Mondelez 2013 Annual Report Download - page 62

Table of Contents
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 12, Commitments and Contingencies , we enter into third-party guarantees primarily to cover the long-term
obligations of our vendors. As part of these transactions, we guarantee that third parties will make contractual payments or achieve
performance measures. At December 31, 2013, we had no material third-party guarantees recorded on our consolidated balance
sheet.
In addition, at December 31, 2013, we were contingently liable for $601 million of guarantees related to our own performance.
These include letters of credit and guarantees related to the payment of custom duties and taxes.
As part of our 2010 Cadbury acquisition, we became the responsible party for tax matters under the Cadbury Schweppes Plc and
Dr Pepper Snapple Group, Inc. (“DPSG”) Tax Sharing and Indemnification Agreement dated May 1, 2008 (“Tax Indemnity”) for
certain 2007 and 2008 transactions relating to the demerger of Cadbury’s Americas Beverage business. A U.S. federal tax audit of
DPSG for the 2006-2008 tax years was concluded with the IRS in August 2013. As a result, we recorded a favorable impact of
$336 million in selling, general and administrative expenses and $49 million in interest and other expense, net for a total pre-tax
impact of $385 million ($363 million net of tax) in 2013 due to the reversal of the accrued liability in excess of the amount we paid to
DPSG under the Tax Indemnity.
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, 2013.
55
Payments Due
Total
2014
2015
-
16
2017
-
18
2019 and
Thereafter
(in millions)
Debt
(1)
$
15,511
$
998
$
3,479
$
3,352
$
7,682
Interest expense
(2)
9,412
719
1,354
1,095
6,244
Capital leases
2
1
1
–
–
Operating leases
(3)
886
240
303
207
136
Purchase obligations:
(4)
Inventory and production costs
7,095
4,296
1,550
913
336
Other
1,198
1,052
112
34
–
8,293
5,348
1,662
947
336
Other long
-
term liabilities
(5)
701
25
61
94
521
Total
$
34,805
$
7,331
$
6,860
$
5,695
$
14,919
(1)
Amounts include the expected cash payments of our total debt excluding capital leases which are presented separately in the table above. The
amounts also exclude $28 million of unamortized non
-
cash bond premiums or discounts recorded in total debt.
(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, 2013. Interest on our British pound sterling notes was forecasted using
the British pound sterling to U.S. dollar exchange rate as of December 31, 2013. 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)
Operating leases represent the minimum rental commitments under non
-
cancelable operating leases.
(4) 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.
(5) Other long-term liabilities include estimated future benefit payments for our postretirement health care plans through December 31, 2023 of $181
million. We are unable to reliably estimate the timing of the payments beyond 2023; as such, they are excluded from the above table. There are also
another $113 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 2014, in the case of accrued pension
costs) for these items. We currently expect to make approximately $319 million in contributions to our pension plans in 2014. We also expect that
our net pension cost will decrease to approximately $263 million in 2014. The decrease is primarily due to lower discount rates and better-than-
expected asset performance. As of December 31, 2013, our total liability for income taxes, including uncertain tax positions and associated accrued
interest and penalties, was $1,540 million. We currently estimate payments of approximately $539 million related to these positions over the next 12
months.