Pizza Hut 2008 Annual Report Download - page 167

45
Contractual Obligations
In addition to any discretionary spending we may choose to make, our significant contractual obligations and payments as
of December 27, 2008 included:
Total
Less than 1
Year 1-3 Years 3-5 Years
More than 5
Years
Long-term debt obligations(a) $ 5,224 $ 201 $ 1,365 $ 925 $ 2,733
Capital leases(b) 384 26 87 43 228
Operating leases(b) 4,576 491 860 701 2,524
Purchase obligations(c) 675 570 96 6 3
Other(d) 169 144 9 7 9
Total contractual obligations $ 11,028 $ 1,432 $ 2,417 $ 1,682 $ 5,497
(a) Debt amounts include principal maturities and expected interest payments. Rates utilized to determine interest
payments for variable rate debt are based on an estimate of future interest rates. Excludes a fair value adjustment
of $59 million included in debt related to interest rate swaps that hedge the fair value of a portion of our debt.
See Note 12.
(b) These obligations, which are shown on a nominal basis, relate to more than 5,800 restaurants. See Note 13.
(c) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding
on us and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed,
minimum or variable price provisions; and the approximate timing of the transaction. We have excluded
agreements that are cancelable without penalty. Purchase obligations relate primarily to information technology,
marketing, commodity agreements, purchases of property, plant and equipment as well as consulting,
maintenance and other agreements.
(d) Other consists of 2009 pension plan funding obligations, the current portion of unrecognized tax benefits and
projected payments for deferred compensation.
We have not included in the contractual obligations table approximately $229 million for long-term liabilities for
unrecognized tax benefits for various tax positions we have taken. These liabilities may increase or decrease over time as
a result of tax examinations, and given the status of the examinations, we cannot reliably estimate the period of any cash
settlement with the respective taxing authorities. These liabilities also include amounts that are temporary in nature and
for which we anticipate that over time there will be no net cash outflow. We have included in the contractual obligations
table $53 million in liabilities for unrecognized tax benefits that we expect to settle in cash in the next year.
We have included $85 million in contributions we expect to make to our pension plans in 2009 in the contractual
obligations table. Our most significant plan, the YUM Retirement Plan (the “U.S. Plan”), is a noncontributory defined
benefit pension plan covering certain full-time U.S. salaried employees. Our funding policy with respect to the U.S. Plan
is to contribute amounts necessary to satisfy minimum pension funding requirements, including requirements of the
Pension Protection Act of 2006, plus such additional amounts from time to time as determined to be appropriate to
improve the U.S. Plan’s funded status. We currently estimate that we will contribute approximately $80 million to the
U.S. Plan in 2009. Contributions beyond 2009 will depend upon the timing and amount of our asset returns as well as
changes in applicable discount rates. At our 2008 measurement date, our pension plans in the U.S., which include the
U.S. Plan and an unfunded supplemental executive plan, had a projected benefit obligation of $923 million and plan assets
of $513 million.
Form 10-K