Kraft 2005 Annual Report Download - page 88

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MERRILL CORPORATION ABLIJDE// 7-MAR-06 14:42 DISK126:[06CHI5.06CHI1135]EC1135A.;7
mrll.fmt Free: 235DM/0D Foot: 0D/ 0D VJ RSeq: 3 Clr: 0
DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;51
KRAFT FOODS-FSC CERTIFIED-10K/AR Proj: P1102CHI06 Job: 06CHI1135 File: EC1135A.;7
Merrill Corporation/Chicago (312) 786-6300 Page Dim: 8.250X 10.750Copy Dim: 38. X 54.3
Note 18. Contingencies:
Kraft and its subsidiaries are parties to a variety of legal proceedings arising out of the normal
course of business, including a few cases in which substantial amounts of damages are sought. While
the results of litigation cannot be predicted with certainty, management believes that the final outcome of
these proceedings will not have a material adverse effect on the Company’s consolidated financial
position, results of operations or cash flows.
Third-Party Guarantees
At December 31, 2005, the Company’s third-party guarantees, which are primarily derived from
acquisition and divestiture activities, approximated $27 million. Substantially all of these guarantees
expire through 2013, with $14 million expiring during 2006. The Company is required to perform under
these guarantees in the event that a third party fails to make contractual payments or achieve
performance measures. The Company has a liability of $17 million on its consolidated balance sheet at
December 31, 2005, relating to these guarantees.
Note 19. Quarterly Financial Data (Unaudited):
2005 Quarters
First Second Third Fourth
(in millions, except per share data)
Net revenues .................................... $8,059 $8,334 $8,057 $9,663
Gross profit ..................................... $2,955 $3,059 $2,856 $3,398
Earnings from continuing operations ................... $ 699 $ 758 $ 674 $ 773
Earnings (loss) from discontinued operations ............. 14 (286)
Net earnings ..................................... $ 713 $ 472 $ 674 $ 773
Weighted average shares for diluted EPS ................ 1,703 1,698 1,689 1,676
Per share data:
Basic EPS:
Continuing operations ........................... $ 0.41 $ 0.45 $ 0.40 $ 0.46
Discontinued operations ......................... 0.01 (0.17)
Net earnings ................................. $ 0.42 $ 0.28 $ 0.40 $ 0.46
Diluted EPS:
Continuing operations ........................... $ 0.41 $ 0.45 $ 0.40 $ 0.46
Discontinued operations ......................... 0.01 (0.17)
Net earnings ................................. $ 0.42 $ 0.28 $ 0.40 $ 0.46
Dividends declared ................................ $0.205 $0.205 $ 0.23 $ 0.23
Market price—high ................................ $35.65 $33.15 $32.17 $30.80
—low................................. $31.34 $30.11 $29.36 $27.88
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