Notes to Consolidated Financial Statements

(Continued)

Note 9.
Short-Term Borrowings and Borrowing Arrangements:

At December 31, 2006 and 2005, Altria Group, Inc.’s short-term borrowings and related average interest rates consisted of the following:


                                                                 
The fair values of Altria Group, Inc.’s short-term borrowings at December 31, 2006 and 2005, based upon current market interest rates, approximate the amounts disclosed above.

At December 31, 2006, ALG’s debt ratings by major credit rating agencies were as follows:

As discussed in Note 5. Acquisitions, the purchase price of the Sampoerna acquisition was primarily financed through a euro 4.5 billion bank credit facility arranged for PMI and its subsidiaries in May 2005, consisting of a euro 2.5 billion three-year term loan facility (which, through repayments has been reduced to euro 1.5 billion) and a euro 2.0 billion five-year revolving credit facility. At December 31, 2006, borrowings under the term loan were included in long-term debt. These facilities, which are not guaranteed by ALG, require PMI to maintain an earnings before interest, taxes, depreciation and amortization (“EBITDA”) to interest ratio of not less than 3.5 to 1.0. At December 31, 2006, PMI’s ratio calculated in accordance with the agreements was 29.0 to 1.0.

ALG has a 364-day revolving credit facility in the amount of $1.0 billion, which expires on March 30, 2007. In addition, ALG maintains a multi-year credit facility in the amount of $4.0 billion, which expires in April 2010. The ALG facilities require the maintenance of an earnings to fixed charges ratio, as defined by the agreement, of not less than 2.5 to 1.0. At December 31, 2006, the ratio calculated in accordance with the agreement was 11.6 to 1.0.

Kraft maintains a multi-year revolving credit facility, which is for its sole use, in the amount of $4.5 billion, which expires in April 2010 and requires the maintenance of a minimum net worth of $20.0 billion. At December 31, 2006, Kraft’s net worth was $28.6 billion.

ALG, PMI and Kraft expect to continue to meet their respective covenants.These facilities do not include any credit rating triggers or any provisions that could require the posting of collateral. The multi-year facilities enable the respective companies to reclassify short-term debt on a long-term basis.

At December 31, 2006, credit lines for ALG, Kraft and PMI, and the related activity, were as follows:

In addition to the above, certain international subsidiaries of ALG and Kraft maintain credit lines to meet their respective working capital needs. These credit lines, which amounted to approximately $2.2 billion for ALG subsidiaries (other than Kraft) and approximately $1.1 billion for Kraft subsidiaries, are for the sole use of these international businesses. Borrowings on these lines amounted to approximately $0.6 billion and $1.0 billion at December 31, 2006 and 2005, respectively. At December 31, 2006, Kraft also had approximately $0.3 billion of outstanding short-term debt related to its United Biscuits acquisition discussed in Note 5. Acquisitions.

ALG does not guarantee the debt of Kraft or PMI.