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Yum! Brands Annual Report, Year Ended Mar 2, 2006

Filing Date
Filed March 3, 2006
Period End
March 2, 2006
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 3, 2006. Cited figures are marked; the original filing is the authoritative source.

YUM!

Brands, Inc. reported fiscal 2005 total revenues of $9.35 billiona, up from $9.01 billion in 2004, and operating profit of $1.15 billion, essentially flat versus $1.16 billion in 2004. Net income rose to $762 million from $740 million, and diluted EPS increased to $2.55 from $2.42. The company operates KFC, Pizza Hut, Taco Bell, Long John Silver's and A&W, with over 34,000 units in more than 100 countries and territories.

Fiscal 2005 included a 53rd week, which added $96 millionb to revenues and $23 million to operating profit, and the adoption of SFAS 123R reduced net income by $38 million, or $0.13 per diluted share. Cash generation remained strong, with net cash provided by operating activities of $1.24 billion versus $1.19 billion in 2004. The company returned capital to shareholders through $1.06 billion of share repurchases and $123 million of dividends paid.

Management is targeting a dividend payout of 15% to 20% of net income, and a $500 millionc repurchase program authorized in November 2005 had $469 million remaining at year end. China Division system sales growth slowed to 11% excluding currency translation, below the company's ongoing target of at least 22%, due to a supplier ingredient issue and avian flu concerns.

Key legal exposures include the Cole Arbitration and related wage-and-hour claims at Long John Silver's, a disability access class action against Taco Bell covering approximately 220 California restaurants, and the Coldiron FLSA matter at Pizza Hut, which the company has provided for. Total debt was $1.86 billiond at year end, and the company had $809 million of unused capacity under its $1.0 billion Credit Facility.

02—Key points

Key Highlights

  1. Total revenues rose to $9.35 billion in 2005 from $9.01 billion in 2004, while Company sales increased to $8.23 billion from $7.99 billion.
  2. Operating profit was $1.15 billion in 2005, essentially flat versus $1.16 billion in 2004, as higher G&A expense and facility actions offset gains.
  3. Net income increased to $762 million from $740 million, and diluted EPS rose to $2.55 from $2.42.
  4. Fiscal 2005 included a 53rd week worth $96 million of revenue and $23 million of operating profit, and SFAS 123R adoption reduced net income by $38 million ($0.13 per share).
  5. China Division operating profit was $211 million and revenues were $1.30 billion, but system sales growth of 11% excluding currency translation fell short of the company's target of at least 22%.
  6. Share repurchases totaled $1.06 billion in 2005, and the company paid $123 million in dividends; $469 million remained under the November 2005 repurchase program.
  7. Operating cash flow was $1.24 billion, and total debt was $1.86 billion at year end, with $809 million unused under the Credit Facility.

03—Questions

Frequently Asked Questions

  1. How did YUM! Brands perform financially in fiscal 2005?

    Total revenues increased to $9.35 billion from $9.01 billion, and net income rose to $762 million from $740 million. Diluted EPS was $2.55 versus $2.42 in 2004. Operating profit was roughly flat at $1.15 billion.

  2. What affected fiscal 2005 results?

    Fiscal 2005 included a 53rd week that added $96 million to revenues and $23 million to operating profit. SFAS 123R adoption reduced operating profit by $58 million and net income by $38 million. Hurricanes Katrina and Rita, and a supplier ingredient issue in mainland China, also affected results.

  3. How is the company returning cash to shareholders?

    The company repurchased $1.06 billion of common stock in 2005 and paid $123 million in dividends. It declared $0.445 per share in dividends for 2005 and is targeting a payout ratio of 15% to 20% of net income. A $500 million repurchase program authorized in November 2005 had $469 million remaining at year end.

  4. What are the main legal exposures disclosed?

    The filing describes wage-and-hour litigation, including the Cole Arbitration against Long John Silver's, where the company says there can be no assurance losses will not exceed amounts provided. It also describes a Taco Bell disability access class action covering about 220 California company restaurants, for which the cost cannot be reasonably estimated, and the Coldiron FLSA case at Pizza Hut, for which a settlement amount has been provided.

  5. How strong is the company's liquidity position?

    Net cash provided by operating activities was $1.24 billion in 2005. The company had $809 million of unused capacity under its $1.0 billion Credit Facility at year end, with no borrowings outstanding under that facility. Total debt was $1.86 billion.

04—Continue

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