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Yum! Brands Annual Report, Year Ended Dec 29, 2001

Filing Date
Filed March 11, 2002
Period End
December 29, 2001
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 11, 2002. Cited figures are marked; the original filing is the authoritative source.

TRICON Global Restaurants, Inc. (filed as TRICON; now Yum!

Brands, Inc.) reported fiscal 2001 system sales of $22.33 billiona, up from $22.16 billion in 2000, and revenues of $6.95 billion, down from $7.09 billion. Net income rose to $492 million ($3.24 diluted EPS) from $413 million ($2.77 diluted EPS in 2000). Operating profit was $891 million, and the company describes ongoing operating profit of $889 million, flat versus $888 million in 2000.

The company substantially completed its refranchising program in 2001, selling 233 units, which reduced Company sales and restaurant margin dollars while raising the share of system units operated by franchisees and licensees. The company operates 30,489 units across KFC, Pizza Hut and Taco Bell, with 10,927 international units. Operating cash flow improved to $832 millionb from $491 million, mainly due to collection of receivables established in 2000 and the absence of 2000 AmeriServe-related charges.

Capital spending was $636 millionc. Total debt was $2.25 billion at year-end, and shareholders' equity turned positive at $104 million from a deficit of $322 million. Short-term borrowings of $696 million include $536 million of Credit Facilities maturing in October 2002, which management says it is negotiating to replace.

The company issued $850 milliond of senior unsecured notes in 2001 and cut its revolving facility from $3.0 billion to $1.75 billion in February 2002. The filing states that the company does not presently intend to pay dividends. Key risks disclosed include the Taco Bell Bravo wage-and-hour litigation, where a damages trial for 93 claimants began in February 2002; the Wrench lawsuit, whose outcome the company says cannot be predicted; franchisee financial difficulties, mainly at Taco Bell; and potential tax indemnities to PepsiCo related to the Spin-off.

02—Key points

Key Highlights

  1. Fiscal 2001 net income of $492 million, or $3.24 diluted EPS, compared with $413 million, or $2.77 diluted EPS, in 2000
  2. System sales of $22.33 billion, up from $22.16 billion; total revenues of $6.95 billion, down from $7.09 billion
  3. Ongoing operating profit of $889 million, flat versus $888 million in 2000
  4. Operating cash flow of $832 million, up from $491 million, driven by receivable collections and the absence of 2000 AmeriServe charges
  5. Total shareholders' equity of $104 million, compared with a deficit of $322 million at year-end 2000
  6. Issued $850 million of senior unsecured notes in 2001; the revolving facility was reduced to $1.75 billion from $3.0 billion in February 2002
  7. Company does not presently intend to pay dividends on its common stock

03—Questions

Frequently Asked Questions

  1. Is the company's refranchising program still reducing its reported revenues?

    The filing states the refranchising program was substantially completed in 2001, after 233 units were refranchised that year. Company sales fell $167 million, or 3%, to $6.14 billion, as units moved to franchisees, although the filing says the decline was flat excluding currency effects and the 53rd week in 2000.

  2. How much debt is coming due, and what is the refinancing plan?

    Amounts outstanding under the Credit Facilities of $536 million were classified as short-term borrowings because the facilities mature in October 2002. The company says it is in negotiations to replace them with new borrowings on terms available at that time.

  3. What are the main litigation exposures disclosed?

    The Bravo wage-and-hour class action against Taco Bell had a jury trial on damages for 93 claimants beginning February 25, 2002, expected to last six to eight weeks; the company says the cost beyond amounts provided will not be material. The Wrench lawsuit against Taco Bell has been returned to the District Court, and its outcome cannot be predicted at this time.

  4. Why did the company's Taco Bell franchisees cause concern?

    The filing states that certain Taco Bell franchise operators experienced financial problems in 2000 and 2001. Through February 11, 2002, restructurings were completed for approximately 1,000 Taco Bell franchise restaurants, and Taco Bell acquired 123 of them for approximately $65 million. The company expects restructurings to be significantly less in number and cost in 2002.

04—Continue

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