Kraft 2009 Annual Report Download - page 197

to Kraft Foods:
Continuing
operations $ 1.22 $ 1.21 $ (0.01)
Discontinued
operations 0.69 0.69 -
Net earnings
attributable to
Kraft Foods $ 1.91 $ 1.90 $ (0.01)
For the Year Ended December 31, 2007
As Computed
under LIFO
As Reported under
Average Cost
Favorable /
(Unfavorable)
(in millions, except per share data)
Cost of sales $ 23,864 $ 23,656 $ 208
Gains on divestitures, net 15 14 (1)
Provision for income taxes 1,002 1,080 (78)
Earnings from continuing operations 2,363 2,492 129
Earnings and gain from discontinued
operations, net of income taxes 230 232 2
Net earnings attributable to Kraft Foods 2,590 2,721 131
Basic earnings per share attributable
to Kraft Foods:
Continuing operations $ 1.48 $ 1.56 $ 0.08
Discontinued operations 0.15 0.15 -
Net earnings attributable to Kraft Foods $ 1.63 $ 1.71 $ 0.08
Diluted earnings per share attributable
to Kraft Foods:
Continuing operations $ 1.48 $ 1.56 $ 0.08
Discontinued operations 0.14 0.14 -
Net earnings attributable to Kraft Foods $ 1.62 $ 1.70 $ 0.08
The following line items within the balance sheets were affected by the change in accounting policy:
December 31, 2009
As Computed
under LIFO
As Reported under
Average Cost
Favorable /
(Unfavorable)
(in millions)
Inventories, net $ 3,718 $ 3,775 $ (57)
Deferred income tax asset 752 730 22
Retained earnings 14,601 14,636 35
December 31, 2008
As Computed
under LIFO
As Reported under
Average Cost
Favorable /
(Unfavorable)
(in millions)
Inventories, net $ 3,729 $ 3,881 $ (152)
Deferred income tax asset 861 804 57
Retained earnings 13,345 13,440 95
As a result of the accounting change, retained earnings as of January 1, 2007, decreased from
$11,128 million, as computed using the LIFO method, to $11,109 million using the average cost
method.
There was no impact to net cash provided by operating activities as a result of this change in
accounting policy.
Long-Lived Assets:
Property, plant and equipment are stated at historical cost and depreciated by the straight-line method
over the estimated useful lives of the assets. Machinery and equipment are depreciated over periods
ranging from 3 to 20 years and buildings and building improvements over periods up to 40 years.
We review long-lived assets, including amortizable intangible assets, for impairment when conditions
exist that indicate the carrying amount of the assets may not be fully recoverable. We perform
undiscounted operating cash flow analyses to determine if an impairment exists. When testing assets
held for use for impairment, we group assets and liabilities at the lowest level for which cash flows are
separately identifiable. If an impairment is determined to exist, the loss is calculated based on
estimated fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated
proceeds to be received, less costs of disposal.
Software Costs:
We capitalize certain computer software and software development costs incurred in connection with
developing or obtaining computer software for internal use. Capitalized software costs are included in
property, plant and equipment and amortized on a straight-line basis over the estimated useful lives of
the software, which do not exceed seven years.
Goodwill and Intangible Assets:
We test goodwill and non-amortizable intangible assets at least annually for impairment. We have
recognized goodwill in our reporting units, which are generally one level below our operating
segments. We use a two step process to test goodwill at the reporting unit level. The first step involves
Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠