Kraft 2013 Annual Report Download - page 7

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5
Top, and Velveeta. We own the rights to these trademarks in the United States, Canada, and many other countries
throughout the world. In addition, we own the trademark rights to Philadelphia in the United States and the
Caribbean, and to Gevalia and Maxwell House throughout North America and Latin America. We protect our
trademarks by registration or otherwise in the United States, Canada, and other markets. From time to time, we
grant third parties licenses to use one or more of our trademarks in particular locations. Similarly, as of
December 28, 2013, we sell some products under brands we license from third parties, including:
• Capri Sun packaged juice drinks for sale in the United States; and
• Taco Bell Home Originals Mexican-style food products for sale in U.S. grocery stores.
In connection with the Spin-Off, we granted International licenses to use some of our trademarks in
particular locations outside of the United States and Canada and we will sell some products under brands we
license from International. These agreements are governed by the Master Ownership and License
Agreement Regarding Trademarks and Certain Related Intellectual Property.
Additionally, we own numerous patents worldwide. We consider our portfolio of patents, patent applications, patent
licenses under patents owned by third parties, proprietary trade secrets, technology, know-how processes, and
related intellectual property rights to be material to our operations. While our patent portfolio is material to our
business, the loss of one patent or a group of related patents would not have a material adverse effect on our
business. We either have been issued patents or have patent applications pending that relate to a number of
current and potential products, including products licensed to others. Patents, issued or applied for, cover inventions
ranging from basic packaging techniques to processes relating to specific products and to the products themselves.
Our issued patents extend for varying periods according to the date of patent application filing or grant and the legal
term of patents in the various countries where patent protection is obtained. The actual protection afforded by a
patent, which can vary from country to country, depends upon the type of patent, the scope of its coverage as
determined by the patent office or courts in the country, and the availability of legal remedies in the country. In
connection with the Spin-Off, we granted International licenses to use some of our patents, and we also
license certain patents from International.
Research and Development
Our research and development focuses on achieving the following four objectives:
• growth through product improvements, new products and line extensions,
• uncompromising product safety and quality,
• superior customer satisfaction, and
• cost reduction.
Our research and development specialists have historically focused on both major product innovation and more
modestly-scaled line extensions, such as the introduction of new flavors, colors, or package designs for established
products. We have approximately 525 food scientists, chemists, and engineers, with teams dedicated to particular
brands and products.
We maintain three key technology centers, each equipped with pilot plants and state-of-the-art instruments.
Research and development expense was approximately $118 million (including a benefit from market-based
impacts related to our postemployment benefit plans of $55 million) in 2013, $178 million (including expense from
market-based impacts related to our postemployment benefit plans of $6 million) in 2012, and $198 million in 2011.
Market-based impacts related to our postemployment benefit plans recorded in research and development were
insignificant in the year ended December 31, 2011.
Seasonality
Overall sales of our products are fairly balanced throughout the year, although demand for certain products may be
influenced by holidays, changes in seasons, or other annual events.
Employees
We have approximately 22,500 employees, of whom approximately 20,400 are located in the United States and
approximately 2,100 are located in Canada. Approximately one-third of our hourly employees are represented
under contracts primarily with the United Food and Commercial Workers International Union and the International