UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
Date of Report (Date of earliest event reported)
July 23, 2002
Commission file number 1-13163
YUM! BRANDS, INC.
(Exact name of registrant as specified in its charter)
| North Carolina | 13-3951308 | |
| (State or other jurisdiction | (IRS Employer | |
| of incorporation or organization) | Identification No.) |
1441 Gardiner Lane, Louisville, Kentucky
40213
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (502) 874-8300
Former name or former address, if changed since last report: N/A
Item 5. OTHER EVENTS
On July 23, 2002 YUM! Brands, Inc. issued a press release with respect to earnings for the second quarter ended June 15, 2002. A copy of such press release is attached hereto as Exhibit 99 and incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99 Press release dated July 23, 2002 from YUM! Brands, Inc.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| YUM! BRANDS, INC. (Registrant) |
| Date: July 24, 2002 | /s/ Brent A. Woodford |
| Vice President and Controller |
| (Principal Accounting Officer) |
3
LOUISVILLE, Ky. (July 23, 2002) - Yum! Brands, Inc. (NYSE: YUM) today reported results for the second quarter ended June 15, 2002.
Highlights of the second quarter:
Financial Highlights
($ Millions Except Per Diluted Share Amounts)
% Change % Change
Vs. Vs.
Q2 Prior Year YTD Prior Year
---------- ------------- ---------- -------------
System Sales 5,458 7 10,701 6
Revenues 1,767 10 3,381 9
Ongoing Operating Earnings 143 28 267 34
As % of Revenue 8.1% +1.2 ppts 7.9% +1.5 ppts
====================================================================================
Ongoing Operating EPS 0.45 24 0.86 30
====================================================================================
Net Facility Actions EPS (0.02) NM (0.05) NM
Unusual Items EPS 0.02 NM 0.04 NM
Reported EPS 0.45 17 0.85 25
4
David C. Novak, Chairman and CEO said, "Yum! Brands had an outstanding first half, and we expect continued earnings growth for the balance of the year. Our second-quarter results were even better than expected, driven by exceptional performance at our international business and Taco Bell.
"International revenues grew at a record rate of 18%, and international ongoing operating profits increased 47%. U.S. blended company same-store sales increased 3%, and U.S. ongoing operating profit grew 16%. Taco Bell led the way with 8% company same-store sales growth.
"We also continued to make significant progress in executing our innovative and unique multibranding strategy where we offer our customers the choice of two great brands in one restaurant. To this end, we successfully completed the acquisition of the Long John Silver's and A&W restaurant brands. The addition of these two brands more than triples the long-term opportunities for multibranded locations in the U.S. to more than 13,000 restaurants. Combinations of these two brands with KFC and Taco Bell on average drive 20% to 30% increases in sales and at least a 30% increase in average unit cash flow.
"Importantly, we are steadily improving restaurant operations and our customer satisfaction measures. We have successfully launched our global Customer Mania initiative with the objective of training our 725,000 system team members globally in customer satisfaction skills each and every quarter, every year. We believe our operational focus will improve our customers' experiences and allow us to drive sales results.
"For the third quarter, we expect ongoing operating EPS to grow at a low- to mid-teens rate resulting in a range of $0.45 to $0.47 per share. Given both the strength of our results in the first half of 2002 and our outlook for the third quarter, we are raising our full-year 2002 ongoing operating EPS guidance from a range of $1.82-$1.85 to at least $1.88."
Following is an update on Yum! Brands' business segments and key drivers, which include global expansion, portfolio of leading U.S. brands, multibranding, franchise fees and cash generation and returns:
Q2 Year to Date
-------------------------------------- -----------------------------------------
Inc/(Dec) Inc/(Dec)
------------------ ----------------------
($ millions) 2002 2001 Reported Excl F/x(a) 2002 2001 Reported Excl F/x(a)
------ ------ --------- ----------- ------ ------ ---------- -------------
Revenue 567 481 +18% +19% 1,047 917 +14% +16%
Restaurant Margin 16.0% 12.1% +3.9ppts +3.9ppts 15.7% 13.3% +2.4ppts +2.4ppts
Ongoing Operating 86 58 +47% +50% 168 132 +27% +31%
Profit
5
In the second quarter and year to date for Yum! Brands' international business, net new-restaurant development was the primary driver of revenue growth.
For the full year 2002, the company expects, in U.S. dollar terms, international revenues to grow at a low- to mid-teens rate and ongoing operating profit to grow at least 20%. Based on current foreign currency rates, the company expects an approximate neutral to slightly positive impact of foreign currency conversion on ongoing operating profit for the year. The Australian dollar, British pound sterling, Canadian dollar, Chinese renminbi, Japanese yen, Korean won, and Mexican peso are all important currencies in the company's international business.
Q2 Year to Date
------------------------------- -------------------------------
($ millions) 2002 2001 Inc/(Dec) 2002 2001 Inc/(Dec)
U.S. Portfolio +3% +1% NM +4% Even NM
Same-Store Sales(a)
Revenue 1,200 1,124 +7% 2,334 2,194 +6%
Restaurant Margin 17.0% 15.6% +1.4ppts 16.4% 14.7% +1.7ppts
Ongoing Operating Profit 199 172 +16% 374 312 +20%
In the second quarter for Yum! Brands' U.S. portfolio, blended same-store sales at company restaurants increased 3% and consisted of an 8% increase at Taco Bell, a 3% increase at KFC, and a 3% decrease at Pizza Hut. An increase in system-wide blended same-store sales drove 3 percentage points of revenue growth, and the acquisition of Long John Silver's and A&W contributed 4 percentage points of revenue growth. The acquisition occurred during Week 7 of the 12-week second quarter.
Year to date, blended portfolio same-store sales at company restaurants increased 4% and consisted of an 8% increase at Taco Bell, a 4% increase at KFC, and same-store sales that were even with last year at Pizza Hut. Increases in system-wide blended same-store sales drove revenue growth.
For the full year 2002, the company expects U.S. blended company same-store sales growth of 3%, U.S. revenues to increase 9% to 10% and U.S. ongoing operating profit to increase at a high single-digit rate. The company expects the acquisition of Long John Silver's and A&W to contribute 6 to 7 percentage points of revenue growth on a full-year basis. Additionally, for the U.S. business, the company expects the adoption of SFAS 142 to contribute 2 to 3 percentage points and the acquisition of Long John Silver's and A&W to contribute 1 to 2 percentage points of ongoing operating profit growth on a full-year basis.
6
Q2 Year to Date
New Restaurant Openings(a)
Worldwide 270 506
International 190 361
United States 80 145
Restaurant Net Growth Vs. Q2 2001(a)(b)
Worldwide 2%
International 6%
United States (1)%
Restaurant growth in the company's four high-growth international markets - China, Mexico, Korea, and the U.K. - drove worldwide and international net restaurant growth versus second-quarter 2001. Versus second-quarter 2001, net restaurant growth was 40% in China, 13% in Korea, 12% in Mexico, and 9% in the U.K.
One point not reflected, which primarily affects U.S. net restaurant-growth statistics, is the impact of multibranding on our U.S. restaurant system. Multibrand conversions, while increasing the sales and points of distribution of the added brand, result in no additional unit counts. Though no additional unit counts are realized, these conversions generally drive significant increases in same-store sales and result in upgraded, new-image restaurants for the U.S. business. Similarly, a newly opened multibrand unit, while increasing sales and points of distribution of two brands, results in just one additional unit count.
For the full-year 2002, we expect 5% to 6% net growth in international restaurants and no change in the U.S. This forecast excludes licensed locations.
Q2 Year to Date
System-wide Multibrand Net Additions(a) 52 89
Total System-wide Multibrand Restaurants(b) 1,757
In the quarter, U.S. net additions totaled 47 and international five. In the U.S., company and franchise net additions were 27 and 20 respectively. About 50% of the U.S. multibrand additions represented conversions of existing single-brand restaurants, and 50% represented new-restaurant openings.
Our multibranding program with KFC and Taco Bell partnering with Long John Silver's and A&W continues to grow with 14 additions completed during the quarter. Results remain very strong with average unit volume increases of 20% to 30%.
7
In 2002, Yum! Brands continues to expect to add at least 325 company and franchise multibranded restaurants through new-restaurant openings and conversions of existing restaurants. About 60% of these additions are expected to be conversions of single-brand restaurants to multibrands and 40% are expected to be new multibrand restaurants.
Q2 Year to Date
Franchise Restaurant Net Growth Vs. Q2 2001(a) +1%
Franchise Fees ($ millions)(b) 196 384
Growth Vs. 2001 +3% +4%
In the second quarter and year to date, positive worldwide franchise same-store sales growth drove franchise-fee growth. Foreign currency translation negatively impacted year-over-year growth for the second quarter and year to date by one percentage point. The acquisition of Long John Silver's and A&W contributed one percentage point of franchise-fee growth in the second quarter and on a year-to-date basis.
For the full year 2002, the company expects franchise fees to grow to at least $850 million.
($ millions) Q2 Year to Date Cash Flow from Ongoing Operations(a) 223 425 Cash Generated 367 624 Capital Spending and Acquisitions(b) 170 284
Cash generated for the second quarter included $53 million of employee stock-option proceeds.
For 2002, the company expects cash flow from ongoing operations to exceed $925 million, which more than funds capital-expenditure needs of an estimated $800 million. Additionally, the company expects total cash generated to be nearly $1.2 billion, including $200 million of proceeds from stock-option exercises and $65 million from after-tax refranchising proceeds.
The company expects to earn $0.45 to $0.47 in ongoing operating EPS.
8
Projected factors contributing to the company's EPS expectations are . . .
Yum! Brands now expects to earn at least $1.88 of ongoing operating EPS for the full year. Our previous guidance was $1.82-$1.85 of ongoing operating EPS.
Estimated U.S. portfolio blended same-store sales at company restaurants increased 3% during the four-week period ended July 13, 2002 (Period 7). For the comparable four-week period, U.S. same-store sales increased 9% at Taco Bell and 3% at KFC and decreased 2% at Pizza Hut.
For Period 7, International system sales increased 14% prior to foreign currency conversion or 15% after conversion to U.S. dollars. Year-to-date international system sales increased 10% prior to foreign currency conversion or 7% after conversion to U.S. dollars.
Same-store sales results for Period 8, 2002 (primarily the latter half of July and first half of August for the U.S. business), will be released Thursday, August 15, 2002, prior to the Market's opening.
9
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include those identified by such words as may, will, expect, anticipate, believe, plan and other similar terminology. These "forward-looking" statements reflect management's current expectations regarding future events and operating and financial performance and are based on currently available data. However, actual results are subject to future events and uncertainties, which could cause actual results to differ from those projected in this announcement. Factors that can cause actual results to differ materially include: changes in global and local business, economic and political conditions in the countries and territories where Yum! Brands operates; changes in currency exchange and interest rates; changes in commodity, labor and other operating costs; changes in competition in the food industry, consumer preferences, spending patterns and demographic trends; the effectiveness of our operating initiatives and advertising and promotional efforts; new-product and concept development by Yum! Brands and other food-industry competitors; the success of our refranchising strategy; the ongoing business viability of our franchise and license operators; our ability to secure alternative distribution to our restaurants at competitive rates and to ensure adequate supplies of restaurant products and equipment in our stores; our actuarially determined casualty loss estimates; changes in legislation and governmental regulation; and changes in accounting policies and practices. Further information about factors that could affect Yum! Brands' financial and other results are included in the company's Forms 10-Q and 10-K, filed with the Securities and Exchange Commission.
Yum! Brands, Inc. will hold a conference call to review the company's operating and financial performance at 9:00 a.m. EDT Wednesday, July 24, 2002.
For U.S. callers, the number is 877/815-2029. For international callers, the number is 706/645-9271.
The call will be available for playback beginning Wednesday, July 24, at noon EDT through Friday, August 9, at midnight EDT. To access the playback, dial 800/642-1687 in the U.S.A. and 706/645-9291 internationally. The playback pass code is 4602718.
The call and the playback can be accessed via the Internet by visiting Yum! Brands' Web site: www.yum.com and selecting "2nd Quarter Earnings Web Cast." (Windows Media Player is required, which can be downloaded at no charge from the following link: http://www.microsoft.com/windows/windowsmedia/players.asp. The process could take several minutes.)
Analysts are invited to contact
Tim Jerzyk, Vice President Investor Relations at 502/874-2543
Scott Colosi, Director Investor Relations at 502/874-8918
Members of the media are invited to contact
Amy Sherwood, Vice President Public Relations at 502/874-8200
Individual shareholders are invited to contact
Scott Colosi, Director Investor Relations at 502/874-8918
10
Yum! Brands, Inc.
Condensed Consolidated Statements of Income
(amounts in millions, except per share amounts)
(unaudited)
12 Weeks Ended 24 Weeks Ended
------------------------ % Change -------------------- % Change
6/15/02 6/16/01 B/(W) (a) 6/15/02 6/16/01 B/(W) (a)
----------- ----------- --------- ---------- ---------- ---------
Revenues
Company sales $ 1,571 $ 1,416 11 $ 2,997 $ 2,742 9
Franchise and license fees 196 189 3 384 369 4
----------- ---------- ---------- ----------
Revenues 1,767 1,605 10 3,381 3,111 9
----------- ----------- ---------- ----------
Costs and expenses, net
Company restaurants
Food and paper 482 442 (9) 921 852 (8)
Payroll and employee benefits 422 390 (8) 817 761 (7)
Occupancy and other operating
expenses 405 378 (7) 774 737 (5)
----------- ----------- ---------- ----------
1,309 1,210 (8) 2,512 2,350 (7)
General and administrative expenses 215 190 (12) 397 363 (9)
Franchise and license expenses(b) 9 17 46 19 34 43
Other (income) expense(c) (8) (5) 60 (13) (9) 43
Facility actions net loss (gain)(d) 10 (18) NM 19 (16) NM
Unusual items (income) (e) (9) (4) NM (20) (2) NM
----------- ----------- ---------- ----------
Total costs and expenses, net 1,526 1,390 (10) 2,914 2,720 (7)
----------- ----------- ---------- ----------
Operating profit 241 215 13 467 391 20
Interest expense, net 33 37 8 67 76 11
----------- ----------- ---------- ----------
Income before income taxes 208 178 17 400 315 27
Income tax provision 68 62 (9) 136 111 (23)
---------- ----------- ---------- ----------
Net income(f) 140 $ 116 21 264 $ 204 29
=========== =========== ========== ==========
Basic EPS Data(g)
EPS $ 0.47 $ 0.40 19 $ 0.89 $ 0.70 29
=========== =========== ========== ==========
Average shares outstanding 297 294 (1) 296 294 (1)
=========== =========== ========== ==========
Diluted EPS Data(g)
EPS $ 0.45 $ 0.38 17 $ 0.85 $ 0.68 25
=========== =========== ========== ==========
Average shares outstanding 314 304 (3) 312 303 (3)
=========== =========== ========== ==========
See accompanying notes.
11
Yum! Brands, Inc.
WORLDWIDE Ongoing Operating Results
(amounts in millions, except per share amounts)
(unaudited)
12 Weeks Ended 24 Weeks Ended
------------------------ % Change --------------------- % Change
6/15/02 6/16/01 B/(W)(a) 6/15/02 6/16/01 B/(W)(a)
----------- ----------- ------------ ---------- ----------- ---------------
System sales $ 5,458 $ 5,114 7 $ 10,701 $ 10,093 6
=========== =========== ========== ===========
Company sales $ 1,571 $ 1,416 11 $ 2,997 $ 2,742 9
Franchise and license fees 196 189 3 384 369 4
----------- ----------- ---------- -----------
Revenues 1,767 1,605 10 3,381 3,111 9
----------- ----------- ---------- -----------
Company restaurants
Food and paper 482 442 (9) 921 852 (8)
Payroll and employee benefits 422 390 (8) 817 761 (7)
Occupancy and other operating
expenses 405 378 (7) 774 737 (5)
----------- ----------- ---------- -----------
1,309 1,210 (8) 2,512 2,350 (7)
General and administrative expenses 215 190 (12) 397 363 (9)
Franchise and license expenses(b) 9 17 46 19 34 43
Other (income)(c) (8) (5) 60 (13) (9) 43
----------- ----------- ---------- -----------
Ongoing operating profit(f)(h) 242 193 26 466 373 25
Interest expense, net 33 37 8 67 76 11
Income tax provision 66 45 (48) 132 98 (36)
----------- ----------- ---------- -----------
ONGOING OPERATING EARNINGS(h) $ 143 $ 111 28 $ 267 $ 199 34
=========== =========== ========== ===========
ONGOING OPERATING EPS(f)(g)(h) $ 0.45 $ 0.36 24 $ 0.86 $ 0.66 30
=========== =========== ========== ===========
Average shares outstanding -
diluted(g) 314 304 (3) 312 303 (3)
=========== =========== ========== ===========
Ongoing operating tax rate 31.8% 28.8% (3.0) ppts. 33.2% 32.8% (0.4) ppts.
=========== =========== ========== ===========
Company sales 100.0% 100.0% 100.0% 100.0%
Food and paper 30.7 31.2 0.5 ppts. 30.7 31.1 0.4 ppts.
Payroll and employee benefits 26.9 27.6 0.7 ppts. 27.3 27.7 0.4 ppts.
Occupancy and other operating
expenses 25.7 26.7 1.0 ppts. 25.8 26.9 1.1 ppts.
----------- ----------- ---------- -----------
Restaurant margin(f) 16.7% 14.5% 2.2 ppts. 16.2% 14.3% 1.9 ppts.
=========== =========== ========== ===========
Reconciliation of Ongoing Operating Profit to Reported Operating Profit
-------------------------------------------------------------------------------------------------------------------
U.S. ongoing operating profit $ 199 $ 172 16 $ 374 $ 312 20
International ongoing operating
profit 86 58 47 168 132 27
Unallocated and corporate expense (43) (36) (17) (76) (69) (9)
Foreign exchange (loss) - (1) NM - (2) NM
----------- ----------- ---------- -----------
Ongoing operating profit $ 242 $ 193 26 $ 466 $ 373 25
Facility actions net (loss) gain(d) (10) 18 NM (19) 16 NM
Unusual items income (expense) (e) 9 4 NM 20 2 NM
----------- ----------- ---------- -----------
Reported operating profit $ 241 $ 215 13 $ 467 $ 391 20
=========== =========== ========== ===========
12
Yum! Brands, Inc.
UNITED STATES Ongoing Operating Results
(amounts in millions)
(unaudited)
12 Weeks Ended 24 Weeks Ended
------------------------ % Change ---------------------- % Change
6/15/02 6/16/01 B/(W)(a) 6/15/02 6/16/01 B/(W)(a)
----------- ----------- ----------- ----------- ---------- -------------
System sales $ 3,590 $ 3,381 6 $ 7,017 $ 6,610 6
=========== =========== =========== ==========
Company sales $ 1,069 $ 997 7 $ 2,079 $ 1,949 7
Franchise and license fees 131 127 2 255 245 4
----------- ----------- ----------- ----------
Revenues 1,200 1,124 7 2,334 2,194 6
----------- ----------- ----------- ----------
Company restaurants
Food and paper 300 285 (5) 586 558 (5)
Payroll and employee benefits 330 306 (8) 644 602 (7)
Occupancy and other operating
expenses 258 250 (4) 509 502 (1)
----------- ----------- ----------- ----------
888 841 (6) 1,739 1,662 (5)
General and administrative
expenses 107 99 (8) 206 192 (7)
Franchise and license
expenses(b) 6 12 45 15 28 45
----------- ----------- ----------- ----------
Ongoing operating profit(f) $ 199 $ 172 16 $ 374 $ 312 20
=========== =========== =========== ==========
Company sales 100.0% 100.0% 100.0% 100.0%
Food and paper 28.0 28.6 0.6 ppts. 28.1 28.6 0.5 ppts.
Payroll and employee benefits 30.8 30.8 - 31.0 30.9 (0.1) ppts.
Occupancy and other operating
expenses 24.2 25.0 0.8 ppts. 24.5 25.8 1.3 ppts.
----------- ----------- ----------- ----------
Restaurant margin(f) 17.0% 15.6% 1.4 ppts. 16.4% 14.7% 1.7 ppts.
=========== =========== =========== ==========
13
Yum! Brands, Inc.
INTERNATIONAL Ongoing Operating Results
(amounts in millions)
(unaudited)
12 Weeks Ended 24 Weeks Ended
------------------------ % Change ---------------------- % Change
6/15/02 6/16/01 B/(W)(a) 6/15/02 6/16/01 B/(W)(a)
----------- ----------- ------------ ---------- ---------- -----------
System sales $ 1,868 $ 1,733 8 $ 3,684 $ 3,483 6
=========== =========== ========== ==========
Company sales $ 502 $ 419 20 $ 918 $ 793 16
Franchise and license fees 65 62 5 129 124 4
----------- ----------- ---------- ----------
Revenues 567 481 18 1,047 917 14
----------- ----------- ---------- ----------
Company restaurants
Food and paper 182 157 (17) 335 294 (14)
Payroll and employee benefits 92 84 (10) 173 159 (9)
Occupancy and other operating
expenses 147 128 (14) 265 235 (12)
----------- ----------- ---------- ----------
421 369 (14) 773 688 (12)
General and administrative
expenses 65 55 (16) 115 102 (12)
Franchise and license expenses(b) 3 5 48 4 6 35
Equity income from investments in
unconsolidated affiliates (8) (6) 18 (13) (11) 17
----------- ----------- ---------- ----------
Ongoing operating profit(f) $ 86 $ 58 47 $ 168 $ 132 27
=========== =========== ========== ==========
Company sales 100.0% 100.0% 100.0% 100.0%
Food and paper 36.5 37.4 0.9 ppts. 36.6 37.1 0.5 ppts.
Payroll and employee benefits 18.4 19.9 1.5 ppts. 18.9 20.0 1.1 ppts.
Occupancy and other operating
expenses 29.1 30.6 1.5 ppts. 28.8 29.6 0.8 ppts.
----------- ----------- ---------- ----------
Restaurant margin(f) 16.0% 12.1% 3.9 ppts. 15.7% 13.3% 2.4 ppts.
=========== =========== ========== ==========
14
Notes To The Condensed Consolidated Statements of Income and Ongoing Operating Results
(amounts in millions, except per share amounts)
12 Weeks Ended 24 Weeks Ended
---------------------- ----------------------
6/15/02 6/16/01 6/15/02 6/16/01
---------- ---------- ---------- ----------
Equity income from investments in
unconsolidated affiliates $ (8) $ (6) $ (13) $ (11)
Foreign exchange net loss - 1 - 2
---------- ---------- ---------- ----------
Total other (income) expense $ (8) $ (5) $ (13) $ (9)
========== ========== ========== ==========
12 Weeks Ended 24 Weeks Ended
---------------------- ----------------------
6/15/02 6/16/01 6/15/02 6/16/01
---------- ---------- ---------- ----------
Refranchising net loss (gain) $ (3) $ (31) $ (6) $ (35)
Store closure costs 5 4 13 6
Store impairment charges 8 9 12 13
---------- ---------- ---------- ----------
Facility actions net loss (gain) $ 10 $ (18) $ 19 $ (16)
========== ========== ========== ==========
12 Weeks Ended 6/16/01
---------------------------------------------------------------
U.S. International Unallocated Worldwide
--------------- --------------- ------------ ---------------
Restaurant profit $ 5 $ 2 $ - $ 7
=============== =============== ============ ===============
Restaurant margin(%) 0.5 ppts. 0.6 ppts. - 0.5 ppts.
Ongoing operating profit $ 5 $ 3 $ - $ 8
=============== =============== ============ ===============
15
24 Weeks Ended 6/16/01
---------------------------------------------------------------
U.S. International Unallocated Worldwide
--------------- --------------- ------------ ---------------
Restaurant profit $ 9 $ 4 $ - $ 13
=============== =============== ============ ===============
Restaurant margin(%) 0.5 ppts. 0.6 ppts. - 0.5 ppts.
Ongoing operating profit $ 10 $ 6 $ - $ 16
=============== =============== ============ ===============
Additionally, if SFAS 142 had been effective for the second quarter and year-to-date 2001, reported net income would have increased approximately $6 million and $11 million, respectively, and ongoing operating EPS on a post-split basis would have increased $0.02 and $0.04, respectively.
16
Yum! Brands, Inc.
Cash Generation/Use(a)
(amounts in millions)
(unaudited)
12 Weeks Ended 24 Weeks Ended
------------------------- -------------------------
6/15/02 6/16/01 6/15/02 6/16/01
----------- ----------- ----------- -----------
Ongoing operating earnings $ 143 $ 111 $ 267 $ 199
Depreciation and amortization 80 85 158 158
----------- ----------- ----------- -----------
Cash flow from ongoing operations 223 196 425 357
Refranchising proceeds, after tax 4 36 21 49
AmeriServe 12 28 28 91
Employee stock-option proceeds 53 10 99 20
Other 75 - 51 -
----------- ----------- ----------- -----------
Total cash generated 367 270 624 517
----------- ----------- ----------- -----------
Capital spending 160 109 273 203
Acquisition of Yorkshire Global
Restaurants, Inc. 271 - 271 -
Acquisitions of restaurants from
franchisees 10 53 11 102
Debt (proceeds) repayments, net (167) 51 (58) 31
Share repurchase 60 11 68 21
Other - 21 - 110
----------- ----------- ----------- -----------
Total cash uses 334 245 565 467
----------- ----------- ----------- -----------
Net increase in cash $ 33 $ 25 $ 59 $ 50
=========== =========== =========== ===========
17
Yum! Brands, Inc.
Restaurant Unit Activity Summary
For the 24 Weeks Ended June 15, 2002
(unaudited)
United States
---------------------------------------------------------------------------------------------
Total
Excluding
Company Franchisees Licensees Licensees Total Units
---------- ------------ ----------- ----------- -----------
Pizza Hut U.S.
Balance at December 29, 2001 1,745 4,824 6,569 1,150 7,719
New Builds 27 29 56 41 97
Acquisitions - - - - -
Refranchising & Licensing - - - - -
Closures & Divestitures (27) (68) (95) (59) (154)
Other - - - - -
---------- ------------ ----------- ----------- -----------
Balance at June 15, 2002 1,745 4,785 6,530 1,132 7,662
========== ============ =========== =========== ===========
% of Total 23% 62% 85% 15% 100%
Taco Bell U.S.
Balance at December 29, 2001 1,265 3,828 5,093 1,351 6,444
New Builds 7 19 26 12 38
Acquisitions 21 (21) - - -
Refranchising & Licensing - - - - -
Closures & Divestitures (10) (49) (59) (93) (152)
Other(a) - - - (30) (30)
---------- ------------ ----------- ----------- -----------
Balance at June 15, 2002 1,283 3,777 5,060 1,240 6,300
========== ============ =========== =========== ===========
% of Total 20% 60% 80% 20% 100%
KFC U.S.
Balance at December 29, 2001 1,274 4,081 5,355 44 5,399
New Builds 30 33 63 2 65
Acquisitions 2 (2) - - -
Refranchising & Licensing (39) 39 - - -
Closures & Divestitures (13) (31) (44) - (44)
Other - - - - -
---------- ------------ ----------- ----------- -----------
Balance at June 15, 2002 1,254 4,120 5,374 46 5,420
========== ============ =========== =========== ===========
% of Total 23% 76% 99% 1% 100%
Long John Silver's U.S.
Balance at December 29, 2001 - - - - -
New Builds - - - - -
Acquisitions(b) 742 470 1,212 - 1,212
Refranchising & Licensing - - - - -
Closures & Divestitures - - - - -
Other - - - - -
---------- ------------ ----------- ----------- -----------
Balance at June 15, 2002 742 470 1,212 - 1,212
========== ============ =========== =========== ===========
% of Total 61% 39% 100% - 100%
A&W U.S.
Balance at December 29, 2001 - - - - -
New Builds - - - - -
Acquisitions(b) 127 558 685 - 685
Refranchising & Licensing - - - - -
Closures & Divestitures - - - - -
Other - - - - -
---------- ------------ ----------- ----------- -----------
Balance at June 15, 2002 127 558 685 - 685
========== ============ =========== =========== ===========
% of Total 19% 81% 100% - 100%
18
Yum! Brands, Inc.
Restaurant Unit Activity Summary
For the 24 Weeks Ended June 15, 2002
(unaudited)
International
----------------------------------------------------------------------------------------------------------
Total
Unconsolidated Excluding Total
Company Affiliates Franchisees Licensees Licensees Units
---------- -------------- ------------ ----------- ----------- ---------
Pizza Hut International
Balance at December 29, 2001 763 860 2,480 4,103 169 4,272
New Builds 30 23 78 131 - 131
Acquisitions - 38 (38) - - -
Refranchising & Licensing (2) (1) 3 - - -
Closures & Divestitures (16) (6) (66) (88) (10) (98)
Other (7) - - (7) - (7)
---------- -------------- ------------ ----------- ----------- ---------
Balance at June 15, 2002 768 914 2,457 4,139 159 4,298
========== ============== ============ =========== =========== =========
% of Total 18% 21% 57% 96% 4% 100%
Taco Bell International
Balance at December 29, 2001 39 31 140 210 29 239
New Builds - 1 4 5 1 6
Acquisitions - - - - - -
Refranchising & Licensing - - - - - -
Closures & Divestitures (1) (3) (2) (6) - (6)
Other(a) - - - - 30 30
---------- -------------- ------------ ----------- ----------- ---------
Balance at June 15, 2002 38 29 142 209 60 269
========== ============== ============ =========== =========== =========
% of Total 14% 11% 53% 78% 22% 100%
KFC International
Balance at December 29, 2001 1,349 1,109 3,910 6,368 48 6,416
New Builds 101 33 91 225 1 226
Acquisitions - - - - - -
Refranchising & Licensing (6) (7) 13 - - -
Closures & Divestitures (18) (5) (54) (77) (3) (80)
Other (1) - - (1) - (1)
---------- -------------- ------------ ----------- ----------- ---------
Balance at June 15, 2002 1,425 1,130 3,960 6,515 46 6,561
========== ============== ============ =========== =========== =========
% of Total 22% 17% 60% 99% 1% 100%
Long John Silver's
International
Balance at December 29, 2001 - - - - - -
New Builds - - - - - -
Acquisitions(b) - - 26 26 - 26
Refranchising & Licensing - - - - - -
Closures & Divestitures - - - - - -
Other - - - - - -
---------- -------------- ------------ ----------- ----------- ---------
Balance at June 15, 2002 - - 26 26 - 26
========== ============== ============ =========== =========== =========
% of Total - - 100% 100% - 100%
A&W International
Balance at December 29, 2001 - - - - - -
New Builds - - - - - -
Acquisitions(b) - - 184 184 - 184
Refranchising & Licensing - - - - - -
Closures & Divestitures - - - - - -
Other - - - - - -
---------- -------------- ------------ ----------- ----------- ---------
Balance at June 15, 2002 - - 184 184 - 184
========== ============== ============ =========== =========== =========
% of Total - - 100% 100% - 100%
19
Yum! Brands, Inc.
Restaurant Unit Activity Summary
For the 24 Weeks Ended June 15, 2002
(unaudited)
Total
Unconsolidated Excluding Total
Company Affiliates Franchisees Licensees Licensees Units
---------- -------------- ------------ ----------- --------- -----------
Total U.S.
Balance at December 29, 2001 4,284 - 12,733 17,017 2,545 19,562
New Builds 64 - 81 145 55 200
Acquisitions(b) 892 - 1,005 1,897 - 1,897
Refranchising & Licensing (39) - 39 - - -
Closures & Divestitures (50) - (148) (198) (152) (350)
Other - - - - (30) (30)
---------- -------------- ------------ ----------- --------- -----------
Balance at June 15, 2002 5,151 - 13,710 18,861 2,418 21,279
========== ============== ============ =========== ========= ===========
% of Total 24% - 65% 89% 11% 100%
Total International
Balance at December 29, 2001 2,151 2,000 6,530 10,681 246 10,927
New Builds 131 57 173 361 2 363
Acquisitions(b) - 38 172 210 - 210
Refranchising & Licensing (8) (8) 16 - - -
Closures & Divestitures (35) (14) (122) (171) (13) (184)
Other (8) - - (8) 30 22
---------- -------------- ------------ ----------- --------- -----------
Balance at June 15, 2002 2,231 2,073 6,769 11,073 265 11,338
========== ============== ============ =========== ========= ===========
% of Total 20% 18% 60% 98% 2% 100%
Total Yum!
Balance at December 29, 2001 6,435 2,000 19,263 27,698 2,791 30,489
New Builds 195 57 254 506 57 563
Acquisitions 892 38 1,177 2,107 - 2,107
Refranchising & Licensing (47) (8) 55 - - -
Closures & Divestitures (85) (14) (270) (369) (165) (534)
Other (8) - - (8) - (8)
---------- -------------- ------------ ----------- --------- -----------
Balance at June 15, 2002 7,382 2,073 20,479 29,934 2,683 32,617
========== ============== ============ =========== ========= ===========
% of Total 23% 6% 63% 92% 8% 100%
20
Yum! Brands, Inc.
Systemwide Multibrand Restaurants
For the 24 Weeks Ended June 15, 2002
(unaudited)
U.S. International Worldwide
-------------------------- -------------------------- --------------------------
Net Additions Net Additions Net Additions
------------- ------------- -------------
Total Total Total
Multibrand Multibrand Multibrand
24 Weeks Restaurants 24 Weeks Restaurants 24 Weeks Restaurants
Ended 6/15/02 6/15/02 Ended 6/15/02 6/15/02 Ended 6/15/02 6/15/02
------------- ----------- ------------- ----------- ------------- -----------
KFC
Taco Bell(a)(b) 5 619 3 54 8 673
Pizza Hut(a) 7 127 1 64 8 191
A&W 23 94 - - 23 94
Taco Bell/Pizza Hut 3 n 1 3 44 1 5 4 49
Long John Silver's 2 7 - - 2 7
Chock Full o'Nuts (3) - - - (3) -
WingWorks(c) 12 13 - - 12 13
------------- ----------- ------------- ------------ ------------- -----------
49 904 5 123 54 1,027
Taco Bell
Pizza Hut(a) 31 572 2 15 33 587
Long John Silver's 1 3 - - 1 3
Backyard Burgers 1 1 - - 1 1
------------- ----------- ------------- ------------ ------------- -----------
33 576 2 15 35 591
Pizza Hut(d)
KFC - 1 - - - 1
Taco Bell - 5 - - - 5
------------- ----------- ------------- ------------ ------------- -----------
- 6 - - - 6
Long John Silver's(e)
A&W 132 132 1 1 133 133
------------- ----------- ------------- ------------ ------------- -----------
Total 214 1,618 8 139 222 1,757
============= =========== ============= ============ ============= ===========
21