Note ~~15.~~16. Supplemental Financial Information

We fully and unconditionally guarantee the notes issued by our ~~100%~~wholly owned operating subsidiary, Kraft Heinz Foods Company. See Note ~~12,~~11, Debt, to our consolidated financial statements for the year ended December 31, 2016 in our Annual Report on Form 10-K for additional 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 ~~The~~ Kraft Heinz ~~Company~~ (as parent guarantor), Kraft Heinz Foods Company (as subsidiary issuer of the notes), and the non-guarantor subsidiaries on a combined basis and eliminations necessary to arrive at the total reported information on a consolidated basis. This condensed consolidating financial information has been prepared and presented pursuant to the SEC Regulation S-X Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or being Registered.” This information is not intended to present the financial position, results of operations, and cash flows of the individual companies or groups of companies in accordance with U.S. GAAP. Eliminations represent adjustments to eliminate investments in subsidiaries and intercompany balances and transactions between or among the parent guarantor, subsidiary issuer, and the non-guarantor subsidiaries.

The Kraft Heinz Company

Condensed Consolidating Statements of Income

For the Three Months Ended April ~~3, 2016~~1, 2017

(in millions)

(Unaudited)


	Parent Guarantor		Subsidiary Issuer			Non-Guarantor Subsidiaries			Eliminations			Consolidated			Parent Guarantor		Subsidiary Issuer			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—	$	4,471		$	2,241		$	(142	)	$	6,570		$	—	$	4,360		$	2,166		$	(162	)	$	6,364
Cost of products sold	—		2,832			1,502			(142		)	4,192			—		2,714			1,511			(162		)	4,063
Gross profit	—		1,639			739			—			2,378			—		1,646			655			—			2,301
Selling, general and administrative expenses	—		277			588			—			865			—		184			566			—			750
Intercompany service fees and other recharges	—		1,214			(1,214		)	—			—			—		1,108			(1,108		)	—			—
Operating income	—		148			1,365			—			1,513			—		354			1,197			—			1,551
Interest expense	—		235			14			—			249			—		303			10			—			313
Other expense/(income), net	—		31			(39		)	—			(8		)	—		17			(29		)	—			(12		)
Income/(loss) before income taxes	—		(118		)	1,390			—			1,272			—		34			1,216			—			1,250
Provision for/(benefit from) income taxes															—		(12		)	371			—			359
Equity in earnings of subsidiaries	896		956			—			(1,852		)	—			893		847			—			(1,740		)	—
Provision for/(benefit from) income taxes	—		(58		)	430			—			372
Net income/(loss)	896		896			960			(1,852		)	900			893		893			845			(1,740		)	891
Net income/(loss) attributable to noncontrolling interest	—		—			4			—			4			—		—			(2		)	—			(2		)
Net income/(loss) excluding noncontrolling interest	$	896	$	896		$	956		$	(1,852	)	$	896		$	893	$	893		$	847		$	(1,740	)	$	893

Comprehensive income/(loss) excluding noncontrolling interest	$	1,007	$	1,007		$	1,149		$	(2,156	)	$	1,007		$	1,072	$	1,072		$	1,842		$	(2,914	)	$	1,072

The Kraft Heinz Company

Condensed Consolidating Statements of Income

For the Three Months Ended ~~March 29, 2015~~April 3, 2016

(in millions)

(Unaudited)



	Parent Guarantor		Subsidiary Issuer			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—	$	4,471		$	2,241		$	(142	)	$	6,570
Cost of products sold	—		2,832			1,502			(142		)	4,192
Gross profit	—		1,639			739			—			2,378
Selling, general and administrative expenses	—		277			588			—			865
Intercompany service fees and other recharges	—		1,214			(1,214		)	—			—
Operating income	—		148			1,365			—			1,513
Interest expense	—		235			14			—			249
Other expense/(income), net	—		31			(39		)	—			(8		)
Income/(loss) before income taxes	—		(118		)	1,390			—			1,272
Provision for/(benefit from) income taxes	—		(58		)	430			—			372
Equity in earnings of subsidiaries	896		956			—			(1,852		)	—
Net income/(loss)	896		896			960			(1,852		)	900
Net income/(loss) attributable to noncontrolling interest	—		—			4			—			4
Net income/(loss) excluding noncontrolling interest	$	896	$	896		$	956		$	(1,852	)	$	896

Comprehensive income/(loss) excluding noncontrolling interest	$	1,007	$	1,007		$	1,149		$	(2,156	)	$	1,007

The Kraft Heinz Company

Condensed Consolidating Balance Sheets

As of April 1, 2017

(in millions)

(Unaudited)

Parent Guarantor Subsidiary Issuer Non-Guarantor Subsidiaries Eliminations Consolidated
Net sales $ —
$ 925
$ 1,612
$ (59 ) $ 2,478
Cost of products sold —
618
1,072
(59 ) 1,631
Gross profit —
307
540
—
847
Selling, general and administrative expenses —
136
202
—
338
Intercompany service fees and other recharges —
(11 ) 11
—
—
Operating income —
182
327
—
509
Interest expense —
166
35
—
201
Other expense/(income), net —
(3 ) (36 ) —
(39 )
Income/(loss) before income taxes —
19
328
—
347
Equity in earnings of subsidiaries 276
257
—
(533 ) —
Provision for/(benefit from) income taxes —
—
68
—
68
Net income/(loss) 276
276
260
(533 ) 279
Net income/(loss) attributable to noncontrolling interest —
—
3
—
3
Net income/(loss) excluding noncontrolling interest $ 276
$ 276
$ 257
$ (533 ) $ 276

Comprehensive income/(loss) excluding noncontrolling interest $ (139 ) $ (139 ) $ (544 ) $ 683
$ (139 )



	Parent Guarantor		Subsidiary Issuer		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—	$	1,929	$	1,313	$	—		$	3,242
Trade receivables	—		30		856		—			886
Receivables due from affiliates	—		808		220		(1,028		)	—
Dividends due from affiliates	32		—		—		(32		)	—
Sold receivables	—		—		588		—			588
Inventories	—		2,074		1,077		—			3,151
Short-term lending due from affiliates	—		1,792		3,062		(4,854		)	—
Other current assets	—		2,366		227		(1,585		)	1,008
Total current assets	32		8,999		7,343		(7,499		)	8,875
Property, plant and equipment, net	—		4,424		2,269		—			6,693
Goodwill	—		11,067		33,233		—			44,300
Investments in subsidiaries	57,732		71,474		—		(129,206		)	—
Intangible assets, net	—		3,329		56,001		—			59,330
Long-term lending due from affiliates	—		1,700		2,000		(3,700		)	—
Other assets	—		602		1,002		—			1,604
TOTAL ASSETS	$	57,764	$	101,595	$	101,848	$	(140,405	)	$	120,802
LIABILITIES AND EQUITY
Commercial paper and other short-term debt	$	—	$	900	$	9	$	—		$	909
Current portion of long-term debt	—		2,012		11		—			2,023
Short-term lending due to affiliates	—		3,062		1,792		(4,854		)	—
Trade payables	—		2,366		1,570		—			3,936
Payables due to affiliates	—		220		808		(1,028		)	—
Accrued marketing	—		165		434		—			599
Accrued postemployment costs	—		144		13		—			157
Income taxes payable	—		—		2,009		(1,585		)	424
Interest payable	—		340		6		—			346
Dividends due to affiliates	—		32		—		(32		)	—
Other current liabilities	32		378		579		—			989
Total current liabilities	32		9,619		7,231		(7,499		)	9,383
Long-term debt	—		28,762		986		—			29,748
Long-term borrowings due to affiliates	—		2,000		1,917		(3,917		)	—
Deferred income taxes	—		1,367		19,543		—			20,910
Accrued postemployment costs	—		1,728		288		—			2,016
Other liabilities	—		387		414		—			801
TOTAL LIABILITIES	32		43,863		30,379		(11,416		)	62,858
Total shareholders’ equity	57,732		57,732		71,257		(128,989		)	57,732
Noncontrolling interest	—		—		212		—			212
TOTAL EQUITY	57,732		57,732		71,469		(128,989		)	57,944
TOTAL LIABILITIES AND EQUITY	$	57,764	$	101,595	$	101,848	$	(140,405	)	$	120,802

The Kraft Heinz Company

Condensed Consolidating Balance Sheets

As of ~~April 3,~~December 31, 2016

(in millions)

(Unaudited)


	Parent Guarantor		Subsidiary Issuer		Non-Guarantor Subsidiaries		Eliminations			Consolidated		Parent Guarantor		Subsidiary Issuer		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—	$	2,561	$	1,638	$	—		$	4,199	$	—	$	2,830	$	1,374	$	—		$	4,204
Trade receivables	—		66		873		—			939		—		12		757		—			769
Receivables due from affiliates	—		386		106		(492		)	—		—		712		111		(823		)	—
Dividends due from affiliates												39		—		—		(39		)	—
Sold receivables	—		767		38		—			805		—		—		129		—			129
Inventories	—		1,943		949		—			2,892		—		1,759		925		—			2,684
Short-term lending due from affiliates	—		3,594		4,038		(7,632		)	—		—		1,722		2,956		(4,678		)	—
Other current assets	—		452		877		(352		)	977		—		2,229		447		(1,709		)	967
Total current assets	—		9,769		8,519		(8,476		)	9,812		39		9,264		6,699		(7,249		)	8,753
Property, plant and equipment, net	—		4,409		2,025		—			6,434		—		4,447		2,241		—			6,688
Goodwill	—		10,966		32,576		—			43,542		—		11,067		33,058		—			44,125
Investments in subsidiaries	66,363		74,406		—		(140,769		)	—		57,358		70,877		—		(128,235		)	—
Intangible assets, net	—		3,803		58,246		—			62,049		—		3,364		55,933		—			59,297
Long-term lending due from affiliates	—		1,484		2,000		(3,484		)	—		—		1,700		2,000		(3,700		)	—
Other assets	—		529		907		—			1,436		—		501		1,116		—			1,617
TOTAL ASSETS	$	66,363	$	105,366	$	104,273	$	(152,729	)	$	123,273	$	57,397	$	101,220	$	101,047	$	(139,184	)	$	120,480
LIABILITIES AND EQUITY
Commercial paper and other short-term debt												$	—	$	642	$	3	$	—		$	645
Current portion of long-term debt												—		2,032		14		—			2,046
Short-term lending due to affiliates	$	—	$	4,038	$	3,594	$	(7,632	)	$	—	—		2,956		1,722		(4,678		)	—
Trade payables	—		1,566		1,207		—			2,773		—		2,376		1,620		—			3,996
Payables due to affiliates	—		106		386		(492		)	—		—		111		712		(823		)	—
Accrued marketing	—		312		555		—			867		—		277		472		—			749
Accrued postemployment costs	—		150		14		—			164		—		144		13		—			157
Income taxes payable	—		837		90		(352		)	575		—		—		1,964		(1,709		)	255
Interest payable	—		261		5		—			266		—		401		14		—			415
Dividends payable	—		794		—		—			794
Dividends due to affiliates												—		39		—		(39		)	—
Other current liabilities	—		1,030		261		—			1,291		39		588		611		—			1,238
Total current liabilities	—		9,094		6,112		(8,476		)	6,730		39		9,566		7,145		(7,249		)	9,501
Long-term debt	—		24,127		1,040		—			25,167		—		28,736		977		—			29,713
Long-term borrowings due to affiliates	—		2,000		1,700		(3,700		)	—		—		2,000		1,902		(3,902		)	—
Deferred income taxes	—		1,255		20,404		—			21,659		—		1,382		19,466		—			20,848
Accrued postemployment costs	—		2,106		274		—			2,380		—		1,754		284		—			2,038
Other liabilities	—		421		316		—			737		—		424		382		—			806
TOTAL LIABILITIES	—		39,003		29,846		(12,176		)	56,673		39		43,862		30,156		(11,151		)	62,906
Redeemable noncontrolling interest	—		—		21		—			21
9.00% Series A cumulative compounding redeemable preferred stock	8,320		—		—		—			8,320
Total shareholders' equity	58,043		66,363		74,190		(140,553		)	58,043
Total shareholders’ equity												57,358		57,358		70,675		(128,033		)	57,358
Noncontrolling interest	—		—		216		—			216		—		—		216		—			216
TOTAL EQUITY	58,043		66,363		74,406		(140,553		)	58,259		57,358		57,358		70,891		(128,033		)	57,574
TOTAL LIABILITIES AND EQUITY	$	66,363	$	105,366	$	104,273	$	(152,729	)	$	123,273	$	57,397	$	101,220	$	101,047	$	(139,184	)	$	120,480

The Kraft Heinz Company

Condensed Consolidating ~~Balance Sheets~~Statements of Cash Flows

~~As of January 3, 2016~~For the Three Months Ended April 1, 2017

(in millions)

(Unaudited)

Parent Guarantor Subsidiary Issuer Non-Guarantor Subsidiaries Eliminations Consolidated
ASSETS
Cash and cash equivalents $ —
$ 3,189
$ 1,648
$ —
$ 4,837
Trade receivables —
62
809
—
871
Receivables due from affiliates —
555
319
(874 ) —
Sold receivables —
554
29

583
Inventories —
1,741
877
—
2,618
Short-term lending due from affiliates —
3,657
4,353
(8,010 ) —
Other current assets —
645
443
(217 ) 871
Total current assets —
10,403
8,478
(9,101 ) 9,780
Property, plant and equipment, net —
4,518
2,006
—
6,524
Goodwill —
10,976
32,075
—
43,051
Investments in subsidiaries 66,005
73,105
—
(139,110 ) —
Intangible assets, net —
3,838
58,282
—
62,120
Long-term lending due from affiliates —
1,700
2,000
(3,700 ) —
Other assets —
534
964
—
1,498
TOTAL ASSETS $ 66,005
$ 105,074
$ 103,805
$ (151,911 ) $ 122,973
LIABILITIES AND EQUITY
Short-term lending due to affiliates $ —
$ 4,353
$ 3,657
$ (8,010 ) $ —
Trade payables —
1,612
1,232
—
2,844
Payables due to affiliates —
319
555
(874 ) —
Accrued marketing —
359
497
—
856
Accrued postemployment costs —
316
12
—
328
Income taxes payable —
71
563
(217 ) 417
Interest payable —
386
15
—
401
Dividends payable —
762
—
—
762
Other current liabilities —
1,053
271
—
1,324
Total current liabilities —
9,231
6,802
(9,101 ) 6,932
Long-term debt —
24,143
1,008
—
25,151
Long-term borrowings due to affiliates —
2,000
1,905
(3,905 ) —
Deferred income taxes —
1,278
20,219
—
21,497
Accrued postemployment costs —
2,147
258
—
2,405
Other liabilities —
270
482
—
752
TOTAL LIABILITIES —
39,069
30,674
(13,006 ) 56,737
Redeemable noncontrolling interest —
—
23
—
23
9.00% Series A cumulative compounding redeemable preferred stock 8,320
—
—
—
8,320
Total shareholders' equity 57,685
66,005
72,900
(138,905 ) 57,685
Noncontrolling interest —
—
208
—
208
TOTAL EQUITY 57,685
66,005
73,108
(138,905 ) 57,893
TOTAL LIABILITIES AND EQUITY $ 66,005
$ 105,074
$ 103,805
$ (151,911 ) $ 122,973



	Parent Guarantor			Subsidiary Issuer			Non-Guarantor Subsidiaries			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by/(used for) operating activities	$	736		$	(304	)	$	153		$	(736	)	$	(151	)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	—			(203		)	(165		)	—			(368		)
Net proceeds from/(payments on) intercompany lending activities	—			(4		)	(67		)	71			—
Return of capital	7			—			—			(7		)	—
Other investing activities, net	—			44			(6		)	—			38
Net cash provided by/(used for) investing activities	7			(163		)	(238		)	64			(330		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of commercial paper	—			2,324			—			—			2,324
Repayments of commercial paper	—			(2,068		)	—			—			(2,068		)
Net proceeds from/(payments on) intercompany borrowing activities	—			67			4			(71		)	—
Dividends paid-common stock	(736		)	(736		)	—			736			(736		)
Other intercompany capital stock transactions	—			(7		)	—			7			—
Other financing activities, net	(7		)	(21		)	3			—			(25		)
Net cash provided by/(used for) financing activities	(743		)	(441		)	7			672			(505		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	—			—			13			—			13
Cash, cash equivalents, and restricted cash:
Net increase/(decrease)	—			(908		)	(65		)	—			(973		)
Balance at beginning of period	—			2,869			1,386			—			4,255
Balance at end of period	$	—		$	1,961		$	1,321		$	—		$	3,282

The Kraft Heinz Company

Condensed Consolidating Statements of Cash Flows

For the Three Months Ended April 3, 2016

(in millions)

(Unaudited)



	Parent Guarantor			Subsidiary Issuer			Non-Guarantor Subsidiaries			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by/(used for) operating activities	$	—		$	166		$	104		$	—		$	270
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	—			(242		)	(61		)	—			(303		)
Net proceeds from/(payments on) intercompany lending activities	—			423			314			(737		)	—
Return of capital	667			—			—			(667		)	—
Other investing activities, net	—			13			(3		)	—			10
Net cash provided by/(used for) investing activities	667			194			250			(1,404		)	(293		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from/(payments on) intercompany borrowing activities	—			(314		)	(423		)	737			—
Dividends paid-common stock	(667		)	(667		)	—			667			(667		)
Other financing activities, net	—			25			15			—			40
Net cash provided by/(used for) financing activities	(667		)	(956		)	(408		)	1,404			(627		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	—			—			44			—			44
Cash, cash equivalents, and restricted cash:
Net increase/(decrease)	—			(596		)	(10		)	—			(606		)
Balance at beginning of period	—			3,253			1,659			—			4,912
Balance at end of period	$	—		$	2,657		$	1,649		$	—		$	4,306

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):

Parent Guarantor Subsidiary Issuer Non-Guarantor Subsidiaries Eliminations Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by/(used for) operating activities $ —
$ 166
$ 104
$ —
$ 270
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures —
(242 ) (61 ) —
(303 )
Net proceeds from/(payments on) intercompany lending activities —
423
314
(737 ) —
Return of capital 667
—
—
(667 ) —
Other investing activities, net —
(19 ) (3 ) —
(22 )
Net cash provided by/(used for) investing activities 667
162
250
(1,404 ) (325 )
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of long-term debt —
(4 ) (2 ) —
(6 )
Net proceeds from/(payments on) intercompany borrowing activities —
(314 ) (423 ) 737
—
Dividends paid-Series A Preferred Stock —
—
—
—
—
Dividends paid-common stock (667 ) (667 ) —
667
(667 )
Other financing activities, net —
29
17
—
46
Net cash provided by/(used for) financing activities (667 ) (956 ) (408 ) 1,404
(627 )
Effect of exchange rate changes on cash and cash equivalents —
—
44
—
44
Cash and cash equivalents:
Net increase/(decrease) —
(628 ) (10 ) —
(638 )
Balance at beginning of period —
3,189
1,648
—
4,837
Balance at end of period $ —
$ 2,561
$ 1,638
$ —
$ 4,199



	April 1, 2017
	Parent Guarantor		Subsidiary Issuer		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash and cash equivalents	$	—	$	1,929	$	1,313	$	—	$	3,242
Restricted cash included in other assets (current)	—		32		4		—		36
Restricted cash included in other assets (noncurrent)	—		—		4		—		4
Cash, cash equivalents, and restricted cash	$	—	$	1,961	$	1,321	$	—	$	3,282



	December 31, 2016
	Parent Guarantor		Subsidiary Issuer		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash and cash equivalents	$	—	$	2,830	$	1,374	$	—	$	4,204
Restricted cash included in other assets (current)	—		39		3		—		42
Restricted cash included in other assets (noncurrent)	—		—		9		—		9
Cash, cash equivalents, and restricted cash	$	—	$	2,869	$	1,386	$	—	$	4,255

~~The Kraft Heinz Company~~

~~Condensed Consolidating Statements of Cash Flows~~

~~For the Three Months Ended March 29, 2015~~

~~(in millions)~~

~~(Unaudited)~~

Parent Guarantor Subsidiary Issuer Non-Guarantor Subsidiaries Eliminations Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by/(used for) operating activities $ 180
$ (103 ) $ 20
$ (180 ) $ (83 )
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures —
(26 ) (27 ) —
(53 )
Net proceeds from/(payments on) intercompany lending activities —
(609 ) (747 ) 1,356
—
Return of capital —
5
—
(5 ) —
Other investing activities, net —
(1 ) 5
—
4
Net cash provided by/(used for) investing activities —
(631 ) (769 ) 1,351
(49 )
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of long-term debt —
(1,960 ) (2 ) —
(1,962 )
Proceeds from issuance of long-term debt —
2,000
—
—
2,000
Net proceeds from/(payments on) intercompany borrowing activities —
747
609
(1,356 ) —
Dividends paid-Series A Preferred Stock (180 ) —
—
—
(180 )
Dividends paid-common stock —
(180 ) —
180
—
Other intercompany capital stock transactions —
—
(5 ) 5
—
Other financing activities, net —
(16 ) (56 ) —
(72 )
Net cash provided by/(used for) financing activities (180 ) 591
546
(1,171 ) (214 )
Effect of exchange rate changes on cash and cash equivalents —
—
(53 ) —
(53 )
Cash and cash equivalents:
Net increase/(decrease) —
(143 ) (256 ) —
(399 )
Balance at beginning of period —
541
1,757
—
2,298
Balance at end of period $ —
$ 398
$ 1,501
$ —
$ 1,899

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

Description of the ~~Company~~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.

In the first quarter of 2016, we moved certain historical Kraft export businesses from our United States segment to our Rest of World and Europe segments to align with our long-term go-to-market strategies. We began to manage and report our results reflecting this change in the first quarter of 2016 and have reflected this change in all pro forma historical information presented. The impact of this change is not material to current or prior period results.

~~Items Affecting Comparability of Financial Results~~

~~The 2015 Merger~~

~~We completed the 2015 Merger on July 2, 2015. See Note 1,~~ ~~Background and Basis of Presentation,~~ ~~and Note 2,~~ ~~Merger and Acquisition,~~ ~~to the condensed consolidated financial statements for additional information.~~

~~Integration and Restructuring Expenses~~

We recorded expenses of $260 million for the three months ended April 3, 2016 and $43 million for the three months ended March 29, 2015 related to the Integration Program and restructuring activities. These expenses include our multi-year $1.9 billion Integration Program, which we announced following the 2015 Merger. The Integration Program costs primarily include organization costs, including cash and non-cash severance, footprint costs to exit facilities, and other costs incurred as a direct result of restructuring activities related to the 2015 Merger. Additionally, we anticipate capital expenditures of approximately $1.1 billion related to the Integration Program, and as of April 3, 2016, we have recognized $318 million in capital expenditures since the inception of the program. The Integration Program is designed to reduce costs, integrate, and optimize our combined organization and is expected to achieve $1.5 billion of pre-tax savings by 2017, primarily benefiting the United States and Canada segments. During the three months ended April 3, 2016, we realized approximately $225 million of pre-tax savings. Since the inception of the program, our cumulative savings achieved are approximately $350 million. See Note 3, ~~Integration and Restructuring Expenses,~~ ~~to the condensed consolidated financial statements for additional information.~~

~~Results of Operations~~

~~Due 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 of Operations~~ include certain unaudited pro forma condensed combined financial information (the “pro forma financial information”) adjusted to assume that Kraft and Heinz were a combined company for the first quarter of 2015. This pro forma financial information reflects combined historical results, preliminary purchase accounting adjustments, and adjustments to align accounting policies for the three months ended March 29, 2015. Pro forma adjustments are only reflected for the three months ended March 29, 2015, as Kraft and Heinz were a combined company for the entire three months ended April 3, 2016. For more information see ~~Supplemental Unaudited Pro Forma Condensed Combined Financial Information.~~

In addition, we include certain non-GAAP financial measures, which, for the three months ended March 29, 2015, are derived from these unaudited pro forma results. These non-GAAP financial measures assist management in comparing our performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our core operations. For additional information see ~~Non-GAAP Financial Measures.~~

~~Consolidated Results of Operations~~

~~Three Months Ended April 3, 2016 compared to the Three Months Ended March 29, 2015:~~

~~Summary of Results~~

For the Three Months Ended
April 3, 2016 March 29, 2015 % Change
(in millions, except per share data)
Net sales $ 6,570
$ 2,478
165.1 %
Operating income 1,513
509
197.2 %
Net income/(loss) attributable to common shareholders 896
96
833.3 %
Diluted earnings/(loss) per share 0.73
0.24
204.2 %

~~Net Sales~~

For the Three Months Ended
April 3, 2016 March 29, 2015 % Change
(in millions)
Net sales $ 6,570
$ 2,478
165.1 %
Pro forma net sales^(a)
6,570
6,830
(3.8 )%
Organic Net Sales^(b)
6,720
6,644
1.1 %

^(a)~~There are no pro forma adjustments in the three months ended April 3, 2016 as Kraft and Heinz were a combined company for the entire period.~~

^(b) ~~Organic Net Sales is a non-GAAP financial measure. See the~~ ~~Non-GAAP Financial Measures~~ ~~section at the end of this item.~~

~~Net sales increased 165.1% to $6.6 billion for the three months ended April 3, 2016 compared to the three months ended March 29, 2015, primarily driven by the 2015 Merger.~~

Pro forma net sales decreased 3.8% reflecting the unfavorable impacts of foreign currency (4.5 pp) and divestitures (0.4 pp). Organic Net Sales increased 1.1% driven by favorable volume/mix (0.8 pp) and higher pricing (0.3 pp). Favorable volume/mix was primarily driven by growth in condiments and sauces globally, refrigerated meal combinations and foodservice in the United States, partially offset by lower shipments of ready-to-drink beverages in the United States. Pricing was higher despite deflation in key commodity costs (which we define as dairy, meat, coffee and nuts) in the United States and Canada, primarily dairy and coffee.

~~Operating Income~~

For the Three Months Ended
April 3, 2016 March 29, 2015 % Change
(in millions)
Operating income $ 1,513
$ 509
197.2 %
Adjusted EBITDA^(c)
1,951
1,609
21.3 %

^(c) ~~Adjusted EBITDA is a non-GAAP financial measure. See the~~ ~~Non-GAAP Financial Measures~~ ~~section at the end of this item.~~

Operating income increased 197.2% to $1.5 billion for the three months ended April 3, 2016 compared to the three months ended March 29, 2015, primarily driven by the 2015 Merger. The benefit realized from the 2015 Merger was partially offset by higher Integration Program and restructuring expenses, higher depreciation and amortization expense, as well as the unfavorable impact of foreign currency.

Adjusted EBITDA increased 21.3% to $2.0 billion for the three months ended April 3, 2016 compared to the three months ended March 29, 2015, primarily driven by savings from Integration Program and restructuring activities and favorable pricing net of commodity costs, partially offset by the unfavorable impact of foreign currency (6.0 pp).

~~Net Income and Diluted EPS~~

For the Three Months Ended
April 3, 2016 March 29, 2015 % Change
(in millions, except per share data)
Net income/(loss) attributable to common shareholders $ 896
$ 96
833.3 %
Diluted earnings per share 0.73
0.24
204.2 %
Adjusted EPS^(d)
0.73
0.53
37.7 %

^(d) ~~Adjusted EPS is a non-GAAP financial measure. See the~~ ~~Non-GAAP Financial Measures~~ ~~section at the end of this item.~~

Net income/(loss) attributable to common shareholders increased $800 million to $896 million for the three months ended April 3, 2016 compared to the three months ended March 29, 2015. The increase was due to the increase in operating income discussed above, as well as the absence of a preferred dividend payment in the current period, partially offset by higher interest expense, lower other expense/(income), net and a higher effective tax rate as follows:

Interest expense increased to $249 million for the three months ended April 3, 2016, compared to $201 million in the prior year period. This increase was primarily due to the assumption of $8.6 billion of Kraft's long-term debt obligations in the 2015 Merger, partially offset by interest savings following our 2015 refinancing activities, as well as a write-off of debt issuance costs associated with 2015 refinancing activities in the prior period.

Other expense/(income), net decreased to $8 million of income for the three months ended April 3, 2016, compared to $39 million of income in the prior year period. The decrease was primarily due to gains in the prior period from the termination of interest rate swaps associated with the 2015 debt refinancing as well as other derivative gains.

The effective tax rate was 29.2% for the three months ended April 3, 2016 compared to 19.5% for the three months ended March 29, 2015. The increase in our effective tax rate was driven by the 2015 Merger. With the 2015 Merger, our operations in the United States and Canada increased and resulted in higher blended statutory tax rates and a larger amount of tax exempt income. See Note 6, ~~Income Taxes, to the condensed consolidated financial statements for a discussion of income tax rates.~~

The Series A Preferred Stock entitles holders to a 9.00% annual dividend, to be paid in four dividends, in arrears on each March 7, June 7, September 7, and December 7, in cash. While the Series A Preferred Stock remains outstanding, if we declare or pay a common stock dividend, we must also declare and pay in full the Series A Preferred Stock dividend for the then-current period. In connection with the declaration of our common stock dividend on December 8, 2015, we also declared and paid the Series A Preferred Stock dividend that would otherwise have been payable on March 7, 2016. Accordingly, there were no cash distributions related to our Series A Preferred Stock in the first quarter of 2016.

For the Three Months Ended
April 3, 2016 March 29, 2015 $ Change % Change
Diluted earnings per share 0.73
0.24
0.49
204.2 %
Impact of the Kraft acquisition and pro forma adjustments, net —
0.22
(0.22 )

Integration and restructuring expenses 0.14
0.05
0.09

Merger costs 0.01
0.02
(0.01 )

Additional preferred dividend in 2015 (0.15 ) —
(0.15 )

Adjusted EPS^(d)
0.73
0.53
0.20
37.7 %

Key drivers of Adjusted EPS^(d):

Results of operations 0.24

Change in interest expense 0.01

Change in other expense/(income), net (0.03 )
Change in effective income tax rate and other (0.02 )
0.20

^(d) ~~Adjusted EPS is a non-GAAP financial measure. See the~~ ~~Non-GAAP Financial Measures~~ ~~section at the end of this item.~~

Diluted earnings per share increased 204.2% to $0.73 for the three months ended April 3, 2016. The increase in diluted earnings per share was driven primarily by the net income factors discussed above, partially offset by the effect of an increase in the weighted average shares of common stock outstanding following the 2015 Merger.

Adjusted EPS increased 37.7% to $0.73 for the three months ended April 3, 2016 compared to $0.53 for the three months ended March 29, 2015, primarily driven by Adjusted EBITDA growth and lower interest expense, which were partially offset by the unfavorable impact of foreign currency, lower other expense/(income), net, and a higher effective tax rate.

~~Results of Operations by Segment~~

~~Three Months Ended April 3, 2016 compared to the Three Months Ended March 29, 2015:~~

~~Following the 2015 Merger, we revised our segment structure and began to~~ 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 ~~three~~two operating segments: ~~Asia Pacific,~~ Latin America and ~~RIMEA. We began to report on our reorganized segment structure during~~AMEA.

In the ~~third~~fourth quarter of ~~2015~~2016, we reorganized our segments to reflect the following:

our Russia business moved from the Rest of World segment to the Europe segment and ~~have~~

management of our Global Procurement Office moved from one of our European subsidiaries to our global headquarters, which resulted in moving the related costs from the Europe segment to general corporate expenses.

These changes are reflected ~~this structure for~~in all historical periods ~~presented.~~ presented and did not have a material impact on our financial statements. See Note 18, Segment Reporting, to our consolidated financial statements for the year ended December 31, 2016 in our Annual Report on Form 10-K for additional information related to these changes.

Items Affecting Comparability of Financial Results

Integration and Restructuring Expenses:

We recorded expenses related to integration and restructuring activities (including the multi-year Integration Program announced following the 2015 Merger) totaling $148 million for the three months ended April 1, 2017 and $260 million for the three months ended April 3, 2016. Integration Program expenses included in these totals were $127 million for the three months ended April 1, 2017 and $241 million for the three months ended April 3, 2016.

We expect to incur pre-tax costs of $2.0 billion related to the Integration Program. As of April 1, 2017, we have incurred cumulative costs of $1.8 billion. These costs primarily include 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 a direct result of integration activities related to the 2015 Merger.

Additionally, we anticipate capital expenditures of approximately $1.3 billion related to the Integration Program. As of April 1, 2017, we have incurred $995 million in capital expenditures since the inception of the Integration Program. The Integration Program is designed to reduce costs, integrate, and optimize our combined organization and is expected to achieve $1.7 billion of pre-tax savings by the end of 2017, primarily benefiting the United States and Canada segments. Since the inception of the Integration Program, our cumulative pre-tax savings achieved are approximately $1,270 million.

See Note 2, Integration and Restructuring Expenses, to the condensed consolidated financial statements for additional information.

Results of Operations

We disclose in this report certain non-GAAP financial measures. These non-GAAP financial measures assist management in comparing our performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our underlying operations. For additional information and reconciliations from our condensed consolidated financial statements see Non-GAAP Financial Measures.

Consolidated Results of Operations

Summary of Results:



	For the Three Months Ended
	April 1, 2017		April 3, 2016		% Change
	(in millions, except per share data)
Net sales	$	6,364	$	6,570	(3.1	)%
Operating income	1,551		1,513		2.5	%
Net income/(loss) attributable to common shareholders	893		896		(0.3	)%
Diluted earnings/(loss) per share	0.73		0.73		—	%

Net Sales:



	For the Three Months Ended
	April 1, 2017		April 3, 2016		% Change
	(in millions)
Net sales	$	6,364	$	6,570	(3.1	)%
Organic Net Sales^(a)	6,379		6,557		(2.7	)%


^(a)	Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.

Three Months Ended April 1, 2017 compared to the Three Months Ended April 3, 2016:

Net sales decreased 3.1% to $6.4 billion for the three months ended April 1, 2017 compared to the prior period, partially due to the unfavorable impact of foreign currency (0.4 pp). Organic Net Sales decreased 2.7% due to unfavorable volume/mix (3.7 pp), partially offset by higher pricing (1.0 pp). Volume/mix was unfavorable across most categories in the United States and Canada, which was partially offset by growth in Rest of World and Europe. Higher pricing in Rest of World and United States were partially offset by lower pricing in Canada and Europe.

Net Income:



	For the Three Months Ended
	April 1, 2017		April 3, 2016		% Change
	(in millions, except per share data)
Operating income	$	1,551	$	1,513	2.5	%
Net income/(loss) attributable to common shareholders	893		896		(0.3	)%
Adjusted EBITDA^(a)	1,885		1,951		(3.4	)%


^(a)	Adjusted EBITDA is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.

Three Months Ended April 1, 2017 compared to the Three Months Ended April 3, 2016:

Operating income increased 2.5% to $1.6 billion for the three months ended April 1, 2017, compared to $1.5 billion in the prior period. This increase was primarily due to lower Integration Program and other restructuring expenses in the current period, partially offset by unrealized losses on commodity hedges in the current period, lower commercial results, and the unfavorable impact from foreign currency (1.1 pp).

Net income/(loss) attributable to common shareholders decreased 0.3% to $893 million for the three months ended April 1, 2017, compared to $896 million in the prior period. The decrease was due to higher interest expense, which more than offset growth in operating income and a lower effective tax rate, detailed as follows:

Interest expense increased to $313 million for the three months ended April 1, 2017, compared to $249 million in the prior period. This increase was primarily due to the issuance of new long-term debt in conjunction with the redemption of our Series A Preferred Stock during the second quarter of 2016, and borrowings under our commercial paper program, which began in the second quarter of 2016.

The effective tax rate decreased to 28.7% for the three months ended April 1, 2017, compared to 29.2% in the prior period. The decrease in our effective tax rate was driven by the favorable impact of net discrete items, primarily related to reversals of uncertain tax position reserves in foreign jurisdictions. The favorable impact of current year discrete items was partially offset by the unfavorable impact of a higher percentage of U.S. income reflected in our estimated full year effective tax rate for 2017 compared to 2016.

Adjusted EBITDA decreased 3.4% to $1.9 billion for the three months ended April 1, 2017 compared to the prior period, primarily due to unfavorable volume/mix and the unfavorable impact of foreign currency (1.0 pp), partially offset by savings from the Integration Program and other restructuring activities as well as higher pricing. Segment Adjusted EBITDA results were as follows:

Canada Segment Adjusted EBITDA decreased primarily due to volume/mix declines, partially offset by Integration Program savings and the favorable impact of foreign currency (2.2 pp).

United States Segment Adjusted EBITDA decreased primarily due to volume/mix declines and unfavorable key commodity costs (which we define as dairy, meat, coffee, and nuts) primarily coffee and meats, partially offset by Integration Program savings and higher pricing in cheese.

Rest of World Segment Adjusted EBITDA decreased primarily due to increased commercial investments, higher input costs in local currency, and the unfavorable impact of foreign currency (2.7 pp), which were partially offset by net sales growth.

Europe Segment Adjusted EBITDA decreased primarily due to higher input costs in local currency and the unfavorable impact of foreign currency (10.2 pp), which were partially offset by productivity savings.

Diluted EPS:



	For the Three Months Ended
	April 1, 2017		April 3, 2016		% Change
	(in millions, except per share data)
Diluted EPS	$	0.73	$	0.73	—	%
Adjusted EPS^(a)	0.84		0.73		15.1	%


^(a)	Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.

Three Months Ended April 1, 2017 compared to the Three Months Ended April 3, 2016:

Diluted EPS was $0.73 for the three months ended April 1, 2017 and April 3, 2016.



	For the Three Months Ended
	April 1, 2017		April 3, 2016			$ Change			% Change
Diluted EPS	$	0.73	$	0.73		$	—		—	%
Integration and restructuring expenses	0.08		0.14			(0.06		)
Merger costs	—		0.01			(0.01		)
Unrealized losses/(gains) on commodity hedges	0.02		—			0.02
Nonmonetary currency devaluation	0.01		—			0.01
Preferred dividend adjustment	—		(0.15		)	0.15
Adjusted EPS^(a)	$	0.84	$	0.73		$	0.11		15.1	%

Key drivers of change in Adjusted EPS:
Results of operations						$	(0.02	)
Change in preferred dividends						0.15
Change in interest expense						(0.04		)
Change in other expense/(income), net						0.01
Change in effective tax rate and other						0.01
						$	0.11


^(a)	Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.

Adjusted EPS increased 15.1% to $0.84 for the three months ended April 1, 2017, compared to $0.73 in the prior period, primarily driven by the absence of a Series A Preferred Stock dividend in the current period, higher other expense/(income), net, and a lower effective tax rate, partially offset by higher interest expense and lower Adjusted EBITDA.

Results of Operations by Segment

Management evaluates segment performance based on several factors including net sales and Segment Adjusted EBITDA. Management uses Segment Adjusted EBITDA to evaluate segment performance and allocate resources. Segment Adjusted EBITDA ~~assists~~is a tool that can assist management and investors in comparing our performance on a consistent basis ~~for purposes of business decision-making~~ by removing the impact of certain items that management believes do not directly reflect our ~~core~~underlying operations. These items include depreciation and amortization (including amortization of postretirement benefit plans prior service credits), equity award compensation expense, integration and restructuring expenses, merger costs, unrealized ~~gains and losses~~gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable ~~segment~~segment’s operating results), impairment losses, ~~gain/(loss) associated with~~gains/(losses) on the sale of a business, and nonmonetary currency devaluation (e.g., remeasurement gains and certain general corporate expenses. In addition, consistent with the manner in which management evaluates segment performance and allocates resources, Segment Adjusted EBITDA includes the operating results of Kraft on a pro forma basis, as if Kraft had been acquired as of December 30, 2013.losses).

Net Sales:


	For the Three Months Ended				For the Three Months Ended
	April 3, 2016		March 29, 2015		April 1, 2017		April 3, 2016
	(in millions)				(in millions)
Net sales:
United States	$	4,715	$	868	$	4,552	$	4,715
Canada	504		121		443		504
Europe	553		626		543		583
Rest of World	798		863		826		768
Total net sales	$	6,570	$	2,478	$	6,364	$	6,570


^(a)	^(a)~~There are no pro forma adjustments in the three months ended April 3, 2016 as Kraft and Heinz were a combined company for the entire period.~~ ^(b)Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.

Three Months Ended April 1, 2017 compared to the Three Months Ended April 3, 2016:

Net sales ~~increased 316.5%~~decreased 6.8% to ~~$504~~$543 million, ~~primarily driven by the 2015 Merger. Pro forma net sales decreased by 8.5%~~ reflecting the unfavorable impact of foreign currency (10.0 pp). Organic Net Sales increased 1.5% driven by higher pricing (3.7 pp) that was partially offset by unfavorable volume/mix (2.2 pp). Pricing increased from significant pricing actions to offset higher input costs in local currency, despite deflation in key commodity costs. Unfavorable volume/mix reflected the volume impact of reduced promotional activity in cheese versus the prior year, as well as lower shipments of coffee and foodservice, partially offset by higher shipments of condiments and sauces.

Segment Adjusted EBITDA increased 33.6% despite the unfavorable impact of foreign currency (14.2 pp). This increase was driven primarily by Integration Program savings and favorable pricing net of higher local input costs that were partially offset by unfavorable volume/mix.

~~Europe~~

For the Three Months Ended
April 3, 2016 March 29, 2015 % Change
(in millions)
Net sales $ 553
$ 626
(11.7 )%
Pro forma net sales^(a)
553
626
(11.7 )%
Organic Net Sales^(b)
577
599
(3.7 )%
Segment Adjusted EBITDA 177
214
(17.3 )%

^(a)~~There are no pro forma adjustments in the three months ended April 3, 2016 as Kraft and Heinz were a combined company for the entire period.~~

^(b) ~~Organic Net Sales is a non-GAAP financial measure. See the~~ ~~Non-GAAP Financial Measures~~ ~~section at the end of this item.~~

~~Net sales and pro forma net sales decreased 11.7% partially due to the unfavorable impacts of divestitures (4.1 pp) and foreign currency (3.9~~(6.6 pp). Organic Net Sales decreased ~~3.7%~~0.2% due to lower pricing ~~(2.9~~(0.6 pp) ~~and unfavorable~~partially offset by favorable volume/mix ~~(0.8~~(0.4 pp). Lower pricing was primarily due to ~~increased~~ promotional ~~activity in soup and beans in the UK versus the prior year period. Unfavorable volume/mix was primarily due to declines in infant nutrition~~timing in the UK and Italy ~~as well as soup in~~versus the ~~UK, partially offset by growth of beans in the UK as well as condiments and sauces across Europe.~~

Segment Adjusted EBITDA decreased 17.3%, partially due to the unfavorable impact of foreign currency (3.7 pp). Excluding currency, the Segment Adjusted EBITDA decline was primarily due to lower pricing and an increase in marketing investments.

~~Rest of World~~

For the Three Months Ended
April 3, 2016 March 29, 2015 % Change
(in millions)
Net sales $ 798
$ 863
(7.5 )%
Pro forma net sales^(a)
798
946
(15.6 )%
Organic Net Sales^(b)
869
787
10.4 %
Segment Adjusted EBITDA 167
190
(12.1 )%

^(a)~~There are no pro forma adjustments in the three months ended April 3, 2016 as Kraft and Heinz were a combined company for the entire~~prior period.

^(b) ~~Organic Net Sales is a non-GAAP financial measure. See the~~ ~~Non-GAAP Financial Measures~~ ~~section at the end of this item.~~

Net sales decreased 7.5%, reflecting the unfavorable impact of foreign currency, which was partially offset by the inclusion of Kraft in the current period. Pro forma net sales decreased 15.6% due to the unfavorable impact of foreign currency (26.0 pp, including 17.0 pp from the devaluation of the Venezuelan bolivar). Organic Net Sales increased 10.4%, driven by favorable volume/mix (8.3 pp) and higher pricing (2.1 pp). Favorable volume/mix was driven by growth in condiments and sauces ~~across all regions, as well as beverages~~ in ~~Indonesia.~~the UK, partially offset by declines in infant nutrition in Italy and in most categories in the Netherlands.

Segment Adjusted EBITDA decreased 5.6%, including the unfavorable impact of foreign currency (10.2 pp). Excluding the currency impact, Segment Adjusted EBITDA increased primarily due to productivity savings partially offset by higher input costs in local currency.

Rest of World:



	For the Three Months Ended
	April 1, 2017		April 3, 2016		% Change
	(in millions)
Net sales	$	826	$	768	7.5	%
Organic Net Sales^(a)	816		755		8.1	%
Segment Adjusted EBITDA	146		166		(11.8	)%


^(a)	Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.

Three Months Ended April 1, 2017 compared to the Three Months Ended April 3, 2016:

Net sales increased 7.5% to $826 million, reflecting the unfavorable impact of foreign currency (0.6 pp). Organic Net Sales increased 8.1% driven by higher pricing (5.1 pp) and favorable volume/mix (3.0 pp). Higher pricing was primarily driven by pricing actions taken to offset higher input costs in local currency, primarily in Latin America. Favorable volume/mix was primarily driven by shipment timing on seasonal holiday categories in Indonesia, ongoing growth in China as well as growth in condiments and sauces in Latin America. This growth was partially offset by volume declines in several markets associated with distributor network re-alignment.

Segment Adjusted EBITDA decreased ~~12.1%~~11.8%, ~~primarily due to~~including the unfavorable impact of foreign currency ~~(38.2 pp, including 29.5 pp from the devaluation of the Venezuelan bolivar)~~(2.7 pp). Excluding the currency impact, Segment Adjusted EBITDA ~~growth was~~decreased primarily ~~driven~~due to higher commercial investments and higher input costs in local currency, partially offset by ~~favorable volume/mix.~~net sales growth.

Liquidity and Capital Resources

We believe that cash generated from our operating activities, our Revolving Credit Facility (as defined below), our securitization programs, and our commercial paper program will provide sufficient liquidity to meet our working capital needs, expected Integration Program and restructuring expenditures, planned capital expenditures, ~~and~~ contributions to our postemployment benefit plans, future contractual obligations (including repayments of long-term debt), and payment of our anticipated quarterly dividends. We intend to use our cash on hand and our ~~Revolving Credit Facility~~commercial paper program for daily funding requirements. Overall, we do not expect any negative 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:

~~Cash~~Net cash used for operating activities was $151 million for the three months ended April 1, 2017 compared to net cash provided by operating activities ~~was~~of $270 million infor the three months ended April 3, ~~2016 compared to net cash used of $83 million in the three months ended March 29, 2015.~~2016. The ~~increase~~decrease in cash provided by operating activities was driven by unfavorable changes in current assets and liabilities, primarily ~~due to an increase~~receivables and inventory, partially offset by decreased pension contributions in ~~operating income~~the current year. Changes in receivables were unfavorable primarily as a result of the 2015 Merger partially offset by working capital increases that were more unfavorable than the prior year, an increase of cash spent on the Integration Program and restructuring activities, and an increase in pension contributions. See Note 8, ~~Postemployment Benefits, for further discussion of~~decreasing our ~~pension contributions, including the amount that we expect~~U.S. securitization program from $800 million to ~~pay~~$500 million in the ~~current year.~~first quarter of 2017. Changes in inventories were unfavorable, primarily within the U.S., which was driven by a combination of higher input costs, including key commodity costs, and lower than anticipated net sales.

Net Cash Provided by/Used for Investing Activities:

Net cash used infor investing activities was ~~$325~~$330 million infor the three months ended April 1, 2017 compared to $293 million for the three months ended April 3, ~~2016 compared to $49 million in the three months ended March 29, 2015.~~2016. The increase in cash used infor investing activities was primarily ~~driven by an increase~~due to increased capital expenditures of $65 million compared to the prior year, which was primarily due to integration and restructuring activities in ~~capital expenditures.~~the United States. We expect ~~2016~~2017 capital expenditures to be approximately ~~$1.6~~$1.1 billion, including capital expenditures required for our ongoing integration and restructuring activities.

Net Cash Provided by/Used for Financing Activities:

Net cash used for financing activities was $505 million for the three months ended April 1, 2017 compared to $627 million infor the three months ended April 3, ~~2016 compared to net cash used of $214 million in the three months ended March 29, 2015. The increase~~2016. This decrease in cash used for financing activities was primarily driven by net proceeds in the ~~payment of~~current period from our ~~quarterly common stock cash dividend,~~commercial paper program, which commenced in the ~~third~~second quarter of ~~2015. Additionally, in the prior year we had a benefit from~~2016. These proceeds ~~from the issuance of long-term debt, which~~ were ~~largely~~partially offset by ~~repayments of long-term debt. Our~~increased cash ~~used for financing activities for the three months ended April 3, 2016 also reflected the positive impact of there being no cash distribution~~distributions related to ~~our Series A Preferred Stock in the three months ended April 3, 2016 compared to cash distributions of $180 million in the three months ended March 29, 2015.~~common stock dividends. SeeEquity and Dividendsfor further information on our ~~cash distributions related to our Series A Preferred Stock.~~common stock dividends.

Cash ~~held~~Held by ~~international subsidiaries:~~International Subsidiaries:

~~At April 3, 2016, approximately $1.6~~Of the $3.2 billion of cash and ~~short-term investments were~~cash equivalents on our condensed consolidated balance sheet at April 1, 2017, approximately $1.3 billion was held by international subsidiaries.

We have provided for a deferred tax liability of $22 million for undistributed earnings not considered to be indefinitely reinvested. Further, certain previously taxed earnings have not yet been remitted and certain intercompany loans have not yet been repaid. As a result, in future periods, we believe that we could remit up to approximately $2.8 billion of cash to the U.S. without incurring any additional material tax expense.

We consider the unremitted earnings of our international subsidiaries that have not been previously taxed in the ~~United States~~U.S. to be indefinitely reinvested. For those undistributed earnings considered to be indefinitely reinvested, our intent is to reinvest these ~~funds~~earnings in our international operations, and our current plans do not demonstrate a need to repatriate the accumulated earnings to fund our ~~United States~~U.S. cash requirements. If we decide at a later date to repatriate these ~~funds~~earnings to the ~~United States,~~U.S., we would be required to pay taxes on these amounts based on the applicable ~~United States~~U.S. tax rates net of credits for foreign taxes already paid.

Further, certain previously taxed earnings have not yet been remitted and certain intercompany loans have not been repaid. As a result, in future periods, we believe that we could remit approximately $4.3 billion of cash to the United States without incurring any additional material tax expense.

Total Debt:

~~Our long-term debt was $25.3 billion~~We had commercial paper outstanding of $900 million at April ~~3, 2016~~1, 2017 and ~~$25.2 billion~~$642 million at ~~January 3,~~December 31, 2016. ~~Our long-term debt contains customary representations, covenants, and events~~The maximum amount of ~~default. We were in compliance with all covenants as of~~commercial paper outstanding during the three months ended April ~~3, 2016.~~1, 2017 was not materially different than the amount outstanding at April 1, 2017.

We maintain our Senior Credit Facilities comprised of our $4.0 billion senior unsecured revolving credit facility (the “Revolving Credit Facility”) and a $600 million ~~Term~~senior unsecured loan facility (the “Term Loan ~~Facility (together~~Facility” and, together with the Revolving Credit Facility, the “Senior Credit Facilities”). Subject to certain conditions, we may increase the amount of revolving commitments and/or add additional tranches of term loans in a combined aggregate amount of up to $1.0 billion. Our Senior Credit Facilities contain customary representations, covenants, and events of default. At April ~~3, 2016,~~1, 2017, $600 million aggregate principal amount of our Term Loan Facility was outstanding. No amounts were drawn on our Revolving Credit Facility at April ~~3, 2016~~1, 2017 or during the three months ended April 3,1, 2017.

Our long-term debt, including the current portion, was $31.8 billion at April 1, 2017 and $31.8 billion at December 31, 2016. ~~Effective May 4, 2016, we amended the Revolving Credit Facility to increase the letter~~Our long-term debt contains customary representations, covenants, and events of credit sub-facility from $150 million to $300 million. In addition, we extended the maturity of the Senior Credit Facilities from July 6, 2020 to July 6, 2021. See our consolidated financial statements and related notes on Form 10-K for the year ended January 3, 2016, for additional information on our Senior Credit Facilities, including covenant information related to our Revolving Credit Facility, interest rates on borrowings, maturity dates, and other general terms.

~~Series A Preferred Stock:~~default. We were in compliance with all such covenants at April 1, 2017.

We ~~currently intend to redeem the Series A Preferred Stock during the second quarter~~have approximately $2.0 billion aggregate principal amount of ~~2016.~~senior notes that will mature in June 2017. We expect to fund ~~this redemption~~these long-term debt repayments primarily ~~through the issuance of new debt securities, as well as other sources of liquidity, including~~with current cash and cash equivalents, cash generated from our operating activities, and proceeds from our U.S. securitization and commercial paper program, U.S. securitization program, and cash on hand.The amount, nature, and timing of any issuances of debt will depend on the economic environment, current interest rates, and overall market conditions.programs.

Commodity Trends

We purchase and use large quantities of commodities, including dairy products, meat products, coffee beans, nuts, tomatoes, potatoes, soybean and vegetable oils, 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 these commodities.

~~Markets for~~We define our key commodities ~~were volatile for~~as dairy, meat, coffee beans, and nuts. During the ~~quarter~~three months ended April ~~3, 2016.~~1, 2017, we experienced increases in our key commodities, including coffee beans, cheese, and meat, while costs for nuts were flat. We expect commodity cost volatility to continue over the remainder of the year. We manage commodity cost volatility primarily through pricing and risk management strategies. As a result of these risk management strategies, our commodity costs may not immediately correlate with market price trends.

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

There were no material changes to our off-balance sheet arrangements ~~and~~or aggregate contractual obligations from those disclosed in our Annual Report on Form 10-K for the year ended ~~January 3,~~December 31, 2016.

Equity and Dividends

Series A Preferred Stock:

On June 7, 2016, we redeemed all outstanding shares of our Series A Preferred Stock, therefore we no longer pay any associated dividends.

There were no cash distributions related to our Series A Preferred Stock for the three months ended April 3, 2016 because, concurrent with the declaration of our common stock dividend on December 8, 2015, we also declared and paid the Series A Preferred Stock dividend that would otherwise have been payable on March 7, 2016.

Common Stock Dividends:

We paid common stock dividends of $736 million for the three months ended April 1, 2017 and $667 million infor the ~~first quarter of~~three months ended April 3, 2016. ~~No common stock dividends were paid in the first quarter of 2015. On February 25, 2016,~~Additionally, on May 3, 2017, our Board of Directors declared a cash dividend of $0.575 per share of common stock, which was paid on April 8, 2016, to shareholders of record on March 18, 2016. We accrued dividends payable related to this dividend as of April 3, 2016. Additionally, on May 4, 2016, our Board of Directors declared a cash dividend of $0.575$0.60 per share of common stock, which is payable on ~~July 8, 2016~~June 16, 2017 to shareholders of record on May ~~27, 2016.~~19, 2017. The present annualized dividend rate is ~~$2.30~~$2.40 per share of common stock.

The declaration of dividends is subject to the discretion of our Board of Directors and depends on various factors, including our net income, financial condition, cash requirements, future prospects, and other factors that our Board of Directors deems relevant to its analysis and decision making.

~~Series A Preferred Stock:~~

Our Series A Preferred Stock entitles holders to a 9.00% annual dividend, to be paid in four dividends, in arrears on each March 7, June 7, September 7, and December 7, in cash. While the Series A Preferred Stock remains outstanding, if we declare or pay a common stock dividend, we must also declare and pay in full the Series A Preferred Stock dividend for the then-current period. In connection with the declaration of our common stock dividend on December 8, 2015, we also declared and paid the Series A Preferred Stock dividend that would otherwise have been payable on March 7, 2016. Accordingly, there were no cash distributions related to our Series A Preferred Stock in the first quarter of 2016. We made cash distributions of $180 millionrelated to our Series A Preferred Stock in the first quarter of 2015. Additionally, our payment of our common stock dividend on April 8, 2016 resulted in a corresponding payment of the Series A Preferred Stock dividend that would have otherwise been payable on June 7, 2016.

Significant Accounting Estimates

We prepare our condensed consolidated financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires the use of estimates, judgments, and assumptions. Our significant accounting policies are described in Note 1, Background and Basis of Presentation, to our consolidated financial statements for the year ended ~~January 3,~~December 31, 2016 in our Annual Report on Form 10-K. Our significant accounting assumptions and estimates are described in our ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended ~~January 3,~~December 31, 2016 in our Annual Report on Form 10-K.

We changed the method that we use to estimate the service cost and interest cost components of net pension cost/(benefit) and net postretirement cost/(benefit). We use a full yield curve approach to estimate service cost and interest cost by applying the specific spot rates along the yield curve used to determine the benefit obligation to the relevant projected cash flows. Previously, we estimated service cost and interest cost using a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. We made this change to provide a more precise measurement of service cost and interest cost by improving the correlation between projected benefit cash flows and the corresponding spot yield curve rates. The new method will result in a decrease in service cost and interest cost compared to what our costs would have been under the previous method. This change did not affect the measurement of our total benefit obligations. We have accounted for this change prospectively as a change in accounting estimate.

~~New~~Recently Issued Accounting ~~Pronouncements~~Standards

See Note 1, Background and Basis of Presentation, to the condensed consolidated financial statements for a discussion of ~~new~~recently issued accounting ~~pronouncements.~~standards.

Contingencies

See Note ~~12,~~13, Commitments, Contingencies and Debt, to the condensed consolidated financial statements for a discussion of our contingencies.

~~Supplemental Unaudited Pro Forma Condensed Combined Financial Information~~

The following unaudited pro forma condensed combined financial information is presented to illustrate the estimated effects of the 2015 Merger, which was consummated on July 2, 2015, and the related equity investments, based on the historical results of operations of Heinz and Kraft. See Note 1, ~~Background and Basis of Presentation,~~ ~~and Note 2,~~ ~~Merger and Acquisition,~~ ~~to the condensed consolidated financial statements for additional information on the 2015 Merger.~~

The following unaudited pro forma condensed combined statements of income for the three months ended March 29, 2015 are based on the historical financial statements of Heinz and Kraft after giving effect to the 2015 Merger, related equity investments, and the assumptions and adjustments described in the accompanying notes to these unaudited pro forma condensed combined statements of income.

The Heinz statement of income information for the three months ended March 29, 2015 was derived from the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q. The Kraft statement of income information for the three months ended March 29, 2015 was derived from its unaudited condensed consolidated financial statements included in Kraft’s Quarterly Report on Form 10-Q for the first quarter of 2015.

The unaudited pro forma condensed combined statements of income are presented as if the 2015 Merger had been consummated on December 30, 2013, the first business day of our 2014 fiscal year, and combine the historical results of Heinz and Kraft. This is consistent with internal management reporting. The unaudited 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 other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the completion of the acquisition. We utilized estimated fair values at the 2015 Merger Date for the preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed. Our purchase price allocation is substantially complete with the exception of identifiable intangible assets and certain income tax accounts. During the measurement period, we will continue to obtain information to assist in determining the fair value of net assets acquired, which may differ materially from our preliminary estimates.

The unaudited pro forma condensed combined financial information has been prepared in accordance with SEC Regulation S-X Article 11 and is not necessarily indicative of the results of operations that would have been realized had the transactions been completed as of the dates indicated, nor are they meant to be indicative of our anticipated combined future results. In addition, the accompanying unaudited pro forma condensed combined statements of income 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 to give effect to unaudited pro forma events that are (1) directly attributable to the transaction, (2) factually supportable and (3) are expected to have a continuing impact on the results of operations of the combined company. As a result, under SEC Regulation S-X Article 11, certain expenses such as Deal Costs and the fair value step-up of Kraft’s inventory (“Inventory Step-up Costs”), if applicable, are eliminated from pro forma results in the period presented. In contrast, under the ASC 805 presentation in Note 2, ~~Merger and Acquisition,~~ ~~to the condensed consolidated financial statements, these expenses are 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 historical consolidated financial statements and related notes of Kraft, and with our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q. The historical SEC filings of Kraft are available to the public at the SEC website at www.sec.gov.

~~The Kraft Heinz Company~~

~~Pro Forma Condensed Combined Statement of Income~~

~~For the Three Months Ended March 29, 2015~~

~~(in millions, except per share data)~~

~~(Unaudited)~~

Historical Heinz Historical Kraft Pro Forma Adjustments Pro Forma
Net sales $ 2,478
$ 4,352
$ —
$ 6,830
Cost of products sold 1,631
2,989
(64 ) 4,556
Gross profit 847
1,363
64
2,274
Selling, general and administrative expenses 338
622
32
992
Operating income 509
741
32
1,282
Interest expense 201
124
(20 ) 305
Other expense/(income), net (39 ) (17 ) —
(56 )
Income/(loss) before income taxes 347
634
52
1,033
Provision for/(benefit from) income taxes 68
204
20
292
Net income/(loss) 279
430
32
741
Net income/(loss) attributable to noncontrolling interest 3
—
—
3
Net income/(loss) attributable to Kraft Heinz 276
430
32
738
Preferred dividends 180
—
—
180
Net income/(loss) attributable to common shareholders $ 96
$ 430
$ 32
$ 558

Basic common shares outstanding 377
588
222
1,187
Diluted common shares outstanding 399
593
226
1,218

Per share data applicable to common shareholders:
Basic earnings/(loss) $ 0.26
$ 0.73
$ (0.52 ) $ 0.47
Diluted earnings/(loss) 0.24
0.72
(0.50 ) 0.46

~~The Kraft Heinz Company~~

~~Summary of Pro Forma Adjustments~~

~~(in millions)~~

~~(Unaudited)~~

For the Three Months Ended
March 29, 2015
Impact to cost of products sold:
Postemployment benefit costs^(a)
$ (64 )
Impact to cost of products sold $ (64 )

Impact to selling, general and administrative expenses:
Depreciation and amortization^(b)
$ 42
Compensation expense^(c)
13
Postemployment benefit costs^(a)
1
Deal costs^(d)
(24 )
Impact to selling, general and administrative expenses $ 32

Impact to interest expense:
Interest expense^(e)
$ (20 )
Impact to interest expense $ (20 )

~~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 policy and 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 in other comprehensive income/(loss). Also represents the elimination of Kraft’s historical amortization of postemployment benefit plan prior service credits.

~~(b)~~

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 in depreciation expense resulting from the fair value adjustment of property, plant, and equipment was insignificant. See our consolidated financial statements and related notes on Form 10-K for the year ended January 3, 2016, for additional information on the determination of fair values.


~~(c)~~	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 our consolidated financial statements and related notes on Form 10-K for the year ended January 3, 2016, for additional information on the conversion of Kraft’s equity awards in connection with the 2015 Merger.


~~(d)~~	~~Represents the elimination of nonrecurring deal costs incurred in connection with the 2015 Merger.~~


~~(e)~~	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 the elimination 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 period presented.~~

Additionally, we calculated the unaudited pro forma weighted average number of basic shares outstanding by adding Heinz’s historical weighted average number of basic shares outstanding, the 500 million shares issued to the Sponsors in connection with their equity investments (after giving effect to the pre-closing Heinz conversion ratio of 0.443332) and the historical weighted average number of basic shares of Kraft, which were converted on a 1:1 basis into shares of Kraft Heinz. We calculated the unaudited pro forma weighted average number of diluted shares outstanding by adding the effect of dilutive securities to the unaudited pro forma weighted average number of basic shares outstanding, including dilutive securities related to historical Heinz.

Non-GAAP Financial Measures

Our non-GAAP financial measures provided should be viewed in addition to, and not as an alternative for, results prepared in accordance with U.S. GAAP.

To supplement the ~~condensed~~ consolidated financial statements prepared in accordance with U.S. GAAP, we have presented Organic Net Sales, Adjusted EBITDA, and Adjusted EPS, which are considered non-GAAP financial measures. The non-GAAP financial measures presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way. These measures are not substitutes for their comparable U.S. GAAP financial measures, such as net sales, ~~operating income,~~net income/(loss), diluted earnings per common share, or other 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 making by removing the impact of certain items that management believes do not directly reflect our ~~core~~underlying operations. Management believes that presenting our non-GAAP financial measures (i.e., Organic Net Sales, Adjusted EBITDA, and Adjusted EPS) is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items, (ii) permits investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating our results. We believe that the presentation of these non-GAAP financial measures, when considered together with the corresponding U.S. GAAP financial measures and the reconciliations to those measures, provides investors with additional understanding 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 53^rd53rd week of shipments. We calculate the impact of currency on net sales by holding exchange rates constant at the previous ~~year's~~year’s exchange rate, with the exception of Venezuela following our June 28, 2015 currency devaluation, for which we calculate the previous ~~year's~~year’s results using the current ~~year's~~year’s exchange rate. ~~Organic Net Sales for 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 ~~intended to~~that can assist management and investors in comparing our performance on a consistent basis ~~for purposes of business decision making~~ by removing the impact of certain items that management believes do not directly reflect our ~~core~~underlying operations.

Adjusted EBITDA is defined as net income/(loss) from continuing operations before interest expense, other expense/(income), net, provision for/(benefit from) income ~~taxes,~~taxes; in addition to these adjustments, we exclude, when they occur, the impacts of depreciation and amortization (excluding integration and restructuring expenses) (including amortization of postretirement benefit plans prior service credits)~~; 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 equity award compensation expense (excluding integration and restructuring expenses), impairment losses, and losses/(gains) on the sale of a business. Adjusted EBITDA for 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.. Adjusted EBITDA is a tool ~~intended to~~that can assist management and investors in comparing our performance on a consistent basis ~~for purposes of business decision making~~ by removing the impact of certain items that management believes do not directly reflect our ~~core~~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, and nonmonetary currency devaluation (e.g., remeasurement gains and ~~timing impacts of~~losses), and including when they occur, adjustments to reflect preferred stock ~~dividends.~~dividend payments on an accrual basis. We believe Adjusted EPS ~~for any period prior to the 2015 Merger Date includes the~~provides important comparability of underlying operating results, ~~of Kraft on a pro forma basis, as if Kraft had been acquired as of December 30, 2013. Management uses Adjusted EPS~~allowing investors and management to assess operating performance on a consistent basis.

The Kraft Heinz Company

Reconciliation of ~~Pro Forma~~ Net Sales to Organic Net Sales

For the Three Months Ended April 1, 2017 and April 3, 2016 ~~and March 29, 2015~~

(dollars in millions)

(Unaudited)


	Pro Forma Net Sales		Impact of Currency			Impact of Divestitures		Organic Net Sales		Price	Volume/Mix	Net Sales		Impact of Currency			Organic Net Sales		Price	Volume/Mix
April 3, 2016*
Three Months Ended April 1, 2017
United States	$	4,715	$	—		$	—	$	4,715			$	4,552	$	—		$	4,552
Canada	504		(55		)	—		559				443		14			429
Europe	553		(24		)	—		577				543		(39		)	582
Rest of World	798		(71		)	—		869				826		10			816
	$	6,570	$	(150	)	$	—	$	6,720			$	6,364	$	(15	)	$	6,379

March 29, 2015
Three Months Ended April 3, 2016
United States	$	4,707	$	—		$	—	$	4,707			$	4,715	$	—		$	4,715
Canada	551		—			—		551				504		—			504
Europe	626		—			27		599				583		—			583
Rest of World	946		159			—		787				768		13			755
	$	6,830	$	159		$	27	$	6,644			$	6,570	$	13		$	6,557

Year-over-year growth rates
United States	0.2%		0.0 pp			0.0 pp		0.2%		0.1 pp	0.1 pp
Canada	(8.5)%		(10.0) pp			0.0 pp		1.5%		3.7 pp	(2.2) pp
Europe	(11.7)%		(3.9) pp			(4.1) pp		(3.7)%		(2.9) pp	(0.8) pp
Rest of World	(15.6)%		(26.0) pp			0.0 pp		10.4%		2.1 pp	8.3 pp
	(3.8)%		(4.5) pp			(0.4) pp		1.1%		0.3 pp	0.8 pp

*There are no pro forma adjustments



Year-over-year growth rates
United States	(3.5	)%	0.0	pp	(3.5	)%	0.7	pp	(4.2	) pp
Canada	(12.2	)%	2.7	pp	(14.9	)%	(1.0	) pp	(13.9	) pp
Europe	(6.8	)%	(6.6	) pp	(0.2	)%	(0.6	) pp	0.4	pp
Rest of World	7.5	%	(0.6	) pp	8.1	%	5.1	pp	3.0	pp
Kraft Heinz	(3.1	)%	(0.4	) pp	(2.7	)%	1.0	pp	(3.7	) pp

The Kraft Heinz Company

Reconciliation of Net Income/(Loss) to Adjusted EBITDA

(in ~~the three months ended April 3, 2016 as Kraft and Heinz were a combined company for the entire period.~~millions)

(Unaudited)



	For the Three Months Ended
	April 1, 2017			April 3, 2016
Net income/(loss)	$	891		$	900
Interest expense	313			249
Other expense/(income), net	(12		)	(8		)
Provision for/(benefit from) income taxes	359			372
Operating income	1,551			1,513
Depreciation and amortization (excluding integration and restructuring expenses)	132			161
Integration and restructuring expenses	148			260
Merger costs	—			15
Unrealized losses/(gains) on commodity hedges	42			(8		)
Nonmonetary currency devaluation	—			1
Equity award compensation expense (excluding integration and restructuring expenses)	12			9
Adjusted EBITDA	$	1,885		$	1,951

The Kraft Heinz Company

Reconciliation of ~~Pro Forma Operating Income to Adjusted EBITDA~~

~~(in millions)~~

~~(Unaudited)~~

For the Three Months Ended
April 3, 2016* March 29, 2015
Pro forma operating income $ 1,513
$ 1,282
Depreciation and amortization (excluding integration and restructuring expenses) 161
216
Integration and restructuring expenses 260
81
Merger costs 15
13
Unrealized losses/(gains) on commodity hedges (8 ) (2 )
Nonmonetary currency devaluation 1
—
Equity award compensation expense (excluding integration and restructuring expenses) 9
19
Adjusted EBITDA $ 1,951
$ 1,609

*There are no pro forma adjustments in the three months ended April 3, 2016 as Kraft and Heinz were a combined company for the entire period.

~~The Kraft Heinz Company~~

~~Reconciliation of Pro Forma~~ Diluted EPS to Adjusted EPS

(Unaudited)


	For the Three Months Ended					For the Three Months Ended
	April 3, 2016*			March 29, 2015		April 1, 2017		April 3, 2016
Pro forma diluted EPS	$	0.73		$	0.46
Diluted EPS						$	0.73	$	0.73
Integration and restructuring expenses(b)	0.14			0.05		0.08		0.14
Merger costs(b)	0.01			0.02		—		0.01
Additional preferred dividend in 2015	(0.15		)	—
Unrealized losses/(gains) on commodity hedges^(a)(b)						0.02		—
Nonmonetary currency devaluation^(a)(c)						0.01		—
Preferred dividend adjustment^(d)						—		(0.15		)
Adjusted EPS	$	0.73		$	0.53	$	0.84	$	0.73


^(a)	Income tax expense associated with these items is based on applicable jurisdictional tax rates and deductibility assessment of individual items.


^(b)	Refer to the reconciliation of net income/(loss) to Adjusted EBITDA for the related gross expenses.


^(c)	Nonmonetary currency devaluation includes the following gross expenses/(income):

*There are no pro forma adjustmentsExpenses recorded in cost of products sold of were $1 million for the three months ended April 3, 2016 ~~as Kraft and Heinz~~(there were ~~a combined company~~no such expenses for the ~~entire period.~~three months ended April 1, 2017) and

Expenses recorded in other expense/(income), net, were $8 million for the three months ended April 1, 2017 (there were no such expenses for the three months ended April 3, 2016).


^(d)	For Adjusted EPS, we present the impact of the Series A Preferred Stock dividend payments on an accrual basis. Accordingly, we included an adjustment to EPS to include $180 million of Series A Preferred Stock dividends in the three months ended April 3, 2016 (to reflect the March 7, 2016 Series A Preferred Stock dividend that was paid in December 2015).

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains a number of forward-looking statements. Words such as “expect,” “improve,” “reassess,” “remain,” “will,” 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, ~~the 2015 Merger,~~synergies and growth, taxes, integration, impacts of accounting guidance, 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 statements include, but are not limited to, increased competition; our ability to maintain, extend and expand our reputation and brand image; our ability to differentiate our products from other brands; the consolidation of retail customers; our ability to predict, identify and interpret changes in consumer preferences and demand; our ability to drive revenue growth in our key product categories, increase our market share, or add products; an impairment of the carrying value of goodwill or other indefinite-lived intangible assets; volatility in commodity, energy and other input costs; changes in our management team or other key personnel; our inability to realize the anticipated benefits from our cost savings initiatives; changes in relationships with significant customers and suppliers; execution of our international expansion strategy; changes in laws and regulations; legal claims or other regulatory enforcement actions; product recalls or product liability claims; unanticipated business disruptions; failure to successfully integrate the business and operations of Kraft ~~Heinz;~~Heinz in the expected time frame; our ability to complete or realize the benefits from potential and completed acquisitions, alliances, divestitures or joint ventures; economic and political conditions in the 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; disruptions in information technology networks and systems; 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 such indebtedness; ~~our dividend payments on our Series A Preferred Stock;~~ tax law changes or interpretations; and other factors. For additional information on these and other factors that could affect our forward-looking statements, see “Risk Factors” below in this Quarterly Report on Form 10-Q. We disclaim and do not undertake any obligation to update or revise any forward-looking statement in this report, except as required by applicable law or regulation.

Item 3. Quantitative and Qualitative Disclosures ~~about~~About Market Risk.

There have been no material changes to our market risk during the three months ended April ~~3, 2016.~~1, 2017. For additional information, refer to our Annual Report on Form 10-K for the year ended ~~January 3,~~December 31, 2016.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the ~~end of the~~ period covered by this report, were effective and provided reasonable assurance that the information required to be disclosed by us in reports filed or submitted under the ~~Securities~~ Exchange Act ~~of 1934 (the “Exchange Act”)~~ is (i) recorded, processed, summarized, and reported within the time periods specified in the ~~SEC's~~SEC’s rules and forms, and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

Our Chief Executive Officer and Chief Financial Officer, with other members of management, evaluated the changes in our internal control over financial reporting during the three months ended April 1, 2017. We determined that there were no changes in our internal control over financial reporting during the three months ended April 1, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II —- OTHER INFORMATION

Item 1. Legal Proceedings.

See Note ~~12,~~13, Commitments, Contingencies and Debt, to the condensed consolidated financial statements for a discussion of legal proceedings.

Item 1A. Risk Factors.

There ~~were~~have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended ~~January 3,~~December 31, 2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~Issuer Purchases of Equity Securities during the Quarter ended April 3, 2016~~

Our share repurchase activity ~~for~~in the three months ended April ~~3, 2016~~1, 2017 was:

Total Number
of Shares^(a)

Average Price
Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plan or Program Dollar Value of Shares that May Yet be Purchased Under the Plan or Program
1/4/2016 - 2/7/2016 50,664
$ 73.11
—

2/8/2016 - 3/6/2016 244,384
76.75
—

3/7/2016 - 4/3/2016 —
—
—
$ —
For the Quarter Ended April 3, 2016 295,048
—



	Total Number of Shares^(a)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program	Dollar Value of Shares that May Yet be Purchased Under the Plan or Program
1/1/2017 - 2/4/2017	111,031	$	87.81	—
2/5/2017 - 3/4/2017	386,000	91.26		—
3/5/2017 - 4/1/2017	—	—		—	$	—
For the Three Months Ended April 1, 2017	497,031			—

^(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 repurchases using accumulated option exercise proceeds), (2) shares tendered by individuals who used shares to pay the related taxes for grants of RSUs that vested, and (3) shares repurchased related to employee benefit programs (including our ~~2016~~annual bonus swap program).

Item 6. Exhibits.



Exhibit No.		Descriptions
~~10.1~~		~~The Kraft Heinz Company 2016 Omnibus Incentive Plan. +~~
~~10.2~~		~~Form of Non-Qualified Stock Option Award Agreement. +~~
~~10.3~~		~~Form of Matching Restricted Stock Unit Award Agreement. +~~
31.1		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 of 2002.
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 of 2002.
101.1		The following materials from The Kraft Heinz Company’s Quarterly Report on Form 10-Q for the period ended April ~~3, 2016~~1, 2017 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statements of Equity, (iv) the Condensed Consolidated Balance Sheets, (v) the Condensed Consolidated Statements of Cash Flows, (vi) Notes to Condensed Consolidated Financial Statements, and (vii) document and entity information.

~~+ Indicates a management contract or compensatory plan or arrangement.~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		The Kraft Heinz Company
Date:	May ~~5, 2016~~4, 2017
		By:	/s/ Paulo Basilio
			Paulo Basilio
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)



		The Kraft Heinz Company
Date:	May ~~5, 2016~~4, 2017
		By:	/s/ Christopher R. Skinger
			Christopher R. Skinger
			Vice President, Global Controller
			(Principal Accounting Officer)



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)



Large accelerated filer ox	Accelerated filer o
Non-accelerated filer xo (Do not check if a smaller reporting company)	Smaller reporting company o	Emerging growth company o



Aggregate fair value of Kraft common stock	$	42,502
$16.50 per share special cash dividend	9,782
Fair value of replacement equity awards	353
Total consideration exchanged	$	52,637



Cash	$	314
Other current assets	3,423
Property, plant and equipment	4,193
Identifiable intangible assets	49,749
Other non-current assets	214
Trade and other payables	(3,011		)
Long-term debt	(9,286		)
Net postemployment benefits and other non-current liabilities	(4,734		)
Deferred income tax liabilities	(17,416		)
Net assets acquired	23,446
Goodwill on acquisition	29,191
Total consideration	52,637
Fair value of shares exchanged and equity awards	42,855
Total cash consideration paid to Kraft shareholders	9,782
Cash and cash equivalents of Kraft at the 2015 Merger Date	314
Acquisition of business, net of cash on hand	$	9,468



	United States		Canada		Europe		Rest of World		Total
Balance at December 31, 2016	$	33,696	$	4,913	$	2,778	$	2,738	$	44,125
Translation adjustments	—		44		51		80		175
Balance at April 1, 2017	$	33,696	$	4,957	$	2,829	$	2,818	$	44,300



x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



PART I - FINANCIAL INFORMATION	1
Item 1. Financial Statements and Supplementary ~~Data~~Data.	1
Condensed Consolidated Statements of Income	1
Condensed Consolidated Statements of Comprehensive Income	2
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statement of Equity	4
Condensed Consolidated Statements of Cash Flows	5
Notes to Condensed Consolidated Financial Statements	6
Note 1. Background and Basis of Presentation	6
Note 2. Integration and Restructuring Expenses	8
Note 3. Restricted Cash	10
Note 4. Inventories	10
Note 5. Goodwill and Intangible Assets	10
Note 6. Income Taxes	11
Note 7. Employees’ Stock Incentive Plans	12
Note 8. Postemployment Benefits	13
Note 9. Accumulated Other Comprehensive Income/(Losses)	14
Note 10. Financial Instruments	15
Note 11. Financing Arrangements	19
Note 12. Venezuela - Foreign Currency and Inflation	19
Note 13. Commitments, Contingencies and Debt	20
Note 14. Earnings Per Share	21
Note 15. Segment Reporting	21
Note 16. Supplemental Financial Information	23
Item 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3031
Overview	31
Consolidated Results of Operations	31
Results of Operations by Segment	33
Liquidity and Capital Resources	37
Commodity Trends	38
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations	38
Equity and Dividends	38
Significant Accounting Estimates	38
Recently Issued Accounting Standards	38
Contingencies	39
Non-GAAP Financial Measures	39
Forward-Looking Statements	43
Item 3. Quantitative and Qualitative Disclosures ~~About~~about Market Risk.	4744
Item 4. Controls and Procedures.	4744
PART II - OTHER INFORMATION	4744
Item 1. Legal Proceedings.	4744
Item 1A. Risk Factors.	4744
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	4744
Item 6. Exhibits.	4845
Signatures	4946


	April 3, 2016			January 3, 2016			April 1, 2017			December 31, 2016
ASSETS
Cash and cash equivalents	$	4,199		$	4,837		$	3,242		$	4,204
Trade receivables (net of allowances of $32 at April 3, 2016 and at January 3, 2016)	939			871
Trade receivables (net of allowances of $30 at April 1, 2017 and $20 at December 31, 2016)							886			769
Sold receivables	805			583			588			129
Inventories	2,892			2,618			3,151			2,684
Other current assets	977			871			1,008			967
Total current assets	9,812			9,780			8,875			8,753
Property, plant and equipment, net	6,434			6,524			6,693			6,688
Goodwill	43,542			43,051			44,300			44,125
Intangible assets, net	62,049			62,120			59,330			59,297
Other assets	1,436			1,498			1,604			1,617
TOTAL ASSETS	$	123,273		$	122,973		$	120,802		$	120,480
LIABILITIES AND EQUITY
Commercial paper and other short-term debt							$	909		$	645
Current portion of long-term debt							2,023			2,046
Trade payables	$	2,773		$	2,844		3,936			3,996
Accrued marketing	867			856			599			749
Accrued postemployment costs	164			328			157			157
Income taxes payable	575			417			424			255
Interest payable	266			401			346			415
Dividends payable	794			762
Other current liabilities	1,291			1,324			989			1,238
Total current liabilities	6,730			6,932			9,383			9,501
Long-term debt	25,167			25,151			29,748			29,713
Deferred income taxes	21,659			21,497			20,910			20,848
Accrued postemployment costs	2,380			2,405			2,016			2,038
Other liabilities	737			752			801			806
TOTAL LIABILITIES	56,673			56,737			62,858			62,906
Commitments and Contingencies (Note 12)
Redeemable noncontrolling interest	21			23
9.00% Series A cumulative compounding redeemable preferred stock, 80,000 authorized and issued shares at April 3, 2016 and January 3, 2016, $.01 par value	8,320			8,320
Commitments and Contingencies (Note 13)
Equity:
Common stock, $.01 par value (5,000,000,000 shares authorized at April 3, 2016 and January 3, 2016; 1,216,075,938 shares issued and 1,215,541,052 shares outstanding at April 3, 2016; 1,214,391,614 shares issued and 1,213,978,752 shares outstanding at January 3, 2016)	12			12
Common stock, $0.01 par value (5,000,000,000 shares authorized; 1,220,191,898 shares issued and 1,217,543,284 shares outstanding at April 1, 2017; 1,218,947,088 shares issued and 1,216,475,740 shares outstanding at December 31, 2016)							12			12
Additional paid-in capital	58,438			58,375			58,642			58,593
Retained earnings/(deficit)	193			—			750			588
Accumulated other comprehensive income/(losses)	(560		)	(671		)	(1,449		)	(1,628		)
Treasury stock, at cost	(40		)	(31		)	(223		)	(207		)
Total shareholders' equity	58,043			57,685			57,732			57,358
Noncontrolling interest	216			208			212			216
TOTAL EQUITY	58,259			57,893			57,944			57,574
TOTAL LIABILITIES AND EQUITY	$	123,273		$	122,973		$	120,802		$	120,480



	Common Stock		Additional Paid-in Capital		Retained Earnings/ (Deficit)			Accumulated Other Comprehensive Income/(Losses)			Treasury Stock			Noncontrolling Interest		Total Equity
Balance at January 3, 2016	$	12	$	58,375	$	—		$	(671	)	$	(31	)	$	208	$	57,893
Net income/(loss) excluding redeemable noncontrolling interest	—		—		896			—			—			4		900
Other comprehensive income/(loss) excluding redeemable noncontrolling interest	—		—		—			111			—			4		115
Dividends declared-common stock	—		—		(699		)	—			—			—		(699		)
Exercise of stock options, issuance of other stock awards, and other	—		63		(4		)	—			(9		)	—		50
Balance at April 3, 2016	$	12	$	58,438	$	193		$	(560	)	$	(40	)	$	216	$	58,259



	For the Three Months Ended
	April 3, 2016
Severance and employee benefit costs	$	28
Asset-related costs	156
Other exit costs	8
Other implementation costs	49
	$	241


	Severance and Employee Benefit Costs			Other Exit Costs^(a)			Total			Severance and Employee Benefit Costs			Other Exit Costs^(a)			Total
Balance at January 3, 2016	$	185		$	23		$	208
Balance at December 31, 2016										$	99		$	10		$	109
Charges	28			8			36			34			9			43
Cash payments	(48		)	(22		)	(70		)	(22		)	(1		)	(23		)
Non-cash utilization	(9		)	—			(9		)	(8		)	(2		)	(10		)
Balance at April 3, 2016	$	156		$	9		$	165
Balance at April 1, 2017										$	103		$	16		$	119



Balance at December 31, 2016	$	53,307
Translation adjustments	80
Balance at April 1, 2017	$	53,387



	Number of Stock Options		Weighted Average Exercise Price (per share)
Outstanding at January 3, 2016	24,205,612		$	34.86
Options granted	1,139,620		77.66
Options forfeited	(303,636	)	37.02
Options exercised	(1,295,303	)	34.47
Outstanding at April 3, 2016	23,746,293		36.91



	Number of Stock Options		Weighted Average Exercise Price (per share)
Outstanding at December 31, 2016	20,560,140		$	37.39
Granted	1,170,685		91.40
Forfeited	(126,206	)	44.78
Exercised	(1,126,852	)	34.00
Outstanding at April 1, 2017	20,477,767		40.62


	April 3, 2016							January 3, 2016							April 1, 2017							December 31, 2016
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Trademarks	$	2,362	$	(97	)	$	2,265	$	2,346	$	(70	)	$	2,276	$	2,346	$	(199	)	$	2,147	$	2,337	$	(172	)	$	2,165
Customer-related assets	4,231		(251		)	3,980		4,218		(209		)	4,009		4,199		(413		)	3,786		4,184		(369		)	3,815
Other	14		(3		)	11		15		(4		)	11		13		(3		)	10		13		(3		)	10
	$	6,607	$	(351	)	$	6,256	$	6,579	$	(283	)	$	6,296	$	6,558	$	(615	)	$	5,943	$	6,534	$	(544	)	$	5,990


	Notional Amount				Notional Amount
	April 3, 2016		January 3, 2016		April 1, 2017		December 31, 2016
Commodity contracts	$	667	$	787	$	641	$	459
Foreign exchange contracts	3,312		3,458		3,048		2,997
Cross-currency contracts	4,328		4,328		3,173		3,173


Instrument	Notional (local) (in billions)		Notional (USD) (in billions)		Maturity	Notional (local) (in billions)		Notional (USD) (in billions)		Maturity
Cross-currency swap	£	0.8	$	1.4	October 2019	£	0.8	$	1.4	October 2019
Cross-currency swap	€	0.9	1.1		October 2019	C$	1.8	$	1.6	December 2019
Cross-currency swap	C$	1.8	1.6		December 2019


	Number of Units		Weighted Average Grant Date Fair Value (per share)		Number of Units		Weighted Average Grant Date Fair Value (per share)
RSUs at January 3, 2016	968,444		$	70.14
Outstanding at December 31, 2016					806,744		$	71.95
Granted	481,767		77.51		1,640,535		84.97
Forfeited	(29,141	)	73.02		(19,395	)	76.65
Vested	(376,961	)	72.96		(117,958	)	72.96
RSUs at April 3, 2016	1,044,109		72.44
Outstanding at April 1, 2017					2,309,926		81.15


	U.S. Plans						Non-U.S. Plans						For the Three Months Ended
	For the Three Months Ended						For the Three Months Ended						U.S. Plans						Non-U.S. Plans
	April 3, 2016			March 29, 2015			April 3, 2016			March 29, 2015			April 1, 2017			April 3, 2016			April 1, 2017			April 3, 2016
Service cost	$	3		$	1		$	6		$	5		$	3		$	3		$	4		$	6
Interest cost	53			5			21			21			45			53			16			21
Expected return on plan assets	(74		)	(5		)	(46		)	(43		)	(65		)	(74		)	(43		)	(46		)
Amortization of unrecognized losses/(gains)	—			1			—			—
Settlements	(6		)	—			—			—			—			(6		)	—			—
Special/contractual termination benefits													7			—			6			—
Other													2			—			(9		)	—
Net pension cost/(benefit)	$	(24	)	$	2		$	(19	)	$	(17	)	$	(8	)	$	(24	)	$	(26	)	$	(19	)


	Foreign Currency Translation Adjustments			Net Postemployment Benefit Plan Adjustments			Net Cash Flow Hedge Adjustments			Total			Foreign Currency Translation Adjustments			Net Postemployment Benefit Plan Adjustments			Net Cash Flow Hedge Adjustments			Total
	(in millions)
Balance as of January 3, 2016	$	(1,646	)	$	922		$	53		$	(671	)
Balance as of December 31, 2016													$	(2,412	)	$	772		$	12		$	(1,628	)
Foreign currency translation adjustments	265			—			—			265			309			—			—			309
Net deferred gains/(losses) on net investment hedges	(60		)	—			—			(60		)	(51		)	—			—			(51		)
Net postemployment benefit gains/(losses) arising during the period													—			(10		)	—			(10		)
Reclassification of net postemployment benefit losses/(gains)	—			(54		)	—			(54		)	—			(55		)	—			(55		)
Net deferred gains/(losses) on cash flow hedges	—			—			(18		)	(18		)	—			—			(34		)	(34		)
Net deferred losses/(gains) on cash flow hedges reclassified to net income	—			—			(22		)	(22		)	—			—			20			20
Total other comprehensive income/(loss)	205			(54		)	(40		)	111			258			(65		)	(14		)	179
Balance as of April 3, 2016	$	(1,441	)	$	868		$	13		$	(560	)
Balance as of April 1, 2017													$	(2,154	)	$	707		$	(2	)	$	(1,449	)


Accumulated Other Comprehensive Income/(Losses) Component	Reclassified from Accumulated Other Comprehensive Income/(Losses)						Affected Line Item in the Statement Where Net Income is Presented	Reclassified from Accumulated Other Comprehensive Income/(Losses)						Affected Line Item in the Statement Where Net Income/(Loss) is Presented
	For the Three Months Ended							For the Three Months Ended
	April 3, 2016			March 29, 2015				April 1, 2017			April 3, 2016
Losses/(gains) on cash flow hedges:
Foreign exchange contracts	$	(1	)	$	1		Net sales	$	—		$	(1	)	Net sales
Foreign exchange contracts	(29		)	(5		)	Cost of products sold	1			(29		)	Cost of products sold
Foreign exchange contracts	3			(1		)	Other expense/(income), net	15			3			Other expense/(income), net
Interest rate contracts	1			4			Interest expense	1			1			Interest expense
Losses/(gains) on cash flow hedges before income taxes	(26		)	(1		)		17			(26		)
Losses/(gains) on cash flow hedges income taxes	4			2				3			4
Losses/(gains) on cash flow hedges	$	(22	)	$	1			$	20		$	(22	)

Losses/(gains) on postemployment benefits:
Amortization of unrecognized losses/(gains)	$	—		$	1		(a)	$	—		$	—		(a)
Amortization of prior service costs/(credits)	(82		)	(1		)	(a)	(90		)	(82		)	(a)
Settlement and curtailments losses/(gains)	(6		)	—			(a)	—			(6		)	(a)
Losses/(gains) on postemployment benefits before income taxes	(88		)	—				(90		)	(88		)
Losses/(gains) on postemployment benefits income taxes	34			—				35			34
Losses/(gains) on postemployment benefits	$	(54	)	$	—			$	(55	)	$	(54	)


(a)	These components are included in the computation of net periodic postemployment benefit costs. See Note 8, Postemployment Benefits, for additional information.


	April 3, 2016																April 1, 2017
	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total Fair Value
	Assets		Liabilities		Assets		Liabilities		Assets		Liabilities		Assets		Liabilities		Assets		Liabilities		Assets		Liabilities		Assets		Liabilities		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	—	$	—	$	24	$	34	$	—	$	—	$	24	$	34	$	—	$	—	$	35	$	23	$	—	$	—	$	35	$	23
Cross-currency contracts	—		—		531		—		—		—		531		—		—		—		549		40		—		—		549		40
Derivatives not designated as hedging instruments:
Commodity contracts	26		22		—		6		—		—		26		28		16		39		2		3		—		—		18		42
Foreign exchange contracts	—		—		43		7		—		—		43		7		—		—		37		1		—		—		37		1
Cross-currency contracts	—		—		40		—		—		—		40		—		—		—		43		—		—		—		43		—
Total fair value	$	26	$	22	$	638	$	47	$	—	$	—	$	664	$	69	$	16	$	39	$	666	$	67	$	—	$	—	$	682	$	106



	Pro Forma Net Sales		Currency	Divestitures	Organic Net Sales		Price	Volume/Mix
United States	0.2	%	0.0 pp	0.0 pp	0.2	%	0.1 pp	0.1 pp
Canada	(8.5	)%	(10.0) pp	0.0 pp	1.5	%	3.7 pp	(2.2) pp
Europe	(11.7	)%	(3.9) pp	(4.1) pp	(3.7	)%	(2.9) pp	(0.8) pp
Rest of World	(15.6	)%	(26.0) pp	0.0 pp	10.4	%	2.1 pp	8.3 pp
	(3.8	)%	(4.5) pp	(0.4) pp	1.1	%	0.3 pp	0.8 pp



	Historical Heinz			Historical Kraft			Pro Forma Adjustments			Pro Forma
Net sales	$	2,478		$	4,352		$	—		$	6,830
Cost of products sold	1,631			2,989			(64		)	4,556
Gross profit	847			1,363			64			2,274
Selling, general and administrative expenses	338			622			32			992
Operating income	509			741			32			1,282
Interest expense	201			124			(20		)	305
Other expense/(income), net	(39		)	(17		)	—			(56		)
Income/(loss) before income taxes	347			634			52			1,033
Provision for/(benefit from) income taxes	68			204			20			292
Net income/(loss)	279			430			32			741
Net income/(loss) attributable to noncontrolling interest	3			—			—			3
Net income/(loss) attributable to Kraft Heinz	276			430			32			738
Preferred dividends	180			—			—			180
Net income/(loss) attributable to common shareholders	$	96		$	430		$	32		$	558

Basic common shares outstanding	377			588			222			1,187
Diluted common shares outstanding	399			593			226			1,218

Per share data applicable to common shareholders:
Basic earnings/(loss)	$	0.26		$	0.73		$	(0.52	)	$	0.47
Diluted earnings/(loss)	0.24			0.72			(0.50		)	0.46



	For the Three Months Ended
	March 29, 2015
Impact to cost of products sold:
Postemployment benefit costs^(a)	$	(64	)
Impact to cost of products sold	$	(64	)

Impact to selling, general and administrative expenses:
Depreciation and amortization^(b)	$	42
Compensation expense^(c)	13
Postemployment benefit costs^(a)	1
Deal costs^(d)	(24		)
Impact to selling, general and administrative expenses	$	32

Impact to interest expense:
Interest expense^(e)	$	(20	)
Impact to interest expense	$	(20	)