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Yum! Brands Annual Report, Year Ended Dec 25, 1999

Filing Date
Filed March 6, 2000
Period End
December 25, 1999
Security
YUM
In the record · 2016–202610-K1110-Q328-K146

YUM filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 146 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Material agreement8-K · Sep ’19Sep ’19
  3. Leadership change8-K · Sep ’21Sep ’21
  4. Material agreement8-K · Sep ’25Sep ’25

01—Abstract

Summary

Summary of the 10-K filed March 6, 2000. Cited figures are marked; the original filing is the authoritative source.

Tricon Global Restaurants, Inc. reported 1999 system sales of $21.8 billiona (up 6% from 1998) and total revenues of $7.82 billion, down 8% as refranchising reduced Company sales to $7.10 billion.

Operating profit rose 21% to $1.24 billionb and diluted EPS was $3.92 versus $2.84 in 1998, helped by $381 million of facility actions net gains and $29 million of favorable accounting changes. Ongoing operating profit grew 15% to $881 million, and net income increased to $627 million. Company ownership of system units fell to 23% at year-end 1999, and the company says it expects to refranchise roughly 500 to 600 restaurants in 2000, versus over 1,400 in 1999, so refranchising gains are expected to be significantly lower.

The filing's most significant risk factor is the January 31, 2000 Chapter 11 filing by AmeriServe Food Distribution, the company's primary U.S. food distributor. Tricon wrote off about $41 million of receivables, committed up to $70 millionc to a $150 million debtor-in-possession facility, and began a temporary direct purchase program for supplies. The company says it believes it can arrange alternative distribution if needed but cannot predict the ultimate impact.

Balance sheet items show total debt of $2.51 billiond, long-term debt of $2.39 billion, and a shareholders' deficit of $560 million at year-end 1999, down from $3.53 billion in total debt in 1998. The company reports it does not presently intend to pay dividends.

02—Key points

Key Highlights

  1. System sales rose 6% to $21.8 billion in 1999, with international system sales up 10% to $7.2 billion, led by Asia (up 19%).
  2. Total revenues fell 8% to $7.82 billion as refranchising reduced Company sales 10% to $7.10 billion; franchise and license fees grew 15% to $723 million.
  3. Operating profit increased 21% to $1.24 billion, including $381 million of facility actions net gains and $51 million of unusual items.
  4. Net income rose to $627 million, or $3.92 diluted EPS, compared with $445 million, or $2.84, in 1998.
  5. Total debt was reduced to $2.51 billion from $3.53 billion; the company repurchased 3.3 million shares for $134 million under a $350 million program.
  6. AmeriServe's January 31, 2000 Chapter 11 filing created supply and receivables risk; Tricon wrote off about $41 million and committed up to $70 million to a debtor-in-possession facility.
  7. Company ownership of system units declined to 23% at year-end 1999, and 2000 refranchising is expected to be 500 to 600 restaurants versus over 1,400 in 1999.

03—Questions

Frequently Asked Questions

  1. Why did revenues decline while system sales and profit grew?

    Revenues fell 8% to $7.82 billion because the company refranchised 1,435 units in 1999, reducing Company sales by $753 million, or 10%. The filing attributes this decline to the portfolio effect. System sales, which include franchisee and licensee sales, grew 6%, and operating profit rose 21%, aided by refranchising gains and higher franchise fees.

  2. How significant is the AmeriServe bankruptcy for the company?

    The filing says AmeriServe is the primary U.S. distributor and that the company had about $43 million of receivables from it at year-end 1999. The company wrote off about $41 million and committed up to $70 million to a $150 million debtor-in-possession facility. Tricon says it can arrange alternative distributors but could face short-term delays and cannot predict the ultimate impact.

  3. Will refranchising continue to boost earnings in 2000?

    Not at the 1999 pace. The company expects to refranchise approximately 500 to 600 restaurants in 2000 compared with over 1,400 in 1999, and it estimates 2000 refranchising gains will be significantly less than 1999 gains. It also expects 2000 combined operating and refranchising cash flow to be lower than 1999.

  4. What is the company's capital structure and dividend policy?

    Total debt was $2.51 billion at year-end 1999, with a $3 billion revolving credit facility and a term loan both maturing October 2, 2002. The company reported a total shareholders' deficit of $560 million. The company does not presently intend to pay dividends on its common stock.

  5. How has the company's ownership mix changed?

    Company-operated units fell to 23% of total system units at year-end 1999, down from 47% at year-end 1994 and from 28% a year earlier. Franchisees operated about 62% of units and licensees about 11%. The company's stated target is roughly 20% Company ownership.

04—Continue

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