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
<PAGE>
TRICON LONG TERM SAVINGS PROGRAM
Financial Statements and Supplemental Schedules
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
<PAGE>
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
<PAGE>
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
<PAGE>
TRICON LONG TERM SAVINGS PROGRAM
Statement of Net Assets Available for Benefits
December 31, 1998
(In thousands)
<TABLE>
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 ----- ---- ---- ---- ---- ---- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
======== ====== ====== ====== ====== ====== ====== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
TRICON LONG TERM SAVINGS PROGRAM
Statement of Net Assets Available for Benefits
December 31, 1997
(In thousands)
<TABLE>
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 ----- ---- ---- ---- ---- ---- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
======== ====== ====== ====== ====== ====== ====== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
TRICON LONG TERM SAVINGS PROGRAM
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998
(In thousands)
<TABLE>
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
----- ---- ---- ---- ---- ---- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
======== ====== ====== ====== ====== ======= ====== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
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)
<TABLE>
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
----- ---- ---- ---- ---- ---- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
======== ====== ====== ====== ====== ====== ====== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
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)
<PAGE>
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)
<PAGE>
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)
<PAGE>
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)
<PAGE>
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)
<PAGE>
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
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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
