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NORTHFIELD, Ill.--(BUSINESS WIRE)--April 30, 2008--Kraft Foods
Inc. (NYSE:KFT):
- Q1 net revenues increased 20.8%; organic net revenues(1) grew
8.0%
- Q1 diluted EPS of $0.40 declined 7.0%; excluding items,(1)
$0.44 equal to prior year
- 2008 organic revenue growth guidance raised to at least 5%, up
from at least 4%
- 2008 EPS guidance reaffirmed; at least $1.56, or at least
$1.90 excluding items
Kraft Foods Inc. (NYSE:KFT) today reported first-quarter 2008
results that reflect continued momentum as the company enters the
second year of its three-year turnaround plan. Organic top-line growth
was strong, enhanced by pricing actions to offset higher input costs.
Reported earnings per share were lower for the first quarter due to
the absence of a one-time interest benefit recorded in 2007. Earnings
per share excluding items were in line with the prior year.
"2008 is off to an excellent start and we expect our results to
continue to strengthen as the year progresses," said Irene Rosenfeld,
Chairman and Chief Executive Officer. "Our investments in product
quality, marketing and innovation are leading to better price
realization, stronger top-line results and sequential improvement in
margins from the fourth quarter of 2007. Our newly-acquired
international biscuit business is performing well and integration is
on track. And, while input costs remain high, I am confident that our
ongoing programs to lower overhead costs and invest in our brands will
enable us to deliver our targeted earnings in 2008 and beyond."
- Net revenues: Quarterly net revenues increased 20.8 percent to
$10.4 billion, including favorable impacts of 8.3 percentage
points from acquisitions and 5.1 percentage points from
currency, partially offset by an unfavorable impact of 0.6
percentage points from divestitures.
Excluding these items, organic net revenues grew 8.0 percent.
Higher pricing contributed 4.3 percentage points to organic revenue
growth, while favorable mix added 3.6 percentage points. Volume was up
modestly in the quarter despite double-digit tonnage declines in
ready-to-drink beverages due to significant pricing actions.
-- Operating income: Reported operating income in the quarter
increased 3.8 percent from the prior year to $1.2 billion.
Operating income excluding items(1) increased 7.2 percent
versus the prior year. Operating income margin excluding
items(1) decreased to 12.4 percent in first quarter 2008 from
14.0 percent in first quarter 2007. The benefits of strong
revenue growth and associated overhead cost leverage were more
than offset by significantly higher input costs and, to a
lesser extent, investments in product quality, marketing and
new products.
-- Tax rate: Kraft's reported tax rate in first quarter 2008 was
29.3 percent. Excluding items(1), the first quarter rate was
30.4 percent compared to 32.3 percent in first quarter 2007.
The first quarter rate was consistent with the company's
full-year guidance of 33.5 percent and reflected the timing of
several favorable discrete items.
-- Earnings per share: First-quarter 2008 reported earnings per
share were $0.40, down 7.0 percent from $0.43 in first quarter
2007. The 2007 quarter included $0.03 from a one-time interest
benefit related to the spin-off from Altria Group, Inc. During
the quarter, the company incurred $0.04 per share in asset
impairment, exit, implementation and other costs, compared to
$0.03 in the same quarter a year ago.
Items(1) Affecting EPS Comparability
----------------------------------------------------------------------
First Quarter
-----------------------------
Growth
2008 2007 (%)
--------- --------- ---------
Reported EPS $0.40 $0.43 (7.0)%
Asset Impairment, Exit, Implementation
And Other Costs 0.04 0.03
Interest from tax reserve transfers from
Altria Group, Inc. (0.03)
--------- ---------
EPS excluding items $0.44 $0.44(a) 0.0%
(a) Does not add due to rounding.
First-quarter 2008 earnings per share excluding items were $0.44,
equal to the prior year. Compared to the prior year, earnings per
share excluding items reflected a $0.02 contribution from operations,
$0.03 contribution from lower shares outstanding, $0.01 benefit from a
lower tax rate, offset by a $0.06 negative impact from higher interest
expense.
During the first quarter, the company repurchased 21.3 million of
its shares at a total cost of $650 million, or an average price of
$30.50 per share. As of March 31, 2008, the company had spent $4.2
billion under its $5.0 billion share repurchase plan.
FIRST QUARTER 2008 RESULTS, DISCUSSION BY SEGMENT(2)
Q1 2008
(percent growth)
------------------------------------------
Operating
Organic Income
Net Net Operating Excluding
Revenues Revenues(1) Income Items(1)
---------- ----------- --------- ---------
Total Kraft 20.8% 8.0% 3.8% 7.2%
North America 5.8 4.8 (5.8) (3.7)
U.S. Beverages (0.6) 2.4 2.9 7.0
U.S. Cheese 8.8 8.8 (23.0) (23.8)
U.S. Convenient Meals 7.5 7.5 4.6 2.5
U.S. Grocery 1.4 1.4 2.8 2.4
U.S. Snacks & Cereals 2.4 2.7 (28.2) (22.6)
Canada & N.A. Foodservice 15.6 6.4 35.4 40.7
International 50.5 14.4 50.7 51.4
European Union 55.4 9.5 44.1 47.7
Developing Markets 42.9 21.7 59.1 57.0
U.S. Beverages
Organic net revenues grew 2.4 percent driven by solid growth in
coffee, partially offset by a decline in ready-to-drink beverages. The
successful relaunch of Maxwell House mainstream coffee with product
quality and packaging upgrades resulted in high single-digit volume
and revenue growth in coffee. Ready-to-drink beverage revenue declined
in the quarter as a significant reduction in trade spending to offset
higher input costs resulted in a double-digit volume decline. Powdered
beverage revenue was flat versus the prior year as double-digit growth
in the successful powdered beverage stick platform, particularly
Crystal Light, was offset by a decline in Kool-Aid. Operating income
excluding items increased 7.0 percent as the benefits of price
increases and trade spending efficiencies were partly offset by higher
input costs.
U.S. Cheese
Organic net revenues grew 8.8 percent reflecting significant price
increases and favorable product mix partially offset by lower volumes.
Declines in natural cheese volume from higher pricing were partially
offset by gains from innovative new products such as LiveActive
snacking and cottage cheeses as well as Singles Select processed
cheese slices. Operating income excluding items declined 23.8 percent
in the first quarter as the contribution from pricing was more than
offset by continued high input costs, including an approximately 30
percent increase in dairy costs, as well as significant investments in
marketing.
U.S. Convenient Meals
Organic net revenues grew 7.5 percent driven by a balanced
contribution from volume growth, favorable product mix and price
increases. Volume growth was primarily driven by ongoing success in
pizza, where all brands grew in the quarter, including double-digit
volume and revenue growth in premium brands such as DiGiorno and
California Pizza Kitchen. Also contributing to the strong performance
in the quarter was the continued success of new product platforms like
Oscar Mayer Deli Fresh meats and Oscar Mayer Deli Creations
sandwiches. Operating income excluding items increased 2.5 percent as
the benefits of strong revenue growth more than offset higher input
costs and manufacturing capacity investments.
U.S. Grocery
Organic net revenues grew 1.4 percent as price increases in
several categories and favorable product mix more than offset volume
declines. The relaunch of Kraft pourable salad dressings, with
improved product and package quality and integrated marketing support,
began in March to address long-standing declines in this category.
Macaroni and cheese continued its momentum from the prior year with
double-digit revenue growth in the quarter. Operating income excluding
items increased 2.4 percent as pricing and manufacturing savings more
than offset lower volume, higher input costs, and increased marketing
support.
U.S. Snacks & Cereals
Organic net revenues grew 2.7 percent primarily from price
increases as well as solid volume gains in biscuits. Cookie growth was
driven by double-digit gains in Nabisco 100 Calorie Packs and
successful new products and innovations such as Oreo Cakesters and
Oreo snack 'n seal reclosable packaging. Crackers also gained in the
quarter, fueled by double-digit volume growth in Ritz crackers
resulting from improved quality and marketing. Revenue growth in
ready-to-eat cereal was driven by higher pricing and gains from
further recovery in the kids' cereal portfolio. Growth in the quarter
was partially offset by revenue declines in the snack bar business,
due largely to new product timing. Operating income excluding items
decreased 22.6 percent as the benefits of lower trade spending and
price increases lagged higher input costs, particularly grains and
oils.
Canada & North America Foodservice
Organic net revenues grew 6.4 percent from a combination of price
increases and solid volume growth. Volume gains were primarily driven
by new product innovation and improved retail execution. Operating
income excluding items grew 40.7 percent resulting from favorable
currency, higher pricing and manufacturing efficiencies that more than
offset higher input costs.
European Union
Organic net revenues grew 9.5 percent from strong volume growth
across all key categories combined with favorable product mix and
modestly higher pricing. Chocolate grew double-digits due to continued
focus on core brands such as Milka, Toblerone and Cote d'Or. Gains in
coffee were driven by growth of the Carte Noire brand in France and
the Jacobs brand in Poland. Cheese growth in the region was driven by
improved marketing and pricing under the Philadelphia brand. Operating
income excluding items grew 47.7 percent primarily due to a 45.3
percentage point contribution from the addition of the Danone biscuit
business. The benefits of a strong combination of pricing, volume and
product mix, net of higher input costs, also contributed to operating
income growth in the quarter.
Developing Markets
Organic net revenues grew 21.7 percent driven by strong gains in
pricing, product mix and volume. Investments in marketing drove strong
growth across all key markets in the Eastern Europe, Middle East &
Africa region. Growth in the Latin America region was driven by
pricing and solid volume gains, particularly in Brazil, Argentina, and
Venezuela. Revenues in the Asia Pacific region grew due to strong
consumption growth, distribution gains and improved marketing,
particularly in China. Operating income excluding items increased 57.0
percent, including a 17.0 percentage point benefit from the
acquisition of the Danone biscuit business. Volume gains, favorable
product mix and pricing net of higher input costs and increased
marketing investment were the primary drivers of the strong increase
in operating income in the quarter.
2008 OUTLOOK(1)
Kraft has raised its outlook for 2008 organic net revenue growth
to at least 5 percent, up from a previous expectation of at least 4
percent resulting from further pricing actions to offset rising input
costs. The company also confirmed its expectation that 2008 EPS will
be at least $1.56 per share, or $1.90 excluding items.
Additionally, the company continues to expect cumulative
annualized savings from the restructuring program to reach
approximately $1.0 billion by year-end and $1.2 billion by the end of
2009. To date, cumulative annualized savings from this cost
restructuring program totaled approximately $850 million, up from
approximately $785 million at the end of 2007.
Also reflected in its guidance, the company reaffirmed that its
2008 full-year effective tax rate excluding items is expected to be
33.5 percent.
All guidance reflects the inclusion of the acquired international
biscuit operations from Danone, but does not include the impact of the
company's recent agreement to merge its Post cereals business into
Ralcorp Holdings, Inc. The company continues to expect to close the
transaction with Ralcorp in mid-2008.
CONFERENCE CALL
Kraft Foods will host a conference call for investors with
accompanying slides to review its results at 8 a.m. EDT on April 30,
2008. Access to a live audio webcast with accompanying slides is
available at www.kraft.com and a replay of the event will be available
on the company's web site.
ABOUT KRAFT FOODS INC.
Kraft is one of the world's largest food and beverage companies,
with 2007 revenues of more than $37 billion. For more than 100 years,
the company has offered consumers delicious foods that fit the way
they live. Kraft markets a broad portfolio of iconic brands in more
than 150 countries, including nine brands with revenues exceeding $1
billion: Kraft cheeses, dinners and dressings; Oscar Mayer meats;
Philadelphia cream cheese; Maxwell House coffee; Nabisco cookies and
crackers and its Oreo brand; Jacobs coffees, Milka chocolates and LU
biscuits. Kraft is listed in the Standard & Poor's 100 and 500
indexes. The company is a member of the Dow Jones Sustainability
Index. For more information, visit the company's web site at
www.kraft.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements regarding
our 2008 guidance, in particular, expected organic revenue growth and
EPS; our expectation that our results will continue to strengthen as
the year progresses; our belief that our investments in product
quality, marketing and innovation are leading to better price
realization, stronger top-line results, and sequential improvements in
margins; our confidence that our ongoing programs to lower overhead
costs and invest in our brands will enable us to deliver targeted
earnings in 2008 and beyond; and with regard to our 2008 outlook, our
expectation that operating income excluding items will grow faster
than revenue, our expectation for 2008 and 2009 cumulative annualized
savings related to our restructuring program, our full year effective
tax rate and our expectation to close the merger of our Post cereals
business into Ralcorp in mid-2008. These forward-looking statements
involve risks and uncertainties that could cause actual results to
differ materially from those predicted in any such forward-looking
statements. Such factors, include, but are not limited to, continued
higher input costs, pricing actions, increased competition, our
ability to differentiate our products from private label products,
increased costs of sales, our ability to realize the expected cost
savings and spending from our planned restructuring program,
unexpected safety or manufacturing issues, FDA or other regulatory
actions or delays, unanticipated expenses such as litigation or legal
settlement expenses, our failure to consummate the Post merger, a
shift in our product mix to lower margin offerings, risks from
operating internationally, and tax law changes. For additional
information on these and other factors that could affect our
forward-looking statements, see our filings with the SEC, including
our most recently filed Annual Report on Form 10-K/A and subsequent
reports on Forms 10-Q and 8-K. We disclaim and do not undertake any
obligation to update or revise any forward-looking statement in this
press release.
NON-GAAP FINANCIAL MEASURES
The company reports its financial results in accordance with
generally accepted accounting principles (GAAP). The company is
presenting various operating results, such as operating income,
operating income margin, effective tax rate, net earnings and EPS on
both a reported basis and on a basis excluding items that affect
comparability of results. When the company uses operating results,
such as operating income, operating income margin, effective tax rate,
net earnings and EPS, excluding items, they are considered non-GAAP
financial measures. The term "items" includes 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 asset
impairment charges on certain long-lived assets, gains and losses on
divestitures, interest from tax reserve transfers from Altria Group,
Inc., the favorable resolution of Altria Group, Inc.'s 1996-1999 IRS
Tax Audit in 2006, and other one-time costs related to the company's
European Union segment reorganization.
Management believes that certain non-GAAP financial measures and
corresponding ratios provide additional meaningful comparisons between
current results and results in prior operating periods. More
specifically, management believes these non-GAAP financial measures
reflect fundamental business performance because they exclude certain
items that affect comparability of results.
The company's top-line guidance measure is organic net revenues,
which excludes the impact of acquisitions, divestitures and currency.
The company uses organic net revenues and corresponding growth ratios
as non-GAAP financial measures. Management believes this measure
better reflects revenues on a going-forward basis and provides
improved comparability of results.
See the attached schedules for supplemental financial data and
corresponding reconciliations to certain GAAP financial measures for
the quarters ended March 31, 2008, and March 31, 2007. Because GAAP
financial measures on a forward-looking basis are neither
accessible nor deemed to be significantly different, and reconciling
information is not available without unreasonable effort, with regard
to the non-GAAP financial measures in our 2008 Outlook, we have not
provided that information. Non-GAAP financial measures should be
viewed in addition to, and not as an alternative for, the company's
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. A reconciliation of all non-GAAP measures to the
nearest comparable GAAP used in this earnings release can be found on
the company's website, www.kraft.com.
(1) Please see discussion of Non-GAAP Financial Measures.
(2) Please refer to the company's Form 8-K filed April 11, 2008
for discussion of changes to reportable business segments.
Schedule 1
-----------
Kraft Foods Inc.
Condensed Statements of Earnings
For the Quarters Ended March 31,
(in millions, except per share data) (Unaudited)
As Reported (GAAP) (1) Excluding Items (Non-GAAP)
(1)
-------------------------- ---------------------------
% %
2008 2007 Change 2008 2007 Change
-------- ------- --------- -------- -------- ---------
Net revenues $10,372 $8,586 20.8% $10,372 $8,586 20.8%
Cost of sales 6,891 5,535 (24.5)% 6,877 5,530 (24.4)%
Gross profit 3,481 3,051 14.1% 3,495 3,056 14.4%
Marketing,
administration
& research
costs 2,158 1,822 (18.4)% 2,151 1,806 (19.1)%
Asset
impairment and
exit costs 80 67 (19.4)% - - -
(Gains) /
losses on
divestitures,
net 18 (12) NM - - -
Amortization of
intangibles 7 2 (100.0+)% 7 2 (100.0+)%
General
corporate
expenses 53 50 (6.0)% 53 50 (6.0)%
Operating
income 1,165 1,122 3.8% 1,284 1,198 7.2%
Interest &
other debt
expense, net 305 64 (100.0+)% 305 141 (100.0+)%
Earnings before
income taxes 860 1,058 (18.7)% 979 1,057 (7.4)%
Provision for
income taxes 252 356 29.2% 298 341 12.6%
Effective tax
rate 29.3% 33.6% 30.4% 32.3%
Net earnings $608 $702 (13.4)% $681 $716 (4.9)%
Earnings per
share:
Basic $0.40 $0.43 (7.0)% $0.45 $0.44 2.3%
Diluted $0.40 $0.43 (7.0)% $0.44 $0.44 -
Average shares
outstanding:
Basic 1,518 1,627 1,518 1,627
Diluted 1,534 1,636 1,534 1,636
Gross margin 33.6% 35.5% 33.7% 35.6%
Operating
income margin 11.2% 13.1% 12.4% 14.0%
(1) Reconciliation of GAAP to Non-GAAP Condensed Statement of Earnings
is available at www.kraft.com.
Schedule 2
-----------
Kraft Foods Inc.
Reconciliation of GAAP and Non-GAAP Information
Net Revenues
For the Quarters Ended March 31,
($ in millions) (Unaudited)
As Impact of Organic
Reported Divestitures Impact of Impact of (Non-
(GAAP) / Other Acquisitions Currency GAAP)
--------- ------------- ------------ --------- -------
2008
Reconciliation
---------------
U.S. Beverages $772 $- $- $- $772
U.S. Cheese 957 - - - 957
U.S. Convenient
Meals 1,032 - - - 1,032
U.S. Grocery 792 - - - 792
U.S. Snacks &
Cereals 1,430 - (5) - 1,425
Canada & N.A.
Foodservice 1,050 - - (89) 961
----------------------------------------------------------------------
North America $6,033 $- $(5) $(89) $5,939
----------------------------------------------------------------------
European Union 2,719 (44) (573) (228) 1,874
Developing
Markets 1,620 - (128) (112) 1,380
----------------------------------------------------------------------
International $4,339 $(44) $(701) $(340) $3,254
----------------------------------------------------------------------
----------------------------------------------------------------------
Kraft Foods $10,372 $(44) $(706) $(429) $9,193
----------------------------------------------------------------------
% Change Organic Growth Drivers
-------------------- ----------------------
Organic
As Reported (Non-
(GAAP) GAAP) Volume Mix Price
------------ ------- ----------------------
2008 Reconciliation
-------------------------
U.S. Beverages (0.6)% 2.4% (12.6)pp 10.1pp 4.9pp
U.S. Cheese 8.8% 8.8% (1.3) 1.2 8.9
U.S. Convenient Meals 7.5% 7.5% 2.7 2.9 1.9
U.S. Grocery 1.4% 1.4% (4.3) 1.5 4.2
U.S. Snacks & Cereals 2.4% 2.7% 0.5 - 2.2
Canada & N.A. Foodservice 15.6% 6.4% 2.5 (0.1) 4.0
-------------------------- -------------------- ----------------------
North America 5.8% 4.8% (2.7) 3.4 4.1
-------------------------- -------------------- ----------------------
European Union 55.4% 9.5% 5.8 2.1 1.6
Developing Markets 42.9% 21.7% 8.4 4.2 9.1
-------------------------- -------------------- ----------------------
International 50.5% 14.4% 7.2 2.6 4.6
-------------------------- -------------------- ----------------------
-------------------------- -------------------- ----------------------
Kraft Foods 20.8% 8.0% 0.1pp 3.6pp 4.3pp
-------------------------- -------------------- ----------------------
As Impact of Organic
Reported Divestitures Impact of Impact of (Non-
(GAAP) / Other Acquisitions Currency GAAP)
--------- ------------ ------------ ---------- -------
2007
Reconciliation
---------------
U.S. Beverages $777 $(23) $- $- $754
U.S. Cheese 880 - - - 880
U.S. Convenient
Meals 960 - - - 960
U.S. Grocery 781 - - - 781
U.S. Snacks &
Cereals 1,396 (9) - - 1,387
Canada & N.A.
Foodservice 908 (5) - - 903
----------------------------------------------------------------------
North America $5,702 $(37) $- $- $5,665
----------------------------------------------------------------------
European Union 1,750 (39) - - 1,711
Developing
Markets 1,134 - - - 1,134
----------------------------------------------------------------------
International $2,884 $(39) $- $- $2,845
----------------------------------------------------------------------
----------------------------------------------------------------------
Kraft Foods $8,586 $(76) $- $- $8,510
----------------------------------------------------------------------
Schedule 3
-----------
Kraft Foods Inc.
Reconciliation of GAAP and Non-GAAP Information
Operating Income
For the Quarters Ended March 31,
($ in millions) (Unaudited)
Asset
Impairment, Asset
Exit and Impairments /
Implementation Other Expenses -
As Reported Costs - Non-
(GAAP) Restructuring Restructuring
----------- --------------- ----------------
2008 Reconciliation
-------------------------
U.S. Beverages $143 $9 $-
U.S. Cheese 117 8 -
U.S. Convenient Meals 114 9 -
U.S. Grocery 254 5 -
U.S. Snacks & Cereals 168 10 -
Canada & N.A. Foodservice 111 10 -
----------------------------------------------------------------------
North America $907 $51 $-
----------------------------------------------------------------------
European Union 170 38 3
Developing Markets 148 9 -
----------------------------------------------------------------------
International $318 $47 $3
----------------------------------------------------------------------
Corporate Items (60) - -
----------------------------------------------------------------------
Kraft Foods Operating
Income $1,165 $98 $3
----------------------------------------------------------------------
% Change
--------------------
(Gains) /
Losses Excluding Excluding
on Items As Items
Divestitures, (Non- Reported (Non-
net GAAP) (GAAP) GAAP)
-------------- --------- ---------- ---------
2008 Reconciliation
------------------------
U.S. Beverages $- $152 2.9% 7.0%
U.S. Cheese - 125 (23.0)% (23.8)%
U.S. Convenient Meals - 123 4.6% 2.5%
U.S. Grocery - 259 2.8% 2.4%
U.S. Snacks & Cereals - 178 (28.2)% (22.6)%
Canada & N.A.
Foodservice - 121 35.4% 40.7%
----------------------------------------------------------------------
North America $- $958 (5.8)% (3.7)%
----------------------------------------------------------------------
European Union 18 229 44.1% 47.7%
Developing Markets - 157 59.1% 57.0%
----------------------------------------------------------------------
International $18 $386 50.7% 51.4%
----------------------------------------------------------------------
Corporate Items - (60) (15.4)% (15.4)%
----------------------------------------------------------------------
Kraft Foods Operating
Income $18 $1,284 3.8% 7.2%
----------------------------------------------------------------------
Asset
Impairment, Asset
Exit and Impairments /
Implementation Other Expenses -
As Reported Costs - Non-
(GAAP) Restructuring Restructuring
------------ -------------- ----------------
2007 Reconciliation
-------------------------
U.S. Beverages $139 $3 $-
U.S. Cheese 152 12 -
U.S. Convenient Meals 109 11 -
U.S. Grocery 247 6 -
U.S. Snacks & Cereals 234 8 -
Canada & N.A. Foodservice 82 4 -
----------------------------------------------------------------------
North America $963 $44 $-
----------------------------------------------------------------------
European Union 118 37 -
Developing Markets 93 7 -
----------------------------------------------------------------------
International $211 $44 $-
----------------------------------------------------------------------
Corporate Items (52) - -
----------------------------------------------------------------------
Kraft Foods Operating
Income $1,122 $88 $-
----------------------------------------------------------------------
(Gains) / Losses Excluding
on Divestitures, Items (Non-
net GAAP)
----------------- ------------
2007 Reconciliation
--------------------------------------
U.S. Beverages $- $142
U.S. Cheese - 164
U.S. Convenient Meals - 120
U.S. Grocery - 253
U.S. Snacks & Cereals (12) 230
Canada & N.A. Foodservice - 86
---------------------------------------------------------------------
North America $(12) $995
---------------------------------------------------------------------
European Union - 155
Developing Markets - 100
---------------------------------------------------------------------
International $- $255
---------------------------------------------------------------------
Corporate Items - (52)
---------------------------------------------------------------------
Kraft Foods Operating Income $(12) $1,198
---------------------------------------------------------------------
Schedule 4
----------
Kraft Foods Inc. and Subsidiaries
Condensed Balance Sheets
($ in millions) (Unaudited)
March 31, December 31, March 31,
2008 2007 2007
--------- ------------ ---------
Assets
--------------------------------------
Cash & cash equivalents $605 $567 $251
Receivables, net 5,361 5,197 3,977
Inventory 4,667 4,096 3,881
Other current assets 1,045 877 743
Property, plant & equipment, net 11,311 10,778 9,624
Goodwill 31,459 31,193 25,411
Other intangible assets, net 12,207 12,200 10,048
Other assets 3,371 3,085 1,879
--------- ------------ ---------
Total assets $70,026 $67,993 $55,814
========= ============ =========
Liabilities & Shareholders' Equity
--------------------------------------
Short-term borrowings $4,528 $7,385 $2,046
Current portion of long-term debt 716 722 1,415
Due to Altria Group, Inc. - - 449
Accounts payable 4,157 4,065 2,574
Other current liabilities 4,853 4,914 3,943
Long-term debt 17,428 12,902 7,081
Deferred income taxes 5,081 4,876 3,824
Other long-term liabilities 5,997 5,834 5,753
--------- ------------ ---------
Total liabilities 42,760 40,698 27,085
Total shareholders' equity 27,266 27,295 28,729
--------- ------------ ---------
Total liabilities &
shareholders' equity $70,026 $67,993 $55,814
========= ============ =========
Kraft Foods Inc.
Reconciliation of GAAP & Non-GAAP Information
Condensed Statements of Earnings
For the Quarters Ended March 31,
(in millions, except per share data) (Unaudited)
2008
-----------------------------------------
Asset Asset
Impairment, Impairments/
Exit and Other
As Implementation Expenses -
Reported Costs - Non-
(GAAP) Restructuring Restructuring
---------- --------------- --------------
Net revenues $10,372 $- $-
Cost of sales 6,891 (14) -
Gross profit 3,481 14 -
Marketing, administration &
research costs 2,158 (4) (3)
Asset impairment and exit
costs 80 (80) -
(Gains) / losses on
divestitures, net 18 - -
Amortization of intangibles 7 - -
General corporate expenses 53 - -
Operating income 1,165 98 3
Interest & other debt
expense, net 305 - -
Earnings before income taxes 860 98 3
Provision for income taxes 252 29 -
Effective tax rate 29.3%
Net earnings $608 $69 $3
Earnings per share:
Basic $0.40 $0.05 $-
Diluted $0.40 $0.04 $-
Average shares outstanding:
Basic 1,518
Diluted 1,534
Gross margin 33.6%
Operating income margin 11.2%
Supplemental Data
----------------------------
Depreciation &
amortization $248
Capital expenditures 271
(Gains) / Excluding
Losses on Items
Divestitures, (Non-
net GAAP)
-------------- ---------
Net revenues $- $10,372
Cost of sales - 6,877
Gross profit - 3,495
Marketing, administration & research costs - 2,151
Asset impairment and exit costs - -
(Gains) / losses on divestitures, net (18) -
Amortization of intangibles - 7
General corporate expenses - 53
Operating income 18 1,284
Interest & other debt expense, net - 305
Earnings before income taxes 18 979
Provision for income taxes 17 298
Effective tax rate 30.4%
Net earnings $1 $681
Earnings per share:
Basic $- $0.45
Diluted $- $0.44
Average shares outstanding:
Basic 1,518
Diluted 1,534
Gross margin 33.7%
Operating income margin 12.4%
Supplemental Data
---------------------------------------------
Depreciation & amortization
Capital expenditures
2007
----------------------------------------
Asset
Impairment,
Exit and (Gains) /
As Implementation Losses on
Reported Costs - Divestitures,
(GAAP) Restructuring net
---------- --------------- --------------
Net revenues $8,586 $- $-
Cost of sales 5,535 (5) -
Gross profit 3,051 5 -
Marketing, administration &
research costs 1,822 (16) -
Asset impairment and exit
costs 67 (67) -
(Gains) / losses on
divestitures, net (12) - 12
Amortization of intangibles 2 - -
General corporate expenses 50 - -
Operating income 1,122 88 (12)
Interest & other debt
expense, net 64 - -
Earnings before income taxes 1,058 88 (12)
Provision for income taxes 356 32 (20)
Effective tax rate 33.6%
Net earnings $702 $56 $8
Earnings per share:
Basic $0.43 $0.03 $-
Diluted $0.43 $0.03 $-
Average shares outstanding:
Basic 1,627
Diluted 1,636
Gross margin 35.5%
Operating income margin 13.1%
Supplemental Data
----------------------------
Depreciation &
amortization $220
Capital expenditures 180
Altria
Group,
Inc.
Interest Excluding
from Tax Items
Reserve (Non-
Transfers GAAP)
---------- ------------
Net revenues $- $8,586
Cost of sales - 5,530
Gross profit - 3,056
Marketing, administration & research costs - 1,806
Asset impairment and exit costs - -
(Gains) / losses on divestitures, net - -
Amortization of intangibles - 2
General corporate expenses - 50
Operating income - 1,198
Interest & other debt expense, net 77 141
Earnings before income taxes (77) 1,057
Provision for income taxes (27) 341
Effective tax rate 32.3%
Net earnings $(50) $716
Earnings per share:
Basic $(0.03) $0.44 (a)
Diluted $(0.03) $0.44 (a)
Average shares outstanding:
Basic 1,627
Diluted 1,636
Gross margin 35.6%
Operating income margin 14.0%
Supplemental Data
----------------------------------------------
Depreciation & amortization
Capital expenditures
(a) Does not foot due to rounding.
CONTACT: Kraft Foods Inc.
Michael Mitchell (Media)
847-646-4538
or
Christopher M. Jakubik (Investors)
847-646-5494
SOURCE: Kraft Foods Inc.
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