Kraft 2006 Annual Report Download - page 101

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During 2006 and 2005, the Company recorded the following pre-tax charges or (gains) in earnings from continuing operations:
2006 Quarters
First
Second
Third
Fourth
(in millions)
Asset impairment and exit costs $ 202 $ 226 $ 125 $ 449
Losses (gains) on sales of businesses 3 8 3 (131)
Gain on redemption of United Biscuits investment (251)
$ 205 $ 234 $ (123) $ 318
2005 Quarters
First
Second
Third
Fourth
(in millions)
Asset impairment and exit costs $ 150 $ 29 $ 26 $ 274
(Gains) losses on sales of businesses (116) 1 7
$ 34 $ 30 $ 26 $ 281
As discussed in Note 13.Income Taxes, the Company has recognized income tax benefits in the consolidated statements of earnings during 2006 and 2005 as
a result of various tax events, including a reimbursement from Altria Group, Inc. in cash for unrequired federal tax reserves and net state tax reversals due to the
conclusion of an audit of Altria Group, Inc.'s consolidated federal income tax returns for the years 1996 through 1999, and benefits earned under the provisions
of the American Jobs Creation Act.
Note 20. Subsequent Event:
On January 31, 2007, the Altria Group, Inc. Board of Directors announced that Altria Group, Inc. plans to spin off all of its remaining interest (89.0%) in the
Company on a pro rata basis to Altria Group, Inc. stockholders in a tax-free transaction. The distribution of all the Kraft shares owned by Altria Group, Inc. will
be made on March 30, 2007 ("Distribution Date"), to Altria Group, Inc. stockholders of record as of the close of business on March 16, 2007. Based on the
number of shares of Altria Group, Inc. outstanding at December 31, 2006, the distribution ratio would be approximately 0.7 shares of Kraft Class A common
stock for every share of Altria Group, Inc. common stock outstanding. Prior to the distribution, Altria Group, Inc. will convert its Class B shares of Kraft
common stock, which carry ten votes per share, into Class A shares of Kraft, which carry one vote per share. Following the distribution, only Class A common
shares of Kraft will be outstanding and Altria Group, Inc. will not own any shares of Kraft.
Stock Compensation:
Holders of Altria Group, Inc. stock options will be treated as stockholders and will, accordingly, have their stock awards split into two instruments. Holders
of Altria Group, Inc. stock options will receive the following stock options, which, immediately after the spin-off, will have an aggregate intrinsic value equal to
the intrinsic value of the pre-spin Altria Group, Inc. options:
•
a new Kraft option to acquire the number of shares of Kraft Class A common stock equal to the product of (a) the number of Altria
Group, Inc. options held by such person on the Distribution Date and (b) the approximate distribution ratio of 0.7 mentioned above; and
96
Source: KRAFT FOODS INC, 10-K, March 01, 2007