Pizza Hut 2012 Annual Report Download - page 145

YUM! BRANDS, INC.-2012 Form10-K 53
Form 10-K
PART II
ITEM 8Financial Statements andSupplementaryData
Intangible assets, net for the years ended 2012 and 2011 are as follows:
2012 2011
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
Defi nite-lived intangible assets
Reacquired franchise rights $ 163 $ (47) $ 167 $ (33)
Franchise contract rights 131 (84) 130 (77)
Lease tenancy rights 57 (12) 58 (12)
Favorable operating leases 21 (11) 29 (13)
Other 51 (19) 33 (14)
$ 423 $ (173) $ 417 $ (149)
Indefi nite-lived intangible assets
KFC trademark $ 31 $ 31
Little Sheep trademark 409 —
$ 440 $ 31
Amortization expense for all defi nite-lived intangible assets was $28million in 2012, $31million in 2011 and $29million in 2010.Amortization expense for
defi nite-lived intangible assets will approximate $27million in 2013, $24million in 2014, $23million annually in 2015 and 2016 and $21million in 2017.
NOTE10 Short-term Borrowings and Long-term Debt
2012 2011
Short-term Borrowings
Current maturities of long-term debt $ 10 $ 315
Current portion of fair value hedge accounting adjustment (See Note12) — 5
$ 10 $ 320
Long-term Debt
Senior Unsecured Notes $ 2,750 $ 3,012
Unsecured Revolving Credit Facility, expires March2017 — —
Capital lease obligations (See Note11) 170 279
2,920 3,291
Less current maturities of long-term debt (10) (315)
Long-term debt excluding long-term portion of hedge accounting adjustment 2,910 2,976
Long-term portion of fair value hedge accounting adjustment (See Note12) 22 21
LONG-TERM DEBT INCLUDING HEDGE ACCOUNTING ADJUSTMENT $ 2,932 $ 2,997
In 2012, the Company executed a fi ve-year syndicated senior unsecured
revolving credit facility (the “Credit Facility”) totaling $1.3billion which
replaced a syndicated revolving domestic credit facility in the amount
of $1.15billion and a syndicated revolving international credit facility of
$350million that were both set to expire in November2012. The Credit
Facility includes 24 participating banks with commitments ranging from
$23million to $115million and expires on March31, 2017.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29, 2012, our unused Credit Facility totaled
$1.2billion net of outstanding letters of credit of $63million.There were
no borrowings outstanding under the Credit Facility at December29,
2012.The interest rate for most borrowings under the Credit Facility
ranges from 1.00% to 1.75% over the London Interbank Offered Rate
(“LIBOR”).The exact spread over LIBOR under the Credit Facility depends
upon our performance against specifi ed fi nancial criteria.Interest on any
outstanding borrowings under the Credit Facility is payable at least quarterly.
The Credit Facility is unconditionally guaranteed by our principal domestic
subsidiaries.This agreement contains fi nancial covenants relating to
maintenance of leverage and fi xed charge coverage ratios and also contains
affi rmative and negative covenants including, among other things, limitations
on certain additional indebtedness and liens, and certain other transactions
specifi ed in the agreement.Given the Company’s strong balance sheet and
cash fl ows, we were able to comply with all debt covenant requirements at
December29, 2012 with a considerable amount of cushion. Additionally,
the Credit Facility contains cross-default provisions whereby our failure to
make any payment on our indebtedness in a principal amount in excess of
$125million, or the acceleration of the maturity of any such indebtedness,
will constitute a default under such agreement.
The majority of our remaining long-term debt primarily comprises Senior
Unsecured Notes with varying maturity dates from 2014 through 2037 and
stated interest rates ranging from 2.38% to 6.88%.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. 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.
During the third quarter of 2012 we repaid $263million of Senior Unsecured
Notes upon their maturity primarily with existing cash on hand.