Tyson Foods 2011 Annual Report Download - page 31

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Revolving Credit Facility
S&P’s corporate credit rating for Tyson Foods, Inc. is “BBB-.” Moody’s corporate credit rating for Tyson Foods, Inc. is “Ba1.” If
Moody’s were to upgrade our credit rating to “Baa2” or higher while our S&P credit rating remained at “BBB-”, or S&P were to
upgrade our credit rating to “BBB” or higher while Moody’s upgraded our credit rating to “Baa3” or higher, our letter of credit fees
would decrease by 0.25% and fees paid on the unused portion of the facility would decrease by 0.075%.
If S&P were to downgrade our corporate credit rating to “BB+” or Moody’s were to downgrade our corporate credit rating to “Ba2”,
our letter of credit fees would increase by 0.25% and fees paid on the unused portion of the facility would increase by 0.025%.
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 of 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. In addition, we are required to maintain minimum interest
expense coverage and maximum leverage ratios.
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 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.
We were in compliance with all debt covenants at October 1, 2011.
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 19: Commitments and Contingencies of the Notes to
Consolidated Financial Statements for further discussion.
CONTRACTUAL OBLIGATIONS
The following table summarizes our contractual obligations as of October 1, 2011:
in millions
Payments Due by Period
2012
2013-2014
2015-2016
2017 and
thereafter
Total
Debt and capital lease obligations:
Principal payments (1)
$70
$1,296
$650
$242
$2,258
Interest payments (2)
165
272
116
46
599
Guarantees (3)
26
61
22
17
126
Operating lease obligations (4)
95
102
31
54
282
Purchase obligations (5)
886
81
31
61
1,059
Capital expenditures (6)
412
15
0
0
427
Other long-term liabilities (7)
12
5
4
29
50
Total contractual commitments
$1,666
$1,832
$854
$449
$4,801
(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 1, 2011, 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.
(4)
Amounts include minimum lease payments under lease agreements.
(5)
Amounts include agreements to purchase goods or services that are enforceable and legally binding and specify all significant terms,
including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the
transaction. The purchase obligations amount included items, such as future purchase commitments for grains, livestock contracts and
fixed grower fees that provide terms that meet the above criteria. We have 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 may
not be considered an enforceable and legally binding contract. Contracts for goods or services that contain termination clauses without
penalty have also been excluded.
(6)
Amounts include estimated amounts to complete buildings and equipment under construction as of October 1, 2011.
(7)
Amounts include items that meet the definition of a purchase obligation and are recorded in the Consolidated Balance Sheets.