Yum: no major harm in $100m pension shortfall

Nation's Restaurant News,  Oct 28, 2002  

Tags: financial, pension plan

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LOUISVILLE, KY. -- Yum! Brands Inc., parent of KFC, Pizza Hut, Taco Bell, Long John Silver's and A&W Restaurants, said it expects a nearly $100 million underfunding of its pension plan this year because of declines in interest rates and the stock market.

In a filing with securities regulators, Yum said it does not believe the circumstance will impair its financial position, but said the company likely will record a charge to shareholders' equity as a result of the shortfall.

Yum's chief financial officer, David J. Deno, was quoted separately as saying he doesn't believe the status of the pension plan will have a "material impact" on the company's cash flow and profit this year. Deno said Yum "has incorporated the expense and cash obligation of the pension plan in its financial forecasts for the remainder of 2002 and 2003 and beyond." He added, "The charge to shareholders' equity will be minor in comparison to the $400 million growth in shareholders' equity in 2002."

In Yum's most recent annual report, it said the pension plan had projected $420 million in benefit payments and a fair value of plan assets of $291 million as of 2001. Yum's chains have some 30,000 units worldwide.

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