Tyson Foods 2013 Annual Report Download - page 51

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2016 Notes
On February 24, 2011, S&P upgraded the credit rating of these notes from "BB+" to "BBB-." On March 29, 2011, Moody’s upgraded
our credit rating from "Ba2" to "Ba1." These upgrades decreased the interest rate on the 2016 Notes from 7.35% to 6.85%, effective
beginning with the six-month interest payment due April 1, 2011.
On June 7, 2012, Moody's upgraded the credit rating of these notes from "Ba1" to "Baa3." This upgrade decreased the interest rate on
the 2016 Notes from 6.85% to 6.60%, effective beginning with the six-month interest payment due October 1, 2012.
2022 Notes
In June 2012, we issued $1.0 billion of senior unsecured notes, which will mature in June 2022. The 2022 Notes carry a 4.50% interest
rate, with interest payments due semi-annually on June 15 and December 15. After the original issue discount of $5 million, based on
an issue price of 99.458%, we received net proceeds of $995 million. In addition, we incurred offering expenses of $9 million.
GO Zone Tax-Exempt Bonds
In October 2008, Dynamic Fuels received $100 million in proceeds from the sale of Gulf Opportunity Zone tax-exempt bonds made
available by the federal government to the regions affected by Hurricanes Katrina and Rita in 2005. These floating rate bonds are due
October 1, 2033. We issued a letter of credit to effectively guarantee the bond issuance. If any amounts are disbursed related to this
guarantee, we would seek recovery of 50% (up to $50 million) from Syntroleum Corporation, our joint venture partner, in accordance
with our 2008 warrant agreement with Syntroleum Corporation.
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; dispose of or transfer assets; change the nature of
our business; 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
debt to capitalization ratios.
Our 2022 Notes also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create
liens; engage in certain sale/leaseback transactions; and engage in certain consolidations, mergers and sales of assets.
We were in compliance with all debt covenants at September 28, 2013.
NOTE 9: INCOME TAXES
Detail of the provision for income taxes from continuing operations consists of the following:
in millions
2013 2012 2011
Federal $ 341 $ 310 $ 320
State 38 22 21
Foreign 30 19 (1)
$ 409 $ 351 $ 340
Current $ 421 $ 211 $ 254
Deferred (12) 140 86
$ 409 $ 351 $ 340
The reasons for the difference between the statutory federal income tax rate and our effective income tax rate from continuing
operations are as follows:
2013 2012 2011
Federal income tax rate 35.0% 35.0% 35.0%
State income taxes 2.4 1.5 1.6
General business credits (1.3)(0.7) (0.9)
Domestic production deduction (3.2)(1.8) (2.3)
Foreign rate differences and valuation allowances 0.3 1.8 —
Other (0.6) 0.6 (1.8)
32.6% 36.4% 31.6%