Pizza Hut 2005 Annual Report Download - page 70

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฀adjustment.฀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%฀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฀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฀speci-
fied฀conditions.฀The฀rights฀expire฀on฀July฀21,฀2008,฀unless฀we฀
extend฀that฀date฀or฀we฀have฀earlier฀redeemed฀or฀exchanged฀
the฀right฀as฀provided฀in฀the฀Agreement.
This฀description฀of฀the฀right฀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฀Right฀Agent฀(both฀including฀the฀exhibits฀thereto).
18.฀SHAREHOLDERS’฀EQUITY
The฀Company฀initiated฀quarterly฀dividend฀payments฀to฀our฀
stockholders฀in฀2004.฀In฀2004,฀the฀Company฀declared฀three฀
cash฀dividends฀ of฀ $0.10฀ per฀ share฀of฀Common฀Stock.฀ In฀
2005,฀the฀Company฀declared฀one฀cash฀dividend฀of฀$0.10฀per฀
share฀of฀Common฀Stock฀and฀three฀cash฀dividends฀of฀$0.115฀
per฀share฀of฀Common฀Stock.฀The฀Company฀had฀dividends฀
payable฀of฀$32฀million฀and฀$29฀million฀as฀of฀December฀31,฀
2005฀and฀December฀25,฀2004,฀respectively.
Under฀the฀authority฀of฀our฀Board฀of฀Directors,฀we฀repur-
chased฀shares฀of฀our฀Common฀Stock฀in฀the฀following฀share฀
repurchase฀ programs฀ during฀ 2005,฀ 2004฀ and฀ 2003.฀ All฀
amounts฀exclude฀applicable฀transaction฀fees.
฀฀ Shares฀Repurchased฀฀ Dollar฀Value฀of฀
Program฀ (thousands)฀฀ ฀Shares฀Repurchased
Authorization฀Date฀฀ 2005฀ 2004฀ 2003฀ 2005฀ 2004฀ 2003
November฀2005฀ 644฀ —฀ —฀$฀ 31฀ $฀ —฀ $฀ —
May฀2005฀ 10,140฀ —฀ —฀ ฀ 500฀ ฀ —฀ ฀ —
January฀2005฀ 9,963฀ —฀ —฀ ฀ 500฀ ฀ —฀ ฀ —
May฀2004฀ 534฀ 5,953฀ —฀ ฀ 25฀ ฀275฀ ฀ —
November฀2003฀ —฀ 8,072฀ 169฀ ฀ —฀ ฀294฀ ฀ 6
November฀2002฀ —฀ —฀ 9,153฀ ฀ —฀ ฀ —฀ ฀272
Total฀฀ 21,281฀ 14,025฀ 9,322฀$฀1,056฀ $฀569฀ $฀278
As฀of฀December฀31,฀2005,฀we฀have฀$469฀million฀available฀
for฀ future฀ repurchases฀ under฀ our฀ November฀ 2005฀ share฀
repurchase฀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.
Accumulated฀ Other฀ Comprehensive฀ Income฀ (Loss)฀ ฀
Comprehensive฀ income฀ is฀ net฀ income฀ plus฀ certain฀ other฀
items฀ that฀ are฀ recorded฀ directly฀ to฀ shareholders’฀ equity.฀
Amounts฀ included฀ in฀ other฀ accumulated฀ comprehensive฀
loss฀for฀the฀Company’s฀derivative฀instruments฀and฀minimum฀
pension฀liability฀are฀recorded฀net฀of฀the฀related฀income฀tax฀
effects.฀The฀following฀table฀gives฀further฀detail฀regarding฀the฀
composition฀of฀other฀accumulated฀comprehensive฀loss฀at฀
December฀31,฀2005฀and฀December฀25,฀2004.
฀ ฀ 2005฀ 2004
Foreign฀currency฀translation฀฀
฀ adjustment฀฀ ฀ ฀ $฀ (59)฀ $฀ (34)
Minimum฀pension฀liability฀adjustment,฀฀
฀ net฀of฀tax฀ ฀ ฀ ฀(110)฀ ฀ (95)
Unrealized฀losses฀on฀derivative฀instruments,฀฀
฀ net฀of฀tax฀ ฀ ฀ ฀ (1)฀ ฀ (2)
Total฀accumulated฀other฀comprehensive฀loss฀ $฀(170)฀ $฀(131)
19.฀INCOME฀TAXES
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฀in฀the฀year฀ended฀December฀27,฀2003฀
due฀to฀the฀adoption฀of฀SFAS฀143.
฀2005฀ 2004฀ 2003
Current:฀ Federal฀ $฀ 241฀ $฀ 78฀ $฀181
฀ ฀ ฀ ฀ Foreign฀ ฀ 113฀ ฀ 79฀ ฀114
฀ ฀ ฀ ฀ State฀ ฀ 11฀ ฀ (13)฀ ฀ (4)
฀฀฀฀ ฀ ฀ 365฀ ฀144฀ ฀291
Deferred:฀ Federal฀ ฀ (66)฀ ฀ 41฀ ฀ (23)
฀ ฀ ฀ ฀ Foreign฀ ฀ (20)฀ ฀ 67฀ ฀ (16)
฀ ฀ ฀ ฀ State฀ ฀ (15)฀ ฀ 34฀ ฀ 16
฀฀฀฀ ฀ ฀(101)฀ ฀142฀ ฀ (23)
฀฀฀฀ ฀ $฀ 264฀ $฀286฀ $฀268
Included฀ in฀the฀federal฀ tax฀provision฀above฀ for฀2005฀and฀
2004฀is฀approximately฀$20฀million฀current฀tax฀and฀$6฀million฀
deferred฀ tax,฀ respectively,฀ provided฀ on฀ $500฀million฀ of฀
earnings฀in฀our฀foreign฀investments฀which฀we฀repatriated฀to฀
the฀U.S.฀in฀2005.฀We฀made฀the฀determination฀to฀repatriate฀
such฀earnings฀as฀the฀result฀of฀The฀American฀Jobs฀Creation฀Act฀
of฀2004฀which฀became฀law฀on฀October฀22,฀2004฀(the฀“Act”).฀
The฀Act฀allowed฀a฀dividends฀received฀deduction฀of฀85%฀of฀
repatriated฀qualified฀foreign฀earnings฀in฀fiscal฀year฀2005.
Taxes฀payable฀were฀reduced฀by฀$94฀million,฀$102฀million฀
and฀$26฀million฀in฀2005,฀2004฀and฀2003,฀respectively,฀as฀a฀
result฀of฀stock฀option฀exercises.
74.฀ ฀ ฀ |฀ ฀ ฀ Yum!฀Brands,฀Inc.