Kraft 2007 Annual Report Download - page 23

six key technology centers: East Hanover, New Jersey; Glenview, Illinois; Tarrytown, New York; Banbury, United Kingdom;
Paris, France; and Munich, Germany. These technology centers are equipped with pilot plants and state-of-the-art instruments.
Research and development expense was $447 million in 2007, $419 million in 2006 and $385 million in 2005.
Regulation
Our U.S. food products and packaging materials are regulated by the Food and Drug Administration or, for products containing
meat and poultry, the Food Safety and Inspection Service of the U.S. Department of Agriculture. These agencies enact and
enforce regulations relating to the manufacturing, distribution and labeling of food products.
In addition, various states regulate our U.S. operations by licensing plants, enforcing federal and state standards for selected
food products, grading food products, inspecting plants and warehouses, regulating trade 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 to Congressional and administrative review.
All of our non-U.S.-based operations are subject to local and national regulations some of which are similar to those applicable
to our U.S. operations. For example, in the EU, requirements apply to labeling, packaging, food content, pricing, marketing and
advertising and related areas.
Environmental Regulation
We are subject to various federal, state, local and foreign laws and regulations relating to the protection of the environment. We
accrue for environmental remediation obligations on an undiscounted basis when amounts are probable and can be reasonably
estimated. The accruals are adjusted as new information develops or circumstances change. Recoveries of environmental
remediation costs from third parties are recorded as assets when their receipt is deemed probable. In the U.S., the laws and
regulations include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act and Superfund, which
imposes joint and severable liability on each responsible party. As of December 31, 2007, our subsidiaries were involved in 70
active Superfund and other similar actions in the U.S. related to current operations and certain former or divested operations for
which we retain liability.
Outside the U.S., we are subject to applicable multi-national, national and local environmental laws and regulations in the host
countries in which we do business. We have specific programs across our international business units designed to meet
applicable environmental compliance requirements.
Based on information currently available, we believe that the ultimate resolution of existing environmental remediation actions
and our compliance in general with environmental laws and regulations will not have a material effect on our financial results.
However, we cannot quantify with certainty the potential impact of future compliance efforts and environmental remediation
actions.
Employees
At December 31, 2007, we employed approximately 103,000 people worldwide. Labor unions represent approximately 30% of
our 41,000 employees in the U.S. Most of the unionized workers at our domestic locations are represented under contracts with
the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union; the United Food and Commercial Workers
International Union; and the International Brotherhood of Teamsters. These contracts expire at various times throughout the
next several years. Outside the U.S., labor unions or workers’ councils represent approximately 55% of our 62,000 employees.
Our business units are subject to various laws and regulations relating to their relationships with their employees. These laws
and regulations are specific to the location of each enterprise. In addition, in accordance with EU requirements, we have
established European Works Councils composed of management and elected members of our workforce. We believe that our
relationships with employees and their representative organizations are good.
In January 2004, we announced a three-year restructuring program (the “Restructuring Program”) and, in January 2006,
extended it through 2008. In connection with our severance initiatives, we have eliminated approximately 11,000 positions as of
December 31, 2007; at that time we had announced the elimination of an additional 400 positions. Upon completion of the
Restructuring Program, we expect to have eliminated approximately 13,500 positions.
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