CHICAGO — The Kraft Heinz Co. on June 7 filed corrected financial reports for the fiscal years 2016 and 2017 as well as the first three quarters of fiscal 2018 when the company filed its 2018 annual report with the Securities and Exchange Commission. The restatements came after the S.E.C. subpoenaed the company last October about problems in its procurement area and a Kraft Heinz internal investigation that followed.
“We are pleased that Kraft Heinz is returning to a path of normalization,” said Alex Behring, chairman of the board of directors for Pittsburgh-based Kraft Heinz. “The adjustments to correct prior year misstatements are in line with the preliminary amounts discussed in our form 8-K filed on May 6, 2019.”
The impact of the restatements to previously reported amounts from 2015 to 2018 is less than 1% of net income or net loss for each period. The company’s 2018 annual report includes restated audited consolidated financial statements as of Dec. 30, 2017, and for the years ended Dec. 30, 2016, and Dec. 31, 2017, as well as restated unaudited interim financial statements for the quarterly periods ended April 1, 2017; July 1, 2017; Sept. 30, 2017; March 31, 2018; June 30, 2018 and Sept. 29, 2018.
The subpoena from the S.E.C. related to the company’s procurement area, specifically the accounting policies, procedures and internal controls, which included agreements, side agreements and changes to agreements with suppliers. A Kraft Heinz internal investigation identified multiple employees in the procurement area who engaged in misconduct. Misstatements increased the cost of products sold in prior financial periods. Misstatements principally related to the incorrect timing of when certain cost and rebate elements associated with supplier contracts and related arrangements initially were recognized. The internal investigation did not identify any misconduct by anybody in the senior management team.
The misstatements of costs of products sold were $24 million for fiscal 2015, $35 million for fiscal 2016, $94 million for fiscal 2017 and $22 million for fiscal 2018, according to the Kraft Heinz international investigation. The company in fiscal 2016 had net income of $3,416 million, or $2.81 per share, and net sales of $26,300 million, according to the restatement. Restated results for 2017 were net income of $10,941 million, or $8.98 per share, and net sales of $26,076 million. Results for 2018 were a net loss of $10,192 million and net sales of $26,268 million.
Kraft Heinz said it has completed its internal investigation and continues to cooperate with the S.E.C. in the S.E.C. investigation.
Kraft Heinz on May 17 received a notice from Nasdaq that the company was not in compliance with a Nasdaq listing rule because it had yet to file a report for the first quarter of the current fiscal year. Kraft Heinz on June 7 said it expects to file its quarterly report for the quarter ended March 30 on or before July 31.