EXHIBIT 99.1
Yum! Brands Inc. to Host Annual Conference for Investors and Analysts
LOUISVILLE, Ky.--(BUSINESS WIRE)--Dec. 2, 2004--Yum! Brands Inc.
(NYSE:YUM)
Additionally, the company -
-- Confirms 14% growth in 2004 earnings per share (EPS) before
special items of $2.35; reported EPS of $2.38.
-- Expects at least 10% growth in 2005 EPS before special items
to at least $2.59.
-- Reports Period 12 estimated international system sales
increased 12% in U.S. dollars or 8% prior to conversion to
U.S. dollars.
-- Reports Period 12 estimated U.S. blended same-store sales at
company restaurants increased +1% versus last year (Taco Bell,
+5%; Pizza Hut, +3%; KFC, -7%).
Yum! Brands Inc. will host an Annual Conference for Investors and
Analysts Tuesday, December 7, 2004, in New York. (See additional
details about the conference at the end of this release.) The company
will present comprehensive updates on its business strategies and
discuss its financial growth outlook for the next three years.
"The theme of our meeting is to continue to demonstrate that Yum!
Brands is not your ordinary restaurant company. Importantly, we look
forward to sharing the significant progress we have made executing
each of our three key strategies: running great restaurants,
continuing profitable international growth and multibranding great
brands. Given the dramatic growth and absolute profit level we have
achieved in China, we will also provide for the first time total China
business and unit-level economics. Investors will see the excellent
progress we are making in executing our strategy in China to build
dominant brands in every significant restaurant category.
"Over the long term, we are confident we can continue to grow EPS
at least 10% each year by executing our unique strategies and
maintaining our financial focus and discipline. For 2004, we expect to
grow EPS 14%. While the fourth quarter is very challenging, our EPS
expectation remains $0.72 per share since we have achieved
higher-than-expected international sales growth to balance
lower-than-expected U.S. sales. U.S. food costs are surprisingly
higher than anticipated, primarily produce and cheese. Due to
favorable international tax planning, our fourth-quarter tax rate will
be better than expected, which is about 3 percentage points below last
year," said David Novak, Chairman and Chief Executive Officer.
Full-Year 2004 Forecast
For full-year 2004, the company confirms earnings expectations of
14% growth in earnings per share or $2.35 before special items and
reported EPS of $2.38.
Full-Year 2005 Forecast
For 2005, the company expects at least 10% EPS growth before
special items or at least $2.59 per share.
Please note: Beginning with Period 1, 2005, results of the
company's China Division, which includes People's Republic of China,
Thailand and KFC Taiwan, will be reported separately from the
international business results. The international business, excluding
the China Division, will be reported as International Division.
For 2005, the company will report fiscal-year results based on 53
weeks versus a normal 52-week year. This additional week normally
occurs every five years. The company expects:
-- EPS of at least $2.59 or at least 10% growth in EPS before
special items, inclusive of the 53rd week. The impact of the
53rd week adds a potential incremental benefit of $0.04 EPS
for the year. However, the company plans to spend back against
this once-every-five-year benefit with specific one-time
strategic actions. These are one-time investments relating to
asset actions and refranchising KFC U.S. restaurants.
-- Worldwide system-sales growth of +5% to +6%, which includes
about 1 percentage-point benefit from the 53rd week;
International Division system-sales growth of at least +5%
(local currency basis); China Division system-sales growth of
at least +22%, and U.S. system-sales growth of +3% to +4%.
-- Worldwide revenue growth of +5% to +6%, which includes about 1
percentage-point benefit from the 53rd week: China Division,
+20%, and U.S., +3% to +4%. International Division revenue is
expected to increase +5% to +6% prior to the impact of
refranchising the Puerto Rico market. The impact of
refranchising the Puerto Rico market this past October will
result in a decline in reported revenue of about (1)%.
-- U.S. blended same-store-sales growth at company restaurants in
a range of +1% to +2%.
-- Over 1,450 new system restaurants to be opened worldwide:
-- At least 725 new International Division restaurants
-- At least 375 new China Division restaurants
-- At least 350 new U.S. restaurants
-- International Division net-restaurant expansion to be at least
+3%.
-- The U.S. restaurant base to be even with 2004.
-- Five hundred fifty (550) multibrand restaurant additions
(gross) for the U.S. system, including conversions of existing
restaurants, rebuilds, and new builds.
-- Continued growth in franchise fees of +6% to +7% resulting
from worldwide restaurant expansion and same-store-sales
growth, which includes about 1 percentage-point benefit from
the 53rd week. The growth in franchise fees includes the
benefit of +1 percentage point from refranchising the Puerto
Rico market in 2004. Refranchising during 2005, as it occurs,
will add further growth. Historically, worldwide franchise
fees have grown +8% per year on average since 1998 as a result
of worldwide restaurant expansion, same-store-sales growth,
and the impact of refranchising.
-- Worldwide restaurant margin slightly favorable versus 2004.
International Division margin is expected to increase slightly
versus 2004; China Division margin is expected to be even
versus 2004, and U.S. margin is expected to increase slightly.
-- General and administrative costs (G&A) will increase versus
2004 by approximately +2% to +3% including the impact from the
53rd week and increased China spending to support brand
expansion. Franchise and license expense will increase $5 to
$6 million.
-- Interest expense will increase slightly from 2004.
-- Facility actions to include $60 to $65 million of closure and
impairment charges, an increase of $20 million versus 2004.
Refranchising gains are expected to be about even with the
2004 full-year forecast of about $10 million.
-- For planning purposes, we are currently assuming no impact
from foreign currency conversion on operating profit for the
full year, as foreign currency exchange rates are volatile. As
always, we will update you each quarter relative to the impact
of foreign currency conversion. The Chinese renminbi, British
pound sterling, Australian dollar, Korean won, Japanese yen,
Canadian dollar, Mexican peso and European euro are important
currencies in the company's international business.
-- Effective tax rate of 28% to 30%.
-- Average shares outstanding to be in a range of 295 to 300
million shares, less than the expected average 305 million
shares in 2004.
-- Return on invested capital to remain at about 18%.
-- Capital expenditures, including franchise restaurant
acquisitions, to be about $780 million, which is about even
with the level expected for 2004. Pretax refranchising and
surplus PP&E proceeds are expected to increase to $180 million
resulting in net capital spending of $600 million being
invested in the business.
-- Note: The 53rd week primarily benefits the U.S. business. The
China market is a monthly reporting business with no 53rd week
impact. Many International Division markets are also monthly
reporting businesses, with no 53rd week benefit. Additionally,
in the U.S., the timing of the KFC business closing will be
accelerated by one week in December 2005, eliminating any 53rd
week benefit for this business. This will align all three
major U.S. brands' fiscal closings.
During 2005, the company will provide additional annual guidance
for these preceding items only when there is a material change to the
full-year expectations previously noted. Otherwise these expectations
for full-year 2005 will remain in effect.
2005 First-Quarter Forecast
For the first quarter 2005, the company is expecting EPS of at
least $0.49 or at least 6% growth versus first-quarter 2004. No
special items affecting reported EPS are currently expected for the
first quarter. Higher commodity costs are expected to impact
first-quarter growth, and the effect of higher commodity costs is
expected to moderate after that point in time. In the 2004
fourth-quarter earnings release scheduled for February 1, 2005, we
will provide updates on the 2005 first quarter and subsequent
quarters.
Period 12 Sales
Period 12 estimated International system sales increased 8% prior
to foreign currency conversion or 12% after conversion to U.S.
dollars. Estimated U.S. blended same-store sales at company
restaurants were +1% versus last year for the comparable four-week
period ended November 27, 2004 (Period 12).
International System-Sales Growth (Estimated)
Current Year Prior Year
Current Year Local Local
Reported (U.S.$) Currency Basis Currency Basis
---------------- ------------------ --------------------
Period 12 +12% +8% +10%
Q4 to Date +13% +9% +9%
----------------------------------- --------------------
U.S. Company Same-Store Sales Growth (Estimated)
Period 12 Prior Year Q4 to Date Prior Year
------------- ------------ ------------ ------------
U.S. BLENDED +1% +2% +2% +1%
Taco Bell +5% +3% +4% +3%
Pizza Hut +3% +1% +5% (1)%
KFC (7)% +1% (4)% Even
-------------------------- -------------------------
Sales results for Period 13 (the four-week period ending December
25, 2004), will be released January 4, 2005, before market hours.
Notes and Definitions for Terms Used in This Document
U.S. same-store sales include only company restaurants that have
been open one year or more. U.S. blended same-store sales include KFC,
Pizza Hut, and Taco Bell company-owned restaurants only. U.S.
same-store sales for Long John Silver's and A&W Restaurants are not
included. U.S. systemwide same-store-sales results, which include the
performance of U.S. franchise restaurants, are reported quarterly
within the company's earnings release and include only KFC, Pizza Hut
and Taco Bell Restaurants.
System Restaurants include unconsolidated affiliates (joint
ventures), company-owned and franchise restaurants but exclude license
restaurants.
System-Sales Growth includes the results of all restaurants
regardless of ownership including unconsolidated affiliates,
company-owned, franchise and license restaurants. Sales of
unconsolidated affiliates (joint ventures), franchise and license
restaurants generate franchise and license fees for the company
(typically at a rate of 4% to 6% of sales). Unconsolidated affiliates
(joint ventures), franchise and license restaurant sales are not
included in company sales we present on the Condensed Consolidated
Statements of Income; however, the franchise fees are included in the
company's revenues.
International business reporting and timing: The international
business period close is one period prior to the company's period-end
date to facilitate consolidated reporting. Please refer to the
reporting calendar posted on Yum! Brands' Web site at the following
URL:
http://investors.yum.com/ireye/ir_site.zhtml?ticker=YUM&script=1000.
Please note that the China business reports on a 12-month basis.
Monthly results for January 2005 will be included in the company's
Period 2, 2005, sales release. First-quarter 2005 results would
include only the months of January and February for the China
Division.
New York Investor and Analyst Conference Details
The Annual Conference for Investors and Analysts will be held from
approximately 8:30 a.m. to 12:30 p.m. Eastern Standard Time (EST) at
The St. Regis Hotel in New York City. To attend, participants must be
preregistered by Friday, December 3.
If you have questions, please call 888/298-6986. The Yum! Brands
Investor Relations team will be happy to help you.
2005-Forecast Charts and Graphs Posted on Web Site
Forecast charts and graphs supporting the 2005 detailed guidance
conveyed in this release can be accessed on the company's Web site,
www.yum.com/investors, by 5:00 p.m. EST, Friday, December 3, 2004.
Conference Webcast Information
Yum! Brands will webcast the company's Annual Conference for
Investors and Analysts, beginning at 8:30 a.m. EST, Tuesday, December
7, 2004. Interested parties can access the webcast by logging on to
www.yum.com and clicking on the link provided.
Conference Presentation Available
A copy of the presentations from the Annual Conference for
Investors and Analysts will be available on the company's Web site,
www.yum.com/investors, after 8:30 a.m. EST, Tuesday, December 7, 2004.
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. 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, 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, 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 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; publicity that may impact our business and/or
industry; severe weather conditions; effects and outcomes of legal
claims involving the company; changes in effective tax rates; our
actuarially determined casualty loss estimates; changes in legislation
and governmental regulations; 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 more
than 33,000 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 2,600 multibrand restaurants. Outside the United States in 2003,
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.
In 2002, the company changed its name to Yum! Brands Inc. from Tricon
Global Restaurants Inc. to reflect its expanding portfolio of brands
and its ticker symbol on the New York Stock Exchange. For the past two
years, the company has been recognized in Fortune Magazine's top 50
"Best Companies for Minorities," claiming the number-one spot for
"managerial diversity."
CONTACT: Yum! Brands Inc., Louisville
Investors/Analysts:
Tim Jerzyk, VP Investor Relations, 888-298-6986
or
Individual Shareholders:
Quan Nghe, Director Investor Relations, 888-298-6986
or
Media:
Amy Sherwood, VP Public Relations, 502-874-8200