Kraft Foods to Sell Fruit2O and Veryfine to Sunny Delight Beverages Co.

NORTHFIELD, Ill.--()--Kraft Foods Inc. (NYSE:KFT), a global leader in branded food and beverages, announced today that it has agreed to sell its Fruit2O water and Veryfine juice brands and related assets to Sunny Delight Beverages Co., a leading producer of juice-based drinks in North America and Western Europe. These brands had net revenues of approximately $135 million in 2006.

As we restore Kraft to reliable growth, were focusing our investments on the brands that best fit with our long-term growth strategies, said Rick Searer, Kraft Executive Vice President and President, Kraft North America. Fruit2O and Veryfine are great brands that have found a wonderful home in Sunny Delight. However, for Kraft, we believe we will create greater long-term shareholder value by selling, rather than investing in, these brands.

The sale includes the Fruit2O, Fuel2O and Veryfine brands, certain manufacturing equipment and the Littleton, Mass. manufacturing facility. As part of the transaction, approximately 200 employees will join Sunny Delight Beverages Co. We are grateful to the Veryfine employees for their commitment and dedication to the business, and wish them continued success in the future, said Searer.

The transaction is expected to be completed during the fourth quarter. In anticipation of the sale, Kraft will record a one-time, pre-tax asset impairment charge of approximately $125 million in Q3. The after-tax impact to net earnings is a charge of approximately $55 million, equivalent to 3 cents diluted earnings per share. Kraft anticipates no material impact to earnings on an ongoing basis.

About Kraft Foods

Kraft Foods (NYSE: KFT) is one of the world's largest food and beverage companies, with annual revenues of more than $34 billion. For over 100 years, Kraft has offered consumers delicious and wholesome foods that fit the way they live. Kraft markets a broad portfolio of iconic brands in 155 countries, including seven brands with revenue of more than $1 billion, such as Kraft cheeses, dinners and dressings; Oscar Mayer meats; Philadelphia cream cheese; Post cereals; Nabisco cookies and crackers; Jacobs coffees and Milka chocolates. Kraft became a fully independent company on March 30, 2007, and is listed in the Standard & Poor's 100 and 500 indexes. The company is a member of the Dow Jones Sustainability Index and the Ethibel Sustainability Index. For more information, visit the company's website at http://www.kraft.com.

Forward-Looking Statements

This press release contains forward-looking statements that we intend to restore Kraft to reliable growth; that we believe we create greater long-term shareholder value by selling, rather than investing in these brands; the number of employees that will join Sunny Delight Beverages Co.; our expectation regarding completion of the transaction; and our expectations regarding the impairment charge, the affect on diluted earnings per share and the impact on future earnings from the transaction. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those predicted in the forward-looking statements. Such factors, include, but are not limited to, increased competition, pricing actions, delays in consummating the transaction, regulatory actions related to the particular brands included in the transaction, failure to recognize expected cost savings from our restructuring program and increased competition. For additional information on these and other factors that could affect our forward-looking statements, see our filings with the SEC, including our most recently filed Annual Report on Form 10-K and subsequent reports on Form 10-Q and 8-K. We disclaim and do not undertake any obligation to update or revise any forward-looking statements in this press release.

Contacts

Kraft Foods Inc.
Media:
Lisa Gibbons
847-646-4538
cec@kraft.com
or
Investors:
Chris Jakubik
847-646-5494
Chris.Jakubik@kraft.com

Contacts

Kraft Foods Inc.
Media:
Lisa Gibbons
847-646-4538
cec@kraft.com
or
Investors:
Chris Jakubik
847-646-5494
Chris.Jakubik@kraft.com