Kraft 2010 Annual Report Download - page 52

contractual payments or achieve performance measures. At December 31, 2010, the carrying amount of our third-party guarantees on our consolidated balance
sheet and the maximum potential payments under these guarantees was $26 million. Substantially all of these guarantees expire at various times through 2018.
In addition, at December 31, 2010, we were contingently liable for $445 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, 2010.
Payments Due
Total 2011 2012-13 2014-15
2016 and
Thereafter
(in millions)
Long-term debt (1) $ 27,937 $ 1,101 $ 7,280 $ 2,509 $ 17,047
Interest expense (2) 17,967 1,621 2,846 2,281 11,219
Capital leases(3) 57 13 18 6 20
Operating leases (4) 1,562 470 549 299 244
Purchase obligations:(5) - - - -
Inventory and production costs 7,099 5,379 1,564 133 23
Other 1,672 1,205 437 26 4
8,771 6,584 2,001 159 27
Other long-term liabilities(6) 2,251 224 462 452 1,113
$ 58,545 $ 10,013 $ 13,156 $ 5,706 $ 29,670
(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 euro notes was forecasted using the euro to
U.S. dollar exchange rate as of December 31, 2010. Interest on our pound sterling notes was forecasted using the pound sterling to U.S. dollar exchange rate as of
December 31, 2010. An insignificant amount of interest expense was excluded from the table for a portion of our other foreign currency obligations due to the
complexities involved in forecasting expected interest payments.
(3) Amounts represent the expected cash payments of our capital leases, including the expected cash payments of interest expense of approximately $12 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, 2020 of
approximately $2,220 million. We are unable to reliably estimate the timing of the payments beyond 2020; as such, they are excluded from the above table. There are
also another $31 million of various other long-term liabilities that are expected to be paid over the next 5 years. 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 2011, in the case of accrued pension costs) for these items. We currently expect to
make approximately $940 million in contributions to our pension plans in 2011. We also expect that our net pension cost will remain unchanged at approximately
$530 million in 2011. As of December 31, 2010, our total liability for income taxes, including uncertain tax positions and associated accrued interest and penalties,
was $1.3 billion. We expect to pay approximately $180 million in the next 12 months. While years 2004-2006 are currently under examination by the IRS, 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.
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