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79PepsiCo, Inc. 2009 Annual Report
Note 9 Debt Obligations and Commitments
2009 2008
Short-term debt obligations
Current maturities of long-term debt $÷«102 $÷÷273
Commercial paper (0.7%) –846
Other borrowings (6.7% and 10.0%) 362 509
Amounts reclassified to long-term debt –(1,259)
$÷«464 $÷÷369
Long-term debt obligations
Short-term borrowings, reclassified $÷÷÷«– $«1,259
Notes due 2012-2026 (4.5% and 5.8%) 7,160 6,382
Zero coupon notes, $225 million due 2010-2012 (13.3%) 192 242
Other, due 2010-2019 (8.4% and 5.3%) 150 248
7,502 8,131
Less: current maturities of long-term debt obligations (102) (273)
$7,400 $«7,858
The interest rates in the above table reflect weighted-average rates at year-end.
In the first quarter of 2009, we issued $1.0 billion of senior
unsecured notes, bearing interest at 3.75% per year and maturing
in 2014. We used the proceeds from the issuance of these notes
for general corporate purposes.
In the third quarter of 2009, we entered into a new 364-day
unsecured revolving credit agreement which enables us to borrow
up to $1.975 billion, subject to customary terms and conditions, and
expires in June 2010. We may request renewal of this facility for an
additional 364-day period or convert any amounts outstanding
into a term loan for a period of up to one year, which would mature
no later than June 2011. This agreement replaced a $1.8 billion
364-day unsecured revolving credit agreement we entered into
during the fourth 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 agreement is in addition to our existing $2.0 billion
unsecured revolving credit agreement which expires in 2012. Our
lines of credit remain unused as of December 26, 2009.
In addition, as of December 26, 2009, $396 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.
Subsequent to year-end 2009, we issued $4.25 billion of fixed
and floating rate notes. The issuance was comprised of $1.25 billion
of floating rate notes maturing in 2011 (the “2011 Floating Rates
Notes”), $1.0 billion of 3.10% senior unsecured notes maturing in
2015, $1.0 billion of 4.50% senior unsecured notes maturing in
2020 and $1.0 billion of 5.50% senior unsecured notes maturing in
2040. The 2011 Floating Rate Notes bear interest at a rate equal to
the three-month London Inter-Bank Offered Rate (“LIBOR”) plus
3 basis points.
We intend to use the net proceeds from this offering to finance
a portion of the purchase price for the mergers with PBG and
PAS and to pay related fees and expenses in connection with the
mergers with PBG and PAS. Pending such use we invested the net
proceeds in short-term, high-quality securities. If one or both of
the mergers with PBG and PAS is not completed, we intend to use
the remaining net proceeds from this offering for general corporate
purposes, which may include the financing of future acquisitions,
capital expenditures, additions to working capital, repurchase,
repayment or refinancing of debt or stock repurchases.
Concurrently with the debt issuance after year-end, we
terminated the commitments from lenders to provide us with
up to $4.0 billion in bridge financing to fund the mergers with
PBG and PAS.
Also subsequent to year-end 2009, we entered into amend-
ments to PBG’s revolving credit facility (the Amended PBG Credit
Facility) and PAS’s revolving credit facility (the Amended PAS Credit
Facility). Under the Amended PBG Credit Facility, subject to the
satisfaction of certain conditions to effectiveness, at the closing of
the merger with PBG, Metro will be able to borrow up to $1,080 mil-
lion from time to time. Borrowings under the Amended PBG Credit
Facility, which expires in October 2012, are guaranteed by us. Under
the Amended PAS Credit Facility, subject to the satisfaction of
certain conditions to effectiveness, at the closing of the merger
with PAS, Metro will be able to borrow up to $540 million from time
to time. Borrowings under the Amended PAS Credit Facility, which
expires in June 2011, are guaranteed by us.
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