Pizza Hut 2010 Annual Report Download - page 185

88
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 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.
During the third quarter of 2010, we issued $350 million aggregate principal amount of 3.88% 10 year Senior Unsecured
Notes due to the favorable credit markets. As a result of issuing the Senior Unsecured Notes as well as our continued
strong cash flows from operating activities, we have cash and cash equivalents at December 25, 2010 that are higher than
our historical levels. Our cash equivalents are temporarily invested in short-term investment grade securities with
maturities of three months or less.
The following table summarizes all Senior Unsecured Notes issued that remain outstanding at December 25, 2010:
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%
August 2010 November 2020 $ 350 3.88% 3.89%
(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
l
oss upon settlement of related treasury locks and forward starting interest rate swaps utilized to hedge the
i
nterest rate risk prior to the debt issuance. Excludes the effect of any swaps that remain outstanding as
d
escribed in Note 12.
Both the Credit Facility and the ICF contain cross-default provisions whereby our failure to make any payment on any of
our indebtedness in a principal amount in excess of $100 million, or the acceleration of the maturity of any such
indebtedness, will constitute a default under such agreement. Our Senior Unsecured Notes provide that the acceleration of
the maturity of any of our indebtedness in a principal amount in excess of $50 million will constitute a default under the
Senior Unsecured Notes if such acceleration is not annulled, or such indebtedness is not discharged, within 30 days after
notice.
Form 10-K