Tyson Foods 2009 Annual Report Download - page 31

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Credit Ratings
2016 Notes
On September 4, 2008, Standard & Poor’s (S&P) downgraded the credit rating from “BBB-” to “BB.” This downgrade increased the
interest rate on the 2016 Notes from 6.85% to 7.35%, effective beginning with the six-month interest payment due October 1, 2008.
On November 13, 2008, Moody’s Investors Services, Inc. (Moody’s) downgraded the credit rating from “Ba1” to “Ba3.” This
downgrade increased the interest rate on the 2016 Notes from 7.35% to 7.85%, effective beginning with the six-month interest
payment due April 1, 2009.
S&P currently rates the 2016 Notes “BB.” Moody’s currently rates this debt “Ba3.” A further one-notch downgrade by either ratings
agency would increase the interest rates on the 2016 Notes by an additional 0.25%.
Revolving Credit Facility
S&P’s corporate credit rating for Tyson Foods, Inc. is “BB.” Moody’s corporate credit rating for Tyson Foods, Inc. is “Ba3.” If S&P
were to downgrade our corporate credit rating to “B+” or lower or Moody’s were to downgrade our corporate credit rating to “B1” or
lower, our letter of credit fees would increase by an additional 0.25%.
Debt Covenants
Our revolving credit facility contains affirmative and negative covenants that, among other things, may limit or restrict our ability to:
create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; make acquisitions and investments; dispose of or
transfer assets; pay dividends or make other payments in respect to our capital stock; amend material documents; change the nature of
our business; make certain payments of debt; engage in certain transactions with affiliates; and enter into sale/leaseback or hedging
transactions, in each case, subject to certain qualifications and exceptions. If availability under this facility is less than the greater of
15% of the commitments and $150 million, we will be required to maintain a minimum fixed charge coverage ratio.
Our 2014 Notes also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: incur
additional debt and issue preferred stock; make certain investments and restricted payments; create liens; create restrictions on
distributions from restricted subsidiaries; engage in specified sales of assets and subsidiary stock; enter into transactions with
affiliates; enter new lines of business; engage in consolidation, mergers and acquisitions; and engage in certain sale/leaseback
transactions.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements material to our financial position or results of operations. The off-balance sheet
arrangements we have are guarantees of debt of outside third parties, including a lease and grower loans, and residual value
guarantees covering certain operating leases for various types of equipment. See Note 10, “Commitments” of the Notes to
Consolidated Financial Statements for further discussion.
CONTRACTUAL OBLIGATIONS
The following table summarizes our contractual obligations as of October 3, 2009:
in millions
Payments Due by Period
2010
2011-2012
2013-2014
2015 and
thereafter
Total
Debt and capital lease obligations:
Principal payments (1)
$
219
$
866
$
1,280
$
1,241
$
3,606
Interest payments (2)
289
444
327
220
1,280
Guarantees (3)
22
33
43
16
114
Operating lease obligations (4)
79
120
55
22
276
Purchase obligations (5)
423
55
19
22
519
Capital expenditures (6)
267
11
-
-
278
Other long-term liabilities (7)
13
5
5
36
59
Total contractual commitments
$
1,312
$
1,534
$
1,729
$
1,557
$
6,132
(1)
In the event of a default on payment, acceleration of the principal payments could occur.
(2)
Interest payments include interest on all outstanding debt. Payments are estimated for variable rate and variable term debt
based on effective rates at October 3, 2009, and expected payment dates.
(3)
Amounts include guarantees of debt of outside third parties, which consist of a lease and grower loans, all of which are
substantially collateralized by the underlying assets, as well as residual value guarantees covering certain operating leases for
various types of equipment. The amounts included are the maximum potential amount of future payments.