Kraft 2010 Annual Report Download - page 34

matters. During 2009, we recorded an additional $50 million of charges for legal matters related to certain of our European operations. 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. Total selling, general and
administrative expenses, as recorded in the consolidated statement of earnings, increased $171 million from 2008. Excluding the impacts of divestitures,
foreign currency, charges for certain legal matters, acquisition-related costs associated with Cadbury and prior year Restructuring Program costs it increased
$569 million over 2008, primarily due to further investments in our brands, including spending on Cost Savings Initiatives, and higher marketing support
costs. In addition, unfavorable foreign currency decreased operating income by $325 million, due primarily to the strength of the U.S. dollar against the pound
sterling, euro, Canadian dollar, Russian ruble, Ukrainian hryvnia, Korean won, Brazilian real, and Polish zloty.
As a result of these changes, operating income margin also increased from 8.8% in 2008 to 13.4% in 2009.
Net Earnings and Earnings per Share Attributable to Kraft Foods - Net earnings attributable to Kraft Foods of $3,021 million increased by $137 million
(4.8%) in 2009. Diluted EPS from continuing operations attributable to Kraft Foods were $1.89 in 2009, up 71.8% from $1.10 in 2008. Diluted EPS
attributable to Kraft Foods were $2.03 in 2009, up 6.8% from $1.90 in 2008, due to the following:
Diluted EPS
Diluted EPS Attributable to
Kraft Foods for the Year
Ended December 31, 2008 (as revised) $ 1.90
Discontinued operations 0.80
Diluted EPS Attributable to
Kraft Foods from Continuing Operations
for the Year Ended December 31, 2008 (as
revised) 1.10
Acquisition-related costs -
Operating EPS(1)
for the Year Ended
December 31, 2008 1.10
Increases in operations 0.13
Lower charges from certain legal matters 0.01
Lower Restructuring Program costs 0.49
Change in unrealized gains on hedging activities 0.18
Lower asset impairment charges 0.06
Lower losses on divestitures, net 0.08
2008 favorable resolution of Brazilian value added tax claim (0.03)
Unfavorable foreign currency (0.14)
Lower interest and other expense, net (2) 0.02
Changes in taxes(3) (0.01)
Higher shares outstanding 0.04
Operating EPS(1) for the Year Ended December 31, 2009 1.93
Acquisition-related costs (0.02)
Acquisition-related interest and other expense, net (0.02)
Diluted EPS Attributable to
Kraft Foods from Continuing Operations
for the Year Ended December 31, 2009 1.89
Discontinued operations 0.14
Diluted EPS Attributable to
Kraft Foods for the Year Ended
December 31, 2009 (as revised) $ 2.03
(1) Please see the Non-GAAP Financial Measures section at the end of this Item.
(2) Excludes impacts of acquisition-related interest and other expense, net.
(3) Includes the impact of the 2009 U.S. federal tax audit agreement.
Results of Operations by Business Segment
We manage and report operating results through three geographic units, Kraft Foods North America, Kraft Foods Europe and Kraft Foods Developing
Markets. We manage the operations of Kraft Foods North America and Kraft Foods Europe by product category, and we manage the operations of Kraft
Foods Developing Markets by location. Our reportable segments are U.S. Beverages, U.S. Cheese, U.S. Convenient Meals, U.S. Grocery, U.S. Snacks,
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