strategic-management

way of creating some interactivity with the visitor. The Recipe Box allows one to store
and retrieve favorite recipes, whether personal ones (up to 100) or from Kraft. The registration
process is in line with the overall browsing experience: painless and respectful.
To illustrate this point, it is worth mentioning that the visitor is not asked to provide
a last name and the newsletter(s) options are off by default.
Financials
Kraft’ recent income statements are provided in Exhibit 3. Note the company’s revenues
increased to $42.2 billion 2008, while earnings increased to $2.9 billion. Kraft weathered
the 2008 global recession really well from a revenue/earnings perspective.
Kraft’s recent balance sheets are provided in Exhibit 4. Note the company has over
$27.5 billion in goodwill, which is not good, and also has over $18.5 billion in long-term
debt, which is also not good. Kraft’s long-term debt increased about 50 percent in 2008
from 2007.
Current Strategy
CEO Rosenfeld has been leading the Kraft through a turn-around process designed
to return the company to sustainable growth.
CASE 19 • KRAFT FOODS INC. — 2009 187
EXHIBIT 3 Kraft Foods Inc. and Subsidiaries Consolidated Statements of Earnings
For the Years Ended December 31
(in millions of dollars, except per share data)
2008 2007 2006
Net revenues $ 42,201 $ 36,134 $ 33,256
Cost of sales 28,186 24,057 21,344
Gross profit 14,015 12,077 11,912
Marketing, administration and research costs 9,059 7,673 7,120
Asset impairment and exit costs 1,024 440 999
Gain on redemption of United Biscuits investment — — (251)
Losses/(gains) on divestitures, net 92 (15) (117)
Amortization of intangibles 23 13 7
Operating income 3,817 3,966 4,154
Interest and other expense, net 1,240 604 510
Earnings from continuing operations
before income taxes 2,577 3,362 3,644
Provision for income taxes 728 1,002 816
Earnings from continuing operations 1,849 2,360 2,828
Earnings and gain from discontinued operations,
net of 1,052 230 232
Net earnings $ 2,901 $ 2,590 $ 3,060
Per share data:
Basic earnings per share:
Continuing operations $ 1.24 $ 1.50 $ 1.72
Discontinued operations 0.71 0.14 0.14
Net earnings $ 1.95 $ 1.64 $ 1.86
Diluted earnings per share:
Continuing operations $ 1.22 $ 1.48 $ 1.71
Discontinued operations 0.70 0.14 0.14
Net earnings $ 1.92 $ 1.62 $ 1.85
Dividends declared $ 1.12 $ 1.04 $ 0.96
Source: www.kraftfoodscompany.com. and Company Form 10K.