We have included any related discount or
premium in the carrying amount of long-term debt.
On October 2, 1997, we entered into a
$5.25 billion bank credit agreement comprised of a $2 billion senior, unsecured Term Loan
Facility and a $3.25 billion senior, unsecured Revolving Credit Facility (collectively
referred to as the "Facilities") which mature on October 2, 2002. Our principal
U.S. Subsidiaries have guaranteed the Facilities. Amounts borrowed under the Term Loan
Facility that we repay may not be reborrowed.
We used $4.5 billion of the initial $4.55 billion borrowed under the Facilities to make
a Spin-off related payment to PepsiCo. We used the remaining $50 million of the proceeds
to provide cash collateral securing certain obligations previously secured by PepsiCo, to
pay fees and expenses related to the Spin-off and establishment of the Facilities and for
general corporate purposes. Interest on amounts borrowed is payable at least quarterly at
rates which are variable, based principally on the London Interbank Offered Rate
("LIBOR") plus a variable margin factor as defined in the credit agreement. At
December 26, 1998, the weighted average interest rate on our variable rate debt was 6.2%,
which includes the effects of associated interest rate swaps and collars. See Note 11 for
a discussion of our use of interest rate swaps, our management of inherent credit risk and
fair value information related to debt and interest rate swaps.
At December 26, 1998, we had unused borrowings available under the Revolving Credit
Facility of $1.3 billion, net of outstanding letters of credit of $173 million. Once we
have repaid the Term Loan in full, mandatory prepayments may be required of the Revolving
Credit Facility which would reduce the amount available. Absent this circumstance, under
the terms of the Revolving Credit Facility, we may borrow up to $3.25 billion less
outstanding letters of credit until maturity. We pay a facility fee on the Revolving
Credit Facility. The variable margin factor and facility fee rate is determined based on
the more favorable of our leverage ratio or third-party senior debt ratings as defined in
the agreement. Facility fees accrued at December 26, 1998 were $1.7 million.