Kraft 2001 Annual Report Download - page 35

Kraft Foods Inc.
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Biscuits, Snacks and Confectionery: Reported volume in 2001
increased more than 100% over 2000, due to the acquisition of
Nabisco. On a pro forma basis, volume in 2001 increased 1.5%
over 2000. Excluding the 53rd week of shipments in 2000, volume
increased 1.6%, due primarily to new product introductions in
biscuits, partially offset by lower shipments of snack nuts.
During 2001, reported operating revenues increased $5.6 billion
or more than 100% over 2000, due to the acquisition of Nabisco.
On a pro forma basis, operating revenues increased 2.7%, due
primarily to higher volume driven by new biscuit products and
higher pricing of biscuit and confectionery products.
Reported operating companies income for 2001 increased $866
million, or more than 100% over 2000, due primarily to the
acquisition of Nabisco ($925 million), partially offset by higher
marketing, administration and research costs ($39 million). On a
pro forma basis, operating companies income increased 24.6%,
due primarily to higher volume from new biscuit products, lower
commodity costs for snack nuts, and productivity and Nabisco
synergy savings.
Beverages, Desserts and Cereals: Reported volume in 2001
increased 9.8% over 2000, due primarily to growth in beverages.
On a pro forma basis, volume in 2001 increased 7.7% over 2000.
Excluding the 53rd week of shipments in 2000, volume increased
9.3%, due primarily to increased shipments of ready-to-drink
beverages, benefiting from the introduction of new products.
Desserts volume was below the prior year due to lower shipments
of dry packaged desserts and frozen toppings. Cereal volume
declined due primarily to weak category performance and
increased competition in the ready-to-eat cereal category.
During 2001, reported operating revenues increased $104 million
(2.0%) over 2000, due primarily to the acquisition of Nabisco ($93
million), the acquisition of Balance Bar Co. ($20 million), the shift in
CDC revenues ($22 million) and higher volume/mix ($17 million),
partially offset by lower pricing ($49 million, due primarily to coffee
commodity-related price reductions). On a pro forma basis,
operating revenues decreased 0.5%, reflecting commodity-related
price reductions on coffee products and lower shipments in
desserts and cereals.
Reported operating companies income for 2001 increased $102
million (9.4%) over 2000, primarily reflecting higher margins ($87
million), the acquisition of Nabisco ($32 million), lower marketing,
administration and research costs ($21 million) and the shift in CDC
income ($7 million), partially offset by integration costs ($12 million).
On a pro forma basis, operating companies income increased 7.0%.
Oscar Mayer and Pizza: Reported volume in 2001 increased
0.8% over 2000. Excluding the 53rd week of shipments in 2000,
volume increased 2.3%, due to volume gains in processed meats
and pizza. The processed meats business recorded volume gains
in luncheon meats, hot dogs, bacon and soy-based meat
alternatives. Volume in the pizza business increased, driven by
new products.
During 2001, reported operating revenues increased $102 million
(2.9%) over 2000 due primarily to higher volume/mix ($75 million),
the shift in CDC revenues ($12 million) and the acquisition of Boca
Burger, Inc.
Reported operating companies income for 2001 increased $27
million (5.3%) over 2000 primarily reflecting higher volume/mix ($45
million), lower marketing, administration and research costs ($22
million) and the shift in CDC income, partially offset by unfavorable
margins ($36 million, due primarily to higher meat and cheese
commodity costs).
2000 compared with 1999
KFNA’s reported volume for 2000 increased 2.8% over 1999. On
an underlying basis, volume increased 3.8%, including the benefit
related to the 53rd week of shipments, partially offset by a
decrease related to trade inventory reductions in 2000.
Reported operating revenues increased $564 million (3.2%) over
1999, due primarily to higher volume/mix ($465 million), the impact
of acquisitions ($148 million) and higher pricing ($79 million), partially
offset by the shift in CDC revenues ($142 million).
Reported operating companies income increased $357 million
(11.2%) over 1999, due primarily to higher margins ($318 million,
driven by higher pricing and lower commodity-related costs), the
1999 pre-tax charge for separation programs ($157 million) and
higher volume/mix ($240 million), partially offset by higher
marketing, administration and research costs ($310 million, the
majority of which related to higher marketing expenses) and the
shift in CDC income ($54 million). On an underlying basis, operating
companies income increased 7.8%.
The following discusses operating results within each of KFNA’s
reportable segments.
Cheese, Meals and Enhancers: Reported volume in 2000
decreased 1.1% from 1999, due primarily to a decrease in the United
States food service business, which more than offset an increase
in retail businesses. The decrease in food service volume was due
to the expiration of an exclusive distribution agreement, the loss
of a contract to supply cold cuts and the pruning of low margin
products. Cheese volume increased over 1999 with gains in
process, natural and cream cheese products. Meals volume was
lower in 2000, reflecting lower shipments of Mexican dinners and
rice. Enhancers volume decreased slightly. Volume in Canada grew
due to new product introductions. On an underlying basis, volume
decreased 0.3%.
Reported operating revenues increased $45 million (0.5%) over
1999, due primarily to higher volume/mix ($99 million, primarily
favorable product mix from the pruning of low margin products)
and favorable currency movements ($30 million), partially offset
by the shift in CDC revenues ($68 million) and the impact of
divestitures ($15 million).