Kraft Heinz CoKHC
Kraft Heinz Co Leases Disclosure
Leases
We have operating and finance leases, primarily for warehouse, production, and office facilities and equipment. Our lease contracts have remaining contractual lease terms of up to 16 years, some of which include options to extend the term by up to 15 years. We include renewal options that are reasonably certain to be exercised as part of the lease term. Additionally, some lease contracts include termination options. We do not expect to exercise the majority of our termination options and generally exclude such options when determining the term of our leases. See Note 2, Significant Accounting Policies, for our lease accounting policy.
The components of our lease costs were (in millions):
| December 27, 2025 | December 28, 2024 | December 30, 2023 | |||||||||||||||
| Operating lease costs | $ | 144 | $ | 141 | $ | 152 | |||||||||||
| Finance lease costs: | |||||||||||||||||
| Amortization of right-of-use assets | 27 | 27 | 28 | ||||||||||||||
| Interest on lease liabilities | 7 | 7 | 5 | ||||||||||||||
| Short-term lease costs | 6 | 9 | 12 | ||||||||||||||
| Variable lease costs | 388 | 334 | 659 | ||||||||||||||
| Sublease income | (8) | (9) | (10) | ||||||||||||||
| Total lease costs | $ | 564 | $ | 509 | $ | 846 | |||||||||||
Our variable lease costs primarily consist of inventory related costs, such as materials, labor, and overhead components in our manufacturing and distribution arrangements that also contain a fixed component related to an embedded lease. These variable lease costs are determined based on usage or output or may vary for other reasons such as changes in material prices, taxes, or insurance. Certain of our variable lease costs are based on fluctuating indices or rates. These leases are included in our ROU assets and lease liabilities based on the index or rate at the lease commencement date. The future variability in these indices and rates is unknown; therefore, it is excluded from our future minimum lease payments and is not a component of our ROU assets or lease liabilities.
We had no losses/(gains) on sale and leaseback transactions in 2025, 2024, and 2023.
Supplemental balance sheet information related to our leases was (in millions, except lease term and discount rate):
| December 27, 2025 | December 28, 2024 | ||||||||||||||||||||||
| Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||||||||||||
| Right-of-use assets | $ | 520 | $ | 158 | $ | 539 | $ | 148 | |||||||||||||||
| Lease liabilities (current) | 126 | 30 | 117 | 25 | |||||||||||||||||||
| Lease liabilities (non-current) | 427 | 130 | 464 | 126 | |||||||||||||||||||
| Weighted average remaining lease term | 6 years | 8 years | 7 years | 9 years | |||||||||||||||||||
| Weighted average discount rate | 3.9 | % | 4.3 | % | 3.9 | % | 4.6 | % | |||||||||||||||
Operating lease ROU assets are included in and finance lease ROU assets are included in property, plant and equipment, net, on our consolidated balance sheets. The current portion of operating lease liabilities is included in , and the current portion of finance lease liabilities is included in the on our consolidated balance sheets. The non-current portion of operating lease liabilities is included in , and the non-current portion of finance lease liabilities is included in on our consolidated balance sheets.
Cash flows arising from lease transactions were (in millions):
| December 27, 2025 | December 28, 2024 | December 30, 2023 | |||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
| Operating cash inflows/(outflows) from operating leases | $ | (147) | $ | (144) | $ | (156) | |||||||||||
| Operating cash inflows/(outflows) from finance leases | (7) | (7) | (5) | ||||||||||||||
| Financing cash inflows/(outflows) from finance leases | (30) | (32) | (26) | ||||||||||||||
| Right-of-use assets obtained in exchange for lease liabilities: | |||||||||||||||||
| Operating leases | 79 | 64 | 44 | ||||||||||||||
| Finance leases | 41 | 48 | 25 | ||||||||||||||
Future minimum lease payments for leases in effect at December 27, 2025 were (in millions):
| Operating Leases | Finance Leases | ||||||||||
| 2026 | $ | 145 | $ | 38 | |||||||
| 2027 | 114 | 31 | |||||||||
| 2028 | 94 | 39 | |||||||||
| 2029 | 72 | 18 | |||||||||
| 2030 | 55 | 13 | |||||||||
| Thereafter | 149 | 49 | |||||||||
| Total future undiscounted lease payments | 629 | 188 | |||||||||
| Less imputed interest | (76) | (28) | |||||||||
| Total lease liability | $ | 553 | $ | 160 | |||||||
At December 27, 2025, our operating and finance leases that had not yet commenced were approximately $210 million. This balance is primarily composed of a non-cancellable synthetic lease with a future minimum lease commitment of approximately $176 million. See below for discussion of our synthetic lease arrangement.
Synthetic Lease Arrangements:
In June 2023, we entered into a non-cancellable synthetic lease for a distribution facility, for which we are the construction agent, for which we now anticipate the estimated construction cost to be approximately $625 million. The lease will commence upon completion of construction of the facility which is now expected to be in the later part of 2027. The term of the lease is five years after commencement. At the end of the lease term, we will be required to either purchase the facility or, in the event that option is not elected, to remarket the facility. Upon lease commencement, the lease classification, right-of-use asset, and lease liability will be determined and recorded. The lease arrangement contains a residual value guarantee of 100% of the total construction cost. The construction agreement and lease contain covenants that are consistent with our Senior Credit Facility as disclosed in Note 17, Debt.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 17, 2021 | |
| 2019 | Feb 14, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.