Pizza Hut 2008 Annual Report Download - page 201
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79
Interest expense on short-term borrowings and long-term debt was $253 million, $199 million and $172 million in 2008,
2007 and 2006, respectively.
Note 13 – Leases
At December 27, 2008 we operated more than 7,300 restaurants, leasing the underlying land and/or building in more than
5,800 of those restaurants with the vast majority of our commitments expiring within 20 years from the inception of the
lease. Our longest lease expires in 2151. We also lease office space for headquarters and support functions, as well as
certain office and restaurant equipment. We do not consider any of these individual leases material to our operations.
Most leases require us to pay related executory costs, which include property taxes, maintenance and insurance.
In 2007, we entered into an agreement to lease a corporate aircraft to enhance our international travel capabilities. This
lease provided for an upfront payment of $10 million and monthly payments for three years. At the end of the three year
period we have the option to purchase the aircraft. In accordance with SFAS No. 13, this lease has been classified as
capital and we had a related capital lease obligation recorded of $40 million at December 27, 2008. Our lease is with
CVS Corporation (“CVS”). One of the Company’s directors is the Chairman, Chief Executive Officer and President of
CVS. Multiple independent appraisals were obtained during the negotiation process to insure that the lease was reflective
of an arms-length transaction.
Future minimum commitments and amounts to be received as lessor or sublessor under non-cancelable leases are set forth
below:
At December 27, 2008 and December 29, 2007, the present value of minimum payments under capital leases was $234
million and $282 million, respectively. At December 27, 2008 and December 29, 2007, unearned income associated with
direct financing lease receivables was $63 million and $46 million, respectively.
The details of rental expense and income are set forth below:
2008 2007 2006
Rental expense
Minimum $ 531 $ 47
4
$ 41
2
Contingent 113 81 6
2
$ 64
4
$ 555 $ 47
4
Minimum rental income $ 28 $ 23 $ 21
Commitments Lease Receivables
Capital
Operating
Direct
Financing
Operating
2009 $ 26 $ 491 $ 13 $ 41
2010 64 451 13 37
2011 23 409 14 34
2012 22 368 14 30
2013 21 333 14 27
Thereafter 228 2,524 79 103
$ 384 $ 4,576 $ 147 $ 272
Form 10-K