Exhibit 99.1
Exhibit 99.1
Yum! Brands Inc. Reports Strong
First-Quarter 2007 EPS Growth of 19% or $0.70 Per Share, Led by
Powerful Growth in China and International Divisions;
Raises Full-Year Forecast
LOUISVILLE, Ky.--(BUSINESS WIRE)--May 1, 2007--Yum! Brands Inc. (NYSE: YUM)
today reported results for the first quarter ended March 24, 2007.
Highlights for the first quarter are . . .
-- Worldwide operating profit increased 12%.
-- Strong double-digit operating-profit growth from our
international divisions: China, +31%, and YRI, +25%.
-- Mainland China restaurant unit growth of 19%.
-- China Division restaurant margin improved 1.1%.
-- Yum! Restaurants International Division (YRI) unit growth of
4%, the seventeenth consecutive quarter of at least 3%
year-over-year unit growth, our ongoing growth target.
-- Average diluted shares outstanding were reduced by 4%, the
eleventh consecutive quarter with year-over-year share
reduction.
Note: All preceding comparisons are versus the same period a year
ago.
FULL-YEAR 2007 OUTLOOK
We have raised our full-year EPS outlook to at least 11% growth or
$3.23 based on the continued strong growth from our China and YRI
divisions. The company's prior EPS guidance for 2007 was at least 10%
growth or $3.21 per share.
CONSOLIDATED FINANCIAL HIGHLIGHTS
First Quarter
-------------------------
2007 2006 % Change
------- ------- ---------
Traditional Restaurants 32,558 31,963 +2
System-Sales Growth +4% +5% NM
Reported EPS $0.70 $0.59 +19
Note: YUM has 34,692 restaurant locations around the world, which
include 2,134 license units.
David C. Novak, Chairman and CEO, said, "I am pleased to report a
strong start to 2007 with first-quarter EPS growth of 19%, led again
by very strong operating-profit growth from our China (+31%) and YRI
(+25%) divisions. We delivered this great performance in the face of
two negative and unforeseen incidents at Taco Bell, which shows the
tremendous earnings power of our company. In fact, we are raising our
full-year EPS forecast to 11% growth or $3.23 per share from 10%.
"Our international businesses continue to generate strong
consistent growth. We fully expect in 2007, for the seventh straight
year, to open at least 1,000 new restaurants outside the U.S., which
makes us the leading international developer in the retail category.
Our proven capability of generating global growth with high returns
and substantial free cash flow gives us confidence to report that we
are on track to deliver another year of solid financial performance
for our shareholders.
"The two incidents at Taco Bell resulted in adverse publicity and
had the most significant impact on U.S. performance. We have taken
immediate actions (detailed in the U.S. Business section) to address
both incidents. We expect that the enduring strength of our brands and
the plans we have in place will enable us to be back on track for
improved U.S. performance during the second half of 2007.
"In summary, we expect to once again beat our target of at least
10% EPS growth for the sixth straight year based on the strength of
our unique global portfolio and continuing to execute our four key
strategies: building dominant restaurant brands in China, driving
profitable international growth, improving U.S. brand positioning and
returns, and driving high ROIC and strong shareholder payout."
CHINA DIVISION
First Quarter
($ million, except restaurant counts %
and percentages) Change
--------------
Excl
2007 2006 Reported F/x
------ ------ -------- -----
Key Financial Measures
System-Sales Growth +24 +19
MAINLAND CHINA (MLC) ONLY +28 +23
Same-Store-Sales Growth - MLC NA +9
Company Sales 331 269 +23 +18
Restaurant Margin % 22.9 21.8 +1.1 +1.1
Operating Profit 76 58 +31 +26
- ----------------------------------------------------------------------
Key Development Metrics
for MAINLAND CHINA ONLY
Total YUM Restaurants 2,202 1,851 +19 NA
KFC 1,881 1,602 +17 NA
Pizza Hut Casual Dining 273 215 +27 NA
Pizza Hut Home Service 39 28 +39 NA
Note: China Division includes mainland China, Thailand and the KFC
Taiwan business.
For the first quarter 2007, company sales for the China Division
increased 18% in local-currency terms due to continued strong unit
expansion of KFC and Pizza Hut in mainland China as well as strong
same-store-sales growth in mainland China of 9%.
First-quarter 2007 reported operating profit increased 31% versus
last year including the positive impact of foreign exchange. The key
contributing factors were sales growth and continued development in
mainland China for both KFC and Pizza Hut. Additionally, with this
strong performance, the restaurant margin improved 1.1 percentage
points.
YUM! RESTAURANTS INTERNATIONAL DIVISION (YRI)
First Quarter
($ million, except restaurant counts %
and percentages) Change
--------------
Excl
2007 2006 Reported F/x
------- ------- -------- -----
Key Financial Measures
System-Sales Growth +13 +10
Franchise & License Fees 121 110 +10 +8
Franchisee Sales 2,186 2,071 +6 +4
Company Sales 560 359 +56 +50
Operating Margin % 17.4 20.1 (2.7) (2.4)
Operating Profit 119 95 +25 +23
- ----------------------------------------------------------------------
Key Development Metrics
Traditional Restaurants 11,791 11,378 +4 NA
KFC 6,610 6,273 +5 NA
Pizza Hut 4,712 4,642 +2 NA
Franchise Restaurants 9,483 8,926 +6 NA
First-quarter 2007 operating profit for YRI increased 25%
including the positive impact of foreign exchange. System-sales
increased 10% in local currency terms, one of the best quarterly
performances ever for the division. In particular the KFC brand
delivered strong system-sales growth of 13% in local currency terms
with strong performances across our KFC franchise markets as well as
our KFC U.K. business. Overall, the vast majority of our YRI markets
generated solid same-store-sales growth (+7% for the system), and we
are continuing to add new KFC and Pizza Hut restaurants around the
world through franchise development. YRI opened 144 new traditional
restaurants for the first quarter 2007, of which 94% were opened by
franchisees.
Note: Excluding the impact of the acquisition of the remaining 50%
ownership of the Pizza Hut U.K. joint venture from Whitbread, the
percentage change for the following financial measures in local
currency terms is estimated to have been:
% Change
- -- Franchise & License Fees +13
- -- Franchisee Sales +11
- -- Company Sales +2
- -- Operating Margin % +3.6 pts
- -- Operating Profit +23
UNITED STATES BUSINESS
First Quarter
($ million, except restaurant counts
and percentages) 2007 2006 % Change
------- ------- ---------
Key Financial Measures
Blended Same-Store-Sales Growth %
Company (6) +4 NM
System (3) +5 NM
Franchisee Sales 2,932 2,912 +1
Company Sales 1,051 1,191 (12)
Franchise & License Fees 149 148 +1
Restaurant Margin % 13.3 15.0 (1.7)
Operating Margin % 13.8 14.0 (0.2)
Operating Profit 165 188 (11)
- ----------------------------------------------------------------------
Key Development Metrics
Total Traditional Restaurants 18,050 18,231 (1)
System Multibrand Restaurants 3,474 3,160 +10
Franchise Restaurants 13,964 13,630 +2
For the first quarter, U.S. operating profit decreased 11% versus
last year primarily due to a 6% decline in blended company same-store
sales. The primary driver was Taco Bell, which lapped a very strong
+8% in same-store-sales growth last year while dealing with two recent
incidents that severely impacted first-quarter performance, resulting
in a decline of 11% in first quarter same-store-sales growth at Taco
Bell. However, our franchisees in general are doing better.
U.S. system-same-store sales, which include franchisees, declined
3% versus company-only results of a 6% decline.
Company sales declined 12% for the first quarter, 8% of the
reduction was due to refranchising: converting company ownership to
franchise, which changes the source of revenue from these restaurants
to franchisee fees.
For the first quarter, franchise sales and fees grew as a result
of the expansion of our franchise-restaurant base due to the sale of
482 company-owned restaurants to franchisees (refranchising) over the
past four quarters. In the first quarter of 2007, 105 U.S. restaurants
were refranchised.
UPDATES ON INCIDENTS AFFECTING U.S. BUSINESS
Produce-Supply Incident at Taco Bell: In early December 2006, Taco
Bell was linked to an E. coli issue associated with lettuce supplied
to our restaurants in four Northeastern states. We immediately
addressed the situation, and the outbreak was declared over by health
authorities by mid-December. The company took swift action to remove
and replace all produce from the affected restaurants with new
ingredients from a new supplier. We provided regular updates to the
public as and when new information became available and worked closely
with all local, state, and federal health authorities to ensure the
safety of our food and assist those who became ill. We have taken a
number of added precautions since that time. In addition to the strict
testing already conducted by our produce suppliers, we have since
begun requiring that lettuce be tested at the farm before it even
enters our supply chain. This new industry testing should benefit all
purchasers of lettuce, not just our company, and our goal is to expand
this to other produce as well. We also sponsored an industry symposium
with the National Restaurant Association to discuss ways to strengthen
the produce supply chain, and have proactively met with congressional
leaders to improve federal food safety standards.
Infestation Incident at a KFC-Taco Bell Restaurant in New York
City: In February of 2007, a KFC-Taco Bell restaurant in New York City
became the subject of much adverse publicity as our franchisee
attempted to resolve a rodent infestation issue at this Greenwich
Village area restaurant. After the restaurant had been closed at the
end of the day, a construction crew attempted to eliminate the
problem, but unfortunately this only made the matter worse as the job
was left unfinished for completion the next day. While the restaurant
was closed, a video of the infestation was made and subsequently
circulated on the Internet and throughout the news media. This had a
negative impact on each brand, particularly on Taco Bell since it had
just begun to recover from the previously discussed produce-supply
issue in the region. Since the incident, this KFC-Taco Bell restaurant
has been closed for business, and it will not reopen. Our Food Safety
Council is using this incident to review and further strengthen our
strict pest control standards in challenging urban environments such
as New York City. To assist us, we hired Dr. Bobby Corrigan, a noted
expert in pest control, to conduct an exhaustive and objective review
of our process and to make further recommendations for improvements.
We expect to review those recommendations by mid-May. We are
determined to prevent this incident from happening again.
U.S. FRANCHISE OWNERSHIP UPDATE
Our current three-year U.S. refranchising plan, through 2008, is
to sell approximately 1,500 company restaurants to franchisees, which
will increase U.S. franchise ownership to approximately 83% of the
system (17% company ownership) from 77% today.
Since the beginning of 2006, a total of 557 company-owned U.S.
restaurants were sold to franchisees, including 105 U.S. restaurants
in the first quarter 2007.
FREE CASH FLOW UPDATE
For 2007, we expect to again return over $1 billion to
shareholders through both significant share buy backs and dividends.
This would be the third consecutive year that we have returned more
than 100% of the company's net income to our shareholders. As we
announced December 5, 2006, we doubled our quarterly dividend with the
second-quarter 2007 payment from $0.15 previously to $0.30 per share.
During the first-quarter 2007, we purchased 3.9 million shares at
an average purchase price of $59.04.
FOREIGN CURRENCY IMPACTS
(operating profit $ million) 2007
Division First Quarter
-------------
YRI +2
China +3
YUM GROWTH MODEL AND 2007 OUTLOOK
Long-Term Earnings Growth Model:
-- China Division operating-profit growth of 20%. This growth is
driven largely by new-unit development in mainland China. Our
key metric is system-sales growth and our target is 20% driven
by 375 new-restaurant openings.
-- YRI Division operating-profit growth of 10%. This growth is
driven mainly by new-unit development measured by system-sales
growth of at least 5% (at least 3% unit growth and 2% to 3%
same-store-sales growth) with 750 new-restaurant openings.
-- U.S. operating-profit growth of 5% with same-store-sales
growth of +2 to +3% and leverage of the G&A infrastructure.
-- EPS growth of at least 10%. This assumes operating profit
performance from our three lines of business as previously
noted with additional benefit from reduction in shares
outstanding due to substantial share buy backs.
Full-Year 2007 Outlook:
-- EPS growth is increased to at least 11%, or at least $3.23 per
share, from prior EPS guidance of at least $3.21 or 10%
growth.
-- China and YRI Divisions' operating-profit growth is expected
to at least meet the targets set forth in the long-term
earnings growth model.
-- U.S. operating profit growth is expected to be positive but
lower than the long-term earnings growth model target.
2007 First-Quarter End Dates 2007 Second-Quarter End Dates
- ------------------------------------ ---------------------------------
International Division 2/26/2007 International Division 5/21/2007
China Division 2/28/2007 China Division 5/31/2007
U.S. Business 3/24/2007 U.S. Business 6/16/2007
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
Wednesday, May 2, 2007.
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 Wednesday, May 2, through 5 p.m. Friday, May 11. To access the
playback, dial 800/642-1687 in the United States and 706/645-9291
internationally. The playback pass code is 6094344.
The call and the playback can be accessed via the Internet by
visiting Yum! Brands' Web site, www.yum.com, and selecting
"1st-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
First-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
34,000 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 3,400 multibrand restaurants.
Outside the United States in 2006, 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 two 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 % Change
------------------
3/24/07 3/25/06 B/(W)
-------- -------- ---------
Company sales $1,942 $1,819 7
Franchise and license fees 281 266 5
-------- --------
Total revenues 2,223 2,085 7
-------- --------
Costs and expenses
Food and paper 586 557 (5)
Payroll and employee benefits 514 477 (7)
Occupancy and other operating expenses 554 501 (11)
-------- --------
Company restaurant expenses 1,654 1,535 (8)
General and administrative expenses 262 254 (3)
Franchise and license expenses 8 8 1
Closures and impairment expenses 4 6 NM
Refranchising (gain) loss (1) 4 NM
Other (income) expense (20) (4) NM
-------- --------
Total costs and expenses 1,907 1,803 (6)
-------- --------
Operating profit 316 282 12
Interest expense, net 36 35 (6)
-------- --------
Income before income taxes 280 247 13
Income tax provision 86 77 (11)
-------- --------
Net income $194 $170 14
======== ========
Effective tax rate 30.6% 31.3%
- ---------------------------------------- ======== ========
Basic EPS Data
- ----------------------------------------
EPS $0.73 $0.62 18
======== ========
Average shares outstanding 266 276 3
======== ========
Diluted EPS Data
- ----------------------------------------
EPS $0.70 $0.59 19
======== ========
Average shares outstanding 275 286 4
======== ========
Dividends declared per common share $-- $0.115
======== ========
See accompanying notes.
Yum! Brands, Inc.
UNITED STATES Operating Results
(amounts in millions)
(unaudited)
Quarter % Change
------------------
3/24/07 3/25/06 B/(W)
-------- -------- ------------
Company sales $1,051 $1,191 (12)
Franchise and license fees 149 148 1
-------- --------
Revenues 1,200 1,339 (10)
-------- --------
Company restaurant expenses
Food and paper 300 340 12
Payroll and employee benefits 326 359 9
Occupancy and other operating
expenses 285 313 9
-------- --------
911 1,012 10
General and administrative expenses 122 126 4
Franchise and license expenses 5 4 (13)
Closures and impairment expenses -- 1 NM
Other (income) expense (3) 8 NM
-------- --------
1,035 1,151 10
-------- --------
Operating profit $165 $188 (11)
======== ========
Company sales 100.0% 100.0%
Food and paper 28.4 28.5 0.1 ppts.
Payroll and employee benefits 31.1 30.2 (0.9) ppts.
Occupancy and other operating
expenses 27.2 26.3 (0.9) ppts.
-------- --------
Restaurant margin 13.3% 15.0% (1.7) ppts.
======== ========
Operating margin 13.8% 14.0% (0.2) ppts.
======== ========
See accompanying notes.
Yum! Brands, Inc.
INTERNATIONAL DIVISION Operating Results
(amounts in millions)
(unaudited)
Quarter % Change
------------------
3/24/07 3/25/06 B/(W)
-------- -------- ------------
Company sales $560 $359 56
Franchise and license fees 121 110 10
-------- --------
Revenues 681 469 45
-------- --------
Company restaurant expenses
Food and paper 167 120 (39)
Payroll and employee benefits 145 84 (72)
Occupancy and other operating
expenses 175 109 (61)
-------- --------
487 313 (55)
General and administrative expenses 71 58 (23)
Franchise and license expenses 3 4 17
Closures and impairment expenses 4 4 NM
Other (income) expense (3) (5) (30)
-------- --------
562 374 (50)
-------- --------
Operating profit $119 $95 25
======== ========
Company sales 100.0% 100.0%
Food and paper 29.7 33.5 3.8 ppts.
Payroll and employee benefits 25.9 23.5 (2.4) ppts.
Occupancy and other operating
expenses 31.3 30.2 (1.1) ppts.
-------- --------
Restaurant margin 13.1% 12.8% 0.3 ppts.
======== ========
Operating margin 17.4% 20.1% (2.7) ppts.
======== ========
See accompanying notes.
Yum! Brands, Inc.
CHINA DIVISION Operating Results
(amounts in millions)
(unaudited)
Quarter % Change
------------------
3/24/07 3/25/06 B/(W)
-------- -------- ------------
Company sales $331 $269 23
Franchise and license fees 11 8 28
-------- --------
Revenues 342 277 23
-------- --------
Company restaurant expenses
Food and paper 119 97 (23)
Payroll and employee benefits 43 34 (23)
Occupancy and other operating
expenses 94 79 (18)
-------- --------
256 210 (21)
General and administrative expenses 20 15 (31)
Franchise and license expenses -- -- NM
Closures and impairment expenses -- 1 NM
Other (income) expense (10) (7) 41
-------- --------
266 219 (21)
-------- --------
Operating profit $76 $58 31
======== ========
Company sales 100.0% 100.0%
Food and paper 36.1 36.0 (0.1) ppts.
Payroll and employee benefits 12.7 12.8 0.1 ppts.
Occupancy and other operating
expenses 28.3 29.4 1.1 ppts.
-------- --------
Restaurant margin 22.9% 21.8% 1.1 ppts.
======== ========
See accompanying notes.
China Division includes mainland China, Thailand and KFC Taiwan
Yum! Brands, Inc.
Condensed Consolidated Balance Sheets
(amounts in millions)
(unaudited)
-----------
3/24/07 12/30/06
----------- ---------
ASSETS
Current Assets
Cash and cash equivalents $341 $319
Accounts and notes receivable, less allowance:
$20 in 2007 and $18 in 2006 278 220
Inventories 97 93
Prepaid expenses and other current assets 147 138
Deferred income taxes 53 57
Advertising cooperative assets, restricted 90 74
----------- ---------
Total Current Assets 1,006 901
Property, plant and equipment, net of
accumulated depreciation and amortization of
$3,161 in 2007 and $3,146 in 2006 3,570 3,631
Goodwill 660 662
Intangible assets, net 343 347
Investments in unconsolidated affiliates 108 138
Other assets 369 369
Deferred income taxes 288 305
----------- ---------
Total Assets $6,344 $6,353
=========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and other current liabilities $1,278 $1,386
Income taxes payable 86 37
Short-term borrowings 34 227
Advertising cooperative liabilities 90 74
----------- ---------
Total Current Liabilities 1,488 1,724
Long-term debt 2,208 2,045
Other liabilities and deferred credits 1,189 1,147
----------- ---------
Total Liabilities 4,885 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; 262 shares and 265 shares issued
in 2007 and 2006, respectively -- --
Retained earnings 1,613 1,593
Accumulated other comprehensive loss (154) (156)
----------- ---------
Total Shareholders' Equity 1,459 1,437
----------- ---------
Total Liabilities and Shareholders' Equity $6,344 $6,353
=========== =========
See accompanying notes.
Yum! Brands, Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in millions)
(unaudited)
Year to date
------------------
3/24/07 3/25/06
-------- --------
Cash Flows - Operating Activities
Net income $194 $170
Depreciation and amortization 112 99
Closures and impairment expenses 4 6
Refranchising (gain) loss (1) 4
Deferred income taxes (11) (51)
Equity income from investments in unconsolidated
affiliates (13) (11)
Excess tax benefit from share-based compensation (11) (20)
Share-based compensation expense 14 16
Changes in accounts and notes receivable (12) 8
Changes in inventories (4) 2
Changes in prepaid expenses and other current assets (6) (13)
Changes in accounts payable and other current
liabilities (35) (65)
Changes in income taxes payable 53 72
Other non-cash charges and credits, net 57 80
-------- --------
Net Cash Provided by Operating Activities 341 297
-------- --------
Cash Flows - Investing Activities
Capital spending (93) (72)
Proceeds from refranchising of restaurants 34 22
Short-term investments 5 (17)
Sales of property, plant and equipment 12 8
Other, net -- (2)
-------- --------
Net Cash Used in Investing Activities (42) (61)
-------- --------
Cash Flows - Financing Activities
Repayments of long-term debt (2) (4)
Revolving credit facilities, three month or less,
net 165 71
Short-term borrowings by original maturity
More than three months - proceeds 1 --
More than three months - payments (183) --
Three months or less, net (11) 11
Repurchase shares of common stock (246) (371)
Excess tax benefit from share-based compensation 11 20
Employee stock option proceeds 28 44
Dividends paid on common shares (40) (32)
-------- --------
Net Cash Used in Financing Activities (277) (261)
-------- --------
Effect of Exchange Rate on Cash and Cash Equivalents -- 1
-------- --------
Net Increase (Decrease) in Cash and Cash Equivalents 22 (24)
Cash and Cash Equivalents - Beginning of Period 319 158
-------- --------
Cash and Cash Equivalents - End of Period $341 $134
======== ========
See accompanying notes.
Notes to the Consolidated Summary of Results, Condensed Consolidated
Balance Sheets and Condensed 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 ended March 24, 2007
are preliminary.
(c) Other (income) expense primarily includes equity income from our
investments in unconsolidated affiliates in our China and
International Divisions. In the quarter ended March 24, 2007,
other (income) expense also includes 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 includes an $8 million charge associated with the
termination of a beverage agreement in the United States segment.
(d) 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, our financial
statements are presented consolidating the PHUK's results of
operations and cash flows. As a result of this acquisition,
company sales and restaurant profit increased $173 million and
$18 million, respectively, franchise fees decreased $7 million
and general and administrative expenses increased $9 million
compared to the quarter ended March 25, 2006. The impacts on
operating profit and net income were not significant. Operating
results for our PHUK business in the quarter ended
March 24, 2007 include approximately $3.5 million in closures and
impairment expenses.
MULTIMEDIA AVAILABLE:
http://www.businesswire.com/cgi-bin/mmg.cgi?eid=5390605
CONTACT: Yum! Brands Inc., Louisville
Analysts:
Tim Jerzyk, 502-874-8006
Senior Vice President, Investor Relations/Treasurer
or
Quan Nghe, 502-874-8918
Director Investor Relations
or
Media:
Amy Sherwood, 502-874-8200
Vice President Public Relations