Kraft 2009 Annual Report Download - page 4

PART I
Item 1. Business.
General
Kraft Foods is the world’s second largest food company, with revenues of $40.4 billion and earnings from continuing operations before income
taxes of $4.3 billion in 2009. Kraft Foods was incorporated in 2000 in the Commonwealth of Virginia. We have approximately 97,000 employees
worldwide, and we manufacture and market packaged food products, including snacks, beverages, cheese, convenient meals and various
packaged grocery products. We sell our products to consumers in approximately 160 countries. At December 31, 2009, we had operations in more
than 70 countries and made our products at 159 manufacturing and processing facilities worldwide. At December 31, 2009, we had net assets of
$25.9 billion and gross assets of $66.7 billion. We are a member of the Dow Jones Industrial Average, Standard & Poor’s 500, the Dow Jones
Sustainability Index and the Ethibel Sustainability Index.
At December 31, 2009, our portfolio included nine brands with annual revenues exceeding $1 billion each: Kraft cheeses, dinners and dressings;
Oscar Mayer meats; Philadelphia cream cheese; Maxwell House and Jacobs coffee; Nabisco cookies and crackers and its Oreo cookie brand;
Milka chocolates; and LU biscuits. Our portfolio included approximately 50 brands which each generate annual revenues of more than $100
million.
Prior to June 13, 2001, Kraft Foods was a wholly owned subsidiary of Altria Group, Inc. (“Altria”). On June 13, 2001, we completed an initial public
offering of 280,000,000 shares of our Common Stock. In the first quarter of 2007, Altria spun off its remaining interest (89.0%) in Kraft Foods on a
pro rata basis to Altria stockholders in a tax-free transaction. Effective as of the close of business on March 30, 2007, all Kraft Foods shares
owned by Altria were distributed to Altria’s stockholders, and our separation from Altria was completed.
Because Kraft Foods Inc. is a holding company, our principal source of funds is from our subsidiaries. Our wholly owned subsidiaries currently are
not limited by long-term debt or other agreements in their ability to pay cash dividends or make other distributions with respect to their common
stock.
Reportable Segments
We manage and report operating results through three geographic units: Kraft Foods North America, Kraft Foods Europe and Kraft Foods
Developing Markets. We manage the operations of Kraft Foods North America and Kraft Foods Europe by product category, and we manage the
operations of Kraft Foods Developing Markets by location. Our reportable segments are U.S. Beverages, U.S. Cheese, U.S. Convenient Meals,
U.S. Grocery, U.S. Snacks, Canada & North America Foodservice, Kraft Foods Europe (formerly known as European Union) and Kraft Foods
Developing Markets.
In January 2009, we began implementing changes to our operating structure based on our Organizing For Growth initiative and the Kraft Foods
Europe Reorganization. In line with our strategies, we are reorganizing our European operations to function on a pan-European centralized
category management and value chain model, and we changed how we work in Europe in two key ways:
• We transitioned our European Biscuit, Chocolate, Coffee and Cheese categories to fully integrated business units, further
strengthening our focus on these core categories. To ensure decisions are made faster and closer to our customers and consumers,
each category is fully accountable for its financial results, including marketing, manufacturing and R&D. Category leadership, based in
Zurich, Switzerland, reports to the Kraft Foods Europe President. These business units now comprise the Kraft Foods Europe
segment.
• We aligned the reporting of our Central Europe operations into our Kraft Foods Developing Markets segment to help build critical scale
in these countries. We operate a country-led model in these markets.
Note 16, Segment Reporting, to our consolidated financial statements includes a breakout of net revenues, segment operating income, total
assets, depreciation expense and capital expenditures by reportable segment, as well as a breakout of net revenues, long-lived assets and total
assets by geographic region. Management uses segment
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Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠