Pizza Hut 2008 Annual Report Download - page 166

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Borrowing Capacity
Our primary bank credit agreement comprises a $1.15 billion syndicated senior unsecured revolving credit facility (the
“Credit Facility”) which matures in November 2012 and includes 23 participating banks with commitments ranging from
$20 million to $113 million. We believe the syndication reduces our dependency on any one bank.
Under the terms of the Credit Facility, we may borrow up to the maximum borrowing limit, less outstanding letters of
credit or banker’s acceptances, where applicable. At December 27, 2008, our unused Credit Facility totaled $685 million
net of outstanding letters of credit of $166 million. There were borrowings of $299 million outstanding under the Credit
Facility at December 27, 2008. The interest rate for borrowings under the Credit Facility ranges from 0.25% to 1.25%
over the London Interbank Offered Rate (“LIBOR”) or is determined by an Alternate Base Rate, which is the greater of
the Prime Rate or the Federal Funds Rate plus 0.50%. The exact spread over LIBOR or the Alternate Base Rate, as
applicable, depends on our performance under specified financial criteria. Interest on any outstanding borrowings under
the Credit Facility is payable at least quarterly.
We also have a $350 million, syndicated revolving credit facility (the “International Credit Facility,” or “ICF”) which
matures in November 2012 and includes 6 banks with commitments ranging from $35 million to $90 million. We believe
the syndication reduces our dependency on any one bank. There was available credit of $350 million and no borrowings
outstanding under the ICF at the end of 2008. The interest rate for borrowings under the ICF ranges from 0.31% to 1.50%
over LIBOR or is determined by 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 July 11, 2008 we entered into a variable rate senior unsecured term loan (“Domestic Term Loan”), in an aggregate
principal amount of $375 million that matures in three years. At our discretion the variable rate resets at one, two, three or
six month intervals. We determine whether the variable rate at each reset date is based upon: (1) LIBOR plus an
applicable spread of up to 2.5%, or (2) an Alternative Base Rate. The Alternate Base Rate is the greater of the Prime Rate
or the Federal Funds Rate plus 0.50%, plus an applicable spread of up to 1.5%. The proceeds from the Domestic Term
Loan were used for general corporate purposes.
The Credit Facility, Domestic Term Loan, and the ICF are unconditionally guaranteed by our principal domestic
subsidiaries. Additionally, the ICF is unconditionally guaranteed by YUM. These agreements contain financial
covenants relating to maintenance of leverage and fixed charge coverage ratios and also contain affirmative and negative
covenants including, among other things, limitations on certain additional indebtedness and liens, and certain other
transactions specified in the agreement. Given the Company’s strong balance sheet and cash flows we were able to
comply with all debt covenant requirements at December 27, 2008 with a considerable amount of cushion.
The majority of our remaining long-term debt primarily comprises Senior Unsecured Notes with varying maturity dates
from 2011 through 2037 and interest rates ranging from 6.25% to 8.88%. The Senior Unsecured Notes represent senior,
unsecured obligations and rank equally in right of payment with all of our existing and future unsecured unsubordinated
indebtedness. Amounts outstanding under Senior Unsecured Notes were $2.6 billion at December 27, 2008. In May
2008, $250 million of Senior Unsecured Notes matured, and the repayment was funded with additional borrowings under
our Credit Facility.
Form 10-K