Management's Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
Discussion and Analysis > Consolidated Operating Results
(Continued)
 Asset Impairment and Exit Costs—For the years ended December 31, 2004, 2003 and 2002, pre-tax asset impairment and exit costs consisted of the following:
|
 |
|
|
(in millions) |
|
|
2004 |
|
|
2003 |
|
2002 |
|
|
|
|
Separation program |
Domestic tobacco |
|
$1 |
|
|
$13 |
|
|
|
|
|
Separation program |
International tobacco* |
|
31 |
|
|
|
|
$58 |
|
|
|
Separation program |
North American food |
|
|
|
|
|
|
135 |
|
|
|
Separation program |
International food |
|
|
|
|
|
|
7 |
|
|
|
Separation program |
Beer |
|
|
|
|
|
|
8 |
|
|
|
Separation program |
General corporate** |
|
56 |
|
|
26 |
|
|
|
|
|
Restructuring program |
North American food |
|
383 |
|
|
|
|
|
|
|
|
Restructuring program |
International food |
|
200 |
|
|
|
|
|
|
|
|
Asset impairment |
International tobacco* |
|
13 |
|
|
|
|
|
|
|
|
Asset impairment |
North American food |
|
8 |
|
|
|
|
|
|
|
|
Asset impairment |
International food |
|
12 |
|
|
6 |
|
|
|
|
|
Asset impairment |
Beer |
|
|
|
|
|
|
15 |
|
|
|
Asset impairment |
General corporate** |
|
10 |
|
|
41 |
|
|
|
|
|
Lease termination |
General corporate** |
|
4 |
|
|
|
|
|
|
|
|
|
Asset impairment and exit costs |
|
$718 |
|
|
$86 |
|
$223 |
|
|
|
|
* During 2004, PMI announced that it will close its Eger, Hungary facility. In addition, during 2004, PMI closed a factory in Belgium and streamlined its Benelux operations. PMI recorded pre-tax charges of $44 million for severance benefits and impairment charges during 2004.
** In 2004 and 2003, Altria Group, Inc. recorded pre-tax charges of $70 million and $26 million, respectively, primarily related to the streamlining of various corporate functions in 2004 and 2003, and the write-off of an investment in an e-business consumer products purchasing exchange in 2004. In addition, during 2004, Altria Group, Inc. sold its office facility in Rye Brook, New York. In connection with this sale, Altria Group, Inc. recorded a pre-tax charge in 2003 of $41 million to write down the facility and the related fixed assets to fair value.
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Provision for Airline Industry Exposure—As discussed in Note 8. Finance Assets, net, during 2004 and 2002, in recognition of the economic downturn in the airline industry, PMCC increased its allowance for losses by $140 million and $290 million, respectively.
Discontinued Operations—As more fully discussed in Note 5. Divestitures, on November 15, 2004, Kraft announced the sale of substantially all of its sugar confectionery business. Altria Group, Inc. has reflected the results of Kraft’s sugar confectionery business as discontinued operations on the consolidated statements of earnings for all years presented.
Losses (Gains) on Sales of Businesses—During 2004, Kraft sold a Brazilian snack nuts business and trademarks associated with a candy business in Norway, and recorded aggregate pre-tax losses of $3 million. During 2003, Kraft sold a European rice business and a branded fresh cheese business in Italy and recorded aggregate pre-tax gains of $31 million. During 2002, Kraft sold a Latin American yeast and industrial bakery ingredients business resulting in a pre-tax gain of $69 million, and Kraft sold several small businesses, resulting in pre-tax gains of $11 million.
Integration Costs and a Loss on Sale of a Food Factory—Altria Group, Inc.’s consolidated statements of earnings include the following integration costs incurred by Kraft as it integrated the operations of Nabisco Holdings Corp. (“Nabisco”), and a loss on sale of a food factory. During 2003, Kraft reversed $13 million related to integration charges recorded in 2002 and 2001.
(in millions)
|
|
|
|
For the Years Ended December 31, |
|
|
2003 |
|
|
2002 |
|
|
|
Closing a facility and other consolidation
programs |
North American food |
|
$(13 |
) |
|
$ 98 |
|
|
Consolidation of production lines and
distribution networks in Latin America |
International food |
|
|
|
|
17 |
|
|
Loss on sale of a food factory |
North American food |
|
|
|
|
(4 |
) |
|
|
Total |
|
|
$(13 |
) |
|
$111 |
|
|
Domestic Tobacco Legal Settlement—During 2003, PM USA and certain other defendants reached an agreement with a class of U.S. tobacco growers and quota-holders to resolve a lawsuit related to tobacco leaf purchases. During 2003, PM USA recorded pre-tax charges of $202 million for its obligations under the agreement. The pre-tax charges are included in the operating companies income of the domestic tobacco segment.
Miller Transaction—As more fully discussed in Note 4. Miller Brewing Company Transaction, on July 9, 2002, Miller was merged into SAB to form SABMiller. The transaction resulted in a pre-tax gain of $2.6 billion, or $1.7 billion after-tax.
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