Pizza Hut 2009 Annual Report Download - page 141

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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 26, 2009, our unused Credit Facility totaled $975 million
net of outstanding letters of credit of $170 million. There were borrowings of $5 million outstanding under the Credit
Facility at December 26, 2009. 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 2009. 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.
The Credit Facility 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 balance sheet and cash flows we were able to comply with all debt covenant requirements at
December 26, 2009 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 stated interest rates ranging from 4.25% 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, reflecting the events described below,
were $2.9 billion at December 26, 2009.
During the second quarter of 2009 we repurchased Senior Unsecured Notes due July 1, 2012 with an aggregate principal
amount of $137 million.
In August 2009, we issued $250 million aggregate principal amount of 4.25% Senior Unsecured Notes that are due in
September 2015 and $250 million aggregate principal amount of 5.30% Senior Unsecured Notes that are due in
September 2019. We used the proceeds from our issuance of these Senior Unsecured Notes to repay a variable rate senior
unsecured term loan in an aggregate principal amount of $375 million that was scheduled to mature in 2011 and to make
discretionary payments to our pension plans in the fourth quarter of 2009.
Our Senior Unsecured Notes, Credit Facility, and ICF all contain cross-default provisions, whereby a default under any of
these agreements constitutes a default under each of the other agreements.
Form 10-K