Pizza Hut 2006 Annual Report Download - page 69

74 YUM! BRANDS, INC.
19.
Shareholders’ Equity
The Company initiated quarterly dividend payments to our stock-
holders 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 Com-
mon Stock and three cash dividends of $0.115 per share of
Common Stock. In 2006, the Company declared one cash divi-
dend of $0.115 per share of common stock, three cash dividends
of $0.15 per share of common stock and one cash dividend of
$0.30 per share of common stock. The Company had dividends
payable of $119 million and $32 million as of December 30, 2006
and December 31, 2005, respectively.
Under the authority of our Board of Directors, we repurchased
shares of our Common Stock during 2006, 2005 and 2004. All
amounts exclude applicable transaction fees.
Shares Repurchased Dollar Value of
(thousands) Shares Repurchased
Authorization Date 2006 2005 2004 2006 2005 2004
September 2006 528 ——$ 31 $ — $ —
March 2006 10,073 ——500 ——
November 2005 9,564 644 — 469 31 —
May 2005 —10,140 — —500 —
January 2005 —9,963 — —500 —
May 2004 —534 5,953 —25 275
November 2003 —— 8,072 —— 294
Total 20,165 21,281 14,025 $ 1,000(a) $1,056 $569
(a) Amount includes effects of $17 million in share repurchases (0.3 million shares)
with trade dates prior to the year end but cash settlement dates subsequent to
year end.
As of December 30, 2006, we have $469 million available for
future repurchases (includes the impact of shares repurchased
but not yet cash settled above) under our September 2006 share
repurchase authorization. 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) Com-
prehensive 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, minimum pension liability and unrecog-
nized actuarial losses are recorded net of the related income
tax effects. Refer to Note 15 for additional information about our
pension accounting and Note 14 for additional information about
our derivative instruments. The following table gives further detail
regarding the composition of other accumulated comprehensive
income (loss) at December 30, 2006 and December 31, 2005.
2006 2005
Foreign currency translation adjustment $— $ (59)
Minimum pension liability adjustment, net of tax — (110)
Unrecognized actuarial losses, net of tax (160) —
Unrealized losses on derivative instruments,
net of tax 4 (1)
Total accumulated other comprehensive loss $ (156) $ (170)
20.
Income Taxes
The details of our income tax provision (benefit) are set forth
below.
2006 2005 2004
Current: Federal $ 181 $ 241 $ 78
Foreign 131 113 79
State 2 11 (13)
314 365 144
Deferred: Federal (33) (66) 41
Foreign (13) (20) 67
State 16 (15) 34
(30) (101) 142
$ 284 $ 264 $ 286
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 dividend received
deduction of 85% of repatriated qualified foreign earnings in fiscal
year 2005. The federal and state tax provision for 2006 includes
$4 million current tax benefit as a result of the reconciliation of
tax on repatriated earnings as recorded in our Consolidated State-
ments of Income to the amounts on our tax returns.
Total changes in valuation allowances were increases of
$109 million and $86 million in 2006 and 2004, respectively,
and a decrease of $36 million in 2005. The deferred tax provision
includes $4 million and $47 million of expense in 2006 and 2004,
respectively, and $39 million of benefit in 2005 for changes in val-
uation allowances due to changes in determinations regarding the
likelihood of use of certain deferred tax assets. The deferred tax
provisions also include $72 million, $26 million and $12 million
in 2006, 2005 and 2004, respectively, for increases in valuation
allowances recorded against deferred tax assets generated during
the year. Additionally, currency translation and other adjustments
contributed to the fluctuations. See additional discussion of fed-
eral valuation allowances adjustments in the effective tax rate
discussion below.
The 2006 state deferred tax provision includes $12 million
($8 million, net of federal tax) expense for the impact of state
law changes. The 2005 state deferred tax provision includes
$8 million ($5 million, net of federal tax) expense for the impact
of changes in state statutory tax rates. The deferred foreign tax
provision includes $2 million expense and $1 million benefit in
2006 and 2004, respectively, for the impact of changes in statu-
tory tax rates in various countries.
U.S. and foreign income before income taxes are set forth
below:
2006 2005 2004
U.S. $ 626 $ 690 $ 690
Foreign 482 336 336
$ 1,108 $ 1,026 $ 1,026
The above U.S. income includes all income taxed in the U.S. even
if the income is earned outside the U.S.