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| Yum! Brands Inc. Reports Strong Full-Year 2007 EPS Growth of 15% or $1.68 per share, Led by China and International Divisions; Increases 2008 EPS Guidance |
LOUISVILLE, Ky.--(BUSINESS WIRE)--Feb. 4, 2008--Yum! Brands Inc. (NYSE: YUM) today reported results for the fourth quarter and year ended December 29, 2007. FULL-YEAR HIGHLIGHTS
FOURTH-QUARTER HIGHLIGHTS
Note: All preceding comparisons are versus the same period a year ago unless noted. In addition, all same-store-sales growth figures quoted in this document represent system results unless noted otherwise. FULL-YEAR 2008 OUTLOOK The company raised its full-year 2008 EPS forecast from $1.82 to $1.85 per share, or at least 10% growth. This is prior to significant one-time gain items described later in this release. David C. Novak, Chairman and CEO, said, "I am pleased to report that we ended our first decade as a public company in 2007 by once again demonstrating the underlying power of our global portfolio of leading restaurant brands. Fueled by strong 2007 same-store-sales growth of 3% and continued profitable international expansion, including record new-restaurant openings of 471 in mainland China and 852 in YRI, we achieved 15% EPS growth. This marks the sixth straight year of delivering on our commitment of at least 10% annual EPS growth. "Importantly for shareholders, our China and YRI divisions continued to generate outstanding operating results, with full-year same-store-sales growth of +10% and +6%, and operating profit growth of +30% and +18%, respectively. With such powerful results, we generated record cash from operating activities of nearly $1.6 billion and returned an all-time high of $1.7 billion to our shareholders through share repurchases and dividends. Additionally, we announced in October our plan to substantially increase the amount of share buybacks over the next two years, repurchasing a total of up to $4 billion of the company's outstanding common stock. "As we enter our second decade, we expect 2008 to be another excellent year. We are confident we can continue to build on our track record of growing EPS at least 10% each year by generating 20% operating profit growth from our China Division, 10% from our YRI Division and 5% from our U.S. businesses. Our teams, strategies and financial strength have never been better, and we are totally focused on delivering exceptional results for our shareholders. "Shareholders should expect us to continue building consistent value by differentiating our global portfolio of brands and driving profitable global expansion through our four key strategies: building leading brands in China in every significant category; driving aggressive international expansion and building strong brands everywhere; dramatically improving U.S. brand positions, consistency and returns; and driving industry-leading, long-term shareholder and franchisee value." CHINA DIVISION
Fourth Quarter Full Year
($ million, % %
except Change Change
restaurant -------------- --------------
counts and Excl Excl
percentages) 2007 2006 Reported F/x 2007 2006 Reported F/x
----- ----- -------- ----- ----- ----- -------- -----
Mainland China
(MLC) -
Traditional
Restaurants 2,558 2,121 +21 NA 2,558 2,121 +21 NA
KFC 2,140 1,822 +17 NA 2,140 1,822 +17 NA
Pizza Hut
Casual Dining 351 254 +38 NA 351 254 +38 NA
Pizza Hut Home
Service 53 37 +43 NA 53 37 +43 NA
System-Sales
Growth % +39 +30 +31 +24
MLC system-
sales growth % +42 +35 +34 +28
MLC Same-Store-
Sales Growth % NA +17 NA +12
Restaurant
Margin % 17.4 17.8 (0.4) (0.4) 20.1 20.4 (0.3) (0.3)
Operating Profit 99 70 +44 +36 375 290 +30 +23
CHINA DIVISION COMMENTS
YUM! RESTAURANTS INTERNATIONAL DIVISION (YRI)
Fourth Quarter Full Year
($ million, % %
except Change Change
restaurant -------------- --------------
counts and Excl Excl
percentages) 2007 2006 Reported F/x 2007 2006 Reported F/x
------ ------ -------- ----- ------ ------ -------- -----
Traditional
Restaurants 12,173 11,710 +4 NA 12,173 11,710 +4 NA
System-Sales
Growth % +16 +9 +15 +10
Franchise &
License Fees 188 157 +20 +12 568 494 +15 +10
Operating
Margin % 13.9 14.2 (0.3) (0.5) 15.6 17.6 (2.0) (2.0)
Operating
Profit 133 119 +11 +3 480 407 +18 +12
YRI DIVISION COMMENTS
UNITED STATES BUSINESS
Fourth Quarter Full Year
($ million, except
restaurant counts and
percentages) 2007 2006 % Change 2007 2006 % Change
------ ------ -------- ------ ------ --------
Traditional Restaurants 17,977 18,117 (1) 17,977 18,117 (1)
Same-Store-Sales Growth
%
System +1 Even NM Even +1 NM
Company (1) (2) NM (3) Even NM
Franchisee Sales 4,060 3,877 +5 13,304 12,804 +4
Company Sales 1,348 1,437 (6) 4,518 4,952 (9)
Franchise & License Fees 207 197 +5 679 651 +4
Restaurant Margin % 12.1 13.5 (1.4) 13.3 14.6 (1.3)
Operating Margin % 12.7 12.1 +0.6 14.2 13.6 +0.6
Operating Profit 196 198 (1) 739 763 (3)
U.S. BUSINESS COMMENTS
CORPORATE AND UNALLOCATED G&A EXPENSES For the fourth quarter, the $31 million year-over-year increase in corporate and unallocated G&A expenses was mainly due to higher annual incentive compensation, investments in strategic projects, and litigation-related expenses. TAX RATE Tax rates for fourth-quarter and full-year 2007 were lower than prior year due to recognition of foreign-tax credit benefits. U.S. REFRANCHISING UPDATE During 2007, a total of 304 company-owned U.S. restaurants were sold to franchisees. Since the beginning of 2006, our U.S. refranchising program has reduced the percentage of company ownership from 26% to 22% at the end of 2007. As we previously announced in our 2008 guidance, we are expanding our refranchising of U.S. company-owned restaurants, with company ownership to potentially reach below 10% by year-end 2010. SHAREHOLDER PAYOUTS During the fourth quarter of 2007, we purchased 16 million shares at an average purchase price of $37.03, or a total of $603 million. For the year, we purchased 42 million shares at an average purchase price of $33.66, or a total of $1.4 billion, reducing average diluted shares outstanding by 4%, the third consecutive year with share reduction as a result of substantial share buybacks. Over the past two years, the company's share repurchases reduced average diluted share count by 9%, at an average cost per share of $29.31. For 2008, we expect to return over $2 billion to shareholders through both dividends and significant share buybacks. FULL-YEAR 2008 UPDATE
For our detailed full-year 2008 guidance and supplemental guidance, please refer online to http://www.yum.com/investors/news.asp and http://investors.yum.com/phoenix.zhtml?c=117941&p=irol-newsEarnings. Q1 2008 EPS UPDATE In the first quarter of 2008, we expect the following one-time impacts: pre-tax gain of approximately $87 million from the sale of our minority interest in KFC Japan; charges of up to $10 million before taxes related to G&A productivity initiatives and realignment of resources to drive stronger U.S. brand growth; and expected refranchising losses of about $20 million. YUM! ONGOING EARNINGS GROWTH MODEL (UPDATED)
2007 Fourth-Quarter End Dates 2008 First-Quarter End Dates ----------------------------------- -------------------------------- International Division 12/3/2007 International Division 2/25/2008 China Division 12/31/2007 China Division 2/29/2008 U.S. Business 12/29/2007 U.S. Business 3/22/2008 CONFERENCE CALL Yum! Brands Inc. will host a conference call to review the company's financial performance and strategies at 9:15 a.m. ET Tuesday, February 5, 2008. 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 at noon Eastern Time Tuesday, February 5, through midnight Friday, February 15. To access the playback, dial 800/642-1687 in the United States and 706/645-9291 internationally. The playback pass code is 30596664. The call and the playback can be accessed via the Internet by visiting Yum! Brands' Web site, www.yum.com, and selecting "4th-Quarter Earnings Webcast." For your added convenience, a podcast will be available within 24 hours of the end of the call at www.yum.com/investors. ADDITIONAL INFORMATION ONLINE Fourth-quarter restaurant-count details, definitions of terms, and segment-results reconciliation are available online at http://investors.yum.com/phoenix.zhtml?c=117941&p=irol-newsEarnings. 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, project, 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. Accordingly, you are cautioned not to place undue reliance on forward-looking statements. Factors that can cause actual results to differ materially include, but are not limited to, changes in global and local business, economic and political conditions in the countries and territories where Yum! Brands operates, including the effects of war and terrorist activities; changes in currency exchange and interest rates; changes in commodity, labor and other operating costs; changes in competition in the food industry, consumer preferences or perceptions concerning the products of the company and/or our competitors, spending patterns and demographic trends; the impact that any widespread illness or general health concern may have on our business and the economy of the countries in which we operate; the effectiveness of our operating initiatives and marketing, advertising and promotional efforts; new-product and concept development by Yum! Brands and other food-industry competitors; the success of our strategies for refranchising and international development and operations; the ongoing business viability of our franchise and license operators; our ability to secure distribution to our restaurants at competitive rates and to ensure adequate supplies of restaurant products and equipment in our stores; unexpected disruptions in our supply chain; publicity that may impact our business and/or industry; severe weather conditions; effects and outcomes of pending or future legal claims involving the company; changes in effective tax rates; our actuarially determined casualty loss estimates; new legislation and governmental regulations or changes in legislation and regulations and the consequent impact on our business; 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., based in Louisville, Kentucky, is the world's largest restaurant company in terms of system restaurants with over 35,000 restaurants, which includes over 2,000 licensed restaurants, in more than 100 countries and territories. Four of the company's restaurant brands -- KFC, Pizza Hut, Taco Bell and Long John Silver's -- are the global leaders of the chicken, pizza, Mexican-style food and quick-service seafood categories respectively. Yum! Brands is the worldwide leader in multibranding, which offers consumers more choice and convenience at one restaurant location from a combination of KFC, Taco Bell, Pizza Hut, A&W or Long John Silver's brands. The company and its franchisees today operate over 3,500 multibrand restaurants. Outside the United States in 2007, the Yum! Brands' system opened about three new restaurants each day of the year, making it one of the fastest growing retailers in the world. For the past four years, the company has been recognized as one of Fortune Magazine's "Top 50 Employers for Minorities." It also has been recognized as one of the "Top 50 Employers for Women" by Fortune, one of the "40 Best Companies for Diversity" by Black Enterprise Magazine for the past three years, one of Black Enterprise Magazine's "30 Hottest Franchises for 2006," one of the "Corporate 100 Companies Providing Opportunities for Hispanics" by Hispanic Magazine, one of the "Top 50 Corporations for Supplier Diversity" by Hispanic Trends Magazine and by BusinessWeek as one of the "Top 15 Companies for In-Kind Corporate Philanthropy."
Yum! Brands, Inc.
Consolidated Summary of Results
(amounts in millions, except per share amounts)
(unaudited)
Quarter % Year %
------------------ Change ----------------- Change
12/29/07 12/30/06 B/(W) 12/29/07 12/30/06 B/(W)
-------- -------- ------- -------- -------- -------
Company sales $2,842 $2,645 7 $ 9,100 $ 8,365 9
Franchise and
license fees 420 371 13 1,316 1,196 10
-------- -------- -------- --------
Total revenues 3,262 3,016 8 10,416 9,561 9
-------- -------- -------- --------
Costs and
expenses, net
Food and
paper 900 803 (12) 2,824 2,549 (11)
Payroll and
employee
benefits 720 681 (6) 2,305 2,142 (8)
Occupancy and
other
operating
expenses 846 796 (6) 2,644 2,403 (10)
-------- -------- -------- --------
Company
restaurant
expenses 2,466 2,280 (8) 7,773 7,094 (10)
General and
administrative
expenses 463 398 (16) 1,293 1,187 (9)
Franchise and
license
expenses 10 11 10 40 35 (14)
Closures and
impairment
expenses 23 34 NM 35 59 NM
Refranchising
(gain) loss (6) (17) NM (11) (24) NM
Other (income)
expense (24) (19) 37 (71) (52) 41
-------- -------- -------- --------
Total costs and
expenses, net 2,932 2,687 (9) 9,059 8,299 (9)
-------- -------- -------- --------
Operating profit 330 329 1 1,357 1,262 8
Interest
expense, net 54 49 (10) 166 154 (8)
-------- -------- -------- --------
Income before
income taxes 276 280 (1) 1,191 1,108 8
Income tax
provision 45 48 6 282 284 1
-------- -------- -------- --------
Net income $ 231 $ 232 -- $ 909 $ 824 10
======== ======== ======== ========
Effective tax
rate 16.4% 17.2% 23.7% 25.6%
---------------- ======== ======== ======== ========
Basic EPS Data
----------------
EPS $ 0.45 $ 0.43 5 $ 1.74 $ 1.51 15
======== ======== ======== ========
Average
shares
outstanding 509 537 5 522 546 4
======== ======== ======== ========
Diluted EPS Data
----------------
EPS $ 0.44 $ 0.42 5 $ 1.68 $ 1.46 15
======== ======== ======== ========
Average
shares
outstanding 528 556 5 541 564 4
======== ======== ======== ========
Dividends
declared per
common share $ 0.30 $ 0.30 $ 0.45 $0.4325
======== ======== ======== ========
See accompanying notes.
Yum! Brands, Inc.
CHINA DIVISION Operating Results
(amounts in millions)
(unaudited)
Quarter % Change Year % Change
----------------- -----------------
12/29/07 12/30/06 B/(W) 12/29/07 12/30/06 B/(W)
-------- -------- -------- -------- -------- --------
Company sales $ 724 $ 521 39 $ 2,075 $ 1,587 31
Franchise and
license fees 25 17 42 69 51 35
-------- -------- -------- --------
Revenues 749 538 39 2,144 1,638 31
-------- -------- -------- --------
Company
restaurants
Food and paper 271 184 (47) 756 562 (34)
Payroll and
employee
benefits 101 72 (42) 273 205 (34)
Occupancy and
other
operating
expenses 225 172 (32) 629 497 (27)
-------- -------- -------- --------
597 428 (40) 1,658 1,264 (31)
General and
administrative
expenses 61 48 (21) 151 119 (26)
Franchise and
license expenses -- -- NM -- -- NM
Closures and
impairment
expenses 3 4 NM 7 6 NM
Other (income)
expense (11) (12) (8) (47) (41) 14
-------- -------- -------- --------
650 468 (39) 1,769 1,348 (31)
-------- -------- -------- --------
Operating profit $ 99 $ 70 44 $ 375 $ 290 30
======== ======== ======== ========
Company sales 100.0% 100.0% 100.0% 100.0%
(1.9) (1.0)
Food and paper 37.4 35.5 ppts. 36.4 35.4 ppts.
Payroll and
employee (0.3) (0.3)
benefits 14.0 13.7 ppts. 13.2 12.9 ppts.
Occupancy and
other operating 1.8 1.0
expenses 31.2 33.0 ppts. 30.3 31.3 ppts.
-------- -------- -------- --------
(0.4) (0.3)
Restaurant margin 17.4% 17.8% ppts. 20.1% 20.4% ppts.
======== ======== ======== ========
See accompanying notes.
China Division includes mainland China, Thailand and KFC Taiwan
Yum! Brands, Inc.
INTERNATIONAL DIVISION Operating Results
(amounts in millions)
(unaudited)
Quarter % Change Year % Change
----------------- -----------------
12/29/07 12/30/06 B/(W) 12/29/07 12/30/06 B/(W)
-------- -------- -------- -------- -------- --------
Company sales $ 770 $ 687 12 $ 2,507 $ 1,826 37
Franchise and
license fees 188 157 20 568 494 15
-------- -------- -------- --------
Revenues 958 844 13 3,075 2,320 33
-------- -------- -------- --------
Company
restaurants
Food and paper 233 211 (11) 751 588 (28)
Payroll and
employee
benefits 203 175 (16) 655 448 (46)
Occupancy and
other
operating
expenses 248 224 (11) 794 566 (40)
-------- -------- -------- --------
684 610 (12) 2,200 1,602 (37)
General and
administrative
expenses 136 106 (29) 375 293 (28)
Franchise and
license
expenses -- 3 NM 11 12 6
Closures and
impairment
expenses 6 8 NM 14 16 NM
Other (income)
expense (1) (2) (27) (5) (10) (46)
-------- -------- -------- --------
825 725 (14) 2,595 1,913 (36)
-------- -------- -------- --------
Operating profit $ 133 $ 119 11 $ 480 $ 407 18
======== ======== ======== ========
Company sales 100.0% 100.0% 100.0% 100.0%
0.4 2.3
Food and paper 30.2 30.6 ppts. 29.9 32.2 ppts.
Payroll and
employee (0.8) (1.5)
benefits 26.3 25.5 ppts. 26.1 24.6 ppts.
Occupancy and
other operating 0.4 (0.7)
expenses 32.2 32.6 ppts. 31.7 31.0 ppts.
-------- -------- -------- --------
Restaurant 0.1
margin 11.3% 11.3% -- 12.3% 12.2% ppts.
======== ======== ======== ========
(0.3) (2.0)
Operating margin 13.9% 14.2% ppts. 15.6% 17.6% ppts.
======== ======== ======== ========
See accompanying notes. As discussed further at note (e), Company
sales increased $61 million and $576 million, restaurant profit
increased $7 million and $59 million, franchise fees decreased $2
million and $19 million, and general and administrative expenses
increased $3 million and $33 million compared to the quarter and year
ended December 30, 2006, respectively, due to the ownership structure
change of the Pizza Hut United Kingdom business.
Yum! Brands, Inc.
UNITED STATES Operating Results
(amounts in millions)
(unaudited)
Quarter % Change Year % Change
----------------- -----------------
12/29/07 12/30/06 B/(W) 12/29/07 12/30/06 B/(W)
-------- -------- -------- -------- -------- ---------
Company sales $ 1,348 $ 1,437 (6) $ 4,518 $ 4,952 (9)
Franchise and
license fees 207 197 5 679 651 4
-------- -------- -------- --------
Revenues 1,555 1,634 (5) 5,197 5,603 (7)
-------- -------- -------- --------
Company
restaurants
Food and
paper 396 408 3 1,317 1,399 6
Payroll and
employee
benefits 416 434 4 1,377 1,489 7
Occupancy and
other
operating
expenses 373 400 7 1,221 1,340 9
-------- -------- -------- --------
1,185 1,242 5 3,915 4,228 7
General and
administrative
expenses 157 166 5 510 546 7
Franchise and
license
expenses 10 8 (16) 29 23 (24)
Closures and
impairment
expenses 14 22 NM 14 37 NM
Other (income)
expense (7) (2) NM (10) 6 NM
-------- -------- -------- --------
1,359 1,436 5 4,458 4,840 8
-------- -------- -------- --------
Operating
profit $ 196 $ 198 (1) $ 739 $ 763 (3)
======== ======== ======== ========
Company sales 100.0% 100.0% 100.0% 100.0%
(1.0) (1.0)
Food and paper 29.4 28.4 ppts. 29.2 28.2 ppts.
Payroll and
employee (0.7) (0.4)
benefits 30.9 30.2 ppts. 30.5 30.1 ppts.
Occupancy and
other
operating 0.3 0.1
expenses 27.6 27.9 ppts. 27.0 27.1 ppts.
-------- -------- -------- --------
Restaurant (1.4) (1.3)
margin 12.1% 13.5% ppts. 13.3% 14.6% ppts.
======== ======== ======== ========
Operating 0.6 0.6
margin 12.7% 12.1% ppts. 14.2% 13.6% ppts.
======== ======== ======== ========
See accompanying notes.
Yum! Brands, Inc.
Consolidated Balance Sheets
(amounts in millions)
(unaudited)
-----------
12/29/07 12/30/06
----------- ---------
ASSETS
Current Assets
Cash and cash equivalents $ 789 $ 319
Accounts and notes receivable, less allowance:
$21 in 2007 and $18 in 2006 225 220
Inventories 128 93
Prepaid expenses and other current assets 131 138
Deferred income taxes 105 57
Advertising cooperative assets, restricted 72 74
----------- ---------
Total Current Assets 1,450 901
Property, plant and equipment, net of
accumulated depreciation and amortization of
$3,283 in 2007 and $3,146 in 2006 3,849 3,631
Goodwill 672 662
Intangible assets, net 333 347
Investments in unconsolidated affiliates 153 138
Other assets 454 369
Deferred income taxes 313 320
----------- ---------
Total Assets $ 7,224 $ 6,368
=========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and other current liabilities $ 1,650 $ 1,386
Income taxes payable 32 37
Short-term borrowings 288 227
Advertising cooperative liabilities 72 74
----------- ---------
Total Current Liabilities 2,042 1,724
Long-term debt 2,924 2,045
Other liabilities and deferred credits 1,117 1,147
----------- ---------
Total Liabilities 6,083 4,916
----------- ---------
Shareholders' Equity
Preferred stock, no par value, zero shares and
250 shares authorized in 2007 and 2006,
respectively; no shares issued -- --
Common stock, no par value, 750 shares
authorized; 499 shares and 530 shares issued in
2007 and 2006, respectively -- --
Retained earnings 1,121 1,608
Accumulated other comprehensive income (loss) 20 (156)
----------- ---------
Total Shareholders' Equity 1,141 1,452
----------- ---------
Total Liabilities and Shareholders' Equity $ 7,224 $ 6,368
=========== =========
See accompanying notes.
Yum! Brands, Inc.
Consolidated Statements of Cash Flows
(amounts in millions)
Year
---------------------
(unaudited)
---------------------
12/29/07 12/30/06
----------- ---------
Cash Flows - Operating Activities
Net income $ 909 $ 824
Depreciation and amortization 542 479
Closures and impairment expenses 35 59
Refranchising (gain) loss (11) (24)
Contributions to defined benefit pension plans (1) (43)
Deferred income taxes (95) (30)
Equity income from investments in unconsolidated
affiliates (51) (51)
Distributions of income received from
unconsolidated affiliates 40 32
Excess tax benefit from share-based compensation (76) (65)
Share-based compensation expense 61 65
Change in accounts and notes receivable (4) 24
Change in inventories (31) (3)
Change in prepaid expenses and other current
assets (6) (33)
Change in accounts payable and other current
liabilities 118 (30)
Change in income taxes payable 70 10
Other non-cash charges and credits, net 65 85
----------- ---------
Net Cash Provided by Operating Activities 1,565 1,299
----------- ---------
Cash Flows - Investing Activities
Capital spending (742) (614)
Proceeds from refranchising of restaurants 117 257
Acquisition of remaining interest in
unconsolidated affiliate, net of cash assumed -- (178)
Proceeds from sale of interest in Japan
unconsolidated affiliate 128 --
Acquisition of restaurants from franchisees (4) (7)
Short-term investments 6 39
Sales of property, plant and equipment 56 57
Other, net 7 (30)
----------- ---------
Net Cash Used in Investing Activities (432) (476)
----------- ---------
Cash Flows - Financing Activities
Proceeds from long-term debt 1,195 300
Repayments of long-term debt (24) (211)
Revolving credit facilities, three months or
less, net (149) (23)
Short-term borrowings by original maturity
More than three months - proceeds 1 236
More than three months - payments (184) (54)
Three months or less, net (8) 4
Repurchase shares of Common Stock (1,410) (983)
Excess tax benefit from share-based compensation 76 65
Employee stock option proceeds 112 142
Dividends paid on Common Shares (273) (144)
Other, net (12) (2)
----------- ---------
Net Cash Used in Financing Activities (676) (670)
----------- ---------
Effect of Exchange Rate on Cash and Cash
Equivalents 13 8
----------- ---------
Net Increase (Decrease) in Cash and Cash
Equivalents 470 161
Cash and Cash Equivalents - Beginning of Period 319 158
----------- ---------
Cash and Cash Equivalents - End of Period $ 789 $ 319
=========== =========
See accompanying notes.
Notes to the Consolidated Summary of Results, Consolidated Balance
Sheets and Consolidated Statements of Cash Flows
(amounts in millions, except per share amounts)
(unaudited)
(a) Percentages may not recompute due to rounding.
(b) Amounts presented as of and for the quarter and year ended
December 29, 2007 are preliminary.
(c) On May 17, 2007, the Company announced that its Board of Directors
approved a two-for-one split of the Company's outstanding shares
of Common Stock. The stock split was effected in the form of a
stock dividend and entitled each shareholder of record at the
close of business on June 1, 2007 to receive one additional share
for every outstanding share of Common Stock held. The stock
dividend was distributed on June 26, 2007, with approximately 261
million shares of Common Stock distributed. All per share and
share amounts in the accompanying Consolidated Summary of Results
and Consolidated Balance Sheets have been adjusted to reflect the
stock split.
(d) Other (income) expense primarily includes equity income from our
investments in unconsolidated affiliates in our China and
International Divisions. In the quarter ended December 29, 2007,
other (income) expense also includes recognition of $11 million
of income from a recovery from an insurance carrier related to a
lawsuit against Taco Bell Corp that was settled in 2004 (the
Wrench litigation). In the quarter ended March 24, 2007, other
(income) expense also included recognition of income of $5
million associated with receipt of payment for a note receivable
arising from the 2005 sale of our fifty percent interest in the
entity that operated almost all KFCs and Pizza Huts in Poland and
the Czech Republic to our then partner in the entity. In the
quarter ended March 25, 2006, other (income) expense also
included an $8 million charge associated with the termination of
a beverage agreement in the United States segment.
(e) During the fourth quarter of 2006, we completed the acquisition of
the remaining fifty percent ownership interest of our Pizza Hut
United Kingdom ("PHUK") unconsolidated affiliate. This
unconsolidated affiliate owned over 500 restaurants in the United
Kingdom. Prior to this acquisition, we accounted for our interest
under the equity method. In 2007 and subsequent to the
acquisition in 2006, our financial statements are presented
consolidating the PHUK's results of operations and cash flows. As
a result of this acquisition, company sales increased $61 million
and $576 million, restaurant profit increased $7 million and $59
million, franchise fees decreased $2 million and $19 million and
general and administrative expenses increased $3 million and $33
million compared to the quarter and year ended December 30, 2006,
respectively. The impacts on operating profit and net income were
not significant.
(f) In December 2007, we sold our interest in our unconsolidated
affiliate in Japan for $128 million (includes the impact of
related foreign currency contracts that were settled in December
2007). The international subsidiary that owned this interest
operates on a fiscal calendar with a period end that is
approximately one month earlier than our consolidated period
close. Thus, the pre-tax gain on the sale of this investment of
approximately $87 will be recorded in the first quarter of 2008.
However, the cash proceeds from this transaction were transferred
from our international subsidiary to the U.S. in December 2007
and are thus reported on our Consolidated Statement of Cash Flows
for the year ended December 29, 2007. The offset to this cash on
our Consolidated Balance Sheet at December 29, 2007 is in
Accounts payable and other current liabilities.
MULTIMEDIA AVAILABLE:
http://www.businesswire.com/cgi-bin/mmg.cgi?eid=5600600
CONTACT:
Pat Grismer, 502-874-8320
Quan Nghe, 502-874-8918
Media: SOURCE: Yum! Brands Inc. |
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