Company: KHC
Filing Date: 2025-07-30
Form Type: 10-Q
Source: 0001637459-25-000152
Chunk: 33

Company: Kraft Heinz Co
Filing Date: 2025-07-30
Form: 10-Q
Item: Part I, Item 1
Chunk 33
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 calculation of the fair value of derivative financial instruments takes into consideration the risk of nonperformance, including counterparty credit risk.Net Investment Hedging:At June 28, 2025, we had the following items designated as net investment hedges:•Non-derivative foreign-currency denominated debt with principal amounts of €1.2 billion; and•Cross-currency contracts with notional amounts of €2.2 billion ($2.4 billion), C$1.3 billion ($900 million), CNY4.0 billion ($549 million), and JPY9.6 billion ($68 million).The components of the gains and losses on our net investment in these designated foreign operations, driven by changes in foreign exchange rates, are economically offset by fair value movements on the effective portion of our cross-currency contracts and foreign exchange contracts.Cash Flow Hedge Coverage:At June 28, 2025, we had entered into foreign exchange contracts designated as cash flow hedges for periods not exceeding the next 2 years and into cross-currency contracts designated as cash flow hedges for periods not exceeding the next 3 years.Fair Value Hedge Coverage:At June 28, 2025, we had fair value hedges of the foreign currency exposure of both intercompany and external foreign currency denominated loans: •Foreign exchange contracts with notional amounts of £400 million ($549 million) and the carrying value of the hedged item of $548 million is included in the long-term debt on the condensed consolidated balance sheets; and•Cross-currency contracts with notional amounts of £683 million ($864 million) and MXN4.8 billion ($251 million) and carrying value of intercompany hedged items of $1.2 billion.The gains/(losses) on the hedged item, driven by changes in foreign exchange rates, are economically offset by fair value movements on the effective portion of our cross-currency and foreign exchange contracts, which are reported in the same income statement line item in the same period. The amounts excluded from the assessment of effectiveness are recognized in earnings over the life of the hedge on a systematic and rational basis in the same line item as the hedged items. Deferred Hedging Gains and Losses on Fair Value and Cash Flow Hedges:Based on our valuation at June 28, 2025 and assuming market rates remain constant through contract maturities, we expect transfers to net income/(loss) of the existing losses reported in accumulated other comprehensive income/(loss