Pizza Hut 2001 Annual Report Download - page 52

50 TRICON GLOBAL RESTAURANTS, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS AND
LONG-TERM DEBT
2001 2000
Short-term Borrowings
Current maturities of long-term debt $ 545 $10
International lines of credit 138 68
Other 13 12
$ 696 $90
Long-term Debt
Senior, unsecured Term Loan Facility,
due October 2002 $ 442 $ 689
Senior, unsecured Revolving Credit Facility,
expires October 2002 94 1,037
Senior, Unsecured Notes, due May 2005 (7.45%) 351 351
Senior, Unsecured Notes, due April 2006 (8.50%) 198 —
Senior, Unsecured Notes, due May 2008 (7.65%) 251 251
Senior, Unsecured Notes, due April 2011 (8.875%) 644 —
Capital lease obligations (See Note 13) 79 74
Other, due through 2010 (6%–12%) 45
2,063 2,407
Less current maturities of long-term debt (545) (10)
Long-term debt excluding SFAS 133 adjustment 1,518 2,397
Derivative instrument adjustment under SFAS 133
(See Note 14) 34 —
Long-term debt including SFAS 133 adjustment $ 1,552 $ 2,397
Our primary bank credit agreement, as amended, is comprised
of a senior unsecured Term Loan Facility and a $1.75 billion sen-
ior unsecured Revolving Credit Facility, which was reduced from
$3 billion as part of the amendment discussed below (collec-
tively referred to as the “Credit Facilities”). The Credit Facilities
mature on October 2, 2002. Amounts outstanding under our
Revolving Credit Facility are expected to fluctuate, but Term
Loan Facility reductions may not be reborrowed.
Under the terms of the Revolving Credit Facility, we may
borrow up to the maximum borrowing limit less outstanding let-
ters of credit. At December 29, 2001, we had unused Revolving
Credit Facilities aggregating $2.7 billion, net of outstanding let-
ters of credit of $0.2 billion. We expensed facility fees on the
Revolving Credit Facility of approximately $4 million in each of
2001, 2000 and 1999.
Amounts outstanding under our Credit Facilities at
December 29, 2001 have been classified as short-term bor-
rowings in the Consolidated Balance Sheet due to the October
2002 maturity. We are currently in negotiations to replace the
Credit Facilities prior to the maturity date with new borrow-
ings, which will reflect the market conditions and terms
available at that time.
The Credit Facilities are subject to various covenants includ-
ing financial covenants relating to maintenance of specific
leverage and fixed charge coverage ratios. In addition, the Credit
Facilities contain affirmative and negative covenants including,
12
NOTE
among other things, limitations on certain additional indebted-
ness, guarantees of indebtedness, cash dividends, aggregate
non-U.S. investment and certain other transactions, as defined
in the agreement. The Credit Facilities require prepayment of a
portion of the proceeds from certain capital market transactions
and refranchising of restaurants.
Interest on amounts borrowed is payable at least quarterly
at variable rates, based principally on the London Interbank
Offered Rate (“LIBOR”) plus a variable margin factor. At
December 29, 2001 and December 30, 2000, the weighted
average interest rate on our variable rate debt was 3.4% and
7.2%, respectively, which includes the effects of associated inter-
est rate swaps. See Note 14 for a discussion of our use of
derivative instruments, our management of credit risk inherent
in derivative instruments and fair value information related to
debt and interest rate swaps.
On February 22, 2002, we entered into an agreement to
amend certain terms of our Credit Facilities. This amendment
provides for, among other things, additional flexibility with
respect to acquisitions and other investments. In addition, we
voluntarily reduced our maximum borrowings under the
Revolving Credit Facility from $3.0 billion to $1.75 billion. As a
result of this amendment, we capitalized debt costs of approx-
imately $1.5 million. These costs will be amortized into interest
expense over the remaining life of the Credit Facilities.
In 1997, we filed a shelf registration statement with the
Securities and Exchange Commission with respect to offerings
of up to $2 billion of senior unsecured debt. In May 1998, we
issued $350 million of 7.45% Unsecured Notes due May 15,
2005 (“2005 Notes”) and $250 million of 7.65% Unsecured
Notes due May 15, 2008 (“2008 Notes”). Interest on the 2005
Notes and 2008 Notes commenced on November 15, 1998 and
is payable semi-annually thereafter. The effective interest rate
on the 2005 Notes and the 2008 Notes is 7.6% and 7.8%,
respectively. In April 2001, we issued $200 million of 8.5%
Senior Unsecured Notes due April 15, 2006 (“2006 Notes”) and
$650 million of 8.875% Senior Unsecured Notes due April 15,
2011 (“2011 Notes”) (collectively referred to as the “Notes”).
The net proceeds from the issuance of the Notes were used to
reduce amounts outstanding under the Credit Facilities. Interest
on the Notes is payable April 15 and October 15 and com-
menced on October 15, 2001. The effective interest rate on the
2006 Notes and the 2011 Notes is 9.0% and 9.2%, respectively.
We still have $550 million available for issuance under the $2 bil-
lion shelf registration statement.
Interest expense on the short-term borrowings and long-
term debt was $172 million, $190 million and $218 million in
2001, 2000 and 1999, respectively. Net interest expense of
$9 million on incremental borrowings related to the AmeriServe
bankruptcy reorganization process was included in unusual
items in 2000.
12
NOTE