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.

We have 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 those years.


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 consists of three components:

  • Gains and losses on sales of our restaurants to new and existing   franchisees,
  • 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.