Tyson Foods 2005 Annual Report Download - page 27

>> MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
TYSON FOODS, INC. 2005 ANNUAL REPORT
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Tyson Foods, Inc. >> 25
Total debt at October 1, 2005, was $3.0 billion, a decrease of
$367 million from October 2, 2004. During the fourth quarter of
fiscal 2005, the Company restructured its revolving credit facilities
into one facility, which now consists of a $1.0 billion unsecured
revolving credit facility that expires in September 2010. This facility
supports the Company’s commercial paper program, letters of
credit and other short-term funding needs. At October 1, 2005,
there were no borrowings outstanding under this facility.
Outstanding debt at October 1, 2005, consisted of $2.5 billion
of senior notes and notes, a $345 million term loan and other
indebtedness of $121 million.
The revolving credit facility, senior notes, notes and accounts
receivable securitization contain various covenants, the more
restrictive of which contain a maximum allowed leverage ratio
and a minimum required interest coverage ratio. The Company
was in compliance with all of such covenants at fiscal year end.
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements
that are material to its financial position or results of operations.
The off-balance sheet arrangements the Company has are guaran-
tees of debt of outside third parties involving a lease, grower loans
and residual value guarantees covering certain operating leases for
various types of equipment. See Note 9, “Commitments” of the
Notes to Consolidated Financial Statements for further discussions
of these guarantees.
CONTRACTUAL OBLIGATIONS
The following table summarizes the Company’s contractual obliga-
tions as of October 1, 2005:
Payments Due by Period
Less Than One to Three to More Than
in millions One Year Three Years Five Years Five Years Total
Debt and capital
lease obligations:
Principal
payments(1) $ 126 $ 912 $595 $1,362 $2,995
Interest
payments(2) 128 290 283 340 1,041
Guarantees(3) 718214187
Operating lease
obligations(4) 82 78 21 6 187
Purchase
obligations(5) 313 17 4 4 338
Capital
expenditures(6) 457 54 10 – 521
Other long-term
liabilities(7) 4 8 7 47 66
Total contractual
commitments $1,117 $1,377 $941 $1,800 $5,235
(1) In the event of a default on payment or violation of debt covenants, acceleration of
the principal payments could occur. At October 1, 2005, the Company was in
compliance with all of its debt covenants.
(2) Interest payments include only interest payments on fixed-rate and fixed-term debt,
based on the expected payment dates. The Company has other interest obligations
on variable-rate, non-term debt; however, these obligations have been excluded, as
the timing of payments and expected interest rates cannot be reasonably estimated.
(3) Amounts included are for the guarantees of debt of outside third parties, which
involve a lease and grower loans, all of which are substantially collateralized by the
underlying assets. The amounts included are the maximum potential amount of
future payments.
(4) Amounts included in operating lease obligations are minimum lease payments
under lease agreements, as well as residual value guarantee amounts.
(5) Amounts included in purchase obligations are agreements to purchase goods or
services that are enforceable and legally binding on the Company that specifies all
significant terms, including: fixed or minimum quantities to be purchased; fixed,
minimum or variable price provisions; and the approximate timing of the trans-
action. The purchase obligations amount includes items, such as future purchase
commitments for corn, soybeans, livestock and natural gas contracts that provide
terms that meet the above criteria. The Company has excluded future purchase
commitments for contracts that do not meet these criteria. Purchase orders have
not been included in the table, as a purchase order is an authorization to purchase
and is not considered an enforceable and legally binding contract. Contracts for
goods or services that contain termination clauses without penalty have also
been excluded.
(6) Amounts included in capital expenditures are estimated amounts to complete
construction projects in progress as of October 1, 2005.
(7) Amounts included in other long-term liabilities are items that meet the
definition of a purchase obligation and are recorded in the Company’s
Consolidated Balance Sheets.
$2,995
$3,362
$3,954
TOTAL
CAPITALIZATION
IN MILLIONS
2003 2004 2005
$4,652
$4,292
$3,604
DEBT
EQUITY