Kraft 2001 Annual Report

Of course we’re big...

2001 ANNUAL REPORT

...but that’s a small part of our story.

Think of us as an energetic one year old with 100 years’ experience.

On June 13, 2001, we began trading as a public company. Our $8.4 billion

initial public offering was the second biggest in U.S. history. With nearly

$34 billion in revenues, we are the largest food company in North

America and the second largest worldwide. 35 of our brands have

been delighting consumers for more than 100 years. The care and

quality that J.L. Kraft, Johann Jacobs, Oscar Mayer and C.W. Post

first put into their products live in our brands today.

We touch a billion people, one at a time.

Six of our brands have global revenues of more than $1 billion, 61 have

revenues of more than $100 million. We’re a member of the family in

99.6% of all American households. Last year, we listened to more

than 2.5 million people to learn how to better meet consumers’needs.

Each month, 12 million people visit our websites for product, menu

and nutrition information. A billion people see our advertising

around the world. We’re building a future on innovations in taste,

nutrition, convenience, variety and value.

We know how to make good ideas grow.

One good idea leads to another, and another, and another. In 2001,

new products generated more than $1.1 billion in revenues. We hold

thousands of patents worldwide and, since 1981, we’ve received

more U.S. food-related patents than any other food company. We invest

more in advertising than any other U.S. food company. In the last six

years, we’ve received more than 100 advertising awards around the

world. Our focus is on four key growth areas: snacks, beverages,

convenient meals and health & wellness.

We’re local, all around the world.

Our brands are sold in millions of neighborhood stores in more

than 145 countries. We’ve earned the #1 share in 21 of our top 25

categories in the U.S. and 21 of our top 25 country categories

elsewhere in the world. We have operations in 68 countries.

In developing markets, our volume grew 11% in 2001. We have

a global sales force of more than 19,000 professionals. Last year,

we supported the communities we live in around the world with

more than $25 million in food and financial contributions.

We think of discipline as one more opportunity to innovate.

At every step, from the purchase of raw materials to the final product

on the shelf, we find ways to create a competitive advantage. Our cost

control breakthroughs generated savings of 3.5% of cost of goods

sold in 2001 to reinvest in growth and build the bottom line. With the

integration of Nabisco, so far we’ve captured more than $100 million

in synergy savings. We’ve developed proprietary tools to make the

most of our marketing investments. Our worldwide councils of category

experts share best practices and leverage new product ideas and

technologies for profitable growth.

We’re a team of 113,690 passionate entrepreneurs.

Profitable growth is everyone’s goal. Our top 27 executives average

20 years of service with Kraft in many different business units and

countries around the world. The Wall Street Journal reported,“In the

food world, Kraft is considered the Harvard of career management.”

U.S. grocery retailers ranked Kraft #1 in Best Combination of Growth

and Profitability, Most Innovative Marketing Programs and Best Sales

Force/Customer Teams.

And what we do is build sustainable growth.

We are a global growth company. With the integration of Nabisco,

our reported revenues increased by 28%. Our volume increased

3.7%* and once again our earnings growth was among the best in

the food industry. In 2001, our return on sales was 18.1%, an increase

of 7.6 percentage points since 1991. For the 28 weeks Kraft stock

traded in 2001, total shareholder return was 10.6%. Growth is the

heart of our culture. We’re committed to driving shareholder value

with consistent, top-tier performance.

*For a more meaningful comparison, results are presented on a pro forma basis,

and volume results are compared to a 52-week fiscal year 2000. See 2001 Financial

Highlights on page18 for a more detailed explanation.

Volume Operating Companies Income

Net Earnings Total Shareholder Return

3.7%

2001

2000

19.9%

2001

2000

10.6%

12/31/01

6/13/01

8.9%

2001

2000

52-week

Pro Forma*

A.1., AIR CRISPS, ALMOST HOME, ALPHA-BITS, ALTOIDS, ATHENOS, BAKER'S, BALANCE NUTRITION BAR, BANANA NUT CRUNCH, BARNUM'S ANIMALS, BETTER C

LUEBERRY MORNING, BOCA, BREAKSTONE'S, BULL'S-EYE, CAFÉ CREMES, CALUMET, CAMEO, CAPRI SUN, CARRIAGE INN, CARTE NOIRE, CASINO, CASTELET

HEESE NIPS CRISPS, CHEESE PUFFS, CHEEZ WHIZ, CHIPS AHOY!, CHURNY, CINNA-CRUNCH PEBBLES, CLIGHT, CLUB SOCIAL, COOL WHIP, CORNNUTS, CÔTE D’OR

ME, CRACKER BARREL, CRANBERRY ALMOND CRUNCH, CREAM OF WHEAT, CREMA DE ARROZ, CREME SAVERS, CROWN, CRYSTAL LIGHT, DAIM, DELI DELUXE,

REAM WHIP, DUET, D-ZERTA, EASY CHEESE, EASY MAC, EL QUESOSISIMO, FIG NEWTONS, FLAVOR CRISPS, FLAVOR SNACKS, FLEISCHMANN’S, FRESHMADE CREATI

FIBRE, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GOLDEN CRISP, GOOD SEASONS, GRAPE-NUTS, GREAT GRAINS, GREY-POUPON, HANDI-SNACKS, HO

ONEYCOMB, JACK'S, JACOBS, JELL-O, KNUDSEN, KOOL-AID, KRAFT, LIFE SAVERS, LIGHT N' LIVELY, LORNA DOONE, LOUIS RICH, LUNCHABLES, MALLOMARS

OUSE, MILKA, MILK-BONE, MINUTE, MIRABELL, MIRACLE WHIP, MISTER SALTY, NABISCO, NUTTER BUTTER, OASIS, OREO O'S, OREOS, OSCAR MAYER, OVEN CLASS

RY, OYSTERETTES, PEEK FREAN’S, PHILADELPHIA, PLANTERS, POLLY-O, POST, POST TOASTIES, POSTUM, PREMIUM, QUE CHATEL, RITZ, SANKA, SEVEN SEAS, SHAK

HREDDIES, SNACKWELL’S, SOCIABLES, SOCIAL TEA, STELLA D’ORO, STONED WHEAT THINS, STOVE TOP, SUCHARD, SURE·JELL, SWISS CRÈME, SWISS FUDGE, TA

RAHAMS, TOBLERONE, TRISCUITS, TROLLI, TWIGS, TWILIGHT, UNEED, VELVEETA, WAFFLE CRISP, WHEAT THINS, WHEATSWORTH, YUBAN, 3-BIT, ALPEN GOLD, ALTOI

ARTE NOIRE, CEREALITAS, CHEEZ WHIZ, CHIPS AHOY!, CLIGHT, CLUB SOCIAL, CÔTE D’OR, DADAK, DAIM, DAIRYLEA, EL CASERÍO, ESTRELLA, EXPRESS, FIGA

RESH, GALLITO, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GRAND’ MÈRE, HAG, INVERNIZZI, JACOBS, JACQUES VABRE, JAPP, JELL-O, JOCCA, KABA

ENCO, KOOL-AID, KORONA, KRAFT, LACTA, LUCKY, LUNCHABLES, MAARUD, MAGUARY, MAMA LUISE, MARABOU, MAXIM, MAXWELL HOUSE, MELLOW BIRD'S,

EURISSE, MILKA, MIRABELL, MIRACLE WHIP, MIRÁCOLI, NOVA BRASILIA, O'BOY, ONKO, OREO, PACIFIC SODA, PEPITOS, PHILADELPHIA, PLANTERS, POIANA, POK

RINCE POLO, RHODESIA, RITZ, ROYAL, SAIMAZA, SAMAR, SHOT, SIESTA, SIMMENTHAL, SOTTILETTE, SPLENDID, SUCHARD, SUGUS, SUSANNA, SVOGE, TANG, T

ERRY'S CHOCOLATE ORANGE, TOBLERONE, TRAKINAS, UKRAINA, VELVEETA, VERAO, A.1., AIR CRISPS, ALMOST HOME, ALPHA-BITS, ALTOIDS, ATHENOS, BAKER'S

UTRITION BAR, BANANA NUT CRUNCH, BARNUM'S ANIMALS, BETTER CHEDDARS, BLUEBERRY MORNING, BOCA, BREAKSTONE'S, BULL'S-EYE, CAFÉ CREMES

AMEO, CAPRI SUN, CARRIAGE INN, CARTE NOIRE, CASINO, CASTELETS, CERTO, CHEESE NIPS CRISPS, CHEESE PUFFS, CHEEZ WHIZ, CHIPS AHOY!, CHURNY, CINN

EBBLES, CLIGHT, CLUB SOCIAL, COOL WHIP, CORNNUTS, CÔTE D’OR, COUNTRY TIME, CRACKER BARREL, CRANBERRY ALMOND CRUNCH, CREAM OF WHEAT,

RROZ, CREME SAVERS, CROWN, CRYSTAL LIGHT, DAIM, DELI DELUXE, DIGIORNO, DREAM WHIP, DUET, D-ZERTA, EASY CHEESE, EASY MAC, EL QUESOSISIMO, FIG

LAVOR CRISPS, FLAVOR SNACKS, FLEISCHMANN’S, FRESHMADE CREATIONS, FRUIT & FIBRE, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GOLDEN CR

EASONS, GRAPE-NUTS, GREAT GRAINS, GREY-POUPON, HANDI-SNACKS, HONEY MAID, HONEYCOMB, JACK'S, JACOBS, JELL-O, KNUDSEN, KOOL-AID, KRAFT, LI

GHT N' LIVELY, LORNA DOONE, LOUIS RICH, LUNCHABLES, MALLOMARS, MAXWELL HOUSE, MILKA, MILK-BONE, MINUTE, MIRABELL, MIRACLE WHIP, MISTER SALTY

UTTER BUTTER, OASIS, OREO O'S, OREOS, OSCAR MAYER, OVEN CLASSICS, OVEN FRY, OYSTERETTES, PEEK FREAN’S, PHILADELPHIA, PLANTERS, POLLY-O, P

OASTIES, POSTUM, PREMIUM, QUE CHATEL, RITZ, SANKA, SEVEN SEAS, SHAKE 'N BAKE, SHREDDIES, SNACKWELL’S, SOCIABLES, SOCIAL TEA, STELLA D’ORO, STON

HINS, STOVE TOP, SUCHARD, SURE·JELL, SWISS CRÈME, SWISS FUDGE, TANG, TEDDY GRAHAMS, TOBLERONE, TRISCUITS, TROLLI, TWIGS, TWILIGHT, UNEED,

AFFLE CRISP, WHEAT THINS, WHEATSWORTH, YUBAN, 3-BIT, ALPEN GOLD, ALTOIDS, BIRD'S, CARTE NOIRE, CEREALITAS, CHEEZ WHIZ, CHIPS AHOY!, CLIGHT, CLU

ÔTE D’OR, DADAK, DAIM, DAIRYLEA, EL CASERÍO, ESTRELLA, EXPRESS, FIGARO, FREIA, FRESH, GALLITO, GENERAL FOODS INTERNATIONAL COFFEES, GEVAL

ÈRE, HAG, INVERNIZZI, JACOBS, JACQUES VABRE, JAPP, JELL-O, JOCCA, KABA, KARUNA, KENCO, KOOL-AID, KORONA, KRAFT, LACTA, LUCKY, LUNCHABLES

AGUARY, MAMA LUISE, MARABOU, MAXIM, MAXWELL HOUSE, MELLOW BIRD'S, MERENDA, MEURISSE, MILKA, MIRABELL, MIRACLE WHIP, MIRÁCOLI, NOVA BRASI

NKO, OREO, PACIFIC SODA, PEPITOS, PHILADELPHIA, PLANTERS, POIANA, POKROV, POST, PRINCE POLO, RHODESIA, RITZ, ROYAL, SAIMAZA, SAMAR, SHO

MMENTHAL, SOTTILETTE, SPLENDID, SUCHARD, SUGUS, SUSANNA, SVOGE, TANG, TERRABUSI, TERRY'S CHOCOLATE ORANGE, TOBLERONE, TRAKINAS, UKRAINA

ERAO, A.1., AIR CRISPS, ALMOST HOME, ALPHA-BITS, ALTOIDS, ATHENOS, BAKER'S, BALANCE NUTRITION BAR, BANANA NUT CRUNCH, BARNUM'S ANIMAL

HEDDARS, BLUEBERRY MORNING, BOCA, BREAKSTONE'S, BULL'S-EYE, CAFÉ CREMES, CALUMET, CAMEO, CAPRI SUN, CARRIAGE INN, CARTE NOIRE, CASINO, C

ERTO, CHEESE NIPS CRISPS, CHEESE PUFFS, CHEEZ WHIZ, CHIPS AHOY!, CHURNY, CINNA-CRUNCH PEBBLES, CLIGHT, CLUB SOCIAL, COOL WHIP, CORNNUTS, C

OUNTRY TIME, CRACKER BARREL, CRANBERRY ALMOND CRUNCH, CREAM OF WHEAT, CREMA DE ARROZ, CREME SAVERS, CROWN, CRYSTAL LIGHT, DAIM, DE

GIORNO, DREAM WHIP, DUET, D-ZERTA, EASY CHEESE, EASY MAC, EL QUESOSISIMO, FIG NEWTONS, FLAVOR CRISPS, FLAVOR SNACKS, FLEISCHMANN’S, F

REATIONS, FRUIT & FIBRE, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GOLDEN CRISP, GOOD SEASONS, GRAPE-NUTS, GREAT GRAINS, GREY-POUPO

NACKS, HONEY MAID, HONEYCOMB, JACK'S, JACOBS, JELL-O, KNUDSEN, KOOL-AID, KRAFT, LIFE SAVERS, LIGHT N' LIVELY, LORNA DOONE, LOUIS RICH, LUN

ALLOMARS, MAXWELL HOUSE, MILKA, MILK-BONE, MINUTE, MIRABELL, MIRACLE WHIP, MISTER SALTY, NABISCO, NUTTER BUTTER, OASIS, OREO O'S, OREOS, OSC

VEN CLASSICS, OVEN FRY, OYSTERETTES, PEEK FREAN’S, PHILADELPHIA, PLANTERS, POLLY-O, POST, POST TOASTIES, POSTUM, PREMIUM, QUE CHATEL, RITZ, SAN

EAS, SHAKE 'N BAKE, SHREDDIES, SNACKWELL’S, SOCIABLES, SOCIAL TEA, STELLA D’ORO, STONED WHEAT THINS, STOVE TOP, SUCHARD, SURE·JELL, SWISS CRÈ

UDGE, TANG, TEDDY GRAHAMS, TOBLERONE, TRISCUITS, TROLLI, TWIGS, TWILIGHT, UNEED, VELVEETA, WAFFLE CRISP, WHEAT THINS, WHEATSWORTH, YUBAN, 3

OLD, ALTOIDS, BIRD'S, CARTE NOIRE, CEREALITAS, CHEEZ WHIZ, CHIPS AHOY!, CLIGHT, CLUB SOCIAL, CÔTE D’OR, DADAK, DAIM, DAIRYLEA, EL CASERÍO,

XPRESS, FIGARO, FREIA, FRESH, GALLITO, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GRAND’ MÈRE, HAG, INVERNIZZI, JACOBS, JACQUES VABRE, JA

OCCA, KABA, KARUNA, KENCO, KOOL-AID, KORONA, KRAFT, LACTA, LUCKY, LUNCHABLES, MAARUD, MAGUARY, MAMA LUISE, MARABOU, MAXIM, MAXWELL HOUS

RD'S, MERENDA, MEURISSE, MILKA, MIRABELL, MIRACLE WHIP, MIRÁCOLI, NOVA BRASILIA, O'BOY, ONKO, OREO, PACIFIC SODA, PEPITOS, PHILADELPHIA,

OIANA, POKROV, POST, PRINCE POLO, RHODESIA, RITZ, ROYAL, SAIMAZA, SAMAR, SHOT, SIESTA, SIMMENTHAL, SOTTILETTE, SPLENDID, SUCHARD, SUGUS, SUSANN

ANG, TERRABUSI, TERRY'S CHOCOLATE ORANGE, TOBLERONE, TRAKINAS, UKRAINA, VELVEETA, VERAO, A.1., AIR CRISPS, ALMOST HOME, ALPHA-BITS, ALTOIDS

AKER'S, BALANCE NUTRITION BAR, BANANA NUT CRUNCH, BARNUM'S ANIMALS, BETTER CHEDDARS, BLUEBERRY MORNING, BOCA, BREAKSTONE'S, BULL'S

REMES, CALUMET, CAMEO, CAPRI SUN, CARRIAGE INN, CARTE NOIRE, CASINO, CASTELETS, CERTO, CHEESE NIPS CRISPS, CHEESE PUFFS, CHEEZ WHIZ, CH

HURNY, CINNA-CRUNCH PEBBLES, CLIGHT, CLUB SOCIAL, COOL WHIP, CORNNUTS, CÔTE D’OR, COUNTRY TIME, CRACKER BARREL, CRANBERRY ALMOND CRUNC

F WHEAT, CREMA DE ARROZ, CREME SAVERS, CROWN, CRYSTAL LIGHT, DAIM, DELI DELUXE, DIGIORNO, DREAM WHIP, DUET, D-ZERTA, EASY CHEESE, EAS

UESOSISIMO, FIG NEWTONS, FLAVOR CRISPS, FLAVOR SNACKS, FLEISCHMANN’S, FRESHMADE CREATIONS, FRUIT & FIBRE, GENERAL FOODS INTERNATIONAL

EVALIA, GOLDEN CRISP, GOOD SEASONS, GRAPE-NUTS, GREAT GRAINS, GREY-POUPON, HANDI-SNACKS, HONEY MAID, HONEYCOMB, JACK'S, JACOBS, JELL-O,

OOL-AID, KRAFT, LIFE SAVERS, LIGHT N' LIVELY, LORNA DOONE, LOUIS RICH, LUNCHABLES, MALLOMARS, MAXWELL HOUSE, MILKA, MILK-BONE, MINUTE, MIRABEL

HIP, MISTER SALTY, NABISCO, NUTTER BUTTER, OASIS, OREO O'S, OREOS, OSCAR MAYER, OVEN CLASSICS, OVEN FRY, OYSTERETTES, PEEK FREAN’S, PHIL

LANTERS, POLLY-O, POST, POST TOASTIES, POSTUM, PREMIUM, QUE CHATEL, RITZ, SANKA, SEVEN SEAS, SHAKE 'N BAKE, SHREDDIES, SNACKWELL’S, SOCIABL

EA, STELLA D’ORO, STONED WHEAT THINS, STOVE TOP, SUCHARD, SURE·JELL, SWISS CRÈME, SWISS FUDGE, TANG, TEDDY GRAHAMS, TOBLERONE, TRISCUIT

WIGS, TWILIGHT, UNEED, VELVEETA, WAFFLE CRISP, WHEAT THINS, WHEATSWORTH, YUBAN, 3-BIT, ALPEN GOLD, ALTOIDS, BIRD'S, CARTE NOIRE, CEREALITAS, CH

HIPS AHOY!, CLIGHT, CLUB SOCIAL, CÔTE D’OR, DADAK, DAIM, DAIRYLEA, EL CASERÍO, ESTRELLA, EXPRESS, FIGARO, FREIA, FRESH, GALLITO, GENER

TERNATIONAL COFFEES, GEVALIA, GRAND’ MÈRE, HAG, INVERNIZZI, JACOBS, JACQUES VABRE, JAPP, JELL-O, JOCCA, KABA, KARUNA, KENCO, KOOL-AID, KORO

ACTA, LUCKY, LUNCHABLES, MAARUD, MAGUARY, MAMA LUISE, MARABOU, MAXIM, MAXWELL HOUSE, MELLOW BIRD'S, MERENDA, MEURISSE, MILKA, MIRABEL

HIP, MIRÁCOLI, NOVA BRASILIA, O'BOY, ONKO, OREO, PACIFIC SODA, PEPITOS, PHILADELPHIA, PLANTERS, POIANA, POKROV, POST, PRINCE POLO, RHODESIA, R

AIMAZA, SAMAR, SHOT, SIESTA, SIMMENTHAL, SOTTILETTE, SPLENDID, SUCHARD, SUGUS, SUSANNA, SVOGE, TANG, TERRABUSI, TERRY'S CHOCOLATE ORANGE, TO

RAKINAS, UKRAINA, VELVEETA, A.1., AIR CRISPS, ALMOST HOME, ALPHA-BITS, ALTOIDS, ATHENOS, BAKER'S, BALANCE NUTRITION BAR, BANANA NUT CRUNCH,

NIMALS, BETTER CHEDDARS, BLUEBERRY MORNING, BOCA, BREAKSTONE'S, BULL'S-EYE, CAFÉ CREMES, CALUMET, CAMEO, CAPRI SUN, CARRIAGE INN, CAR

ASINO, CASTELETS, CERTO, CHEESE NIPS CRISPS, CHEESE PUFFS, CHEEZ WHIZ, CHIPS AHOY!, CHURNY, CINNA-CRUNCH PEBBLES, CLIGHT, CLUB SOCIAL, C

ORNNUTS, CÔTE D’OR, COUNTRY TIME, CRACKER BARREL, CRANBERRY ALMOND CRUNCH, CREAM OF WHEAT, CREMA DE ARROZ, CREME SAVERS, CROWN, CRYS

AIM, DELI DELUXE, DIGIORNO, DREAM WHIP, DUET, D-ZERTA, EASY CHEESE, EASY MAC, EL QUESOSISIMO, FIG NEWTONS, FLAVOR CRISPS, FLAVOR SNACKS, FLEISC

RESHMADE CREATIONS, FRUIT & FIBRE, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GOLDEN CRISP, GOOD SEASONS, GRAPE-NUTS, GREAT GRA

We are

NIMALS, BETTER CHEDDARS, BLUEBERRY MORNING, BOCA, BREAKSTONE'S, BULL'S-EYE, CAFÉ CREMES, CALUMET, CAMEO, CAPRI SUN, CARRIAGE INN, CART

HT, CLUB SOCIAL, COOL WHIP, CORNNUTS, CÔTE D’OR, COUNTRY TIME, CRACKER BARREL, CRANBERRY ALMOND CRUNCH, CREAM OF WHEAT, CREMA DE ARROZ

SIMO, FIG NEWTONS, FLAVOR CRISPS, FLAVOR SNACKS, FLEISCHMANN’S, FRESHMADE CREATIONS, FRUIT & FIBRE, GENERAL FOODS INTERNATIONAL COFFEES

ACOBS, JELL-O, KNUDSEN, KOOL-AID, KRAFT, LIFE SAVERS, LIGHT N' LIVELY, LORNA DOONE, LOUIS RICH, LUNCHABLES, MALLOMARS, MAXWELL HOUSE, MILKA

SICS, OVEN FRY, OYSTERETTES, PEEK FREAN’S, PHILADELPHIA, PLANTERS, POLLY-O, POST, POST TOASTIES, POSTUM, PREMIUM, QUE CHATEL, RITZ, SANKA, SEVEN

JELL, SWISS CRÈME, SWISS FUDGE, TANG, TEDDY GRAHAMS, TOBLERONE, TRISCUITS, TROLLI, TWIGS, TWILIGHT, UNEED, VELVEETA, WAFFLE CRISP, WHEAT THINS

ÔTE D’OR, DADAK, DAIM, DAIRYLEA, EL CASERÍO, ESTRELLA, EXPRESS, FIGARO, FREIA, FRESH, GALLITO, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA

UCKY, LUNCHABLES, MAARUD, MAGUARY, MAMA LUISE, MARABOU, MAXIM, MAXWELL HOUSE, MELLOW BIRD'S, MERENDA, MEURISSE, MILKA, MIRABELL, MIRACL

LO, RHODESIA, RITZ, ROYAL, SAIMAZA, SAMAR, SHOT, SIESTA, SIMMENTHAL, SOTTILETTE, SPLENDID, SUCHARD, SUGUS, SUSANNA, SVOGE, TANG, TERRABUS

THENOS, BAKER'S, BALANCE NUTRITION BAR, BANANA NUT CRUNCH, BARNUM'S ANIMALS, BETTER CHEDDARS, BLUEBERRY MORNING, BOCA, BREAKSTONE'S

CHEESE PUFFS, CHEEZ WHIZ, CHIPS AHOY!, CHURNY, CINNA-CRUNCH PEBBLES, CLIGHT, CLUB SOCIAL, COOL WHIP, CORNNUTS, CÔTE D’OR, COUNTRY TIME

ELUXE, DIGIORNO, DREAM WHIP, DUET, D-ZERTA, EASY CHEESE, EASY MAC, EL QUESOSISIMO, FIG NEWTONS, FLAVOR CRISPS, FLAVOR SNACKS, FLEISCHMANN’S

REAT GRAINS, GREY-POUPON, HANDI-SNACKS, HONEY MAID, HONEYCOMB, JACK'S, JACOBS, JELL-O, KNUDSEN, KOOL-AID, KRAFT, LIFE SAVERS, LIGHT N' LIVELY

TY, NABISCO, NUTTER BUTTER, OASIS, OREO O'S, OREOS, OSCAR MAYER, OVEN CLASSICS, OVEN FRY, OYSTERETTES, PEEK FREAN’S, PHILADELPHIA, PLANTERS

LES, SOCIAL TEA, STELLA D’ORO, STONED WHEAT THINS, STOVE TOP, SUCHARD, SURE·JELL, SWISS CRÈME, SWISS FUDGE, TANG, TEDDY GRAHAMS, TOBLERONE

IRD'S, CARTE NOIRE, CEREALITAS, CHEEZ WHIZ, CHIPS AHOY!, CLIGHT, CLUB SOCIAL, CÔTE D’OR, DADAK, DAIM, DAIRYLEA, EL CASERÍO, ESTRELLA, EXPRESS

E, JAPP, JELL-O, JOCCA, KABA, KARUNA, KENCO, KOOL-AID, KORONA, KRAFT, LACTA, LUCKY, LUNCHABLES, MAARUD, MAGUARY, MAMA LUISE, MARABOU, MAXIM

CIFIC SODA, PEPITOS, PHILADELPHIA, PLANTERS, POIANA, POKROV, POST, PRINCE POLO, RHODESIA, RITZ, ROYAL, SAIMAZA, SAMAR, SHOT, SIESTA, SIMMENTHAL

NA, VELVEETA, VERAO, A.1., AIR CRISPS, ALMOST HOME, ALPHA-BITS, ALTOIDS, ATHENOS, BAKER'S, BALANCE NUTRITION BAR, BANANA NUT CRUNCH, BARNUM'S

IAGE INN, CARTE NOIRE, CASINO, CASTELETS, CERTO, CHEESE NIPS CRISPS, CHEESE PUFFS, CHEEZ WHIZ, CHIPS AHOY!, CHURNY, CINNA-CRUNCH PEBBLES

HEAT, CREMA DE ARROZ, CREME SAVERS, CROWN, CRYSTAL LIGHT, DAIM, DELI DELUXE, DIGIORNO, DREAM WHIP, DUET, D-ZERTA, EASY CHEESE, EASY MAC, E

TERNATIONAL COFFEES, GEVALIA, GOLDEN CRISP, GOOD SEASONS, GRAPE-NUTS, GREAT GRAINS, GREY-POUPON, HANDI-SNACKS, HONEY MAID, HONEYCOMB

MAXWELL HOUSE, MILKA, MILK-BONE, MINUTE, MIRABELL, MIRACLE WHIP, MISTER SALTY, NABISCO, NUTTER BUTTER, OASIS, OREO O'S, OREOS, OSCAR MAYER

CHATEL, RITZ, SANKA, SEVEN SEAS, SHAKE 'N BAKE, SHREDDIES, SNACKWELL’S, SOCIABLES, SOCIAL TEA, STELLA D’ORO, STONED WHEAT THINS, STOVE TOP

TA, WAFFLE CRISP, WHEAT THINS, WHEATSWORTH, YUBAN, 3-BIT, ALPEN GOLD, ALTOIDS, BIRD'S, CARTE NOIRE, CEREALITAS, CHEEZ WHIZ, CHIPS AHOY!, CLIGHT

NATIONAL COFFEES, GEVALIA, GRAND’ MÈRE, HAG, INVERNIZZI, JACOBS, JACQUES VABRE, JAPP, JELL-O, JOCCA, KABA, KARUNA, KENCO, KOOL-AID, KORONA

ISSE, MILKA, MIRABELL, MIRACLE WHIP, MIRÁCOLI, NOVA BRASILIA, O'BOY, ONKO, OREO, PACIFIC SODA, PEPITOS, PHILADELPHIA, PLANTERS, POIANA, POKROV

NNA, SVOGE, TANG, TERRABUSI, TERRY'S CHOCOLATE ORANGE, TOBLERONE, TRAKINAS, UKRAINA, VELVEETA, VERAO, A.1., AIR CRISPS, ALMOST HOME, ALPHA

RNING, BOCA, BREAKSTONE'S, BULL'S-EYE, CAFÉ CREMES, CALUMET, CAMEO, CAPRI SUN, CARRIAGE INN, CARTE NOIRE, CASINO, CASTELETS, CERTO, CHEES

ÔTE D’OR, COUNTRY TIME, CRACKER BARREL, CRANBERRY ALMOND CRUNCH, CREAM OF WHEAT, CREMA DE ARROZ, CREME SAVERS, CROWN, CRYSTAL LIGHT

OR SNACKS, FLEISCHMANN’S, FRESHMADE CREATIONS, FRUIT & FIBRE, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GOLDEN CRISP, GOOD SEASONS

FT, LIFE SAVERS, LIGHT N' LIVELY, LORNA DOONE, LOUIS RICH, LUNCHABLES, MALLOMARS, MAXWELL HOUSE, MILKA, MILK-BONE, MINUTE, MIRABELL, MIRACL

REAN’S, PHILADELPHIA, PLANTERS, POLLY-O, POST, POST TOASTIES, POSTUM, PREMIUM, QUE CHATEL, RITZ, SANKA, SEVEN SEAS, SHAKE 'N BAKE, SHREDDIES

E, TANG, TEDDY GRAHAMS, TOBLERONE, TRISCUITS, TROLLI, TWIGS, TWILIGHT, UNEED, VELVEETA, WAFFLE CRISP, WHEAT THINS, WHEATSWORTH, YUBAN, 3-BIT

LEA, EL CASERÍO, ESTRELLA, EXPRESS, FIGARO, FREIA, FRESH, GALLITO, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GRAND’ MÈRE, HAG, INVERNIZZ

GUARY, MAMA LUISE, MARABOU, MAXIM, MAXWELL HOUSE, MELLOW BIRD'S, MERENDA, MEURISSE, MILKA, MIRABELL, MIRACLE WHIP, MIRÁCOLI, NOVA BRASILIA

MAZA, SAMAR, SHOT, SIESTA, SIMMENTHAL, SOTTILETTE, SPLENDID, SUCHARD, SUGUS, SUSANNA, SVOGE, TANG, TERRABUSI, TERRY'S CHOCOLATE ORANGE

BAR, BANANA NUT CRUNCH, BARNUM'S ANIMALS, BETTER CHEDDARS, BLUEBERRY MORNING, BOCA, BREAKSTONE'S, BULL'S-EYE, CAFÉ CREMES, CALUMET

OY!, CHURNY, CINNA-CRUNCH PEBBLES, CLIGHT, CLUB SOCIAL, COOL WHIP, CORNNUTS, CÔTE D’OR, COUNTRY TIME, CRACKER BARREL, CRANBERRY ALMOND

ZERTA, EASY CHEESE, EASY MAC, EL QUESOSISIMO, FIG NEWTONS, FLAVOR CRISPS, FLAVOR SNACKS, FLEISCHMANN’S, FRESHMADE CREATIONS, FRUIT & FIBRE

CKS, HONEY MAID, HONEYCOMB, JACK'S, JACOBS, JELL-O, KNUDSEN, KOOL-AID, KRAFT, LIFE SAVERS, LIGHT N' LIVELY, LORNA DOONE, LOUIS RICH, LUNCHABLES

O O'S, OREOS, OSCAR MAYER, OVEN CLASSICS, OVEN FRY, OYSTERETTES, PEEK FREAN’S, PHILADELPHIA, PLANTERS, POLLY-O, POST, POST TOASTIES, POSTUM

ED WHEAT THINS, STOVE TOP, SUCHARD, SURE·JELL, SWISS CRÈME, SWISS FUDGE, TANG, TEDDY GRAHAMS, TOBLERONE, TRISCUITS, TROLLI, TWIGS, TWILIGHT

Z WHIZ, CHIPS AHOY!, CLIGHT, CLUB SOCIAL, CÔTE D’OR, DADAK, DAIM, DAIRYLEA, EL CASERÍO, ESTRELLA, EXPRESS, FIGARO, FREIA, FRESH, GALLITO, GENERA

KENCO, KOOL-AID, KORONA, KRAFT, LACTA, LUCKY, LUNCHABLES, MAARUD, MAGUARY, MAMA LUISE, MARABOU, MAXIM, MAXWELL HOUSE, MELLOW BIRD'S

A, PLANTERS, POIANA, POKROV, POST, PRINCE POLO, RHODESIA, RITZ, ROYAL, SAIMAZA, SAMAR, SHOT, SIESTA, SIMMENTHAL, SOTTILETTE, SPLENDID, SUCHARD

RISPS, ALMOST HOME, ALPHA-BITS, ALTOIDS, ATHENOS, BAKER'S, BALANCE NUTRITION BAR, BANANA NUT CRUNCH, BARNUM'S ANIMALS, BETTER CHEDDARS

, CASTELETS, CERTO, CHEESE NIPS CRISPS, CHEESE PUFFS, CHEEZ WHIZ, CHIPS AHOY!, CHURNY, CINNA-CRUNCH PEBBLES, CLIGHT, CLUB SOCIAL, COOL WHIP

RS, CROWN, CRYSTAL LIGHT, DAIM, DELI DELUXE, DIGIORNO, DREAM WHIP, DUET, D-ZERTA, EASY CHEESE, EASY MAC, EL QUESOSISIMO, FIG NEWTONS, FLAVOR

N CRISP, GOOD SEASONS, GRAPE-NUTS, GREAT GRAINS, GREY-POUPON, HANDI-SNACKS, HONEY MAID, HONEYCOMB, JACK'S, JACOBS, JELL-O, KNUDSEN, KOOL

TE, MIRABELL, MIRACLE WHIP, MISTER SALTY, NABISCO, NUTTER BUTTER, OASIS, OREO O'S, OREOS, OSCAR MAYER, OVEN CLASSICS, OVEN FRY, OYSTERETTES

'N BAKE, SHREDDIES, SNACKWELL’S, SOCIABLES, SOCIAL TEA, STELLA D’ORO, STONED WHEAT THINS, STOVE TOP, SUCHARD, SURE·JELL, SWISS CRÈME, SWISS

ORTH, YUBAN, 3-BIT, ALPEN GOLD, ALTOIDS, BIRD'S, CARTE NOIRE, CEREALITAS, CHEEZ WHIZ, CHIPS AHOY!, CLIGHT, CLUB SOCIAL, CÔTE D’OR, DADAK, DAIM

MÈRE, HAG, INVERNIZZI, JACOBS, JACQUES VABRE, JAPP, JELL-O, JOCCA, KABA, KARUNA, KENCO, KOOL-AID, KORONA, KRAFT, LACTA, LUCKY, LUNCHABLES

P, MIRÁCOLI, NOVA BRASILIA, O'BOY, ONKO, OREO, PACIFIC SODA, PEPITOS, PHILADELPHIA, PLANTERS, POIANA, POKROV, POST, PRINCE POLO, RHODESIA, RITZ

Y'S CHOCOLATE ORANGE, TOBLERONE, TRAKINAS, UKRAINA, VELVEETA, VERAO, A.1., AIR CRISPS, ALMOST HOME, ALPHA-BITS, ALTOIDS, ATHENOS, BAKER'S

'S-EYE, CAFÉ CREMES, CALUMET, CAMEO, CAPRI SUN, CARRIAGE INN, CARTE NOIRE, CASINO, CASTELETS, CERTO, CHEESE NIPS CRISPS, CHEESE PUFFS, CHEEZ

ARREL, CRANBERRY ALMOND CRUNCH, CREAM OF WHEAT, CREMA DE ARROZ, CREME SAVERS, CROWN, CRYSTAL LIGHT, DAIM, DELI DELUXE, DIGIORNO, DREAM

ADE CREATIONS, FRUIT & FIBRE, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GOLDEN CRISP, GOOD SEASONS, GRAPE-NUTS, GREAT GRAINS, GREY

NA DOONE, LOUIS RICH, LUNCHABLES, MALLOMARS, MAXWELL HOUSE, MILKA, MILK-BONE, MINUTE, MIRABELL, MIRACLE WHIP, MISTER SALTY, NABISCO, NUTTER

Y-O, POST, POST TOASTIES, POSTUM, PREMIUM, QUE CHATEL, RITZ, SANKA, SEVEN SEAS, SHAKE 'N BAKE, SHREDDIES, SNACKWELL’S, SOCIABLES, SOCIAL TEA

ISCUITS, TROLLI, TWIGS, TWILIGHT, UNEED, VELVEETA, WAFFLE CRISP, WHEAT THINS, WHEATSWORTH, YUBAN, 3-BIT, ALPEN GOLD, ALTOIDS, BIRD'S, CARTE NOIRE

FREIA, FRESH, GALLITO, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GRAND’ MÈRE, HAG, INVERNIZZI, JACOBS, JACQUES VABRE, JAPP, JELL-O, JOCCA

ELL HOUSE, MELLOW BIRD'S, MERENDA, MEURISSE, MILKA, MIRABELL, MIRACLE WHIP, MIRÁCOLI, NOVA BRASILIA, O'BOY, ONKO, OREO, PACIFIC SODA, PEPITOS

LETTE, SPLENDID, SUCHARD, SUGUS, SUSANNA, SVOGE, TANG, TERRABUSI, TERRY'S CHOCOLATE ORANGE, TOBLERONE, TRAKINAS, UKRAINA, VELVEETA, VERAO

LS, BETTER CHEDDARS, BLUEBERRY MORNING, BOCA, BREAKSTONE'S, BULL'S-EYE, CAFÉ CREMES, CALUMET, CAMEO, CAPRI SUN, CARRIAGE INN, CARTE NOIRE

B SOCIAL, COOL WHIP, CORNNUTS, CÔTE D’OR, COUNTRY TIME, CRACKER BARREL, CRANBERRY ALMOND CRUNCH, CREAM OF WHEAT, CREMA DE ARROZ, CREM

NEWTONS, FLAVOR CRISPS, FLAVOR SNACKS, FLEISCHMANN’S, FRESHMADE CREATIONS, FRUIT & FIBRE, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA

LL-O, KNUDSEN, KOOL-AID, KRAFT, LIFE SAVERS, LIGHT N' LIVELY, LORNA DOONE, LOUIS RICH, LUNCHABLES, MALLOMARS, MAXWELL HOUSE, MILKA, MILK-BONE

N FRY, OYSTERETTES, PEEK FREAN’S, PHILADELPHIA, PLANTERS, POLLY-O, POST, POST TOASTIES, POSTUM, PREMIUM, QUE CHATEL, RITZ, SANKA, SEVEN SEAS

L, SWISS CRÈME, SWISS FUDGE, TANG, TEDDY GRAHAMS, TOBLERONE, TRISCUITS, TROLLI, TWIGS, TWILIGHT, UNEED, VELVEETA, WAFFLE CRISP, WHEAT THINS

ÔTE D’OR, DADAK, DAIM, DAIRYLEA, EL CASERÍO, ESTRELLA, EXPRESS, FIGARO, FREIA, FRESH, GALLITO, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA

the world’s favorite foods...

IT A.1., AIR CRISPS, ALMOST HOME, ALPHA-BITS, ALTOIDS, ATHENOS, BAKER'S, BALANCE NUTRITION BAR, BANANA NUT CRUNCH, BARNUM'S ANIMALS, BETT

NOIRE, CASINO, CASTELETS, CERTO, CHEESE NIPS CRISPS, CHEESE PUFFS, CHEEZ WHIZ, CHIPS AHOY!, CHURNY, CINNA-CRUNCH PEBBLES, CLIGHT, CLUB SOC

CREME SAVERS, CROWN, CRYSTAL LIGHT, DAIM, DELI DELUXE, DIGIORNO, DREAM WHIP, DUET, D-ZERTA, EASY CHEESE, EASY MAC, EL QUESOSISIMO, FIG NEW

GEVALIA, GOLDEN CRISP, GOOD SEASONS, GRAPE-NUTS, GREAT GRAINS, GREY-POUPON, HANDI-SNACKS, HONEY MAID, HONEYCOMB, JACK'S, JACOBS, JELL-

MILK-BONE, MINUTE, MIRABELL, MIRACLE WHIP, MISTER SALTY, NABISCO, NUTTER BUTTER, OASIS, OREO O'S, OREOS, OSCAR MAYER, OVEN CLASSICS, OVEN FR

SEAS, SHAKE 'N BAKE, SHREDDIES, SNACKWELL’S, SOCIABLES, SOCIAL TEA, STELLA D’ORO, STONED WHEAT THINS, STOVE TOP, SUCHARD, SURE·JELL, SWISS C

WHEATSWORTH, YUBAN, 3-BIT, ALPEN GOLD, ALTOIDS, BIRD'S, CARTE NOIRE, CEREALITAS, CHEEZ WHIZ, CHIPS AHOY!, CLIGHT, CLUB SOCIAL, CÔTE D’OR, DA

GRAND’ MÈRE, HAG, INVERNIZZI, JACOBS, JACQUES VABRE, JAPP, JELL-O, JOCCA, KABA, KARUNA, KENCO, KOOL-AID, KORONA, KRAFT, LACTA, LUCKY, LUNCHA

WHIP, MIRÁCOLI, NOVA BRASILIA, O'BOY, ONKO, OREO, PACIFIC SODA, PEPITOS, PHILADELPHIA, PLANTERS, POIANA, POKROV, POST, PRINCE POLO, RHODESI

TERRY'S CHOCOLATE ORANGE, TOBLERONE, TRAKINAS, UKRAINA, VELVEETA, VERAO, A.1., AIR CRISPS, ALMOST HOME, ALPHA-BITS, ALTOIDS, ATHENOS, BAK

BULL'S-EYE, CAFÉ CREMES, CALUMET, CAMEO, CAPRI SUN, CARRIAGE INN, CARTE NOIRE, CASINO, CASTELETS, CERTO, CHEESE NIPS CRISPS, CHEESE PUFF

CRACKER BARREL, CRANBERRY ALMOND CRUNCH, CREAM OF WHEAT, CREMA DE ARROZ, CREME SAVERS, CROWN, CRYSTAL LIGHT, DAIM, DELI DELUXE, DIGIO

FRESHMADE CREATIONS, FRUIT & FIBRE, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GOLDEN CRISP, GOOD SEASONS, GRAPE-NUTS, GREAT GRAINS

LORNA DOONE, LOUIS RICH, LUNCHABLES, MALLOMARS, MAXWELL HOUSE, MILKA, MILK-BONE, MINUTE, MIRABELL, MIRACLE WHIP, MISTER SALTY, NABISCO,

POLLY-O, POST, POST TOASTIES, POSTUM, PREMIUM, QUE CHATEL, RITZ, SANKA, SEVEN SEAS, SHAKE 'N BAKE, SHREDDIES, SNACKWELL’S, SOCIABLES, SOCIAL T

TRISCUITS, TROLLI, TWIGS, TWILIGHT, UNEED, VELVEETA, WAFFLE CRISP, WHEAT THINS, WHEATSWORTH, YUBAN, 3-BIT, ALPEN GOLD, ALTOIDS, BIRD'S, CARTE

FIGARO, FREIA, FRESH, GALLITO, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GRAND’ MÈRE, HAG, INVERNIZZI, JACOBS, JACQUES VABRE, JAPP, JELL-

MAXWELL HOUSE, MELLOW BIRD'S, MERENDA, MEURISSE, MILKA, MIRABELL, MIRACLE WHIP, MIRÁCOLI, NOVA BRASILIA, O'BOY, ONKO, OREO, PACIFIC SODA, P

SOTTILETTE, SPLENDID, SUCHARD, SUGUS, SUSANNA, SVOGE, TANG, TERRABUSI, TERRY'S CHOCOLATE ORANGE, TOBLERONE, TRAKINAS, UKRAINA, VELVEETA

ANIMALS, BETTER CHEDDARS, BLUEBERRY MORNING, BOCA, BREAKSTONE'S, BULL'S-EYE, CAFÉ CREMES, CALUMET, CAMEO, CAPRI SUN, CARRIAGE INN, CA

CLIGHT, CLUB SOCIAL, COOL WHIP, CORNNUTS, CÔTE D’OR, COUNTRY TIME, CRACKER BARREL, CRANBERRY ALMOND CRUNCH, CREAM OF WHEAT, CREMA

QUESOSISIMO, FIG NEWTONS, FLAVOR CRISPS, FLAVOR SNACKS, FLEISCHMANN’S, FRESHMADE CREATIONS, FRUIT & FIBRE, GENERAL FOODS INTERNATIONAL

JACK'S, JACOBS, JELL-O, KNUDSEN, KOOL-AID, KRAFT, LIFE SAVERS, LIGHT N' LIVELY, LORNA DOONE, LOUIS RICH, LUNCHABLES, MALLOMARS, MAXWELL HO

OVEN CLASSICS, OVEN FRY, OYSTERETTES, PEEK FREAN’S, PHILADELPHIA, PLANTERS, POLLY-O, POST, POST TOASTIES, POSTUM, PREMIUM, QUE CHATEL, RITZ

SUCHARD, SURE·JELL, SWISS CRÈME, SWISS FUDGE, TANG, TEDDY GRAHAMS, TOBLERONE, TRISCUITS, TROLLI, TWIGS, TWILIGHT, UNEED, VELVEETA, WAFFLE C

CLUB SOCIAL, CÔTE D’OR, DADAK, DAIM, DAIRYLEA, EL CASERÍO, ESTRELLA, EXPRESS, FIGARO, FREIA, FRESH, GALLITO, GENERAL FOODS INTERNATIONAL CO

KRAFT, LACTA, LUCKY, LUNCHABLES, MAARUD, MAGUARY, MAMA LUISE, MARABOU, MAXIM, MAXWELL HOUSE, MELLOW BIRD'S, MERENDA, MEURISSE, MILKA,

POST, PRINCE POLO, RHODESIA, RITZ, ROYAL, SAIMAZA, SAMAR, SHOT, SIESTA, SIMMENTHAL, SOTTILETTE, SPLENDID, SUCHARD, SUGUS, SUSANNA, SVOGE, T

BITS, ALTOIDS, ATHENOS, BAKER'S, BALANCE NUTRITION BAR, BANANA NUT CRUNCH, BARNUM'S ANIMALS, BETTER CHEDDARS, BLUEBERRY MORNING, BOCA

NIPS CRISPS, CHEESE PUFFS, CHEEZ WHIZ, CHIPS AHOY!, CHURNY, CINNA-CRUNCH PEBBLES, CLIGHT, CLUB SOCIAL, COOL WHIP, CORNNUTS, CÔTE D’OR, CO

DAIM, DELI DELUXE, DIGIORNO, DREAM WHIP, DUET, D-ZERTA, EASY CHEESE, EASY MAC, EL QUESOSISIMO, FIG NEWTONS, FLAVOR CRISPS, FLAVOR SNACKS,

GRAPE-NUTS, GREAT GRAINS, GREY-POUPON, HANDI-SNACKS, HONEY MAID, HONEYCOMB, JACK'S, JACOBS, JELL-O, KNUDSEN, KOOL-AID, KRAFT, LIFE SAVER

WHIP, MISTER SALTY, NABISCO, NUTTER BUTTER, OASIS, OREO O'S, OREOS, OSCAR MAYER, OVEN CLASSICS, OVEN FRY, OYSTERETTES, PEEK FREAN’S, PHILA

SNACKWELL’S, SOCIABLES, SOCIAL TEA, STELLA D’ORO, STONED WHEAT THINS, STOVE TOP, SUCHARD, SURE·JELL, SWISS CRÈME, SWISS FUDGE, TANG, TEDD

ALPEN GOLD, ALTOIDS, BIRD'S, CARTE NOIRE, CEREALITAS, CHEEZ WHIZ, CHIPS AHOY!, CLIGHT, CLUB SOCIAL, CÔTE D’OR, DADAK, DAIM, DAIRYLEA, EL CASER

JACOBS, JACQUES VABRE, JAPP, JELL-O, JOCCA, KABA, KARUNA, KENCO, KOOL-AID, KORONA, KRAFT, LACTA, LUCKY, LUNCHABLES, MAARUD, MAGUARY, MAMA

O'BOY, ONKO, OREO, PACIFIC SODA, PEPITOS, PHILADELPHIA, PLANTERS, POIANA, POKROV, POST, PRINCE POLO, RHODESIA, RITZ, ROYAL, SAIMAZA, SAMAR

TOBLERONE, TRAKINAS, UKRAINA, VELVEETA, A.1., AIR CRISPS, ALMOST HOME, ALPHA-BITS, ALTOIDS, ATHENOS, BAKER'S, BALANCE NUTRITION BAR, BANAN

CAMEO, CAPRI SUN, CARRIAGE INN, CARTE NOIRE, CASINO, CASTELETS, CERTO, CHEESE NIPS CRISPS, CHEESE PUFFS, CHEEZ WHIZ, CHIPS AHOY!, CHURNY,

CRUNCH, CREAM OF WHEAT, CREMA DE ARROZ, CREME SAVERS, CROWN, CRYSTAL LIGHT, DAIM, DELI DELUXE, DIGIORNO, DREAM WHIP, DUET, D-ZERTA, EASY

GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GOLDEN CRISP, GOOD SEASONS, GRAPE-NUTS, GREAT GRAINS, GREY-POUPON, HANDI-SNACKS, HONEY M

MALLOMARS, MAXWELL HOUSE, MILKA, MILK-BONE, MINUTE, MIRABELL, MIRACLE WHIP, MISTER SALTY, NABISCO, NUTTER BUTTER, OASIS, OREO O'S, OREOS

PREMIUM, QUE CHATEL, RITZ, SANKA, SEVEN SEAS, SHAKE 'N BAKE, SHREDDIES, SNACKWELL’S, SOCIABLES, SOCIAL TEA, STELLA D’ORO, STONED WHEAT TH

UNEED, VELVEETA, WAFFLE CRISP, WHEAT THINS, WHEATSWORTH, YUBAN, 3-BIT, ALPEN GOLD, ALTOIDS, BIRD'S, CARTE NOIRE, CEREALITAS, CHEEZ WHIZ, CHIPS

FOODS INTERNATIONAL COFFEES, GEVALIA, GRAND’ MÈRE, HAG, INVERNIZZI, JACOBS, JACQUES VABRE, JAPP, JELL-O, JOCCA, KABA, KARUNA, KENCO, KOO

MERENDA, MEURISSE, MILKA, MIRABELL, MIRACLE WHIP, MIRÁCOLI, NOVA BRASILIA, O'BOY, ONKO, OREO, PACIFIC SODA, PEPITOS, PHILADELPHIA, PLANTERS,

SUGUS, SUSANNA, SVOGE, TANG, TERRABUSI, TERRY'S CHOCOLATE ORANGE, TOBLERONE, TRAKINAS, UKRAINA, VELVEETA, VERAO, A.1., AIR CRISPS, ALMOS

BLUEBERRY MORNING, BOCA, BREAKSTONE'S, BULL'S-EYE, CAFÉ CREMES, CALUMET, CAMEO, CAPRI SUN, CARRIAGE INN, CARTE NOIRE, CASINO, CASTELETS,

CORNNUTS, CÔTE D’OR, COUNTRY TIME, CRACKER BARREL, CRANBERRY ALMOND CRUNCH, CREAM OF WHEAT, CREMA DE ARROZ, CREME SAVERS, CROWN, C

CRISPS, FLAVOR SNACKS, FLEISCHMANN’S, FRESHMADE CREATIONS, FRUIT & FIBRE, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GOLDEN CRISP, GOO

AID, KRAFT, LIFE SAVERS, LIGHT N' LIVELY, LORNA DOONE, LOUIS RICH, LUNCHABLES, MALLOMARS, MAXWELL HOUSE, MILKA, MILK-BONE, MINUTE, MIRABELL

PEEK FREAN’S, PHILADELPHIA, PLANTERS, POLLY-O, POST, POST TOASTIES, POSTUM, PREMIUM, QUE CHATEL, RITZ, SANKA, SEVEN SEAS, SHAKE 'N BAKE, SHR

FUDGE, TANG, TEDDY GRAHAMS, TOBLERONE, TRISCUITS, TROLLI, TWIGS, TWILIGHT, UNEED, VELVEETA, WAFFLE CRISP, WHEAT THINS, WHEATSWORTH, YUBAN

DAIRYLEA, EL CASERÍO, ESTRELLA, EXPRESS, FIGARO, FREIA, FRESH, GALLITO, GENERAL FOODS INTERNATIONAL COFFEES, GEVALIA, GRAND’ MÈRE, HAG, I

MAARUD, MAGUARY, MAMA LUISE, MARABOU, MAXIM, MAXWELL HOUSE, MELLOW BIRD'S, MERENDA, MEURISSE, MILKA, MIRABELL, MIRACLE WHIP, MIRÁCOLI,

ROYAL, SAIMAZA, SAMAR, SHOT, SIESTA, SIMMENTHAL, SOTTILETTE, SPLENDID, SUCHARD, SUGUS, SUSANNA, SVOGE, TANG, TERRABUSI, TERRY'S CHOCOLA

BALANCE NUTRITION BAR, BANANA NUT CRUNCH, BARNUM'S ANIMALS, BETTER CHEDDARS, BLUEBERRY MORNING, BOCA, BREAKSTONE'S, BULL'S-EYE, CAFÉ

WHIZ, CHIPS AHOY!, CHURNY, CINNA-CRUNCH PEBBLES, CLIGHT, CLUB SOCIAL, COOL WHIP, CORNNUTS, CÔTE D’OR, COUNTRY TIME, CRACKER BARREL, CRAN

WHIP, DUET, D-ZERTA, EASY CHEESE, EASY MAC, EL QUESOSISIMO, FIG NEWTONS, FLAVOR CRISPS, FLAVOR SNACKS, FLEISCHMANN’S, FRESHMADE CREATIO

POUPON, HANDI-SNACKS, HONEY MAID, HONEYCOMB, JACK'S, JACOBS, JELL-O, KNUDSEN, KOOL-AID, KRAFT, LIFE SAVERS, LIGHT N' LIVELY, LORNA DOONE, LO

BUTTER, OASIS, OREO O'S, OREOS, OSCAR MAYER, OVEN CLASSICS, OVEN FRY, OYSTERETTES, PEEK FREAN’S, PHILADELPHIA, PLANTERS, POLLY-O, POST, PO

STELLA D’ORO, STONED WHEAT THINS, STOVE TOP, SUCHARD, SURE·JELL, SWISS CRÈME, SWISS FUDGE, TANG, TEDDY GRAHAMS, TOBLERONE, TRISCUITS, TRO

CEREALITAS, CHEEZ WHIZ, CHIPS AHOY!, CLIGHT, CLUB SOCIAL, CÔTE D’OR, DADAK, DAIM, DAIRYLEA, EL CASERÍO, ESTRELLA, EXPRESS, FIGARO, FREIA, FRESH

KABA, KARUNA, KENCO, KOOL-AID, KORONA, KRAFT, LACTA, LUCKY, LUNCHABLES, MAARUD, MAGUARY, MAMA LUISE, MARABOU, MAXIM, MAXWELL HOUSE, M

PHILADELPHIA, PLANTERS, POIANA, POKROV, POST, PRINCE POLO, RHODESIA, RITZ, ROYAL, SAIMAZA, SAMAR, SHOT, SIESTA, SIMMENTHAL, SOTTILETTE, SPLEND

A.1., AIR CRISPS, ALMOST HOME, ALPHA-BITS, ALTOIDS, ATHENOS, BAKER'S, BALANCE NUTRITION BAR, BANANA NUT CRUNCH, BARNUM'S ANIMALS, BETTER CH

CASINO, CASTELETS, CERTO, CHEESE NIPS CRISPS, CHEESE PUFFS, CHEEZ WHIZ, CHIPS AHOY!, CHURNY, CINNA-CRUNCH PEBBLES, CLIGHT, CLUB SOCIAL, COO

SAVERS, CROWN, CRYSTAL LIGHT, DAIM, DELI DELUXE, DIGIORNO, DREAM WHIP, DUET, D-ZERTA, EASY CHEESE, EASY MAC, EL QUESOSISIMO, FIG NEWTONS, F

GOLDEN CRISP, GOOD SEASONS, GRAPE-NUTS, GREAT GRAINS, GREY-POUPON, HANDI-SNACKS, HONEY MAID, HONEYCOMB, JACK'S, JACOBS, JELL-O, KNUDSE

MINUTE, MIRABELL, MIRACLE WHIP, MISTER SALTY, NABISCO, NUTTER BUTTER, OASIS, OREO O'S, OREOS, OSCAR MAYER, OVEN CLASSICS, OVEN FRY, OYSTE

SHAKE 'N BAKE, SHREDDIES, SNACKWELL’S, SOCIABLES, SOCIAL TEA, STELLA D’ORO, STONED WHEAT THINS, STOVE TOP, SUCHARD, SURE·JELL, SWISS CRÈ

WHEATSWORTH, YUBAN, 3-BIT, ALPEN GOLD, ALTOIDS, BIRD'S, CARTE NOIRE, CEREALITAS, CHEEZ WHIZ, CHIPS AHOY!, CLIGHT, CLUB SOCIAL, CÔTE D’OR, DA

• Oreo, the world’s number one cookie, got a lot bigger with the launch

of Chocolate Creme Oreo.

• We’re positioned for growth in Russia and Poland with the acquisition

of Stollwerck, a leading producer of chocolate confectionery.

• Creme Savers, our newest $100 million brand, grew revenues more

than 25%, with new flavors and expanded distribution.

• Club Social and Trakinas, two of our core biscuit brands in Latin

America, grew volume better than 30% in the large Brazilian market.

• Bringing together two icon brands, we launched Jell-O Oreo

ready-to-eat pudding.

• Our growth in developing markets continued with the expansion of

Milka into Ukraine and Siesta into Romania, Lithuania and Bulgaria.

• Broader distribution in the grocery and convenience store channels

drove strong growth of Planters Trail Mix, which has six of the top ten

items in the trail mix category.

Revenues $10.1 Billion

From the first cup of coffee in the

morning to a last late-night snack,

Kraft Foods makes the world’s favorite

foods. Our market basket of products,

which includes six brands with more

than $1 billion in revenues and a total

of 61 brands with revenues of at least

$100 million, is balanced across five

growing global sectors: Snacks,

Beverages, Cheese, Convenient

Meals and Grocery.

Whether it’s with global brands like

Nabisco, Philadelphia and Tang, or

regional favorites like Oscar Mayer,

Jacobs and Post, we’re on trend with

local tastes in more than145 countries

around the world. And along with our

products come great food and nutrition

ideas. Our websites, which are among

the most popular of any consumer goods

company, offer recipes, menu planning,

kitchen basics and in-depth health &

wellness information. With the best

brands and a range of helpful services,

we’re making food a simpler, easier,

more enjoyable part of life.

As more consumers eat on the run and snack whenever they get

a chance, Kraft is right beside them with some of the best-known

brands of cookies, crackers, confectionery and salty snacks. Now,

with the addition of Nabisco, Kraft is the world’s leading producer

of cookies and crackers, including global leaders like the Oreo

and Ritz brands. We’re also one of the largest chocolate producers

worldwide, with brands such as Milka, Toblerone and Côte d’Or.

Brands like Life Savers, Creme Savers, Altoids and Sugus round

out our confectionery business. Estrella in Europe and Planters in

North America are just two of our leading brands of salty snacks.

Snacks

Total Revenues $33.9 Billion

CHEDDARS,

ETS, CERTO,

R, COUNTRY

DIGIORNO,

IONS, FRUIT

ONEY MAID,

S, MAXWELL

SSICS, OVEN

KE 'N BAKE,

ANG, TEDDY

OIDS, BIRD'S,

ARO, FREIA,

A, KARUNA,

, MERENDA,

KROV, POST,

TERRABUSI,

S, BALANCE

S, CALUMET,

NA-CRUNCH

CREMA DE

G NEWTONS,

RISP, GOOD

IFE SAVERS,

Y, NABISCO,

POST, POST

NED WHEAT

, VELVEETA,

LUB SOCIAL,

LIA, GRAND’

S, MAARUD,

SILIA, O'BOY,

HOT, SIESTA,

A, VELVEETA,

ALS, BETTER

CASTELETS,

CÔTE D’OR,

ELI DELUXE,

FRESHMADE

PON, HANDI-

UNCHABLES,

CAR MAYER,

NKA, SEVEN

ÈME, SWISS

3-BIT, ALPEN

ESTRELLA,

APP, JELL-O,

SE, MELLOW

PLANTERS,

NA, SVOGE,

S, ATHENOS,

S-EYE, CAFÉ

HIPS AHOY!,

NCH, CREAM

SY MAC, EL

L COFFEES,

, KNUDSEN,

LL, MIRACLE

LADELPHIA,

LES, SOCIAL

ITS, TROLLI,

HEEZ WHIZ,

RAL FOODS

ONA, KRAFT,

LL, MIRACLE

RITZ, ROYAL,

OBLERONE,

, BARNUM'S

ARTE NOIRE,

COOL WHIP,

YSTAL LIGHT,

SCHMANN’S,

AINS, GREY-

• Our ready-to-drink beverages continued their double-digit growth in

the U.S., with strong performances from Capri Sun, Tang, Crystal Light

and Kool-Aid Jammers.

• We expanded our leading global position in coffee with acquisitions

in Romania, Bulgaria and Morocco.

• We introduced Tang into Indonesia, India and Vietnam – three countries

with a combined population of 1.3 billion people.

• We were the first to introduce an easy-open coffee can lid nationally

in the U.S., on Maxwell House and Yuban coffees.

• Coffee became more convenient across Europe with new single-serve coffee

sticks under the Jacobs, Carte Noire, Gevalia and Maxwell House brands.

• Clight expanded its Latin American presence with new products in

Brazil and Venezuela.

• Annual per capita cheese consumption is more than 30 pounds

in the U.S., where Kraft is the number one brand.

• Kraft Singles with added calcium was introduced across the

Asia Pacific region.

• Our global “Taste of Heaven” ad campaign for Philadelphia

cream cheese is now building volume in 29 markets.

• We expanded our fast-growing Kraft 2% Milk line of cheese

with two new flavors.

• We continued to renew growth in our cottage cheese business,

adding new flavors to our innovative Breakstone’s and Knudsen

Cottage Doubles.

Beverages Cheese

Revenues $6.6 Billion Revenues $6.3 Billion

There’s nothing more satisfying than hot coffee on a cold morning

or a cold drink on a hot day. Kraft has them both, with a wide range

of exciting global and local brands and innovative new products.

We built our leading global position in coffee with Maxwell House,

Jacobs, Carte Noire and other brands that meet consumers’ unique

local coffee preferences. In the fast-growing area of refreshment

beverages, Kraft is leading the way with powerhouse global brands

such as Tang and strong national and regional brands, including

Capri Sun, Crystal Light, Kool-Aid and Clight.

Throughout history, cheese has been an essential element of the

eating experience, and for more than a century, Kraft’s innovations

have brought quality, convenience and variety to consumers

worldwide. Philadelphia cream cheese, our most global brand,

is the perfect example. While people all over the world use cream

cheese differently, the cream cheese they like best is Philadelphia.

From Cracker Barrel natural cheese, and Kraft Singles, Shreds

and Cubes, to Dairylea and El Caserío process cheese, Kraft

makes the cheese that pleases the world.

• Our high-growth pizza business picked up momentum from new

DiGiorno Stuffed Crust and Tombstone Mexican pizzas in the U.S.

and Delissio Personal Size pizza in Canada.

• By taking North America’s favorite Kraft Macaroni & Cheese dinner

and fast-adapting it to the Czech Republic with a variety of sauces

to fit local tastes, we’ve created a whole new growth business.

• Lunchables lunch combinations, an American phenomenon,

continued to gain ground in Europe with solid volume growth

in the United Kingdom, Ireland and Spain.

• Boca meat alternatives grew from the number three to the number

two brand in the U.S.

• We acquired It’s Pasta Anytime, giving us a new shelf-stable

technology for future new products.

• Oscar Mayer sliced meats accelerated their volume growth with

revitalized ham and turkey products.

Convenient Meals Grocery

Revenues $5.5 Billion

Who ever has enough time? Kraft helps make life a little easier

with products that are as convenient as they are delicious. From

the perennial favorite Oscar Mayer sliced meats and hot dogs, to

Lunchables lunch combinations, Mirácoli dinners, Boca meat

alternatives, to Stove Top Oven Classics and Tombstone, DiGiorno

and Jack’s pizza, consumers rely on Kraft for creative ideas for

their mealtime needs. Wherever there’s a busy family seeking

relief from mealtime mayhem, Kraft is there with satisfying and

convenient solutions.

• We joined together the Kraft and Oscar Mayer brands to launch

three new bacon-flavored pourable salad dressings, increasing

our numberone share in the U.S.

• In Germany we offered health-conscious consumers new low-fat

Miracle Whip with yogurt.

• In Latin America, we built on the strength of our popular Clight

powdered soft drink brand with the successful introduction of

Clight powdered gelatin dessert.

• With new Easy Squeeze packaging for Kraft mayonnaise and

Miracle Whip dressing, we increased our share leadership in

U.S. spoonable dressings.

• Royal, the leader in dry desserts in Latin America, grew even

stronger with the introduction of new Space gelatin fantasy flavors.

A good breakfast is important for the body, but a good dessert

feeds the soul. Our grocery sector covers both, and just about

everything in between, including sauces, pourable and spoonable

dressings and mustard. Kraft starts the morning right with a wide

variety of Post cereals, from Grape Nuts and Shredded Wheat

to Honey Bunches of Oats and Honeycomb. Midday, a sandwich

just isn’t a sandwich without Miracle Whip – or Vegemite in Australia

and New Zealand. And as everyone knows, there’s always room

for Jell-O – topped, of course, with Cool Whip dessert topping.

Once again, Kraft has the perfect brand for any eating occasion.

Revenues $5.4 Billion

2001 Financial Highlights

Consolidated Results

Reported Pro Forma

(in millions, except per share data) 2001 2000 % Change 2001 2000 % Change

Volume (in pounds) 17,392 13,130 32.5% 17,374 16,747 3.7%

Operating revenues $33,875 $26,532 27.7 $33,871 $34,033 (0.5)

Operating companies income 6,035 4,755 26.9 6,116 5,616 8.9

Net earnings 1,882 2,001 (5.9) 2,092 1,745 19.9

Diluted earnings per share 1.17 1.38 (15.2) 1.21 1.01 19.8

Results by Business Segment

North America

Cheese, Meals and Enhancers

Operating revenues $10,256 $ 9,405 9.0% $10,256 $10,272 (0.2%)

Operating companies income 2,099 1,845 13.8 2,162 2,057 5.1

Biscuits, Snacks and Confectionery

Operating revenues 5,917 329 100

5,917 5,761 2.7

Operating companies income 966 100 100

968 777 24.6

Beverages, Desserts and Cereals

Operating revenues 5,370 5,266 2.0 5,370 5,395 (0.5)

Operating companies income 1,192 1,090 9.4 1,204 1,125 7.0

Oscar Mayer and Pizza

Operating revenues 3,563 3,461 2.9 3,563 3,473 2.6

Operating companies income 539 512 5.3 544 51 6 5. 4

Total North America

Operating revenues $25,106 $ 18,461 36.0% $25,106 $24,901 0.8%

Operating companies income 4,796 3,547 35.2 4,878 4,475 9.0

International

Europe, Middle East and Africa

Operating revenues $ 6,339 $ 6,824 (7.1%) $ 6,339 $ 6,754 (6.1%)

Operating companies income 861 1,019 (15.5) 861 857 0.5

Latin America and Asia Pacific

Operating revenues 2,430 1,247 94.9 2,426 2,378 2.0

Operating companies income 378 189 100.0 377 284 32.7

Total International

Operating revenues $8,769 $8,071 8.6% $ 8,765 $ 9,132 (4.0%)

Operating companies income 1,239 1,208 2.6 1,238 1,141 8.5

Total Kraft Foods

Operating revenues $33,875 $26,532 27.7% $33,871 $34,033 (0.5%)

Operating companies income 6,035 4,755 26.9 6,116 5,616 8.9

Reported results include the operating results of Nabisco in 2001, but not in 2000. Reported results also reflect average shares of common stock

outstanding during 2001 and assume an average of 1.455 billion shares outstanding during 2000.

Pro forma results assume Kraft owned Nabisco for all of 2000. In addition, pro forma results reflect common shares outstanding of 1.735 billion

based on the assumption that shares issued immediately following the Kraft initial public offering (IPO) were outstanding during all periods

presented and that, effective January 1, 2000, the net proceeds of the IPO were used to retire indebtedness incurred to finance the Nabisco

acquisition. These results also exclude significant one-time items for loss on sale of a factory and integration costs, estimated sales made in

advance of the century date change, gain on sale of a business, and results from operations divested since the beginning of 2000.

Results for fiscal year 2001 are based on a traditional 52-week year while fiscal year 2000 results reflect a 53-week year.

Pro forma volume results shown above and volume comparisons elsewhere in this report exclude the impact of the 53rd week in 2000

for a more meaningful comparison.

Yes, we’re big. But we’ve never lost touch with the source of our success: the ability

to listen with a creative ear...the imagination to meet people’s needs with innovative

food ideas…a commitment to trust we will not compromise.

And as we’ve grown, we’ve kept the best of local while capturing all the advantages

of global scale – and done it with teamwork, discipline and speed. For those who

invest in us, our goal is simple: consistent, top-tier performance.

Perhaps no other year in our history has embodied all this quite like 2001.

It was a transformational year for Kraft Foods.

We integrated Nabisco and Kraft with great success, building new growth opportunities

and gaining more than $100 million in synergy savings.

We completed an initial public offering of 16.1% of Kraft’s outstanding shares, raising

$8.4 billion in net proceeds used to retire debt associated with the Nabisco acquisition.

We began paying dividends at an annual rate of 52 cents per share and produced

a total return for shareholders of 10.6% for the 28 weeks Kraft shares traded in 2001.

New products generated more than $1.1 billion in revenues.

Our volume grew 11% in developing markets around the world.

We made five acquisitions to drive future growth.

More than 12 million consumers visited our websites each month for ideas and information.

Productivity savings for the year met our target of 3.5% of cost of goods sold.

We grew worldwide volume 3.7%, in line with our stated goal of 3% - 4% growth.

We generated a strong $3.3 billion in operating cash flow.

And once again we delivered on our promise of top-tier financial results, with operating

companies income up 8.9% to $6.1 billion, net earnings up 19.9% to $2.1 billion and

diluted earnings per share up 19.8% to $1.21.

Our results were strong across the company.

All six of our business segments increased volume and operating companies income

for the year.

Kraft Foods North America:

Beverages, Desserts and Cereals – Volume was up 9.3%, powered by double-digit

gains in our ready-to-drink beverage business, which more than offset softness in

Desserts and Cereals. Operating companies income for the segment increased 7.0%.

Biscuits, Snacks and Confectionery – Volume increased 1.6%, led by strong growth

in our core cookies and crackers businesses. Operating companies income was up

24.6%, benefiting from volume growth and synergy gains.

Fellow Shareholders:

Our Mission

To Be the Undisputed Global

Food Leader

Consumers... First Choice

Customers... Indispensable Partner

Alliances... Most Desired Partner

Employees... Employer of Choice

Communities... Responsible Citizen

Investors... Top-Tier Performer

•

Note: All amounts discussed in this letter are on a pro forma basis. In addition, the volume comparisons

are also adjusted to reflect a 52-week fiscal year 2000.

Cheese, Meals and Enhancers – Volume grew 0.9%, as growth in Meals and

Enhancers and in Canada more than offset declines in Cheese and Food Service,

due in part to exiting non -branded businesses. Operating companies income

increased 5.1%.

Oscar Mayer and Pizza – Volume was up 2.3% on gains from our processed meats,

meat alternatives and pizza businesses. Operating companies income was up 5.4%.

Kraft Foods International:

Europe, Middle East and Africa – Volume increased 1.3%, as strong growth in Central

and Eastern Europe and gains in numerous Western European markets were partially

offset by declines in Germany and Italy. Operating companies income increased 0.5%.

Latin America and Asia Pacific – Volume increased a strong 9.9%, led by broad-based

growth in snacks, beverages, cheese and grocery products. Operating companies

income increased 32.7%.

Overall, the earnings growth we delivered was once again among the industry’s best.

But as good a year as it was, we’re not satisfied. Looking ahead, we will continue to

build both the bottom and top lines with five enduring strategies:

Accelerate growth of core brands – To drive growth, we’re leveraging one of the industry’s

most powerful portfolios of brands to address the marketplace’s most compelling trends.

We’re focusing new-product innovation on four high-growth consumer needs: snacking,

beverages, convenient meals and health & wellness. We’re capturing a greater share

of the fastest-growing distribution channels, including supercenters, convenience stores,

mass merchandisers, drug stores, club stores and food away from home. And we’re

developing customized products and marketing programs to reach rapidly expanding

demographic segments such as the African-American and Hispanic populations

in the U.S.

Drive global category leadership – Managed effectively, category leadership is

a compelling advantage. With our large number of leading brands, we’re able

to capture a strong share of each category’s growth, giving us the resources to

reinvest in marketing and innovation and keep us well positioned for future growth.

We build category strength with our worldwide councils of category experts, who

share best practices, fast-adapt product ideas, and optimize productivity and

sourcing in our global biscuits, cheese, coffee, confectionery and refreshment

beverages businesses.

We are intent on driving growth in developing markets. More than 80% of the world’s

population lives in developing markets, yet only 9% of Kraft’s revenues are sourced

there. Our rapid expansion in these markets will continue by broadening our brand

portfolio in current categories, bringing new categories to current geographies,

expanding to new geographies and building distribution in all geographies where

we operate.

Optimize our portfolio – With the integration of Nabisco, our reported revenues increased

28%, giving us a leading global position in snack foods. We will continue to acquire

high-potential businesses to jump-start us in new fast-growing categories or countries

and give us greater scale in existing ones. We also will divest slower-growth or lower-

margin businesses that no longer constitute a strategic fit.

Drive world-class productivity, quality and service – Strong cost management funds

our future, helping us deliver top-tier growth and profitability. Using a continuously

replenished, three-year pipeline of ideas, our productivity programs now yield annual

Our Strategies

Accelerate growth of core brands

Drive global category leadership

Optimize our portfolio

Drive world-class productivity,

quality and service

Build employee and organizational

excellence

savings of 3.5% of cost of goods sold, while helping us improve product quality and

customer-service levels. We’re also on track to achieve $600 million in ongoing annual

synergy savings from the integration of Nabisco.

Build employee and organizational excellence – Even with our great brand strength

and global scale, the biggest advantage we have is our people. Using highly

successful recruitment, retention and development initiatives, we’ve built the best

team in the business. We have the experience, the bench strength, the diversity and

the leadership skills that set us apart. And every one of us is committed to the

same goal – consistent, top-tier performance.

We expect to deliver on that goal again in 2002. For the year, we expect to grow volume

in the 3%-4% range. And we project diluted earnings per share growth in the range of

14%-16%, to $2.00 -$2.05, reflecting new accounting standards on goodwill amortization.

Of course, in every year there are challenges, some anticipated and some we cannot

foresee. But whether it’s currency translation, commodity costs or economic weakness in

certain countries, you have our committment that we will do our best to overcome them.

In so many ways, 2001 was an extraordinary year for Kraft Foods.

As eventful as it was, and as pleased as we are to celebrate all its successes, our

focus is on what’s next: an emerging trend that creates new opportunity…another

developing market where our brands can prosper...a thriving high-potential business

we can acquire...the next innovative idea to reduce supply-chain costs...a new

leadership program to help the best team get even better.

We look ahead with confidence – to another strong year in 2002 and a future of

long-term, sustainable growth.

Geoffrey C. Bible Betsy D. Holden Roger K. Deromedi

Chairman of the Board Co-CEO, Kraft Foods Inc. Co-CEO, Kraft Foods Inc.

Kraft Foods Inc. President & CEO President & CEO

Kraft Foods North America Kraft Foods International

February 28, 2002

Geoffrey C. Bible Betsy D. Holden Roger K. Deromedi

Kraft Foods Inc.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

Overview

Kraft Foods Inc. (“Kraft”), together with its subsidiaries (collectively

referred to as the “Company”) is the largest branded food and

beverage company headquartered in the United States. Prior to

June 13, 2001, the Company was a wholly-owned subsidiary of

Philip Morris Companies Inc. (“Philip Morris”). On June 13, 2001, the

Company completed an initial public offering (“IPO”) of 280,000,000

shares of its Class A common stock at a price of $31.00 per share.

The IPO proceeds, net of the underwriting discount and expenses,

of $8.4 billion were used to retire a portion of an $11.0 billion long-

term note payable to Philip Morris incurred in connection with the

acquisition of Nabisco Holdings Corp. (“Nabisco”). After the IPO,

Philip Morris owns approximately 83.9% of the outstanding shares

of the Company’s capital stock through its ownership of 49.5%

of the Company’s Class A common stock, and 100% of the

Company’s Class B common stock. The Company’s Class A

common stock has one vote per share while the Company’s Class

B common stock has ten votes per share. Therefore, Philip Morris

holds 97.7% of the combined voting power of the Company’s

outstanding common stock.

The Company conducts its global business through two units: Kraft

Foods North America, Inc. (“KFNA”) and Kraft Foods International,

Inc. (“KFI”). KFNA manages its operations by product category,

while KFI manages its operations by geographic region. KFNA’s

segments are Cheese, Meals and Enhancers; Biscuits, Snacks and

Confectionery; Beverages, Desserts and Cereals; and Oscar Mayer

and Pizza. KFNA’s food service business within the United States

and its businesses in Canada and Mexico are reported through

the Cheese, Meals and Enhancers segment. KFI’s segments are

Europe, Middle East and Africa; and Latin America and Asia Pacific.

Financial Reporting Release No. 60, which was recently issued

by the Securities and Exchange Commission (“SEC”), requires

all registrants to discuss critical accounting policies or methods

used in the preparation of financial statements. Note 2 to the

consolidated financial statements includes a summary of the

significant accounting policies and methods used in the preparation

of the Company’s consolidated financial statements. In the opinion

of management, the Company does not have any individual

accounting policy which is critical to the preparation of its

consolidated financial statements. This is due principally to the

definitive nature of accounting requirements for consumer products

companies. Also, in most instances, the Company must use

an accounting policy or method because it is the only policy or

method permitted under accounting principles generally accepted

in the United States of America (“U.S. GAAP”). The following is a

review of the more significant accounting policies and methods

used by the Company:

Revenue Recognition: As required by U.S. GAAP, the Company

recognizes operating revenues upon shipment of products to

customers when title and risk of loss pass to its customers.

Provisions and allowances for sales returns and bad debts are also

recorded in the Company’s consolidated financial statements. The

amounts recorded for these provisions and related allowances are

not significant to the Company’s consolidated financial position or

results of operations. As discussed in Note 2 to the consolidated

financial statements, effective January 1, 2002, the Company will

adopt new required accounting standards mandating that certain

costs currently reported as marketing, administration and research

costs be shown as a reduction of operating revenues or an

increase in cost of sales. As a result, previously reported revenues

will be reduced by approximately $4.6 billion, $3.6 billion and $3.4

billion for 2001, 2000 and 1999, respectively. The adoption of the

new accounting standards will have no impact on net earnings or

basic or diluted earnings per share.

Depreciation and Amortization: The Company depreciates

property, plant and equipment and amortizes goodwill and other

intangible assets using straight-line methods. Through December

31, 2001, the Company used forty years to amortize goodwill and

other intangible assets, in recognition of the strength of its brands,

which resulted in amortization expense of $962 million for the year

ended December 31, 2001. Beginning on January 1, 2002, with the

adoption of a new required accounting standard, the Company

will no longer be required to amortize a substantial portion of its

goodwill and other intangible assets. As a result, the Company

estimates that amortization expense will approximate $10 million

for the year ending December 31, 2002. The Company will also be

required to continue to review annually its goodwill and other

intangible assets for possible impairment or loss of value. However,

the Company does not currently anticipate having to record an

impairment loss when it adopts the new standard.

Marketing Costs: As required by U.S. GAAP, the Company

records marketing costs as an expense in the year to which such

costs relate. The Company does not defer the recognition of

any amounts on its consolidated balance sheet with respect to

marketing costs. The Company expenses advertising costs as

incurred in the period in which the related advertisement initially

appears. The Company records consumer incentive and trade

promotion costs as an expense in the period in which these

programs are offered, based on estimates of utilization and

redemption rates that are developed from historical information. As

discussed above under “Revenue Recognition,” beginning January

1, 2002, the Company will adopt the previously mentioned revenue

recognition accounting standards mandating that certain costs

currently reported as marketing expense be shown as a reduction

of operating revenues or an increase in cost of sales. As a result,

previously reported amounts for marketing, administration and

research costs will be reduced by approximately $4.7 billion, $3.7

billion and $3.4 billion for 2001, 2000 and 1999, respectively. The

adoption of the new accounting standards will have no impact on

net earnings or basic or diluted earnings per share.

Hedging Instruments: As of January 1, 2001, the Company

adopted the provisions of a new required accounting standard,

which did not have a material effect on net earnings (less than

$1 million) or accumulated other comprehensive losses (less than

$1 million). The new accounting standard requires that the fair value

of all derivative financial instruments be recorded on the Company’s

consolidated balance sheet as assets or liabilities. Substantially all

of the Company’s derivative financial instruments are effective as

hedges under the new standard; accordingly, the changes in their

Kraft Foods Inc.

fair value are recognized in earnings when the related hedged items

are recorded in earnings. During 2001, the Company recognized

deferred losses of $15 million in earnings, which offset the impact

of gains on the related hedged items. In Note 16 of the notes to

consolidated financial statements, the Company has included a

detailed discussion of the types of exposures that it periodically

hedges, as well as a summary of the various instruments which it

utilizes. The Company does not use derivative financial instruments

for speculative purposes.

Employee Benefit Plans: The Company and its subsidiaries

provide a range of benefits to their employees and retired

employees, including pensions, postretirement health care

benefits and postemployment benefits (primarily severance). The

Company records annual amounts relating to these plans based

on calculations specified by U.S. GAAP, which include various

actuarial assumptions, such as discount rates, assumed rates of

return, compensation increases, turnover rates and health care

cost trend rates. The Company reviews its actuarial assumptions

on an annual basis and makes modifications to the assumptions

based on current rates and trends when it is deemed appropriate

to do so. As required by U.S. GAAP, the effect of the modifications

is generally recorded or amortized over future periods. The

Company believes that the assumptions utilized in recording its

obligations under its plans, which are presented in Note 14 to the

consolidated financial statements, are reasonable based on its

experience and advice from its actuaries.

Related Party Transactions: As discussed in Note 3 to the

Company’s consolidated financial statements, Philip Morris and

certain of its affiliates provide the Company with various services,

including planning, legal, treasury, accounting and financial

services, auditing, insurance, human resources, office of the

secretary, corporate affairs, information technology and tax

services. Billings for these services were $339 million in 2001,

$248 million in 2000 and $165 million in 1999. The increases reflect

information services and financial services that were previously

performed by the Company, but are now provided by Philip Morris

at approximately the same cost. Although the value of services

provided by Philip Morris cannot be quantified on a stand-alone

basis, management believes that the billings are reasonable based

on the level of support provided by Philip Morris, and that the

charges reflect all services provided.

The Company also has long-term notes payable to Philip Morris of

$5.0 billion at December 31, 2001 and $21.4 billion at December 31,

2000. A significant portion of the amount outstanding at December

31, 2000 related to borrowings for the acquisition of Nabisco. The

decrease from 2000 to 2001 reflects the repayment of borrowings

with proceeds from the IPO, a public global bond offering and

short-term borrowings. The interest rates on the debt with Philip

Morris were established at market rates available to Philip Morris

at the time of issuance for similar debt with matching maturities.

However, the $5.0 billion remaining long-term note payable to Philip

Morris has no prepayment penalty, and the Company may repay

some or all of the note with the proceeds from external debt

offerings in the current low interest rate environment.

In addition, the accounts of the Company are included in the

consolidated federal income tax return of Philip Morris. To the

extent that foreign tax credits, capital losses and other credits

generated by the Company, which cannot be utilized on a stand-

alone basis, are utilized in Philip Morris’ consolidated federal income

tax return, the benefit is recognized in the Company’s calculation

of its provision for income taxes. The Company’s provisions for

income taxes for the years ended December 31, 2001, 2000 and

1999 were lower than provisions calculated on a stand-alone basis

by $185 million, $139 million and $107 million, respectively.

The preparation of all financial statements includes the use of

estimates and assumptions that affect a number of amounts

included in the Company’s financial statements, including, among

other things, employee benefit costs and related disclosures,

inventories under the last-in-first-out (“LIFO”) method, marketing

costs (advertising, consumer incentives and trade promotions),

environmental costs and income taxes. The Company bases its

estimates on historical experience and other assumptions which it

believes are reasonable. If actual amounts are ultimately different

from previous estimates, the revisions are included in the

Company’s results for the period in which the actual amounts

become known. Historically, the aggregate differences, if any,

between the Company’s estimates and actual amounts in any year

have not had a significant impact on the Company’s consolidated

financial statements.

Business Environment

The Company is subject to fluctuating commodity costs, currency

movements and competitive challenges in various product

categories and markets, including a trend toward increasing

consolidation in the retail trade and consequent inventory reductions

and changing consumer preferences. Certain competitors may have

different profit objectives and some international competitors may

be less susceptible to currency exchange rates. To confront these

challenges, the Company continues to take steps to build the value

of its brands and improve its food business portfolio with new

products and marketing initiatives.

Fluctuations in commodity costs can cause retail price volatility,

intensify price competition and influence consumer and trade

buying patterns. KFNA’s and KFI’s businesses are subject to

fluctuating commodity costs, including dairy, coffee bean and

cocoa costs. Dairy commodity costs on average have been higher

in 2001 than those seen in 2000. Cocoa bean prices have also

been higher, while coffee bean prices have been lower than in

2000. During the latter part of 2000 and into 2001, energy costs

rose in response to higher prices charged for oil and natural gas.

However, this increase in energy costs did not have a material

adverse effect on the operating results of the Company.

Kraft Foods Inc.

On December 11, 2000, the Company acquired all of the

outstanding shares of Nabisco for $55 per share in cash. The

purchase of the outstanding shares, retirement of employee stock

options and other payments totaled approximately $15.2 billion. In

addition, the acquisition included the assumption of approximately

$4.0 billion of existing Nabisco debt. The Company financed the

acquisition through the issuance of two long-term notes payable

to Philip Morris totaling $15.0 billion and short-term intercompany

borrowings of $255 million. The acquisition has been accounted

for as a purchase. Nabisco’s balance sheet was consolidated with

the Company as of December 31, 2000, and beginning January 1,

2001, Nabisco’s earnings have been included in the consolidated

operating results of the Company; however, Nabisco’s earnings

from December 11, 2000 to December 31, 2000 were not included

in the consolidated operating results of the Company since such

amounts were insignificant. The Company’s interest cost associated

with acquiring Nabisco has been included in interest and other

debt expense, net, on the Company’s consolidated statements

of earnings for the years ended December 31, 2001 and 2000.

The integration of Nabisco into Kraft has continued throughout

2001. The closure of a number of Nabisco domestic and

international facilities resulted in severance and other exit costs

of $379 million, which are included in the adjustments for the

allocation of purchase price. The closures will result in the

termination of approximately 7,500 employees and will require total

cash payments of $373 million, of which approximately $74 million

has been spent through December 31, 2001. Substantially all of the

closures will be completed by the end of 2002.

The integration of Nabisco into the operations of the Company

will also result in the closure or reconfiguration of several of the

Company’s existing facilities. The aggregate charges to the

Company’s consolidated statement of earnings to close or

reconfigure its facilities and integrate Nabisco are estimated to

be in the range of $200 million to $300 million. During 2001, the

Company incurred pre-tax integration costs of $53 million for

site reconfigurations and other consolidation programs in the

United States.

During 2001, the Company purchased coffee businesses in

Romania, Morocco and Bulgaria and also acquired confectionery

businesses in Russia and Poland. The total cost of these and

other smaller acquisitions was $194 million. The operating results

of these businesses were not material to the Company’s

consolidated financial position or results of operations in any

of the periods presented.

During 2000, the Company purchased the outstanding common

stock of Balance Bar Co., a maker of energy and nutrition snack

products. In a separate transaction, the Company also acquired

Boca Burger, Inc., a privately held manufacturer and marketer of

soy-based meat alternatives. The total cost of these and other

smaller acquisitions was $365 million. The operating results of

these businesses were not material to the Company’s consolidated

financial position or results of operations in any of the periods

presented.

During 2001, 2000 and 1999, the Company sold several small

businesses, including a French confectionery business in 2000.

The aggregate proceeds received in these transactions during 2001,

2000 and 1999 were $21 million, $300 million and $175 million,

respectively, on which pre-tax gains of $8 million, $172 million and

$62 million, respectively, were recorded. The operating results of

businesses divested were not material to the consolidated

operating results of the Company in any of the periods presented.

Euro: Twelve of the fifteen member countries of the European

Union have established fixed conversion rates between their

existing currencies and one common currency—the euro. In

January 2002, the new euro-denominated currency (bills and coins)

was issued. The Company’s operating subsidiaries affected by the

euro conversion have addressed the systems and business issues

raised by the euro currency conversion. These issues included,

among others: (1) the need to adapt computer and other business

systems and equipment to accommodate euro-denominated

transactions; and (2) the competitive impact of cross-border price

transparency, which makes it more difficult for businesses to

charge different prices for the same products on a country-by-

country basis. The euro conversion has not had, and the Company

currently anticipates that it will not have, a material adverse impact

on its financial condition or results of operations.

Century Date Change: The Company did not experience any

material disruptions to its business as a result of the Century Date

Change (“CDC”). The Company’s increases in 1999 year-end

inventories and trade receivables caused by preemptive CDC

contingency plans resulted in incremental cash outflows during

1999 of approximately $155 million. The cash outflows reversed in

the first quarter of 2000. In addition, the Company had increased

shipments in the fourth quarter of 1999 because customers

purchased additional product in anticipation of potential CDC-

related disruptions. The increased shipments in 1999 resulted

in estimated incremental operating revenues and operating

companies income in 1999 of approximately $97 million and $40

million, respectively, and corresponding decreases in operating

revenues and operating companies income in 2000.

53rd Week and Trade Inventory Reductions: The Company’s

subsidiaries end their fiscal years on the last Saturday in December.

Accordingly, most years contain 52 weeks of operating results

while every fifth or sixth year includes 53 weeks. The Company’s

consolidated statement of earnings for the year ended December

31, 2000 included a 53rd week. The benefit to 2000 operating

results from an extra week of shipments was partially offset by

inventory reductions undertaken by trade customers for certain

of the Company’s products. A reduction in trade inventories also

occurred in 2001. The net result is that Kraft’s 2001 volume

and revenue comparisons to 2000 were affected by the extra

week of shipments in 2000. Volume comparisons contained in

Management’s Discussion and Analysis for 2001 versus 2000 have

been provided on a comparable 52-week basis to provide a more

meaningful comparison of operating results.

Kraft Foods Inc.

Separation Programs: In October 2001, the Company announced

that it was offering a voluntary retirement program to certain

salaried employees in the United States. The program is expected

to terminate approximately 750 employees and will result in an

estimated pre-tax charge of approximately $140 million upon final

employee acceptance in the first quarter of 2002. This pre-tax

charge is part of the previously discussed $200 million to $300

million in pre-tax charges related to the integration of Nabisco.

During 1999, KFNA offered voluntary retirement incentive or

separation programs to certain eligible hourly and salaried

employees in the United States. Employees electing to terminate

employment under the terms of these programs were entitled to

enhanced retirement or severance benefits. Approximately 1,100

hourly and salaried employees accepted the benefits offered by

these programs and elected to retire or terminate. As a result, the

Company recorded a pre-tax charge of $157 million in 1999. This

charge was included in marketing, administration and research

costs in the consolidated statements of earnings for the following

segments: Cheese, Meals and Enhancers, $71 million; Oscar

Mayer and Pizza, $38 million; Biscuits, Snacks and Confectionery,

$2 million; and Beverages, Desserts and Cereals, $46 million.

Payments of pension and postretirement benefits are made in

accordance with the terms of the applicable benefit plans.

Severance benefits, which were paid over a period of time,

commenced upon dates of termination, which ranged from April

1999 to March 2000. The program and related payments were

completed during 2000. Salary and related benefit costs of

employees prior to their retirement or termination date were

expensed as incurred.

Consolidated Operating Results

The acquisition of Nabisco and subsequent IPO were significant

events that affect the comparability of earnings. In order to isolate

the financial effects of these events, and to provide a more

meaningful comparison of the Company’s results of operations, the

following tables and the subsequent discussion of the Company’s

consolidated operating results refer to results on a reported,

underlying and pro forma basis. Reported results include the

operating results of Nabisco in 2001, but not in 2000 and 1999.

Reported results also reflect average shares of common stock

outstanding during 2001, and reflect an average of 1.455 billion

shares outstanding during 2000 and 1999. Underlying results

include the operating results of Nabisco in 2001, but not in 2000

and 1999, and adjust for certain unusual items as detailed on

the tables, such as results from operations divested since the

beginning of 1999. Pro forma results assume the Company owned

Nabisco for all of 2000. In addition, pro forma results reflect

common shares outstanding of 1.735 billion based on the

assumption that shares issued immediately following the IPO were

outstanding during 2001 and 2000, and that, effective January 1,

2000, the net proceeds of the IPO were used to retire a portion of

a long-term note payable used to finance the Nabisco acquisition.

Pro forma results also adjust for certain unusual items as detailed

on the tables, such as the results from operations divested since

the beginning of 2000.

Consolidated Operating Results

(in millions)

Year Ended December 31, 2001 2000 1999

Reported volume (in pounds):

Kraft Foods North America

Cheese, Meals and Enhancers 5,219 4,820 4,874

Biscuits, Snacks and Confectionery 2,350 54 47

Beverages, Desserts and Cereals 3,421 3,117 2,883

Oscar Mayer and Pizza 1,519 1,507 1,433

Total Kraft Foods North America 12,509 9,498 9,237

Kraft Foods International

Europe, Middle East and Africa 2,826 2,829 2,816

Latin America and Asia Pacific 2,057 803 764

Total Kraft Foods International 4,883 3,632 3,580

Total reported volume 17,392 13,130 12,817

Reported operating revenues:

Kraft Foods North America

Cheese, Meals and Enhancers $10,256 $ 9,405 $ 9,360

Biscuits, Snacks and Confectionery 5,917 329 265

Beverages, Desserts and Cereals 5,370 5,266 5,074

Oscar Mayer and Pizza 3,563 3,461 3,198

Total Kraft Foods North America 25,106 18,461 17,897

Kraft Foods International

Europe, Middle East and Africa 6,339 6,824 7,676

Latin America and Asia Pacific 2,430 1,247 1,224

Total Kraft Foods International 8,769 8,071 8,900

Total reported operating

revenues $33,875 $26,532 $26,797

Reported operating

companies income:

Kraft Foods North America

Cheese, Meals and Enhancers $ 2,099 $ 1,845 $ 1,658

Biscuits, Snacks and Confectionery 966 100 73

Beverages, Desserts and Cereals 1,192 1,090 1,009

Oscar Mayer and Pizza 539 512 450

Total Kraft Foods North America 4,796 3,547 3,190

Kraft Foods International

Europe, Middle East and Africa 861 1,019 895

Latin America and Asia Pacific 378 189 168

Total Kraft Foods International 1,239 1,208 1,063

Total reported operating

companies income $ 6,035 $ 4,755 $ 4,253

Kraft Foods Inc.

Reported operating companies income, which is defined as

operating income before general corporate expenses and

amortization of goodwill and other intangible assets, was affected

by the following unusual items during 2001 and 2000:

• Sale of Food Factory and Integration Costs: During 2001,

the Company recorded pre-tax charges of $53 million for site

reconfigurations and other consolidation programs in the United

States. In addition, the Company recorded a pre-tax charge of

$29 million related to the sale of a North American food factory.

These pre-tax charges, which aggregate $82 million, were

included in marketing, administration and research costs in the

consolidated statement of earnings for the following segments:

Cheese, Meals and Enhancers, $63 million; Biscuits, Snacks and

Confectionery, $2 million; Beverages, Desserts and Cereals, $12

million; and Oscar Mayer and Pizza, $5 million.

• Sale of French Confectionery Business: During 2000, the

Company sold a French confectionery business (“French

Confectionery Sale”) for proceeds of $251 million on which a

pre-tax gain of $139 million was recorded. The pre-tax gain is

included in the Europe, Middle East and Africa segment’s

marketing, administration and research costs in the consolidated

statement of earnings.

The operating companies income comparison was also affected by

approximately $40 million of operating income from the previously

mentioned CDC sales.

Reported operating companies income increased $1,280 million

(26.9%) over 2000, due primarily to the acquisition of Nabisco.

On a pro forma basis, operating companies income increased

$500 million (8.9%), driven by volume growth, productivity

savings and Nabisco synergies, partially offset by unfavorable

currency movements.

Currency movements have decreased operating revenues by

$522 million and operating companies income by $60 million from

2000. Decreases in operating revenues and operating companies

income are due to the strength of the U.S. dollar against the euro,

Canadian dollar and certain Asian and Latin American currencies.

Although the Company cannot predict future movements in

currency exchange rates, the strength of the U.S. dollar, primarily

against the euro and Asian currencies, if sustained during 2002,

could continue to have an unfavorable impact on operating

revenues and operating companies income comparisons.

Reported interest and other debt expense, net, increased $840

million in 2001. This increase was due primarily to notes issued to

Philip Morris in the fourth quarter of 2000 to finance the acquisition

of Nabisco. On a pro forma basis, interest and other debt expense,

net, decreased $213 million in 2001 from $1,348 million in 2000.

This decrease in pro forma interest expense is due to the use of

free cash flow to repay debt and ongoing efforts to externally

refinance debt payable to Philip Morris in the current low interest

rate environment.

The following is a reconciliation of reported operating results to

underlying and pro forma operating results:

(in millions)

Year Ended December 31, 2001 2000 1999

Reported volume (in pounds) 17,392 13,130 12,817

Volume of businesses sold (18) (82) (176)

Estimated impact of century

date change 55 (55)

Underlying volume (in pounds) 17,374 13,103 12,586

Nabisco volume 3,852

Pro forma volume (in pounds) 17,374 16,955

Reported operating revenues $33,875 $26,532 $26,797

Operating revenues of

businesses sold (4) (162) (373)

Estimated impact of century

date change 97 (97)

Underlying operating revenues 33,871 26,467 $26,327

Nabisco operating revenues 7,566

Pro forma operating revenues $33,871 $34,033

Reported operating

companies income $ 6,035 $ 4,755 $ 4,253

Operating companies income of

businesses sold (1) (39) (64)

Estimated impact of century

date change 40 (40)

Loss on the sale of a North American

food factory and integration costs 82

Separation programs 157

Gain on sale of a French

confectionery business (139)

Underlying operating

companies income 6,116 4,617 $ 4,306

Nabisco operating

companies income 999

Pro forma operating

companies income $ 6,116 $ 5,616

2001 compared with 2000

Reported volume for 2001 increased 4,262 million pounds (32.5%)

over 2000, due primarily to the acquisition of Nabisco. Pro forma

volume increased 2.5% over 2000. Excluding the 53rd week of

shipments in 2000, volume increased 3.7%, reflecting new product

introductions and volume gains in developing markets.

Reported operating revenues for 2001 increased $7,343 million

(27.7%) over 2000, due primarily to the acquisition of Nabisco.

Pro forma operating revenues decreased slightly from 2000, due

primarily to the 53rd week of sales in 2000, the adverse effect of

currency exchange rates and lower sales prices on coffee products

(driven by commodity-related price declines), partially offset by the

favorable impact of volume growth.

Kraft Foods Inc.

During 2001, the Company’s reported effective tax rate increased

by 4.0 percentage points to 45.4% as compared with 2000, due

primarily to higher Nabisco-related goodwill amortization, which is

not tax deductible.

Reported diluted and basic earnings per share (“EPS”), which were

both $1.17 for 2001, decreased by 15.2% from 2000, due primarily

to higher levels of goodwill amortization and interest expense

associated with the acquisition of Nabisco. Reported net earnings

of $1,882 million for 2001 decreased $119 million (5.9%) from 2000.

On a pro forma basis, diluted and basic EPS, which were both

$1.21 for 2001, increased by 19.8% over 2000, due primarily to

higher operating results in all segments. Pro forma net earnings of

$2,092 million for 2001 increased $347 million (19.9%) from 2000.

2000 compared with 1999

Reported volume for 2000 increased 313 million pounds (2.4%)

over 1999. Reported volume in 2000 benefited from the inclusion of

53 weeks in 2000 operating results, partially offset by a decrease

related to trade inventory reductions in the United States. Volume

increased in every segment except Cheese, Meals and Enhancers,

where a decrease in lower-margin food service products more

than offset volume increases in higher margin products. On an

underlying basis, volume increased 4.1%.

Reported operating revenues for 2000 decreased $265 million

(1.0%) from 1999, due primarily to unfavorable currency movements

($857 million), the estimated shift in CDC revenues ($194 million)

and revenues from divested businesses, partially offset by higher

volume/mix ($756 million), the impact of acquisitions ($148 million)

and higher pricing ($49 million). On an underlying basis, operating

revenues increased 0.5%.

Reported operating companies income for 2000 increased $502

million (11.8%) over 1999, due primarily to higher volume/mix

($387 million), higher margins ($402 million, due primarily to price

increases and lower commodity and manufacturing costs), 1999

separation charges ($157 million) and the gain on the French

Confectionery Sale in 2000 ($139 million), partially offset by higher

marketing expenses ($366 million), unfavorable currency

movements ($91 million), the shift in CDC income ($80 million)

and the impact of divested businesses. On an underlying basis,

operating companies income increased 7.2%.

Interest and other debt expense, net, increased $58 million (10.8%),

due primarily to the notes issued to Philip Morris in connection with

the acquisition of Nabisco.

During 2000, the Company’s reported effective tax rate decreased

0.9 percentage points to 41.4%. This decrease was due primarily to

a reduction in state and local income taxes resulting from the mix

of pre-tax earnings in various states.

Reported net earnings in 2000 increased $248 million (14.1%) and

2000 basic and diluted earnings per share each increased by

15.0%. On an underlying basis, net earnings of $1.9 billion increased

6.6% over $1.8 billion in 1999, and basic and diluted earnings per

share each grew 7.2% from $1.25 in 1999 to $1.34 in 2000.

Operating Results by Reportable Segment

Kraft Foods North America

(in millions)

Year Ended December 31, 2001 2000 1999

Reported volume (in pounds):

Cheese, Meals and Enhancers 5,219 4,820 4,874

Biscuits, Snacks and Confectionery 2,350 54 47

Beverages, Desserts and Cereals 3,421 3,117 2,883

Oscar Mayer and Pizza 1,519 1,507 1,433

Total reported volume (in pounds) 12,509 9,498 9,237

Volume of businesses sold:

Cheese, Meals and Enhancers (5) (13)

Estimated impact of century

date change:

Cheese, Meals and Enhancers 16 (16)

Biscuits, Snacks and Confectionery 1(1)

Beverages, Desserts and Cereals 19 (19)

Oscar Mayer and Pizza 5(5)

Underlying volume (in pounds) 12,509 9,534 9,183

Nabisco volume:

Cheese, Meals and Enhancers 418

Biscuits, Snacks and Confectionery 2,260

Beverages, Desserts and Cereals 41

Pro forma volume (in pounds) 12,509 12,253

Reported operating revenues:

Cheese, Meals and Enhancers $10,256 $ 9,405 $ 9,360

Biscuits, Snacks and Confectionery 5,917 329 265

Beverages, Desserts and Cereals 5,370 5,266 5,074

Oscar Mayer and Pizza 3,563 3,461 3,198

Total reported operating revenues 25,106 18,461 17,897

Operating revenues of

businesses sold:

Cheese, Meals and Enhancers (10) (25)

Estimated impact of century

date change:

Cheese, Meals and Enhancers 34 (34)

Biscuits, Snacks and Confectionery 3(3)

Beverages, Desserts and Cereals 22 (22)

Oscar Mayer and Pizza 12 (12)

Underlying operating revenues 25,106 18,522 $17,801

Nabisco operating revenues:

Cheese, Meals and Enhancers 843

Biscuits, Snacks and Confectionery 5,429

Beverages, Desserts and Cereals 107

Pro forma operating revenues $25,106 $24,901

Kraft Foods Inc.

Kraft Foods North America (continued)

(in millions)

Year Ended December 31, 2001 2000 1999

Reported operating

companies income:

Cheese, Meals and Enhancers $2,099 $1,845 $1,658

Biscuits, Snacks and Confectionery 966 100 73

Beverages, Desserts and Cereals 1,192 1,090 1,009

Oscar Mayer and Pizza 539 512 450

Total reported operating

companies income 4,796 3,547 3,190

Operating companies income of

businesses sold:

Cheese, Meals and Enhancers (4) (8)

Estimated impact of century

date change:

Cheese, Meals and Enhancers 15 (15)

Biscuits, Snacks and Confectionery 1(1)

Beverages, Desserts and Cereals 7(7)

Oscar Mayer and Pizza 4(4)

Loss on sale of a North American

food factory and integration costs:

Cheese, Meals and Enhancers 63

Biscuits, Snacks and Confectionery 2

Beverages, Desserts and Cereals 12

Oscar Mayer and Pizza 5

Separation programs:

Cheese, Meals and Enhancers 71

Biscuits, Snacks and Confectionery 2

Beverages, Desserts and Cereals 46

Oscar Mayer and Pizza 38

Underlying operating

companies income 4,878 3,570 $3,312

Nabisco operating companies income:

Cheese, Meals and Enhancers 201

Biscuits, Snacks and Confectionery 676

Beverages, Desserts and Cereals 28

Pro forma operating

companies income $4,878 $4,475

2001 compared with 2000

KFNA’s reported volume for 2001 increased 31.7% over 2000, due

primarily to the acquisition of Nabisco. On a pro forma basis,

volume for 2001 increased 2.1%, or 3.4% excluding the 53rd week

of shipments in 2000. The increase was due primarily to higher

shipments across all segments and reflects contributions from

new products.

Reported operating revenues increased $6.6 billion (36.0%) over

2000, due primarily to the acquisition of Nabisco ($6.6 billion)

and the shift in CDC revenues ($71 million), partially offset by

unfavorable currency movements ($62 million). On a pro forma

basis, operating revenues increased 0.8%, due primarily to higher

revenues from the Biscuits, Snacks and Confectionery segment

and the Oscar Mayer and Pizza segment, partially offset by the

impact of the 53rd week in 2000.

Reported operating companies income for 2001 increased $1,249

million (35.2%) over 2000, due primarily to the acquisition of

Nabisco ($1.2 billion), lower marketing, administration and research

costs ($177 million) and the shift in CDC income ($27 million),

partially offset by lower margins ($39 million, driven by higher dairy

commodity-related costs) and the loss on the sale of a North

American food factory and integration costs ($82 million). On a

pro forma basis, operating companies income increased 9.0%.

The following discusses operating results within each of KFNA’s

reportable segments.

Cheese, Meals and Enhancers: Reported volume in 2001

increased 8.3% over 2000, due primarily to the acquisition of

Nabisco. On a pro forma basis, volume in 2001 decreased 0.6%

due primarily to the 53rd week of shipments in 2000. Excluding the

53rd week of shipments in 2000, volume increased 0.9%, as

volume gains in meals, enhancers and Canada were partially offset

by declines in cheese and food services. Meals recorded volume

gains, reflecting higher shipments of macaroni & cheese dinners.

Enhancers also recorded volume gains, reflecting higher shipments

of spoonable and pourable dressings. In Canada, volume grew

on higher shipments of branded products. In cheese, shipments

decreased due primarily to the Company’s decision to exit the

lower-margin, non-branded cheese business. Volume also declined

in process cheese loaves and cream cheese, as retailers continued

to reduce trade inventory levels, partially offset by higher volume

in grated and natural cheese. In U.S. food service, shipments

declined due to weakness in the economy and the Company’s

exit from lower-margin businesses.

During 2001, reported operating revenues increased $851 million

(9.0%) over 2000, due primarily to the acquisition of Nabisco ($861

million), higher pricing ($89 million, primarily related to higher dairy

commodity costs) and the shift in CDC revenues ($34 million),

partially offset by lower volume/mix ($65 million) and unfavorable

currency movements ($62 million). On a pro forma basis, operating

revenues decreased slightly from the comparable period of 2000,

as unfavorable currency and lower volume/mix were partially offset

by higher pricing in cheese and food service.

Reported operating companies income for 2001 increased $254

million (13.8%) over 2000, due primarily to the acquisition of

Nabisco ($234 million), lower marketing, administration and

research costs ($173 million, primarily lower marketing expense) and

the shift in CDC income ($15 million), partially offset by unfavorable

margins due to higher dairy commodity costs ($81 million) and the

loss on the sale of a North American food factory and integration

costs ($63 million). Marketing expense decreased due to lower

price promotions on cheese products as cheese commodity costs

increased. This followed a period of heavy price promotion in 2000,

when low cheese commodity costs drove a period of intense price

competition. On a pro forma basis, operating companies income

increased 5.1%.

Kraft Foods Inc.

Biscuits, Snacks and Confectionery: Reported volume in 2001

increased more than 100% over 2000, due to the acquisition of

Nabisco. On a pro forma basis, volume in 2001 increased 1.5%

over 2000. Excluding the 53rd week of shipments in 2000, volume

increased 1.6%, due primarily to new product introductions in

biscuits, partially offset by lower shipments of snack nuts.

During 2001, reported operating revenues increased $5.6 billion

or more than 100% over 2000, due to the acquisition of Nabisco.

On a pro forma basis, operating revenues increased 2.7%, due

primarily to higher volume driven by new biscuit products and

higher pricing of biscuit and confectionery products.

Reported operating companies income for 2001 increased $866

million, or more than 100% over 2000, due primarily to the

acquisition of Nabisco ($925 million), partially offset by higher

marketing, administration and research costs ($39 million). On a

pro forma basis, operating companies income increased 24.6%,

due primarily to higher volume from new biscuit products, lower

commodity costs for snack nuts, and productivity and Nabisco

synergy savings.

Beverages, Desserts and Cereals: Reported volume in 2001

increased 9.8% over 2000, due primarily to growth in beverages.

On a pro forma basis, volume in 2001 increased 7.7% over 2000.

Excluding the 53rd week of shipments in 2000, volume increased

9.3%, due primarily to increased shipments of ready-to-drink

beverages, benefiting from the introduction of new products.

Desserts volume was below the prior year due to lower shipments

of dry packaged desserts and frozen toppings. Cereal volume

declined due primarily to weak category performance and

increased competition in the ready-to-eat cereal category.

During 2001, reported operating revenues increased $104 million

(2.0%) over 2000, due primarily to the acquisition of Nabisco ($93

million), the acquisition of Balance Bar Co. ($20 million), the shift in

CDC revenues ($22 million) and higher volume/mix ($17 million),

partially offset by lower pricing ($49 million, due primarily to coffee

commodity-related price reductions). On a pro forma basis,

operating revenues decreased 0.5%, reflecting commodity-related

price reductions on coffee products and lower shipments in

desserts and cereals.

Reported operating companies income for 2001 increased $102

million (9.4%) over 2000, primarily reflecting higher margins ($87

million), the acquisition of Nabisco ($32 million), lower marketing,

administration and research costs ($21 million) and the shift in CDC

income ($7 million), partially offset by integration costs ($12 million).

On a pro forma basis, operating companies income increased 7.0%.

Oscar Mayer and Pizza: Reported volume in 2001 increased

0.8% over 2000. Excluding the 53rd week of shipments in 2000,

volume increased 2.3%, due to volume gains in processed meats

and pizza. The processed meats business recorded volume gains

in luncheon meats, hot dogs, bacon and soy-based meat

alternatives. Volume in the pizza business increased, driven by

new products.

During 2001, reported operating revenues increased $102 million

(2.9%) over 2000 due primarily to higher volume/mix ($75 million),

the shift in CDC revenues ($12 million) and the acquisition of Boca

Burger, Inc.

Reported operating companies income for 2001 increased $27

million (5.3%) over 2000 primarily reflecting higher volume/mix ($45

million), lower marketing, administration and research costs ($22

million) and the shift in CDC income, partially offset by unfavorable

margins ($36 million, due primarily to higher meat and cheese

commodity costs).

2000 compared with 1999

KFNA’s reported volume for 2000 increased 2.8% over 1999. On

an underlying basis, volume increased 3.8%, including the benefit

related to the 53rd week of shipments, partially offset by a

decrease related to trade inventory reductions in 2000.

Reported operating revenues increased $564 million (3.2%) over

1999, due primarily to higher volume/mix ($465 million), the impact

of acquisitions ($148 million) and higher pricing ($79 million), partially

offset by the shift in CDC revenues ($142 million).

Reported operating companies income increased $357 million

(11.2%) over 1999, due primarily to higher margins ($318 million,

driven by higher pricing and lower commodity-related costs), the

1999 pre-tax charge for separation programs ($157 million) and

higher volume/mix ($240 million), partially offset by higher

marketing, administration and research costs ($310 million, the

majority of which related to higher marketing expenses) and the

shift in CDC income ($54 million). On an underlying basis, operating

companies income increased 7.8%.

The following discusses operating results within each of KFNA’s

reportable segments.

Cheese, Meals and Enhancers: Reported volume in 2000

decreased 1.1% from 1999, due primarily to a decrease in the United

States food service business, which more than offset an increase

in retail businesses. The decrease in food service volume was due

to the expiration of an exclusive distribution agreement, the loss

of a contract to supply cold cuts and the pruning of low margin

products. Cheese volume increased over 1999 with gains in

process, natural and cream cheese products. Meals volume was

lower in 2000, reflecting lower shipments of Mexican dinners and

rice. Enhancers volume decreased slightly. Volume in Canada grew

due to new product introductions. On an underlying basis, volume

decreased 0.3%.

Reported operating revenues increased $45 million (0.5%) over

1999, due primarily to higher volume/mix ($99 million, primarily

favorable product mix from the pruning of low margin products)

and favorable currency movements ($30 million), partially offset

by the shift in CDC revenues ($68 million) and the impact of

divestitures ($15 million).

Kraft Foods Inc.

Reported operating companies income increased $187 million

(11.3%) over 1999 due to higher margins ($254 million, driven by

lower commodity-related and manufacturing costs), higher

volume/mix ($67 million) and the 1999 separation charge ($71

million), partially offset by higher marketing, administration and

research costs ($171 million, the majority of which related to higher

marketing expenses) and the shift in CDC income ($30 million).

Marketing expense increased as the Company increased price

promotions on cheese products during 2000 in the United States

during a period of intense competition that resulted from low

cheese commodity costs. On an underlying basis, operating

companies income increased 8.8%.

Biscuits, Snacks and Confectionery: Reported volume in 2000

increased 14.9% over 1999, reflecting the continued success of

two-compartment snacks and the introduction of new intense mint

and chocolate products.

Reported operating revenues increased $64 million (24.2%) over

1999, due primarily to higher volume/mix. Reported operating

companies income increased $27 million (37.0%) over 1999, due

primarily to higher volume/mix ($45 million) and the 1999 separation

charge, partially offset by higher marketing, administration and

research costs ($24 million). On an underlying basis, operating

companies income increased 36.5%.

Beverages, Desserts and Cereals: Reported volume in 2000

increased 8.1% from 1999. Beverages volume grew on the strength

of ready-to-drink beverages, reflecting new product introductions,

and higher coffee shipments due to growth in Starbucks grocery

coffee. Volume also grew in frozen whipped toppings, due in part

to the introduction of new products. These increases were partially

offset by lower volume in ready-to-eat cereals, due to aggressive

competitive activity, and lower volume in dry packaged desserts,

reflecting lower promotions. On an underlying basis, volume

increased 9.5%, of which 0.6 percentage points related to the

acquisition of Balance Bar Co.

Reported operating revenues increased $192 million (3.8%) over

1999, due primarily to higher volume/mix ($126 million) and the

acquisition of Balance Bar Co. ($113 million), partially offset by the

shift in CDC revenues ($44 million).

Reported operating companies income increased $81 million (8.0%)

over 1999, due primarily to higher volume/mix ($50 million), the

1999 separation charges ($46 million), higher margins ($20 million,

due primarily to lower commodity costs) and the acquisition of

Balance Bar Co., partially offset by higher marketing, administration

and research costs ($29 million, the majority of which related to

higher marketing expenses), and the shift in CDC income ($14

million). On an underlying basis, operating companies income

increased 4.7%.

Oscar Mayer and Pizza: Reported volume in 2000 increased

5.2% from 1999. Volume grew in pizza, reflecting the continued

success of rising crust pizza and new product introductions.

Volume growth also reflected the introduction of new lunch

combination varieties, the acquisition of Boca Burger, Inc. and

gains in hot dogs and cold cuts. On an underlying basis, volume

increased 5.9%, of which approximately 0.8 percentage points

related to the acquisition of Boca Burger, Inc.

Reported operating revenues increased $263 million (8.2%) over

1999, due primarily to higher volume/mix ($168 million), higher

pricing ($82 million) and the acquisition of Boca Burger, Inc. ($35

million), partially offset by the shift in CDC revenues ($24 million).

Reported operating companies income increased $62 million

(13.8%) over 1999, due primarily to higher volume/mix ($78 million),

higher margins ($43 million) and the 1999 separation charge ($38

million), partially offset by higher marketing, administration and

research costs ($86 million, the majority of which related to higher

marketing expenses) and the shift in CDC income ($8 million). On

an underlying basis, operating companies income increased 6.6%.

Kraft Foods International

(in millions)

Year Ended December 31, 2001 2000 1999

Reported volume (in pounds):

Europe, Middle East and Africa 2,826 2,829 2,816

Latin America and Asia Pacific 2,057 803 764

Total reported volume (in pounds) 4,883 3,632 3,580

Volume of businesses sold:

Europe, Middle East and Africa (1) (40) (93)

Latin America and Asia Pacific (17) (37) (70)

Estimated impact of century

date change:

Europe, Middle East and Africa 7(7)

Latin America and Asia Pacific 7(7)

Underlying volume (in pounds) 4,865 3,569 3,403

Nabisco volume:

Europe, Middle East and Africa 44

Latin America and Asia Pacific 1,089

Pro forma volume (in pounds) 4,865 4,702

Reported operating revenues:

Europe, Middle East and Africa $6,339 $6,824 $7,676

Latin America and Asia Pacific 2,430 1,247 1,224

Total reported operating revenues 8,769 8,071 8,900

Operating revenues of

businesses sold:

Europe, Middle East and Africa (131) (294)

Latin America and Asia Pacific (4) (21) (54)

Estimated impact of century

date change:

Europe, Middle East and Africa 14 (14)

Latin America and Asia Pacific 12 (12)

Underlying operating revenues 8,765 7,945 $8,526

Nabisco operating revenues:

Europe, Middle East and Africa 47

Latin America and Asia Pacific 1,140

Pro forma operating revenues $8,765 $9,132

Kraft Foods Inc.

Kraft Foods International (continued)

(in millions)

Year Ended December 31, 2001 2000 1999

Reported operating

companies income:

Europe, Middle East and Africa $ 861 $1,019 $ 895

Latin America and Asia Pacific 378 189 168

Total reported operating

companies income 1,239 1,208 1,063

Gain on sale of a French

confectionery business:

Europe, Middle East and Africa (139)

Operating companies income of

businesses sold:

Europe, Middle East and Africa (32) (52)

Latin America and Asia Pacific (1) (3) (4)

Estimated impact of century

date change:

Europe, Middle East and Africa 8(8)

Latin America and Asia Pacific 5(5)

Underlying operating

companies income 1,238 1,047 $ 994

Nabisco operating companies income:

Europe, Middle East and Africa 1

Latin America and Asia Pacific 93

Pro forma operating

companies income $1,238 $1,141

2001 compared with 2000

KFI’s reported volume for 2001 increased 34.4% over 2000, due

primarily to the acquisition of Nabisco. On a pro forma basis,

volume for 2001 increased 3.5% over 2000. Excluding the 53rd

week of shipments in 2000, volume increased 4.7%, benefiting from

gains across most consumer sectors and driven by continued

growth in the developing markets of Central and Eastern Europe,

Latin America and Asia Pacific.

During 2001, reported operating revenues increased $698 million

(8.6%) over 2000, due primarily to the acquisition of Nabisco ($1.2

billion) and the shift in CDC revenues ($26 million), partially offset by

unfavorable currency movements ($460 million) and the revenues

of divested businesses ($148 million). On a pro forma basis,

operating revenues decreased 4.0%, primarily reflecting unfavorable

currency movements.

Reported operating companies income for 2001 increased $31

million (2.6%) over 2000, due primarily to the acquisition of Nabisco

($128 million), lower marketing, administration and research costs

($119 million) and the shift in CDC income ($13 million), partially

offset by the gain on the French Confectionery Sale in 2000 ($139

million), unfavorable currency movements ($51 million) and income

of divested businesses ($34 million). On a pro forma basis, which

does not include the French Confectionery Sale in 2000, operating

companies income increased 8.5%.

The following discusses operating results within each of KFI’s

reportable segments.

Europe, Middle East and Africa: Reported and pro forma

volume for 2001 decreased slightly from 2000, due primarily to

the 53rd week of shipments in 2000. Excluding the 53rd week of

shipments in 2000, volume increased 1.3%, due primarily to volume

gains in the developing markets of Central and Eastern Europe and

growth in many Western European markets, partially offset by lower

volume in Germany, reflecting increased price competition and

trade inventory reductions, and lower canned meats volume in Italy.

In beverages, volume increased in both coffee and refreshment

beverages. Coffee volume grew in many markets, driven by new

product introductions and recent acquisitions in Romania, Morocco

and Bulgaria. In Germany, coffee volume increased despite trade

inventory reductions. Refreshment beverages volume increased,

driven by higher sales to the Middle East. Snacks volume

increased, driven by confectionery and salty snacks, particularly in

Central and Eastern Europe. Snacks volume in Germany was lower

due to increased price competition and trade inventory reductions.

Cheese volume increased due primarily to Philadelphia cream

cheese growth across the region, partially offset by lower volume

in Germany. In convenient meals and grocery, volume declined as

lower canned meats volume in Italy and a decline in grocery

volume in Germany were partially offset by higher shipments of

lunch combinations and pourable dressings in the United Kingdom.

Reported operating revenues for 2001 decreased $485 million

(7.1%) from 2000, due primarily to unfavorable currency movements

($251 million), revenues from divested businesses ($131 million),

lower pricing ($123 million, primarily commodity-driven coffee price

decreases) and lower volume/mix ($69 million), partially offset by

the acquisition of Nabisco ($46 million), the 2001 acquisitions of

coffee businesses in Romania, Morocco and Bulgaria ($29 million)

and the shift in CDC revenues ($14 million). On a pro forma basis,

operating revenues decreased 6.1%, reflecting unfavorable currency

movements and commodity-related coffee price decreases.

Reported operating companies income for 2001 decreased $158

million (15.5%) from 2000, due primarily to the gain on the French

Confectionery Sale in 2000 ($139 million), unfavorable currency

movements ($19 million), income from divested businesses ($32

million), lower volume/mix ($12 million) and unfavorable margins

($16 million), partially offset by lower marketing, administration and

research costs ($50 million) and the shift in CDC income. On a pro

forma basis, operating companies income increased 0.5%.

Latin America and Asia Pacific: Reported volume for 2001

increased more than 100% from 2000, due primarily to the

acquisition of Nabisco. On a pro forma basis, volume for 2001

increased 9.6% over 2000. Excluding the 53rd week of shipments

in 2000, volume increased 9.9%, due to gains across most

consumer sectors. Beverages volume increased, due primarily to

growth in refreshment beverages in Latin America and Asia Pacific,

and coffee in Asia Pacific. Cheese volume increased due primarily

to cream cheese and process cheese. Grocery volume was higher,

due primarily to new product introductions. Snacks volume

increased, driven primarily by new biscuit product introductions

Kraft Foods Inc.

and geographic expansion, partially offset by lower volume in

Argentina, due to economic weakness. Continued erosion of the

economic climate in Argentina may negatively affect volume and

income growth in the Latin America and Asia Pacific segment

during 2002.

During 2001, reported operating revenues increased $1,183 million

(94.9%) over 2000, due primarily to the acquisition of Nabisco,

partially offset by unfavorable currency movements. On a pro forma

basis, operating revenues increased 2.0%.

Reported operating companies income for 2001 increased $189

million (100.0%) over 2000, due primarily to the acquisition of

Nabisco ($128 million), lower marketing, administration and

research costs ($69 million), higher margins ($14 million) and the

shift in CDC income, partially offset by unfavorable currency

movements ($32 million). On a pro forma basis, operating

companies income increased 32.7%, due primarily to productivity

savings and Nabisco synergies.

2000 compared with 1999

KFI’s reported volume for 2000 increased 1.5% over 1999, due

primarily to volume increases in both the Europe, Middle East &

Africa and Latin America & Asia Pacific segments. On an underlying

basis, volume increased 4.9%, including the impact of the 53rd

week of shipments in 2000.

Reported operating revenues for 2000 decreased $829 million

(9.3%) from 1999, due primarily to unfavorable currency movements

($887 million), the shift in CDC revenues ($52 million), lower pricing

($30 million, due primarily to commodity-driven coffee price

decreases) and the impact of divestitures ($196 million), partially

offset by higher volume/mix ($291 million). On an underlying basis,

operating revenues decreased 6.8%.

Reported operating companies income for 2000 increased by $145

million (13.6%) to $1.2 billion, due primarily to higher volume/mix

($147 million), the gain on the French Confectionery Sale ($139

million) and higher margins ($84 million, primarily relating to lower

commodity costs), partially offset by unfavorable currency

movements ($96 million), higher marketing, administration and

research costs ($78 million), the shift in CDC income ($26 million)

and the impact of divested businesses. On an underlying basis,

operating companies income increased 5.3%.

The following discusses operating results within each of KFI’s

reportable segments.

Europe, Middle East and Africa: Reported volume for 2000

increased 0.5% over 1999, while underlying volume increased 2.9%

over 1999, with growth in all product categories. In beverages,

coffee volume benefited from growth in the developing markets

of Central and Eastern Europe and in the established markets

of Sweden, Austria, Italy and the United Kingdom. Volume in

refreshment beverages grew in Central and Eastern Europe, driven

by the expansion of powdered soft drinks. Volume growth in

snacks reflected double-digit gains in salty snacks on expansion

into Central and Eastern Europe, as well as new confectionery

product launches and line extensions. Cheese volume grew on

the strength of Philadelphia cream cheese, reflecting successful

marketing programs across Europe and a re-launch in the Middle

East. Volume also grew for process cheese in Italy and Spain. In

convenient meals, volume grew on the successful launch of new

lunch combination varieties in the United Kingdom and line

extensions of packaged dinners in Germany and Belgium. Volume

grew in grocery, reflecting gains in spoonable dressings, benefiting

from effective marketing programs in Italy and new product

launches in Spain.

Reported operating revenues decreased $852 million (11.1%) from

1999, due primarily to unfavorable currency movements ($830

million), lower pricing ($60 million, due primarily to commodity-

driven coffee price decreases), the shift in CDC revenues ($28

million) and the impact of divestitures ($163 million), partially offset

by higher volume/mix ($186 million). On an underlying basis,

operating revenues decreased 9.0%.

Reported operating companies income increased $124 million

(13.9%) over 1999, due primarily to the gain on the French

Confectionery Sale ($139 million), higher volume/mix ($104 million)

and higher margins ($70 million, due primarily to lower coffee

commodity costs), partially offset by unfavorable currency

movements ($97 million), higher marketing, administration and

research costs ($58 million), the shift in CDC income ($16 million)

and the impact of divestitures ($20 million). On an underlying basis,

operating companies income increased 2.5%.

Latin America and Asia Pacific: Reported volume for 2000

increased 5.1% over 1999. On an underlying basis, volume in 2000

increased 12.5% over 1999, led by strong growth in Brazil, Australia,

China, the Philippines, Indonesia, Japan and Korea and higher

exports to the Caribbean. Beverages volume grew due to

increased coffee volume in the Caribbean and China. Refreshment

beverages volume increased, benefiting from new flavors in Brazil,

marketing programs in China and the Philippines, and expansion

into Thailand. Snacks volume gains were driven by confectionery

volume growth in Asia Pacific, reflecting new product launches in

Indonesia, China and the Philippines. In Latin America, volume

benefited from the launch of new chocolate products in Brazil.

Cheese volume grew, driven by marketing and promotion of

Philadelphia cream cheese in Australia and Japan, as well as gains

in process cheese in the Philippines and Indonesia. Convenient

meals volume grew, led by exports of macaroni & cheese dinners

to Asian markets. Grocery volume grew on higher shipments of

yeast spread in Australia and increased shipments of gelatins and

cereals to Asia.

Reported operating revenues increased $23 million (1.9%) over

1999, due primarily to higher volume/mix ($105 million) and higher

pricing ($30 million), partially offset by unfavorable currency

movements ($57 million), the shift in CDC revenues ($24 million)

and the impact of divestitures ($33 million). On an underlying basis,

operating revenues increased 6.9%.

Kraft Foods Inc.

Reported operating companies income increased $21 million

(12.5%) over 1999, due primarily to higher volume/mix ($43 million)

and higher pricing ($14 million), partially offset by higher marketing,

administration and research costs ($20 million) and the shift in CDC

income ($10 million). On an underlying basis, operating companies

income increased 20.1%.

Financial Review

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $3.3 billion in 2001

and 2000, while $2.7 billion was provided by operating activities

in 1999. The increase in 2000 operating cash flows over 1999

primarily reflected increased net earnings of $248 million and

reduced levels of receivables and inventories of $318 million, which

included the shift in working capital attributable to the CDC.

Net Cash Used in Investing Activities

During 2001, 2000 and 1999, net cash used in investing activities

was $1.2 billion, $16.1 billion and $669 million, respectively. The

increase in 2000 primarily reflects the cash used for the acquisition

of Nabisco.

Capital expenditures, which were funded by operating activities,

were $1.1 billion, $906 million and $860 million in 2001, 2000 and

1999, respectively. The capital expenditures were primarily to

modernize the manufacturing facilities, lower cost of production

and expand production capacity for growing product lines. The

additional expenditures in 2001 were due primarily to the

acquisition of Nabisco. Capital expenditures are expected to be

approximately $1.2 billion in 2002 and are expected to be funded

from operations.

During 2001, the Company purchased coffee businesses in

Romania, Morocco and Bulgaria and also acquired confectionery

businesses in Russia and Poland. The total cost of these and other

smaller acquisitions was $194 million.

During 2000, the Company purchased Boca Burger, Inc. and

Balance Bar Co. The total cost of these and other smaller

acquisitions was $365 million.

Net Cash Used in Financing Activities

During 2001, net cash of $2.1 billion was used in financing activities,

compared with $13.0 billion provided by financing activities

during 2000. During 2001, financing activities included net debt

repayments of $2.0 billion, excluding debt repayments made with

IPO proceeds. The net proceeds from the IPO were used to repay

debt to Philip Morris and, as a result, had no impact on financing

cash flows. In 2000, the Company’s financing activities provided

cash, as additional borrowings to finance the acquisition of

Nabisco exceeded the cash used to pay dividends. During 1999,

net cash of $2.0 billion was used in financing activities.

Debt and Liquidity

The SEC recently issued Financial Reporting Release No. 61, which

sets forth the views of the SEC regarding enhanced disclosures

relating to liquidity and capital resources. The information provided

below about the Company’s debt, credit facilities, guarantees and

future commitments is included here to facilitate a review of the

Company’s liquidity.

Debt: The Company’s total debt, including intercompany accounts

payable to Philip Morris, was $16.0 billion at December 31, 2001,

and $25.8 billion at December 31, 2000. The decrease was due

primarily to the repayment of $8.4 billion of long-term notes payable

to Philip Morris with the net proceeds from the IPO.

During 2001, the Company refinanced $2.6 billion, representing the

remaining portion of an $11.0 billion long-term note payable to Philip

Morris, with the proceeds from short-term borrowings. In addition,

the Company refinanced long-term, fixed-rate Swiss franc notes

payable to Philip Morris with short-term Swiss franc borrowings

from Philip Morris at variable interest rates.

During 2001, in anticipation of a public bond offering, the Company

converted its $4.0 billion, 7.40% note payable to Philip Morris,

originally maturing in December 2002, into a 3.56125% note

payable to Philip Morris maturing in November 2001. On November

2, 2001, the Company completed a $4.0 billion public global bond

offering at a weighted average interest rate of 5.48%, the net

proceeds of which were used to repay the 3.56125% short-term

note payable to Philip Morris.

As discussed in Notes 3, 7 and 8 to the consolidated financial

statements, the Company’s total debt of $16.0 billion at December

31, 2001 is due to be repaid as follows: in 2002, $4.9 billion; in

2003-2004, $0.5 billion; in 2005-2006, $2.0 billion; and thereafter,

$8.6 billion. Debt obligations due to be repaid in 2002 will be

satisfied with a combination of short-term borrowings, refinancing

transactions in the debt markets and operating cash flows. The

Company’s debt-to-equity ratio was 0.68 at December 31, 2001

and 1.84 at December 31, 2000.

Credit Ratings: The Company’s credit ratings by Moody’s at

December 31, 2001 were “P-1” in the commercial paper market and

“A2” for long-term debt obligations. The Company’s credit ratings

by Standard & Poor’s at December 31, 2001 were “A-1” in the

commercial paper market, and “A-” for long-term debt obligations.

The Company’s credit ratings by Fitch Rating Services at

December 31, 2001 were “F-1” in the commercial paper market and

“A” for long-term debt obligations. Changes in the Company’s credit

ratings, although none are currently anticipated, could result in

corresponding changes in the Company’s borrowing costs.

However, none of the Company’s debt agreements require

accelerated repayment in the event of a decrease in credit ratings.

Credit Facilities: In July 2001, reflecting the Company’s reduced

requirements for credit facilities following the IPO, Philip Morris

terminated an existing $9.0 billion 364-day revolving credit

agreement that could have been transferred to the Company. Upon

Kraft Foods Inc.

termination of this facility, the Company entered into agreements

for a $2.0 billion 5-year revolving credit facility expiring in July 2006

and a $4.0 billion 364-day revolving credit facility expiring in July

2002. Including these revolving credit facilities, the Company’s total

credit facilities were $6.8 billion at December 31, 2001, of which

approximately $6.5 billion were undrawn at December 31, 2001.

Certain of these credit facilities are used to support commercial

paper borrowings, the proceeds of which will be used for general

corporate purposes. A portion of the facilities is used to meet the

short-term working capital needs of the Company’s international

businesses. Certain of the credit facilities require the maintenance

of a minimum net worth, as defined, of $18.2 billion, which the

Company exceeded at December 31, 2001. The Company does

not currently anticipate any difficulty in continuing to exceed this

covenant requirement. The foregoing revolving credit facilities do

not include any other covenants that could require an acceleration

of maturity or the posting of collateral. The five-year revolving credit

facility enables the Company to reclassify short-term debt on a

long-term basis. At December 31, 2001, $2.0 billion of commercial

paper borrowings that the Company intends to refinance were

reclassified as long-term debt. The Company expects to continue

to refinance long-term and short-term debt from time to time. The

nature and amount of the Company’s long-term and short-term

debt and the proportionate amount of each can be expected to

vary as a result of future business requirements, market conditions

and other factors.

Guarantees and Commitments: At December 31, 2001, the

Company was contingently liable for guarantees and commitments

of $41 million. These include surety bonds related to dairy

commodity purchases and guarantees related to letters of credit.

Guarantees do not have, and are not expected to have, a

significant impact on the Company’s liquidity. The Company’s

consolidated rent expense for 2001 was $372 million. Accordingly,

the Company does not consider its lease commitments to be a

significant determinant of the Company’s liquidity.

The Company believes that its cash from operations, existing credit

facilities and access to global capital markets will provide sufficient

liquidity to meet its working capital needs, planned capital

expenditures and payment of its anticipated quarterly dividends.

Dividends

Dividends paid in 2001 and 2000 were $225 million and $1.0 billion,

respectively. The dividends paid in 2000 reflect dividends to Philip

Morris. During 2001, the Company declared two regular quarterly

dividends of $0.13 per share on its Class A and Class B common

stock. The present annualized dividend rate is $0.52 per common

share. The declaration of dividends is subject to the discretion of

the Company’s board of directors and will depend on various

factors, including the Company’s net earnings, financial condition,

cash requirements, future prospects and other factors deemed

relevant by the Company’s board of directors.

Market Risk

The Company operates internationally, with manufacturing and

sales facilities in various locations around the world, and utilizes

certain financial instruments to manage its foreign currency and

commodity exposures, which primarily relate to forecasted

transactions and interest rate exposures. Derivative financial

instruments are used by the Company, principally to reduce

exposures to market risks resulting from fluctuations in foreign

exchange rates, commodity prices and interest rates by creating

offsetting exposures. The Company is not a party to leveraged

derivatives. For a derivative to qualify as a hedge at inception and

throughout the hedged period, the Company formally documents

the nature and relationships between the hedging instruments and

hedged items, as well as its risk-management objectives, strategies

for undertaking the various hedge transactions and method of

assessing hedge effectiveness. Additionally, for hedges of

forecasted transactions, the significant characteristics and

expected terms of a forecasted transaction must be specifically

identified, and it must be probable that each forecasted transaction

will occur. Financial instruments qualifying for hedge accounting

must maintain a specified level of effectiveness between the

hedging instrument and the item being hedged, both at inception

and throughout the hedged period. The Company does not use

derivative financial instruments for speculative purposes.

Substantially all of the Company’s derivative financial instruments

are effective as hedges under the new accounting standard.

Accordingly, the Company recorded deferred losses of $18 million

in accumulated other comprehensive losses. This reflects the initial

adoption of the accounting pronouncement and a decrease in the

fair value of derivatives during the year of $33 million, partially offset

by deferred losses transferred to earnings of $15 million. The fair

value of all derivative financial instruments has been calculated

based on active market quotes.

Foreign Exchange Rates: The Company uses forward foreign

exchange contracts and foreign currency options to mitigate its

exposure to changes in foreign currency exchange rates from third-

party and intercompany forecasted transactions. The primary

currencies to which the Company is exposed include the euro and

Canadian dollar. At December 31, 2001 and 2000, the Company

had option and forward foreign exchange contracts with aggregate

notional amounts of $431 million and $237 million, respectively, for

the purchase or sale of foreign currencies.

Kraft Foods Inc.

Commodities: The Company is exposed to price risk related to

forecasted purchases of certain commodities used as raw

materials by the Company’s businesses. Accordingly, the Company

uses commodity forward contracts, as cash flow hedges, primarily

for coffee, cocoa, milk, cheese and wheat. Commodity futures and

options are also used to hedge the price of certain commodities,

including milk, coffee, cocoa, wheat, corn, sugar and soybean.

At December 31, 2001 and 2000, the Company had net long

commodity positions of $589 million and $617 million, respectively.

Interest Rates: The Company uses interest rate swaps to hedge

the fair value of an insignificant portion of its long-term debt. The

differential to be paid or received is accrued and recognized as

interest expense. If an interest rate swap agreement is terminated

prior to maturity, the realized gain or loss is recognized over the

remaining life of the agreement if the hedged amount remains

outstanding, or immediately if the underlying hedged exposure does

not remain outstanding. If the underlying exposure is terminated

prior to the maturity of the interest rate swap, the unrealized gain or

loss on the related interest rate swap is recognized in earnings

currently. At December 31, 2001, the aggregate notional principal

amount of those agreements, which converted fixed-rate debt to

variable-rate debt, was $102 million. Aggregate maturities at

December 31, 2001 were $29 million in 2003 and $73 million in

2004. During the year ended December 31, 2001, there was no

ineffectiveness relating to these fair value hedges.

Value at Risk: The Company uses a value at risk (“VAR”)

computation to estimate the potential one-day loss in the fair value

of its interest rate-sensitive financial instruments and to estimate

the potential one-day loss in pre-tax earnings of its foreign currency

and commodity price-sensitive derivative financial instruments.

The VAR computation includes the Company’s debt; short-term

investments; foreign currency forwards, swaps and options; and

commodity futures, forwards and options. Anticipated transactions,

foreign currency trade payables and receivables, and net

investments in foreign subsidiaries, which the foregoing instruments

are intended to hedge, were excluded from the computation.

The VAR estimates were made assuming normal market

conditions, using a 95% confidence interval. The Company used

a “variance/co-variance” model to determine the observed

interrelationships between movements in interest rates and various

currencies. These interrelationships were determined by observing

interest rate and forward currency rate movements over the

preceding quarter for the calculation of VAR amounts at December

31, 2001 and 2000, and over each of the four preceding quarters

for the calculation of average VAR amounts during each year. The

values of foreign currency and commodity options do not change

on a one-to-one basis with the underlying currency or commodity,

and were valued accordingly in the VAR computation.

The estimated potential one-day loss in fair value of the Company’s

interest rate-sensitive instruments, primarily debt, under normal

market conditions and the estimated potential one-day loss in pre-

tax earnings from foreign currency and commodity instruments

under normal market conditions, as calculated in the VAR model,

were as follows:

Pre-Tax Earnings Impact

(in millions) At 12/31/01 Average High Low

Instruments sensitive to:

Foreign currency rates $ 2 $6 $13 $2

Commodity prices 57115

Fair Value Impact

(in millions) At 12/31/01 Average High Low

Instruments sensitive to:

Interest rates $122 $79 $122 $56

Pre-Tax Earnings Impact

(in millions) At 12/31/00 Average High Low

Instruments sensitive to:

Foreign currency rates $ 20 $20 $ 24 $15

Commodity prices 98 97

Fair Value Impact

(in millions) At 12/31/00 Average High Low

Instruments sensitive to:

Interest rates $166 $83 $166 $39

Kraft Foods Inc.

This VAR computation is a risk analysis tool designed to statistically

estimate the maximum probable daily loss from adverse movements

in interest rates, foreign currency rates and commodity prices

under normal market conditions. The computation does not purport

to represent actual losses in fair value or earnings to be incurred

by the Company, nor does it consider the effect of favorable

changes in market rates. The Company cannot predict actual future

movements in such market rates and does not present these VAR

results to be indicative of future movements in such market rates

or to be representative of any actual impact that future changes

in market rates may have on its future results of operations or

financial position.

New Accounting Standards

Effective January 1, 2001, the Company adopted Statement of

Financial Accounting Standards (“SFAS”) No. 133, “Accounting for

Derivative Instruments and Hedging Activities,” and its related

amendment, SFAS No. 138, “Accounting for Certain Derivative

Instruments and Certain Hedging Activities” (collectively referred

to as “SFAS No. 133”). These standards require that all derivative

financial instruments be recorded on the consolidated balance

sheets at their fair value as either assets or liabilities. Changes in

the fair value of derivatives are recorded each period in earnings or

accumulated other comprehensive losses, depending on whether

a derivative is designated and effective as part of a hedge

transaction and, if it is, the type of hedge transaction. Gains and

losses on derivative instruments reported in accumulated other

comprehensive losses are included in earnings in the periods in

which earnings are affected by the hedged item. As of January 1,

2001, the adoption of these new standards did not have a material

effect on net earnings (less than $1 million) or accumulated other

comprehensive losses (less than $1 million).

The Emerging Issues Task Force (“EITF”) issued EITF Issue

No. 00-14, “Accounting for Certain Sales Incentives” and EITF

Issue No. 00-25, “Vendor Income Statement Characterization of

Consideration Paid to a Reseller of the Vendor’s Products.” As a

result, certain items previously included in marketing, administration

and research costs on the consolidated statement of earnings will

either be recorded as a reduction of operating revenues or as an

increase in cost of sales. These EITF Issues will be effective in the

first quarter of 2002. The Company estimates that adoption of

EITF Issues No. 00-14 and No. 00-25 will result in a reduction of

operating revenues in 2001, 2000 and 1999 of approximately

$4.6 billion, $3.6 billion and $3.4 billion, respectively. Marketing,

administration and research costs will decline in 2001, 2000 and

1999 by approximately $4.7 billion, $3.7 billion and $3.4 billion,

respectively, while cost of sales will increase by an insignificant

amount. The adoption of these EITF Issues will have no impact

on net earnings or basic and diluted EPS.

During 2001, the Financial Accounting Standards Board (“FASB”)

issued SFAS No. 141, “Business Combinations” and SFAS No. 142,

“Goodwill and Other Intangible Assets.” Effective January 1, 2002,

the Company will no longer be required to amortize indefinite life

goodwill and intangible assets as a charge to earnings. In addition,

the Company will be required to conduct an annual review of

goodwill and other intangible assets for potential impairment. The

Company estimates that net earnings and diluted earnings per

share would have been approximately $2,839 million and $1.76,

respectively, for the year ended December 31, 2001; $2,531 million

and $1.74, respectively, for the year ended December 31, 2000; and

$2,287 million and $1.57, respectively, for the year ended December

31, 1999, had the provisions of the new standards been applied in

those years. The Company does not currently anticipate having

to record a charge to earnings for the potential impairment of

goodwill or other intangible assets as a result of adoption of these

new standards.

In October 2001, the FASB issued SFAS No. 144, “Accounting for

the Impairment or Disposal of Long-Lived Assets,” which replaces

SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets

and Long-Lived Assets to be Disposed Of.” SFAS No. 144 provides

updated guidance concerning the recognition and measurement of

an impairment loss for certain types of long-lived assets, expands

the scope of a discontinued operation to include a component of

an entity and eliminates the current exemption to consolidation

when control over a subsidiary is likely to be temporary. SFAS

No. 144 is effective for the Company on January 1, 2002. The

Company does not expect the adoption of SFAS No. 144 to have

a material impact on the Company’s 2002 financial statements.

Contingencies

See Note 17 to the consolidated financial statements for a

discussion of contingencies.

Kraft Foods Inc.

Forward-Looking and Cautionary Statements

The Company and its representatives may from time to time make

written or oral forward-looking statements, including statements

contained in the Company’s filings with the Securities and

Exchange Commission and in its reports to shareholders. One can

identify these forward-looking statements by use of words such as

“strategy,” “expects,” “plans,” “believes,” “will,” “estimates,” “intends,”

“projects,” “goals,” “targets” and other words of similar meaning.

One can also identify them by the fact that they do not relate

strictly to historical or current facts. In connection with the “safe

harbor” provisions of the Private Securities Litigation Reform Act of

1995, the Company is hereby identifying important factors that

could cause actual results and outcomes to differ materially from

those contained in any forward-looking statement made by or on

behalf of the Company; any such statement is qualified by

reference to the following cautionary statements.

Each of the Company’s segments is subject to intense competition,

changes in consumer preferences, the effects of changing prices

for its raw materials and local economic conditions. Their results

are dependent upon their continued ability to promote brand equity

successfully, to anticipate and respond to new consumer trends,

to develop new products and markets and to broaden brand

portfolios, in order to compete effectively with lower priced

products in a consolidating environment at the retail and

manufacturing levels, and to improve productivity. The Company’s

results are also dependent on its ability to successfully integrate

and derive cost savings from the integration of Nabisco’s

operations with the Company. In addition, the Company is subject

to the effects of foreign economies, currency movements and

fluctuations in levels of customer inventories. The food industry

continues to be subject to the possibility that consumers could

lose confidence in the safety and quality of certain food products.

Developments in any of these areas, which are more fully

described above and which descriptions are incorporated into this

section by reference, could cause the Company’s results to differ

materially from results that have been or may be projected by or on

behalf of the Company. The Company cautions that the foregoing

list of important factors is not exclusive. The Company does not

undertake to update any forward-looking statement that may be

made from time to time by or on behalf of the Company.

Kraft Foods Inc.

Selected Financial Data

—

Five-Year Review

(in millions of dollars, except per share data)

2001 2000 1999 1998 1997

Summary of Operations:

Operating revenues $33,875 $26,532 $26,797 $27,311 $27,690

Cost of sales 17,531 13,917 14,573 15,544 15,978

Operating income 4,884 4,012 3,579 3,535 3,559

Interest and other debt expense, net 1,437 597 539 536 476

Earnings before income taxes 3,447 3,415 3,040 2,999 3,083

Pre-tax profit margin 10.2% 12.9% 11.3% 11.0% 11.1%

Provision for income taxes 1,565 1,414 1,287 1,367 1,291

Net earnings 1,882 2,001 1,753 1,632 1,792

Basic EPS 1.17 1.38 1.20 1.12 1.23

Diluted EPS 1.17 1.38 1.20 1.12 1.23

Dividends declared per share 0.26

————

Weighted average shares (millions)

—

Basic 1,610 1,455 1,455 1,455 1,455

Weighted average shares (millions)

—

Diluted 1,610 1,455 1,455 1,455 1,455

Capital expenditures 1,101 906 860 841 737

Depreciation 680 499 491 494 512

Property, plant and equipment, net 9,109 9,405 6,526 6,494 6,198

Inventories 3,026 3,041 2,563 2,570 2,643

Total assets 55,798 52,071 30,336 31,391 31,257

Total long-term debt 8,134 2,695 433 483 531

Notes payable to parent and affiliates 5,000 21,407 6,602 6,234 5,000

Total debt 16,007 25,826 7,828 7,168 6,393

Total deferred income taxes 4,565 942 789 707 340

Shareholders’ equity 23,478 14,048 13,461 15,134 15,761

Common dividends declared as a % of Basic EPS 22.2%

————

Common dividends declared as a % of Diluted EPS 22.2%

————

Book value per common share outstanding 13.53 9.65 9.25 10.40 10.83

Market price per Class A common share

—

high/low 35.57-29.50

————

Closing price of Class A common share at year end 34.03

————

Price/earnings ratio at year end

—

Basic 29

————

Price/earnings ratio at year end

—

Diluted 29

————

Number of common shares outstanding at

year end (millions) 1,735 1,455 1,455 1,455 1,455

Number of employees 114,000 117,000 71,000 78,000 82,000

Kraft Foods Inc.

Consolidated Balance Sheets

(in millions of dollars)

At December 31, 2001 2000

Assets

Cash and cash equivalents $ 162 $ 191

Receivables (less allowances of $151 and $152) 3,131 3,231

Inventories:

Raw materials 1,281 1,175

Finished product 1,745 1,866

3,026 3,041

Deferred income taxes 466 504

Other current assets 221 185

Total current assets 7,006 7,152

Property, plant and equipment, at cost:

Land and land improvements 387 419

Buildings and building equipment 2,915 2,949

Machinery and equipment 9,264 8,858

Construction in progress 706 816

13,272 13,042

Less accumulated depreciation 4,163 3,637

9,109 9,405

Goodwill and other intangible assets (less accumulated amortization of $7,099 and $6,100) 35,957 31,584

Prepaid pension assets 2,675 2,623

Other assets 1,051 1,307

Total Assets $55,798 $52,071

Liabilities

Short-term borrowings $ 681 $ 146

Current portion of long-term debt 540 713

Due to parent and affiliates 1,652 865

Accounts payable 1,897 1,971

Accrued liabilities:

Marketing 1,398 1,601

Employment costs 658 625

Other 1,821 1,411

Income taxes 228 258

Total current liabilities 8,875 7,590

Long-term debt 8,134 2,695

Deferred income taxes 5,031 1,446

Accrued postretirement health care costs 1,850 1,867

Notes payable to parent and affiliates 5,000 21,407

Other liabilities 3,430 3,018

Total liabilities 32,320 38,023

Contingencies (Note 17)

Shareholders’ Equity

Class A common stock, no par value (555,000,000 and 275,000,000 shares issued and

outstanding in 2001 and 2000)

Class B common stock, no par value (1,180,000,000 shares issued and outstanding)

Additional paid-in capital 23,655 15,230

Earnings reinvested in the business 2,391 992

Accumulated other comprehensive losses (primarily currency translation adjustments) (2,568) (2,174)

Total shareholders’ equity 23,478 14,048

Total Liabilities and Shareholders’ Equity $55,798 $52,071

See notes to consolidated financial statements.

Kraft Foods Inc.

(in millions of dollars, except per share data)

For the years ended December 31, 2001 2000 1999

Operating revenues $33,875 $26,532 $26,797

Cost of sales 17,531 13,917 14,573

Gross profit 16,344 12,615 12,224

Marketing, administration and research costs 10,498 8,068 8,106

Amortization of goodwill and other intangible assets 962 535 539

Operating income 4,884 4,012 3,579

Interest and other debt expense, net 1,437 597 539

Earnings before income taxes 3,447 3,415 3,040

Provision for income taxes 1,565 1,414 1,287

Net earnings $ 1,882 $ 2,001 $ 1,753

Per share data:

Basic earnings per share $1.17 $ 1.38 $ 1.20

Diluted earnings per share $1.17 $ 1.38 $ 1.20

See notes to consolidated financial statements.

Consolidated Statements of Earnings

Kraft Foods Inc.

(in millions of dollars)

For the years ended December 31, 2001 2000 1999

Cash Provided By (Used In) Operating Activities

Net earnings $ 1,882 $ 2,001 $ 1,753

Adjustments to reconcile net earnings to operating cash flows:

Depreciation and amortization 1,642 1,034 1,030

Deferred income tax provision 414 245 151

Gains on sales of businesses (8) (172) (62)

Loss on sale of a North American food factory and integration costs 82

Cash effects of changes, net of the effects from acquired and divested companies:

Receivables, net 23 204 156

Inventories (107) 175 (95)

Accounts payable (73) 13 (18)

Income taxes 74 35 127

Other working capital items (407) (195) (137)

Increase in pension assets and postretirement liabilities, net (245) (215) (205)

Increase (decrease) in amount due to parent and affiliates 138 104 (21)

Other (87) 25 14

Net cash provided by operating activities 3,328 3,254 2,693

Cash Provided By (Used In) Investing Activities

Capital expenditures (1,101) (906) (860)

Purchase of Nabisco, net of acquired cash (15,159)

Purchases of other businesses, net of acquired cash (194) (365) (14)

Proceeds from sales of businesses 21 300 175

Other 52 (8) 30

Net cash used in investing activities (1,222) (16,138) (669)

Cash Provided By (Used In) Financing Activities

Net issuance (repayment) of short-term borrowings 2,505 (816) (22)

Long-term debt proceeds 4,077 87 78

Long-term debt repaid (705) (112) (111)

Net proceeds from sale of Class A common stock 8,425

Proceeds from issuance of notes payable to parent and affiliates 15,000 768

Repayment of notes payable to parent and affiliates (16,350) (124) (178)

Increase in amounts due to parent and affiliates 142 143 450

Dividends paid (225) (1,009) (3,016)

Other (187)

Net cash (used in) provided by financing activities (2,131) 12,982 (2,031)

Effect of exchange rate changes on cash and cash equivalents (4) (2) (10)

Cash and cash equivalents:

(Decrease) increase (29) 96 (17)

Balance at beginning of year 191 95 112

Balance at end of year $ 162 $ 191 $ 95

Cash paid:

Interest $ 1,433 $ 605 $ 533

Income taxes $ 1,058 $ 1,051 $ 1,022

See notes to consolidated financial statements.

Consolidated Statements of Cash Flows

Kraft Foods Inc.

(in millions of dollars, except per share data)

Accumulated Other Comprehensive Losses

Class A and B Additional Earnings Currency Total

Common Paid-in Reinvested in Translation Shareholders’

Stock Capital the Business Adjustments Other Total Equity

Balances, January 1, 1999 $

—

$16,493 $

—

$(1,349) $ (10) $(1,359) $15,134

Comprehensive earnings:

Net earnings 1,753 1,753

Other comprehensive losses, net of

income taxes:

Currency translation adjustments (392) (392) (392)

Additional minimum pension liability (18) (18) (18)

Total other comprehensive losses (410)

Total comprehensive earnings 1,343

Dividends declared (1,263) (1,753) (3,016)

Balances, December 31, 1999

—

15,230

—

(1,741) (28) (1,769) 13,461

Comprehensive earnings:

Net earnings 2,001 2,001

Other comprehensive losses, net of

income taxes:

Currency translation adjustments (397) (397) (397)

Additional minimum pension liability (8) (8) (8)

Total other comprehensive losses (405)

Total comprehensive earnings 1,596

Dividends declared (1,009) (1,009)

Balances, December 31, 2000

—

15,230 992 (2,138) (36) (2,174) 14,048

Comprehensive earnings:

Net earnings 1,882 1,882

Other comprehensive losses, net of

income taxes:

Currency translation adjustments (298) (298) (298)

Additional minimum pension liability (78) (78) (78)

Change in fair value of derivatives

accounted for as hedges (18) (18) (18)

Total other comprehensive losses (394)

Total comprehensive earnings 1,488

Sale of Class A common stock to public 8,425 8,425

Dividends declared ($0.26 per share) (483) (483)

Balances, December 31, 2001 $

—

$23,655 $2,391 $(2,436) $(132) $(2,568) $23,478

See notes to consolidated financial statements.

Consolidated Statements of Shareholders’ Equity

Kraft Foods Inc.

Note 1. Background and Basis of Presentation:

Background: Kraft Foods Inc. (“Kraft”) was incorporated in 2000

in the Commonwealth of Virginia. Following Kraft’s formation, Philip

Morris Companies Inc. (“Philip Morris”) transferred to Kraft its

ownership interest in Kraft Foods North America, Inc., a Delaware

corporation, through a capital contribution. In addition, during

2000, Philip Morris transferred management responsibility for its

food businesses in Latin America to Kraft Foods North America,

Inc. and its wholly-owned subsidiary, Kraft Foods International, Inc.

Kraft, together with its subsidiaries (collectively referred to as the

“Company”), is engaged in the manufacture and sale of retail

packaged foods in the United States, Canada, Europe, Latin

America and Asia Pacific.

On December 11, 2000, the Company acquired all of the

outstanding shares of Nabisco Holdings Corp. (“Nabisco”) for

$55 per share in cash. See Note 5, Acquisitions, for a complete

discussion of this transaction.

Prior to June 13, 2001, the Company was a wholly-owned

subsidiary of Philip Morris. On June 13, 2001, the Company

completed an initial public offering (“IPO”) of 280,000,000 shares of

its Class A common stock at a price of $31.00 per share. The IPO

proceeds, net of the underwriting discount and expenses, of $8.4

billion were used to retire a portion of an $11.0 billion long-term note

payable to Philip Morris incurred in connection with the acquisition

of Nabisco. After the IPO, Philip Morris owns approximately 83.9%

of the outstanding shares of the Company’s capital stock through

its ownership of 49.5% of the Company’s Class A common

stock and 100% of the Company’s Class B common stock. The

Company’s Class A common stock has one vote per share while

the Company’s Class B common stock has ten votes per share.

Therefore, Philip Morris holds 97.7% of the combined voting power

of the Company’s outstanding common stock.

Basis of presentation: The consolidated financial statements

include the Company and its subsidiaries. The preparation of

financial statements in conformity with accounting principles

generally accepted in the United States of America requires

management to make estimates and assumptions that affect

the reported amounts of assets and liabilities, the disclosure of

contingent assets and liabilities at the dates of the financial

statements and the reported amounts of operating revenues and

expenses during the reporting periods. Actual results could differ

from those estimates. The Company’s operating subsidiaries report

year-end results as of the Saturday closest to December 31 each

year. This resulted in fifty-three weeks of operating results in the

Company’s consolidated statement of earnings for the year ended

December 31, 2000.

Certain prior years’ amounts have been reclassified to conform with

the current year’s presentation.

Note 2. Summary of Significant Accounting Policies:

Cash and cash equivalents: Cash equivalents include demand

deposits with banks and all highly liquid investments with original

maturities of three months or less.

Inventories: Inventories are stated at the lower of cost or market.

The last-in, first-out (“LIFO”) method is used to cost substantially

all domestic inventories. The cost of other inventories is principally

determined by the average cost method.

Impairment of long-lived assets: The Company reviews long-

lived assets, including intangible assets, for impairment whenever

events or changes in business circumstances indicate that the

carrying amount of the assets may not be fully recoverable. The

Company performs undiscounted operating cash flow analyses to

determine if an impairment exists. If an impairment is determined to

exist, any related impairment loss is calculated based on fair value.

Impairment losses on assets to be disposed of, if any, are based

on the estimated proceeds to be received, less costs of disposal.

In October 2001, the Financial Accounting Standards Board

(“FASB”) issued Statement of Financial Accounting Standards

(“SFAS”) No. 144, “Accounting for the Impairment or Disposal of

Long-Lived Assets,” which replaces SFAS No. 121, “Accounting

for the Impairment of Long-Lived Assets and Long-Lived Assets

to be Disposed Of.” SFAS No. 144 provides updated guidance

concerning the recognition and measurement of an impairment

loss for certain types of long-lived assets, expands the scope of a

discontinued operation to include a component of an entity and

eliminates the current exemption to consolidation when control

over a subsidiary is likely to be temporary. SFAS No. 144 is effective

for the Company on January 1, 2002. The Company does not

expect the adoption of SFAS No. 144 to have a material impact

on the Company’s 2002 financial statements.

Depreciation, amortization and goodwill valuation: Property,

plant and equipment are stated at historical cost and depreciated

by the straight-line method over the lives of the assets. Machinery

and equipment are depreciated over periods ranging from 3 to

20 years and buildings and building improvements over periods

up to 40 years. Goodwill and other intangible assets substantially

comprise brand names purchased through acquisitions.

In consideration of the long histories of these brands, goodwill

and other intangible assets associated with them are amortized

on the straight-line method over 40 years.

Notes to Consolidated Financial Statements

Kraft Foods Inc.

During 2001, the FASB issued SFAS No. 141, “Business

Combinations” and SFAS No. 142, “Goodwill and Other Intangible

Assets.” Effective January 1, 2002, the Company will no longer be

required to amortize indefinite life goodwill and intangible assets as

a charge to earnings. In addition, the Company will be required to

conduct an annual review of goodwill and other intangible assets

for potential impairment. The Company estimates that net

earnings and diluted earnings per share (“EPS”) would have been

approximately $2,839 million and $1.76, respectively, for the year

ended December 31, 2001; $2,531 million and $1.74, respectively, for

the year ended December 31, 2000; and $2,287 million and $1.57,

respectively, for the year ended December 31, 1999, had the

provisions of the new standards been applied in those years. The

Company does not currently anticipate having to record a charge

to earnings for the potential impairment of goodwill or other

intangible assets as a result of adoption of these new standards.

Marketing costs: The Company promotes its products with

significant marketing activities, including advertising, consumer

incentives and trade promotions. Advertising costs are expensed

as incurred. Consumer incentive and trade promotion activities are

recorded as expense based on amounts estimated as being due to

customers and consumers at the end of a period, based principally

on the Company’s historical utilization and redemption rates.

Revenue recognition: The Company recognizes operating

revenue upon shipment of goods when title and risk of loss pass to

customers. The Company classifies shipping and handling costs

as part of cost of sales.