Pizza Hut 2002 Annual Report Download - page 64

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PENSION AND POSTRETIREMENT
MEDICAL BENEFITS
Pension Benefits
We sponsor noncontributory defined benefit pension plans cov-
ering substantially all full-time U.S. salaried employees, certain
hourly employees and certain international employees. During
2001, the YUM Retirement Plan (the “Plan”) was amended such
that any salaried employee hired or rehired by YUM after
September 30, 2001 will not be eligible to participate in the Plan.
Benefits are based on years of service and earnings or stated
amounts for each year of service.
Postretirement Medical Benefits
Our postretirement plan provides health care benefits, principally
to U.S. salaried retirees and their dependents. This plan includes
retiree cost sharing provisions. During 2001, the plan was
amended such that any salaried employee hired or rehired by
YUM after September 30, 2001 will not be eligible to participate in
this plan. Employees hired prior to September 30, 2001 are eligi-
ble for benefits if they meet age and service requirements and
qualify for retirement benefits.
NOTE
17
The components of net periodic benefit cost are set forth below:
Pension Benefits
2002 2001 2000
Service cost $22 $20 $ 19
Interest cost 31 28 24
Amortization of prior service cost 111
Expected return on plan assets (28) (29) (25)
Recognized actuarial loss 11
—
Net periodic benefit cost $27 $21 $19
Additional loss (gain) recognized due to:
Curtailment $1 $
—
$ (4)
Special termination benefits
—
2
—
Postretirement Medical Benefits
2002 2001 2000
Service cost $2 $2 $2
Interest cost 443
Amortization of prior service cost
—
(1) (1)
Recognized actuarial loss 1
——
Net periodic benefit cost $7 $5 $4
Additional (gain) recognized due to:
Curtailment $
—
$
—
$ (1)
Prior service costs are amortized on a straight-line basis over the
average remaining service period of employees expected to
receive benefits. Curtailment gains and losses have generally been
recognized in facility actions net loss (gain) as they have resulted
primarily from refranchising and closure activities.
62.
The carrying amounts and fair values of our other financial instruments subject to fair value disclosures are as follows:
2002 2001
Carrying Carrying
Amount Fair Value Amount Fair Value
Debt
Short-term borrowings and long-term debt, excluding
capital leases and the derivative instrument adjustments $ 2,302 $ 2,470 $2,135 $ 2,215
Debt-related derivative instruments:
Open contracts in a net asset position 48 48 37 37
Foreign currency-related derivative instruments:
Open contracts in a net asset (liability) position (1) (1) 55
Lease guarantees 242 235
Guarantees supporting financial arrangements
of certain franchisees, unconsolidated affiliates and other third parties 16 21 17 21
Letters of credit
—
3
—
1
We estimated the fair value of debt, debt-related derivative instruments, foreign currency-related derivative instruments, guarantees and
letters of credit using market quotes and calculations based on market rates.