Pizza Hut 2003 Annual Report Download - page 71

Yum! Brands Inc. 69.
person or group has acquired, or has commenced or intends
to commence a tender offer for, 15% or more, or 20% or
more if such person or group owned 10% or more on the
adoption date of this plan, of our Common Stock. In the
event the rights become exercisable for Common Stock,
each right will entitle its holder (other than the Acquiring
Person as defined in the Agreement) to purchase, at the
right’s then-current exercise price, YUM Common Stock
having a value of twice the exercise price of the right. In the
event the rights become exercisable for Common Stock and
thereafter we are acquired in a merger or other business
combination, each right will entitle its holder to purchase,
at the right’s then-current exercise price, common stock of
the acquiring company having a value of twice the exercise
price of the right.
We can redeem the rights in their entirety, prior to
becoming exercisable, at $0.01 per right under certain
specified conditions. The rights expire on July 21, 2008,
unless we extend that date or we have earlier redeemed or
exchanged the rights as provided in the Agreement.
This description of the rights is qualified in its
entirety by reference to the original Rights Agreement,
dated July 21, 1998, and the Agreement of Substitution
and Amendment of Common Share Rights Agreement,
dated August 28, 2003, between YUM and American
Stock Transfer and Trust Company, the Rights Agent (both
including the exhibits thereto).
SHARE REPURCHASE PROGRAM
note
21
In November 2003, our Board of Directors authorized a new
share repurchase program. This program authorizes us to
repurchase, through May 21, 2005, up to $300 million of
our outstanding Common Stock (excluding applicable trans-
action fees). During 2003, we repurchased approximately
169,000 shares for approximately $5.7 million under this
program at an average price per share of approximately
$34. Based on market conditions and other factors, addi-
tional repurchases may be made from time to time in the
open market or through privately negotiated transactions
at the discretion of the Company.
In November 2002, 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 2003. During
2003, we repurchased approximately 9.2 million shares
for approximately $272 million at an average price per
share of approximately $30 under this program. 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.
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.
INCOME TAXES
note
22
The details of our income tax provision (benefit) are set
forth below. Amounts do not include the income tax benefit
of approximately $1 million on the $2 million cumulative
effect adjustment recorded on December 29, 2002 due to
the adoption of SFAS 143.
2003 2002 2001
Current:
Federal $ 181 $ 137 $ 200
Foreign 114 93 75
State (4) 24 38
291 254 313
Deferred:
Federal (23) 29 (29)
Foreign (16) (6) (33)
State 16 (2) (10)
(23) 21 (72)
$ 268 $ 275 $ 241
Taxes payable were reduced by $26 million, $49 million
and $13 million in 2003, 2002 and 2001, 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.
Valuation allowances related to deferred tax assets
in certain states increased by $6 million ($4 million, net
of federal tax) and $1 million ($1 million, net of federal
tax) and in foreign countries increased by $19 million and
$6 million in 2003 and 2002, respectively, as a result of
determining that it is more likely than not that certain loss
carryforwards will not be utilized 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 determining that these assets
will be utilized prior to expiration.
The deferred foreign tax provision for both 2002 and
2001 included a $2 million credit to reflect the impact of
changes in statutory tax rates in various countries.