Pizza Hut 2008 Annual Report Download - page 168

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The funding rules for our pension plans outside of the U.S. vary from country to country and depend on many factors
including discount rates, performance of plan assets, local laws and regulations. Our most significant plans are in the
U.K. The projected benefit obligation of our pension plans in the U.K. exceeded plan assets by $43 million at our 2008
measurement date. We have committed to make a discretionary funding contribution of approximately $5 million in 2009
to one of these plans. The plans are currently under review to determine if additional discretionary pension funding
payments will be committed to in 2009.
Our postretirement plan in the U.S. is not required to be funded in advance, but is pay as you go. We made postretirement
benefit payments of $5 million in 2008 and no future funding amounts are included in the contractual obligations table.
See Note 15 for further details about our pension and postretirement plans.
We have excluded from the contractual obligations table payments we may make for exposures for which we are self-
insured, including workers’ compensation, employment practices liability, general liability, automobile liability, product
liability and property losses (collectively “property and casualty losses”) and employee healthcare and long-term
disability claims.
The majority of our recorded liability for self-insured employee healthcare, long-term disability and property and casualty
losses represents estimated reserves for incurred claims that have yet to be filed or settled.
Off-Balance Sheet Arrangements
We have provided a partial guarantee of approximately $16 million of a franchisee loan program used primarily to assist
franchisees in the development of new restaurants and, to a lesser extent, in connection with the Company’s historical
refranchising programs at December 27, 2008. We have also provided two letters of credit totaling approximately $23
million in support of the franchisee loan program. One such letter of credit could be used if we fail to meet our
obligations under our guarantee. The other letter of credit could be used, in certain circumstances, to fund our
participation in the funding of the franchisee loan program. The total loans outstanding under the loan pool were
approximately $48 million at December 27, 2008.
Our unconsolidated affiliates had approximately $51 million and $22 million of debt outstanding as of December 27, 2008
and December 29, 2007, respectively.
New Accounting Pronouncements Not Yet Adopted
See Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of this report for further details of new
accounting pronouncements not yet adopted.
Critical Accounting Policies and Estimates
Our reported results are impacted by the application of certain accounting policies that require us to make subjective or
complex judgments. These judgments involve estimations of the effect of matters that are inherently uncertain and may
significantly impact our quarterly or annual results of operations or financial condition. Changes in the estimates and
judgments could significantly affect our results of operations, financial condition and cash flows in future years. A
description of what we consider to be our most significant critical accounting policies follows.
Form 10-K