Kraft 2013 Annual Report Download - page 57

55
Note 6. Debt
Borrowing Arrangements:
On May 18, 2012, we entered into a $3.0 billion five-year senior unsecured revolving credit facility that expires on
May 17, 2017. All committed borrowings under the facility bear interest at a variable annual rate based on the
London Inter-Bank Offered Rate or a defined base rate, at our election, plus an applicable margin based on the
ratings of our long-term senior unsecured indebtedness. The revolving credit agreement requires us to maintain a
minimum total shareholders’ equity (excluding accumulated other comprehensive income or losses and any income
or losses recognized in connection with “mark-to-market” accounting in respect of pension and other retirement
plans) of at least $2.4 billion. At December 28, 2013, we were compliant. The revolving credit agreement also
contains customary representations, covenants, and events of default. We intend to use the proceeds from this
facility, if any, for general corporate purposes. As of December 28, 2013, no amounts were drawn on this credit
facility.
Long-Term Debt:
On June 4, 2012, we issued $6.0 billion of senior unsecured notes at a weighted average effective rate of 3.938%
and transferred the net proceeds of $5.9 billion to International. We also recorded approximately $260
million of deferred financing costs, including losses on hedging activities in advance of the debt issuance, which will
be recognized in interest expense over the life of the notes. The general terms of the notes are:
• $1 billion of notes due June 4, 2015 at a fixed, annual interest rate of 1.625%, paid semiannually.
• $1 billion of notes due June 5, 2017 at a fixed, annual interest rate of 2.250%, paid semiannually.
• $2 billion of notes due June 6, 2022 at a fixed, annual interest rate of 3.500%, paid semiannually.
• $2 billion of notes due June 4, 2042 at a fixed, annual interest rate of 5.000%, paid semiannually.
On July 18, 2012, International completed a debt exchange in which $3.6 billion of
International debt was exchanged for our debt as part of the Spin-Off capitalization plan. No cash was generated
from the exchange. The general terms of the unsecured notes we received in connection with this exchange are:
• $1,035 million of notes due August 23, 2018 at a fixed, annual interest rate of 6.125%, paid semiannually.
• $900 million of notes due February 10, 2020 at a fixed, annual interest rate of 5.375%, paid semiannually.
• $878 million of notes due January 26, 2039 at a fixed, annual interest rate of 6.875%, paid semiannually.
• $787 million of notes due February 9, 2040 at a fixed, annual interest rate of 6.500%, paid semiannually.
On October 1, 2012, International transferred approximately $400 million of International's
7.550% senior unsecured notes maturing on June 15, 2015 to us in connection with the Spin-Off capitalization plan.
As of December 28, 2013, aggregate maturities of our long-term debt were (in millions):
2014 $ 4
2015 1,405
2016 4
2017 1,004
2018 1,037
Thereafter 6,577
Our long-term debt contains customary representations, covenants, and events of default. We were in compliance
with all covenants as of December 28, 2013.
Fair Value of Our Debt:
At December 28, 2013, the aggregate fair value of our total debt was $10.7 billion as compared with the carrying
value of $10.0 billion. At December 29, 2012, the aggregate fair value of our total debt was $11.5 billion as
compared with the carrying value of $10.0 billion. We determined the fair value of our long-term debt using Level 1
quoted prices in active markets for the publicly traded debt obligations.