Tyson Foods 2008 Annual Report Download - page 44

42 Tyson Foods, Inc.
Notes to Consolidated Financial Statements (continued)
We guarantee debt of outside third parties, which consist of a lease
and grower loans, all of which are substantially collateralized by the
underlying assets. Terms of the underlying debt cover periods up to
nine years, and the maximum potential amount of future payments as
of September 27, 2008, was $66 million. We also maintain operating
leases for various types of equipment, some of which contain residual
value guarantees for the market value of assets at the end of the term
of the lease. The terms of the lease maturities cover periods up to
seven years. The maximum potential amount of the residual value
guarantees is approximately $55 million, of which approximately
$21 million would be recoverable through various recourse provisions
and an undeterminable recoverable amount based on the fair market
value of the underlying leased assets. The likelihood of material
payments under these guarantees is not considered probable. At
September 27, 2008, and September 29, 2007, no material liabilities
for guarantees were recorded.
Additionally, we enter into future purchase commitments for various
items, such as grains, livestock contracts and fi xed grower fees. At
September 27, 2008, these commitments totaled:
in millions
2009 $710
2010 42
2011 31
2012 13
2013 7
2014 and beyond 24
Total $827
NOTE 10: LONG-TERM DEBT
in millions Maturity 2008 2007
Revolving credit facility 2010 $ – $ –
Accounts receivable
securitization facility 2009, 2010 – 213
Senior notes (rates ranging from
7.00% to 8.25%) 2010–2028 2,400 2,475
3.25% Convertible senior notes 2013 458 –
Lakeside term loan – – 25
Other Various 38 66
Total debt 2,896 2,779
Less current debt 8 137
Total long-term debt $2,888 $2,642
Annual maturities of long-term debt for the fi ve fi scal years subse-
quent to September 27, 2008, are: 2009 – $8 million; 2010 – $240 mil-
lion; 2011 – $1.0 billion; 2012 – $3 million; 2013 – $2 million.
Revolving Credit Facility We have a revolving credit facility totaling
$1.0 billion that supports short-term funding needs and letters of
credit. The facility expires in September 2010. At September 27, 2008,
we had outstanding letters of credit totaling approximately $291 mil-
lion, none of which were drawn upon, issued primarily in support
of workers’ compensation insurance programs and derivative activ-
ities. The amount available for borrowings under this facility as of
September 27, 2008, was $709 million. All trademarks of our domestic
subsidiaries are pledged as collateral under this facility. Additionally,
certain domestic subsidiaries guaranteed this facility and pledged
their inventory as collateral, which had a book value of $2.0 billion
at September 27, 2008.
Accounts Receivable Securitization Facility We have a receivables
purchase agreement with three co-purchasers to sell up to $750 million
of trade receivables. The agreement includes a $375 million 364-day
facility expiring in August 2009 and a $375 million 364-day facility
with an additional one-year option, which commits funding through
August 2010. 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, substan-
tially all of our accounts receivable may be sold to a special purpose
entity, Tyson Receivables Corporation (TRC), which is a wholly-owned
consolidated subsidiary of the Company. TRC has its own creditors
who are entitled to be satisfi ed out of all of the assets of TRC prior
to any value becoming available to the Company as TRC’s equity
holder. At September 27, 2008, there were no amounts borrowed
under the receivables purchase agreement.
3.25% Convertible Senior Notes due 2013 In September 2008,
we issued $458 million principal amount 3.25% convertible senior
unsecured notes due October 15, 2013 (Convertible Notes), with
interest paid semi-annually in arrears on April 15 and October 15.
The conversion rate initially is 59.1935 shares of Class A stock per
$1,000 principal amount of notes, which is equivalent to an initial
conversion price of $16.89 per share of Class A stock. The Convertible
Notes may be converted before the close of business on July 12, 2013,
only under the following circumstances:
• during any fi scal quarter after December 27, 2008, if the last
reported sale price of our Class A stock for at least 20 trading days
during a period of 30 consecutive trading days ending on the last
trading day of the preceding fi scal quarter is at least 130% of the
applicable conversion price on each applicable trading day (which
would currently require our shares to trade at or above $21.96); or