-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JA8TpQwgMwJktQKWu4Gvu5TVFUHxQ+BLsbyD5S93pGbX6b3KYHus8lasFdZSYUYe CUbK2OIKzRytzFQYkg9FKA== 0000892303-00-000004.txt : 20000110 0000892303-00-000004.hdr.sgml : 20000110 ACCESSION NUMBER: 0000892303-00-000004 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 20000107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRICON GLOBAL RESTAURANTS INC CENTRAL INDEX KEY: 0001041061 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 133951308 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-13163 FILM NUMBER: 503555 BUSINESS ADDRESS: STREET 1: 1441 GARDINER LANE CITY: LOUISVILLE STATE: KY ZIP: 40213 BUSINESS PHONE: 5028748300 MAIL ADDRESS: STREET 1: 1441 GARDINER LANE CITY: LOUISVILLE STATE: KY ZIP: 40213 FORMER COMPANY: FORMER CONFORMED NAME: GREAT AMERICAN RESTAURANT CO DATE OF NAME CHANGE: 19970618 11-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 and the period from October 7, 1997 (inception) through December 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ -------------- Commission File Number: 1-13163 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: TRICON LONG TERM SAVINGS PROGRAM B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: TRICON Global Restaurants, Inc. 1441 Gardiner Lane Louisville, Kentucky 40213 TRICON LONG TERM SAVINGS PROGRAM Financial Statements and Supplemental Schedules December 31, 1998 and 1997 (With Independent Auditors' Report Thereon) TRICON LONG TERM SAVINGS PROGRAM TABLE OF CONTENTS PAGE Independent Auditors' Report 1 Statement of Net Assets Available for Benefits at December 31, 1998 2 Statement of Net Assets Available for Benefits at December 31, 1997 3 Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 1998 4 Statement of Changes in Net Assets Available for Benefits for the Period from October 7, 1997 (Inception) through December 31, 1997 5 Notes to Financial Statements 6 SCHEDULES 1 Item 27a - Schedule of Assets Held for Investment Purposes - December 31, 1998 12 2 Item 27a - Schedule of Assets Held for Investment Purposes - December 31, 1997 14 3 Item 27d - Schedule of Reportable Transactions - Year Ended December 31, 1998 16 4 Item 27d - Schedule of Reportable Transactions - For the Period from October 7, 1997 (Inception) through December 31, 1997 17 INDEPENDENT AUDITORS' REPORT Plan Administrator TRICON Long Term Savings Program: We have audited the accompanying statements of net assets available for benefits of the TRICON Long Term Savings Program (the "Plan") as of December 31, 1998 and 1997 and the related statements of changes in net assets available for benefits for the year ended December 31, 1998, and the period from October 7, 1997 (inception) through December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1998 and 1997 and the changes in net assets available for benefits for the year ended December 31, 1998, and the period from October 7, 1997 (inception) through December 31, 1997, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes at December 31, 1998 and 1997 and of reportable transactions for the year ended December 31, 1998 and the period from October 7, 1997 (inception) through December 31, 1997 are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the statements of net assets available for benefits and the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for plan benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all materials respects in relation to the basic financial statements taken as a whole. /s/ KPMG LLP Louisville, Kentucky October 25, 1999 TRICON LONG TERM SAVINGS PROGRAM Statement of Net Assets Available for Benefits December 31, 1998 (In thousands) PARTICIPANT DIRECTED ----------------------------------------------------------------------- TRICON VANGUARD FIDELITY PEPSICO COMMON INSTITUTIONAL EQUITY - SECURITY CAPITAL STOCK INDEX INCOME PLUS STOCK BROKERAGE LOAN TOTAL FUND FUND FUND FUND FUND OPTION ACCOUNT OTHER ASSETS ----- ---- ---- ---- ---- ---- ------ ------- ----- Investments: Investments, at fair value: Common stock $ 97,743 28,262 - - - 69,481 - - - Mutual funds 60,059 - 34,440 25,619 - - - - - Short-term investment funds 7,987 - - - 7,987 - - - - Various securities 6,546 - - - - - 6,546 - - Investments, at contract value: Investment contracts 16,380 - - - 16,380 - - - - -------- ------ ------ ------ ------ ------ ------ ----- ----- Total investments 188,715 28,262 34,440 25,619 24,367 69,481 6,546 - - -------- ------ ------ ------ ------ ------ ------ ----- ----- Receivables: Investments sold 402 - - - - 402 - - - Participants' contributions 109 63 21 13 12 - - - - Loans receivable from participants 5,969 22 4 3 5 - - 5,935 - Interest and dividends 366 6 - - 125 233 - - 2 Other 6 3 - - - 3 - - - -------- ------ ------ ------ ------ ------ ------ ----- ----- Total receivables 6,852 94 25 16 142 638 - 5,935 2 -------- ------ ------ ------ ------ ------ ------ ----- ----- Cash and cash equivalents 2,425 838 - - - 1,016 - - 571 -------- ------ ------ ------ ------ ------ ------ ----- ----- Total assets 197,992 29,194 34,465 25,635 24,509 71,135 6,546 5,935 573 -------- ------ ------ ------ ------ ------ ------ ----- ----- LIABILITIES Payable for investments purchased 299 299 - - - - - - - Other liabilities 4 - - - 4 - - - - -------- ------ ------ ------ ------ ------ ------ ----- ----- Total liabilities 303 299 - - 4 - - - - -------- ------ ------ ------ ------ ------ ------ ----- ----- Net assets available for benefits $197,689 28,895 34,465 25,635 24,505 71,135 6,546 5,935 573 ======== ====== ====== ====== ====== ====== ====== ===== =====
The accompanying notes are an integral part of these financial statements. 2 TRICON LONG TERM SAVINGS PROGRAM Statement of Net Assets Available for Benefits December 31, 1997 (In thousands) PARTICIPANT DIRECTED ----------------------------------------------------------------------- TRICON VANGUARD FIDELITY PEPSICO COMMON INSTITUTIONAL EQUITY - SECURITY CAPITAL STOCK INDEX INCOME PLUS STOCK BROKERAGE LOAN TOTAL FUND FUND FUND FUND FUND OPTION ACCOUNT OTHER ASSETS ----- ---- ---- ---- ---- ---- ------ ------- ----- Investments: Investments, at fair value: Common stock $ 87,637 7,702 - - - 79,935 - - - Mutual funds 49,091 - 24,612 24,479 - - - - - Short-term investment funds 3,375 - - - 3,375 - - - - Various securities 4,679 - - - - - 4,679 - - Investments, at contract value: Investment contracts 21,256 - - - 21,256 - - - - -------- ------ ------ ------ ------ ------ ------ ----- ----- Total investments 166,038 7,702 24,612 24,479 24,631 79,935 4,679 - - -------- ------ ------ ------ ------ ------ ------ ----- ----- Receivables: Investments sold 350 - - - - 350 - - - Participants' contributions 153 53 44 37 19 - - - - Loans receivable from participants 5,529 17 5 5 5 - - 5,497 - Interest and dividends 431 4 - - 139 284 - - 4 -------- ------ ------ ------ ------ ------ ------ ----- ----- Total receivables 6,463 74 49 42 163 634 - 5,497 4 -------- ------ ------ ------ ------ ------ ------ ----- ----- Cash and cash equivalents 2,228 574 - - - 1,253 - - 401 -------- ------ ------ ------ ------ ------ ------ ----- ----- Total assets 174,729 8,350 24,661 24,521 24,794 81,822 4,679 5,497 405 -------- ------ ------ ------ ------ ------ ------ ----- ----- LIABILITIES Payable for investments purchased - - - - - - - - - Other liabilities - - - - - - - - - -------- ------ ------ ------ ------ ------ ------ ----- ----- Total liabilities - - - - - - - - - -------- ------ ------ ------ ------ ------ ------ ----- ----- Net assets available for benefits $174,729 8,350 24,661 24,521 24,794 81,822 4,679 5,497 405 ======== ====== ====== ====== ====== ====== ====== ===== =====
The accompanying notes are an integral part of these financial statements. 3 TRICON LONG TERM SAVINGS PROGRAM Statement of Changes in Net Assets Available for Benefits For the Year Ended December 31, 1998 (In thousands) PARTICIPANT DIRECTED ----------------------------------------------------------------------- TRICON VANGUARD FIDELITY PEPSICO COMMON INSTITUTIONAL EQUITY - SECURITY CAPITAL STOCK INDEX INCOME PLUS STOCK BROKERAGE LOAN TOTAL FUND FUND FUND FUND FUND OPTION ACCOUNT OTHER ----- ---- ---- ---- ---- ---- ------ ------- ----- Net investment income (expense): Net appreciation in market value of investments $ 26,345 8,892 6,704 1,477 - 8,512 760 - - Dividends 3,170 - 691 1,476 - 1,003 - - - Interest income 2,138 292 75 63 1,613 70 - - 25 Other income 325 5 - - - 3 317 - - Investment expenses (91) (1) (10) (2) (71) (7) - - - -------- ------ ------ ------ ------ ------- ------ ----- ----- Net investment income (expense) 31,887 9,188 7,460 3,014 1,542 9,581 1,077 - 25 Participants' contributions 12,687 5,675 3,459 2,271 1,282 - - - - Employer contributions 831 831 - - - - - - - Benefits paid to participants (22,588) (1,604) (3,891) (3,920) (4,208) (8,280) - (685) - Transfers from (to) other funds - 6,455 2,775 (250) 1,095 (11,988) 790 1,123 - Other 143 - 1 (1) - - - - 143 -------- ------ ------ ------ ------ ------- ------ ----- ----- Net increase (decrease) 22,960 20,545 9,804 1,114 (289) (10,687) 1,867 438 168 Net assets available for benefits at beginning of year 174,729 8,350 24,661 24,521 24,794 81,822 4,679 5,497 405 -------- ------ ------ ------ ------ ------- ------ ----- ----- Net assets available for benefits at end of year $197,689 28,895 34,465 25,635 24,505 71,135 6,546 5,935 573 ======== ====== ====== ====== ====== ======= ====== ===== =====
The accompanying notes are an integral part of these financial statements. 4 TRICON LONG TERM SAVINGS PROGRAM Statement of Changes in Net Assets Available for Benefits For the Period from October 7, 1997 (Inception) through December 31, 1997 (In thousands) PARTICIPANT DIRECTED ----------------------------------------------------------------------- TRICON VANGUARD FIDELITY PEPSICO COMMON INSTITUTIONAL EQUITY - SECURITY CAPITAL STOCK INDEX INCOME PLUS STOCK BROKERAGE LOAN TOTAL FUND FUND FUND FUND FUND OPTION ACCOUNT OTHER ----- ---- ---- ---- ---- ---- ------ ------- ----- Net investment income (expense): Net (depreciation) in market value of investments $ (2,232) (340) (78) (601) - (919) (294) - - Dividends 1,432 - 324 789 42 277 - - - Interest income 493 61 16 15 374 19 - - 8 Investment expenses (11) - (1) - (8) (2) - - - -------- ------ ------ ------ ------ ------ ------ ----- ----- Net investment income (expense) (318) (279) 261 203 408 (625) (294) - 8 Participants' contributions 2,614 994 767 556 335 (38) - - - Benefits paid to participants (4,446) (173) (645) (504) (1,140) (1,876) - (108) - Transfer from PepsiCo Long Term Savings Program 176,347 - 23,917 24,148 25,539 92,637 4,619 5,487 - Transfers from (to) other funds - 7,735 290 66 (337) (8,375) 354 267 - Other 532 73 71 52 (11) 99 - (149) 397 -------- ------ ------ ------ ------ ------ ------ ----- ----- Net increase 174,729 8,350 24,661 24,521 24,794 81,822 4,679 5,497 405 Net assets available for benefits at beginning of period - - - - - - - - - -------- ------ ------ ------ ------ ------ ------ ----- ----- Net assets available for benefits at end of period $174,729 8,350 24,661 24,521 24,794 81,822 4,679 5,497 405 ======== ====== ====== ====== ====== ====== ====== ===== =====
The accompanying notes are an integral part of these financial statements. 5 TRICON LONG TERM SAVINGS PROGRAM Notes to Financial Statements December 31, 1998 and 1997 (Tabular amounts in thousands except unit data) (1) SUMMARY PLAN DESCRIPTION The following brief description of the TRICON Long Term Savings Program (the "Plan") provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. (A) GENERAL TRICON Global Restaurants, Inc. (the "Company") adopted the Plan effective October 7, 1997 as a result of the spin-off of the Company from PepsiCo, Inc. The Plan is a successor of the PepsiCo Long Term Savings Program. Any employee within a group or class so designated by the Company is eligible to participate in the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). (B) CONTRIBUTIONS Each participant in the Plan may elect to contribute any amount, not to exceed 15% of their eligible earnings. The Tax Reform Act of 1986 limited the maximum annual amount a participant could contribute on a before-tax basis to $7,000, indexed for inflation. For calendar years 1998 and 1997, the maximum contribution allowed under the IRS tax code section 402(g)(3), was $10,000 and $9,500, respectively. There was no matching of contributions by the employer during the period from October 7, 1997 through June 30, 1998. Beginning in July 1998, participants received a 25% matching contribution on each unit of Company stock purchased. (C) INVESTMENT OPTIONS Each participant in the Plan elects to have contributions invested in any one or combination of the following separate investment options: TRICON COMMON STOCK FUND: This fund is invested primarily in the common stock of the Company. Investments in this investment option are subject to market fluctuations, and there is no guarantee of future performance. EQUITY INDEX FUND: This fund is invested primarily in the Vanguard Institutional Index Fund, a diversified stock fund. This fund is a passively managed fund designed to mirror the performance of Standard and Poor's 500 Index, a broadly- based average of stock market performance. Investments in this investment option are subject to fluctuations, and there is no guarantee of future performance. EQUITY - INCOME FUND: This fund is invested primarily in the Fidelity Equity - Income Fund. The fund's chief objective is to provide income, although some consideration is given to capital appreciation. Amounts invested in this investment option are subject to market fluctuations, and there is no guarantee of future performance. 6 (Continued) TRICON LONG TERM SAVINGS PROGRAM Notes to Financial Statements December 31, 1998 and 1997 (Tabular amounts in thousands except unit data) SECURITY PLUS FUND: This fund is an investment portfolio managed by State Street Global Advisors and is comprised of investment funds and contracts issued by highly rated banks and insurance companies and short-term investment funds. Guarantees of principal and interest are provided by the insurance company or other financial institutions issuing the contracts. The objective of this fund is to provide, over a period of time, a higher rate of return than average money market funds while preserving principal and providing liquidity. The rate of return on this fund will fluctuate based on existing market conditions and is not intended to provide a guaranteed rate of return. PEPSICO CAPITAL STOCK FUND: This fund was established as a temporary investment under the Plan. Effective the end of the day on January 31, 2000, the PepsiCo Capital Stock Fund will cease to be available under the Plan. Any amount in the fund will be reallocated to the investment option designated for this purpose by the Plan Administrator unless the participant selects a different replacement option in accordance with such requirements as the Plan Administrator may apply. BROKERAGE OPTION: The Trustee has engaged a wholly owned subsidiary, State Street Brokerage Services, Inc. ("SSBSI"), to maintain Brokerage Option accounts for participants. SSBSI has entered into an agreement with National Financial Services Corporation, a New York Stock Exchange member firm unrelated to the Trustee or SSBSI, to transact allowable trades directed by participants and maintain custody of the assets of the Brokerage Option accounts. This investment option permits electing participants and beneficiaries to invest all or a portion of their investment in the Plan in additional choices for self-directed investment, subject to written rules and procedures published by the Plan Administrator. The investments available under this fund are securities traded on the New York Stock Exchange, the American Stock Exchange, the NASDAQ National Market, and certain mutual funds as specified by the Plan Administrator. LOAN ACCOUNT: The Plan has a loan program for participants. The maximum amount a participant may borrow is the lesser of 50% of the participant's vested interest under the Plan; $50,000 reduced by the highest outstanding loan balance during the preceding one-year period; 100% of the value of the participant's investment in the TRICON Common Stock, Equity Index, Equity - Income, Security Plus and PepsiCo Capital Stock funds; or the maximum loan amount that can be amortized by the participant's net pay up to four years. The interest rate for loans is based on the prime rate plus one percent. In addition, a one-time loan origination fee of $25 and a monthly maintenance fee are charged to those participants who obtain a loan. Loan issuances and principal repayments are included in "transfers from (to) other funds". Interest on loans is allocated to each of the funds based upon the participant's contribution election percentages. Any loans outstanding shall become immediately due and payable in full if the participant's employment is terminated. As of December 31, 1998 and 1997, loans outstanding had an estimated average interest rate of 9.5% and maturities through the year 2002 and 2001, respectively. The investments of the Plan are maintained in a trust (the "Trust") by State Street Bank and Trust Company (the "Trustee"). 7 (Continued) TRICON LONG TERM SAVINGS PROGRAM Notes to Financial Statements December 31, 1998 and 1997 (Tabular amounts in thousands except unit data) For the purpose of providing liquidity in each of the separate investment options (other than the Brokerage Option) under the Plan, the Trustee may invest a portion of each fund in cash or short-term securities. The percentage of assets held for this purpose is normally expected to range from 2 to 10 percent, but under extraordinary circumstances, the percentages may be substantially higher. Consequently, the mix of cash, securities, and other investments in each of the investment funds could vary significantly at any given time and the performance of any particular fund may not match the performance of the fund or stock, as the case may be, outside the Plan. (D) VESTING Participants are fully vested in the entire value of their accounts upon contribution, including the Company matching contribution in stock purchased in 1998. (E) WITHDRAWALS Distributions under the Plan are made upon a participant's death, disability, retirement, or termination of employment. In the case of a participant who has not yet attained the age of 59-1/2, withdrawal shall only be permitted in the event of hardship, as defined in the Plan. As discussed above, the Plan permits withdrawals under a loan program. (F) TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to terminate the Plan. In the event that the Plan is terminated, the Trustee is not required to make any distributions from the Trust until such time as the Internal Revenue Service has determined in writing that such termination will not adversely affect the prior qualification of the Plan. (2) SUMMARY OF ACCOUNTING POLICIES (A) BASIS OF ACCOUNTING The financial statements of the Plan are prepared under the accrual method of accounting. (B) USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 8 (Continued) TRICON LONG TERM SAVINGS PROGRAM Notes to Financial Statements December 31, 1998 and 1997 (Tabular amounts in thousands except unit data) (C) INVESTMENT VALUATION AND INCOME RECOGNITION INVESTMENT VALUATION - Investment contracts in the Security Plus Fund are stated at contract value, which approximates fair value. The Security Plus Fund is credited with actual earnings on the underlying investments and charged for plan withdrawals and administration expenses charged by the issuer of the respective contracts. Cash and cash equivalents and the Loan Account are recorded at cost, which approximates fair value. The Brokerage Option is valued at quoted market prices of participants' investments. All other investments are valued at quoted market values. The investments in each fund (except the Brokerage Option and the Loan Account) are valued in units. The value of a unit has and will fluctuate in response to various factors including, but not limited to, the price of and dividends paid, earnings and losses, and the mix of assets in the respective fund. INCOME RECOGNITION - Dividend income is recorded on the ex- dividend date. Income from investments is recorded as earned on an accrual basis. Purchases and sales of securities are recorded on a trade-date basis. Realized gains and losses on the sales of securities in each fund are reported on the average cost method. (D) PAYMENT OF BENEFITS Benefits are recorded when paid. (E) ADMINISTRATIVE COSTS All usual and reasonable expenses of the Plan and the Plan administrator may be paid in whole or in part by the Company, and any expenses not paid by the Company will be paid by the Trustee out of the Trust. All expenses for the year ended December 31, 1998 and the period from October 7, 1997 (inception) through December 31, 1997 were borne by the Company, except for monthly investment service fees charged to the funds, loan origination and monthly maintenance fees charged to participants who obtained a loan, and maintenance and transaction fees charged to participants within the Brokerage Option account. 9 (Continued) TRICON LONG TERM SAVINGS PROGRAM Notes to Financial Statements December 31, 1998 and 1997 (Tabular amounts in thousands except unit data) (3) INVESTMENTS Individual investments that represent 5 percent or more of the Plan's net assets available for benefits as of December 31, 1998 and 1997 were as follows: 1998 1997 ---- ---- TRICON Common Stock $28,262 - Vanguard Institutional Index 34,440 24,612 Fidelity Equity-Income 25,619 24,479 Security Plus - Investment Contracts 16,380 21,256 PepsiCo Common Stock 69,481 79,935 At December 31, 1998 and 1997, the total units and net asset value per unit (rounded to the nearest one-hundredth) for each of the respective unit-valued funds were as follows: 1998 1997 ---------------- ---------------- NET NET ASSET ASSET VALUE VALUE TOTAL PER TOTAL PER UNITS UNIT UNITS UNIT ----- ----- ----- ----- TRICON Common Stock Fund 1,844,766 $15.66 890,284 $ 9.38 Vanguard Institutional Index Fund 9,928,490 3.47 9,149,550 2.70 Fidelity Equity - Income Fund 8,273,781 3.10 8,904,842 2.75 Security Plus Fund 16,282,674 1.51 17,543,602 1.41 PepsiCo Capital Stock Fund 2,526,251 28.16 3,309,513 24.72 (4) TRANSFER FROM PEPSICO SAVINGS PLAN In connection with the spin-off, as referred to in note 1(a), approximately $176 million in plan assets representing employee account balances were transferred in October 1997 to the Plan from a long term savings plan administered by PepsiCo. Such transfer has been reflected in the accompanying financial statements as a transfer from PepsiCo Long Term Savings Program. (5) TAX STATUS The Plan has not yet requested a determination letter from the Internal Revenue Service, however, the Plan Administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Accordingly, no provision for income taxes has been included in the Plan's financial statements. 10 (Continued) TRICON LONG TERM SAVINGS PROGRAM Notes to Financial Statements December 31, 1998 and 1997 (Tabular amounts in thousands except unit data) (6) RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 Notwithstanding the requirements of generally accepted accounting principles, the U.S. Department of Labor requires that unpaid benefit amounts be reported as a liability of the Plan for purposes of Internal Revenue Service Form 5500 filings. As a result, the following represents a reconciliation between the amounts shown on the accompanying financial statements and the amounts reported in the Plan's Form 5500. NET ASSETS AVAILABLE FOR BENEFITS ----------------------------------------------------------------- 1998 1997 ---- ---- Net assets available for benefits, as reported in the financial statements $197,689 174,729 Less: benefits payable at end of year 17 475 -------- -------- Net assets available for benefits as reported in the Plan's Form 5500 $197,672 174,254 ======== ======== PARTICIPANT BENEFITS ------------------------------------------------------------------- 1998 1997 ---- ---- Benefit payments for the year, as reported in the financial statements $ 22,588 4,446 Less: benefits payable as of beginning of period 475 - Plus: benefits payable as of end of year 17 475 -------- -------- Benefit payments for the year, as reported in the Plan's Form 5500 $ 22,130 4,921 ======== ======== (7) YEAR 2000 (UNAUDITED) The Company's information technology systems and non- information technology systems with embedded technology applications are part of the Company's enterprise-wide plan designed to reasonably assure that those systems and certain critical business partners are prepared for the Year 2000 issue and that plans exist for business continuity as the Company enters the coming millennium. Material third party vendors of the Company, including data exchange providers, have been included in the Company's assurance plans. It is difficult to predict with certainty what truly will happen after December 31, 1999. Despite the Company's diligent preparation, unanticipated third party failures, general public infrastructure failures, or failures of the Company to successfully conclude its remediation efforts as planned could have a material adverse impact on the Plan's activities and, accordingly, its net assets available for benefits and changes therein. 11 SUPPLEMENTAL SCHEDULES SCHEDULE 1 TRICON LONG TERM SAVINGS PROGRAM EIN: 13-3951308 Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1998 (In thousands, except share amounts) IDENTITY OF ISSUE FAIR BORROWER OR SIMILAR PARTY DESCRIPTION COST VALUE ------------------------- ----------- ---- ----- TRICON Common Stock* 563,982 shares $ 18,579 28,262 Vanguard Institutional Index 305,179 shares 20,128 34,440 Fidelity Equity - Income 461,195 shares 18,152 25,619 Security Plus State Street Bank Selection Fund* - Investment Contracts 1997 - EEE 1 AIG Interest rate of 6.65% due through 2/6/02 1,056 1,056 1997 - EEE 2 New York Life Interest rate of 6.44% due through 1/15/00 573 573 1997 - EEE 3 Monumental Interest rate of Life Insurance 6.07% due through 3/31/00 1,323 1,323 1997 - EEE 4 CDC Interest rate of 7.39% due through 10/31/99 630 630 1997 - EEE 5 Life of Interest rate of Virginia 6.42% due through 7/31/01 409 409 1997 - EEE 6 John Hancock Interest rate of Life 6.65% due through 5/31/01 618 618 1997 - EEE 7 Principal Interest rate of Mutual 7.18% due through 7/1/02 838 838 1997 - EEE 8 John Hancock Interest rate of Life 6.46% due through 5/31/02 472 472 1997 - EEE 9 New York Life Interest rate of 6.58% due through 10/1/01 849 849 1997 - EEE 10 Principal Interest rate of Mutual 6.82% due through 10/31/01 864 864 1997 - EEE 11 Life of Interest rate of Virginia 7.16% due through 1/2/02 876 876 1997 - EEE 12 Prudential Interest rate of 6.85% due through 11/30/01 584 584 1997 - EEE 13 Prudential Interest rate of 6.08% due through 1/31/00 452 452 1997 - EEE 14 Principal Interest rate of Mutual 6.30% due through 7/31/00 577 577 12 SCHEDULE 1 TRICON LONG TERM SAVINGS PROGRAM EIN: 13-3951308 Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1998 (In thousands, except share amounts) IDENTITY OF ISSUE FAIR BORROWER OR SIMILAR PARTY DESCRIPTION COST VALUE ------------------------- ----------- ---- ----- 1997 - EEE 15 MetLife Interest rate of 6.53% due through 12/31/99 392 392 1997 - EEE 16 Pacific Interest rate of Mutual 4.2% due through 5/31/99 944 944 1997 - EEE 17 Allstate Interest rate of 7.38% due through 11/30/99 813 813 1997 - EEE 18 TransAmerica Interest rate of 7.70% due through 8/31/99 828 828 1997 - EEE 19 CNA Interest rate of 8.22% due through 9/30/99 640 640 1997 - EEE 21 Allstate Interest rate of 8.10% due through 12/31/99 775 775 1997 - EEE 22 Hartford Interest rate of 7.20% due through 3/99 849 849 1997 - EEE 23 New York Life Interest rate of 6.90% due through 6/30/99 512 512 1997 - EEE 24 Prudential Interest rate of 6.66% due through 3/31/99 253 253 1997 - EEE 25 Hartford Interest rate of 6.66% due through 3/31/99 253 253 -------- ------- 16,380 16,380 State Street Bank Par Fund* - Short-term Investment Funds 7,986,511 shares 7,987 7,987 PepsiCo Common Stock* 1,697,251 shares 15,125 69,481 Brokerage Option* Various 5,526 6,546 Loans receivable from Average interest rate of participants* 9.5% due through 2002 5,969 5,969 State Street Bank - cash and cash equivalents* 2,425,043 shares 2,425 2,425 -------- ------- Total $110,271 197,109 ======== ======= * Party-In-Interest 13 SCHEDULE 2 TRICON LONG TERM SAVINGS PROGRAM EIN: 13-3951308 Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1997 (In thousands, except share amounts) IDENTITY OF ISSUE FAIR BORROWER OR SIMILAR PARTY DESCRIPTION COST VALUE ------------------------- ----------- ---- ----- TRICON Common Stock* 265,020 shares $ 3,877 7,702 Vanguard Institutional Index 274,809 shares 15,616 24,612 Fidelity Equity - Income 467,152 shares 16,963 24,479 Security Plus State Street Bank Selection Fund* - Investment Contracts 1997 - EEE 1 AIG Interest rate of 6.65% due through 2/6/02 990 990 1997 - EEE 2 New York Life Interest rate of 6.44% due through 1/15/00 853 853 1997 - EEE 3 Monumental Interest rate of Life Insurance 6.07% due through 3/31/00 1,248 1,248 1997 - EEE 4 CDC Interest rate of 7.39% due through 10/31/99 1,260 1,260 1997 - EEE 5 Life of Interest rate of Virginia 6.42% due through 7/31/01 384 384 1997 - EEE 6 John Hancock Interest rate of Life 6.65% due through 5/31/01 579 579 1997 - EEE 7 Principal Interest rate of Mutual 7.18% due through 7/1/02 782 782 1997 - EEE 8 John Hancock Interest rate of Life 6.46% due through 5/31/02 592 592 1997 - EEE 9 New York Life Interest rate of 6.58% due through 10/1/01 797 797 1997 - EEE 10 Principal Interest rate of Mutual 6.82% due through 10/31/01 809 809 1997 - EEE 11 Life of Interest rate of Virginia 7.16% due through 1/2/02 817 817 1997 - EEE 12 Prudential Interest rate of 6.85% due through 11/30/01 546 546 1997 - EEE 13 Prudential Interest rate of 6.08% due through 1/31/00 638 638 1997 - EEE 14 Principal Interest rate of Mutual 6.30% due through 7/31/00 543 543 14 SCHEDULE 2 TRICON LONG TERM SAVINGS PROGRAM EIN: 13-3951308 Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1997 (In thousands, except share amounts) IDENTITY OF ISSUE FAIR BORROWER OR SIMILAR PARTY DESCRIPTION COST VALUE ------------------------- ----------- ---- ----- 1997 - EEE 15 MetLife Interest rate of 6.53% due through 12/31/99 1,103 1,103 1997 - EEE 16 Pacific Interest rate of Mutual 5.83% due through 5/31/99 946 946 1997 - EEE 17 Allstate Interest rate of 7.38% due through 11/30/99 1,136 1,136 1997 - EEE 18 TransAmerica Interest rate of 7.70% due through 8/31/99 1,153 1,153 1997 - EEE 19 CNA Interest rate of 8.22% due through 9/30/99 1,182 1,182 1997 - EEE 20 Monumental Interest rate of Life Insurance 7.63% due through 11/30/98 236 236 1997 - EEE 21 Allstate Interest rate of 8.10% due through 12/31/99 717 717 1997 - EEE 22 Hartford Interest rate of 7.20% due through 3/99 1,585 1,585 1997 - EEE 23 New York Life Interest rate of 6.90% due through 6/30/99 951 951 1997 - EEE 24 Prudential Interest rate of 6.66% due through 3/31/99 474 474 1997 - EEE 25 Hartford Interest rate of 6.66% due through 3/31/99 474 474 1997 - EEE 26 Monumental Interest rate of Life Insurance 5.51% due through 12/31/98 461 461 -------- ------- 21,256 21,256 State Street Bank Par Fund* - Short-term Investment Funds 3,374,508 shares 3,375 3,375 PepsiCo Common Stock* 2,193,875 shares 19,634 79,935 Brokerage Option* Various 4,974 4,679 Loans receivable from Average interest rate of participants* 9.5% due through 2001 5,529 5,529 State Street Bank - cash and cash equivalents* 2,228,250 shares 2,228 2,228 -------- ------- Total $ 93,452 173,795 ======== ======= * Party-In-Interest 15 SCHEDULE 3 TRICON LONG TERM SAVINGS PROGRAM EIN: 13-3951308 Item 27d - Schedule of Reportable Transactions Year Ended December 31, 1998 (In thousands) CURRENT PURCHASE VALUE OF OR COST ASSET ON NET PARTY INVOLVED AND SELLING OF TRANSACTION GAIN DESCRIPTION OF ASSET PRICE ASSET DATE (LOSS) -------------------- ----- ----- ---- ------ Purchases: TRICON Common Stock Fund $48,737 (1) 48,737 (1) 48,737 (1) - Sec urity Plus Fund 22,761 (1) 22,761 (1) 22,761 (1) - PepsiCo Capital Stock Fund 13,566 (1) 13,566 (1) 13,566 (1) - Sales: TRICON Common Stock Fund 36,860 (1) 33,826 (1) 36,860 (1) 3,034 Security Plus Fund 23,138 (1) 23,138 (1) 23,138 (1) - PepsiCo Capital Stock Fund 32,695 (1) 18,229 (1) 32,695 (1) 14,466 (1) Series of Transactions 16 SCHEDULE 4 TRICON LONG TERM SAVINGS PROGRAM EIN: 13-3951308 Item 27d - Schedule of Reportable Transactions For the Period from October 7, 1997 (Inception) through December 31, 1997 (In thousands) CURRENT PURCHASE VALUE OF OR COST ASSET ON NET PARTY INVOLVED AND SELLING OF TRANSACTION GAIN DESCRIPTION OF ASSET PRICE ASSET DATE (LOSS) -------------------- ----- ----- ---- ------ Purchases: Vanguard Institutional Index Fund $16,000 (1) 16,000 (1) 16,000 (1) - Vanguard Institutional Index Fund 14,593 14,593 14,593 - Fidelity Equity - Income Fund 17,409 (1) 17,409 (1) 17,409 (1) - Fidelity Equity - Income Fund 15,786 15,786 15,786 - Security Plus Fund 25,409 (1) 25,409 (1) 25,409 (1) - Security Plus Fund 22,953 22,953 22,953 - PepsiCo Capital Stock Fund 26,514 (1) 26,514 (1) 26,514 (1) - PepsiCo Capital Stock Fund 22,304 22,304 22,304 - (1) Series of Transactions 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. TRICON LONG TERM SAVINGS PROGRAM By: /s/ Laura Warren-Bock -------------------------------- Laura Warren-Bock Date: January 6, 2000 EX-23 2 EXHIBIT 23 Consent of Independent Auditors ------------------------------- The Board of Directors TRICON Global Restaurants, Inc.: We consent to the incorporation by reference in the registration statement (No. 333-36893) on Form S-8 of TRICON Global Restaurants, Inc. of our report dated October 25, 1999, relating to the financial statements and supplemental schedules of the TRICON Long Term Savings Program as of December 31, 1998 and 1997, for the year ended December 31, 1998 and the period from October 7, 1997 through December 31, 1997, which report appears in the December 31, 1998 annual report on Form 11-K of TRICON Global Restaurants, Inc. /s/ KPMG LLP Louisville, Kentucky January 6, 2000 -----END PRIVACY-ENHANCED MESSAGE-----