Pepsi 2008 Annual Report Download - page 87

85PepsiCo, Inc. 2008 Annual Report
Such amounts are settled on terms consistent with other trade
receivables and payables. See Note 9 regarding our guarantee of
certain PBG debt.
In addition, we coordinate, on an aggregate basis, the contract
negotiations of sweeteners and other raw material requirements
for certain of our bottlers. Once we have negotiated the con-
tracts, the bottlers order and take delivery directly from the sup-
plier and pay the suppliers directly. Consequently, these
transactions are not reected in our consolidated nancial state-
ments. As the contracting party, we could be liable to these sup-
pliers in the event of any nonpayment by our bottlers, but we
consider this exposure to be remote.
Note 9 Debt Obligations and Commitments
2008 2007
Short-term debt obligations
Current maturities of long-term debt $÷÷273 $÷÷526
Commercial paper (0.7% and 4.3%) 846 361
Other borrowings (10.0% and 7.2%) 509 489
Amounts reclassied to long-term debt (1,259) (1,376)
$÷÷369 $÷÷÷÷–
Long-term debt obligations
Short-term borrowings, reclassied $«1,259 $«1,376
Notes due 2009-2026 (5.8% and 5.3%) 6,382 2,673
Zero coupon notes, $300 million due 2009-2012 (13.3%) 242 285
Other, due 2009-2016 (5.3% and 6.1%) 248 395
8,131 4,729
Less: current maturities of long-term debt obligations (273) (526)
$«7,858 $«4,203
Theinterestratesintheabovetablereectweighted-averageratesatyear-end.
In the second quarter of 2008, we issued $1.75 billion of
senior unsecured notes, maturing in 2018. We entered into an
interest rate swap, maturing in 2018, to effectively convert the
interest rate from a xed rate of 5% to a variable rate based on
LIBOR. The proceeds from the issuance of these notes were used
for general corporate purposes, including the repayment of out-
standing short-term indebtedness.
In the third quarter of 2008, we updated our U.S. $2.5 billion
euro medium term note program following the expiration of the
existing program. Under the program, we may issue unsecured
notes under mutually agreed upon terms with the purchasers of
the notes. Proceeds from any issuance of notes may be used for
general corporate purposes, except as otherwise specied in the
related prospectus. As of December 27, 2008, we had no out-
standing notes under the program.
In the fourth quarter of 2008, we issued $2 billion of senior
unsecured notes, bearing interest at 7.90% per year and maturing
in 2018. We used the proceeds from the issuance of these notes
for general corporate purposes, including the repayment of out-
standing short-term indebtedness.
Additionally, in the fourth quarter of 2008, we entered into
a new 364-day unsecured revolving credit agreement which
enables us to borrow up to $1.8 billion, subject to customary
terms and conditions, and expires in December 2009. This agree-
ment replaced a $1 billion 364-day unsecured revolving credit
agreement we entered into during the third quarter of 2008.
Funds borrowed under this agreement may be used to repay
outstanding commercial paper issued by us or our subsidiaries
and for other general corporate purposes, including working
capital, capital investments and acquisitions. This line of credit
remained unused as of December 27, 2008.
This 364-day credit agreement is in addition to our $2 billion
unsecured revolving credit agreement. Funds borrowed under this
agreement may be used for general corporate purposes, including
supporting our outstanding commercial paper issuances. This
agreement expires in 2012. This line of credit remains unused as
of December 27, 2008.
As of December 27, 2008, we have reclassied $1.3 billion
of short-term debt to long-term based on our intent and ability to
renance on a long-term basis.
In addition, as of December 27, 2008, $844 million of our
debt related to borrowings from various lines of credit that are
maintained for our international divisions. These lines of credit
are subject to normal banking terms and conditions and are fully
committed to the extent of our borrowings.
INTEREST RATE SWAPS
In connection with the issuance of the $1.75 billion notes in the
second quarter of 2008, we entered into an interest rate swap,
maturing in 2018, to effectively convert the interest rate from a
xed rate of 5% to a variable rate based on LIBOR. In addition, in
connection with the issuance of the $1 billion senior unsecured
notes in the second quarter of 2007, we entered into an interest
rate swap, maturing in 2012, to effectively convert the interest
rate from a xed rate of 5.15% to a variable rate based on LIBOR.
The terms of the swaps match the terms of the debt they modify.
The notional amounts of the interest rate swaps outstanding at
December 27, 2008 and December 29, 2007 were $2.75 billion
and $1 billion, respectively.