<PAGE>
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, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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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
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TRICON LONG TERM SAVINGS PROGRAM
Financial Statements and Supplemental Schedules
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
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TRICON LONG TERM SAVINGS PROGRAM
TABLE OF CONTENTS
PAGE
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits at
December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 1999 and 1998 3
Notes to Financial Statements 4
SCHEDULES
1 Form 5500, Schedule of Assets Held for Investment
Purposes - December 31, 1999 10
2 Form 5500, Schedule of Non-Exempt Transactions -
Year Ended December 31, 1999 12
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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, 1999 and 1998 and the related
statements of changes in net assets available for benefits for
the years then ended. 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, 1999 and
1998 and the changes in net assets available for benefits for the
years then ended, 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, 1999 and 1998 and non-exempt transactions for the
year ended December 31, 1999 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 supplemental schedules 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.
Louisville, Kentucky
October 2, 2000
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TRICON LONG TERM SAVINGS PROGRAM
Statements of Net Assets Available for Benefits
December 31, 1999 and 1998
(In thousands)
<TABLE>
ASSETS 1999 1998
---- ----
<S> <C> <C>
Investments:
Investments, at fair value:
Common stock $ 63,941 97,743
Mutual funds 75,587 60,059
Short-term investment funds 14,614 7,987
Various securities 11,562 6,546
Investment, at contract value:
Investment contracts 8,296 16,380
-------- --------
Total investments 174,000 188,715
-------- --------
Receivables:
Investments sold 627 402
Participants' contributions 625 109
Employer contributions 162 -
Loans receivable from participants 6,283 5,969
Interest and dividends 231 366
Other 10 6
-------- --------
Total receivables 7,938 6,852
-------- --------
Cash and cash equivalents 2,697 2,425
-------- --------
Total assets 184,635 197,992
-------- --------
LIABILITIES
Payable for investments purchased 277 299
Other liabilities 6 4
-------- --------
Total liabilities 283 303
-------- --------
Net assets available for benefits $184,352 197,689
======== ========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
2
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TRICON LONG TERM SAVINGS PROGRAM
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998
(In thousands)
<TABLE>
1999 1998
---- ----
<S> <C> <C>
Additions:
Additions to net assets attributed to:
Investment income:
Net (depreciation) appreciation in
fair value of investments $(13,555) 26,345
Interest income 1,996 2,138
Dividends 4,143 3,170
Other 1,488 325
-------- --------
(5,928) 31,978
Less investment expenses (77) (91)
-------- --------
(6,005) 31,887
-------- --------
Contributions:
Participants 15,974 12,687
Employer 4,383 831
-------- --------
20,357 13,518
-------- --------
Total additions 14,352 45,405
-------- --------
Deductions:
Deductions from net asset attributed to:
Benefits paid to participants 26,151 22,588
Transfers to UFPC Thrift and Money
Purchase Plan 1,335 -
Transfers to Konig Restaurants
International 401(k) Plan 192 -
Other 11 (143)
-------- --------
Total deductions 27,689 22,445
-------- --------
Net (decrease) increase (13,337) 22,960
Net assets available for benefits:
Beginning of year 197,689 174,729
-------- --------
End of year $184,352 197,689
======== ========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
3
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<PAGE>
TRICON LONG TERM SAVINGS PROGRAM
Notes to Financial Statements
December 31, 1999 and 1998
(Tabular amounts in thousands)
(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").
The investments of the Plan are maintained in a trust
(the "Trust") by State Street Bank and Trust Company
(the "Trustee").
(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 1999 and 1998, the maximum
contribution allowed under the IRS tax code section
402(g)(3), was $10,000. There was not matching of
contributions by the employer during the period from
January 1, 1998 through June 30, 1998. Beginning in
July 1998, participants received a 25% matching
contribution on each unit of Company stock purchased.
As of January 1, 1999, the matching contribution on
each unit of Company stock purchased was 40%.
(c) PARTICIPANT LOANS
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 certain
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. 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, 1999 and 1998, loans outstanding had
an estimated average interest rate of 9.0% and 9.5%,
respectively, and maturities through the year 2003 and
2002, respectively.
(d) VESTING
Participants are fully vested in the entire value of
their accounts upon contribution, including the Company
matching contribution in stock purchased.
4 (Continued)
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TRICON LONG TERM SAVINGS PROGRAM
Notes to Financial Statements
December 31, 1999 and 1998
(Tabular amounts in thousands)
(e) WITHDRAWALS
Distributions under the Plan are made upon a
participant's death, disability, retirement, or
termination of employment. Benefit payments are made in
the form of a lump sum cash amount or in kind
distribution. 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 changes therein, and disclosure of contingent
assets and liabilities. Actual results could differ
from those estimates.
(c) INVESTMENT VALUATION AND INCOME RECOGNITION
INVESTMENT VALUATION - Investment contracts are stated
at contract value, which approximates fair value. The
Plan 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
participant loans are recorded at cost, which
approximates fair value. Securities and mutual funds
held by participants in the Plan are valued at quoted
market prices of participants' investments. All other
investments are valued at quoted market values.
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.
5 (Continued)
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TRICON LONG TERM SAVINGS PROGRAM
Notes to Financial Statements
December 31, 1999 and 1998
(Tabular amounts in thousands)
(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, 1999 and
December 31, 1998 were borne by the Company, except for
monthly investment service fees charged to the funds,
loan application and monthly maintenance fees charged
to participants who obtained a loan and maintenance and
transaction fees charged to participants within the
Brokerage Option account.
(3) INVESTMENTS
In September 1999, the American Institute of Certified
Public Accountants issued Statement of Position 99-3,
ACCOUNTING FOR AND REPORTING OF CERTAIN DEFINED CONTRIBUTION
PLAN INVESTMENTS AND OTHER DISCLOSURE MATTERS ("SOP 99-3").
SOP 99-3 simplifies the disclosure for certain investments
and is effective for plan years ending after December 15,
1999. The Plan adopted SOP 99-3 during the Plan year ending
December 31, 1999. Accordingly, information previously
required to be disclosed about participant-directed fund
investment programs is not presented in the Plan's 1999
financial statements. The Plan's 1998 financial statements
have been reclassified to conform with the current year's
presentation.
Individual investments that represent 5 percent or more of
the Plan's net assets available for benefits as of December
31, 1999 and 1998 were as follows:
<TABLE>
1999 1998
---- ----
<S> <C> <C>
TRICON Common Stock $40,040 28,262
Vanguard Institutional Index 49,218 34,440
Fidelity Equity-Income 26,369 25,619
Security Plus - Investment Contracts 8,296 16,380
PepsiCo Common Stock 23,901 69,481
Brokerage Option 11,562 6,546
State Street Bank Par Fund -
Mutual Funds 14,614 7,987
</TABLE>
The TRICON Common Stock fund includes nonparticipant-
directed investments.
6 (Continued)
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TRICON LONG TERM SAVINGS PROGRAM
Notes to Financial Statements
December 31, 1999 and 1998
(Tabular amounts in thousands)
During 1999 and 1998, the Plan's investments (including
gains and losses of investments bought and sold, as well as
held during the year) depreciated in value by approximately
$14 million in 1999 and appreciated in value by
approximately $26 million in 1998 as follows:
1999 1998
---- ----
Common stock $(21,725) 17,404
Mutual funds 6,058 8,180
Short-term investment funds - -
Various securities 2,112 761
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$(13,555) 26,345
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(4) NONPARTICIPANT-DIRECTED INVESTMENTS
The TRICON Common Stock fund, which contains nonparticipant-
directed investments, has net assets of $40 million and $28
million, of which $3.8 million and $1 million are
nonparticipant-directed investments, as of December 31, 1999
and 1998, respectively. Information about the significant
components of the changes in net assets relating to the
nonparticipant-directed investment portion of the TRICON
Common Stock fund is as follows:
<TABLE>
Year Ended
December 31, 1999
-----------------
<S> <C>
Changes in Net Assets:
Contributions $4,222
Interest 4
Net depreciation (931)
Benefits paid to participants (376)
Transfers to participant-directed
investments (119)
------
$2,800
======
</TABLE>
(5) TRANSFERS TO OTHER PLANS
During 1999, employees formerly employed in the supply chain
management division transferred to the Unified Foodservice
and Purchasing Co-op, LLC (the "UFPC"). For these
individuals, Plan assets of approximately $1.3 million
representing their account balances were transferred to the
UFPC Thrift and Money Pension Plan. This transfer has been
reflected in the accompanying financial statements as a
transfer to UFPC Thrift and Money Pension Plan.
7 (Continued)
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TRICON LONG TERM SAVINGS PROGRAM
Notes to Financial Statements
December 31, 1999 and 1998
(Tabular amounts in thousands)
Additionally, during 1999, several stores were refranchised
to Koning Restaurants International. A transfer,
representing the total of the accounts of participants who
became employees of Koning Restaurants International, was
made from the Plan to the Koning Restaurants International
401(k) Plan. This transfer has been reflected in the
accompanying financial statements as a transfer to Koning
Restaurants International 401(k) Plan.
(6) 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. The Plan is a spin-off from the
PepsiCo Long Term Savings Program which had received a
favorable determination letter from the Internal Revenue
Service. The Plan intends to request a determination letter
from the Internal Revenue Service before the end of the
current remedial amendment period.
(7) 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.
<TABLE>
Net Assets Available for Benefits
---------------------------------
1999 1998
---- ----
<S> <C> <C>
Net assets available for benefits, as
reported in the financial statements $184,352 197,689
Less: benefits payable at end of year 262 17
-------- --------
Net assets available for benefits, as
reported in the Plan's Form 5500 $184,090 197,672
======== ========
Participant Benefits
--------------------
1999 1998
---- ----
Benefit payments for the year, as
reported in the financial statements $ 26,151 22,588
Less: benefits payable as of beginning
of year 17 475
Plus: benefits payable as of end
of year 262 17
-------- --------
Benefit payments for the year, as
reported in the Plan's Form 5500 $ 26,396 22,130
======== ========
</TABLE>
8 (Continued)
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TRICON LONG TERM SAVINGS PROGRAM
Notes to Financial Statements
December 31, 1999 and 1998
(Tabular amounts in thousands)
(8) NON-EXEMPT TRANSACTIONS
There was a one-time unintentional delay by the Company in
submitting employee deferrals in the amount of $125,990 to
the Trustee during 1999. As soon as the delayed contribution
was discovered, the Company contributed the employee
deferrals to the Plan. In September 2000, the Company
reimbursed the Plan for lost interest in the amount of
$46,715.
(9) RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed
by the Trustee. These transactions qualify as party-in-
interest transactions.
9
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SUPPLEMENTAL SCHEDULES
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SCHEDULE 1
TRICON LONG TERM SAVINGS PROGRAM
EIN: 13-3951308
Form 5500, Schedule of Assets Held for Investment Purposes
December 31, 1999
(In thousands, except share amounts)
<TABLE>
IDENTITY OF ISSUE DESCRIPTION OF FAIR
BORROWER OR SIMILAR PARTY INTEREST COST VALUE
------------------------- -------- ---- -----
<S> <C> <C> <C>
* TRICON Common Stock 1,036,620 shares $ 44,403 40,040
* PepsiCo Capital Stock 678,049 shares 5,785 23,901
Vanguard Institutional Index 367,268 shares 29,424 49,218
Fidelity Equity - Income 493,070 shares 21,156 26,369
* State Street Bank Par Fund -
Mutual Funds 14,613,632 shares 14,614 14,614
* Brokerage Option Various 8,985 11,562
* Security Plus
State Street Bank Selection
Fund - Investment Contracts
1997 - EEE 1 AIG Variable interest rate
through 2/6/02 554 554
1997 - EEE 2 New York Life Interest rate of
6.44% due through 1/15/00 373 373
1997 - EEE 3 Monumental
Life Insurance Variable interest rate
through 3/31/00 937 937
1997 - EEE 5 Life of
Virginia Interest rate of
6.42% due through 7/31/01 435 435
1997 - EEE 6 John Hancock
Life Interest rate of
6.65% due through 5/31/01 659 659
1997 - EEE 7 Principal Mutual Interest rate of
7.18% due through 7/1/02 899 899
</TABLE>
10
(Continued)
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(Continued)
SCHEDULE 1
TRICON LONG TERM SAVINGS PROGRAM
EIN: 13-3951308
Form 5500, Schedule of Assets Held for Investment Purposes
December 31, 1999
(In thousands, except share amounts)
<TABLE>
IDENTITY OF ISSUE DESCRIPTION OF FAIR
BORROWER OR SIMILAR PARTY INTEREST COST VALUE
------------------------- -------- ---- -----
<S> <C> <C> <C>
1997 - EEE 8 John Hancock Life Interest rate of
6.46% due through 5/31/02 503 503
1997 - EEE 9 New York Life Interest rate of
6.58% due through 10/1/01 905 905
1997 - EEE 10 Principal Mutual Interest rate of
6.82% due through 10/31/01 923 923
1997 - EEE 11 Life of Virginia Interest rate of
7.16% due through 1/2/02 938 938
1997 - EEE 12 Prudential Interest rate of
6.85% due through 11/30/01 624 624
1997 - EEE 13 Prudential Interest rate of
6.08% due through 1/31/00 239 239
1997 - EEE 14 Principal Mutual Interest rate of
6.30% due through 7/31/00 307 307
-------- -------
8,296 8,296
* Loans receivable from
participants Average interest rate of
9.0% due through 2003 6,283 6,283
* State Street Bank - cash and
cash equivalents 2,696,983 shares 2,697 2,697
-------- -------
Total $141,643 182,980
======== =======
</TABLE>
*Party-In-Interest
11
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SCHEDULE 2
TRICON LONG TERM SAVINGS PROGRAM
EIN: 13-3951308
Form 5500, Schedule of Non-Exempt Transactions
Year ended December 31, 1999
<TABLE>
IDENTITY OF DESCRIPTION OF COST OF
PARTY INVOLVED RELATIONSHIP TRANSACTION ASSET
-------------- ------------ ----------- -----
<S> <C> <S> <C>
TRICON Global Restaurants, Sponsor Employee deferrals not $46,715
Inc. deposited to Plan in a
timely manner
</TABLE>
There was a one-time unintentional delay by the Company in
submitting employee deferrals in the amount of $125,990 to the
trustee during 1999. In September 2000, the Company reimbursed
the Plan for lost interest in the amount of $46,715.
12
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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: December 19, 2000
