Tyson Foods 2006 Annual Report Download - page 39

On September 18, 2006, TFM, a wholly-owned subsidiary of the
Company, guaranteed the 2016 Notes. This guarantee does not
extend to the other unsecured senior notes of the Company.
Moody’s and S&P did not change the July 2006 credit ratings appli-
cable to the 2016 Notes. However, Moody’s issued a new credit
rating of “Ba2,” and S&P issued a new credit rating of “BB+” related
to the other unsecured senior notes not guaranteed by TFM. These
new ratings did not impact the interest rate applicable to the 2016
Notes. However, other interest expense and related fees for other
debt increased by less than $3 million.
The revolving credit facility, senior notes, term loan and accounts
receivable securitization contain various covenants, the more restric-
tive of which contain maximum allowed leverage ratios and a mini-
mum required interest coverage ratio.
On July 27, 2006, the Company entered into a third amendment to
its five-year credit revolving facility and the three-year term loan
facility of its subsidiary, Lakeside Farm Industries, Ltd. These amend-
ments modified the minimum required interest coverage ratio,
temporarily suspended the maximum allowed leverage ratios and
implemented temporary minimum consolidated EBITDA require-
ments. The Company was in compliance with all of such covenants
at fiscal year end.
In connection with these amendments, the Company’s availability
under its unsecured revolving credit facility decreased, and if the
Company’s credit rating is further downgraded, prior to the delivery
of the second quarter fiscal 2007 compliance certificate, the Company
is required to have certain subsidiaries guarantee the revolving
credit facility and term loan.
Long-term debt consists of the following:
in millions Maturity 2006 2005
Revolving credit facility 2010 $ – $ –
Senior notes (rates ranging from
6.13% to 8.25%) 2006–2028 3,388 2,529
Term loan (6.36% effective rate
at 9/30/06) 2008 345 345
Accounts receivable securitization
(5.98% effective rate at 9/30/06) 2007, 2009 159 –
Institutional notes –10
Leveraged equipment loans
(rates ranging from 4.67% to 5.36%) 2007–2009 38 64
Other Various 49 47
Total debt 3,979 2,995
Less current debt 992 126
Total long-term debt $2,987 $2,869
Under the terms of the leveraged equipment loans, the Company
had cash deposits totaling approximately $35 million and $52 million,
which were included on the Consolidated Balance Sheets in Other
Assets at September 30, 2006, and October 1, 2005. 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 fiscal years subsequent
to September 30, 2006, are: 2007 – $992 million; 2008 – $19 million;
2009 – $435 million; 2010 – $236 million; 2011 – $1 million.
The Company has fully and unconditionally guaranteed $375 million
of senior notes issued by TFM, a wholly-owned subsidiary of the
Company. Additionally, the Company has fully and unconditionally
guaranteed $345 million related to a term loan facility borrowed
by Lakeside Farm Industries, Ltd., a wholly-owned subsidiary of
the Company.
TFM, a wholly-owned subsidiary of the Company, has fully and
unconditionally guaranteed the Company’s 2016 Notes. The follow-
ing condensed consolidating financial information is provided for
the Company, as issuer, and for TFM, as guarantor, as an alternative
to providing separate financial statements for the guarantor.
The following financial information presents condensed consolidat-
ing financial statements, which include Tyson Foods, Inc. (TFI Parent);
Tyson Fresh Meats, Inc. (TFM Parent); the Non-Guarantor Subsidiaries
on a combined basis; the elimination entries necessary to consoli-
date the TFI Parent, TFM Parent and the Non-Guarantor Subsidiaries;
and Tyson Foods, Inc. on a consolidated basis.
Ty s o n F o o d s , I n c . 2 0 0 6 A n n u a l R e p o r t 37
Notes to Consolidated Financial Statements continued