2006 CAGNY

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Kraft Foods Inc.
First Quarter 2006 Earnings
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Safe Harbor Statement
This presentation contains projections of future
results and other forward-looking statements.
One can identify these forward-looking statements
by use of words such as strategy, expects,
plans, anticipates, believes, will,
continues, 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. These statements are based on the
Companys current assumptions and estimates and
are subject to risks and uncertainties. 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. These factors
include (a) the effect on the Company of
competition in its markets, changes in consumer
preferences and demand for its products,
including diet trends, changing prices for its
raw materials and local economic and market
conditions (b) the Companys continued ability
to promote brand equity successfully, to
anticipate and respond to new consumer trends, to
develop new products and markets, to broaden
brand portfolios, to compete effectively with
lower priced products in a consolidating
environment at the retail and manufacturing
levels and to improve productivity (c) the
Companys ability to consummate and successfully
integrate acquisitions and to realize the cost
savings and improved asset utilization
contemplated by its restructuring program (d)
the impact of gains or losses, or lost operating
income, from the sales businesses that are less
of a strategic fit within the Companys
portfolio (e) the effects of foreign economies,
changes in tax requirements and currency
movements (f) fluctuations in levels of customer
inventories and credit and other business risks
related to the operations of the Companys
customers (g) the Companys access to credit
markets, borrowing costs and credit ratings,
which may in turn be influenced by the credit
ratings of Altria Group, Inc. (h) the Companys
benefit expense, which is subject to the
investment performance of pension plan assets,
interest rates and cost increases for medical
benefits offered to employees and retirees (i)
the impact of recalls if products become
adulterated or misbranded, liability if product
consumption causes injury, ingredient disclosure
and labeling laws and regulations, potential
claims relating to false or deceptive advertising
under consumer protection or other laws and the
possibility that consumers could lose confidence
in the safety and quality of certain food
products (j) consumer concerns regarding
genetically modified organisms and the health
implications of obesity and trans fatty acids
and (k) potential short-term volatility in the
trading volume and market price of the Companys
stock as a result of a spin-off of the Company
from Altria Group, Inc. Developments in any of
these areas 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. For
additional information on these and other factors
that could affect the Companys forward-looking
statements, see the Companys filings with the
Securities and Exchange Commission, including the
Companys most recently filed Annual Report on
Form 10-K and subsequent reports on Form 10-Q and
8-K. Any forward looking statements in this
presentation are made as of the date hereof. The
Company does not undertake to update any forward
looking statement.
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Comparability of Q1 results affected by several
items
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Q1 results were solid and a good start to 2006

• Put Consumers First
• Brand Value propositions further improved
• Continued new product introductions
• Organic net revenue growth above 3
• Work Simply, Act Quickly
• Restructuring savings and overhead reductions on
  track
• Further SKU pruning and product line
  discontinuations
• Play to Win
• Strong developing markets growth
• Continued portfolio divestitures

Organic net revenue growth excludes
acquisitions, the impact of divestitures,
currency impact, and asset impairment, exit, and
implementation costs.
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Organic revenue growth was solid in Q1
Reported
Excluding Items
Change Vs 2005
Change Vs 2005
Q1 2006
Q1 2006
Net Revenues 8.1bn 0.8 8.1bn 0.8 Divestitur
es (1.6)pp Currency (1.2) Organic Net
Revenue 3.6
Reported Results excluding asset impairment,
exit, and implementation costs the gains/losses
on the sales of businesses the impacts of the
favorable tax resolution and earnings from
discontinued operations
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Organic net revenue growth improved
Organic Net Revenue Growth Chg Vs PY
3 Long-term Target
Excludes Acquisition Impact 0.7pp 0.2pp 0.5pp 0.
1pp 0.0pp
Growth rate shown has been adjusted down by 2
pp to remove the estimated impact of the 53rd
week in 2005
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Organic net revenue growth was broad-based
Q1 Organic Net Revenue Growth
NA Beverages 2.7 NA Cheese Foodservice (0.2) N
A Convenient Meals 6.3 NA Grocery (2.5) NA Snacks
Cereals 7.0 European Union 0.4 Developing
Markets, 11.6 Oceania North Asia Total
Kraft 3.6
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Q1 volume impacted by pruning and pricing
Reported
Excluding Items
Change Vs 2005
Change Vs 2005
Q1 2006
Q1 2006
Net Revenues 8.1bn 0.8 8.1bn 0.8 Organic Net
Revenue Growth 3.6 Volume (1.1)pp

• Pruned items and discontinued product lines were
  2 of volume
• Discontinued certain ready-to-drink beverages in
  Canada, Mexico, U.S.
• SKU pruning target of 10 in 2006
• Easter timing offset fiscal calendar shift
• Easter timing negatively impacted Cheese
  Foodservice and Grocery
• Pricing negatively impacted category growth

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Strong mix gains drove organic net revenue growth
Reported
Excluding Items
Change Vs 2005
Change Vs 2005
Q1 2006
Q1 2006
Net Revenues 8.1bn 0.8 8.1bn 0.8 Organic Net
Revenue Growth 3.6 Volume (1.1)pp Mix
3.0

• Organization focus on revenue paying off
• New products contributing to positive mix
• Includes benefit from sku pruning and product
  line discontinuations

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All segments contributed to positive mix
Q1 2006 Mix Impact On Revenue Growth
DMONA NA Beverages NA Snacks Cereals Total
Kraft NA Convenient Meals European Union NA
Cheese Foodservice NA Grocery
6.3pp
4.0
3.0
3.0
2.7
1.4
1.3
0.4
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New products momentum continued in Q1
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Pricing contributed to organic net revenue growth
Reported
Excluding Items
Change Vs 2005
Change Vs 2005
Q1 2006
Q1 2006
Net Revenues 8.1bn 0.8 8.1bn 0.8 Organic Net
Revenue Growth 3.6 Volume (1.1)pp Mix
3.0 Pricing 1.7

• Pricing actions delivered solid price realization
• Overall, price gaps remained in line with
  expectations
• Actions being taken to address gaps in select
  categoriesand countries
• US Cheese pricing taken but trade spending
  increased to reflect lower cheese costs

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Pricing actions continued into 2006
2005
Q1 06
Cookies - US Crackers US Cheese US Frozen
Toppings - US
Coffee - Global Cold Cuts - US Chocolate -
International Hot Dogs - US RTD Beverages -
US RTE Desserts - US Snack Nuts - US
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Gross Margin declined slightly in Q1
Reported
Excluding Items
Change Vs 2005
Change Vs 2005
Q1 2006
Q1 2006
Net Revenues 8.1bn 0.8 8.1bn 0.8 Gross
Margin 36.1 (0.6)pp 36.2 (0.7)pp

• Pricing and productivity did not fully offset
  cost increases
• Continued to increase price gap investment in
  select categories

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Commodity cost trends were mixed
First Quarter Avg. Price Change 2006 Vs. 2005
91
Sugar (World) Coffee (London) Crude Oil
(NY) Wheat (Chicago) Cocoa (London) PET
Resin Hazelnuts (Turkey) Lean Hogs Barrel Cheese
(U.S.)
42
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12
2
(7)
(18)
(19)
(21)
Source Chicago Mercantile Exchange Bloomberg
Chemical Data Inc
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Overall commodity costs continued to increase
Cost Increase Vs. Prior Year
(in millions)
900
800
300
250
250
225
200
200
150
125
100
Q1 04
Q2 04
Q3 04
Q4 04
Q1 05
Q2 05
Q3 05
Q4 05
Q1 06
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Operating Income Margin increased modestly
Reported
Excluding Items
Change Vs 2005
Change Vs 2005
Q1 2006
Q1 2006
Net Revenues 8.1bn 0.8 8.1bn 0.8 Gross
Margin 36.1 (0.6)pp 36.2 (0.7)pp Operating
Income 1.0bn (12.0) 1.2bn 2.1 Operating
Income Margin 12.5 (1.9)pp 15.2 0.2pp

• Strong overhead cost reductions
• Consumer marketing investment maintained

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Diluted EPS grew in line with Operating Income
gains
Reported
Excluding Items
Change Vs 2005
Change Vs 2005
Q1 2006
Q1 2006
Net Revenues 8.1bn 0.8 8.1bn 0.8 Gross
Margin 36.1 (0.6)pp 36.2 (0.7)pp Operating
Income 1.0bn (12.0) 1.2bn 2.1 Diluted
EPS 0.61 45.2 0.45 2.3 Interest
Expense 0.1 (45.5) 0.1 (19.3) Tax Rate
(9.2) NM 30.9 2.9 pp
Diluted Shares 1662 (2.4) 1662 (2.4)

• Lower debt level and financing costs
• Tax rate impacts of one-time items and
  adjustments
• Continued share buy-back program

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2006 Full Year Guidance remains unchanged
Organic Revenue Growth
EPS
Cash Flow
3.4B in Discretionary Cash Flow Plus
Divestiture Proceeds
52-week Basis 3 Reported Basis 1
Continuing Basis 1.55 - 1.60
Includes 0.8B from prior year tax resolutions
and divestiture proceeds, partially offset by
(0.6)B impact from Restructuring Program
Includes (0.50) per share charges from
restructuring and impairment charges, 0.24 from
prior year tax resolutions, and (0.07) loss
related to divestiture
Excludes acquisitions, the impact of
divestitures, currency impact, and asset
impairment, exit, and implementation costs.
Net cash provided by operating activities less
capital expenditures
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Summary

• Solid Q1 results and a good start to 2006
• Strengthening Brand Value propositions
• Cost savings benefits coming through
• Momentum will build as 2006 progresses

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