Pizza Hut 2004 Annual Report Download - page 69

Our฀cash฀obligations฀under฀the฀EID฀Plan฀as฀of฀the฀end฀
of฀2004฀and฀2003฀were฀$23฀million฀and฀$25฀million,฀respec-
tively.฀We฀recognized฀compensation฀expense฀ of฀ $4฀million฀
in฀2004,฀$3฀million฀in฀2003฀and฀$2฀million฀in฀2002฀for฀the฀
EID฀Plan.
We฀sponsor฀ a฀contributory฀plan฀ to฀provide฀ retirement฀
benefits฀under฀the฀provisions฀of฀Section฀401(k)฀of฀the฀Internal฀
Revenue฀Code฀(the฀“401(k)฀Plan”)฀for฀eligible฀U.S.฀salaried฀
and฀hourly฀employees.฀During฀2004,฀participants฀were฀able฀to฀
elect฀to฀contribute฀up฀to฀25%฀of฀eligible฀compensation฀on฀a฀
pre-tax฀basis฀(the฀maximum฀participant฀contribution฀increased฀
from฀15%฀ to฀ 25%฀effective฀ January฀1,฀2003).฀ Participants฀
may฀allocate฀their฀contributions฀to฀one฀or฀any฀combination฀of฀
10฀investment฀options฀within฀the฀401(k)฀Plan.฀The฀Company฀
matches฀100%฀of฀the฀participant’s฀contribution฀to฀the฀401(k)฀
Plan฀up฀to฀3%฀of฀eligible฀compensation฀and฀50%฀of฀the฀partic-
ipant’s฀contribution฀on฀the฀next฀2%฀of฀eligible฀compensation.฀
All฀ matching฀ contributions฀are฀made฀to฀the฀ YUM฀Common฀
Stock฀Fund.฀We฀recognized฀as฀compensation฀expense฀our฀total฀
matching฀contribution฀of฀$11฀million฀in฀2004,฀$10฀million฀in฀
2003฀and฀$8฀million฀in฀2002.
SHAREHOLDERS’฀RIGHTS฀PLAN฀
NOTE฀20
In฀ July฀ 1998,฀ our฀ Board฀ of฀ Directors฀ declared฀ a฀ dividend฀
distribution฀ of฀ one฀right฀for฀ each฀share฀ of฀Common฀Stock฀
outstanding฀as฀of฀August฀3,฀1998฀(the฀“Record฀Date”).฀As฀
a฀result฀of฀the฀two-for-one฀stock฀split฀distributed฀on฀June฀17,฀
2002,฀each฀holder฀of฀Common฀Stock฀is฀entitled฀to฀one฀right฀for฀
every฀two฀shares฀of฀Common฀Stock฀(one-half฀right฀per฀share).฀
Each฀right฀initially฀entitles฀the฀registered฀holder฀to฀purchase฀
a฀unit฀consisting฀of฀one฀one-thousandth฀of฀a฀share฀(a฀“Unit”)฀
of฀Series฀A฀Junior฀Participating฀Preferred฀Stock,฀without฀par฀
value,฀at฀a฀purchase฀price฀of฀$130฀per฀Unit,฀subject฀to฀adjust-
ment.฀The฀rights,฀which฀do฀not฀have฀voting฀rights,฀will฀become฀
exercisable฀for฀our฀Common฀Stock฀ten฀business฀days฀following฀
a฀public฀announcement฀that฀a฀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฀May฀2004,฀our฀Board฀of฀Directors฀authorized฀a฀share฀repur-
chase฀program.฀This฀program฀authorized฀us฀to฀repurchase,฀
through฀ November฀ 2005,฀ up฀ to฀ $300฀million฀ (excluding฀
applicable฀ transaction฀ fees)฀ of฀ our฀ outstanding฀ Common฀
Stock.฀During฀the฀year฀ended฀December฀25,฀2004,฀we฀repur-
chased฀approximately฀5.9฀million฀shares฀for฀approximately฀
$275฀million฀at฀an฀average฀price฀per฀share฀of฀approximately฀
$46฀under฀this฀program.฀ Based฀on฀market฀conditions฀ and฀
other฀factors,฀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฀November฀ 2003,฀our฀Board฀ of฀Directors฀authorized฀
a฀share฀repurchase฀program.฀This฀program฀authorized฀us฀to฀
repurchase,฀through฀May฀21,฀2005,฀up฀to฀$300฀million฀of฀our฀
outstanding฀Common฀Stock฀(excluding฀ applicable฀transac-
tion฀fees).฀This฀share฀repurchase฀program฀was฀completed฀in฀
2004.฀During฀2004,฀we฀repurchased฀approximately฀8.1฀million฀
shares฀for฀approximately฀$294฀million฀at฀an฀average฀price฀
per฀share฀of฀approximately฀$36฀under฀this฀program.฀During฀
2003,฀we฀repurchased฀ approximately฀ 169,000฀ shares฀for฀
approximately฀$6฀million฀at฀an฀average฀ price฀per฀share฀ of฀
approximately฀$34฀under฀this฀program.
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฀repur-
chased฀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.
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Yum!฀Brands,฀Inc.