Kraft 2001 Annual Report Download - page 34

Kraft Foods Inc.
28
Kraft Foods North America (continued)
(in millions)
Year Ended December 31, 2001 2000 1999
Reported operating
companies income:
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 reported operating
companies income 4,796 3,547 3,190
Operating companies income of
businesses sold:
Cheese, Meals and Enhancers (4) (8)
Estimated impact of century
date change:
Cheese, Meals and Enhancers 15 (15)
Biscuits, Snacks and Confectionery 1(1)
Beverages, Desserts and Cereals 7(7)
Oscar Mayer and Pizza 4(4)
Loss on sale of a North American
food factory and integration costs:
Cheese, Meals and Enhancers 63
Biscuits, Snacks and Confectionery 2
Beverages, Desserts and Cereals 12
Oscar Mayer and Pizza 5
Separation programs:
Cheese, Meals and Enhancers 71
Biscuits, Snacks and Confectionery 2
Beverages, Desserts and Cereals 46
Oscar Mayer and Pizza 38
Underlying operating
companies income 4,878 3,570 $3,312
Nabisco operating companies income:
Cheese, Meals and Enhancers 201
Biscuits, Snacks and Confectionery 676
Beverages, Desserts and Cereals 28
Pro forma operating
companies income $4,878 $4,475
2001 compared with 2000
KFNA’s reported volume for 2001 increased 31.7% over 2000, due
primarily to the acquisition of Nabisco. On a pro forma basis,
volume for 2001 increased 2.1%, or 3.4% excluding the 53rd week
of shipments in 2000. The increase was due primarily to higher
shipments across all segments and reflects contributions from
new products.
Reported operating revenues increased $6.6 billion (36.0%) over
2000, due primarily to the acquisition of Nabisco ($6.6 billion)
and the shift in CDC revenues ($71 million), partially offset by
unfavorable currency movements ($62 million). On a pro forma
basis, operating revenues increased 0.8%, due primarily to higher
revenues from the Biscuits, Snacks and Confectionery segment
and the Oscar Mayer and Pizza segment, partially offset by the
impact of the 53rd week in 2000.
Reported operating companies income for 2001 increased $1,249
million (35.2%) over 2000, due primarily to the acquisition of
Nabisco ($1.2 billion), lower marketing, administration and research
costs ($177 million) and the shift in CDC income ($27 million),
partially offset by lower margins ($39 million, driven by higher dairy
commodity-related costs) and the loss on the sale of a North
American food factory and integration costs ($82 million). On a
pro forma basis, operating companies income increased 9.0%.
The following discusses operating results within each of KFNA’s
reportable segments.
Cheese, Meals and Enhancers: Reported volume in 2001
increased 8.3% over 2000, due primarily to the acquisition of
Nabisco. On a pro forma basis, volume in 2001 decreased 0.6%
due primarily to the 53rd week of shipments in 2000. Excluding the
53rd week of shipments in 2000, volume increased 0.9%, as
volume gains in meals, enhancers and Canada were partially offset
by declines in cheese and food services. Meals recorded volume
gains, reflecting higher shipments of macaroni & cheese dinners.
Enhancers also recorded volume gains, reflecting higher shipments
of spoonable and pourable dressings. In Canada, volume grew
on higher shipments of branded products. In cheese, shipments
decreased due primarily to the Company’s decision to exit the
lower-margin, non-branded cheese business. Volume also declined
in process cheese loaves and cream cheese, as retailers continued
to reduce trade inventory levels, partially offset by higher volume
in grated and natural cheese. In U.S. food service, shipments
declined due to weakness in the economy and the Company’s
exit from lower-margin businesses.
During 2001, reported operating revenues increased $851 million
(9.0%) over 2000, due primarily to the acquisition of Nabisco ($861
million), higher pricing ($89 million, primarily related to higher dairy
commodity costs) and the shift in CDC revenues ($34 million),
partially offset by lower volume/mix ($65 million) and unfavorable
currency movements ($62 million). On a pro forma basis, operating
revenues decreased slightly from the comparable period of 2000,
as unfavorable currency and lower volume/mix were partially offset
by higher pricing in cheese and food service.
Reported operating companies income for 2001 increased $254
million (13.8%) over 2000, due primarily to the acquisition of
Nabisco ($234 million), lower marketing, administration and
research costs ($173 million, primarily lower marketing expense) and
the shift in CDC income ($15 million), partially offset by unfavorable
margins due to higher dairy commodity costs ($81 million) and the
loss on the sale of a North American food factory and integration
costs ($63 million). Marketing expense decreased due to lower
price promotions on cheese products as cheese commodity costs
increased. This followed a period of heavy price promotion in 2000,
when low cheese commodity costs drove a period of intense price
competition. On a pro forma basis, operating companies income
increased 5.1%.