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)
December 9, 1997
TRICON GLOBAL RESTAURANTS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 1-13163 13-3951308
- ----------------------------- ---------------- ----------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1441 Gardiner Lane, Louisville, Kentucky 40213
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(502) 456-8300
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Item 5. OTHER EVENTS
On December 9, 1997, Tricon Global Restaurants, Inc. issued a press
release with respect to certain strategic actions to be taken during
the fourth quarter to dramatically refocus its business. 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 December 9, 1997 from Tricon Global
Restaurants, Inc.
2
SIGNATURES
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.
TRICON GLOBAL RESTAURANTS, INC.
--------------------------------------------------
(Registrant)
Date: December 9, 1997 /s/ Robert L. Carleton
--------------------------------------------------
Senior Vice President and
Controller and Chief Accounting Officer
3
Exhibit 99
Tricon Global Restaurants Announces Fourth Quarter Strategic Actions
(Louisville, KY, December 9, 1997) - Tricon Global Restaurants (NYSE:YUM) today
announced that it will take one-time charges of approximately $530 million ($425
million after-tax or $2.79 per share) in its fourth quarter to dramatically
refocus its business. The actions will have a one-time negative impact on
earnings for the year. The after-tax charge is largely non-cash and is expected
to have a favorable effect on future cash flows.
Andrall E. Pearson, Chairman and CEO, commented: "Our commitment to shareholders
was to take decisive action to drive cash flow and execute a more focused
operating strategy. This charge reflects that commitment. The actions underlying
the charge primarily address Tricon's two biggest strategic issues: (1)
domestically, we are strengthening Pizza Hut's asset base by closing or
refranchising marginal stores and, (2) internationally, we are focusing to build
scale in high growth company markets. The charge will cover closure of
underperforming stores over the next year, writing-down to market value the
carrying value of some of the stores that we intend to refranchise, revaluation
of some other investment assets and reducing the overhead costs related to these
operations."
Mr. Pearson continued: "Tricon will end 1997 strongly with low double-digit
growth in Operating Profit, before facility action net gains and these charges,
to about $660 million. We regard this as a good start for Tricon in its initial
transition as a freestanding company particularly given the adverse currency
impacts of recent months. Our 1998 earnings estimates remain essentially
unchanged reflecting a major improvement over 1997. Moreover, we expect to
continue to grow Operating Profit at least at a low double-digit rate. The
actions we are taking in the quarter will provide significant benefits in 1998.
We now have the much-needed flexibility to make investments in systems
technology, including Year 2000, and to cover the potential adverse effects of
currency changes in Asia where we will continue our long-term market
development. Additionally, by being decisive now, we are accelerating certain
asset disposal decisions into 1997 that will give us the potential for a higher
level of facility action net gains next year. Our asset base continues to give
us unsurpassed financial flexibility in the restaurant industry."
"We are confident these actions will improve our return on assets and cash flow
and result in annual earnings growth in the mid-teens on average over the next
five years."
1
Details of the Charge
U.S. Int'l
----------- --------- ----------- ----------
$MM $MM
Units pre-tax Units pre-tax
Stores to be refranchised 362 75 305 74
Stores to be closed 598 139 143 73
Other asset write-downs n/a 12 n/a 128
Other actions n/a 9 n/a 20
---- --- ---- ----
Total 960 235 448 295
=== === === ===
This announcement contains forward-looking statements that estimate future
benefits from strategic actions and full-year earnings per share performance.
These "forward-looking" statements reflect management's expectations and are
based upon currently available data; however, actual results are subject to
future events and uncertainties, which could materially impact actual
performance. Factors that can cause actual results to differ are economic and
political conditions in the countries and territories where Tricon operates, the
impact of such conditions on consumer spending and currency exchange rates,
pricing pressures resulting from competitive discounting, new product and
concept development by Tricon and other food industry competitors, and
fluctuations in commodity prices.
Contact: Lynn Tyson, Vice President Investor Relations, 502/456-8617
2