Income Tax Accounting Policy
Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Analyst Adjustments: Removal of Deferred Taxes
Adjusted Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Kraft Heinz recognizes income taxes based on amounts refundable or payable for the current year and record deferred tax assets or liabilities for any difference between the financial reporting and tax basis of the assets and liabilities. Kraft Heinz also recognizes deferred tax assets for temporary differences, operating loss carryforwards, and tax credit carryforwards. Inherent in determining Kraft Heinz’s annual tax rate are judgments regarding business plans, planning opportunities, and expectations about future outcomes. Realization of certain deferred tax assets, primarily net operating loss and other carryforwards, is dependent upon generating sufficient taxable income in the appropriate jurisdiction prior to the expiration of the carryforward periods.

Kraft Heinz applies a more-likely-than-not threshold to the recognition and derecognition of uncertain tax positions. Accordingly, Kraft Heinz recognizes the amount of tax benefit that has a greater than 50 percent likelihood of being ultimately realized upon settlement. Future changes in judgment related to the expected ultimate resolution of uncertain tax positions will affect Kraft Heinz’s results in the quarter of such change.

Kraft Heinz records valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. When assessing the need for valuation allowances, Kraft Heinz considers future taxable income and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, Kraft Heinz would adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding adjustment to the provision for/(benefit from) income taxes. The resolution of tax reserves and changes in valuation allowances could be material to Kraft Heinz’s results of operations for any period, but is not expected to be material to the financial position.

Source: 10-K (filing date: 2019-06-07).

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

USD $ in millions

	12 months ended	Dec 29, 2018		Dec 30, 2017		Dec 31, 2016		Dec 31, 2015
	U.S. federal
	U.S. state and local
	International
	Current
	U.S. federal
	U.S. state and local
	International
	Deferred
	Provision for (benefit from) income taxes

Based on: 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 declined from 2016 to 2017 and from 2017 to 2018.
Deferred	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Kraft Heinz Co.’s deferred declined from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.
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 declined from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.

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

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	U.S. federal statutory tax rate
	Tax on income of foreign subsidiaries
	Domestic manufacturing deduction
	U.S. state and local income taxes, net of federal tax benefit
	Earnings repatriation
	Tax exempt income
	Deferred tax effect of statutory tax rate changes
	Audit settlements and changes in uncertain tax positions
	Venezuela nondeductible devaluation loss
	Global intangible low-taxed income
	Goodwill impairment
	Wind-up of non-U.S. pension plans
	Other
	Effective tax rate, before U.S. Tax Reform discrete income tax benefit
	U.S. Tax Reform discrete income tax benefit
	Effective tax rate

Based on: 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 increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

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

USD $ in millions

		Dec 29, 2018		Dec 30, 2017		Dec 31, 2016		Dec 31, 2015
	Benefit plans
	Other
	Deferred income tax assets, gross
	Valuation allowance
	Deferred income tax assets, net
	Intangible assets, net
	Property, plant and equipment, net
	Other
	Deferred income tax liabilities
	Net deferred income tax assets (liabilities)

Based on: 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 declined from 2016 to 2017 but then slightly increased from 2017 to 2018.
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 declined from 2016 to 2017 but then slightly increased from 2017 to 2018.
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 2016 to 2017 and from 2017 to 2018.

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

USD $ in millions

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	Deferred income tax assets
	Deferred income tax liabilities

Based on: 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 increased from 2016 to 2017 but then declined significantly from 2017 to 2018.
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 declined from 2016 to 2017 and from 2017 to 2018.

Kraft Heinz Co., adjustments to financial data

USD $ in millions

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	Adjustment to Total Assets
	Total assets (as reported)
	Less: Noncurrent deferred tax assets, net
	Total assets (adjusted)
	Adjustment to Total Liabilities
	Total liabilities (as reported)
	Less: Noncurrent deferred tax liabilities, net
	Total liabilities (adjusted)
	Adjustment to Shareholders’ Equity
	Shareholders’ equity (as reported)
	Less: Net deferred tax assets (liabilities)
	Shareholders’ equity (adjusted)
	Adjustment to Net Income (loss) Attributable To Kraft Heinz
	Net income (loss) attributable to Kraft Heinz (as reported)
	Add: Deferred income tax expense (benefit)
	Net income (loss) attributable to Kraft Heinz (adjusted)

Based on: 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

Kraft Heinz Co., adjusted ratios

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	Net Profit Margin
	Reported net profit margin
	Adjusted net profit margin
	Total Asset Turnover
	Reported total asset turnover
	Adjusted total asset turnover
	Financial Leverage
	Reported financial leverage
	Adjusted financial leverage
	Return on Equity (ROE)
	Reported ROE
	Adjusted ROE
	Return on Assets (ROA)
	Reported ROA
	Adjusted ROA

Based on: 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).

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 improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Kraft Heinz Co.’s adjusted total asset turnover deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.
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 declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Kraft Heinz Co.’s adjusted ROE improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Kraft Heinz Co.’s adjusted ROA improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.

Kraft Heinz Co., Ratios: Reported vs. Adjusted

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (USD $ in millions)
	Net income (loss) attributable to Kraft Heinz
	Net sales
	Ratio
	Net profit margin¹
	Adjusted for Deferred Taxes
	Selected Financial Data (USD $ in millions)
	Adjusted net income (loss) attributable to Kraft Heinz
	Net sales
	Ratio
	Adjusted net profit margin²

Based on: 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).

2018 Calculations

¹ Net profit margin = 100 × Net income (loss) attributable to Kraft Heinz ÷ Net sales
= 100 × hidden ÷ hidden = hidden

² Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to Kraft Heinz ÷ Net sales
= 100 × hidden ÷ hidden = hidden

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 improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (USD $ in millions)
	Net sales
	Total assets
	Ratio
	Total asset turnover¹
	Adjusted for Deferred Taxes
	Selected Financial Data (USD $ in millions)
	Net sales
	Adjusted total assets
	Ratio
	Adjusted total asset turnover²

Based on: 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).

2018 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= hidden ÷ hidden = hidden

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= hidden ÷ hidden = hidden

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 deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (USD $ in millions)
	Total assets
	Shareholders’ equity
	Ratio
	Financial leverage¹
	Adjusted for Deferred Taxes
	Selected Financial Data (USD $ in millions)
	Adjusted total assets
	Adjusted shareholders’ equity
	Ratio
	Adjusted financial leverage²

Based on: 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).

2018 Calculations

¹ Financial leverage = Total assets ÷ Shareholders’ equity
= hidden ÷ hidden = hidden

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= hidden ÷ hidden = hidden

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 declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (USD $ in millions)
	Net income (loss) attributable to Kraft Heinz
	Shareholders’ equity
	Ratio
	ROE¹
	Adjusted for Deferred Taxes
	Selected Financial Data (USD $ in millions)
	Adjusted net income (loss) attributable to Kraft Heinz
	Adjusted shareholders’ equity
	Ratio
	Adjusted ROE²

Based on: 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).

2018 Calculations

¹ ROE = 100 × Net income (loss) attributable to Kraft Heinz ÷ Shareholders’ equity
= 100 × hidden ÷ hidden = hidden

² Adjusted ROE = 100 × Adjusted net income (loss) attributable to Kraft Heinz ÷ Adjusted shareholders’ equity
= 100 × hidden ÷ hidden = hidden

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 improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (USD $ in millions)
	Net income (loss) attributable to Kraft Heinz
	Total assets
	Ratio
	ROA¹
	Adjusted for Deferred Taxes
	Selected Financial Data (USD $ in millions)
	Adjusted net income (loss) attributable to Kraft Heinz
	Adjusted total assets
	Ratio
	Adjusted ROA²

Based on: 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).

2018 Calculations

¹ ROA = 100 × Net income (loss) attributable to Kraft Heinz ÷ Total assets
= 100 × hidden ÷ hidden = hidden

² Adjusted ROA = 100 × Adjusted net income (loss) attributable to Kraft Heinz ÷ Adjusted total assets
= 100 × hidden ÷ hidden = hidden

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 improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.

	Kraft Heinz Co.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

	All companies
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

Kraft Heinz Co. (KHC)

Analysis of Income Taxes

Income Tax Accounting Policy

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Analyst Adjustments: Removal of Deferred Taxes

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

Adjusted Ratios: Removal of Deferred Taxes (Summary)

Kraft Heinz Co., 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)