TO OUR SHAREHOLDERS:
We are responsible for the preparation, integrity and fair
presentation of the Consolidated Financial Statements, related notes and other information
included in this annual report. The financial statements were prepared in accordance with
generally accepted accounting principles and include certain amounts based upon our
estimates and assumptions, as required. Other financial information presented in the
annual report is derived from the financial statements.
We maintain a system of internal control over financial
reporting, designed to provide reasonable assurance as to the reliability of the financial
statements, as well as to safeguard assets from unauthorized use or disposition. The
system is supported by formal policies and procedures, including an active Code of Conduct
program intended to ensure employees adhere to the highest standards of personal and
professional integrity. Our internal audit function monitors and reports on the adequacy
of and compliance with the internal control system, and appropriate actions are taken to
address significant control deficiencies and other opportunities for improving the system
as they are identified.
The financial statements have been audited and reported on by our independent auditors,
KPMG LLP, who were given free access to all financial records and related data, including
minutes of the meetings of the Board of Directors and Committees of the Board. We believe
that management representations made to the independent auditors were valid and
The Audit Committee of the Board of Directors, which is
composed solely of outside directors, provides oversight to our financial reporting
process and our controls to safeguard assets through periodic meetings with our
independent auditors, internal auditors and management. Both our independent auditors and
internal auditors have free access to the Audit Committee.
Although no cost-effective internal control system will preclude all errors and
irregularities, we believe our controls as of December 26, 1998 provide reasonable
assurance that our assets are reasonably safeguarded.
THE BOARD OF DIRECTORS
TRICON GLOBAL RESTAURANTS, INC.:
We have audited the accompanying consolidated balance sheet
of TRICON Global Restaurants, Inc. and Subsidiaries ("TRICON") as of December
26, 1998 and December 27, 1997, and the related consolidated statements of operations,
cash flows and shareholders (deficit) equity and comprehensive income for each of
the years in the three-year period ended December 26, 1998. These consolidated financial
statements are the responsibility of TRICONs management. Our responsibility is to
express an opinion on these consolidated 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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of TRICON as of December 26, 1998 and
December 27, 1997, and the results of its operations and its cash flows for each of the
years in the three-year period ended December 26, 1998, in conformity with generally
accepted accounting principles.