Kraft 2010 Annual Report Download - page 19

These facilities are located throughout the following regions:
Region
Number of
Manufacturing
Facilities
Number of
Distribution
Facilities
U.S. 46 128
Canada 11 11
Western Europe 59 23
Central & Eastern Europe, Middle East and Africa 50 8
Latin America 20 6
Asia Pacific 37 60
Total 223 236
These facilities are in good condition, and we believe they have sufficient capacity to meet our distribution needs in the near term.
Item 3. Legal Proceedings.
We routinely are involved in legal proceedings, claims, and governmental inspections or investigations ("Legal Matters") arising in the ordinary course of our
business.
On November 29, 2010, we initiated an arbitration proceeding against Starbucks Coffee Company ("Starbucks") to challenge Starbucks attempt to end our
retail coffee agreement without compensating us pursuant to the agreement's termination provisions. On December 6, 2010, in a separate proceeding, we filed
a motion for preliminary injunction in the U.S. District Court for the Southern District of New York against Starbucks to enjoin Starbucks from unilaterally
terminating our agreement. The District Court denied our motion for preliminary injunction on January 28, 2011. On February 25, 2011, the U.S. Court of
Appeals for the Second Circuit upheld the U.S. District Court's ruling. Despite this ruling, our arbitration proceeding, which we are vigorously pursuing, will
continue.
A compliant and ethical corporate culture, which includes adhering to laws and industry regulations in the United States and abroad, is integral to our success.
To this end, after we acquired Cadbury in February 2010 we began reviewing and adjusting, as needed, Cadbury's operations in light of U.S. and international
standards as well as Kraft Foods' policies and practices. We initially focused on such high priority areas as food safety, the Foreign Corrupt Practices Act
("FCPA") and antitrust. Based upon Cadbury's pre-acquisition policies and compliance programs and our post-acquisition reviews, our preliminary findings
indicated that Cadbury's overall state of compliance was sound. Nonetheless, through our reviews, we determined that in certain jurisdictions, including India,
there appeared to be facts and circumstances warranting further investigation. We have undertaken these investigations, which are ongoing.
On February 1, 2011, we received a subpoena from the SEC. The subpoena, issued in connection with an investigation under the FCPA, primarily relates to a
Cadbury facility in India that we acquired in the Cadbury acquisition and primarily requests information regarding dealings with Indian governmental
agencies and officials to obtain approvals related to the operation of that facility. We are cooperating with the U.S. government in its investigation of these
matters.
While we cannot predict with certainty the results of these or any other Legal Matters in which we are currently involved, we do not expect that the ultimate
costs to resolve any of these matters will have effect on our financial results.
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