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    The Company reports its financial results in accordance with ... The Company reports its financial results in accordance with ... Document Transcript

    • Kraft Foods Inc. Reconciliation of GAAP and Non-GAAP Information (in millions, except per share data) (Unaudited) The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). Management believes that certain non-GAAP measures and corresponding ratios that it uses to manage the business provide additional meaningful comparisons between current results and results in prior operating periods. More specifically, management believes these non-GAAP measures reflect fundamental business performance because they exclude certain items that are non-recurring or unusual in nature and therefore otherwise affect comparability of results. The non-GAAP measures that the Company is using to present operating results exclude certain items, such as asset impairment, exit, and implementation costs primarily related to a restructuring program that began in the first quarter of 2004 (the "Restructuring Program"). These restructuring charges include separation-related costs, asset write-downs, and other costs related to the implementation of the Restructuring Program. Other excluded items pertain to the impact of divested businesses; asset impairment charges on certain long-lived assets; gains and losses on the sales of businesses; the favorable resolution of Altria Group, Inc.'s 1996-1999 IRS Tax Audit in 2006; and earnings from discontinued operations in 2005. The Company also uses organic net revenue and operating companies income (OCI) and corresponding growth ratios as non-GAAP measures. Organic net revenue is defined as net revenue excluding acquisitions; the impact of divestitures; currency impact; and asset impairment, exit, and implementation costs. Management believes this measure reflects revenue on a go-forward basis and provides improved comparability of results. Reported operating companies income (OCI) is defined as operating income before corporate expenses and amortization of intangibles. Management uses ongoing OCI to evaluate segment performance and allocate resources. Ongoing OCI at a segment level excludes the impact of divestitures; asset impairment, exit, and implementation costs; and gains/losses on the sales of businesses. Management believes this measure helps investors analyze business segment performance and trends. Ongoing OCI on a total-Company (consolidated) basis does not exclude the impact of divestitures. See the Tables below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the quarter ended March 31, 2006, and March 31, 2005. Non- GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. In addition, the non- GAAP measures the Company is using may differ from non-GAAP measures that other companies use.
    • Kraft Foods Inc. Reconciliation of GAAP and Non-GAAP Information (in millions, except per share data) (Unaudited) Operating Income Reconciliation Quarter Quarter Ended Ended 3/31/06 3/31/05 Growth Reported Operating Income (GAAP) $ 1,018 $ 1,157 (12.0%) Asset impairment, exit and implementation costs - Restructuring 105 76 Asset impairments - Non-Restructuring 110 93 (Gains)/losses on sales of businesses 3 (116) Ongoing Operating Income (Non-GAAP) $ 1,236 $ 1,210 2.1% Net Earnings Reconciliation Quarter Quarter Ended Ended 3/31/06 3/31/05 Growth Reported Net Earnings (GAAP) $ 1,006 $ 713 41.1% Asset impairment, exit and implementation costs - Restructuring 74 52 Asset impairments - Non-Restructuring 78 60 (Gains)/losses on sales of businesses 2 (67) Favorable resolution of the Altria Group, Inc. 1996-1999 (405) IRS Tax Audit Earnings from discontinued operations (14) Rounding 1 Ongoing Net Earnings from Continuing Operations (Non-GAAP) $ 756 $ 744 1.6% Diluted Earnings Per Share Reconciliation Quarter Quarter Ended Ended 3/31/06 3/31/05 Growth Reported Diluted Earnings Per Share (GAAP) $ 0.61 $ 0.42 45.2% Asset impairment, exit and implementation costs - Restructuring 0.04 0.07 Asset impairments - Non-Restructuring 0.05 (Gains)/losses on sales of businesses (0.04) Impact of divested businesses Favorable resolution of the Altria Group, Inc. 1996-1999 (0.24) IRS Tax Audit Earnings from discontinued operations (0.01) Rounding (0.01) Diluted Earnings Per Share excluding asset impairment, $ 0.45 $ 0.44 2.3% exit and implementation costs; gains/losses on the sales of businesses; the earnings from discontinued operations; and the resolution of an IRS tax audit (Non-GAAP)
    • Kraft Foods Inc. Reconciliation of GAAP and Non-GAAP Information (in millions, except per share data) (Unaudited) Effective Tax Rate Reconciliation (Quarter Ended 3/31/06) Pre-tax Income Effective Income Taxes Tax Rate Reported Tax Rate (GAAP) $ 922 $ (85) (9.2%) Asset impairment, exit and implementation costs - Restructuring 105 31 Asset impairments - Non-Restructuring 110 32 (Gains)/losses on sales of businesses 3 1 Favorable resolution of the Altria Group, Inc. 1996-1999 (46) 1 359 IRS Tax Audit Tax Rate excluding asset impairment, exit and $ 1,094 $ 338 30.9% implementation costs; gains/losses on the sales of businesses; and the resolution of an IRS tax audit (Non-GAAP) 1 Interest on the IRS tax audit ($29 million after tax) Effective Tax Rate Reconciliation (Quarter Ended 3/31/05) Pre-tax Income Effective Income Taxes Tax Rate Reported Tax Rate (GAAP) $ 981 $ 282 28.7% Asset impairment, exit and implementation costs - Restructuring 76 24 Asset impairments - Non-Restructuring 93 33 (Gains)/losses on sales of businesses (116) (49) Tax Rate excluding asset impairment, exit and $ 1,034 $ 290 28.0% and implementation costs; and the gains/losses on the sales of businesses (Non-GAAP)
    • The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). Management believes that certain non-GAAP measures and corresponding ratios that it uses to manage the business provide additional meaningful comparisons between current results and results in prior operating periods. More specifically, management believes these non-GAAP measures reflect fundamental business performance because they exclude certain items that are non-recurring or unusual in nature and therefore otherwise affect comparability of results. See the Tables below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the quarter ended March 31, 2006, and March 31, 2005. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. In addition, the non-GAAP measures the Company is using may differ from non-GAAP measures that other companies use. KRAFT FOODS INC. Reconciliation of GAAP and Non-GAAP Information Net Revenues For the Quarters Ended March 31, ($ in millions, Unaudited) Kraft Developing North Markets, Cheese & Convenient Snacks & America European Oceania & Total Beverages Foodservice Meals Grocery Cereals Commercial Union North Asia Kraft 2006 Reconciliation Reported Net Revenues (GAAP) $ 795 $ 1,469 $ 1,214 $ 632 $ 1,533 $ 5,643 $ 1,467 $ 1,013 $ 8,123 - Impact of divestitures - - - (8) (2) (10) - - (10) - Asset impairment and exit costs - - - - - - - - - - Implementation costs - - - - - - - - - Ongoing Net Revenues (Non-GAAP) $ 795 $ 1,469 $ 1,214 $ 624 $ 1,531 $ 5,633 $ 1,467 $ 1,013 $ 8,113 - Acquisitions - - - - - - - - - - Currency impact (2) (9) (2) (4) (7) (24) 142 (23) 95 Organic Net Revenues (Non-GAAP) $ 793 $ 1,460 $ 1,212 $ 620 $ 1,524 $ 5,609 $ 1,609 $ 990 $ 8,208 2005 Reconciliation Reported Net Revenues (GAAP) $ 772 $ 1,490 $ 1,140 $ 719 $ 1,432 $ 5,553 $ 1,614 $ 892 $ 8,059 - Impact of divestitures - (27) - (83) (8) (118) (12) (5) (135) - Asset impairment and exit costs - - - - - - - - - - Implementation costs - - - - - - - - - Ongoing Net Revenues (Non-GAAP) $ 772 $ 1,463 $ 1,140 $ 636 $ 1,424 $ 5,435 $ 1,602 $ 887 $ 7,924 % Change from Prior Year Reported Net Revenues (GAAP) 3.0% (1.4)% 6.5% (12.1)% 7.1% 1.6% (9.1)% 13.6% 0.8% Ongoing Net Revenues (Non-GAAP) 3.0% 0.4% 6.5% (1.9)% 7.5% 3.6% (8.4)% 14.2% 2.4% Organic Net Revenues (Non-GAAP) 2.7% (0.2)% 6.3% (2.5)% 7.0% 3.2% 0.4% 11.6% 3.6%
    • The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). Management believes that certain non-GAAP measures and corresponding ratios that it uses to manage the business provide additional meaningful comparisons between current results and results in prior operating periods. More specifically, management believes these non-GAAP measures reflect fundamental business performance because they exclude certain items that are non-recurring or unusual in nature and therefore otherwise affect comparability of results. See the Tables below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the quarter ended March 31, 2006, and March 31, 2005. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. In addition, the non-GAAP measures the Company is using may differ from non-GAAP measures that other companies use. KRAFT FOODS INC. Reconciliation of GAAP and Non-GAAP Information Operating Companies Income For the Quarters Ended March 31, ($ in millions, Unaudited) Kraft Developing North Markets, Cheese & Convenient Snacks & America European Oceania & Total Beverages Foodservice Meals Grocery Cereals Commercial Union North Asia Kraft 2006 Reconciliation Reported Operating Companies Income (GAAP) $ 147 $ 203 $ 200 $ 204 $ 142 $ 896 $ 129 $ 35 $ 1,060 - Impact of divestitures - - - 1 - 1 - - 1 - Asset impairment and exit costs - Restructuring 2 6 17 5 5 35 18 39 92 - Asset impairments - Non-Restructuring - - - - 99 99 - 11 110 - Implementation costs 1 4 - 1 1 7 3 3 13 - (Gains)/Losses on sales of businesses - - - 1 2 3 - - 3 Ongoing Operating Companies Income (Non-GAAP) $ 150 $ 213 $ 217 $ 212 $ 249 $ 1,041 $ 150 $ 88 $ 1,279 2005 Reconciliation Reported Operating Companies Income (GAAP) $ 162 $ 219 $ 198 $ 132 $ 199 $ 910 $ 245 $ 48 $ 1,203 - Impact of divestitures - (1) - (3) - (4) (3) - (7) - Asset impairment and exit costs - Restructuring 3 7 2 8 4 24 30 3 57 - Asset impairments - Non-Restructuring - - - 93 - 93 - - 93 - Implementation costs 1 3 1 - 9 14 4 1 19 - (Gains)/Losses on sales of businesses - - - - - - (115) (1) (116) Ongoing Operating Companies Income (Non-GAAP) $ 166 $ 228 $ 201 $ 230 $ 212 $ 1,037 $ 161 $ 51 $ 1,249 % Change from Prior Year Reported Operating Companies Income (GAAP) (9.3)% (7.3)% 1.0% 54.5% (28.6)% (1.5)% (47.3)% (27.1)% (11.9)% Ongoing Operating Companies Income (Non-GAAP) (9.6)% (6.6)% 8.0% (7.8)% 17.5% 0.4% (6.8)% 72.5% 2.4%
    • The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). Management believes that certain non-GAAP measures and corresponding ratios that it uses to manage the business provide additional meaningful comparisons between current results and results in prior operating periods. More specifically, management believes these non-GAAP measures reflect fundamental business performance because they exclude certain items that are non- recurring or unusual in nature and therefore otherwise affect comparability of results. See the Tables below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the quarter ended March 31, 2006, and March 31, 2005. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. In addition, the non-GAAP measures the Company is using may differ from non-GAAP measures that other companies use. KRAFT FOODS INC. Reconciliation of GAAP and Non-GAAP Information Operating Companies Income Reconciliation to Ongoing Operating Income For the Quarters Ended March 31, ($ in millions, Unaudited) Operating Operating Companies Income Income Developing Markets, Cheese & Convenient Snacks & European Oceania & Total Corporate Total Beverages Foodservice Meals Grocery Cereals Union North Asia Kraft Items Kraft 2006 Reconciliation Reported (GAAP) $ 147 $ 203 $ 200 $ 204 $ 142 $ 129 $ 35 $ 1,060 $ (42) $ 1,018 - Impact of divestitures - - - 1 - - - 1 (1) - - Asset impairment and exit costs - Restructuring 2 6 17 5 5 18 39 92 - 92 - Asset impairments - Non-Restructuring - - - - 99 - 11 110 - 110 - Implementation costs 1 4 - 1 1 3 3 13 - 13 - (Gains)/Losses on sales of businesses - - - 1 2 - - 3 - 3 Ongoing (Non-GAAP) $ 150 $ 213 $ 217 $ 212 $ 249 $ 150 $ 88 $ 1,279 $ (43) $ 1,236 2005 Reconciliation Reported (GAAP) $ 162 $ 219 $ 198 $ 132 $ 199 $ 245 $ 48 $ 1,203 $ (46) $ 1,157 - Impact of divestitures - (1) - (3) - (3) - (7) 7 - - Asset impairment and exit costs - Restructuring 3 7 2 8 4 30 3 57 - 57 - Asset impairments - Non-Restructuring - - - 93 - - - 93 - 93 - Implementation costs 1 3 1 - 9 4 1 19 - 19 - (Gains)/Losses on sales of businesses - - - - - (115) (1) (116) - (116) Ongoing (Non-GAAP) $ 166 $ 228 $ 201 $ 230 $ 212 $ 161 $ 51 $ 1,249 $ (39) $ 1,210 % Change from Prior Year Reported (GAAP) (9.3)% (7.3)% 1.0% 54.5% (28.6)% (47.3)% (27.1)% (11.9)% n/a (12.0)% Ongoing (Non-GAAP) (9.6)% (6.6)% 8.0% (7.8)% 17.5% (6.8)% 72.5% 2.4% n/a 2.1%