Kraft 2007 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    In 2007, we hit fast forward

  • Page 3
    to become a new Kraft. We invite you to learn how.

  • Page 4
    We are looking at everything

  • Page 5
    differently... From our products and packaging to where and how we do business to how we bring products to market to the ways we connect with our consumers and customers. But, ultimately, words don't matter. Actions do.

  • Page 6
    ... & CEO Our New Product Pipeline Memorable Marketing Moments Growing Through Acquisition Connecting to Consumers Expanding Go-to-Market Opportunities Growing the Oreo Brand Brewing a Strong Coffee Presence Reinventing Salad Dressing Making a Chocolate Sensation Bringing Premium Pizza Home Say Cheese

  • Page 7

  • Page 8
    We are turning the brands that consumers have lived with for years, into brands they can't live without.

  • Page 9
    ... are definitely changing. But one thing remains the same-our commitment to returning Kraft to reliable growth and to returning value to you, our shareholders. Last year, we laid out our three-year growth plan. We said 2007 would be an investment year-a time to step back and rebuild our brands and...

  • Page 10
    ...actions to strengthen our portfolio-acquiring Groupe Danone's global biscuit business, selling Veryfine and Fruit2O and announcing the merger of the Post cereal business into Ralcorp. (in millions, except per share data) 2007 $37,241 4,331 2,590 1.62 % Change 8.4% (4.2%) (15.4%) (12.4%) Financial...

  • Page 11
    ... with the strongest Kraft veterans. - Tying our annual bonuses and long-term incentive plan more directly to measures that investors value and our people can control-revenue, operating income and cash flow. - Improving our organizational structure and processes by creating business units that are...

  • Page 12
    ... non-GAAP reporting in our earnings releases and EPS guidance. On the quality side, our shift from "good enough" to "truly delicious" has had a measurable impact. In 2006, only 44% of our global revenue came from products that consumers preferred to the competition. In 2007, that number jumped to...

  • Page 13
    ... per share Results of Operations by Business Segment North America Beverages Net revenues Segment operating income* Cheese & Foodservice Net revenues Segment operating income* Convenient Meals Net revenues Segment operating income* Grocery Net revenues Segment operating income* Snacks & Cereals Net...

  • Page 14
    2007 Consumer Sector Data Net Revenues in Billions* Percentage of 2007 Net Revenues* Revenue Change Versus Prior Year Snacks $ 11.4 8.1 6.9 5.8 5.1 37.2 * 31 % + 13.3 % 10.0 % + Beverages $ 22 % 19 % 15% 14% We are one of the largest food and beverage companies in the world. Hundreds of ...

  • Page 15
    ... closing price of such stock on June 29, 2007, was $56 billion. At January 31, 2008, there were 1,533,315,478 shares of the registrant's Class A Common Stock outstanding. Documents Incorporated by Reference Portions of the registrant's definitive proxy statement for use in connection with its annual...

  • Page 16
    ... Controls and Procedures Report of Management on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm Other Information 15 17 18 43 45 82 82 83 84 85 Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of...

  • Page 17
    ...food products, including snacks, beverages, cheese, convenient meals and various packaged grocery products. We manage and report operating results through two commercial units, Kraft North America and Kraft International. Kraft North America operates in the U.S. and Canada, and we manage Kraft North...

  • Page 18
    ... dinners, lunch combinations and processed meats. The following table shows each reportable segment's participation in these five core consumer sectors. Percentage of 2007 Net Revenues by Consumer Sector (2) Convenient Beverages Cheese Grocery Meals Segment (1) Snacks Total Kraft North America...

  • Page 19
    ... pudding snacks; Kraft and Miracle Whip spoonable dressings; Kraft and Good Seasons salad dressings; A.1.steak sauce; Kraft and Bull's-Eye barbecue sauces; Grey Poupon premium mustards; Shake N' Bake coatings; and Kraft peanut butter. North America Snacks & Cereals Snacks: Cheese: Grocery: Kraft...

  • Page 20
    Cheese: Grocery: Convenient Meals: (1) Kraft, Velveeta, and Eden process cheeses; Kraft and Philadelphia cream cheese; Kraft natural cheese; and Cheez Whiz process cheese spread. Royal dry packaged desserts; Post ready-to-eat cereals; Kraft spoonable and pourable salad dressings; Miracle Whip ...

  • Page 21
    ... company-operated and public cold-storage facilities, depots and other facilities. We currently distribute most products in North America through warehouse delivery, but we deliver biscuits and frozen pizza through two direct-store delivery systems. We are in the process of combining the executional...

  • Page 22
    ... pizzas for sale in grocery stores in the U.S. and Canada; Pebbles ready-to-eat cereals for sale in the U.S. and Canada; and South Beach Living pizzas, meals, breakfast wraps, lunch wrap kits, crackers, cookies, snack bars, cereals and dressings for sale in grocery stores in the U.S. Additionally...

  • Page 23
    ... practices related to the sale of dairy products and imposing their own labeling requirements on food products. Many of the food commodities we use in our U.S. operations are subject to governmental agricultural programs. These programs have substantial effects on prices and supplies and are subject...

  • Page 24
    ... to her current position, Ms. Spence served as the Senior Vice President, Research and Development, Kraft Foods North America. She joined Kraft in 1981. Ms. West was appointed as Executive Vice President and Chief Marketing Officer in October 2007. Previously, she served as a Group Vice President...

  • Page 25
    ... to be tax-free to our U.S. shareholders, the effects depending on whether we determine to do a spin-off or a split-off and the amount of cash we will receive; with regard to the Danone global biscuit business that we plan to build profitable scale by expanding distribution reach in countries...

  • Page 26
    ... higher input costs, pricing actions, increased competition, our ability to differentiate our products from private label products, increased costs of sales, our ability to realize the expected cost savings and spending from our planned Restructuring Program, difficulty in obtaining materials...

  • Page 27
    ...increases, and they demand lower pricing, increased promotional programs and specifically tailored products. They also may use shelf space currently used for our products for their own private label products. If we fail to respond to these trends, our volume growth could slow or we may need to lower...

  • Page 28
    ... relationships with suppliers and customers, inaccurate estimates of fair value made in the accounting for acquisitions and amortization of acquired intangible assets which would reduce future reported earnings, potential loss of customers or key employees of acquired businesses, and indemnities and...

  • Page 29
    .... The numbers above include these facilities. As of December 31, 2007, our distribution facilities consisted of 313 distribution centers and depots worldwide. In North America, we had 302 distribution centers and depots, more than 75% of which support our direct-store-delivery systems. Outside North...

  • Page 30
    ...ended December 31, 2007 was: Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)(2) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) Period Total Number of Shares Purchased Average Price Paid per Share October 1-October...

  • Page 31
    ... return of the S&P 500 Index and the performance peer group index. The graph assumes the reinvestment of all dividends on a quarterly basis. Kraft Foods $200 S&P 500 Performance Peer Group $150 $100 $50 $0 12/02 12/03 12/04 12/05 12/06 12/07 Date Kraft Foods S&P 500 Performance Peer Group...

  • Page 32
    ... assets Long-term debt Total debt Shareholders' equity Common dividends declared as a % of Basic EPS Common dividends declared as a % of Diluted EPS Book value per common share outstanding Market price per Common Stock share - high/low Closing price of Common Stock at year end Price / earnings ratio...

  • Page 33
    ... corporate purposes, including the repayment of outstanding commercial paper and a portion of the bridge facility used to fund our Danone Biscuit acquisition. In the third quarter of 2007, our Board of Directors approved an 8.0% increase in the current quarterly dividend rate to $0.27 per share...

  • Page 34
    ...using our large scale as a competitive advantage as we better leverage our portfolio. Our "Wall-to-Wall" initiative for Kraft North America combined the executional benefits of direct store delivery used in our Biscuit business unit with the economics of our warehouse delivery to drive faster growth...

  • Page 35
    ... Divestitures Danone Biscuit: On November 30, 2007, we acquired the global biscuit business of Groupe Danone S.A. ("Danone Biscuit") for â,¬5.1 billion (approximately $7.6 billion) in cash subject to purchase price adjustments. On October 12, 2007, we entered into a 364-day bridge facility agreement...

  • Page 36
    ... 15, 2007, we announced a definitive agreement to merge our Post cereals business ("Post Business") into Ralcorp Holdings, Inc. ("Ralcorp") after a tax-free distribution to our shareholders (the "Post Distribution"). We have signed an agreement with Ralcorp to execute the Post Distribution by means...

  • Page 37
    ... Years Ended December 31, 2007 2006 (in millions) 2005 North America Beverages North America Cheese & Foodservice North America Convenient Meals North America Grocery North America Snacks & Cereals European Union Developing Markets (1) Gains on divestitures, net $ 5 (12) (8) (15) $ 95 8 (226...

  • Page 38
    ... the European Principal Company ("EPC") will manage the European Union segment categories centrally and make decisions for all aspects of the value chain, except for sales and distribution. The European subsidiaries will execute sales and distribution locally, and the local production companies will...

  • Page 39
    ... Policies, Altria transferred our federal tax contingencies of $375 million to our balance sheet and related interest income of $77 million, or $0.03 per diluted share, as a result of the Distribution. Following the Distribution, we are no longer a member of the Altria consolidated tax return group...

  • Page 40
    ... costs, including higher commodity costs, net of the impact of higher pricing ($533 million), higher marketing, administration and research costs ($338 million, including higher marketing support), an asset impairment charge related to our flavored water and juice brand assets and related trademarks...

  • Page 41
    ..., we benefited $.04 per diluted share due to the 2006 share repurchase activity. Results of Operations by Business Segment We manage and report operating results through two commercial units, Kraft North America and Kraft International. We manage Kraft North America's operations by product category...

  • Page 42
    ... our reportable segments for 2007 with 2006, and for 2006 with 2005. For the Years Ended December 31, 2006 (in millions) 2007 2005 Net revenues: North America Beverages North America Cheese & Foodservice North America Convenient Meals North America Grocery North America Snacks & Cereals European...

  • Page 43
    ... plant, an asset impairment charge related to Tassimo hot beverage system, higher commodity costs and higher Restructuring Program costs, partially offset by higher pricing. North America Cheese & Foodservice For the Years Ended December 31, 2007 2006 (in millions) $ change % change Net revenues...

  • Page 44
    ... on sale of industrial coconut assets, partially offset by favorable costs (primarily cheese commodity costs), net of lower net pricing, lower fixed manufacturing costs and favorable currency. North America Convenient Meals For the Years Ended December 31, 2007 2006 (in millions) $ change % change...

  • Page 45
    ... and research costs, favorable currency and higher pricing, net of unfavorable costs. These favorabilities were partially offset by unfavorable volume/mix and the impact of divestitures. North America Snacks & Cereals For the Years Ended December 31, 2007 2006 (in millions) $ change % change Net...

  • Page 46
    ... snacks and hot cereal assets and trademarks, higher product costs, the impact of divestitures and higher Restructuring Program costs. These unfavorable items were partially offset by higher net pricing, the 2005 asset impairment charge in anticipation of the 2006 sale of a small U.S. biscuit brand...

  • Page 47
    ... the reported amounts of net revenues and expenses during the reporting periods. Significant accounting policy elections, estimates and assumptions include, among others, pension and benefit plan assumptions, lives and valuation assumptions of goodwill and intangible assets, marketing programs and...

  • Page 48
    ... consolidated statement of earnings for the year ended December 31, 2005, versus 52 weeks for the years ended December 31, 2007 and 2006. The results of operations from our newly acquired global biscuit business of Groupe Danone S.A. will be reported on a one month lag. We account for investments in...

  • Page 49
    ... values of assets acquired and liabilities assumed. Insurance & Self-Insurance: We use a combination of insurance and self-insurance for a number of risks, including workers' compensation, general liability, automobile liability, product liability and our obligation for employee healthcare benefits...

  • Page 50
    ... the use of various actuarial assumptions, such as discount rates, assumed rates of return on plan assets, compensation increases, turnover rates and health care cost trend rates. We review our actuarial assumptions on an annual basis and make modifications to the assumptions based on current rates...

  • Page 51
    ... rates using a portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the benefit obligations. Changes in our discount rates are primarily the result of changes in bond yields year-over-year. Our expected rate of return on plan assets...

  • Page 52
    ... not occur, we recognize the gain or loss in earnings currently. By using derivatives to hedge exposures to changes in exchange rates and commodity prices, Kraft has exposure on these derivatives to credit and market risk. We are exposed to credit risk that the counterparty might fail to fulfill its...

  • Page 53
    ... 30, 2007, we acquired the global biscuit business of Groupe Danone S.A. for approximately â,¬5.1 billion (approximately $7.6 billion) in cash subject to purchase price adjustments. During 2007, we received proceeds of $216 million from the sales of our flavored water and juice brand assets and...

  • Page 54
    and net outstanding borrowings of $5.5 billion under the bridge facility used to fund our Danone Biscuit acquisition, partially offset by $3.7 billion in Common Stock share repurchases and a $1.5 billion repayment of long-term debt that matured in 2007. During 2006, we used $3.7 billion net cash in ...

  • Page 55
    ... $364 million of accrued dividends. Prior to the Distribution, the amounts payable to Altria generally included accrued dividends, taxes and service fees. Credit Ratings: At December 31, 2007, our debt ratings by major credit rating agencies were: Short - term Long - term Moody's Standard & Poor...

  • Page 56
    ...Based Compensation: At the Distribution, Altria stock awards were modified through the issuance of Kraft stock awards, and accordingly the Altria stock awards were split into two instruments. Holders of Altria stock options received: 1) a new Kraft option to acquire shares of Kraft Common Stock; and...

  • Page 57
    ...on the number of shares granted and the market value at date of grant. The fair value of stock options is determined using a modified Black-Scholes methodology. The impact of adoption was not material. At December 31, 2007, the number of shares to be issued upon exercise of outstanding stock options...

  • Page 58
    ..., unanticipated earnings fluctuations that may arise from volatility in foreign currency exchange rates and commodity prices. We occasionally use related futures to cross-hedge a commodity exposure, however we are not a party to leveraged derivatives and, by policy, do not use financial instruments...

  • Page 59
    ...adverse movements in interest rates, foreign currency rates and commodity prices under normal market conditions. The computation does not represent actual losses in fair value or earnings to be incurred by Kraft, nor does it consider the effect of favorable changes in market rates. We cannot predict...

  • Page 60
    ... 31, (in millions of dollars, except per share data) 2007 2006 2005 Net revenues Cost of sales Gross profit Marketing, administration and research costs Asset impairment and exit costs Gain on redemption of United Biscuits investment Gains on divestitures, net Amortization of intangibles Operating...

  • Page 61
    ..., plant and equipment, net Goodwill Intangible assets, net Prepaid pension assets Other assets TOTAL ASSETS LIABILITIES Short-term borrowings Current portion of long-term debt Due to Altria Group, Inc. and affiliates Accounts payable Accrued liabilities: Marketing Employment costs Dividends payable...

  • Page 62
    ... comprehensive earnings Initial adoption of FIN 48 (Note 1) Exercise of stock options and issuance of other stock awards Net settlement of employee stock awards with Altria Group, Inc. (Note 8) Cash dividends declared ($1.04 per share) Common Stock repurchased Other Balances at December 31, 2007...

  • Page 63
    ...acquisitions and divestitures: Receivables, net Inventories Accounts payable Income taxes Amounts due to Altria Group, Inc. and affiliates Other working capital items Change in pension assets and postretirement liabilities, net Other Net cash provided by operating activities CASH PROVIDED BY / (USED...

  • Page 64
    ...Kraft common stock into Class A shares of Kraft common stock. The Distribution ratio was calculated by dividing the number of shares of Kraft Common Stock held by Altria by the number of Altria shares outstanding on the record date, March 16, 2007. The distribution ratio was 0.692024 shares of Kraft...

  • Page 65
    ... assets. No impairments resulted from this review. Insurance & Self-Insurance: We use a combination of insurance and self-insurance for a number of risks, including workers' compensation, general liability, automobile liability, product liability and our obligation for employee healthcare benefits...

  • Page 66
    ... that Altria used our foreign tax credits and other tax benefits in its consolidated federal income tax return, we recognized the benefit in the calculation of our provision for income taxes. This benefit was approximately $270 million in 2007 (both through the date of Distribution as well as post...

  • Page 67
    ... No. 123, Accounting for Stock-Based Compensation ("SFAS No. 123"). No compensation expense for employee stock options was reflected in net earnings in 2005, as all stock options granted under those plans had an exercise price equal to the market value of the common stock on the date of the grant...

  • Page 68
    ...which change the way companies account for business combinations, are effective for Kraft as of January 1, 2009. This statement requires the acquiring entity in a business combination to recognize assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value...

  • Page 69
    ... European Union segment reorganization. During the second quarter of 2006, we entered into a seven-year, $1.7 billion agreement to receive information technology services from Electronic Data Systems ("EDS"). On June 1, 2006, we began using EDS's data centers, and EDS started providing us with web...

  • Page 70
    ... Restructuring Program were: 2007 2006 (in millions) 2005 Net Revenues Cost of sales Marketing, administration and research costs Total implementation costs Asset Impairment Charges $ 67 60 $ 25 70 $ 2 56 29 $2 $ 127 $ 95 $ 87 In 2007, we sold our flavored water and juice brand assets...

  • Page 71
    ... 31, 2007 Total Asset Asset Impairment Implementation Impairment and Exit Costs Costs (in millions) Restructuring Costs Total North America Beverages North America Cheese & Foodservice North America Convenient Meals North America Grocery North America Snacks & Cereals European Union Developing...

  • Page 72
    ...-amortizable intangible assets consist substantially of brand names purchased through our acquisitions of Nabisco Holdings Corp. ("Nabisco"), the global biscuit business of Groupe Danone S.A. ("Danone Biscuit"), and certain United Biscuits operations (see Note 11, Acquisitions, for further details...

  • Page 73
    ... 10,244 $ Significant changes to goodwill and intangible assets during 2007 were: • Acquisitions - We increased goodwill by $5,239 million and intangible assets by $2,196 million related to preliminary allocations of purchase price for our acquisition of Danone Biscuit. The allocations are based...

  • Page 74
    ... credit facility that we have historically used for general corporate purposes and to support our commercial paper issuances. The $4.5 billion, multi-year revolving credit facility expires in April 2010. No amounts were drawn on this facility at December 31, 2007. We must maintain a net worth...

  • Page 75
    ... quarterly, and began on November 13, 2007. On December 12, 2007, we issued $3.0 billion of senior unsecured notes, and used the net proceeds ($2,966 million) for general corporate purposes, including the repayment of outstanding commercial paper and a portion of our Danone Biscuit Bridge Facility...

  • Page 76
    ... additional tax expense of $280 million from the sale of the sugar confectionery business. After the implementation of FIN 48 on January 1, 2007, our unrecognized tax benefits were $667 million. If we had recognized all of these benefits, the net impact on our income tax provision would have been...

  • Page 77
    ... earnings, and the effect on foreign deferred taxes from lower foreign tax rates enacted in 2007, partially offset by other foreign tax expense items. The 2007 tax rate also benefited from an increased domestic manufacturing deduction and the divestiture of our flavored water and juice brand assets...

  • Page 78
    ... benefits Other Total deferred income tax assets Valuation allowance Net deferred income tax assets Deferred income tax liabilities: Trade names Property, plant and equipment Prepaid pension costs Other Total deferred income tax liabilities Net deferred income tax liabilities Note 6. Capital Stock...

  • Page 79
    At the Distribution, Altria converted all of its Class B shares of Kraft common stock into Class A shares of Kraft common stock. Following the Distribution, we only have Class A common stock outstanding. There were 1.18 billion Class B common shares issued and outstanding at December 31, 2006, which...

  • Page 80
    ... adjustments Amortization of experience losses and prior service costs Pension settlement Net actuarial gain arising during period Change in fair value of derivatives accounted for as hedges Total other comprehensive earnings Balances at December 31, 2007 Note 8. Stock Plans: $ (890) (400...

  • Page 81
    ... 300,000 stock options under the 2005 Performance Incentive Plan, which vest under varying market and service conditions and expire ten years after the grant date. Prior to our IPO, certain Kraft employees participated in Altria's stock compensation plans. Other than reloads of previously issued...

  • Page 82
    ... restricted share or right, in 2005. The vesting date fair value of restricted stock and rights was $153 million in 2007, $123 million in 2006 and $2 million in 2005. Note 9. Benefit Plans: In September 2006, the FASB issued SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other...

  • Page 83
    ... and Canadian subsidiaries provide health care and other benefits to most retired employees. Local government plans generally cover health care benefits for retirees outside the U.S. and Canada. The plan assets and benefit obligations of our U.S. and Canadian pension plans are measured at December...

  • Page 84
    ... future cash flows of the benefit obligations. The 2007 year-end discount rates for our non-U.S. plans (other than Canadian pension plans) were developed from local bond indices that match local benefit obligations as closely as possible. Components of Net Periodic Pension Cost: Net periodic pension...

  • Page 85
    The following weighted-average assumptions were used to determine our net pension cost for the years ended December 31: 2007 U.S. Plans 2006 2005 2007 Non-U.S. Plans 2006 2005 Discount rate Expected rate of return on plan assets Rate of compensation increase 5.90% 8.00% 4.00% 5.60% 8.00% 4.00% ...

  • Page 86
    ...for the years ended December 31: U.S. Plans 2006 Canadian Plans 2006 2007 2005 2007 2005 Discount rate Health care cost trend rate 5.90% 8.00% 5.60% 8.00% 5.75% 8.00% 5.00% 8.50% 5.00% 9.00% 5.75% 9.50% In 2008, the discount rate used to determine our net postretirement cost will be 6.10...

  • Page 87
    ...-average assumptions were used to determine our postretirement benefit obligations at December 31: U.S. Plans 2007 2006 Canadian Plans 2007 2006 Discount rate Health care cost trend rate assumed for next year Ultimate trend rate Year that the rate reaches the ultimate trend rate 6.10% 7.50% 5.00...

  • Page 88
    ... average shares for diluted EPS because they were antidilutive. Note 11. Acquisitions: Danone Biscuit: On November 30, 2007, we acquired the global biscuit business of Groupe Danone S.A. ("Danone Biscuit") for â,¬5.1 billion (approximately $7.6 billion) in cash subject to customary purchase price...

  • Page 89
    ... 15, 2007, we announced a definitive agreement to merge our Post cereals business ("Post Business") into Ralcorp Holdings, Inc. ("Ralcorp") after a tax-free distribution to our shareholders (the "Post Distribution"). We have signed an agreement with Ralcorp to execute the Post Distribution by means...

  • Page 90
    ..., auditing, insurance, human resources, office of the secretary, corporate affairs, information technology, aviation and tax services. Billings for these pre-spin services, which were based on the cost to ALCS to provide such services and a 5% management fee based on wages and benefits, were $19...

  • Page 91
    ...As of December 31, 2007, we had hedged forecasted commodity transactions for periods not exceeding the next 19 months. Foreign currency cash flow hedges: We use various financial instruments to mitigate our exposure to changes in exchange rates from third-party and intercompany actual and forecasted...

  • Page 92
    ... packaged food products, including snacks, beverages, cheese, convenient meals and various packaged grocery products. We manage and report operating results through two commercial units, Kraft North America and Kraft International. We manage Kraft North America's operations by product category...

  • Page 93
    ... Accounting Policies. Segment data were: For the Years Ended December 31, 2007 2006 (in millions) 2005 Net revenues: North America Beverages North America Cheese & Foodservice North America Convenient Meals North America Grocery North America Snacks & Cereals European Union Developing Markets Net...

  • Page 94
    ... International into sector components and Cereals into the Grocery sector, were: For the Year Ended December 31, 2007 Kraft North Kraft America International Total (in millions) Consumer Sector: Snacks Beverages Cheese Grocery Convenient Meals Total net revenues $ 5,704 3,499 5,199 4,198 5,339...

  • Page 95
    ... Years Ended December 31, 2007 2006 2005 (in millions) Depreciation expense from continuing operations: North America Beverages North America Cheese & Foodservice North America Convenient Meals North America Grocery North America Snacks & Cereals European Union Developing Markets Total depreciation...

  • Page 96
    ...$ $ $ $ $ Note 17. Quarterly Financial Data (Unaudited): First 2007 Quarters Second Third (in millions, except per share data) Fourth Net revenues Gross profit Net earnings Weighted average shares for diluted EPS Per share data: Basic EPS Diluted EPS Dividends declared Market price - high - low...

  • Page 97
    ... procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. We acquired the global biscuit business of Groupe Danone S.A. ("Danone Biscuit") on November 30, 2007, and it represents approximately 14.0% of our total assets as of December 31, 2007. As the...

  • Page 98
    ... of our internal control over financial reporting. We acquired the global biscuit business of Groupe Danone S.A. ("Danone Biscuit") on November 30, 2007, and it represents approximately 14.0% of our total assets as of December 31, 2007. As the acquisition occurred late in 2007, the scope of our...

  • Page 99
    ... over Financial Reporting, management has excluded Groupe Danone S.A.'s global biscuit operations ("Danone Biscuit") from its assessment of internal control over financial reporting as of December 31, 2007 because it was acquired by the Company in a purchase business combination during 2007. We have...

  • Page 100
    ...other filings we make with the SEC. On May 17, 2007, we filed our Annual CEO Certification as required by Section 303A.12 of the New York Stock Exchange Listed Company Manual. Item 11. Executive Compensation. Information about director compensation is in our 2007 Proxy Statement under the heading...

  • Page 101
    ... Annual Report: RMT Transaction Agreement, among the Registrant, Cable Holdco, Inc., Ralcorp Holdings, Inc. and Ralcorp Mailman LLC., dated as of November 15, 2007. (1) * Master Sale and Purchase Agreement between Groupe Danone S.A. and Kraft Foods Global, Inc., dated October 29, 2007. (2) Articles...

  • Page 102
    ... Grantor Trust Enrollment Agreement. (11) + 2006 Stock Compensation Plan for Non-Employee Directors. (12) + Form of Kraft Foods Inc. Change in Control Plan for Key Executives, dated April 24, 2007. (9) + Offer of Employment letter between the Registrant and Irene B. Rosenfeld entered into as of June...

  • Page 103
    ...(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. KRAFT FOODS INC. By: /s/ TIMOTHY R. MCLEVISH (Timothy R. McLevish, Executive Vice President and Chief Financial Officer) Date: February 26...

  • Page 104
    ... REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors and Shareholders of Kraft Foods Inc.: Our audits of the consolidated financial statements and of the effectiveness of internal control over financial reporting referred to in our report dated February...

  • Page 105
    Kraft Foods Inc. and Subsidiaries Valuation and Qualifying Accounts for the years ended December 31, 2007, 2006 and 2005 (in millions) Col. A Col. B Balance at Beginning of Period Col. C Additions Charged to Charged to Costs and Other Expenses Accounts (a) Col. D Col. E Balance at End of Period ...

  • Page 106
    ... 4 Member of Public Affairs Committee Corporate and Shareholder Information Headquarters Kraft Foods Inc. Three Lakes Drive Northfield, IL 60093-2753 www.kraft.com Transfer Agent, Registrar and Direct Purchase Plan Administrator Wells Fargo Bank, N.A. Shareholder Account Information Wells Fargo...

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