Pizza Hut 2009 Annual Report Download - page 142

51
Contractual Obligations
In addition to any discretionary spending we may choose to make, our significant contractual obligations and payments as
of December 26, 2009 included:
Total
Less than 1
Year 1-3 Years 3-5 Years
More than 5
Years
L
ong-term debt obligations(a) $ 4,844 $ 178 $ 1,207 $ 258 $ 3,201
C
apital leases(b) 409 67 51 48 243
O
perating leases(b) 4,675 535 938 778 2,424
P
urchase obligations(c) 737 551 173 11 2
Other(d) 50 22 11 7 10
T
otal contractual obligations $ 10,715 $ 1,353 $ 2,380 $ 1,102 $ 5,880
(a) Debt amounts include principal maturities and expected interest payments. Rates utilized to determine interest
payments for variable rate debt are based on the LIBOR forward yield curve. Excludes a fair value adjustment
of $36 million included in debt related to interest rate swaps that hedge the fair value of a portion of our debt.
See Note 11.
(b) These obligations, which are shown on a nominal basis, relate to nearly 6,200 restaurants. See Note 12.
(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 2010 pension plan funding obligations, the current portion of liabilities for unrecognized tax
b
enefits and projected payments for deferred compensation.
We have not included in the contractual obligations table approximately $264 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 sponsor noncontributory defined benefit pension plans covering certain salaried and hourly employees, the most
significant of which are in the U.S. and U.K. The most significant of these plans, the YUM Retirement Plan (the “Plan”),
is funded while benefits from the other U.S. plans are paid by the Company as incurred. Our funding policy for the Plan
is to contribute annually amounts that will at least equal the minimum amounts required to comply with the Pension
Protection Act of 2006. However, additional voluntary contributions are made from time to time as are determined to be
appropriate to improve the Plan’s funded status. At December 26, 2009, the Plan was in a net underfunded position of
$83 million. Based on the current funding status of the Plan, we will not be required to make minimum contributions in
2010. Investment performance and corporate bond rates have a significant effect on our net funding position as they drive
our asset balances and discount rate assumption. Future changes in investment performance and corporate bond rates
could impact our funded status and the timing and amounts of required contributions beyond 2010.
Form 10-K