a settlement obligation of $6.0 million. Assuming average variable rate debt levels and issuances of fixed rate debt during the year, a one percentage point increase in interest rates would have in- creased interest expense by approximately $3.8 million in 2003 and $2.3 million in 2002. Our Company is exposed to price fluctuations primarily as a result of anticipated purchases of raw and packaging materials. Primary exposures include corn, wheat, soybean oil, sugar, cocoa, and pa- perboard. We use the combination of long cash positions with suppliers, and exchange-traded futures and option contracts to re- duce price fluctuations in a desired percentage of forecasted pur- chases over a duration of generally less than one year. The total notional amount of commodity derivative instruments at year-end 2003 was $26.5 million, representing a settlement receivable of $.2 million. Assuming a 10% decrease in year-end commodity prices, this settlement receivable would have converted to a settle- ment obligation of approximately $2.7 million, generally offset by a reduction in the cost of the underlying material purchases. The total notional amount of commodity derivative instruments at year-end 2002 was $25.4 million, representing a settlement obli- gation of $.8 million. Assuming a 10% decrease in year-end com- modity prices, this settlement obligation would have increased by approximately $1.6 million, generally offset by a reduction in the cost of the underlying material purchases. In addition to the derivative commodity instruments discussed above, we use long cash positions with suppliers to manage a por- tion of our price exposure. It should be noted that the exclusion of these positions from the analysis above may be a limitation in as- sessing the net market risk of our Company. Our off-balance sheet arrangements are generally limited to resid- ual value guarantees and secondary liabilities on operating leases of approximately $15 million and third party loan guarantees as discussed in the following paragraph. Our Keebler subsidiary is guarantor on loans to independent con- tractors for the purchase of DSD route franchises. At year-end 2003, there were total loans outstanding of $15.2 million to 413 franchisees. Related to this arrangement, our Company has estab- lished with a financial institution a one-year renewable loan facil- ity up to $17.0 million with a five-year term-out and servicing arrangement. We have the right to revoke and resell the route franchises in the event of default or any other breach of contract by franchisees. Revocations have been infrequent. Our maximum potential future payments under these guarantees are limited to the outstanding loan principal balance plus unpaid interest. In ac- Our promotional activities are conducted either through the retail trade or directly with consumers and involve in-store displays; fea- Our critical accounting estimates, which require significant judg- ments and assumptions likely to have a material impact on our fi- nancial statements, are generally limited to those governing the amount and timing of recognition of consumer promotional expen- ditures, the assessment of the carrying value of goodwill and other intangible assets, valuation of our pension and other postretirement benefit obligations, and determination of our income tax expense and liabilities. In addition, administrative ambiguities concerning the Medicare Prescription Drug Improvement and Modernization Act of 2003, as well as the current lack of FASB authoritative guidance in this area, presently result in uncertainty regarding the eventual fi- nancial impact of this legislative change on our Company. Our significant accounting policies, as well as recently adopted pro- nouncements, are discussed in Note 1 of Notes to Consolidated Financial Statements. None of the pronouncements adopted in fiscal 2003 have had or are expected to have a significant impact on our Company’s financial statements. The following table summarizes future estimated cash payments to be made under existing contractual obligations. Further infor- mation on debt obligations is contained in Note 7 of Notes to Consolidated Financial Statements. Further information on lease obligations is contained in Note 6. cordance with FIN 45 (refer to Note 1 within Notes to Consolidated Financial Statements), we have recognized the fair value of guarantees associated with new loans to DSD route fran- chisees issued beginning in 2003. These amounts are insignificant. Contractual obligations Price risk Significant  accounting estimates Off-balance sheet arrange- ments and other obligations Off-balance sheet arrangements Promotional expenditures 27 Kellogg Company (a) Purchase obligations consist primarily of fixed commitments under various co-marketing agreements and to a lesser extent, of contracts for future delivery of commodities, packaging materials, and equipment, and service agreements. The amounts presented in the table do not include items already recorded in accounts payable or other current liabilities at year-end 2003, nor does the table reflect cash flows we are likely to incur based on our plans, but are not obligated to incur. Therefore, it should be noted that the exclusion of these items from the table could be a limitation in assessing our total future cash flows under contracts. (b) Other long-term contractual obligations are those associated with noncurrent liabilities recorded within the Consolidated Balance Sheet at year-end 2003 and consist principally of projected commitments under deferred compensation arrangements and other retiree benefits in excess of those provided within our broad-based plans. We do not have sig- nificant statutory or contractual funding requirements for our broad-based retiree benefit plans during the periods pre- sented and have not included these amounts in the table. Refer to Notes 9 and 10 within Notes to Consolidated Financial Statements for further information on these plans, including expected contributions for fiscal year 2004. Contractual obligations Payments due by period 2009 and (millions) Total 2004 2005 2006 2007 2008 beyond Long-term debt $4,866.2 $578.1 $278.6 $ 904.4 $ 2.0 $501.4 $2,601.7 Capital leases 5.6 1.6 1.5 1.5 1.0 — — Operating leases 367.0 76.4 64.0 50.3 38.0 34.4 103.9 Purchase obligations (a) 369.9 191.5 68.3 43.8 30.4 29.6 6.3 Other long-term (b) 97.0 13.0 5.4 5.5 6.9 7.4 58.8 Total $5,705.7 $860.6 $417.8 $1,005.5 $78.3 $572.8 $2,770.7