Notes To Consolidated Financial Statements

(Continued)

Note 14.
Segment Reporting:

(Continued)

Gains on Sales of Businesses—During 2003, KFI sold a European rice business and a branded fresh cheese business in Italy and recorded aggregate pre-tax gains of $31 million. During 2002, KFI 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 disclose the following items as integration costs, which are costs incurred by Kraft as it integrated the operations of Nabisco, and a loss on sale of a food factory. During 2003, Kraft reversed $13 million related to the previously recorded integration charges.

	For the years ended December 31,			2003			2002		2001
	Closing a facility and other consolidation programs	North American food		$(13)			$  98		$53
	Consolidation of production lines and distribution networks in Latin America	International food					17
	Loss on sale of a food factory	North American food					(4)		29
	Total			$(13)			$111		$82

Asset Impairment and Exit Costs—For the years ended December 31, 2003, 2002 and 2001, asset impairment and exit costs were comprised of the following:

	(in millions)			2003			2002		2001
	Voluntary separation program	Domestic tobacco		$13
	Voluntary early retirement	North American food					$135
	Voluntary early retirement	International food					7
	Separation program	International tobacco					58
	Separation program	Beer					8
	Separation program	General corporate*		26
	Asset impairment	International food		6
	Asset impairment	Beer					15		$19
	Asset impairment	General corporate*		41
	Total			$86			$223		$19

*

During January 2004, Altria Group, Inc. announced plans to sell its office facility in Rye Brook, New York. Approximately 1,000 employees currently work at the facility and these employees will either be relocated to other office facilities or will be severed. In connection with the decision to sell the facility, Altria Group, Inc. recorded a pre-tax charge of $41 million to write down the facility and the related fixed assets to fair value. During 2003, Altria Group, Inc. also recorded a pre-tax charge of $26 million, primarily for severance benefits related to the streamlining of various corporate functions.

Provision for Airline Industry Exposure—As discussed in Note 7. Finance Assets, net, during 2002, in recognition of the economic downturn in the airline industry, PMCC increased its allowance for losses by $290 million.

Litigation Related Expense—As discussed in Note 18. Contingencies, in connection with obtaining a stay of execution in May 2001 in the Engle class action, PM USA placed $500 million into a separate interest-bearing escrow account that, regardless of the outcome of the appeal, will be paid to the court and the court will determine how to allocate or distribute it consistent with the Florida Rules of Civil Procedure. As a result, PM USA recorded a $500 million pre-tax charge in its operating results for the year ended December 31, 2001.

Miller Transaction—As more fully discussed in Note 3. 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. 

See Notes 3, 4 and 5, respectively, regarding the Miller Brewing Company transaction, divestitures and acquisitions.

(in millions) For the years ended December 31,			2003			2002		2001
	Depreciation expense:
	Domestic tobacco		$      194			$     194		$     187
	International tobacco		370			307		294
	North American food		542			506		483
	International food		262			203		197
	Beer					61		119
			1,368			1,271		1,280
	Other		63			53		43
	Total depreciation expense		$   1,431			$  1,324		$  1,323
	Assets:
	Tobacco		$23,298			$18,329		$17,791
	Food		59,735			57,245		55,798
	Beer							1,782
	Financial Services		8,540			9,231		8,864
			91,573			84,805		84,235
	Other		4,602			2,735		733
	Total assets		$96,175			$87,540		$84,968
	Capital expenditures:
	Domestic tobacco		$      154			$     140		$     166
	International tobacco		586			497		418
	North American food		713			808		761
	International food		372			376		340
	Beer					84		132
			1,825			1,905		1,817
	Other		149			104		105
	Total capital expenditures		$   1,974			$  2,009		$  1,922

Altria Group, Inc.’s operations outside the United States, which are principally in the tobacco and food businesses, are organized into geographic regions within each segment, with Europe being the most significant. Total tobacco and food segment net revenues attributable to customers located in Germany, Altria Group, Inc.’s largest European market, were $8.5 billion, $7.4 billion and $6.8 billion for the years ended December 31, 2003, 2002 and 2001, respectively.

Geographic data for net revenues and long-lived assets (which consist of all financial services assets and non-current consumer products assets, other than goodwill and other intangible assets) were as follows:

(in millions) For the years ended December 31,			2003			2002		2001
	Net revenues:
	United States—domestic		$36,769			$41,067		$43,876
	—export		3,529			3,658		3,866
	Europe		30,842			26,118		22,737
	Other		10,692			9,565		10,400
	Total net revenues		$81,832			$80,408		$80,879
	Long-lived assets:
	United States		25,825			24,308		22,864
	Europe		6,048			4,939		4,328
	Other		3,375			2,981		2,953
	Total long-lived assets		$35,248			$32,228		$30,145