Pizza Hut 2004 Annual Report Download - page 84

1-6฀ DEAR฀PARTNERS
7฀ THE฀Yum!฀DYNASTY฀MODEL
8-11฀฀ CHINA฀POWER
12-13฀฀ GLOBAL฀POWER
14-15฀ BRAND฀POWER฀X5
16-17฀ TACO฀BELL:฀THINK฀OUTSIDE฀THE฀BUN!
18-19฀ PIZZA฀HUT:฀GATHER฀’ROUND฀THE฀GOOD฀STUFF
20-21฀ KFC:฀CHICKEN฀CAPITAL฀U.S.A.
22-23฀ LONG฀JOHN฀SILVER’S:฀GET฀COASTAL!
฀ A&W:฀HOMETOWN฀FOOD฀MADE฀FUN฀
24-25฀ MULTIBRAND฀POWER
26-29฀ CUSTOMER฀MANIA฀POWER:฀100%฀CHAMPS฀
30-32฀ POWER฀OF฀RESULTS:฀FINANCIAL฀REVIEW
33-80฀ FINANCIALS
฀ ฀ ฀ %฀B/(W)฀
(In฀millions,฀except฀per฀share฀amounts)฀ 2004฀ 2003฀ Change
Company฀sales฀ $฀7,992฀ $฀7,441฀ 7
Franchise฀and฀license฀fees฀ ฀1,019฀ ฀ 939฀ 8
Total฀revenues฀ $฀9,011฀ $฀8,380฀ 8
Operating฀profit฀ $฀1,155฀ $฀1,059฀ 9
Earnings฀before฀special฀items฀ $฀ 721฀ $฀ 628฀ 15
Special฀items,฀net฀of฀tax฀ ฀ 19฀ ฀ (11)฀ NM
Net฀income฀ $฀ 740฀ $฀ 617฀ 20
Wrench฀litigation฀income฀(expense)฀ $฀ 14฀ $฀ (42)฀ NM
AmeriServe฀and฀other฀(charges)฀credits฀ ฀ 16฀ ฀ 26฀ NM
Cumulative฀effect฀of฀accounting฀change฀ ฀ —฀ ฀ (2)฀ NM
Special฀items฀ ฀ 30฀ ฀ (18)฀ NM
Income฀tax฀on฀special฀items฀ ฀ (11)฀ ฀ 7฀ NM
Special฀items,฀net฀of฀tax฀ $฀ 19฀ $฀ (11)฀ NM
Diluted฀earnings฀per฀common฀share:
Earnings฀before฀special฀items฀ $฀ 2.36฀ $฀ 2.06฀ 15
Special฀items,฀net฀of฀tax฀ ฀ 0.06฀ ฀ (0.04)฀ NM
Reported฀ $฀ 2.42฀ $฀ 2.02฀ 20
Cash฀flows฀provided฀by฀operating฀activities฀ $฀1,131฀ $฀1,053฀ 7
AVERAGE฀U.S.฀SALES฀PER฀SYSTEM฀UNIT(a)
(In฀thousands)฀ 2004฀ 2003฀ 2002฀ 2001฀ 2000฀ 5-year฀growth(b)
KFC฀ $฀ 896฀ $฀ 898฀ $฀898฀ $฀865฀ $฀833฀ 1%
Pizza฀Hut฀ ฀ 794฀ ฀ 748฀ 748฀ 724฀ 712฀ 3%
Taco฀Bell฀ ฀1,069฀ ฀1,005฀ 964฀ 890฀ 896฀ 3%
(a)฀Excludes฀license฀units.
(b)฀Compound฀annual฀growth฀rate.
TABLE฀OF฀CONTENTS
financial
฀฀฀฀฀฀highlights
Nourishing฀Bodies:฀YUMeals.฀In฀America฀
alone,฀one฀in฀ten฀children฀under฀the฀age฀
of฀five฀runs฀the฀risk฀of฀going฀to฀bed฀hungry฀
every฀night.฀One฀in฀ten.฀So฀we฀decided฀
to฀do฀something฀about฀this฀and฀have฀
created฀the฀world’s฀largest฀prepared฀food฀
recovery฀program.฀We฀now฀donate฀millions฀
of฀pounds฀of฀prepared฀food฀to฀the฀hungry.฀
Food฀that฀has฀nutritional฀value฀and฀will฀
provide฀nourishment฀to฀those฀most฀in฀
need,฀the฀underprivileged.
Nourishing฀Young฀Minds:฀Pizza฀Hut’s฀
BOOK฀IT!฀Program.฀For฀20฀years,฀children฀
have฀found฀reading฀a฀little฀more฀fun฀and฀
rewarding,฀as฀a฀result฀of฀participating฀in฀
BOOK฀IT!฀As฀the฀nation’s฀largest฀reading฀
incentive฀program,฀BOOK฀IT!฀provides฀
pizza,฀praise฀and฀recognition฀for฀children’s฀
reading฀achievements.฀Since฀1985,฀฀
Pizza฀Hut฀has฀invested฀nearly฀a฀half฀billion฀
dollars฀in฀BOOK฀IT!฀to฀encourage฀children฀
to฀read฀more฀and฀discover฀the฀joy฀and฀
pleasure฀of฀reading.
Nourishing฀Souls:฀KFC’s฀Colonel’s฀Kids.฀
With฀more฀and฀more฀double-income฀and฀
single-parent฀households,฀finding฀safe,฀
affordable฀high-quality฀child฀care฀has฀
become฀an฀increasing฀burden.฀Today,฀
Colonel’s฀Kids฀helps฀fund฀extended-hour฀
and฀infant/toddler฀child฀care฀programs฀
across฀the฀country฀for฀the฀millions฀of฀
people฀who฀work฀“after฀hours”฀or฀on฀฀
weekends.฀Since฀2000,฀more฀than฀฀
$4.5฀million฀has฀been฀awarded฀to฀YMCA฀฀
Child฀Care฀Centers฀nationwide.
Nourishing฀Spirits:฀Taco฀Bell’s฀
TEENSupreme.฀The฀Taco฀Bell฀Foundation฀
is฀committed฀to฀helping฀teens฀become฀
successful฀and฀productive฀leaders฀in฀their฀
communities.฀Through฀its฀partnership฀
with฀the฀Boys฀&฀Girls฀Clubs฀of฀America,฀
the฀Taco฀Bell฀Foundation฀supports฀teen-
focused฀initiatives฀that฀are฀designed฀to฀
build฀self-esteem,฀leadership฀skills฀and฀
values.฀Since฀1995,฀Taco฀Bell฀and฀its฀฀
franchisees฀have฀donated฀over฀$15฀฀
million฀dollars฀to฀the฀Boys฀&฀Girls฀Clubs฀฀
of฀America฀for฀teen฀programming.
Tsunami฀Relief:฀Finally,฀we’re฀very฀proud฀
that฀our฀teammates฀and฀franchisees฀
around฀the฀globe฀came฀together฀in฀
support฀of฀victims฀of฀the฀Tsunami฀natural฀
disaster฀in฀Southeast฀Asia฀in฀late฀2004.฀
Together,฀the฀YUM฀Foundation฀and฀its฀
employees฀and฀franchisees฀donated฀฀
over฀$2.2฀million฀to฀aid฀those฀in฀their฀฀
time฀of฀need.
At฀Yum!฀Brands,฀we฀believe฀in฀the฀
power฀of฀giving฀back฀to฀the฀community฀
to฀make฀a฀difference฀in฀the฀lives฀of฀our฀
customers฀and฀their฀families.฀
While฀we฀commit฀ourselves฀to฀making฀a฀
difference฀by฀financially฀supporting฀hundreds฀
and฀hundreds฀of฀charities฀across฀the฀globe,฀฀
our฀efforts฀are฀primarily฀focused฀on฀nourishing฀฀
the฀bodies,฀minds,฀souls฀and฀spirits฀of฀children฀฀
in฀need.฀We฀do฀this฀through฀programs฀dedicated฀฀
to฀hunger฀relief,฀daycare฀subsidies,฀reading฀฀
incentives฀and฀mentoring฀at-risk฀teens.฀
Here’s฀a฀brief฀snapshot฀of฀the฀work฀that฀is฀under฀way:
From฀America฀to฀Europe,฀Asia฀and฀all฀around฀the฀globe,฀we’re฀
committed฀to฀improving฀the฀lives฀of฀the฀customers฀we฀serve.฀฀
That’s฀community฀mania!
฀฀฀฀฀฀฀฀฀฀“power฀
฀฀฀฀฀฀฀฀of฀giving฀back!”
Front฀and฀Back฀Cover:฀KFC฀and฀Pizza฀Hut฀in฀Shanghai,฀China