Pizza Hut 2004 Annual Report Download - page 43
Download and view the complete annual report
Please find page 43 of the 2004 Pizza Hut annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.anannualbasis,theCompanyistargetingapayoutratioof
15%to20%ofnetincome.
On September 7, 2004, the Company executed an
amendedandrestatedfive-yearseniorunsecuredRevolving
CreditFacility(the“CreditFacility”)totaling$1.0billionwhich
replaced a$1.0billionseniorunsecured Revolving Credit
Facility(the“OldFacility”)withamaturitydateofJune25,
2005.UnderthetermsoftheCreditFacility,theCompanymay
borrowuptothemaximumborrowinglimitlessoutstanding
lettersofcredit.AtDecember25,2004,ourunusedCredit
Facility totaled $776million,net of outstanding lettersof
creditof$205million.Therewereborrowingsof$19million
outstandingundertheCreditFacilityatDecember25,2004.
TheinterestrateforborrowingsundertheCreditFacilityranges
from0.35%to1.625%overtheLondonInterbankOfferedRate
(“LIBOR”)or0.00%to0.20%overanAlternateBaseRate,
whichisthegreaterofthePrimeRateortheFederalFunds
EffectiveRateplus0.50%.TheexactspreadoverLIBORor
theAlternateBaseRate,asapplicable,willdependuponour
performanceunderspecifiedfinancialcriteria.Interestonany
outstandingborrowingsundertheCreditFacilityispayableat
leastquarterly.
TheCreditFacilityisunconditionallyguaranteedbyour
principaldomesticsubsidiariesandcontainsfinancialcove-
nantsrelatingtomaintenanceofleverageandfixedcharge
coverageratios.TheCreditFacilityalsocontainsaffirmative
andnegativecovenantsincluding,amongotherthings,limi-
tations oncertain additionalindebtedness,guaranteesof
indebtedness,levelofcashdividends,aggregate non-U.S.
investmentandcertainothertransactionsasdefinedinthe
agreement. These covenants are substantially similar to
thosecontainedintheOldFacility.Wewereincompliance
withallcovenantsatDecember25,2004,anddonotantici-
patethatthecovenantswillimpactourabilitytoborrowunder
ourCreditFacilityforitsremainingterm.
Theremainderofourlong-termdebtprimarilycomprises
SeniorUnsecuredNotes.AmountsoutstandingunderSenior
UnsecuredNoteswere$1.5billionatDecember25,2004.
On November 15, 2004, we voluntarily redeemed all of
our7.45%SeniorUnsecuredNotesdueinMay2005(the
“2005Notes”)inaccordancewiththeiroriginalterms.The
2005Notes,whichhadafacevalueof$350million,were
redeemedforanamountofapproximately$358millionusing
primarilycashonhandas well assomeborrowingsunder
ourCreditFacility.Theredemptionamountapproximatedthe
carryingvalueofthe2005Notesresultinginnosignificant
impactonnetincome.
Weestimatethatin2005 capitalspending,including
acquisitions of our restaurants from franchisees, will be
approximately$780million.Wealsoestimatethatin2005
refranchisingproceeds,priortotaxes,willbeapproximately
$100million,employeestockoptionsproceeds,priortotaxes,
willbeapproximately$150millionandsalesofproperty,plant
and equipmentwillbeapproximately $80million.A share
repurchaseprogramauthorizedbyourBoardofDirectorsin
May2004isexpectedtobecompletedduringthefirsthalf
of2005.AtDecember25,2004,wehadremainingcapacity
torepurchase,throughNovember2005,uptoapproximately
$25millionofouroutstandingCommonStock(excludingappli-
cabletransactionfees)underthisprogram.InJanuary2005,
theBoardofDirectorsauthorizedanewsharerepurchase
programforupto$500millionoftheCompany’soutstanding
commonstocktobepurchasedthroughJanuary2006.
Inadditiontoanydiscretionaryspendingwemaychoose
tomake,significantcontractualobligationsandpaymentsas
ofDecember25,2004included:
Less More
than 1–3 3–5 than
Total 1Year Years Years 5Years
Long-termdebt(a) $1,598 $ 1 $204 $275 $1,118
Capitalleases(b) 184 18 32 28 106
Operatingleases(b) 2,511 342 564 442 1,163
Purchaseobligations(c) 233 138 39 30 26
Otherlong-term
liabilitiesreflected
onourConsolidated
BalanceSheet
underGAAP 30 — 18 4 8
Totalcontractual
obligations $4,556 $499 $857 $779 $2,421
(a)Excludesafairvalueadjustmentof$21millionincludedindebtrelatedtointerest
rateswapsthathedgethefairvalueofaportionofourdebt.SeeNote14.
(b)Theseobligations,whichareshownonanominalbasis,relatetoapproximately
5,500restaurants.SeeNote15.
(c)Purchaseobligationsinclude agreementstopurchasegoodsor servicesthat
areenforceableandlegallybindingonusandthatspecifyallsignificantterms,
including:fixedorminimumquantitiestobepurchased;fixed,minimumorvariable
priceprovisions;andtheapproximatetimingofthetransaction.Wehaveexcluded
agreements that are cancelable without penalty. Purchase obligations relate
primarilytoinformationtechnology and commodity agreements,purchases of
property,plantandequipmentaswellasmarketing,maintenance,consultingand
otheragreements.
Wehavenotincludedobligationsunder our pensionand
postretirementmedicalbenefitplansinthecontractualobli-
gationstable.Ourfundingpolicyregardingourfundedpension
planistocontributeamountsnecessarytosatisfyminimum
pensionfundingrequirementsplussuchadditionalamounts
fromtimetotimeas aredetermined to be appropriateto
improvetheplan’sfundedstatus.Thepensionplan’sfunded
statusisaffectedbymanyfactorsincludingdiscountrates
and the performanceofplan assets.Wearenot required
tomakeminimumpensionfundingpaymentsin2005,but
we may make discretionary contributions during the year
basedonourestimateoftheplan’sexpectedSeptember30,
2005fundedstatus.During2004,wemadea$50million
discretionarycontributiontoourfundedplan,noneofwhich
representedminimumfundingrequirements.Ourpostretire-
mentplanisnotrequiredtobefundedinadvance,butis
payasyougo.Wemadepostretirementbenefitpaymentsof
$4millionin2004.
Alsoexcludedfromthecontractualobligationstableare
paymentswemaymakeforworkers’compensation,employ-
mentpracticesliability,generalliability,automobileliability
and property losses (collectively “property and casualty
losses”)aswellasemployeehealthcareclaimsforwhichwe
41
Yum!Brands,Inc.