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Pizza Huts to go
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December 10, 1997: 6:29 a.m. ET
Tricon Global sees $425 million charge to restructure operations
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NEW YORK (CNNfn) - Tricon Global Restaurants Inc. said it will take one-time charges of $425 million to dramatically refocus its business, including closing several hundred Pizza Hut locations.
Tricon, which represented the restaurant businesses of PepsiCo Inc., became a separate company two months ago. It also operates brand names such as KFC and Taco Bell.
The restructuring charges will lower fourth-quarter results by $2.79 a share but is expected to have a favorable effect on future cash flows.
"The charge will cover closure of underperforming stores over the next year, writing-down to market value the carrying value of some of the stores that we intend to refranchise, revaluation of some other investment assets and reducing the overhead costs related to these operations," said Andrall E. Pearson, chairman and chief executive, in a statement.
Pearson further stated Tricon will end 1997 strongly with low double-digit growth in operating profit, before facility action net gains and these charges, to about $660 million.
"Our 1998 earnings estimates remain essentially unchanged reflecting a major improvement over 1997," he said.
Moreover, Tricon expects to continue to grow operating profit at least at a low double-digit rate.
"We are confident these actions will improve our return on assets and cash flow and result in annual earnings growth in the mid-teens on average over the next five years," Pearson said.
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PepsiCo
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