Pizza Hut 2001 Annual Report Download - page 48

46 TRICON GLOBAL RESTAURANTS, INC. AND SUBSIDIARIES
Such transactions were not significant for the Company through
December 29, 2001.
Historically, the Company’s business combinations have pri-
marily consisted of acquiring restaurants from our franchisees
and have been accounted for using the purchase method of
accounting. The primary intangible asset to which we have
generally allocated value in these business combinations is reac-
quired franchise rights. We have determined that reacquired
franchise rights do not meet the criteria of SFAS 141 to be rec-
ognized as an asset apart from goodwill.
In 2001, the FASB also issued SFAS 142, which supersedes
APB Opinion No. 17, “Intangible Assets.” SFAS 142 eliminates
the requirement to amortize goodwill and indefinite-lived intan-
gible assets, addresses the amortization of intangible assets with
a defined life, and addresses impairment testing and recogni-
tion for goodwill and intangible assets. SFAS 142 applies to
goodwill and intangible assets arising from transactions com-
pleted before and after its effective date. SFAS 142 is effective
for the Company for fiscal year 2002.
If SFAS 142 had been effective for fiscal year 2001, the ces-
sation of amortization of goodwill and indefinite-lived
intangibles would have resulted in our reported net income
being approximately $26 million higher. We have not yet deter-
mined the impact of the transitional goodwill impairment test,
which is required to be performed in connection with the adop-
tion of SFAS 142.
In 2001, the FASB issued SFAS No. 143, “Accounting for
Asset Retirement Obligations” (“SFAS 143”), which will be
effective for the Company beginning fiscal year 2003. SFAS 143
addresses the financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. We have not yet deter-
mined the impact of adopting SFAS 143 on the Company’s
Financial Statements.
In 2001, the FASB issued SFAS No. 144, “Accounting for
the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”)
which supersedes SFAS No. 121, “Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of” (“SFAS 121”) and the accounting and reporting provisions
of APB No. 30, “Reporting the Results of Operations —
Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events
and Transactions” for the disposal of a segment of a business.
SFAS 144 retains many of the fundamental provisions of
SFAS 121, but resolves certain implementation issues associated
with that Statement. SFAS 144 is effective for the Company for
fiscal year 2002. We do not anticipate that the adoption of SFAS
144 will have a significant impact on our results of operations.
ACCUMULATED OTHER
COMPREHENSIVE INCOME (LOSS)
Accumulated other comprehensive income (loss) includes:
2001 2000
Foreign currency translation adjustment $ (182) $ (177)
Minimum pension liability adjustment,
net of tax (24) —
Unrealized losses on derivative instruments,
net of tax (1) —
Total accumulated other
comprehensive income (loss) $ (207) $ (177)
EARNINGS PER
COMMON SHARE (“EPS”)
2001 2000 1999
Net income $ 492 $ 413 $ 627
Basic EPS:
Weighted-average common
shares outstanding 147 147 153
Basic EPS $3.36 $ 2.81 $ 4.09
Diluted EPS:
Weighted-average common
shares outstanding 147 147 153
Shares assumed issued on exercise
of dilutive share equivalents 27 19 24
Shares assumed purchased with
proceeds of dilutive share equivalents (22) (17) (17)
Shares applicable to diluted earnings 152 149 160
Diluted EPS $3.24 $ 2.77 $ 3.92
Unexercised employee stock options to purchase approximately
2.6 million, 10.8 million and 2.5 million shares of our Common
Stock for the years ended December 29, 2001, December 30,
2000 and December 25, 1999, respectively, were not included
in the computation of diluted EPS because their exercise prices
were greater than the average market price of our Common
Stock during the year.
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NOTE
3
NOTE