Kraft 2003 Annual Report Download - page 51

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Aggregate maturities of long-term debt, excluding short-term
borrowings reclassified as long-term debt, are as follows:
(in millions)
2004 $775
2005 737
2006 1,257
2007 1,398
2008 702
2009–2013 4,502
Thereafter 1,139
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
$12,873 million and $11,544 million at December 31, 2003 and
2002,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 December 3,
2003, the Company completed a $500 million Class A common
stock repurchase program, acquiring 15,308,458 Class A shares
at an average price of $32.66 per share. On December 8, 2003,
the Company commenced repurchasing shares under a new
$700 million Class A common stock repurchase program. Through
December 31, 2003, repurchases under the $700 million program
were 1,583,600 shares at a cost of $50 million, or $31.57 per share.
Shares of Class A common stock issued, repurchased and
outstanding were as follows:
Shares Shares
Shares Issued Repurchased Outstanding
Balance at
January 1, 2002 555,000,000 — 555,000,000
Repurchase of
shares (4,383,150) (4,383,150)
Exercise of stock
options 2,000 2,000
Balance at
December 31, 2002 555,000,000 (4,381,150) 550,618,850
Repurchase of
shares (12,508,908) (12,508,908)
Exercise of stock
options and
issuance of other
stock awards 3,827,182 3,827,182
Balance at
December 31, 2003 555,000,000 (13,062,876) 541,937,124
In addition, 1.18 billion Class B common shares were issued and
outstanding at December 31, 2003 and 2002. Altria Group, Inc.
holds 276.6 million Class A common shares and all of the Class B
common shares at December 31, 2003. There are no preferred
shares issued and outstanding. Class A common shares are entitled
to one vote each, while Class B common shares are entitled to ten
votes each. Therefore, Altria Group, Inc. holds 97.9% of the
combined voting power of the Company’s outstanding capital
stock at December 31, 2003. At December 31, 2003, 71,662,879
shares of common stock were reserved for stock options and other
stock awards.
Concurrent with the IPO, certain employees of Altria Group, Inc.
and its subsidiaries received a one-time grant of options to purchase
shares of the Company’s Class A common stock held by Altria
Group, Inc. at the IPO price of $31.00 per share. In order to
completely satisfy this obligation, Altria Group, Inc. purchased
1.6million shares of the Company’s Class A common stock in
open market transactions during 2002.
Note 10. Stock Plans:
The Company’s Board of Directors and shareholders approved
the 2001 Kraft Performance Incentive Plan (the “Plan”), which was
established concurrently with the IPO. Under the Plan, the Company
may grant stock options, stock appreciation rights, restricted stock,
reload options and other awards based on the Company’s Class A
common stock, as well as performance-based annual and long-term
incentive awards. A maximum of 75 million shares of the Company’s
Class A common stock may be issued under the Plan. The
Company’s Board of Directors granted options for 21,029,777 shares
of Class A common stock concurrent with the closing date of the
IPO (June 13, 2001) at an exercise price equal to the IPO price of
$31.00 per share. A portion of the shares granted (18,904,637)
became exercisable on January 31, 2003, and will expire ten years
from the date of the grant. The remainder of the shares granted
(2,125,140) were scheduled to become exercisable based on total
shareholder return for the Company’s Class A common stock during
the three years following the date of the grant, or were to become
exercisable five years from the date of the grant. Based on total
shareholder return, one-third of these shares became exercisable
in June 2002 and one-third will become exercisable in June 2006.
The remaining one-third could become exercisable in June 2004 or
in June 2006, depending on shareholder return. These options will
also expire ten years from the date of the grant. Shares available to
be granted under the Plan at December 31, 2003, were 51,317,940.
The Company’s Board of Directors and shareholders also approved
the Kraft Director Plan. Under the Kraft Director Plan, awards are
granted only to members of the Board of Directors who are not
full-time employees of the Company or Altria Group, Inc., or their
subsidiaries. Up to 500,000 shares of Class A common stock may
be awarded under the Kraft Director Plan. Shares available to be
granted under the Kraft Director Plan at December 31, 2003,
were 470,705.