(Continued)

Kraft Foods Inc.

Kraft Spin-Off On March 30, 2007, Kraft will become a fully independent company. Kraft shares previously owned by Altria are scheduled to be distributed on that date to Altria shareholders of record as of March 16, 2007. Key terms of the spin-off and the business purpose supporting it are highlighted on page 2 of this report. Additional details are available at www.altria.com/kraftspinoff.

Kraft Foods Inc. (Kraft) reported mixed results in 2006 and continued to implement a restructuring program designed to put the company on a path to predictable growth.

Net revenues were up only 0.7% to $34.4 billion, primarily reflecting one less shipping week in 2006 versus 2005, which negatively impacted reported net revenues by approximately two percentage points.

Ongoing volume declined 1.7%, due primarily to the impact of product item pruning and the discontinuation of select product lines, primarily in the North American Foodservice and Canadian ready-to-drink beverage businesses, as well as one less shipping week in 2006.

Operating income decreased 4.8% to $4.5 billion for 2006, due primarily to higher asset  impairment, exit and implementation costs, including a non-cash pre-tax charge of $245 million in the fourth quarter related to Kraft’s Tassimo single-serve hot beverage system, and one less shipping week in 2006, partially offset by the gain on the redemption of Kraft’s investment in United Biscuits (UB) in the third quarter.

Kraft North America Commercial (KNAC) net revenues were down 0.8% to $23.1 billion, reflecting one less shipping week in 2006 and divestitures, as well as declines in Cheese & Foodservice and Grocery, partially offset by favorable mix and favorable currency of $153 million. Ongoing volume decreased 2.5%, primarily due to one less shipping week in 2006. Operating companies income decreased 2.0% to $3.8 billion, as the impact of one less shipping week in 2006 and higher asset impairment, exit and implementation costs were partially offset by productivity and restructuring savings, positive mix, a gain on the sale of Minute Rice and favorable currency of $27 million.

Kraft International Commercial (KIC) net revenues increased 3.9% to $11.2 billion versus 2005, reflecting the UB acquisition and an increase in Developing Markets, Oceania & North Asia, partially offset by one less shipping week in 2006. Ongoing volume was up 0.5%, due primarily to the UB acquisition, partially offset by one less shipping week in 2006. Operating companies income decreased 14.1% to $964 million, due primarily to higher asset impairment, exit and implementation costs, including the Tassimo charge, and the impact of one less shipping week in 2006, partially offset by the $251 million gain on redemption of Kraft’s investment in UB, as well as positive mix and price increases.

A separate Kraft Foods Inc. Annual Report is available at www.kraft.com.