settlements and changes in uncertain tax positions 1.30% -0.30% -0.10% 1.80% 6.20%
Venezuela nondeductible devaluation loss 0.00% 0.00% 0.00% 0.20% 9.90%
Global intangible low-taxed income 1.80% -0.50% 0.00% 0.00% 0.00%
Goodwill impairment 9.30% -15.10% 0.00% 0.00% 0.00%
Wind-up of non-U.S. pension plans 0.00% -0.40% 0.00% 0.00% 0.00%
(Gains) losses related to acquisitions and divestitures 1.00% 0.10% 0.00% 0.00% 0.00%
Movement of valuation allowance reserves 1.30% 0.00% 0.00% 0.00% 0.00%
Other -1.90% -0.90% -1.20% 0.10% -0.20%
Effective tax rate, before U.S. Tax Reform discrete income tax benefit 27.40% 8.90% 28.60% 27.50% 36.20%
U.S. Tax Reform discrete income tax benefit 0.00% 0.50% -127.30% 0.00% 0.00%
Effective tax rate 27.40% 9.40% -98.70% 27.50% 36.20%

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

Item Description The company
Effective tax rate, before U.S. Tax Reform discrete income tax benefit Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Kraft Heinz Co.’s effective tax rate, before U.S. Tax Reform discrete income tax benefit decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level.

Components of Deferred Tax Assets and Liabilities

Kraft Heinz Co., components of deferred tax assets and liabilities

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 31, 2015
Benefit plans 112  172  212  1,025  1,323 
Other 474  470  428  782  1,011 
Deferred income tax assets, gross 586  642  640  1,807  2,334 
Valuation allowance (112) (81) (80) (89) (83)
Deferred income tax assets, net 474  561  560  1,718  2,251 
Intangible assets, net (11,230) (11,571) (13,637) (20,946) (21,950)
Property, plant and equipment, net (773) (735) (641) (1,035) (1,233)
Other (252) (410) (293) (532) (495)
Deferred income tax liabilities (12,255) (12,716) (14,571) (22,513) (23,678)
Net deferred income tax assets (liabilities) (11,781) (12,155) (14,011) (20,795) (21,427)

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

Item Description The company
Deferred income tax assets, gross Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Kraft Heinz Co.’s deferred income tax assets, gross increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.
Deferred income tax assets, net Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Kraft Heinz Co.’s deferred income tax assets, net increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.
Net deferred income tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Kraft Heinz Co.’s net deferred income tax assets (liabilities) increased from 2017 to 2018 and from 2018 to 2019.

Deferred Tax Assets and Liabilities, Classification

Kraft Heinz Co., deferred tax assets and liabilities, classification

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 28, 2019 Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 31, 2015
Deferred income tax assets 97  47  65  53  70 
Deferred income tax liabilities 11,878  12,202  14,076  20,848  21,497 

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

Item Description The company
Deferred income tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Kraft Heinz Co.’s deferred income tax assets decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.
Deferred income tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. Kraft Heinz Co.’s deferred income tax liabilities decreased from 2017 to 2018 and from 2018 to 2019.

Adjustments to Financial Statements: Removal of Deferred Taxes

Kraft Heinz Co., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
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: Noncurrent deferred tax assets, net 97  47  65  53  70 
Total assets (adjusted) 101,353  103,414  120,167  120,427  122,903 
Adjustment to Total Liabilities
Total liabilities (as reported) 49,701  51,683  53,985  62,906  56,737 
Less: Noncurrent deferred tax liabilities, net 11,878  12,202  14,076  20,848  21,497 
Total liabilities (adjusted) 37,823  39,481  39,909  42,058  35,240 
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 51,623  51,657  66,034  57,358  57,685 
Less: Net deferred tax assets (liabilities) (11,781) (12,155) (14,011) (20,795) (21,427)
Shareholders’ equity (adjusted) 63,404  63,812  80,045  78,153  79,112 
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: Deferred income tax expense (benefit) (293) (1,967) (6,467) (29) (317)
Net income (loss) attributable to Kraft Heinz (adjusted) 1,642  (12,159) 4,532  3,603  317 

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).


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


Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Kraft Heinz Co., adjusted financial ratios

Microsoft Excel LibreOffice Calc
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 6.57% -46.29% 17.28% 13.60% 1.73%
Total Asset Turnover
Reported total asset turnover 0.25 0.25 0.22 0.22 0.15
Adjusted total asset turnover 0.25 0.25 0.22 0.22 0.15
Financial Leverage
Reported financial leverage 1.97 2.00 1.82 2.10 2.13
Adjusted financial leverage 1.60 1.62 1.50 1.54 1.55
Return on Equity (ROE)
Reported ROE 3.75% -19.73% 16.66% 6.33% 1.10%
Adjusted ROE 2.59% -19.05% 5.66% 4.61% 0.40%
Return on Assets (ROA)
Reported ROA 1.91% -9.85% 9.15% 3.01% 0.52%
Adjusted ROA 1.62% -11.76% 3.77% 2.99% 0.26%

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Kraft Heinz Co.’s adjusted net profit margin ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 not reaching 2017 level.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Kraft Heinz Co.’s 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.’s 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.’s 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.’s adjusted ROA deteriorated from 2017 to 2018 but then improved from 2018 to 2019 not reaching 2017 level.

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


Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Kraft Heinz 1,642  (12,159) 4,532  3,603  317 
Net sales 24,977  26,268  26,232  26,487  18,338 
Profitability Ratio
Adjusted net profit margin2 6.57% -46.29% 17.28% 13.60% 1.73%

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

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 × 1,642 ÷ 24,977 = 6.57%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Kraft Heinz Co.’s adjusted net profit margin ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 not reaching 2017 level.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
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 Deferred Taxes
Selected Financial Data (US$ in millions)
Net sales 24,977  26,268  26,232  26,487  18,338 
Adjusted total assets 101,353  103,414  120,167  120,427  122,903 
Activity Ratio
Adjusted total asset turnover2 0.25 0.25 0.22 0.22 0.15

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

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 ÷ 101,353 = 0.25

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

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 101,353  103,414  120,167  120,427  122,903 
Adjusted shareholders’ equity 63,404  63,812  80,045  78,153  79,112 
Solvency Ratio
Adjusted financial leverage2 1.60 1.62 1.50 1.54 1.55

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

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
= 101,353 ÷ 63,404 = 1.60

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.’s adjusted financial leverage ratio increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Kraft Heinz 1,642  (12,159) 4,532  3,603  317 
Adjusted shareholders’ equity 63,404  63,812  80,045  78,153  79,112 
Profitability Ratio
Adjusted ROE2 2.59% -19.05% 5.66% 4.61% 0.40%

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

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 × 1,642 ÷ 63,404 = 2.59%

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

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Kraft Heinz 1,642  (12,159) 4,532  3,603  317 
Adjusted total assets 101,353  103,414  120,167  120,427  122,903 
Profitability Ratio
Adjusted ROA2 1.62% -11.76% 3.77% 2.99% 0.26%

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

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 × 1,642 ÷ 101,353 = 1.62%

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