Kraft 2009 Annual Report Download - page 51

(3) Amounts represent the expected cash payments of our capital leases, including the expected cash payments of interest expense of approximately $18 million
on our capital leases.
(4) Operating leases represent the minimum rental commitments under non-cancelable operating leases.
(5) Purchase obligations for inventory and production costs (such as raw materials, indirect materials and supplies, packaging, co-manufacturing arrangements,
storage and distribution) are commitments for projected needs to be utilized in the normal course of business. Other purchase obligations include
commitments for marketing, advertising, capital expenditures, information technology and professional services. Arrangements are considered purchase
obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure and approximate timing of the
transaction. Most arrangements are cancelable without a significant penalty and with short notice (usually 30 days). Any amounts reflected on the
consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above.
(6) Other long-term liabilities primarily consist of estimated future benefit payments for our postretirement health care plans through December 31, 2019 of
approximately $2,180 million. We are unable to reliably estimate the timing of the payments beyond 2019; as such, they are excluded from the above table. In
addition, the following long-term liabilities included on the consolidated balance sheet are excluded from the table above: accrued pension costs, income
taxes, insurance accruals and other accruals. We are unable to reliably estimate the timing of the payments (or contributions beyond 2010, in the case of
accrued pension costs) for these items. We currently expect to make approximately $240 million in contributions to our pension plans in 2010. We also expect
that our net pension cost will increase by approximately $50 million to approximately $440 million in 2010. As of December 31, 2009, our total liability for
income taxes, including uncertain tax positions and associated accrued interest and penalties, was $1.2 billion. We expect to pay approximately $239 million
in the next 12 months. During 2009, we reached an agreement with the IRS on specific matters related to years 2000 through 2003. Our returns for those
years are still under examination, and the IRS recently began its examination of years 2004 through 2006. We are not able to reasonably estimate the timing
of future cash flows beyond 12 months due to uncertainties in the timing of these and other tax audit outcomes.
Equity and Dividends
Stock Repurchases:
Our Board of Directors authorized the following Common Stock repurchase programs. Our $5.0 billion share repurchase authority expired on
March 30, 2009. We did not repurchase any shares in 2009.
Share Repurchase Program
Authorized by the Board of Directors $5.0 billion $2.0 billion
Authorized / completed period for repurchase
April 2007 -
March 2009
March 2006 -
March 2007
Aggregate cost of shares repurchased in 2008 $777 million
(millions of shares) (25.3 shares)
Aggregate cost of shares repurchased in 2007 $3.5 billion $140 million
(millions of shares) (105.6 shares) (4.5 shares)
Aggregate cost of shares repurchased life-to-date under program $4.3 billion $1.1 billion
(millions of shares) (130.9 shares) (34.7 shares)
In total, we repurchased 25.3 million shares for $777 million in 2008 and 110.1 million shares for $3,640 million in 2007 under these programs. We
made these repurchases of our Common Stock in open market transactions.
In March 2007, we repurchased 1.4 million additional shares of our Common Stock from Altria at a cost of $46.5 million. We paid $32.085 per
share, which was the average of the high and the low price of Kraft Foods Common Stock as reported on the NYSE on March 1, 2007. This
repurchase was in accordance with our spin-off agreement with Altria.
Stock Plans:
At our 2009 annual meeting, our shareholders approved the Kraft Foods Inc. Amended and Restated 2005 Performance Incentive Plan (the “2005
Plan”). The 2005 Plan includes, among other provisions, a limit on the number of shares that may be granted, vesting restrictions and a prohibition
on stock option repricing. Under the amended plan, we are authorized to issue a maximum of 168.0 million shares of our Common Stock. As of
the effective date of the amendment, there were 92.1 million shares available to be granted under the 2005 Plan, of which no more than
27.5 million shares may be awarded as restricted or deferred stock.
In 2008, we changed our annual and long-term incentive compensation programs to further align them with shareholder returns. Under the annual
equity program, we now grant equity in the form of both restricted or deferred stock and stock options. The restricted or deferred stock continues
to vest 100% after three years, and the stock
48
Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠