Kraft 2005 Annual Report Download - page 35

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MERRILL CORPORATION ABLIJDE// 7-MAR-06 14:42 DISK126:[06CHI5.06CHI1135]DK1135A.;21
mrll.fmt Free: 85D*/300D Foot: 0D/ 0D VJ RSeq: 5 Clr: 0
DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;51
KRAFT FOODS-FSC CERTIFIED-10K/AR Proj: P1102CHI06 Job: 06CHI1135 File: DK1135A.;21
Merrill Corporation/Chicago (312) 786-6300 Page Dim: 8.250X 10.750Copy Dim: 38. X 54.3
The Company’s reported effective income tax rate decreased by 2.6 percentage points to 32.3%,
resulting from an $81 million favorable resolution of an outstanding tax item and the reversal of
$35 million of tax accruals that are no longer required due to tax events that occurred during 2004.
Earnings from continuing operations of $2,669 million decreased $710 million (21.0%), due
primarily to lower operating income, partially offset by a lower effective income tax rate. Diluted EPS from
continuing operations, which was $1.55, decreased by 20.5%.
Earnings from discontinued operations, net of income tax, decreased $101 million, resulting in a net
loss of $4 million in 2004. The decrease was due primarily to pre-tax non-cash asset impairment charges
in 2004 of $107 million ($69 million after-tax) and an intangible pre-tax asset impairment charge of
$17 million ($11 million after-tax).
Net earnings of $2,665 million decreased $811 million (23.3%). Diluted EPS from net earnings,
which was $1.55, decreased by 22.9%.
Operating Results by Reportable Segment
Kraft North America Commercial
For the Years Ended
December 31,
2005 2004 2003
(in millions)
Volume (in pounds):
U.S. Beverages ..................................... 3,109 2,968 2,634
U.S. Cheese, Canada & North America Foodservice ........... 4,493 4,527 4,373
U.S. Convenient Meals ................................ 2,267 2,205 2,171
U.S. Grocery ....................................... 1,709 1,690 1,678
U.S. Snacks & Cereals ................................ 2,509 2,424 2,389
Volume (in pounds) ................................... 14,087 13,814 13,245
Net revenues:
U.S. Beverages ..................................... $ 2,852 $ 2,555 $ 2,433
U.S. Cheese, Canada & North America Foodservice ........... 7,774 7,420 6,716
U.S. Convenient Meals ................................ 4,497 4,250 4,058
U.S. Grocery ....................................... 2,421 2,425 2,388
U.S. Snacks & Cereals ................................ 5,749 5,410 5,342
Net revenues ........................................ $23,293 $22,060 $20,937
Operating companies income:
U.S. Beverages ..................................... $ 458 $ 479 $ 630
U.S. Cheese, Canada & North America Foodservice ........... 1,018 989 1,271
U.S. Convenient Meals ................................ 741 771 817
U.S. Grocery ....................................... 743 894 894
U.S. Snacks & Cereals ................................ 871 737 1,046
Operating companies income ........................... $ 3,831 $ 3,870 $ 4,658
2005 compared with 2004
The following discussion compares Kraft North America Commercial’s operating results for 2005
with 2004.
Volume increased 2.0% including the benefit of 53 weeks in 2005 results. Excluding acquisitions
and divestitures, and the 53rd week of shipments, volume was essentially flat.
34
6 C Cs: 48970