|Unexercised employee stock options to
purchase approximately 1 million shares of our Common Stock for the year ended December
26, 1998 were not included in the computation of diluted EPS because their exercise prices
were greater than the average market price of our Common Stock during the year.
omitted EPS data for the years ended December 27, 1997 and December 28, 1996 since we were
not an independent, publicly owned company with a capital structure of our own during
1997 FOURTH QUARTER CHARGE
Our 1997 fourth quarter charge of $530 million ($425
million after-tax) represented actions taken to refocus our business. The charge included
estimates for (1) costs of closing underperforming stores during 1998, primarily at Pizza
Hut and internationally; (2) reduction to fair market value, less costs to sell, of the
carrying amounts of certain restaurants we intended to refranchise in 1998; (3) impairment
of certain restaurants intended to be used in the business; (4) impairment of certain
joint venture investments to be retained; and (5) costs of related personnel reductions.
The 1997 fourth quarter charge included liabilities of approximately $129 million and
asset writedowns of approximately $401 million. The liabilities consisted primarily of
occupancy-related costs and, to a much lesser extent, severance. The components of the
1997 fourth quarter charge are detailed below:
In 1998, favorable adjustments of $54 million ($33 million
after-tax) and $11 million ($7 million after-tax) were included in facility actions net
gain and unusual charges, respectively. These adjustments primarily relate to decisions to
retain certain stores originally expected to be disposed of, better-than-expected proceeds
from refranchisings and lease settlements with certain lessors related to stores closed.
FACILITY ACTIONS NET (GAIN) LOSS
Facility actions net (gain) loss consists of three
- Gains and losses on sales of our restaurants to new and existing
- Costs of closing our underperforming stores and
- Impairment charges both for restaurants we intend to continue to use in the business
and, since April 23, 1998, restaurants we intend to close beyond the quarter in which the
closure decision is made.