Company: KHC
Filing Date: 2025-04-29
Form Type: 10-Q
Source: 0001637459-25-000061
Chunk: 148

Company: Kraft Heinz Co
Filing Date: 2025-04-29
Form: 10-Q
Item: Part I, Item 2
Chunk 148
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, MC, and CNAC. Our WE reporting unit had 10-20% fair value over carrying amount with an aggregate goodwill carrying amount of $2.2 billion as of the latest impairment test. Our HD and Asia reporting units had 20-50% fair value over carrying amount with an aggregate goodwill carrying amount of $4.6 billion as of the latest impairment test. Our reporting units that have less than 5% excess fair value over carrying amount as of the latest impairment test are considered at a heightened risk of future impairments and include our TMS and AFH reporting units, which had an aggregate goodwill carrying amount of $18.6 billion. Our four remaining reporting units had no goodwill carrying amount at the time of the 2024 annual impairment test.

We generally utilize the discounted cash flow method under the income approach to estimate the fair value of our reporting units. Some of the more significant assumptions inherent in estimating the fair values include the estimated future annual net cash flows for each reporting unit (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, long-term growth rates, royalty rates, a discount rate that appropriately reflects the risks inherent in each future cash flow stream, and other market factors. We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product category growth rates, management’s plans, and guideline companies.

The discount rates and long-term growth rates used to estimate the fair values of our reporting units with 20% or less excess fair value over carrying amount, as well as the goodwill carrying amounts, as of their latest impairment test were as follows:

Goodwill Carrying Amount(in billions)Discount RateLong-Term Growth RateMinimumMaximumMinimumMaximumReporting units$24.1 7.8 %12.0 %1.3 %4.0 %

Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based on the facts and circumstances present at each annual and interim impairment test date. Additionally, these assumptions are generally interdependent and do not change in isolation. However, as it is reasonably possible that changes in assumptions could occur, as a sensitivity measure, we have presented the estimated effects of isolated changes in discount rates and long-term growth rates on the fair values of our reporting units with 20% or less excess fair value over carrying amount. These estimated changes in fair value are not