Pizza Hut 2007 Annual Report Download - page 73

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As of December 29, 2007, total deferrals to phantom shares
of our Common Stock within the EID Plan totaled approximately
6.1 million shares. We recognized compensation expense of
$9 million, $8 million and $4 million, including discount amorti-
zation of $5 million, $5 million and $4 million, in 2007, 2006 and
2005, respectively, for the EID Plan. These expense amounts do
not include the salary or bonus actually deferred into Common
Stock of $15 million, $17 million and $13 million in 2007, 2006
and 2005, respectively.
CONTRIBUTORY 401(K) 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 eli-
gible U.S. salaried and hourly employees. Participants are able to
elect to contribute up to 25% of eligible compensation on a pre-tax
basis. Participants may allocate their contributions to one or any
combination of 10 investment options within the 401(k) Plan. We
match 100% of the participant’s contribution to the 401(k) Plan
up to 3% of eligible compensation and 50% of the participant’s
contribution on the next 2% of eligible compensation. We recog-
nized as compensation expense our total matching contribution
of $13 million in 2007 and $12 million in 2006 and 2005.
19.
Shareholders’ Equity
Under the authority of our Board of Directors, we repurchased
shares of our Common Stock during 2007, 2006 and 2005. All
amounts exclude applicable transaction fees.
Shares Repurchased Dollar Value of
(thousands) Shares Repurchased
Authorization Date 2007 2006 2005 2007 2006 2005
October 2007 11,431 — — $ 437 $ — $ —
March 2007 15,092 — — 500 — —
September 2006 15,274 1,056 — 469 31 —
March 2006 —20,145 — —500 —
November 2005 —19,128 1,289 —469 31
May 2005 —— 20,279 —— 500
January 2005 —— 19,926 —— 500
May 2004 —— 1,068 —— 25
Total 41,797 40,329 42,562 $1,406
(a)
$1,000
(b)
$1,056
(a) Amounts excludes the effects of $17 million in share repurchases (0.6 million
shares) with trade dates prior to the 2006 fiscal year end but cash settlement
dates subsequent to the 2006 fiscal year end and includes the effect of $13 mil-
lion in share repurchases (0.4 million shares) with trade dates prior to the 2007
fiscal year end but cash settlement dates subsequent to the 2007 fiscal year.
(b) Amount includes effects of $17 million in share repurchases (0.6 million shares)
with trade dates prior to the 2006 fiscal year end but cash settlement dates
subsequent to the 2006 fiscal year end.
As of December 29, 2007, we have $813 million available for
future repurchases (includes the impact of shares repurchased
but not yet cash settled above) under our October 2007 share
repurchase authorization. Additionally, in January 2008 our Board
of Directors authorized additional share repurchases, through
January 2009, of up to an additional $1.25 billion (excluding
applicable transaction fees) of our outstanding Common Stock.
Based on market conditions and other factors, additional repur-
chases 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 deriva-
tive instruments and unrecognized actuarial losses are recorded
net of the related income tax effects. Refer to Note 16 for addi-
tional information about our pension accounting and Note 15
for additional information about our derivative instruments. The
following table gives further detail regarding the composition of
other accumulated comprehensive income (loss) at December 29,
2007 and December 30, 2006.
2007 2006
Foreign currency translation adjustment $ 94 $ —
Pension and post retirement losses, net of tax (64) (160)
Net unrealized losses on derivative instruments,
net of tax (10) 4
Total accumulated other comprehensive
income (loss) $ 20 $ (156)
20.
Income Taxes
The details of our income tax provision (benefit) are set forth
below:
2007 2006 2005
Current: Federal $ 229 $ 181 $ 241
Foreign 151 131 113
State (3) 2 11
377 314 365
Deferred: Federal (125) (33) (66)
Foreign 27 (13) (20)
State 316 (15)
(95) (30) (101)
$ 282 $ 284 $ 264
Included in the federal tax provision above for 2005 is approxi-
mately $20 million current tax 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 quali-
fied 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 Statements of Income to the
amounts on our tax returns.