Pizza Hut 2009 Annual Report Download - page 176

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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 ratio 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.
During the second quarter of 2009 we completed a cash tender offer to repurchase certain of our Senior Unsecured Notes
due July 1, 2012 with an aggregate principal amount of $137 million. In conjunction with this transaction, we settled
interest rate swaps with a notional amount of $150 million that were hedging these Senior Unsecured Notes, receiving $14
million in cash. The net impact of the repurchase of Senior Unsecured Notes and related interest rate swap settlement had
no significant impact on Interest expense.
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.
The following table summarizes all Senior Unsecured Notes issued that remain outstanding at December 26, 2009:
Interest Rate
Issuance Date(a)
Maturity Date
Principal Amount
(in millions)
Stated Effective(b)
April 2001 April 2011 $ 650 8.88% 9.20%
June 2002 July 2012 $ 263 7.70% 8.04%
April 2006 April 2016 $ 300 6.25% 6.03%
October 2007 March 2018 $ 600 6.25% 6.38%
October 2007 November 2037 $ 600 6.88% 7.29%
September 2009 September 2015 $ 250 4.25% 4.44%
September 2009 September 2019 $ 250 5.30% 5.59%
(a)
I
nterest payments commenced six months after issuance date and are payable semi-annually thereafter.
(b)
I
ncludes 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 and forward starting interest rate swaps utilized to hedge the
interest rate risk prior to the debt issuance. Excludes the effect of any swaps that remain outstanding as
d
escribed in Note 13.
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