Kraft 2009 Annual Report Download - page 48

support new product and productivity initiatives. We expect 2010 capital expenditures to be in line with 2009 expenditures, including capital
expenditures required for systems’ investments. We expect to fund these expenditures from operations. As this disclosure was made as of
December 31, 2009, it does not reflect the impacts of our recent acquisition and divestiture activity.
Net Cash (Used in) / Provided by Financing Activities:
Net cash used in financing activities was $3.1 billion in 2009 and $2.1 billion during 2008, compared with $5.1 billion provided during 2007. The
net cash used in financing activities in 2009 primarily related to $1.7 billion in dividend payments, $950 million in repayments of long-term debt
securities and $344 million in net commercial paper repayments. Additionally, other cash used in financing activities in 2009 included $69 million in
costs related to our bridge facility agreement dated November 9, 2009 (the “Cadbury Bridge Facility”). The net cash used in financing activities in
2008 primarily related to $5.9 billion in payments made on the bridge facility used to fund our LU Biscuit acquisition, $1.7 billion in dividend
payments, $777 million in Common Stock share repurchases and $795 million in repayments of long-term debt securities, primarily related to debt
that matured on October 1, 2008, partially offset by $6.9 billion in proceeds from our long-term debt offerings. The net cash provided by financing
activities in 2007 was primarily due to $6.4 billion in proceeds from long-term debt offerings and net outstanding borrowings of $5.5 billion under
the bridge facility used to fund our LU Biscuit acquisition, partially offset by $3.7 billion in Common Stock share repurchases, $1.6 billion in
dividend payments and $1.4 billion in repayments of long-term debt securities that matured.
In August 2010, $500 million of our long-term debt matures. We expect to fund the repayment with cash from operations or short-term borrowings.
As this disclosure was made as of December 31, 2009, it does not reflect the impacts of our recent acquisition and divestiture activity.
Borrowing Arrangements:
On November 30, 2009, we entered into a revolving credit agreement for a $4.5 billion three-year senior unsecured revolving credit facility. The
agreement replaced our former revolving credit agreement, which was terminated upon the signing of the new agreement. We intend to use the
revolving credit facility for general corporate purposes, including for working capital purposes, and to support our commercial paper issuances. No
amounts have been drawn on the facility.
The revolving credit agreement requires us to maintain a minimum total shareholders’ equity, excluding accumulated other comprehensive
earnings / (losses), of at least $23.0 billion. Upon the completion of the Cadbury acquisition this covenant will increase by 75% of any increase in
our total shareholders’ equity as a direct result of a) our issuance of certain types of equity securities to finance the acquisition; or b) our
refinancing certain indebtedness. At December 31, 2009, our total shareholders’ equity, excluding accumulated other comprehensive earnings /
(losses), was $29.8 billion. We expect to continue to meet this covenant. The revolving credit agreement also contains customary representations,
covenants and events of default. However, 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, 2009. Borrowings on these lines amounted to $191 million at
December 31, 2009 and $291 million at December 31, 2008.
The Cadbury Bridge Facility is a £5.5 billion (approximately $8.9 billion) 364-day senior unsecured facility. On January 18, 2010, we amended the
agreement to increase the Cadbury Bridge Facility to an aggregate of £7.1 billion. On February 11, 2010, after the issuance of $9.5 billion of senior
unsecured notes, we amended the agreement again to decrease the Cadbury Bridge Facility to an aggregate of £1.3 billion. We expect to use
borrowings under the Cadbury Bridge Facility and proceeds from other financing sources to finance the Cadbury acquisition and to refinance
certain indebtedness of Cadbury and its subsidiaries. With certain restrictions, borrowings under the Cadbury Bridge Facility are also available for
our general corporate purposes.
The Cadbury Bridge Facility agreement includes the same minimum shareholders’ equity requirement as in our $4.5 billion revolving credit
agreement. In addition, in the event that our long-term senior unsecured indebtedness is rated below investment grade by either Moody’s or
Standard & Poor’s, the Cadbury Bridge Facility agreement requires us to maintain a net debt to adjusted EBITDA ratio of not more than 4.25 to
1.00. At December 31, 2009, we continued
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Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠