Pizza Hut 2007 Annual Report Download - page 66

70 YUM! BRANDS, INC.
11.
Goodwill and Intangible Assets
The changes in the carrying amount of goodwill are as follows:
Inter-
national China
U.S. Division Division Worldwide
Balance as of
December 31, 2005 $ 384 $ 96 $ 58 $ 538
Acquisitions — 123 — 123
Disposals and other, net(a) (17) 18 — 1
Balance as of
December 30, 2006 $ 367 $ 237 $ 58 $ 662
Acquisitions ————
Disposals and other, net(b) (9) 17 2 10
Balance as of
December 29, 2007 $ 358 $ 254 $ 60 $ 672
(a) Disposals and other, net for the International Division primarily reflects the impact
of foreign currency translation on existing balances. Disposals and other, net for the
U.S. Division, primarily reflects goodwill write-offs associated with refranchising.
(b) Disposals and other, net for the International Division primarily reflects adjust-
ments to the Pizza Hut U.K. goodwill allocation and the impact of foreign currency
translation on existing balances. Disposals and other, net for the U.S. Division,
primarily reflects goodwill write-offs associated with refranchising.
Intangible assets, net for the years ended 2007 and 2006 are
as follows:
2007 2006
Gross Gross
Carrying Accumulated Carrying Accumulated
Amount Amortization Amount Amortization
Amortized intangible
assets
Franchise contract
rights $ 157 $ (73) $ 153 $ (66)
Trademarks/brands 221 (26) 220 (18)
Favorable/unfavorable
operating leases 15 (12) 15 (10)
Reacquired franchise
rights 17 (1) 18 —
Other 6 (2) 5 (1)
$ 416 $ (114) $ 411 $ (95)
Unamortized intangible
assets
Trademarks/brands $ 31 $ 31
We have recorded intangible assets through past acquisitions
representing the value of our KFC, LJS and A&W trademarks/
brands. The value of a trademark/brand is determined based
upon the value derived from the royalty we avoid, in the case of
Company stores, or receive, in the case of franchise and licensee
stores, for the use of the trademark/brand. We have determined
that our KFC trademark/brand intangible asset has an indefinite
life and therefore is not amortized. We have determined that our
LJS and A&W trademarks/brands are subject to amortization and
are being amortized over their expected useful lives which are
currently thirty years.
Amortization expense for all definite-lived intangible assets
was $19 million in 2007, $15 million in 2006 and $13 million in
2005. Amortization expense for definite-lived intangible assets
will approximate $18 million annually in 2008 through 2012.
12.
Accounts Payable and Other Current Liabilities
2007 2006
Accounts payable $ 639 $ 554
Accrued compensation and benefits 372 302
Dividends payable 75 119
Proceeds from sale of interest in Japan
unconsolidated affiliate (See Note 5) 128 —
Other current liabilities 436 411
$ 1,650 $ 1,386
13.
Short-term Borrowings and Long-term Debt
2007 2006
Short-term Borrowings
Unsecured Term Loans, expire January 2007 $ — $ 183
Current maturities of long-term debt 268 16
Other 20 28
$ 288 $ 227
Long-term Debt
Unsecured International Revolving Credit
Facility, expires November 2012 $ 28 $ 174
Unsecured Revolving Credit Facility,
expires November 2012 ——
Senior, Unsecured Notes, due May 2008 250 251
Senior, Unsecured Notes, due April 2011 648 646
Senior, Unsecured Notes, due July 2012 399 399
Senior, Unsecured Notes, due April 2016 300 300
Senior, Unsecured Notes, due March 2018 598 —
Senior, Unsecured Notes, due November 2037 597 —
Capital lease obligations (See Note 14) 282 228
Other, due through 2019 (11%) 73 76
3,175 2,074
Less current maturities of long-term debt (268) (16)
Long-term debt excluding SFAS 133 adjustment 2,907 2,058
Derivative instrument adjustment under
SFAS 133 (See Note 15) 17 (13)
Long-term debt including SFAS 133 adjustment $ 2,924 $ 2,045
On November 29, 2007, the Company executed an amended and
restated five-year senior unsecured Revolving Credit Facility (the
“Credit Facility”) totaling $1.15 billion which replaced a five-year
facility in the amount of $1.0 billion that was set to expire on
September 7, 2009. The Credit Facility is unconditionally guaran-
teed by our principal domestic subsidiaries and contains financial
covenants relating to maintenance of leverage and fixed charge
coverage ratios. The Credit Facility also contains affirmative and
negative covenants including, among other things, limitations on
certain additional indebtedness and liens and certain other trans-
actions specified in the agreement. We were in compliance with
all debt covenants at December 29, 2007.
Under the terms of the Credit Facility, we may borrow up to
the maximum borrowing limit less outstanding letters of credit or
banker’s acceptances, where applicable. At December 29, 2007,
our unused Credit Facility totaled $971 million, net of outstand-
ing letters of credit of $179 million. There were no borrowings