Kraft 2002 Annual Report Download - page 57

Other Acquisitions: During 2002, the Company acquired a
snacks business in Turkey and a biscuits business in Australia.
The total cost of these and other smaller acquisitions was
$122 million.
During 2001, the Company purchased coffee businesses in
Romania, Morocco and Bulgaria and also acquired confectionery
businesses in Russia and Poland. The total cost of these and
other smaller acquisitions was $194 million.
During 2000, the Company purchased Balance Bar Co. and Boca
Burger, Inc. The total cost of these and other smaller acquisitions
was $365 million.
The effects of these acquisitions were not material to the
Company’s consolidated financial position or results of
operations in any of the periods presented.
Note 6. Inventories:
The cost of approximately 49% and 54% of inventories in 2002
and 2001, respectively, was determined using the LIFO method.
The stated LIFO amounts of inventories were approximately
$215 million and $150 million higher than the current cost of
inventories at December 31, 2002 and 2001, respectively.
Note 7. Short-Term Borrowings and
Borrowing Arrangements:
At December 31, 2002 and 2001, the Company had short-term
borrowings of $1,621 million and $2,681 million, respectively,
consisting principally of commercial paper borrowings with an
average year-end interest rate of 1.3% and 1.9%, respectively.
Of these amounts, the Company reclassified $1,401 million and
$2,000 million, respectively, of the commercial paper borrowings
to long-term debt based upon its intent and ability to refinance
these borrowings on a long-term basis.
The fair values of the Company’s short-term borrowings at
December 31, 2002 and 2001, based upon current market interest
rates, approximate the amounts disclosed above.
The Company has a $2.0 billion 5-year revolving credit facility
maturing in July 2006 and a $3.0 billion 364-day revolving credit
facility maturing in July 2003. The Company intends to use these
credit facilities to support commercial paper borrowings, the
proceeds of which will be used for general corporate purposes.
None of these facilities were drawn at December 31, 2002. These
facilities require the maintenance of a minimum net worth. The
Company met this covenant at December 31, 2002. In addition,
the Company maintains credit lines with a number of lending
institutions amounting to approximately $577 million. The
Company maintains these credit lines primarily to meet the short-
term working capital needs of its international businesses.
The foregoing revolving credit facilities do not include any other
financial tests, any credit rating triggers or any provisions that
could require the posting of collateral.
Note 8. Long-Term Debt:
At December 31, 2002 and 2001, the Company’s long-term debt
consisted of the following:
(in millions)
2002 2001
Short-term borrowings, reclassified as
long-term debt $ 1,401 $2,000
Notes, 4.63% to 7.55% (average effective
rate 5.53%), due through 2035 9,053 6,229
7% Debenture (effective rate 11.32%),
$200 million face amount, due 2011 153 258
Foreign currency obligations 117 136
Other 44 51
10,768 8,674
Less current portion of long-term debt (352) (540)
$10,416 $8,134
Aggregate maturities of long-term debt, excluding short-term
borrowings reclassified as long-term debt, are as follows:
(in millions)
2003 $ 352
2004 838
2005 732
2006 1,255
2007 1,395
2008-2012 3,701
Thereafter 1,141
Based on market quotes, where available, or interest rates
currently available to the Company for issuance of debt with
similar terms and remaining maturities, the aggregate fair value
of the Company’s long-term debt, including the current portion
of long-term debt, was $11,544 million and $8,679 million at
December 31, 2002 and 2001, respectively.
Note 9. Capital Stock:
The Company’s articles of incorporation authorize 3.0 billion
shares of Class A common stock, 2.0 billion shares of Class B
common stock and 500 million shares of preferred stock.
On June 21, 2002, the Company’s Board of Directors approved
the repurchase from time to time of up to $500 million of the
Company’s Class A common stock solely to satisfy the
obligations of the Company under the 2001 Kraft Performance
Incentive Plan, the Kraft Director Plan for non-employee directors,
and other plans where options to purchase the Company’s
Class A common stock are granted. During 2002, the Company
repurchased approximately 4.4 million shares of its Class A
common stock at a cost of $170 million.
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