Tyson Foods 2002 Annual Report Download - page 41

notes to
consolidated
financial
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Note 10: Long-Term Debt
The Company has unsecured revolving credit agreements totaling $1 billion that support the Company’s commercial paper
program, letters of credit and other short-term funding needs. These facilities were restructured during the third quarter of fiscal
2002. The $500 million 364 day facility was restructured into a $300 million 3 year facility and a $200 million 364 day facility. These
$1 billion in facilities consist of $200 million that expires in June 2003, $300 million that expires in June 2005 and $500 million that
expires in September 2006. At September 28, 2002, there were no amounts outstanding under these facilities.
In October 2001, the Company refinanced the $2.3 billion outstanding under a bridge financing facility through the issuance
of $2.25 billion of notes offered in three tranches consisting of $500 million of 6.625% notes due October 2004, $750 million of
7.25% notes due October 2006 and $1 billion of 8.25% notes due October 2011.
In October 2001, the Company entered into a receivables purchase agreement with three co-purchasers to sell up to $750 million
of trade receivables. The receivables purchase agreement has been accounted for as a borrowing and has an interest rate based
on commercial paper issued by the co-purchasers. Under this agreement, substantially all of the Company’s accounts receivable
are sold to a special purpose entity, Tyson Receivables Corporation (TRC), which is a wholly owned consolidated subsidiary of
the Company. TRC has its own separate creditors that are entitled to be satisfied out of all of the assets of TRC prior to any value
becoming available to TRC’s equity holders.
At September 28, 2002, the Company had outstanding letters of credit totaling approximately $287 million issued primarily in
support of workers’ compensation insurance programs, industrial revenue bonds and the leveraged equipment loans. There were
no draw downs under these letters of credit at September 28, 2002.
Under the terms of the leveraged equipment loans, the Company had restricted cash totaling approximately $52 million, which
is included in other assets at September 28, 2002. Under these leveraged loan agreements, the Company entered into interest rate
swap agreements to effectively lock in a fixed interest rate for these borrowings.
Annual maturities of long-term debt for the five years subsequent to September 28, 2002, are: 2003 –$254 million; 2004 –$42 million;
2005 –$719 million; 2006 –$286 million and 2007–$909 million.
The revolving credit agreements, senior notes, notes and accounts receivable securitization debt contain various covenants, the
more restrictive of which contain a maximum allowed leverage ratio and a minimum required interest coverage ratio. The Company
is in compliance with these covenants at fiscal year end.
Industrial revenue bonds are secured by facilities with a net book value of $64 million at September 28, 2002. The weighted
average interest rate on all outstanding short-term borrowing was 3.3% at September 28, 2002, and 5.1% at September 29, 2001.
Long-term debt consists of the following:
in millions
Maturity 2002 2001
Commercial paper (2.17% effective rate at 9/28/02 and
4.01% effective rate at 9/29/01) 2002 $24 $ 210
Revolver (4.05% effective rate at 9/29/01) 2003, 2005, 2006 –500
Bridge Facility (4.01% effective rate at 9/29/01) 2002 –2,300
Senior notes and Notes (rates ranging from 6% to 8.25%) 2002–2028 3,607 1,456
Accounts Receivable Securitization Debt
(2.35% effective rate at 9/28/02) 2002 75 –
Institutional notes (10.84% effective rate at 9/28/02 and 9/29/01) 2002 –2006 50 50
Leveraged equipment loans (rates ranging from 4.7% to 6.0%) 2005 –2008 124 138
Other Various 107 122
Total debt 3,987 4,776
Less current debt 254 760
Total long-term debt $3,733 $4,016
Tyson Foods, Inc. 2002 annual report