Kraft 2004 Annual Report Download - page 14

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management believes that the final outcome of these proceedings will not have a material adverse effect
on the Company’s consolidated financial position, results of operations or cash flows.
In October 2002, Mr. Mustapha Gaouar and five other family members (collectively ‘‘the Gaouars’’)
filed suit in the Commercial Court of Casablanca against Kraft Foods Maroc and Mr. Omar Berrada
claiming damages of approximately $31 million arising from a non-compete undertaking signed by
Mr. Gaouar allegedly under duress. The non-compete clause was contained in an agreement concluded
in 1986 between Mr. Gaouar and Mr. Berrada acting for himself and for his group of companies, including
Les Cafes Ennasr (renamed Kraft Foods Maroc), which was acquired by Kraft Foods International, Inc.
from Mr. Berrada in 2001. In June 2003, the court issued a preliminary judgment against Kraft Foods
Maroc and Mr. Berrada holding that the Gaouars are entitled to damages for being deprived of the
possibility of engaging in coffee roasting from 1986 due to such non-compete undertaking. At that time,
the court appointed two experts to assess the amount of damages to be awarded. In December 2003,
these experts delivered a report concluding that they could see no evidence of loss suffered by the
Gaouars. The Gaouars asked the court that this report be set aside and new court experts be appointed.
On April 15, 2004, the court delivered a judgment upholding the defenses of Kraft Foods Maroc and
rejecting the claims of the Gaouars. The Gaouars have appealed this judgment. The existence of the
claims of Mr. Gaouar was not disclosed by Mr. Berrada at the time of the Kraft Foods International, Inc.
acquisition of Kraft Foods Maroc in 2001. As a result, in the event that the Company is ultimately found
liable on appeal for damages to plaintiff in this case, the Company believes that it may have claims
against Mr. Berrada for recovery of all or a portion of the amount.
Environmental Matters
In May 2001, the State of Ohio notified the Company that it may be subject to an enforcement action
for alleged past violations of the Company’s wastewater discharge permit at its production facility in
Farmdale, Ohio. In December 2004, the Company finalized a monetary settlement with the State, which
was approved by The Court of Common Pleas for Trumball County on January 3, 2005. The settlement
amount is not material to the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
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