Pizza Hut 2011 Annual Report Download - page 173

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2011. 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 International credit facility (the “ICF”) which matures in November 2012 and
includes 6 banks with commitments ranging from $35 million to $90 million. There was available credit of $350 million and no
borrowings outstanding under the ICF at the end of 2011. 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 on our 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 31, 2011 with a considerable amount
of cushion.
We are in the process of renewing the Credit Facility and ICF.
The majority of our remaining long-term debt primarily comprises Senior Unsecured Notes with varying maturity dates from 2012
through 2037 and stated interest rates ranging from 2.38% to 7.70%. 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.
In the fourth quarter of 2011, we issued Chinese Yuan Renminbi 350 million ($56 million) aggregate principal amount 2.38%
Senior Unsecured Notes that are due September 29, 2014. During the third quarter of 2011, we issued $350 million aggregate
principal amount of 3.75% 10 year Senior Unsecured Notes. During the second quarter of 2011 we repaid $650 million of Senior
Unsecured Notes upon their maturity primarily with existing cash on hand.
The following table summarizes all Senior Unsecured Notes issued that remain outstanding at December 31, 2011:
Issuance Date(a)
June 2002
April 2006
October 2007
October 2007
August 2009
August 2009
August 2010
August 2011
September 2011
Maturity Date
July 2012
April 2016
March 2018
November 2037
September 2015
September 2019
November 2020
November 2021
September 2014
Principal Amount
(in millions)
$ 263
$ 300
$ 600
$ 600
$ 250
$ 250
$ 350
$ 350
$ 56
Interest Rate
Stated
7.70%
6.25%
6.25%
6.88%
4.25%
5.30%
3.88%
3.75%
2.38%
Effective(b)
8.06%
6.03%
6.38%
7.29%
4.44%
5.59%
4.01%
3.88%
2.92%
(a) Interest payments commenced six months after issuance date and are payable semi-annually thereafter.
(b) Includes 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 described in Note 12.
Form 10-K