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The Kraft Heinz: Unaudited Condensed Combined Financial Information

The following excerpt is from the company's SEC filing.

The following unaudited pro forma condensed combined financial information (the “financial information”) is presented to illustrate the estimated effects of:

(1) the merger consummated on July 2, 2015 (the “Merger Date”) pursuant to which, through a series of transactions, Kraft Foods Group, Inc. (“Kraft”) merged with and into a wholly owned subsidiary of H.J. Heinz Holding Corporation (“Heinz”) (the “2015 Merger”);

(2) the related equity investments of the Sponsors (as defined below); and

(3) the assumptions and adjustments described in the accompanying notes to the financial information.

At the closing of the 2015 Merger, Heinz was renamed The Kraft Heinz Company (“Kraft Heinz,” “we,” “us,” and “our”).

Before the consummation of the 2015 Merger, Heinz had been controlled by Berkshire Hathaway Inc. (“Berkshire Hathaway”) and 3G Global Food Holdings, L.P. (“3G Capital,” and together with Berkshire Hathaway, the “Sponsors”) following their acquisition of H.J. Heinz Company on June 7, 2013 (the “2013 Merger”). The Sponsors initially owned 850 million shares of common stock in Heinz; Berkshire Hathaway also held a warrant to purchase 46 million additional shares of common stock, which it exercised in June 2015. Prior to, but in connection with, the 2015 Merger, the Sponsors made equity investments whereby they purchased an additional 500 million newly issued shares of Heinz common stock for an aggregate purchase price of approximately $10.0 billion.

Immediately prior to the consummation of the 2015 Merger, each share of Heinz issued and outstanding common stock was reclassified and changed into 0.443332 of a share of Kraft Heinz common stock (the “Conversion”). In the 2015 Merger, all outstanding shares of Kraft common stock (other than deferred shares and restricted shares) were converted into the right to receive, on a one-for-one basis, shares of Kraft Heinz common stock. Upon the completion of the 2015 Merger, the Kraft shareholders of record immediately prior to the closing received a special cash dividend of $16.50 per share.

For additional information on the 2015 Merger, please refer to our Form 10-Q for the quarter ended June 28, 2015 and Kraft Heinz's other filings with the Securities and Exchange Commission (the “SEC”).

The following unaudited pro forma condensed combined statements of income by quarter for 2014 and for the first two quarters of 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 this financial information.

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. 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 Conversion;

The exchange of one share of Kraft Heinz common stock for each share of Kraft common stock; and

Conformance of accounting policies.

The 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 Merger Date for the preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed. 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 these preliminary estimates.

The historical consolidated financial statements have been adjusted in the accompanying financial information 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.

The financial information has been prepared based upon currently available information and assumptions deemed appropriate by our management. This financial information is not necessarily indicative of what our results of operations actually would have been had the 2015 Merger been completed as of December 30, 2013. In addition, the financial information is not indicative of future results or current financial conditions and does not reflect any anticipated synergies, operating efficiencies, cost savings or any integration costs that may result from the 2015 Merger.

The financial information should be read in conjunction with historical financial statements and accompanying notes filed with the SEC. We made certain reclassifications to the historical Kraft and Heinz results to align accounting policies and eliminate intercompany sales in all periods presented. This included the following changes to historical Heinz results to harmonize our accounting and reporting as a combined company:

We made a...


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