Kraft 2008 Annual Report Download - page 13

the Danone Biscuit facility from the proceeds of the issuance of investment grade bonds or other securities; our expectation to continue to meet financial
covenants under our revolving credit facility; the amount of our expected payment for tax liabilities; our expectation to complete the current authorization under
our share repurchase program before the authorization expires in March 2009; and our 2008 Outlook, specifically diluted EPS, costs, savings and spending
related to our Restructuring Program; and our 2008 effective tax rate.
These forward-looking statements involve risks and uncertainties, and the cautionary statements contained in the “Risk Factors” found in this Annual Report on
Form 10-K identify important factors that could cause actual results to differ materially from those predicted in any such forward-looking statements. Such
factors, include, but are not limited to, continued 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 from our suppliers, the ability to supply our products and meet demand for our products, our indebtedness and our ability to pay our
indebtedness, unexpected safety or manufacturing issues, FDA or other regulatory actions or delays, unanticipated expenses such as litigation or legal settlement
expenses, our inability to successfully integrate the Danone Biscuit business, our failure to consummate the Post merger, a shift in our product mix to lower
margin offerings, risks from operating internationally, our ability to protect our intellectual and other proprietary rights, our ability to retain key employees and
tax law changes. We disclaim and do not undertake any obligation to update or revise any forward-looking statement in this Form 10-K.
Item 1A. Risk Factors.
You should read the following risk factors carefully in connection with evaluating our business and the forward-looking information contained in this Annual
Report on Form 10-K. Any of the following risks could materially adversely affect our business, operating results, financial condition and the actual outcome of
matters as to which forward-looking statements are made in this Annual Report on Form 10-K. While we believe we have identified and discussed below the key
risk factors affecting our business, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be
significant that may adversely affect our business, performance or financial condition in the future.
We operate in a highly competitive industry, which may affect our profitability.
The food industry is intensely competitive. We compete based on price, product innovation, product quality, brand recognition and loyalty, effectiveness of
marketing, promotional activity and the ability to identify and satisfy consumer preferences. From time to time, we may need to reduce our prices in response
to competitive and customer pressures and to maintain our market share. Competition and customer pressures, however, also may restrict our ability to increase
prices in response to commodity and other input cost increases. Our results of operations will suffer if profit margins decrease, as a result of either a reduction in
prices or increased input costs, and if we are unable to increase sales volumes to offset those profit margin decreases.
We may also need to increase spending on marketing, advertising and new product innovation to protect existing market share or capture increased market share.
The success of our investments is subject to risks, including uncertainties about trade and consumer acceptance. As a result, our increased expenditures may not
maintain or enhance market share and could result in lower profitability.
Our brand image may be challenged to compete against lower-priced private label items, particularly in times of economic downturns.
Retailers are increasingly offering private label products that compete with our products. Consumers’ willingness to purchase our products will depend upon our
ability to offer products that appeal to consumers at the right price. It is also important that our products are perceived to be of a higher quality than less
expensive alternatives. If the difference in quality between our products and those of store brands narrows, or if such difference in quality is perceived to have
narrowed, then consumers may not buy our products. Furthermore, during periods of economic uncertainty, consumers tend to purchase more private label or
other economy brands, which could reduce sales volumes of our higher margin products or there could be a shift in our product mix to our lower margin
offerings. If we are not able to maintain or improve our brand image, it could have a material affect on our market share and our profitability.
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Source: KRAFT FOODS INC, 10-K, February 25, 2008 Powered by Morningstar® Document Research℠