Kraft 2009 Annual Report Download - page 50

Debt Ratings:
At February 16, 2010, our debt ratings by major credit rating agencies were:
Short term Long term
Moody’s P-2 Baa2
Standard & Poor’s A-2 BBB-
Fitch F3 BBB-
Our debt ratings were downgraded due to the increased level of our indebtedness incurred in connection with our acquisition of Cadbury. On
February 2, 2010, Moody’s affirmed our short-term debt rating of P-2 and our long-term debt rating Baa2, and revised the outlook from stable to
negative. On February 2, 2010, Standard & Poor’s affirmed our short-term debt rating of A-2 and downgraded our long-term debt rating from
BBB+ to BBB-, with a positive outlook. On January 20, 2010, Fitch downgraded our short-term debt rating from F2 to F3 and downgraded our
long-term debt rating from BBB to BBB-, with a stable outlook.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
We have no off-balance sheet arrangements other than the guarantees and contractual obligations that are discussed below.
Guarantees:
As discussed in Note 13, Commitments and Contingencies, we have third-party guarantees primarily covering the long-term obligations of our
vendors. As part of those transactions, we guarantee that third parties will make contractual payments or achieve performance measures. At
December 31, 2009, the carrying amount of our third-party guarantees on our consolidated balance sheet and the maximum potential payments
under these guarantees was $29 million. Substantially all of these guarantees expire at various times through 2018.
In addition, at December 31, 2009, we were contingently liable for $274 million of guarantees related to our own performance. These include
letters of credit related to dairy commodity purchases and guarantees related to the payment of custom duties and taxes, and other letters of
credit.
Guarantees do not have, and we do not expect them to have, a material effect on our liquidity.
Aggregate Contractual Obligations:
The following table summarizes our contractual obligations at December 31, 2009, and does not reflect the impacts of our recent acquisition
and divestiture activity.
Payments Due
Total 2010 2011-12 2013-14
2015 and
Thereafter
(in millions)
Long-term debt (1) $ 18,536 $ 501 $ 6,366 $ 2,051 $ 9,618
Interest expense (2) 10,598 1,132 2,073 1,364 6,029
Capital leases (3) 84 16 26 13 29
Operating leases (4) 1,125 306 428 179 212
Purchase obligations: (5)
Inventory and production costs 5,819 4,465 1,079 257 18
Other 1,281 863 278 137 3
7,100 5,328 1,357 394 21
Other long term liabilities (6) 2,296 280 474 454 1,088
$ 39,739 $ 7,563 $ 10,724 $ 4,455 $ 16,997
(1) Amounts represent the expected cash payments of our long-term debt and do not include unamortized bond premiums or discounts.
(2) Amounts represent the expected cash payments of our interest expense on our long-term debt. Interest calculated on our variable-rate debt was
forecasted using a LIBOR rate forward curve analysis as of December 31, 2009. Interest calculated on our euro notes was forecasted using the euro to
U.S. dollar exchange rate as of December 31, 2009. An insignificant amount of interest expense was excluded from the table for a portion of our foreign
debt due to the complexities involved in forecasting expected interest payments.
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Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠