Kentucky Fried Chicken 2005 Annual Report Download - page 63

10.฀ACCOUNTS฀PAYABLE฀฀
AND฀OTHER฀CURRENT฀LIABILITIES
฀ ฀ 2005฀ 2004
Accounts฀payable฀ ฀ ฀ $฀ 398฀ $฀ 414
Accrued฀compensation฀and฀benefits฀ ฀ ฀ 274฀ ฀ 263
Other฀current฀liabilities฀ ฀ ฀ ฀ 566฀ ฀ 512
฀ ฀ ฀ ฀ ฀ ฀ $฀1,238฀ $฀1,189
11.฀SHORT-TERM฀฀
BORROWINGS฀AND฀LONG-TERM฀DEBT
฀ ฀ 2005฀ 2004
Short-term฀Borrowings
Current฀maturities฀of฀long-term฀debt฀ ฀ $฀ 211฀ $฀ 11
Long-term฀Debt฀
Unsecured฀International฀Revolving฀฀
฀ Credit฀Facility,฀expires฀November฀2010฀ ฀ ฀ 180฀ ฀ —
Unsecured฀Revolving฀Credit฀Facility,฀฀
฀ expires฀September฀2009฀ ฀ ฀ ฀ —฀ ฀ 19
Senior,฀Unsecured฀Notes,฀due฀April฀2006฀฀ ฀ ฀ 200฀ ฀ 200
Senior,฀Unsecured฀Notes,฀due฀May฀2008฀฀ ฀ ฀ 251฀ ฀ 251
Senior,฀Unsecured฀Notes,฀due฀April฀2011฀฀ ฀ ฀ 646฀ ฀ 646
Senior,฀Unsecured฀Notes,฀due฀July฀2012฀฀ ฀ ฀ 398฀ ฀ 398
Capital฀lease฀obligations฀(See฀Note฀12)฀ ฀ ฀ 114฀ ฀ 128
Other,฀due฀through฀2019฀(6% –12%)฀ ฀ ฀ 77฀ ฀ 79
฀฀฀฀ ฀ ฀ ฀1,866฀ ฀1,721
Less฀current฀maturities฀of฀long-term฀debt฀ ฀ ฀ (211)฀ ฀ (11)
Long-term฀debt฀excluding฀฀
฀ SFAS฀133฀adjustment฀ ฀ ฀ ฀1,655฀ ฀1,710
Derivative฀instrument฀adjustment฀under฀฀
฀ SFAS฀133฀(See฀Note฀13)฀ ฀ ฀ ฀ (6)฀ ฀ 21
Long-term฀debt฀including฀฀
฀ SFAS฀133฀adjustment฀ ฀ ฀ $฀1,649฀ $฀1,731
Our฀primary฀bank฀credit฀agreement฀comprises฀a฀$1.0฀billion฀
senior฀ unsecured฀ Revolving฀ Credit฀ Facility฀ (the฀ “Credit฀
Facility”),฀ which฀ matures฀ in฀ September฀ 2009.฀ The฀Credit฀
Facility฀ is฀ unconditionally฀ guaranteed฀ by฀ our฀ principal฀
domestic฀ subsidiaries฀ and฀ contains฀ financial฀ covenants฀
relating฀ to฀ maintenance฀ of฀ leverage฀ and฀ fixed฀ charge฀
coverage฀ratios.฀The฀Credit฀Facility฀also฀contains฀affirmative฀
and฀negative฀covenants฀including,฀among฀other฀things,฀limi-
tations฀on฀certain฀additional฀indebtedness,฀guarantees฀of฀
indebtedness,฀level฀of฀cash฀dividends,฀aggregate฀non-U.S.฀
investment฀and฀certain฀other฀transactions฀as฀specified฀in฀the฀
agreement.฀We฀were฀in฀compliance฀with฀all฀debt฀covenants฀at฀
December฀31,฀2005.
Under฀the฀terms฀ of฀ the฀ Credit฀ Facility,฀we฀may฀borrow฀
up฀to฀the฀maximum฀borrowing฀limit฀less฀outstanding฀letters฀
of฀credit.฀At฀December฀31,฀2005,฀our฀unused฀Credit฀Facility฀
totaled฀ $809฀million,฀ net฀ of฀ outstanding฀ letters฀ of฀ credit฀
of฀$191฀million.฀There฀were฀no฀borrowings฀under฀the฀Credit฀
Facility฀at฀the฀end฀of฀2005฀while฀outstanding฀borrowings฀at฀
December฀25,฀2004฀were฀$19฀million.฀The฀interest฀rate฀for฀
borrowings฀under฀the฀Credit฀Facility฀ ranges฀ from฀0.35%฀to฀
1.625%฀over฀the฀London฀Interbank฀Offered฀Rate฀(“LIBOR”)฀or฀
0.00%฀to฀0.20%฀over฀an฀Alternate฀Base฀Rate,฀which฀is฀the฀
greater฀of฀the฀Prime฀Rate฀or฀the฀Federal฀Funds฀Effective฀Rate฀
plus฀0.50%.฀The฀exact฀spread฀over฀LIBOR฀or฀the฀Alternate฀Base฀
Rate,฀as฀applicable,฀will฀depend฀upon฀our฀performance฀under฀
specified฀financial฀criteria.฀Interest฀on฀any฀outstanding฀borrow-
ings฀under฀the฀Credit฀Facility฀is฀payable฀at฀least฀quarterly.฀In฀
2005,฀2004฀and฀2003,฀we฀expensed฀facility฀fees฀of฀approxi-
mately฀$2฀million,฀$4฀million฀and฀$6฀million,฀respectively.
Additionally,฀on฀November฀8,฀2005,฀we฀executed฀a฀five-
year฀revolving฀credit฀facility฀(the฀“International฀Credit฀Facility”฀
or฀“ICF”)฀on฀behalf฀of฀three฀of฀our฀wholly฀owned฀international฀
subsidiaries.฀The฀total฀facility฀amount฀is฀$350฀million,฀with฀
separate฀sublimits฀for฀each฀of฀the฀three฀subsidiaries.฀The฀ICF฀
is฀unconditionally฀guaranteed฀by฀YUM฀and฀by฀YUM’s฀principal฀
domestic฀subsidiaries฀and฀contains฀covenants฀substantially฀
identical฀to฀those฀of฀the฀Credit฀Facility.฀We฀were฀in฀compli-
ance฀with฀all฀debt฀covenants฀at฀the฀end฀of฀2005.
There฀ were฀ borrowings฀of฀ $180฀million฀ and฀ available฀
credit฀ of฀ $170฀million฀ outstanding฀ under฀ the฀ ICF฀ at฀ the฀
end฀ of฀ 2005.฀ The฀ interest฀ rate฀ for฀ borrowings฀ under฀ the฀
Credit฀Facility฀ranges฀from฀0.20%฀to฀1.20%฀over฀the฀LIBOR฀
or฀0.00%฀to฀0.20%฀over฀a฀Canadian฀Alternate฀Base฀Rate,฀
which฀is฀the฀greater฀of฀the฀Citibank,฀N.A.,฀Canadian฀Branch’s฀
publicly฀announced฀reference฀rate฀or฀the฀“Canadian฀Dollar฀
Offered฀Rate”฀plus฀0.50%.฀The฀exact฀spread฀over฀LIBOR฀or฀
the฀Canadian฀Alternate฀Base฀Rate,฀as฀applicable,฀depends฀
upon฀YUM’s฀performance฀under฀specified฀financial฀criteria.฀
Interest฀ on฀ any฀ outstanding฀ borrowings฀ under฀ the฀ ICF฀ is฀
payable฀at฀least฀quarterly.
On฀November฀15,฀2004,฀we฀voluntarily฀redeemed฀all฀of฀
our฀7.45%฀Senior฀Unsecured฀ Notes฀that฀were฀due฀in฀May฀
2005฀(the฀“2005฀Notes”)฀in฀accordance฀with฀their฀original฀
terms.฀ The฀ 2005฀ Notes,฀ which฀ had฀ a฀ total฀ face฀ value฀ of฀
$350฀million,฀were฀redeemed฀for฀approximately฀$358฀million฀
using฀primarily฀cash฀on฀hand฀as฀well฀as฀some฀borrowings฀
under฀our฀Credit฀Facility.฀The฀redemption฀amount฀approxi-
mated฀the฀ carrying฀ value฀of฀the฀ 2005฀ Notes,฀including฀ a฀
derivative฀instrument฀adjustment฀under฀SFAS฀133,฀resulting฀
in฀no฀significant฀impact฀on฀net฀income฀upon฀redemption.
In฀1997,฀we฀filed฀a฀shelf฀registration฀statement฀with฀the฀
Securities฀and฀Exchange฀Commission฀for฀offerings฀of฀up฀to฀
$2฀billion฀of฀senior฀unsecured฀debt,฀of฀which฀$150฀million฀is฀
available฀for฀issuance฀at฀December฀31,฀2005.฀The฀following฀
table฀ summarizes฀ all฀ Senior฀ Unsecured฀ Notes฀ issued฀
under฀ this฀ shelf฀ registration฀ that฀ remain฀ outstanding฀ at฀
December฀31,฀2005:
฀ ฀ Principal฀฀ Interest฀Rate
Issuance฀Date(a)฀ Maturity฀Date฀ Amount฀ Stated฀ Effective(b)
May฀1998฀ May฀2008฀ ฀ 250฀ ฀ 7.65%฀ ฀ 7.81%
April฀2001฀ April฀2006฀ ฀ 200฀ ฀ 8.50%฀ ฀ 9.04%
April฀2001฀ April฀2011฀ ฀ 650฀ ฀ 8.88%฀ ฀ 9.20%
June฀2002฀ July฀2012฀ ฀ 400฀ ฀ 7.70%฀ ฀ 8.04%
(a)฀Interest฀payments฀commenced฀six฀months฀after฀issuance฀date฀and฀are฀payable฀
semi-annually฀thereafter.
(b)฀Includes฀the฀effects฀of฀the฀amortization฀of฀any฀(1)฀premium฀or฀discount;฀(2)฀debt฀
issuance฀costs;฀and฀(3)฀gain฀or฀loss฀upon฀settlement฀of฀related฀treasury฀locks.฀
Excludes฀the฀effect฀of฀any฀interest฀rate฀swaps฀as฀described฀in฀Note฀13.
Yum!฀Brands,฀Inc.฀ ฀ ฀ |฀ ฀ ฀ 67.