Kraft 2005 Annual Report Download - page 46

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MERRILL CORPORATION MBLOUNT// 9-MAR-06 12:42 DISK126:[06CHI5.06CHI1135]DM1135A.;12
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DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;51
KRAFT FOODS-FSC CERTIFIED-10K/AR Proj: P1102CHI06 Job: 06CHI1135 File: DM1135A.;12
Merrill Corporation/Chicago (312) 786-6300 Page Dim: 8.250X 10.750Copy Dim: 38. X 54.3
nature and amount of the Company’s long-term and short-term debt and the proportionate amount of
each can be expected to vary as a result of future business requirements, market conditions and other
factors.
In addition to the above, certain international subsidiaries of Kraft maintain uncommitted credit lines
to meet the short-term working capital needs of the international businesses. These credit lines, which
amounted to approximately $1.3 billion as of December 31, 2005, are for the sole use of the Company’s
international businesses. Borrowings on these lines amounted to approximately $400 million and
$150 million at December 31, 2005 and 2004, respectively.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
The Company has no off-balance sheet arrangements other than the guarantees and contractual
obligations that are discussed below.
Guarantees. As discussed in Note 18 to the consolidated financial statements, the Company had
third-party guarantees, which are primarily derived from acquisition and divestiture activities, of
approximately $27 million at December 31, 2005. Substantially all of these guarantees expire through
2013, with $14 million expiring during 2006. The Company is required to perform under these
guarantees in the event that a third party fails to make contractual payments or achieve performance
measures. The Company has a liability of $17 million on its consolidated balance sheet at December 31,
2005, relating to these guarantees.
In addition, at December 31, 2005, the Company was contingently liable for $127 million of
guarantees related to its own performance. These include surety bonds related to dairy commodity
purchases and guarantees related to the payment of customs duties and taxes, and letters of credit.
Guarantees do not have, and are not expected to have, a significant impact on the Company’s
liquidity.
Aggregate Contractual Obligations. The following table summarizes the Company’s contractual
obligations at December 31, 2005:
Payments Due
2011 and
Total 2006 2007-08 2009-10 Thereafter
(in millions)
Long-term debt(1) ........................ $ 9,779 $1,268 $2,112 $ 755 $5,644
Operating leases(2) ....................... 996 260 385 198 153
Purchase obligations(3):
Inventory and production costs ............. 2,264 1,678 503 63 20
Other ............................... 1,456 1,315 138 3
3,720 2,993 641 66 20
Other long-term liabilities(4) ................. 89 6 81 2
$14,584 $4,527 $3,219 $1,021 $5,817
(1) Amounts represent the expected cash payments of the Company’s long-term debt and do not
include bond premiums or discounts, and interest.
(2) Operating leases represent the minimum rental commitments under non-cancelable operating
leases. The Company has no significant capital lease obligations.
(3) Purchase obligations for inventory and production costs (such as raw materials, indirect materials
and supplies, packaging, co-manufacturing arrangements, storage and distribution) are
45
6 C Cs: 16071