Pizza Hut 2009 Annual Report Download - page 164

73
Common Stock Share Repurchases. From time to time, we repurchase shares of our Common Stock under share
repurchase programs authorized by our Board of Directors. Shares repurchased constitute authorized, but unissued shares
under the North Carolina laws under which we are incorporated. Additionally, our Common Stock has no par or stated
value. Accordingly, we record the full value of share repurchases, upon the trade date, against Common Stock except
when to do so would result in a negative balance in our Common Stock account. In such instances, on a period basis, we
record the cost of any further share repurchases as a reduction in retained earnings. Due to the large number of share
repurchases and the increase in our Common Stock market value over the past several years, our Common Stock balance
is frequently zero at the end of any period. Accordingly, $1,434 million and $1,154 million in share repurchases were
recorded as a reduction in Retained earnings in 2008 and 2007, respectively. There were no shares of our Common Stock
repurchased during 2009. See Note 18 for additional information.
Pension and Post-retirement Medical Benefits. We measure and recognize the overfunded or underfunded status of our
pension and post-retirement plans as an asset or liability in our Consolidated Balance Sheet as of our fiscal year end. The
funded status represents the difference between the projected benefit obligation and the fair value of plan assets. The
projected benefit obligation is the present value of benefits earned to date by plan participants, including the effect of
future salary increases, as applicable. The difference between the projected benefit obligation and the fair value of assets
that has not previously been recognized as expense is recorded as a component of Other comprehensive income (loss).
Prior to 2008, we measured and recognized the funded status of certain plans on dates that did not coincide with our fiscal
year end. As required by the Financial Accounting Standards Board (“FASB”), we changed these plans’ measurement
dates in 2008 to coincide with our fiscal year end and estimated the impact based on the measurements performed in 2007.
The change in the measurement dates resulted in a decrease to Retained Earnings of $9 million, or $6 million after-tax, for
our pension plans and $2 million, or $1 million after-tax, for our post-retirement medical plan, respectively, during the
fourth quarter of 2008.
Note 3 – Two-for-One Common Stock Split
On May 17, 2007, the Company announced that its Board of Directors approved a two-for-one split of the Company’s
outstanding shares of Common Stock. The stock split was effected in the form of a stock dividend and entitled each
shareholder of record at the close of business on June 1, 2007 to receive one additional share for every outstanding share
of Common Stock held. The stock dividend was distributed on June 26, 2007, with approximately 261 million shares of
Common Stock distributed. All per share and share amounts in these Consolidated Financial Statements and Notes to the
Consolidated Financial Statements have been adjusted to reflect the stock split.
Note 4 – Earnings Per Common Share (“EPS”)
2009 2008 2007
Net Income – YUM! Brands, Inc.
$
1,071 $ 964 $ 909
Weighted-average common shares outstanding (for basic
calculation) 471 475 522
Effect of dilutive share-based employee compensation 12 16 19
Weighted-average common and dilutive potential common shares
outstanding (for diluted calculation) 483 491 541
Basic EPS
$
2.28 $ 2.03 $ 1.74
Diluted EPS
$
2.22 $ 1.96 $ 1.68
Unexercised employee stock options and SARs (in millions)
excluded from the diluted EPS compensation(a) 13.3 5.9 5.7
(a) These unexercised employee stock options and SARs were not included in the computation of diluted EPS
b
ecause to do so would have been antidilutive for the periods presented.
Form 10-K