Kraft 2009 Annual Report Download - page 103

For the Years Ended December 31,
2009 2008 2007
(in millions)
Earnings from continuing operations
before income taxes:
Operating income:
Kraft Foods North America:
U.S. Beverages $ 511 $ 381 $ 346
U.S. Cheese 667 563 487
U.S. Convenient Meals 510 339 319
U.S. Grocery 1,146 1,009 1,022
U.S. Snacks 723 638 716
Canada & N.A. Foodservice 527 448 443
Kraft Foods Europe 785 182 455
Kraft Foods Developing Markets 936 815 588
Unrealized gains / (losses) on
hedging activities 203 (205) 16
Certain U.S. pension plan costs (165) - -
General corporate expenses (293) (304) (203)
Amortization of intangibles (26) (23) (13)
Operating income 5,524 3,843 4,176
Interest and other expense, net (1,237) (1,240) (604)
Earnings from continuing operations
before income taxes $ 4,287 $ 2,603 $ 3,572
Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 16% of consolidated net revenues in 2009, 16% in 2008
and 15% in 2007. These net revenues occurred primarily in the Kraft Foods North America segments.
In 2009, unrealized gains on hedging activities of $203 million primarily resulted from the 2008 unrealized losses on energy derivatives becoming
realized in 2009. In 2008, unrealized losses on hedging activities of $205 million were primarily related to energy derivatives, including heating oil
(used primarily to hedge transportation costs) and natural gas contracts. In 2009, general corporate expenses included $50 million of charges for
legal matters related to certain of our European operations (see Part I Item 3. Legal Proceedings for a description of these matters). In 2008, we
recorded $72 million in charges for legal matters related to certain of our U.S. and European operations, including U.S. coffee operations and
represented the primary reason general corporate expenses increased $101 million in 2008.
We incurred costs associated with our Cost Savings Initiatives of $318 million in 2009. These charges were recorded in operations, primarily within
the segment operating income of Kraft Foods Europe with the remainder spread across all other segments. In 2009, we also reversed $85 million
of Restructuring Program costs, with the majority relating to our Kraft Foods Europe segment while the remainder was spread across all other
segments. We incurred Restructuring Program costs of $989 million in 2008 and $459 million in 2007. Refer to Note 6, Restructuring Costs, for a
breakout of the 2008 and 2007 charges by segment. We also incurred asset impairment charges of $21 million in 2009 related to our Kraft Foods
Europe segment, $140 million in 2008 related to our Kraft Foods Europe and Kraft Foods Developing Markets segments, and $120 million in 2007
related to our U.S. Beverages segment. Refer to Note 5, Goodwill and Intangible Assets, for further details of these charges.
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Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠