Summary
This Form 8-K filing from Altria Group, Inc. (MO) reports on a significant non-cash asset impairment charge of $245 million recognized by its subsidiary, Kraft Foods Inc. (Kraft), as of January 3, 2007. This charge, related to the Tassimo single-serve hot beverage system, primarily stems from lower-than-anticipated utilization of manufacturing capacity and will impact Kraft's fourth-quarter 2006 financial results. While the impairment is non-cash, it will lead to approximately $3 million in related cash expenditures for decommissioning idle production lines. Investors should note Altria Group's substantial ownership of approximately 88.8% of Kraft, making this a material event impacting the consolidated financial performance of Altria.
Key Highlights
- 1Kraft Foods Inc., a subsidiary of Altria Group, Inc., recorded a $245 million non-cash asset impairment charge.
- 2The impairment is related to the Tassimo single-serve hot beverage system.
- 3The charge is primarily due to lower utilization of existing manufacturing capacity.
- 4The impairment will be reflected in Kraft's fourth-quarter 2006 financial results.
- 5An estimated $3 million in cash expenditures are anticipated for decommissioning idle production lines.
- 6Altria Group, Inc. owns approximately 88.8% of Kraft Foods Inc.
Frequently Asked Questions
The impairment charge is primarily attributed to the lower-than-expected utilization of manufacturing capacity for the Tassimo single-serve hot beverage system.
The $245 million non-cash asset impairment charge will be reflected in Kraft Foods' fourth-quarter 2006 financial results.
Yes, Kraft anticipates approximately $3 million in related cash expenditures, mainly for the decommissioning of idle production lines.
Altria Group, Inc. owns approximately 88.8% of Kraft Foods Inc.