Kraft Foods Inc. Reports 2005 Results And Issues 2006 Outlook; Announces Expanded Restructuring Program As Part Of Sustainable Growth Plan.

NORTHFIELD, Ill. -- Kraft Foods Inc. (NYSE:KFT):

--Fourth quarter diluted E.P.S. from continuing operations up 15.0% to $0.46 (including $0.10 in exit and implementation costs for the restructuring program and impairment charges)

--Full-year diluted E.P.S. from continuing operations up 11.0% to $1.72 (including $0.20 in exit and implementation costs for the restructuring program and impairment charges and $0.04 in net gains on sales of businesses)

--Expanding cost restructuring program by $2.5 billion with $700 million in newly identified annual savings as part of Sustainable Growth Plan

--Diluted E.P.S. in 2006 projected at $1.38 - $1.43 (including approximately $0.50 in exit and implementation costs for the expanded restructuring program and impairment charges)

Kraft Foods Inc. (NYSE:KFT), a global leader in branded food and beverages, today reported 2005 results, announced an expanded restructuring program as part of its Sustainable Growth Plan, and issued its earnings outlook for 2006. Kraft's fourth quarter results (which included an additional week versus 2004) reflected solid momentum in several areas including better price realization, improved U.S. market shares, strong product mix and new product contributions. For the full year, the company delivered on its top-line growth and earnings guidance provided in October. Additionally, the company generated $4.0 billion in discretionary cash flow(1) plus divestiture proceeds in 2005 and returned approximately $2.6 billion in cash to shareholders through dividends and share repurchases. In providing its 2006 outlook, the company expects many of the cost pressures it faced in 2005 to continue in 2006 and has announced an expanded restructuring program as part of its Sustainable Growth Plan to aggressively reduce its cost structure.

"While 2005 was a difficult year for Kraft and several of the challenges we faced will continue in 2006, I am pleased by our progress in many areas, particularly in our fourth quarter U.S. market shares," said Roger K. Deromedi, Chief Executive Officer of Kraft Foods. "The actions we've taken over the past two years have improved our Brand Value propositions and are enabling us to drive out costs even more aggressively."

(1) The company defines discretionary cash flow as net cash provided by operating activities less capital expenditures.

(Kraft Foods results are discussed on a continuing operations basis, following the company's sale effective June 26, 2005 of its sugar confectionery business, and the treatment of this business as discontinued operations. As such, net revenues and operating companies income for the sugar confectionery business are excluded from the company's results, while the net earnings impact is included as a single line item in reported earnings. All references in this release are to continuing operations, unless otherwise noted. Additionally, the company's fourth quarter and full-year 2005 results include an extra shipping week versus 2004. The company estimates that this week positive...

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