Pizza Hut 2010 Annual Report Download - page 148

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During the year ended December 25, 2010, we paid cash dividends of $412 million. Additionally, on November 19, 2010
our Board of Directors approved cash dividends of $0.25 per share of Common Stock to be distributed on February 4,
2011 to shareholders of record at the close of business on January 14, 2011. The Company is targeting an ongoing annual
dividend payout ratio of 35% - 40% of net income.
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 24 participating banks with commitments ranging from
$10 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 25, 2010, our unused Credit Facility totaled $998 million
net of outstanding letters of credit of $152 million. There were no borrowings outstanding under the Credit Facility at
December 25, 2010. 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 2010. 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 strong balance sheet and cash flows we were able to comply with all debt covenant requirements at
December 25, 2010 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 3.88% 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 $3.3 billion at December 25,
2010 including $650 million in Senior Unsecured Notes due in April 2011.
Form 10-K