Pizza Hut 2000 Annual Report Download - page 61

TRICON GLOBAL RESTAURANTS, INC. AND SUBSIDIARIES 59
This description of the rights is qualified in its entirety by
reference to the Rights Agreement between TRICON and
BankBoston, N.A., as Rights Agent, dated as of July 21,
1998 (including the exhibits thereto).
Note 18 Share Repurchase Program
In 1999, our Board of Directors authorized the repurchase
of up to $350 million of our outstanding Common Stock,
excluding applicable transaction fees. This Share Repurchase
Program was completed in 2000. During 2000, we repurchased
over 6.4 million shares for approximately $216 million at an
average price per share of $34. During 1999, we repurchased
over 3.3 million shares for approximately $134 million at
an average price of $40 per share. In total, we repurchased
approximately 9.8 million shares at an average price of $36.
On February 14, 2001, our Board of Directors authorized
a new Share Repurchase Program. The new Share Repurchase
Program authorizes us to repurchase, over a two-year period,
up to $300 million of our outstanding Common Stock,
excluding applicable transaction fees. Based on market condi-
tions and other factors, repurchases may be made from time
to time in the open market or through privately negotiated
transactions, at the discretion of the Company.
Note 19 Income Taxes
The details of our income tax provision (benefit) are set
forth below:
2000 1999 1998
Current
Federal $215 $342 $231
Foreign 66 46 55
State 41 39 22
322 427 308
Deferred
Federal (11) (18) (2)
Foreign (9) 17 10
State (31) (15) (5)
(51) (16) 3
$271 $411 $311
Taxes payable were reduced by $5 million, $14 million, and
$3 million in 2000, 1999 and 1998, respectively, as a result
of stock option exercises. In addition, goodwill and other
intangibles were reduced by $2 million and $22 million in
2000 and 1999, respectively, as a result of the settlement of a
disputed claim with the Internal Revenue Service relating to the
deductibility of reacquired franchise rights and other intangibles.
These reductions were offset by reductions in deferred and
accrued taxes payable.
In 2000, valuation allowances that relate to deferred tax
assets in certain states and foreign countries were reduced by
$35 million ($23 million, net of federal tax) and $6 million,
respectively, as a result of making a determination that it is
more likely than not that these assets will be utilized in the
current and future years. In 1999, valuation allowances that
related to deferred tax assets in certain foreign countries were
reduced by $13 million as a result of establishing a pattern
of profitability.
U.S. and foreign income before income taxes are set
forth below:
2000 1999 1998
U.S. $518 $÷«876 $617
Foreign 166 162 139
$684 $1,038 $756
The reconciliation of income taxes calculated at the
U.S. federal tax statutory rate to our effective tax rate is
set forth below:
2000 1999 1998
U.S. federal statutory rate 35.0% 35.0% 35.0%
State income tax, net of federal tax benefit 3.7 3.0 2.8
Foreign and U.S. tax effects attributable to
foreign operations (0.4) 1.7 4.4
Effect of unusual items (0.5) (0.5) (0.6)
Adjustments relating to prior years 1.6 0.4 (1.1)
Other, net 0.2 (0.1) 0.6
Effective income tax rate 39.6% 39.5% 41.1%
The details of 2000 and 1999 deferred tax liabilities
(assets) are set forth below:
2000 1999
Intangible assets and property, plant and equipment $«184 $«170
Other 35 25
Gross deferred tax liabilities $«219 $«195
Net operating loss and tax credit carryforwards $(137) $(140)
Employee benefits (82) (91)
Self-insured casualty claims (55) (38)
Stores held for disposal –(12)
Various liabilities and other (219) (178)
Gross deferred tax assets (493) (459)
Deferred tax assets valuation allowances 132 173
Net deferred tax assets (361) (286)
Net deferred tax (assets) liabilities $(142) $÷(91)
Reported in Consolidated Balance Sheets as:
Deferred income tax assets $÷(75) $÷(59)
Other assets (78) (51)
Accounts payable and other current liabilities 112
Deferred income taxes 10 7
$(142) $÷(91)
Our valuation allowances related to deferred tax assets
decreased by $41 million in 2000 primarily due to the previ-
ously discussed change in circumstances related to deferred
tax assets in certain states and foreign countries.
A determination of the unrecognized deferred tax liability
for temporary differences related to our investments in foreign
subsidiaries and investments in foreign unconsolidated affiliates
that are essentially permanent in duration is not practicable.