Kraft 2008 Annual Report Download - page 41

and net outstanding borrowings of $5.5 billion under the bridge facility used to fund our Danone Biscuit acquisition, partially offset by $3.7 billion in Common
Stock share repurchases and a $1.5 billion repayment of long-term debt that matured in 2007.
During 2006, we used $3.7 billion net cash in financing activities, compared with $4.0 billion that we used during 2005. The decrease in net cash used in 2006
was due primarily to a decrease in net debt repayments, partially offset by an increase in our Common Stock share repurchases and dividend payments.
Borrowing Arrangements:
On October 12, 2007, we entered into a 364-day bridge facility agreement for €5.3 billion for our pending acquisition of Danone Biscuit (“Danone Biscuit Bridge
Facility”). Upon closing of the transaction, we borrowed €5.1 billion (approximately $7.5 billion) under this facility to finance the acquisition. We intend to
repay our outstanding borrowings under this facility with proceeds from the issuance of investment grade bonds or other securities. According to the credit
agreement, aggregate net cash proceeds in excess of $1.0 billion from debt offerings having a maturity of greater than one year are required to be repaid. As such,
we repaid approximately €1.3 billion ($2.0 billion) of the bridge facility with the proceeds from our December 2007 debt issuance. Additionally, proceeds from
equity offerings are required to be repaid under the facility, and drawings under this facility may be reduced by the aggregate proceeds in excess of $1.0 billion
from certain divestitures of assets. This facility replaced a commitment letter we entered into upon the announcement of the Danone Biscuit acquisition.
On May 24, 2007, we entered into a $1.5 billion, 364-day revolving credit agreement. In accordance with the terms of that agreement, it was terminated upon our
issuance of the $3.5 billion of senior unsecured notes in August 2007.
We maintain a revolving credit facility that we have historically used for general corporate purposes and to support our commercial paper issuances. The $4.5
billion, multi-year revolving credit facility expires in April 2010. No amounts were drawn on this facility at December 31, 2007.
We must maintain a net worth of at least $20.0 billion under the terms of our revolving credit facility. At December 31, 2007, our net worth was $27.3 billion.
We expect to continue to meet this covenant. The revolving credit facility has no other financial covenants, credit rating triggers or provisions that could require
us to post collateral as security.
In addition to the above, some of our international subsidiaries maintain primarily uncommitted credit lines to meet short-term working capital needs.
Collectively, these credit lines amounted to $1.5 billion at December 31, 2007. Borrowings on these lines amounted to $250 million at December 31, 2007 and
$465 million at December 31, 2006, which included $282 million of outstanding short-term debt related to our United Biscuits acquisition discussed in Note 11,
Acquisitions.
Debt:
Our total debt was $21.0 billion at December 31, 2007 and $10.8 billion at December 31, 2006. Our total debt balance at December 31, 2006, included amounts
due to Altria and affiliates. Our debt-to-capitalization ratio was 0.43 at December 31, 2007 and 0.27 at December 31, 2006.
In August 2007, we issued $3.5 billion of senior unsecured notes, which was the remainder of the capacity under our existing Form S-3 shelf registration
statement on file with the SEC. We used the net proceeds from the offering (approximately $3,462 million) for general corporate purposes, including the
repayment of outstanding commercial paper.
In December 2007, we filed an automatic shelf registration on Form S-3 with the SEC. As a well-known seasoned issuer, we are able to register new debt
securities in amounts authorized by our Board of Directors through December 2010. Our Board of Directors authorized $5.0 billion in long-term financing, which
was in addition to the €5.3 billion authorized for the Danone Biscuit acquisition.
In December 2007, we issued $3.0 billion of senior unsecured notes under the shelf registration. We used the net proceeds from the offering (approximately
$2,966 million) for general corporate purposes, including the repayment of outstanding commercial paper and a portion of our Danone Biscuit Bridge Facility.
Refer to Note 4, Debt and Borrowing Arrangements, for further details of these debt offerings.
We refinance long-term and short-term debt from time to time. The nature and amount of our long-term and short-term debt and the proportionate amount of
each varies as a result of future business requirements, market conditions and other factors. At December 31, 2007, we had approximately $9.5 billion remaining
in long-term financing authority from our Board of Directors.
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Source: KRAFT FOODS INC, 10-K, February 25, 2008 Powered by Morningstar® Document Research℠