Kraft 2001 Annual Report Download - page 31

Kraft Foods Inc.
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Separation Programs: In October 2001, the Company announced
that it was offering a voluntary retirement program to certain
salaried employees in the United States. The program is expected
to terminate approximately 750 employees and will result in an
estimated pre-tax charge of approximately $140 million upon final
employee acceptance in the first quarter of 2002. This pre-tax
charge is part of the previously discussed $200 million to $300
million in pre-tax charges related to the integration of Nabisco.
During 1999, KFNA offered voluntary retirement incentive or
separation programs to certain eligible hourly and salaried
employees in the United States. Employees electing to terminate
employment under the terms of these programs were entitled to
enhanced retirement or severance benefits. Approximately 1,100
hourly and salaried employees accepted the benefits offered by
these programs and elected to retire or terminate. As a result, the
Company recorded a pre-tax charge of $157 million in 1999. This
charge was included in marketing, administration and research
costs in the consolidated statements of earnings for the following
segments: Cheese, Meals and Enhancers, $71 million; Oscar
Mayer and Pizza, $38 million; Biscuits, Snacks and Confectionery,
$2 million; and Beverages, Desserts and Cereals, $46 million.
Payments of pension and postretirement benefits are made in
accordance with the terms of the applicable benefit plans.
Severance benefits, which were paid over a period of time,
commenced upon dates of termination, which ranged from April
1999 to March 2000. The program and related payments were
completed during 2000. Salary and related benefit costs of
employees prior to their retirement or termination date were
expensed as incurred.
Consolidated Operating Results
The acquisition of Nabisco and subsequent IPO were significant
events that affect the comparability of earnings. In order to isolate
the financial effects of these events, and to provide a more
meaningful comparison of the Company’s results of operations, the
following tables and the subsequent discussion of the Company’s
consolidated operating results refer to results on a reported,
underlying and pro forma basis. Reported results include the
operating results of Nabisco in 2001, but not in 2000 and 1999.
Reported results also reflect average shares of common stock
outstanding during 2001, and reflect an average of 1.455 billion
shares outstanding during 2000 and 1999. Underlying results
include the operating results of Nabisco in 2001, but not in 2000
and 1999, and adjust for certain unusual items as detailed on
the tables, such as results from operations divested since the
beginning of 1999. Pro forma results assume the Company owned
Nabisco for all of 2000. In addition, pro forma results reflect
common shares outstanding of 1.735 billion based on the
assumption that shares issued immediately following the IPO were
outstanding during 2001 and 2000, and that, effective January 1,
2000, the net proceeds of the IPO were used to retire a portion of
a long-term note payable used to finance the Nabisco acquisition.
Pro forma results also adjust for certain unusual items as detailed
on the tables, such as the results from operations divested since
the beginning of 2000.
Consolidated Operating Results
(in millions)
Year Ended December 31, 2001 2000 1999
Reported volume (in pounds):
Kraft Foods North America
Cheese, Meals and Enhancers 5,219 4,820 4,874
Biscuits, Snacks and Confectionery 2,350 54 47
Beverages, Desserts and Cereals 3,421 3,117 2,883
Oscar Mayer and Pizza 1,519 1,507 1,433
Total Kraft Foods North America 12,509 9,498 9,237
Kraft Foods International
Europe, Middle East and Africa 2,826 2,829 2,816
Latin America and Asia Pacific 2,057 803 764
Total Kraft Foods International 4,883 3,632 3,580
Total reported volume 17,392 13,130 12,817
Reported operating revenues:
Kraft Foods North America
Cheese, Meals and Enhancers $10,256 $ 9,405 $ 9,360
Biscuits, Snacks and Confectionery 5,917 329 265
Beverages, Desserts and Cereals 5,370 5,266 5,074
Oscar Mayer and Pizza 3,563 3,461 3,198
Total Kraft Foods North America 25,106 18,461 17,897
Kraft Foods International
Europe, Middle East and Africa 6,339 6,824 7,676
Latin America and Asia Pacific 2,430 1,247 1,224
Total Kraft Foods International 8,769 8,071 8,900
Total reported operating
revenues $33,875 $26,532 $26,797
Reported operating
companies income:
Kraft Foods North America
Cheese, Meals and Enhancers $ 2,099 $ 1,845 $ 1,658
Biscuits, Snacks and Confectionery 966 100 73
Beverages, Desserts and Cereals 1,192 1,090 1,009
Oscar Mayer and Pizza 539 512 450
Total Kraft Foods North America 4,796 3,547 3,190
Kraft Foods International
Europe, Middle East and Africa 861 1,019 895
Latin America and Asia Pacific 378 189 168
Total Kraft Foods International 1,239 1,208 1,063
Total reported operating
companies income $ 6,035 $ 4,755 $ 4,253