Pizza Hut 2002 Annual Report Download - page 69

SHARE REPURCHASE PROGRAM
In November 2002, our Board of Directors authorized a new share
repurchase program. This program authorizes us to repurchase,
through November 20, 2004, up to $300 million (excluding appli-
cable transaction fees) of our outstanding Common Stock. During
2002, we repurchased approximately 1.2 million shares for
approximately $28 million at an average price per share of
approximately $24 under this program. At December 28, 2002,
approximately $272 million remained available for repurchases
under this program. Based on market conditions and other fac-
tors, additional repurchases may be made from time to time in the
open market or through privately negotiated transactions at the
discretion of the Company.
In February 2001, our Board of Directors authorized a share
repurchase program. This program authorized us to repurchase
up to $300 million (excluding applicable transaction fees) of our
outstanding Common Stock. This share repurchase program was
completed in 2002. During 2002, we repurchased approximately
7.0 million shares for approximately $200 million at an average
price per share of approximately $29 under this program. During
2001, we repurchased approximately 4.8 million shares for
approximately $100 million at an average price per share of
approximately $21 under this program.
In 1999, our Board of Directors authorized a share repurchase
program. This program authorized us to repurchase up to $350
million (excluding applicable transaction fees) of our outstanding
Common Stock. This share repurchase program was completed
in 2000. During 2000, we repurchased approximately 12.8 million
shares for approximately $216 million at an average price per
share of approximately $17. In total, we repurchased approxi-
mately 19.5 million shares for approximately $350 million at an
average price per share of approximately $18 under this program.
INCOME TAXES
The details of our income tax provision (benefit) are set forth below:
2002 2001 2000
Current:
Federal $ 137 $ 200 $ 215
Foreign 93 75 66
State 24 38 41
254 313 322
Deferred:
Federal 29 (29) (11)
Foreign (6) (33) (9)
State (2) (10) (31)
21 (72) (51)
$275 $ 241 $ 271
NOTE
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NOTE
21
Taxes payable were reduced by $49 million, $13 million and $5 mil-
lion in 2002, 2001 and 2000, respectively, as a result of stock option
exercises. In addition, goodwill and other intangibles were reduced
by $8 million in 2001 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 offset by an
$8 million reduction in deferred and accrued taxes payable.
In 2002, valuation allowances related to deferred tax assets
in certain states and foreign countries were increased by $1 mil-
lion and $6 million, respectively, primarily as a result of determining
that it is more likely than not that certain losses would not be uti-
lized prior to expiration.
In 2001, valuation allowances related to deferred tax assets
in certain states and foreign countries were reduced by $9 million
($6 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 2000,
valuation allowances related to deferred tax assets in certain
states and foreign countries were reduced by $35 million ($23 mil-
lion, 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.
The deferred foreign tax provision for both 2002 and 2001
included a $2 million charge to reflect the impact of changes in
statutory tax rates in various countries. The impact of statutory rate
changes in foreign countries was less than $1 million in 2000.
U.S. and foreign income before income taxes are set forth
below:
2002 2001 2000
U.S. $ 665 $ 599 $ 537
Foreign 193 134 147
$ 858 $ 733 $ 684
The reconciliation of income taxes calculated at the U.S. federal
tax statutory rate to our effective tax rate is set forth below:
2002 2001 2000
U.S. federal statutory rate 35.0% 35.0% 35.0%
State income tax, net of federal tax benefit 2.0 2.1 3.3
Foreign and U.S. tax effects
attributable to foreign operations (1.4) 0.7 0.2
Effect of unusual items — 0.1 (0.5)
Adjustments relating to prior years (3.2) (3.2) 5.5
Valuation allowance reversals — (1.7) (4.2)
Other, net (0.3) (0.2) 0.3
Effective income tax rate 32.1% 32.8% 39.6%
67.
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