Kraft 2014 Annual Report Download - page 17

products and brands.
We consider our intellectual property rights, particularly and most notably our trademarks, but also our patents, trade secrets,
copyrights, and licensing agreements, to be a significant and valuable aspect of our business. We attempt to protect our intellectual
property rights through a combination of patent, trademark, copyright, and trade secret laws, as well as licensing agreements, third-
party nondisclosure and assignment agreements, and policing of third-party misuses of our intellectual property. Our failure to
obtain or adequately protect our trademarks, products, new features of our products, or our technology, or any change in law or
other changes that serve to lessen or remove the current legal protections of our intellectual property, may diminish our
competitiveness and could materially harm our business.
We may be unaware of intellectual property rights of others that may cover some of our technology, brands, or products. Any
litigation regarding patents or other intellectual property could be costly and time-consuming and could divert the attention of our
management and key personnel from our business operations. Third-party claims of intellectual property infringement might also
require us to enter into costly license agreements. We also may be subject to significant damages or injunctions against
development and sale of certain products.
Our indebtedness levels could impact our business.
As of December 27, 2014, we had total debt of approximately $10 billion. Our ability to make payments on and to refinance our
indebtedness, including any future debt that we may incur, will depend on our ability to generate cash from operations, financings,
or asset sales. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory, and other
factors that are beyond our control. We may not generate sufficient funds to service our debt and meet our business needs, such
as funding working capital or the expansion of our operations. If we are not able to repay or refinance our debt as it becomes due,
we may be forced to take disadvantageous actions, including reducing spending on marketing, retail trade incentives, advertising
and product innovation, reducing financing in the future for working capital, capital expenditures and general corporate purposes,
selling assets, or dedicating an unsustainable level of our cash flow from operations to the payment of principal and interest on our
indebtedness. The lenders who hold our debt could also accelerate amounts due in the event that we default, which could
potentially trigger a default or acceleration of the maturity of our other debt.
Our indebtedness could also impair our ability to obtain additional financing for working capital, capital expenditures, or general
corporate purposes, especially if the ratings assigned to our debt securities by rating organizations were revised downward. In
addition, our leverage could put us at a competitive disadvantage compared to less-leveraged competitors that could have greater
financial flexibility to pursue strategic acquisitions and secure additional financing for their operations. Our ability to withstand
competitive pressures and to react to changes in the food and beverage industry could be impaired, making us more vulnerable in
the event of a general downturn in economic conditions, in our industry, or in our business.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Our corporate headquarters are located in Northfield, Illinois. Our headquarters are leased and house our executive offices, certain
U.S. business units, and our administrative, finance, and human resource functions. We maintain additional owned and leased
offices and three technology centers in the United States and Canada.
We have 36 manufacturing and processing facilities, of which 34 are in the United States and two are in Canada. We own all 36 of
these facilities. It is our practice to maintain all of our plants and properties in good condition, and we believe they are suitable and
adequate for our present needs.
We also have 36 distribution centers, of which 33 are in the United States and three are in Canada. We own four and lease 32 of
these distribution centers. These facilities are in good condition, and we believe they have sufficient capacity to meet our present
distribution needs.
Item 3. Legal Proceedings.
We are routinely involved in legal proceedings, claims, and governmental inquiries, inspections, or investigations (“Legal Matters”)
arising in the ordinary course of our business.
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