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Morningstar® Document Research℠
FORM 10-K
KRAFT FOODS INC - KFT
Filed: February 25, 2008 (period: December 31, 2007)
Annual report which provides a comprehensive overview of the company for the past year

Table of contents

  • Page 1
    Morningstar Document Research ® ℠FORM 10-K KRAFT FOODS INC - KFT Filed: February 25, 2008 (period: December 31, 2007) Annual report which provides a comprehensive overview of the company for the past year

  • Page 2
    ... EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2007 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-16483 � (Exact name of registrant as specified in its charter) Kraft Foods Inc. (State or other jurisdiction of...

  • Page 3
    ... about Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Report of Management on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm Other...

  • Page 4
    ...food products, including snacks, beverages, cheese, convenient meals and various packaged grocery products. We manage and report operating results through two commercial units, Kraft North America and Kraft International. Kraft North America operates in the U.S. and Canada, and we manage Kraft North...

  • Page 5
    ... ended December 31, 2007, were: 2007 2006 2005 Cheese Biscuits Coffee Confectionery 19% 15% 14% 11% 19% 15% 14% 10% 19% 14% 14% 10% Our major brands within each reportable segment and consumer sector are: Kraft North America: North America Beverages Beverages: Maxwell House, General Foods...

  • Page 6
    .... North America Snacks & Cereals Snacks: Cheese: Grocery: Kraft International: European Union Snacks: Oreo, Chips Ahoy!, Newtons, Nilla, Nutter Butter, SnackWell's, and Peek Freans cookies; Ritz, Premium, Triscuit, Wheat Thins, Cheese Nips, Honey Maid Grahams, and Teddy Grahams crackers; South...

  • Page 7
    .... Our corporate and shared service functions are streamlining their organizations and focusing them on core activities that can more efficiently support the goals of the business units. Our new operating structure will result in changes to the reportable business segments within our North America...

  • Page 8
    ... basis of product quality, brand recognition, brand loyalty, service, marketing, advertising and price. Moreover, improving our market position or introducing a new product requires substantial advertising and promotional expenditures. Distribution Kraft North America's products are generally sold...

  • Page 9
    ...Best coffee T-Discs and Tazo teas T-Discs for use in our Tassimo hot beverage system; Tazo teas for sale in grocery stores in the U.S.; Capri Sun aseptic juice drinks for sale in the U.S., Canada and within our Developing Markets segment; Taco Bell Home Originals Mexican style food products for sale...

  • Page 10
    ... key technology centers: East Hanover, New Jersey; Glenview, Illinois; Tarrytown, New York; Banbury, United Kingdom; Paris, France; and Munich, Germany. These technology centers are equipped with pilot plants and state-of-the-art instruments. Research and development expense was $447 million in 2007...

  • Page 11
    ... joining Kraft, he served as the Managing Director of the consumer and foodservice business for the New Zealand-based Fonterra Co-operative Group. Previously Mr. Khosla spent 27 years with Unilever in India, London and Europe. Ms. May was appointed as Executive Vice President, Global Human Resources...

  • Page 12
    ... to be tax-free to our U.S. shareholders, the effects depending on whether we determine to do a spin-off or a split-off and the amount of cash we will receive; with regard to the Danone global biscuit business that we plan to build profitable scale by expanding distribution reach in countries with...

  • Page 13
    ... 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...

  • Page 14
    ... of our control, including fluctuations in commodities markets, currency fluctuations and changes in governmental agricultural programs. If we are unable to increase our prices to offset increased commodity costs or achieve cost efficiencies in manufacturing and distribution, our profitability could...

  • Page 15
    ... diversion of management attention from existing core businesses, integrating or separating personnel and financial and other systems, adverse effects on existing business relationships with suppliers and customers, inaccurate estimates of fair value made in the accounting for acquisitions and...

  • Page 16
    ... of North America, we have 123 facilities located in 44 countries. These manufacturing and processing facilities are located throughout the following territories: Number of Facilities Territory U.S. Canada European Union Eastern Europe, Middle East and Africa Latin America Asia Pacific Total...

  • Page 17
    ... and may suspend the program at our discretion. Aggregate number of shares repurchased under the share repurchase program as of the end of the period presented. Shares tendered to us by employees who vested in restricted stock and rights, and used shares to pay the related taxes. As such, these are...

  • Page 18
    ....36 155.10 185.94 The Kraft performance peer group consists of the following companies considered our market competitors, or that have been selected on the basis of industry, level of management complexity, global focus or industry leadership: Anheuser-Busch Companies, Inc., Cadbury Schweppes plc...

  • Page 19
    ... EPS Book value per common share outstanding Market price per Common Stock share - high/low Closing price of Common Stock at year end Price/earnings ratio at year end - Basic Price/earnings ratio at year end - Diluted Number of common shares outstanding at year end (millions) Number of employees 17...

  • Page 20
    ... financial statements and related notes contained in Item 8 of this Form 10-K. Description of the Company We manufacture and market packaged food products, including snacks, beverages, cheese, convenient meals and various packaged grocery products, worldwide in more than 150 countries. Kraft Spin...

  • Page 21
    ...We are using our large scale as a competitive advantage as we better leverage our portfolio. Our "Wall-to-Wall" initiative for Kraft North America combined the executional benefits of direct store delivery used in our Biscuit business unit with the economics of our warehouse delivery to drive faster...

  • Page 22
    ... employees. Danone Biscuit generated global revenues of approximately $2.8 billion during 2007. Danone Biscuit will report results from operations on a one month lag; as such, there was no impact on our operating results in 2007. On a proforma basis, Danone Biscuit's net earnings for the year ended...

  • Page 23
    ... trademarks in the European Union, Eastern Europe, the Middle East and Africa, which UB had held since 2000. The Spanish and Portuguese operations of UB include its biscuits, dry desserts and canned meats, tomato and fruit juice businesses. The operations also include seven manufacturing facilities...

  • Page 24
    ... core elements: accountable business units; shared services that leverage the scale of our global portfolio; and a streamlined corporate staff. Within our new structure, business units now have full P&L accountability and are staffed accordingly. This also ensures that we are putting our resources...

  • Page 25
    ... and value chain model. After the reorganization is complete, the European Principal Company ("EPC") will manage the European Union segment categories centrally and make decisions for all aspects of the value chain, except for sales and distribution. The European subsidiaries will execute sales and...

  • Page 26
    ..., the timing of holidays and other annual or special events, seasonality, significant weather conditions, timing of our own or customer incentive programs and pricing actions, customer inventory programs and general economic conditions. Our domestic operating subsidiaries report year-end results as...

  • Page 27
    ... pet snacks and hot cereal assets and trademarks, Tassimo hot beverage system and biscuits assets in Egypt (totaling $424 million), lower Restructuring Program charges ($214 million) and the 2006 loss on the sale of a U.S. coffee plant ($95 million). Currency fluctuations increased operating income...

  • Page 28
    ...We manage Kraft North America's operations by product category, and Kraft International's operations by geographic location. Kraft North America's segments are North America Beverages; North America Cheese & Foodservice; North America Convenient Meals; North America Grocery; and North America Snacks...

  • Page 29
    ... operating income: North America Beverages North America Cheese & Foodservice North America Convenient Meals North America Grocery North America Snacks & Cereals European Union Developing Markets General corporate expenses Amortization of intangibles Operating income For the Years Ended December...

  • Page 30
    ... coffee plant, an asset impairment charge related to Tassimo hot beverage system, higher commodity costs and higher Restructuring Program costs, partially offset by higher pricing. North America Cheese & Foodservice For the Years Ended December 31, 2007 2006 (in millions) $ change % change Net...

  • Page 31
    ... mix from new products, partially offset by higher promotional spending. Dinners net revenues decreased due to the impact of lower volume. Segment operating income increased $121 million (15.3%), due primarily to the gain on the sale of the rice brand and assets, lower fixed manufacturing costs...

  • Page 32
    ... assets, lower marketing, administration and research costs, favorable currency and higher pricing, net of unfavorable costs. These favorabilities were partially offset by unfavorable volume/mix and the impact of divestitures. North America Snacks & Cereals For the Years Ended December 31, 2007 (in...

  • Page 33
    ... Program costs. These unfavorable items were partially offset by higher net pricing, the 2005 asset impairment charge in anticipation of the 2006 sale of a small U.S. biscuit brand, lower marketing spending and lower fixed manufacturing costs. European Union For the Years Ended December 31, 2007...

  • Page 34
    ...coffee and chocolate in Russia, Romania and Ukraine, and in refreshment beverages and snacks for the Middle East & Africa. In Latin America, net revenues increased due to higher pricing and favorable volume/mix, particularly in Brazil, Venezuela and Argentina. In Asia Pacific, net revenues increased...

  • Page 35
    .... Effective October 1, 2007, we adopted a new accounting policy to perform our annual impairment review of goodwill and non-amortizable intangible assets as of October 1 instead of January 1 of each year. The change in our testing date was made to align it with the revised timing of our annual...

  • Page 36
    ... allowances are not significant to our financial statements. Marketing costs: We promote our products with advertising, consumer incentives and trade promotions. These programs include, but are not limited to, discounts, coupons, rebates, in-store display incentives and volume-based incentives...

  • Page 37
    ... assets, compensation increases, turnover rates and health care cost trend rates. We review our actuarial assumptions on an annual basis and make modifications to the assumptions based on current rates and trends when appropriate. As permitted by U.S. GAAP, we generally amortize any effect of the...

  • Page 38
    ...amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects as of December 31, 2007: One-Percentage-Point Increase Decrease Effect on total of service and interest cost Effect on postretirement benefit obligation...

  • Page 39
    ... federal income tax return in 2006 impacted us. Financial Instruments: As Kraft operates globally, we use certain financial instruments to manage our foreign currency exchange rate and commodity price risks. We monitor and manage these exposures as part of our overall risk-management program...

  • Page 40
    ... trademark in Mexico. Capital expenditures, which were funded by operating activities, were $1.2 billion in each of the last three years. The 2007 capital expenditures were primarily to modernize manufacturing facilities, implement the Restructuring Program, and support new product and productivity...

  • Page 41
    ...) for general corporate purposes, including the repayment of outstanding commercial paper. In December 2007, we filed an automatic shelf registration on Form S-3 with the SEC. As a well-known seasoned issuer, we are able to register new debt securities in amounts authorized by our Board of Directors...

  • Page 42
    ... included $364 million of accrued dividends. Prior to the Distribution, the amounts payable to Altria generally included accrued dividends, taxes and service fees. Credit Ratings: At December 31, 2007, our debt ratings by major credit rating agencies were: Short - term Long - term Moody's Standard...

  • Page 43
    ... accordingly the Altria stock awards were split into two instruments. Holders of Altria stock options received: 1) a new Kraft option to acquire shares of Kraft Common Stock; and 2) an adjusted Altria stock option for the same number of shares of Altria common stock 41 Source: KRAFT FOODS INC, 10...

  • Page 44
    ... cost for all stock-based awards at fair value on date of grant and recognition of compensation over the service periods for awards expected to vest. The fair value of restricted stock and rights to receive shares of stock is determined based on the number of shares granted and the market value...

  • Page 45
    ...Kraft operates globally, we use certain financial instruments to manage our foreign currency exchange rate and commodity price risks. We monitor and manage these exposures as part of our overall risk-management program. Our risk management program focuses on the unpredictability of financial markets...

  • Page 46
    ...adverse movements in interest rates, foreign currency rates and commodity prices under normal market conditions. The computation does not represent actual losses in fair value or earnings to be incurred by Kraft, nor does it consider the effect of favorable changes in market rates. We cannot predict...

  • Page 47
    ... years ended December 31, (in millions of dollars, except per share data) 2007 2006 2005 Net revenues Cost of sales Gross profit Marketing, administration and research costs Asset impairment and exit costs Gain on redemption of United Biscuits investment Gains on divestitures, net Amortization...

  • Page 48
    ... taxes Accrued pension costs Accrued postretirement health care costs Other liabilities TOTAL LIABILITIES Contingencies (Note 15) SHAREHOLDERS' EQUITY Class A common stock, no par value (1,735,000,000 shares issued in 2007 and 555,000,000 shares issued in 2006) Class B common stock, no par value...

  • Page 49
    ...adoption of FIN 48 (Note 1) Exercise of stock options and issuance of other stock awards Net settlement of employee stock awards with Altria Group, Inc. (Note 8) Cash dividends declared ($1.04 per share) Common Stock repurchased Other Balances at December 31, 2007 $ - $ - 23,762 - $ 8,304 2,632...

  • Page 50
    ...redemption of United Biscuits investment Gains on divestitures, net Loss on sale of discontinued operations Asset impairment and exit costs, net of cash paid Change in assets and liabilities, excluding the effects of acquisitions and divestitures: Receivables, net Inventories Accounts payable Income...

  • Page 51
    ... stock outstanding. Principles of Consolidation: The consolidated financial statements include Kraft, as well as our wholly-owned and majority-owned subsidiaries. Our domestic operating subsidiaries report year-end results as of the Saturday closest to the end of each year, and our international...

  • Page 52
    .... Effective October 1, 2007, we adopted a new accounting policy to perform our annual impairment review of goodwill and non-amortizable intangible assets as of October 1 instead of January 1 of each year. The change in our testing date was made to align it with the revised timing of our annual...

  • Page 53
    ... that the revenue is recognized. Marketing, administration and research costs: Marketing - We promote our products with advertising, consumer incentives and trade promotions. These programs include, but are not limited to, discounts, coupons, rebates, in-store display incentives and volume-based...

  • Page 54
    ... EPS for the year ended December 31, 2005. Financial instruments: As Kraft operates globally, we use certain financial instruments to manage our foreign currency exchange rate and commodity price risks. We monitor and manage these exposures as part of our overall risk-management program. Our risk...

  • Page 55
    ... governed by an International Swaps and Derivatives Association master agreement. Market risk is the risk that the value of the financial instrument might be adversely affected by a change in foreign currency exchange rates, commodity prices, or interest rates. We manage market risk by incorporating...

  • Page 56
    ... core elements: accountable business units; shared services that leverage the scale of our global portfolio; and a streamlined corporate staff. Within our new structure, business units now have full P&L accountability and are staffed accordingly. This also ensures that we are putting our resources...

  • Page 57
    ...in millions) 2005 Net Revenues Cost of sales Marketing, administration and research costs Total implementation costs Asset Impairment Charges $ 67 60 127 $ 25 70 95 $ 2 56 29 87 $ $ $ In 2007, we sold our flavored water and juice brand assets and related trademarks, including Veryfine and...

  • Page 58
    ... Year Ended December 31, 2006 Total Asset Asset Impairment Implementation and Exit Costs Costs Impairment (in millions) Total North America Beverages North America Cheese & Foodservice North America Convenient Meals North America Grocery North America Snacks & Cereals European Union (1) Developing...

  • Page 59
    ... primarily of trademark licenses and non-compete agreements. In 2007, we completed the purchase price allocation and reclassified $101 million from non-amortizable to amortizable intangible assets as part of the 2006 acquisition of certain United Biscuits operations. 57 Source: KRAFT FOODS INC, 10...

  • Page 60
    ... cereal assets and trademarks and the sale of our pet snacks brand and assets. Other - We reduced goodwill by $47 million and intangible assets by $64 million primarily relating to a deferred tax purchase price allocation adjustment from our Nabisco acquisition. • • • Amortization expense...

  • Page 61
    ...least $20.0 billion under the terms of our revolving credit facility. At December 31, 2007, our net worth was $27.3 billion. We expect to continue to meet this covenant. The revolving credit facility has no other financial covenants, credit rating triggers or provisions that could require us to post...

  • Page 62
    ...November 13, 2007. On December 12, 2007, we issued $3.0 billion of senior unsecured notes, and used the net proceeds ($2,966 million) for general corporate purposes, including the repayment of outstanding commercial paper and a portion of our Danone Biscuit Bridge Facility. The general terms of the...

  • Page 63
    ...1,209 $ $ $ The loss from discontinued operations for the year ended December 31, 2005, includes additional tax expense of $280 million from the sale of the sugar confectionery business. After the implementation of FIN 48 on January 1, 2007, our unrecognized tax benefits were $667 million. If we...

  • Page 64
    ... by other foreign tax expense items. The 2007 tax rate also benefited from an increased domestic manufacturing deduction and the divestiture of our flavored water and juice brand assets and related trademarks. These benefits were partially offset by state tax expense. 62 Source: KRAFT FOODS INC, 10...

  • Page 65
    ... tax expense and by the tax costs associated with our 2006 divestitures. The 2005 effective tax rate includes tax benefits of $117 million from dividend repatriation including the impact from the American Jobs Creation Act of 2004, the resolution of outstanding items in our international operations...

  • Page 66
    ... programs were 110.1 million shares for $3,640 million in 2007, 38.7 million shares for $1,250 million in 2006, and 39.2 million shares for $1,200 million in 2005. We made these repurchases of our Common Stock in open market transactions. Share Repurchase Program authorized by the Board of Directors...

  • Page 67
    ... Non-Employee Directors (the "2006 Directors Plan"). The 2006 Directors Plan replaced the Kraft 2001 Directors Plan. Under the 2006 Directors Plan, we may grant up to 500,000 shares of Common Stock to members of the Board of Directors who are not our full-time employees. At December 31, 2007, there...

  • Page 68
    ... as a result of the Distribution, Altria has not issued Altria stock compensation to our employees since the IPO. No reloads were issued during 2007. Compensation expense for Altria stock option awards for reloads totaled $3 million for the year ended December 31, 2006, and the related tax benefit...

  • Page 69
    ... 2007 and is expected to be recognized over a weighted average period of two years. Our restricted stock and rights activity for the year ended December 31, 2007 was: Weighted-Average Grant Date Fair Value Per Share Number of Shares Balance at January 1, 2007 Issued as part of Distribution Granted...

  • Page 70
    ... plans as of our operating subsidiaries year-end close date, beginning in 2008. We do not expect the adoption of this statement to have a material impact on our financial statements. We sponsor noncontributory defined benefit pension plans covering most U.S. employees. As appropriate, we provide...

  • Page 71
    ... the expected future cash flows of the benefit obligations. The 2007 year-end discount rates for our non-U.S. plans (other than Canadian pension plans) were developed from local bond indices that match local benefit obligations as closely as possible. Components of Net Periodic Pension Cost: Net...

  • Page 72
    ... weighted-average assumptions were used to determine our net pension cost for the years ended December 31: U.S. Plans 2006 Non-U.S. Plans 2006 2007 2005 2007 2005 Discount rate Expected rate of return on plan assets Rate of compensation increase 5.90% 8.00% 4.00% 5.60% 8.00% 4.00% 5.75% 8.00...

  • Page 73
    ... Benefit Plans Net postretirement health care costs consisted of the following for the years ended December 31, 2007, 2006 and 2005: 2007 2006 (in millions) 2005 Service cost Interest cost Amortization: Net loss from experience differences Prior service cost Other expense Net postretirement health...

  • Page 74
    ...amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects as of December 31, 2007: One-Percentage-Point Increase Decrease Effect on total of service and interest cost Effect on postretirement benefit obligation...

  • Page 75
    ...we excluded an insignificant number of Kraft stock options from the calculation of weighted average shares for diluted EPS because they were antidilutive. Note 11. Acquisitions: Danone Biscuit: On November 30, 2007, we acquired the global biscuit business of Groupe Danone S.A. ("Danone Biscuit") for...

  • Page 76
    ... trademarks in the European Union, Eastern Europe, the Middle East and Africa, which UB had held since 2000. The Spanish and Portuguese operations of UB include its biscuits, dry desserts and canned meats, tomato and fruit juice businesses. The operations also include seven manufacturing facilities...

  • Page 77
    ... loss on sale of discontinued operations, above, for the year ended December 31, 2005, related largely to taxes on the transaction. Other: In 2007, we received $216 million in proceeds, and recorded pre-tax gains of $15 million on the divestitures of our hot cereal assets and trademarks, our sugar...

  • Page 78
    ... during the years ended December 31, 2007, 2006, and 2005. For the derivative instruments that we considered economic hedges but did not designate for hedge accounting under SFAS No. 133, we recognized net gains of $56 million in 2007, directly as a component of cost of sales in our consolidated...

  • Page 79
    ... packaged food products, including snacks, beverages, cheese, convenient meals and various packaged grocery products. We manage and report operating results through two commercial units, Kraft North America and Kraft International. We manage Kraft North America's operations by product category, and...

  • Page 80
    ... Snacks & Cereals. We manage Kraft International's operations by geographic location, and its reportable segments are European Union and Developing Markets (formerly known as Developing Markets, Oceania & North Asia). In February 2008, we announced the implementation of our new operating structure...

  • Page 81
    ... operating income as follows: For the Years Ended December 31, 2006 2005 (in millions) 2007 North America Beverages North America Cheese & Foodservice North America Convenient Meals North America Grocery North America Snacks & Cereals European Union Developing Markets Gains on divestitures, net...

  • Page 82
    Consumer Sector: Snacks Beverages Cheese Grocery Convenient Meals Total net revenues Depreciation expense and capital expenditures by segment were: For the Year Ended December 31, 2005 Kraft North Kraft America International Total (in millions) $ $ 5,372 3,320 4,952 4,613 5,036 23,293 $ $ 4,...

  • Page 83
    ...) were: For the Years Ended December 31, 2007 2006 2005 (in millions) Net revenues: United States Europe Other Total net revenues Total assets: United States Europe Other Total assets Long-lived assets: United States Europe Other Total long-lived assets Note 17. Quarterly Financial Data (Unaudited...

  • Page 84
    ... the global biscuit business of Groupe Danone S.A. ("Danone Biscuit") on November 30, 2007, and it represents approximately 14.0% of our total assets as of December 31, 2007. As the acquisition occurred late in 2007, the scope of our assessment of the effectiveness of internal control over financial...

  • Page 85
    ... and testing of the operational effectiveness of our internal control over financial reporting. We acquired the global biscuit business of Groupe Danone S.A. ("Danone Biscuit") on November 30, 2007, and it represents approximately 14.0% of our total assets as of December 31, 2007. As the acquisition...

  • Page 86
    ... for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31...

  • Page 87
    ... this Annual Report or incorporated into any other filings we make with the SEC. On May 17, 2007, we filed our Annual CEO Certification as required by Section 303A.12 of the New York Stock Exchange Listed Company Manual. Item 11. Executive Compensation. Information about director compensation is...

  • Page 88
    ... (2) Generale dated as of October 12, 2007. (7) Agreement Relating to United Biscuits Southern Europe, dated as of July 8, 2006. *Master (7) Professional Services Agreement between Kraft Foods Global, Inc. and Electronic Data Systems Services Corporation dated as of April 27, 2006. (8) Tax Sharing...

  • Page 89
    ... Trust Enrollment Agreement. (12) + 2006 Stock Compensation Plan for Non-Employee Directors. (9) + Form of Kraft Foods Inc. Change in Control Plan for Key Executives, dated April 24, 2007. (7) + Offer of Employment letter between the Registrant and Irene B. Rosenfeld entered into as of June 24, 2006...

  • Page 90
    ... Officer February 25, 2008 Executive Vice President and Chief Financial Officer February 25, 2008 Senior Vice President and Corporate Controller February 25, 2008 Directors February 25, 2008 88 Source: KRAFT FOODS INC, 10-K, February 25, 2008 Powered by Morningstar® Document Research...

  • Page 91
    ... REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors and Shareholders of Kraft Foods Inc.: Our audits of the consolidated financial statements and of the effectiveness of internal control over financial reporting referred to in our report dated February...

  • Page 92
    Kraft Foods Inc. and Subsidiaries Valuation and Qualifying Accounts for the years ended December 31, 2007, 2006 and 2005 (in millions) Col. A Col. B Balance at Beginning of Period Col. C Additions Charged to Charged to Costs and Other Expenses Accounts (a) Col. D Col. E Balance at End of Period ...

  • Page 93
    ... 3.3 AMENDED AND RESTATED BY-LAWS of KRAFT FOODS INC. (Effective as of December 7, 2007) ARTICLE I Meetings of Shareholders Section 1. Annual Meetings. - The annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before...

  • Page 94
    ..., limitations on the time allotted to questions or comments on the affairs of the Corporation, restrictions on entry to such meeting after the time prescribed for the commencement thereof and the opening and closing of the voting polls. At each annual meeting of shareholders, only such business...

  • Page 95
    ... inspector. ARTICLE II Board of Directors Section 1. General Powers. - The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. Section 2. Number. - The number of directors shall be twelve (12). Section 3. Term of Office. - Each director shall serve...

  • Page 96
    ... the close of business on the seventh day following the date on which notice of such meeting is first given to shareholders. Each such shareholder's notice shall set forth (a) as to the shareholder giving the notice, (i) the name and address, as they appear on the Corporation's stock transfer books...

  • Page 97
    ...- In addition to the executive committee authorized by Article III of these By-Laws, other committees, consisting of two or more directors, may be designated by the Board of Directors by a resolution adopted by the greater number of (a) a majority of all directors in office at the time the action is...

  • Page 98
    ... the Board of Directors. ARTICLE IV Officers Section 1. Number. - The officers of the Corporation shall be a chairman and chief executive officer; a chief financial officer; one or more executive vice presidents; a secretary and such other officers as may from time to time be chosen by the Board of...

  • Page 99
    ... that may from time to time be assigned to them by the Board of Directors or the chairman and chief executive officer. Section 8. Chief Financial Officer. - The chief financial officer shall be an executive vice president of the Corporation and shall be responsible for the management and supervision...

  • Page 100
    ...all powers of the Corporation as the holder of such stock or other securities of such other corporation. ARTICLE VI Certificates Representing Shares Certificates representing shares of the Corporation shall be signed by the chairman and chief executive officer or any vice president and the secretary...

  • Page 101
    ...; and shall hold such office until the Board of Directors determines the original officer is again available to serve or until such temporary officer resigns or is removed by the Board of Directors. -9- Source: KRAFT FOODS INC, 10-K, February 25, 2008 Powered by Morningstar® Document Researchâ„

  • Page 102
    ...Custody and Delivery of Certificates Representing Shares. The shares of Common Stock subject to the Award may be held by a custodian in book entry form with the restrictions on such shares duly noted or, alternatively, the Company may hold the certificate or certificates representing such shares, in...

  • Page 103
    ... Restricted Stock Award administrator to sell such Restricted Shares on the open market as soon as practicable, and remitting the proceeds to the appropriate governmental authorities, except to the extent that such a sale would violate any Federal Securities law or other applicable law. The Company...

  • Page 104
    ... compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments and in no event should be any member of the Kraft Group...

  • Page 105
    ...such claim; (k) the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Employee's participation in the Plan, or the Employees' acquisition or sale of the underlying shares of Common Stock; and (l) the Employee is hereby advised to...

  • Page 106
    ..., split-up, spin-off, issuance of rights or warrants or other similar transaction or event affecting the Common Stock after the date of this Award, the Board of Directors of the Company shall make adjustments to the number and kind of shares of stock subject to this Award, including, but not limited...

  • Page 107
    IN WITNESS WHEREOF, this Restricted Stock Agreement has been duly executed as of February 4, 2008. KRAFT FOODS INC. By: /S/ CAROL J. WARD Carol J. Ward, Vice President and Corporate Secretary 6 Source: KRAFT FOODS INC, 10-K, February 25, 2008 Powered by Morningstar® Document Researchâ„

  • Page 108
    ... the Kraft Foods Inc. 2005 Performance Incentive Plan (the "Plan") a non-qualified stock option (the "Option"). The Option entitles the Optionee to exercise up to the aggregate number of shares set forth in the Award Statement (the "Option Shares") of the Company's Common Stock, at the Grant Price...

  • Page 109
    ...acceptable to the Company for all applicable Tax-Related Items, as well as amounts due the Company as "theoretical taxes" pursuant to the then-current international assignment and tax equalization policies and procedures of the Kraft Group, or arrangements satisfactory to the Company for the payment...

  • Page 110
    ... date of this Agreement, the Board of Directors of the Company or the Committee may make adjustments to the terms and provisions of this Agreement (including, without limiting the generality of the foregoing, terms and provisions relating to the Grant Price and the number and kind of shares subject...

  • Page 111
    ... any notice period mandated under local law; (m) the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Optionee's participation in the Plan, or the Optionee's acquisition or sale of the underlying shares of Common Stock; (n) the...

  • Page 112
    ...50 percent or (B) is under common control with the applicable entity through a parent company that, directly or indirectly, has a beneficial ownership interest of greater than 50 percent in both the applicable entity and the affiliate. 13. Electronic Delivery. The Company may, in its sole discretion...

  • Page 113
    EXHIBIT 12.1 KRAFT FOODS INC. AND SUBSIDIARIES Computation of Ratios of Earnings to Fixed Charges (in millions of dollars) Years Ended December 31, 2006 2005 2004 Earnings from continuing operations before income taxes Add (Deduct): Equity in net earnings of less than 50% owned affiliates Dividends...

  • Page 114
    ... in the Company's Annual Report on Form 10-K for the year ended December 31, 2007 and issued our report thereon dated February 22, 2008. Note 1 to the financial statements describes a change in accounting principle related to changing the timing of the annual goodwill impairment test from January...

  • Page 115
    ... 000 Kraft Foods Rus 000 Kraft Foods Sales & Marketing 152999 Canada Inc. 20th Century Denmark Limited 3072440 Nova Scotia Company AB Kraft Foods Lietuva Abades B.V. Aberdare Developments Limited Aberdare Two Developments Limited AGF Kanto, Inc. AGF SP, Inc. AGF Suzuka, Inc. Ajinomoto General Foods...

  • Page 116
    Closed Joint Stock Company Kraft Foods Ukraine Compania Venezolana de Conservas C.A. Confibel SA Consiber, S.A. Corportivo Kraft, S. de R.L. de C.V. Cote d'Or Italia S.r.l. Covenco Holding C.A. Daesung Machinery Danone Biscuits Algerie SA Danone Biscuits Manufacturing (M) Sdn Bhd Danone Foods (...

  • Page 117
    ... China Canada United States of America United States of America Australia Bahrain China China Malaysia New Zealand Philippines United States of America Singapore Thailand Trinidad and Tobago Argentina Source: KRAFT FOODS INC, 10-K, February 25, 2008 Powered by Morningstar® Document Research...

  • Page 118
    ... Foods AS Kraft Foods Asia Pacific Services Pte Ltd Kraft Foods Ausser-Haus Service GmbH Kraft Foods Aviation, LLC Kraft Foods Bakery Companies, Inc. Kraft Foods Belgium N.V. Kraft Foods Biscuit B.V. Kraft Foods Bolivia S.A. Kraft Foods Brasil S.A. Kraft Foods Bulgaria AD Kraft Foods Caribbean Sales...

  • Page 119
    ...Beverages, Inc. Kraft Foods International Eastern Europe, Middle East & Africa GmbH Kraft Foods International Services, Inc. Kraft Foods International, Inc. Kraft Foods Ireland Limited Kraft Foods Italia S.p.A. Kraft Foods Jamaica Limited Kraft Foods Jaya (Malaysia) Sdn Bhd Kraft Foods LA MB Holding...

  • Page 120
    ... France South Africa Slovakia South Africa France Sweden Sweden United States of America Taiwan Singapore United Kingdom Unknown Country Uruguay Venezuela Croatia United States of America Turkey China Mexico Ireland Australia France Hong Kong United States of America Source: KRAFT FOODS INC...

  • Page 121
    ... Food Company Ltd. Nabisco Euro Holdings Ltd. Nabisco Europe, Middle East and Africa Trading, S.A. Nabisco Food (Suzhou) Co. Ltd. Nabisco Group Pensions Limited Nabisco Holdings I B.V. Nabisco Holdings II B.V. Nabisco Iberia, S.L.U. Nabisco International Limited Nabisco International N.E./Africa...

  • Page 122
    ... Philippines, Inc. Nabisco Royal Argentina LLC Nabisco Taiwan Corporation NISA Holdings LLC NSA Holdings, L.L.C. OAO "UNITED BAKERS - Pskov" OAO Bolshevik OMFC Service Company ONKO Grossroesterei G.m.b.H. Opavia LU a.s. Opavia LU s.r.o. Oy Kraft Foods Finland Ab P.T. Kraft Ultrajaya Indonesia Perdue...

  • Page 123
    ... Taloca y Cia Ltda. Tassimo Corporation Tevalca Holding C.A. UB Hong Kong Ltd. Uni-Foods Corporation United Biscuits (Holdings) Plc United Biscuits Asia Pacific Limited United Biscuits Iberia, Lda. United Biscuits Snacks (Shenzhen) Ltd. United Biscuits Tunisia S.A. Veryfine Products, Inc. Vict. Th...

  • Page 124
    ...333-133559 and 333-137021) of Kraft Foods Inc. of our report dated February 22, 2008 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers LLP...

  • Page 125
    ..., to affix, as attorney-in-fact, his or her signature, by manual or facsimile signature, electronic transmission or otherwise, to the Annual Report on Form 10-K of the Company for its fiscal year ended December 31, 2007, and any and all amendments thereto to be filed with the Securities and Exchange...

  • Page 126
    SIGNATURES Chief Executive Officer, Chairman of the Board and Director Director February 25, 2008 Irene B. Rosenfeld /S/ AJAY BANGA Ajay Banga Jan Bennink /S/ MYRA M. HART Director Myra M. Hart Director February 25, 2008 /S/ LOIS D. JULIBER Lois D. Juliber Director February 25, 2008 /S/ ...

  • Page 127
    ..., whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. (b) Date: February 25, 2007 /s/ IRENE B. ROSENFELD Irene B. Rosenfeld Chairman and Chief Executive Officer Source: KRAFT FOODS INC, 10...

  • Page 128
    ...not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. (b) Date: February 25, 2007 /s/ TIMOTHY R. MCLEVISH Timothy R. McLevish Executive Vice President and Chief Financial Officer Source: KRAFT FOODS INC...

  • Page 129
    ... in Kraft's Annual Report on Form 10-K fairly presents in all material respects Kraft's financial condition and results of operations. /s/ IRENE B. ROSENFELD Irene B. Rosenfeld Chairman and Chief Executive Officer February 25, 2007 I, Timothy R. McLevish, Chief Financial Officer of Kraft Foods Inc...