Kraft 2005 Annual Report Download - page 17

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MERRILL CORPORATION MBLOUNT// 9-MAR-06 12:40 DISK126:[06CHI5.06CHI1135]DG1135A.;12
mrll.fmt Free: 75D*/120D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0
DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;51
KRAFT FOODS-FSC CERTIFIED-10K/AR Proj: P1102CHI06 Job: 06CHI1135 File: DG1135A.;12
Merrill Corporation/Chicago (312) 786-6300 Page Dim: 8.250X 10.750Copy Dim: 38. X 54.3
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties.
The Company has 175 manufacturing and processing facilities worldwide. In North America, the
Company has 77 facilities, and outside of North America there are 98 facilities located in 44 countries.
These manufacturing and processing facilities are located throughout the following territories:
Number
of
Territory Facilities
United States ................................................. 59
Canada ..................................................... 18
European Union ............................................... 43
Eastern Europe, Middle East and Africa .............................. 14
Latin America ................................................ 25
Asia Pacific .................................................. 16
Total ..................................................... 175
The Company owns 168 and leases 7 of these manufacturing and processing facilities. All of the
Company’s plants and properties are maintained in good condition, and the Company believes that they
are suitable and adequate for its present needs.
The numbers above include 2 facilities in the United States, 5 facilities in Canada, 9 facilities in the
European Union, 1 facility in Eastern Europe, Middle East and Africa, and 4 facilities in Latin America, all
of which closure or sale has been publicly announced but has not yet been completed.
As of December 31, 2005, the Company’s distribution facilities consisted of 338 distribution centers
and depots worldwide. In North America, the Company had 316 distribution centers and depots, more
than 75% of which support the Company’s direct-store-delivery systems. Outside North America, the
Company had 22 distribution centers in ten countries. The Company owns 47 of these distribution
centers and three of these depots and leases 137 of these distribution centers and 151 of these depots.
The Company believes that all of these facilities are in good condition and have sufficient capacity to
meet the Company’s distribution needs for the foreseeable future.
In January 2004, the Company announced a three-year restructuring program. As part of this
program, the Company anticipated the closure or sale of up to 20 plants. In 2005, the Company
announced the closing of 6 plants, for a total of 19 since January 2004, as part of the restructuring
program. In addition, in January 2006, the Company announced plans to expand its restructuring efforts
beyond those originally contemplated. The expanded restructuring program will result in the anticipated
closure of up to 20 additional facilities, for a total of up to 40 facilities.
Item 3. Legal Proceedings.
Legal Proceedings
The Company is party to a variety of legal proceedings arising out of the normal course of business,
including the matters discussed below. While the results of litigation cannot be predicted with certainty,
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
16
6 C Cs: 36558