Kraft 2004 Annual Report Download - page 3

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(b) Financial Information About Segments
The Company manufactures and markets packaged food products, consisting principally of
beverages, cheese, snacks, convenient meals and various packaged grocery products. The Company
manages and reports operating results through two units: Kraft North America Commercial and Kraft
International Commercial. The Company has operations in 68 countries and sells its products in more
than 155 countries. Kraft North America Commercial operates in the United States and Canada, and
manages its operations principally by product category, while Kraft International Commercial manages
its operations by geographic region.
During January 2004, the Company announced a new global organization structure, which resulted
in new segments. During the fourth quarter of 2004, following the sale of its sugar confectionery
business, the Company realigned its North American segments. Kraft North America Commercial’s new
segments are U.S. Beverages; U.S. Cheese, Canada & North America Foodservice; U.S. Convenient
Meals; U.S. Grocery; and U.S. Snacks & Cereals. Kraft International Commercial’s segments are Europe,
Middle East & Africa; and Latin America & Asia Pacific. The new segment structure in North America
reflects a shift of certain divisions and brands among segments to more closely align these businesses
to consumer sectors, to provide more focus on the separate beverage and grocery businesses, and to
benefit from synergies in grain based products. Historical data have been restated to reflect the new
segment structure.
Net revenues and operating companies income* attributable to each segment (together with a
reconciliation to consolidated operating income) for each of the last three years are set forth in Note 14 to
the Company’s consolidated financial statements contained in Part II hereof.
The relative percentages of operating companies income attributable to each reportable segment
were as follows:
For the Years Ended
December 31,
2004 2003 2002
Kraft North America Commercial:
U.S. Beverages ......................................... 10.0% 10.4% 9.4%
U.S. Cheese, Canada & North America Foodservice .............. 20.6% 21.0% 20.5%
U.S. Convenient Meals ................................... 16.1% 13.5% 12.8%
U.S. Grocery .......................................... 18.6% 14.8% 14.4%
U.S. Snacks & Cereals ................................... 15.3% 17.3% 19.1%
Kraft International Commercial:
Europe, Middle East & Africa ............................... 14.2% 16.5% 15.5%
Latin America & Asia Pacific ............................... 5.2% 6.5% 8.3%
Total Kraft Foods Inc. .................................. 100.0% 100.0% 100.0%
* The Company’s management uses operating companies income, which is defined as operating
income before general corporate expenses and amortization of intangibles, to evaluate segment
performance and allocate resources. Management believes it is appropriate to disclose this
measure to help investors analyze business performance and trends of the various business
segments.
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