Pizza Hut 2004 Annual Report Download - page 63
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Please find page 63 of the 2004 Pizza Hut annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.In 1997, we filed a shelf registration statement with
theSecuritiesandExchangeCommissionforofferingsofup
to $2billion of seniorunsecured debt. The following table
summarizesallSeniorUnsecuredNotesissuedunderthisshelf
registrationthatremainoutstandingatDecember25,2004:
Principal InterestRate
IssuanceDate MaturityDate Amount Stated Effective)(d)
May1998 May2008)(a) 250 7.65% 7.81%
April2001 April2006)(b) 200 8.50% 9.04%
April2001 April2011)(b) 650 8.88% 9.20%
June2002 July2012)(c) 400 7.70% 8.04%
(a)InterestpaymentscommencedonNovember15,1998andarepayablesemi-
annuallythereafter.
(b)Interest payments commenced on October 15, 2001 and are payable semi-
annuallythereafter.
(c)InterestpaymentscommencedonJanuary1,2003andarepayablesemi-annually
thereafter.
(d)Includestheeffectsoftheamortizationofany(1)premiumordiscount;(2)debt
issuancecosts;and(3)gainorlossuponsettlementofrelatedtreasurylocks.
ExcludestheeffectofanyinterestrateswapsasdescribedinNote16.
We have $150million remaining for issuance under the
$2billionshelfregistration.
InconnectionwithouracquisitionofYGRin2002,we
assumedapproximately$168millioninpresentvalueoffuture
rentobligationsrelatedtothreeexistingsale-leasebackagree-
mentsenteredintobyYGRinvolvingapproximately350LJS
units.Asaresultofliensheldbythebuyer/lessoroncertain
personalpropertywithintheunits,thesale-leasebackagree-
mentswereaccountedforasfinancingsuponacquisition.On
August15,2003,weamendedtwoofthesesale-leaseback
agreements to remove theliensonthe personal property
within the units. As the two amended agreements qualify
for sale-leaseback accounting, they are accounted for as
operatingleases.Accordingly,thefuturerentobligationsasso-
ciatedwiththetwoamendedagreements,previouslyrecorded
aslong-termdebtof$88million,werenolongerreflectedon
ourConsolidatedBalanceSheetsatDecember25,2004or
December27,2003.Therewasnogainorlossrecordedasa
resultofthistransaction.
The annual maturities of long-term debt as of
December25, 2004, excluding capital lease obligations
of $128million and derivative instrument adjustments of
$21million,areasfollows:
Yearended:
2005 $ 1
2006 202
2007 2
2008 253
2009 22
Thereafter 1,118
Total $1,598
Interestexpenseonshort-termborrowingsandlong-termdebt
was$145million,$185millionand$180millionin2004,
2003and2002,respectively.
LEASES
NOTE15
AtDecember25,2004weoperatedover7,700restaurants,
leasingtheunderlyinglandand/orbuildinginover5,500of
thoserestaurantswithourcommitmentsexpiringatvarious
datesthrough2087.Wealsoleaseofficespaceforhead-
quartersandsupportfunctions,aswellascertainofficeand
restaurantequipment.Wedonotconsideranyoftheseindi-
vidualleasesmaterialtoouroperations.Mostleasesrequire
us to payrelated executory costs,which includeproperty
taxes,maintenanceandinsurance.
Future minimum commitments and amounts to be
receivedaslessororsublessorundernon-cancelableleases
aresetforthbelow:
Commitments LeaseReceivables
Direct
Capital Operating Financing Operating
2005 $ 18 $ 342 $ 7 $ 21
2006 17 298 7 18
2007 15 266 6 15
2008 14 234 7 12
2009 14 208 7 11
Thereafter 106 1,163 67 80
$184 $2,511 $101 $157
AtDecember25,2004andDecember27,2003,thepresent
value of minimum payments under capital leases was
$128millionand$112million,respectively.AtDecember25,
2004andDecember27,2003,unearnedincomeassociated
withdirectfinancingleasereceivableswas$48millionand
$41million,respectively.
Thedetailsofrentalexpenseandincomearesetforth
below:
2004 2003 2002
Rentalexpense
Minimum $376 $329 $303
Contingent 49 44 40
$425 $373 $343
Minimumrentalincome $ 13 $ 14 $ 11
FINANCIALINSTRUMENTS
NOTE16
InterestRateDerivativeInstruments Weenterintointerest
rateswapswith theobjectiveofreducingour exposure to
interestrateriskandloweringinterestexpenseforaportion
ofourdebt.Underthecontracts,weagreewithotherparties
toexchange,atspecifiedintervals,thedifferencebetween
variablerateandfixedrateamountscalculatedonanotional
principalamount.AtDecember25,2004,interestratederiv-
ativeinstrumentsoutstandingincludedpay-variableinterest
61
Yum!Brands,Inc.