Company: KHC
Filing Date: 2025-07-30
Form Type: 10-Q
Source: 0001637459-25-000152
Chunk: 95

Company: Kraft Heinz Co
Filing Date: 2025-07-30
Form: 10-Q
Item: Part I, Item 8
Chunk 95
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 more than 20% excess fair value over carrying amount as of our latest impairment test, this amount is also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.

10

As of the first day of the third quarter of 2025, certain organizational changes occurred that resulted in a change to the reporting unit composition within our North America segment. Our six North America reporting units — TMS, HD, MC, AFH, CNAC, and Other North America — were reorganized into the five reporting units: Elevation; Hydration, Desserts, & Meals (“HDM”); Meat, Cheese, Coffee, & Snacks (“MCCS”); Canada; and Other North America. We have determined these changes represent a change in composition for the TMS, HD, MC, AFH, and CNAC reporting units as they will be reorganized into Elevation, HDM, MCCS, and Canada reporting units and will require us to reallocate goodwill from the former reporting units to the new reporting units. As a result of this organizational change, we will perform a pre-reorganization impairment test on the impacted reporting units, and a post-reorganization impairment test that will occur in conjunction with our annual impairment test in the third quarter of 2025. As these transition tests will incorporate changes to our reporting unit composition, as well as updates to our estimated future cash flows, among other assumptions, there is a risk that future impairment charges may occur. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions, and to consider the market multiples of certain peer and guideline companies. These assumptions and estimates include estimated future annual cash flows (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, discount rates, long-term growth rates, royalty rates, and other market factors. If current expectations of future growth rates and margins are not met, if market factors outside of our control change; such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units might become impaired in the future. Additionally, any decisions to divest certain non-str