[]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2017
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OR
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934
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North Carolina
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13-3951308
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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1441 Gardiner Lane, Louisville, Kentucky
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40213
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (502) 874-8300
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Securities registered pursuant to Section 12(b) of the Act
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, no par value
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
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None
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Item 1.
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Business.
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The KFC Division which includes the worldwide operations of the KFC concept
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The Pizza Hut Division which includes the worldwide operations of the Pizza Hut concept
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The Taco Bell Division which includes the worldwide operations of the Taco Bell concept
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KFC was founded in Corbin, Kentucky by Colonel Harland D. Sanders, an early developer of the quick service food business and a pioneer of the restaurant franchise concept. The Colonel perfected his secret blend of 11 herbs and spices for Kentucky Fried Chicken in 1939 and signed up his first franchisee in 1952.
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KFC operates in 131 countries and territories throughout the world. As of year end 2017, KFC had 21,487 units, 97 percent of which are franchised.
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KFC restaurants across the world offer fried and non-fried chicken products such as sandwiches, chicken strips, chicken-on-the-bone and other chicken products marketed under a variety of names. KFC restaurants also offer a variety of entrees and side items suited to local preferences and tastes. Restaurant decor throughout the world is characterized by the image of the Colonel.
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The first Pizza Hut restaurant was opened in 1958 in Wichita, Kansas, and within a year, the first franchise unit was opened. Today, Pizza Hut is the largest restaurant chain in the world specializing in the sale of ready-to-eat pizza products.
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Pizza Hut operates in 106 countries and territories throughout the world. As of year end 2017, Pizza Hut had 16,748 units, 99 percent of which are franchised.
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Pizza Hut operates in the delivery, carryout and casual dining segments around the world. Outside of the U.S., Pizza Hut often uses unique branding to differentiate these segments. Additionally, a growing percentage of Pizza Hut's customer orders are being generated digitally.
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Pizza Hut features a variety of pizzas which are marketed under varying names. Each of these pizzas is offered with a variety of different toppings suited to local preferences and tastes. Many Pizza Huts also offer pasta and chicken wings, including approximately 5,900 stores offering wings under the WingStreet brand in the U.S. Outside the U.S., Pizza Hut casual dining restaurants offer a variety of core menu products other than pizza, which are typically suited to local preferences and tastes. Pizza Hut units feature a distinctive red roof logo on their signage.
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The first Taco Bell restaurant was opened in 1962 by Glen Bell in Downey, California, and in 1964, the first Taco Bell franchise was sold.
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Taco Bell operates in 27 countries and territories throughout the world. As of year end 2017, there were 6,849 Taco Bell units, primarily in the U.S., 90 percent of which are franchised.
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Taco Bell specializes in Mexican-style food products, including various types of tacos, burritos, quesadillas, salads, nachos and other related items. Taco Bell offers breakfast items in its U.S. stores. Taco Bell units feature a distinctive bell logo on their signage.
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Item 1A.
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Risk Factors.
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The Americans with Disabilities Act in the U.S. and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations and other areas.
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The U.S. Fair Labor Standards Act, which governs matters such as minimum wages, overtime and other working conditions, as well as family leave mandates and a variety of similar state laws that govern these and other employment law matters.
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Laws and regulations in government-mandated health care benefits such as the Patient Protection and Affordable Care Act.
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Laws and regulations relating to nutritional content, nutritional labeling, product safety, product marketing and menu labeling.
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Laws relating to state and local licensing.
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Laws relating to the relationship between franchisors and franchisees.
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Laws and regulations relating to health, sanitation, food, workplace safety, child labor, including laws prohibiting the use of certain “hazardous equipment” by employees younger than the age of 18 years of age, and fire safety and prevention.
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Laws and regulations relating to union organizing rights and activities.
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Laws relating to information security, privacy (including the European Union's GDPR, which will become effective in May 2018), cashless payments, and consumer protection.
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Laws relating to currency conversion or exchange.
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Laws relating to international trade and sanctions.
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Tax laws and regulations.
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Anti-bribery and anti-corruption laws.
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Environmental laws and regulations.
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Federal and state immigration laws and regulations in the U.S.
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increasing our vulnerability to, and reducing our flexibility to plan for and respond to, adverse economic and industry conditions and changes in our business and the competitive environment;
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requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, dividends, share repurchases or other corporate purposes;
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increasing our vulnerability to a further downgrade of our credit rating, which could adversely affect our cost of funds, liquidity and access to capital markets;
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restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;
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placing us at a disadvantage compared to other less leveraged competitors or competitors with comparable debt at more favorable interest rates;
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increasing our exposure to the risk of increased interest rates insofar as current and future borrowings are subject to variable rates of interest;
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making it more difficult for us to repay, refinance or satisfy our obligations with respect to our debt;
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limiting our ability to borrow additional funds in the future and increasing the cost of any such borrowing;
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imposing restrictive covenants on our operations, which, if not complied with, could result in an event of default, which in turn, if not cured or waived, could result in the acceleration of the applicable debt, and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies; and
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increasing our exposure to risks related to fluctuations in foreign currency as we earn profits in a variety of currencies around the world and our debt is denominated in U.S. dollars.
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Item 1B.
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Unresolved Staff Comments.
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Item 2.
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Properties.
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The KFC Division owned land, building or both for 184 units and leased land, building or both for 484 units.
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The Pizza Hut Division owned land, building or both for 9 units and leased land, building or both for 151 units.
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The Taco Bell Division owned land, building or both for 387 units and leased land, building or both for 266 units.
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Item 3.
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Legal Proceedings.
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Item 4.
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Mine Safety Disclosures.
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Item 5.
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Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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2017
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Quarter
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High
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Low
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Dividends
Declared
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First
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$
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68.65
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$
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63.18
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$
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0.30
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Second
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74.82
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63.55
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0.30
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Third
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77.80
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72.65
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—
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Fourth
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83.47
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73.75
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0.30
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(a)
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Stock price information presented for 2016 is now reflective of our current reporting calendar. See Note 2 to the Consolidated Financial Statements in Item 8 of this Form 10-K for discussion of the change in our reporting calendar.
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Fiscal Periods
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Total number
of shares
purchased
(thousands)
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Average price
paid per share
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Total number of shares
purchased as part of
publicly announced plans
or programs
(thousands)
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Approximate dollar value
of shares that may yet be
purchased under the plans
or programs
(millions)
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10/1/17 - 10/31/17
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2,686
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$
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75.47
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2,686
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$
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385
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11/1/17- 11/30/17
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3,162
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$
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79.68
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3,162
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$
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1,633
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12/1/17 - 12/31/17
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1,603
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$
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82.95
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1,603
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$
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1,500
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Total
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7,451
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$
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78.87
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7,451
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$
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1,500
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12/31/2012
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12/31/2013
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12/31/2014
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12/31/2015
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12/30/2016
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12/29/2017
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YUM
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$
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100
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$
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116
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$
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114
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$
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117
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$
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145
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$
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190
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S&P 500
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$
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100
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$
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132
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$
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150
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$
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153
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$
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171
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$
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208
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S&P Consumer Discretionary
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$
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100
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$
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143
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$
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157
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$
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173
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$
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183
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$
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225
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Item 6.
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Selected Financial Data.
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Fiscal Year
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2017
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2016(a)(d)
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2015(a)
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2014(a)
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2013(a)
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Income Statement Data
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Revenues
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Company sales
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$
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3,572
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$
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4,189
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$
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4,336
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$
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4,503
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$
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4,384
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Franchise and license fees and income
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2,306
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2,167
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2,082
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2,084
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2,033
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Total
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5,878
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6,356
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6,418
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6,587
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6,417
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Refranchising (gain) loss(b)
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(1,083
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)
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(163
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)
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23
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(16
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(95
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)
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Operating Profit(b)
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2,761
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1,682
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1,434
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1,517
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1,530
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Other pension (income) expense(b)
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47
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32
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40
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N/A
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N/A
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Interest expense, net(b)
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440
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305
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141
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143
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251
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Income from continuing operations before income taxes(b)
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2,274
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1,345
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1,253
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1,374
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1,279
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Income from continuing operations(b)
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1,340
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1,018
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926
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1,006
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922
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Income from discontinued operations, net of tax
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N/A
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625
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357
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45
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169
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Net Income(b)
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1,340
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1,643
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1,283
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1,051
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1,091
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Basic earnings per common share from continuing operations(b)
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3.86
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2.58
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2.13
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2.27
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2.04
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Basic earnings per common share from discontinued operations
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N/A
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1.59
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0.82
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0.10
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0.37
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Basic earnings per common share(b)
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3.86
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4.17
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2.95
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2.37
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2.41
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Diluted earnings per common share from continuing operations(b)
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3.77
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2.54
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2.09
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2.22
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2.00
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Diluted earnings per common share from discontinued operations
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N/A
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1.56
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0.81
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0.10
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0.36
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Diluted earnings per common share(b)
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3.77
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4.10
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2.90
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2.32
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2.36
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Diluted earnings per common share from continuing operations excluding Special Items(c)
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2.96
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2.46
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2.31
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2.20
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2.04
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Cash Flow Data
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Provided by operating activities
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$
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1,030
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$
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1,248
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$
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1,260
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$
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1,217
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$
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1,289
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Capital spending
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318
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427
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442
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508
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481
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Proceeds from refranchising of restaurants
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1,773
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370
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213
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83
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250
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Repurchase shares of Common Stock
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1,960
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5,403
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1,200
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820
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|
770
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Dividends paid on Common Stock
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416
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744
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730
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669
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615
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Balance Sheet Data
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Total assets
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$
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5,311
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$
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5,453
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$
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4,939
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$
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5,073
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$
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4,975
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Long-term debt
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9,429
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9,059
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2,988
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3,003
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2,888
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Total debt
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9,804
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9,125
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3,908
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3,268
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2,958
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|||||
Other Data
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Number of stores at year end
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Franchise
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43,603
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40,834
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39,320
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37,959
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36,746
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|||||
Company
|
1,481
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|
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2,841
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|
|
3,163
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|
|
3,279
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|
|
3,071
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|||||
System
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45,084
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43,675
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42,483
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41,238
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|
|
39,817
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|||||
System Sales(c)
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KFC Division system sales
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24,515
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|
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23,242
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22,628
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|
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23,458
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23,147
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|||||
Reported growth
|
5
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%
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|
3
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%
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(3
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)%
|
|
1
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%
|
|
(2
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)%
|
|||||
Growth in local currency
|
6
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%
|
|
7
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%
|
|
5
|
%
|
|
4
|
%
|
|
—
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%
|
|||||
Pizza Hut Division system sales
|
12,034
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|
|
12,019
|
|
|
11,999
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|
|
12,106
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|
|
11,948
|
|
|||||
Reported growth
|
—
|
%
|
|
—
|
%
|
|
(1
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)%
|
|
1
|
%
|
|
3
|
%
|
|||||
Growth in local currency
|
1
|
%
|
|
2
|
%
|
|
3
|
%
|
|
2
|
%
|
|
4
|
%
|
|||||
Taco Bell Division system sales
|
10,145
|
|
|
9,660
|
|
|
9,102
|
|
|
8,459
|
|
|
8,107
|
|
|||||
Reported growth
|
5
|
%
|
|
6
|
%
|
|
8
|
%
|
|
4
|
%
|
|
4
|
%
|
|||||
Growth in local currency
|
5
|
%
|
|
6
|
%
|
|
8
|
%
|
|
4
|
%
|
|
4
|
%
|
|||||
Shares outstanding at year end
|
332
|
|
|
355
|
|
|
420
|
|
|
434
|
|
|
443
|
|
|||||
Cash dividends declared per Common Share
|
$
|
0.90
|
|
|
$
|
1.73
|
|
|
$
|
1.74
|
|
|
$
|
1.56
|
|
|
$
|
1.41
|
|
Market price per share at year end(e)
|
$
|
81.61
|
|
|
$
|
63.33
|
|
|
$
|
73.05
|
|
|
$
|
73.14
|
|
|
$
|
73.87
|
|
(a)
|
Selected financial data for years 2016 and 2015 has been recast to present the change in our reporting calendar and retroactively adopting a new accounting standard related to the presentation of net periodic pension cost and net periodic postretirement benefit cost (collectively,"Benefit Costs"). See Notes 2 and 5 to the Consolidated Financial Statements in Item 8 of this Form 10-K for discussion related to adopting a new accounting standard on Benefit Costs and the change in our reporting calendar, respectively. 2014 reflects our Balance Sheet and store count data that were recast for purposes of presenting 2015 Consolidated Statement of Cash Flows and unit growth. No other data presented in 2014 or 2013 has been recast.
|
(b)
|
Includes amounts deemed as Special Items for some or all years presented. See discussion of our 2017, 2016 and 2015 Special Items in our Management's Discussion and Analysis ("MD&A"). Special Items in 2014 positively impacted Operating Profit by $16 million, primarily due to Refranchising gains. Special Items in 2013 positively impacted Operating Profit by $73 million, primarily due to Refranchising gains, partially offset by $10 million in pension settlement charges and $5 million of expense related to U.S. productivity initiatives and realignment of resources. Additionally, in 2013, we incurred $118 million of premiums paid and other costs related to the extinguishment of debt that were considered Special Items and were recorded in Interest expense, net. Special Items resulted in cumulative net tax benefits of $23 million 2013.
|
(c)
|
These non-GAAP measures are discussed in further detail in our MD&A.
|
(d)
|
Fiscal years for our U.S. and certain international subsidiaries that operate on a weekly periodic calendar include 52 weeks in 2017, 2015, 2014 and 2013 and 53 weeks in 2016. Refer to Note 2 for additional details related to our fiscal calendar.
|
(e)
|
Historical stock prices prior to November 1, 2016, do not reflect any adjustment for the impact of the Separation.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
The KFC Division which includes our worldwide operations of the KFC concept
|
•
|
The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept
|
•
|
The Taco Bell Division which includes our worldwide operations of the Taco Bell concept
|
•
|
More Focused. Four growth drivers form the basis of YUM’s strategic plans and repeatable business model to accelerate same-store sales growth and net-new restaurant development at KFC, Pizza Hut and Taco Bell around the world over the long term. The Company is focused on becoming best-in-class in:
|
•
|
Building Distinctive, Relevant and Easy Brands
|
•
|
Developing Unmatched Franchise Operating Capability
|
•
|
Driving Bold Restaurant Development
|
•
|
Growing Unrivaled Culture and Talent
|
•
|
More Franchised. YUM intends franchise restaurant ownership to be at least 98% by the end of 2018.
|
•
|
More Efficient. The Company is revamping its financial profile, improving the efficiency of its organization and cost structure globally, by:
|
•
|
Reducing annual capital expenditures to approximately $100 million in 2019;
|
•
|
Lowering General and administrative expenses ("G&A") to 1.7% of system sales in 2019; and
|
•
|
Maintaining an optimized capital structure of ~5.0x Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) leverage.
|
•
|
Same-store sales growth is the estimated percentage change in sales of all restaurants that have been open and in the YUM system for one year or more.
|
•
|
Net new units represents new unit openings, offset by store closures.
|
•
|
Company restaurant profit ("Restaurant profit") is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales. Company restaurant margin as a percentage of sales is defined as Restaurant profit divided by Company sales. Within the Company sales and Restaurant profit sections of this MD&A, Store Portfolio Actions represent the net impact of new unit openings, acquisitions, refranchising and store closures, and Other primarily represents the impact of same-store sales as well as the impact of changes in costs such as inflation/deflation.
|
•
|
Operating margin is Operating Profit divided by Total revenues.
|
•
|
System sales, System sales excluding the impacts of foreign currency translation ("FX"), and System sales excluding FX and the impact of the 53rd week in 2016. System sales include the results of all restaurants regardless of ownership, including Company-owned and franchise restaurants that operate our Concepts. Sales of franchise restaurants typically generate ongoing franchise and license fees for the Company at a rate of 3% to 6% of sales. Franchise restaurant sales are not included in Company sales on the Consolidated Statements of Income; however, the franchise and license fees are included in the Company’s revenues. We believe System sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all of our revenue drivers, Company and franchise same-store sales as well as net unit growth.
|
•
|
Diluted Earnings Per Share from Continuing Operations excluding Special Items (as defined below);
|
•
|
Effective Tax Rate excluding Special Items;
|
•
|
Core Operating Profit and Core Operating Profit excluding the impact of the 53rd week in 2016. Core Operating Profit excludes Special Items and FX and we use Core Operating Profit for the purposes of evaluating performance internally.
|
|
% Change
|
||||||||
|
System Sales, Ex FX
|
|
Same-Store Sales
|
|
Net New Units
|
|
GAAP Operating Profit
|
|
Core Operating Profit
|
KFC Division
|
+6
|
|
+3
|
|
+4
|
|
+13
|
|
+12
|
Pizza Hut Division
|
+1
|
|
Even
|
|
+2
|
|
(7)
|
|
(6)
|
Taco Bell Division
|
+5
|
|
+4
|
|
+4
|
|
+4
|
|
+4
|
Worldwide
|
+4
|
|
+2
|
|
+3
|
|
+64
|
|
+7
|
|
Results Excluding 53rd Week in 2016
(% Change)
|
||
|
System Sales, Ex FX
|
|
Core Operating Profit
|
KFC Division
|
+6
|
|
+14
|
Pizza Hut Division
|
+2
|
|
(5)
|
Taco Bell Division
|
+7
|
|
+6
|
Worldwide
|
+5
|
|
+9
|
•
|
During the year, we opened 1,407 net new units for 3% net new unit growth.
|
•
|
During the year, we refranchised 1,470 restaurants, including 828 KFC, 389 Pizza Hut and 253 Taco Bell units, for pre-tax proceeds of $1.8 billion. We recorded net refranchising gains of $1.1 billion in Special Items.
|
•
|
During the year, we repurchased 26.6 million shares totaling $1.9 billion at an average share price of $72.
|
|
Amount
|
|
% B/(W)
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
||||||||||||
Company sales
|
$
|
3,572
|
|
|
$
|
4,189
|
|
|
$
|
4,336
|
|
|
(15
|
)
|
|
|
|
(3
|
)
|
|
|
Franchise and license fees and income
|
2,306
|
|
|
2,167
|
|
|
2,082
|
|
|
6
|
|
|
|
|
4
|
|
|
|
|||
Total revenues
|
$
|
5,878
|
|
|
$
|
6,356
|
|
|
$
|
6,418
|
|
|
(8
|
)
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Restaurant profit
|
$
|
618
|
|
|
$
|
700
|
|
|
$
|
709
|
|
|
(12
|
)
|
|
|
|
(1
|
)
|
|
|
Restaurant margin %
|
17.3
|
%
|
|
16.7
|
%
|
|
16.3
|
%
|
|
0.6
|
|
|
ppts.
|
|
0.4
|
|
|
ppts.
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
G&A expenses
|
$
|
999
|
|
|
$
|
1,129
|
|
|
$
|
1,058
|
|
|
12
|
|
|
|
|
(7
|
)
|
|
|
Franchise and license expenses
|
237
|
|
|
201
|
|
|
240
|
|
|
(18
|
)
|
|
|
|
16
|
|
|
|
|||
Closures and impairment expenses
|
3
|
|
|
15
|
|
|
16
|
|
|
82
|
|
|
|
|
8
|
|
|
|
|||
Refranchising (gain) loss
|
(1,083
|
)
|
|
(163
|
)
|
|
23
|
|
|
NM
|
|
|
|
|
NM
|
|
|
|
|||
Other (income) expense
|
7
|
|
|
3
|
|
|
20
|
|
|
(103
|
)
|
|
|
|
83
|
|
|
|
|||
Operating Profit
|
$
|
2,761
|
|
|
$
|
1,682
|
|
|
$
|
1,434
|
|
|
64
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other pension (income) expense
|
47
|
|
|
32
|
|
|
40
|
|
|
(45
|
)
|
|
|
|
18
|
|
|
|
|||
Interest expense, net
|
440
|
|
|
305
|
|
|
141
|
|
|
(44
|
)
|
|
|
|
NM
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income tax provision
|
934
|
|
|
327
|
|
|
327
|
|
|
NM
|
|
|
|
|
—
|
|
|
|
|||
Income from continuing operations
|
1,340
|
|
|
1,018
|
|
|
926
|
|
|
32
|
|
|
|
|
10
|
|
|
|
|||
Income from discontinued operations, net of tax
|
N/A
|
|
|
625
|
|
|
357
|
|
|
NM
|
|
|
|
|
75
|
|
|
|
|||
Net Income
|
$
|
1,340
|
|
|
$
|
1,643
|
|
|
$
|
1,283
|
|
|
(18
|
)
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted EPS from continuing operations(a)
|
$
|
3.77
|
|
|
$
|
2.54
|
|
|
$
|
2.09
|
|
|
48
|
|
|
|
|
22
|
|
|
|
Diluted EPS from discontinued operations(a)
|
N/A
|
|
|
$
|
1.56
|
|
|
$
|
0.81
|
|
|
NM
|
|
|
|
|
93
|
|
|
|
|
Diluted EPS(a)
|
$
|
3.77
|
|
|
$
|
4.10
|
|
|
$
|
2.90
|
|
|
(8
|
)
|
|
|
|
42
|
|
|
|
Effective tax rate - continuing operations
|
41.1%
|
|
24.3%
|
|
26.1%
|
|
(16.8
|
)
|
|
ppts.
|
|
1.8
|
|
|
ppts.
|
(a)
|
See Note 3 for the number of shares used in these calculations.
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
|||||||
Unit Count
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|||||
Franchise
|
43,603
|
|
|
40,834
|
|
|
39,320
|
|
|
7
|
|
|
4
|
|
Company-owned
|
1,481
|
|
|
2,841
|
|
|
3,163
|
|
|
(48
|
)
|
|
(10
|
)
|
|
45,084
|
|
|
43,675
|
|
|
42,483
|
|
|
3
|
|
|
3
|
|
|
KFC Division
|
|
Pizza Hut Division
|
|
Taco Bell Division
|
|
Total
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Company sales
|
$
|
26
|
|
|
$
|
5
|
|
|
$
|
24
|
|
|
$
|
55
|
|
Franchise and license fees and income
|
8
|
|
|
6
|
|
|
7
|
|
|
21
|
|
||||
Total revenues
|
$
|
34
|
|
|
$
|
11
|
|
|
$
|
31
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Profit
|
|
|
|
|
|
|
|
||||||||
Franchise and license fees and income
|
$
|
8
|
|
|
$
|
6
|
|
|
$
|
7
|
|
|
$
|
21
|
|
Restaurant profit
|
6
|
|
|
1
|
|
|
7
|
|
|
14
|
|
||||
G&A expenses
|
(3
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(7
|
)
|
||||
Operating Profit
|
$
|
11
|
|
|
$
|
5
|
|
|
$
|
12
|
|
|
$
|
28
|
|
|
|
Year
|
||||||||||
Detail of Special Items
|
|
2017
|
|
2016
|
|
2015
|
||||||
Refranchising gain (loss) (See Note 5)
|
|
$
|
1,083
|
|
|
$
|
163
|
|
|
$
|
(19
|
)
|
YUM's Strategic Transformation Initiatives (See Note 5)
|
|
(23
|
)
|
|
(67
|
)
|
|
—
|
|
|||
Costs associated with Pizza Hut U.S. Transformation Agreement (See Note 5)
|
|
(31
|
)
|
|
—
|
|
|
—
|
|
|||
Costs associated with KFC U.S. Acceleration Agreement (See Note 5)
|
|
(17
|
)
|
|
(26
|
)
|
|
(72
|
)
|
|||
Non-cash charges associated with share-based compensation (See Note 5)
|
|
(18
|
)
|
|
(30
|
)
|
|
—
|
|
|||
Other Special Items Income (Expense)
|
|
7
|
|
|
(5
|
)
|
|
—
|
|
|||
Special Items Income (Expense) - Operating Profit
|
|
1,001
|
|
|
35
|
|
|
(91
|
)
|
|||
Special Items - Other Pension Income (Expense) (See Note 5)
|
|
(23
|
)
|
|
(26
|
)
|
|
—
|
|
|||
Special Items Income (Expense) from Continuing Operations before Income Taxes
|
|
978
|
|
|
9
|
|
|
(91
|
)
|
|||
Tax Benefit (Expense) on Special Items(a)
|
|
(256
|
)
|
|
24
|
|
|
(4
|
)
|
|||
Tax (Expense) - U.S. Tax Act(a)
|
|
(434
|
)
|
|
—
|
|
|
—
|
|
|||
Special Items Income (Expense), net of tax
|
|
$
|
288
|
|
|
$
|
33
|
|
|
$
|
(95
|
)
|
Average diluted shares outstanding
|
|
355
|
|
|
400
|
|
|
443
|
|
|||
Special Items diluted EPS
|
|
$
|
0.81
|
|
|
$
|
0.08
|
|
|
$
|
(0.22
|
)
|
|
|
|
|
|
|
|
||||||
Reconciliation of GAAP Operating Profit to Core Operating Profit and Core Operating Profit, excluding 53rd Week
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Consolidated
|
|
|
|
|
|
|
||||||
GAAP Operating Profit
|
|
$
|
2,761
|
|
|
$
|
1,682
|
|
|
$
|
1,434
|
|
Special Items Income (Expense) - Operating Profit
|
|
1,001
|
|
|
35
|
|
|
(91
|
)
|
|||
Foreign Currency Impact on Divisional Operating Profit(b)
|
|
—
|
|
|
(47
|
)
|
|
N/A
|
|
|||
Core Operating Profit
|
|
$
|
1,760
|
|
|
$
|
1,694
|
|
|
$
|
1,525
|
|
Impact of 53rd Week
|
|
N/A
|
|
|
28
|
|
|
N/A
|
|
|||
Core Operating Profit, excluding 53rd Week
|
|
$
|
1,760
|
|
|
$
|
1,666
|
|
|
$
|
1,525
|
|
|
|
|
|
|
|
|
||||||
KFC Division
|
|
|
|
|
|
|
||||||
GAAP Operating Profit
|
|
$
|
981
|
|
|
$
|
871
|
|
|
$
|
835
|
|
Foreign Currency Impact on Divisional Operating Profit(b)
|
|
4
|
|
|
(41
|
)
|
|
N/A
|
|
|||
Core Operating Profit
|
|
977
|
|
|
912
|
|
|
835
|
|
|||
Impact of 53rd Week
|
|
N/A
|
|
|
11
|
|
|
N/A
|
|
|||
Core Operating Profit, excluding 53rd Week
|
|
$
|
977
|
|
|
$
|
901
|
|
|
$
|
835
|
|
|
|
|
|
|
|
|
||||||
Pizza Hut Division
|
|
|
|
|
|
|
||||||
GAAP Operating Profit
|
|
$
|
341
|
|
|
$
|
367
|
|
|
$
|
351
|
|
Foreign Currency Impact on Divisional Operating Profit(b)
|
|
(4
|
)
|
|
(7
|
)
|
|
N/A
|
|
|||
Core Operating Profit
|
|
345
|
|
|
374
|
|
|
351
|
|
|||
Impact of 53rd Week
|
|
N/A
|
|
|
5
|
|
|
N/A
|
|
|||
Core Operating Profit, excluding 53rd Week
|
|
$
|
345
|
|
|
$
|
369
|
|
|
$
|
351
|
|
|
|
|
|
|
|
|
Taco Bell Division
|
|
|
|
|
|
|
||||||
GAAP Operating Profit
|
|
$
|
619
|
|
|
$
|
595
|
|
|
$
|
546
|
|
Foreign Currency Impact on Divisional Operating Profit(b)
|
|
—
|
|
|
1
|
|
|
N/A
|
|
|||
Core Operating Profit
|
|
619
|
|
|
594
|
|
|
546
|
|
|||
Impact of 53rd Week
|
|
N/A
|
|
|
12
|
|
|
N/A
|
|
|||
Core Operating Profit, excluding 53rd Week
|
|
$
|
619
|
|
|
$
|
582
|
|
|
$
|
546
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Reconciliation of Diluted EPS from Continuing Operations to Diluted EPS from Continuing Operations, excluding Special Items
|
|
|
|
|
|
|
||||||
Diluted EPS from Continuing Operations
|
|
$
|
3.77
|
|
|
$
|
2.54
|
|
|
$
|
2.09
|
|
Special Items Diluted EPS
|
|
0.81
|
|
|
0.08
|
|
|
(0.22
|
)
|
|||
Diluted EPS from Continuing Operations excluding Special Items
|
|
$
|
2.96
|
|
|
$
|
2.46
|
|
|
$
|
2.31
|
|
|
|
|
|
|
|
|
||||||
Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate, excluding Special Items
|
|
|
|
|
|
|
||||||
GAAP Effective Tax Rate
|
|
41.1
|
%
|
|
24.3
|
%
|
|
26.1
|
%
|
|||
Impact on Tax Rate as a result of Special Items(a)
|
|
22.3
|
%
|
|
(2.0
|
)%
|
|
2.1
|
%
|
|||
Effective Tax Rate excluding Special Items(c)
|
|
18.8
|
%
|
|
26.3
|
%
|
|
24.0
|
%
|
|||
|
|
|
|
|
|
|
||||||
Reconciliation of GAAP Company sales to System sales
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Consolidated
|
|
|
|
|
|
|
||||||
GAAP Company sales(d)
|
|
$
|
3,572
|
|
|
$
|
4,189
|
|
|
$
|
4,336
|
|
Franchise sales
|
|
43,122
|
|
|
40,732
|
|
|
39,393
|
|
|||
System sales
|
|
46,694
|
|
|
44,921
|
|
|
43,729
|
|
|||
Foreign Currency Impact on System sales(e)
|
|
(90
|
)
|
|
(1,123
|
)
|
|
N/A
|
|
|||
System sales, excluding FX
|
|
46,784
|
|
|
46,044
|
|
|
43,729
|
|
|||
Impact of 53rd week
|
|
N/A
|
|
|
434
|
|
|
N/A
|
|
|||
System sales, excluding FX and 53rd Week
|
|
$
|
46,784
|
|
|
$
|
45,610
|
|
|
$
|
43,729
|
|
|
|
|
|
|
|
|
||||||
KFC Division
|
|
|
|
|
|
|
||||||
GAAP Company sales(d)
|
|
$
|
1,928
|
|
|
$
|
2,156
|
|
|
$
|
2,191
|
|
Franchise sales
|
|
22,587
|
|
|
21,086
|
|
|
20,437
|
|
|||
System sales
|
|
24,515
|
|
|
23,242
|
|
|
22,628
|
|
|||
Foreign Currency Impact on System sales(e)
|
|
(28
|
)
|
|
(858
|
)
|
|
N/A
|
|
|||
System sales, excluding FX
|
|
24,543
|
|
|
24,100
|
|
|
22,628
|
|
|||
Impact of 53rd week
|
|
N/A
|
|
|
165
|
|
|
N/A
|
|
|||
System sales, excluding FX and 53rd Week
|
|
$
|
24,543
|
|
|
$
|
23,935
|
|
|
$
|
22,628
|
|
|
|
|
|
|
|
|
||||||
Pizza Hut Division
|
|
|
|
|
|
|
||||||
GAAP Company sales(d)
|
|
$
|
285
|
|
|
$
|
493
|
|
|
$
|
601
|
|
Franchise sales
|
|
11,749
|
|
|
11,526
|
|
|
11,398
|
|
|||
System sales
|
|
12,034
|
|
|
12,019
|
|
|
11,999
|
|
|||
Foreign Currency Impact on System sales(e)
|
|
(66
|
)
|
|
(258
|
)
|
|
N/A
|
|
|||
System sales, excluding FX
|
|
12,100
|
|
|
12,277
|
|
|
11,999
|
|
|||
Impact of 53rd week
|
|
N/A
|
|
|
113
|
|
|
N/A
|
|
|||
System sales, excluding FX and 53rd Week
|
|
$
|
12,100
|
|
|
$
|
12,164
|
|
|
$
|
11,999
|
|
|
|
|
|
|
|
|
Taco Bell Division
|
|
|
|
|
|
|
||||||
GAAP Company sales(d)
|
|
$
|
1,359
|
|
|
$
|
1,540
|
|
|
$
|
1,544
|
|
Franchise sales
|
|
8,786
|
|
|
8,120
|
|
|
7,558
|
|
|||
System sales
|
|
10,145
|
|
|
9,660
|
|
|
9,102
|
|
|||
Foreign Currency Impact on System sales(e)
|
|
4
|
|
|
$
|
(7
|
)
|
|
N/A
|
|
||
System sales, excluding FX
|
|
10,141
|
|
|
9,667
|
|
|
9,102
|
|
|||
Impact of 53rd week
|
|
N/A
|
|
|
156
|
|
|
N/A
|
|
|||
System sales, excluding FX and 53rd Week
|
|
$
|
10,141
|
|
|
$
|
9,511
|
|
|
$
|
9,102
|
|
|
|
|
|
|
|
|
(a)
|
The tax benefit (expense) was determined based upon the impact of the nature, as well as the jurisdiction of the respective individual components within Special Items. In 2016, our tax rate on Special Items was favorably impacted by the recognition of capital loss carryforwards in anticipation of U.S. refranchising gains. In 2015, our tax rate on Special Items was unfavorably impacted by the non-deductibility of certain losses associated with international refranchising. See Note 18.
|
(b)
|
The foreign currency impact on reported Operating Profit is presented in relation only to the immediately preceding year presented. When determining applicable Core Operating Profit Growth percentages, the Core Operating Profit for the current year should be compared to the prior year Operating Profit, prior to adjustment for the prior year FX impact.
|
(c)
|
Our 2017 Effective Tax Rate excluding Special Items was lower than prior years due primarily to the inclusion of tax expense on the repatriation of certain foreign earnings in 2017 being included in the one-time Special Items charge referenced in (a) above. The majority of our foreign entities have a tax year-end of November 30. Amounts repatriated from these foreign entities after November 30, 2017, which were significant due to the timing of international refranchising proceeds, were required to be taxed as part of the mandatory deemed repatriation tax in connection with the Tax Act. See Note 18.
|
(d)
|
Company Sales represents sales from our Company-operated stores as presented on our Consolidated Statements of Income.
|
(e)
|
The foreign currency impact on System sales is presented in relation only to the immediately preceding year presented. When determining applicable System sales growth percentages, the System sales excluding FX for the current year should be compared to the prior year System sales prior to adjustment for the prior year FX impact.
|
|
|
|
|
|
|
|
|
% B/(W)
|
|
% B/(W)
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
2017
|
|
2016
|
||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
Reported
|
|
Ex FX
|
|
Ex FX and 53rd Week in 2016
|
|
Reported
|
|
Ex FX
|
|
Ex FX and 53rd Week in 2016
|
||||||||||||||||||
System Sales
|
|
$
|
24,515
|
|
|
$
|
23,242
|
|
|
$
|
22,628
|
|
|
5
|
|
|
|
6
|
|
|
|
6
|
|
|
|
3
|
|
|
|
7
|
|
|
|
6
|
|
|
Same-Store Sales Growth (Decline)
|
|
|
|
|
|
|
|
3
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
2
|
|
|
|
N/A
|
|
|
|
N/A
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Company sales
|
|
$
|
1,928
|
|
|
$
|
2,156
|
|
|
$
|
2,191
|
|
|
(11
|
)
|
|
|
(12
|
)
|
|
|
(11
|
)
|
|
|
(2
|
)
|
|
|
4
|
|
|
|
3
|
|
|
Franchise and license fees and income
|
|
1,182
|
|
|
1,069
|
|
|
1,031
|
|
|
11
|
|
|
|
10
|
|
|
|
11
|
|
|
|
4
|
|
|
|
7
|
|
|
|
7
|
|
|
|||
Total revenues
|
|
$
|
3,110
|
|
|
$
|
3,225
|
|
|
$
|
3,222
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
5
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Restaurant profit
|
|
$
|
289
|
|
|
$
|
317
|
|
|
$
|
307
|
|
|
(9
|
)
|
|
|
(10
|
)
|
|
|
(8
|
)
|
|
|
3
|
|
|
|
9
|
|
|
|
7
|
|
|
Restaurant margin %
|
|
15.0
|
%
|
|
14.7
|
%
|
|
14.0
|
%
|
|
0.3
|
|
ppts.
|
|
0.3
|
|
ppts.
|
|
0.4
|
|
ppts.
|
|
0.7
|
|
ppts.
|
|
0.7
|
|
ppts.
|
|
0.6
|
|
ppts.
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
G&A expenses
|
|
$
|
370
|
|
|
$
|
396
|
|
|
$
|
395
|
|
|
7
|
|
|
|
7
|
|
|
|
7
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
Operating Profit
|
|
$
|
981
|
|
|
$
|
871
|
|
|
$
|
835
|
|
|
13
|
|
|
|
12
|
|
|
|
14
|
|
|
|
4
|
|
|
|
9
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
||||||||
Unit Count
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
||||||
Franchise
|
|
20,819
|
|
|
19,236
|
|
|
18,473
|
|
|
8
|
|
|
4
|
|
|
Company-owned
|
|
668
|
|
|
1,407
|
|
|
1,513
|
|
|
(53
|
)
|
|
(7
|
)
|
|
|
|
21,487
|
|
|
20,643
|
|
|
19,986
|
|
|
4
|
|
|
3
|
|
|
|
2016
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
Acquired
|
|
Other
|
|
2017
|
|||||||
Franchise
|
|
19,236
|
|
|
1,169
|
|
|
(414
|
)
|
|
828
|
|
|
—
|
|
|
—
|
|
|
20,819
|
|
Company-owned
|
|
1,407
|
|
|
102
|
|
|
(13
|
)
|
|
(828
|
)
|
|
—
|
|
|
—
|
|
|
668
|
|
Total
|
|
20,643
|
|
|
1,271
|
|
|
(427
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,487
|
|
|
|
2015
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
Acquired
|
|
Other
|
|
2016
|
|||||||
Franchise
|
|
18,473
|
|
|
994
|
|
|
(412
|
)
|
|
180
|
|
|
—
|
|
|
1
|
|
|
19,236
|
|
Company-owned
|
|
1,513
|
|
|
114
|
|
|
(39
|
)
|
|
(180
|
)
|
|
—
|
|
|
(1
|
)
|
|
1,407
|
|
Total
|
|
19,986
|
|
|
1,108
|
|
|
(451
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,643
|
|
|
2017 vs. 2016
|
||||||||||||||||||||||
Income / (Expense)
|
2016
|
|
Store Portfolio Actions
|
|
Other
|
|
FX
|
|
53rd Week
|
|
2017
|
||||||||||||
Company sales
|
$
|
2,156
|
|
|
$
|
(286
|
)
|
|
$
|
61
|
|
|
$
|
23
|
|
|
$
|
(26
|
)
|
|
$
|
1,928
|
|
Cost of sales
|
(733
|
)
|
|
93
|
|
|
(22
|
)
|
|
(11
|
)
|
|
9
|
|
|
(664
|
)
|
||||||
Cost of labor
|
(507
|
)
|
|
69
|
|
|
(16
|
)
|
|
(3
|
)
|
|
6
|
|
|
(451
|
)
|
||||||
Occupancy and other
|
(599
|
)
|
|
82
|
|
|
(7
|
)
|
|
(5
|
)
|
|
5
|
|
|
(524
|
)
|
||||||
Company restaurant expenses
|
$
|
(1,839
|
)
|
|
$
|
244
|
|
|
$
|
(45
|
)
|
|
$
|
(19
|
)
|
|
$
|
20
|
|
|
$
|
(1,639
|
)
|
Restaurant profit
|
$
|
317
|
|
|
$
|
(42
|
)
|
|
$
|
16
|
|
|
$
|
4
|
|
|
$
|
(6
|
)
|
|
$
|
289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 vs. 2015
|
||||||||||||||||||||||
Income / (Expense)
|
2015
|
|
Store Portfolio Actions
|
|
Other
|
|
FX
|
|
53rd Week
|
|
2016
|
||||||||||||
Company sales
|
$
|
2,191
|
|
|
$
|
24
|
|
|
$
|
39
|
|
|
$
|
(124
|
)
|
|
$
|
26
|
|
|
$
|
2,156
|
|
Cost of sales
|
(751
|
)
|
|
(10
|
)
|
|
(7
|
)
|
|
44
|
|
|
(9
|
)
|
|
(733
|
)
|
||||||
Cost of labor
|
(511
|
)
|
|
(3
|
)
|
|
(14
|
)
|
|
27
|
|
|
(6
|
)
|
|
(507
|
)
|
||||||
Occupancy and other
|
(622
|
)
|
|
3
|
|
|
(10
|
)
|
|
35
|
|
|
(5
|
)
|
|
(599
|
)
|
||||||
Company restaurant expenses
|
$
|
(1,884
|
)
|
|
$
|
(10
|
)
|
|
$
|
(31
|
)
|
|
$
|
106
|
|
|
$
|
(20
|
)
|
|
$
|
(1,839
|
)
|
Restaurant profit
|
$
|
307
|
|
|
$
|
14
|
|
|
$
|
8
|
|
|
$
|
(18
|
)
|
|
$
|
6
|
|
|
$
|
317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% B/(W)
|
|
% B/(W)
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
2017
|
|
2016
|
||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
Reported
|
|
Ex FX
|
|
Ex FX and 53rd Week in 2016
|
|
Reported
|
|
Ex FX
|
Ex FX and 53rd Week in 2016
|
|||||||||||||||||||
System Sales
|
|
$
|
12,034
|
|
|
$
|
12,019
|
|
|
$
|
11,999
|
|
|
—
|
|
|
|
1
|
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
|
|
1
|
|
|
Same-Store Sales Growth (Decline)
|
|
|
|
|
|
|
|
Even
|
|
|
N/A
|
|
|
|
N/A
|
|
|
(2
|
)
|
|
|
N/A
|
|
|
|
N/A
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Company sales
|
|
$
|
285
|
|
|
$
|
493
|
|
|
$
|
601
|
|
|
(42
|
)
|
|
|
(42
|
)
|
|
|
(41
|
)
|
|
|
(18
|
)
|
|
|
(16
|
)
|
|
|
(17
|
)
|
|
Franchise and license fees and income
|
|
608
|
|
|
615
|
|
|
604
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
2
|
|
|
|
4
|
|
|
|
3
|
|
|
|||
Total revenues
|
|
$
|
893
|
|
|
$
|
1,108
|
|
|
$
|
1,205
|
|
|
(19
|
)
|
|
|
(19
|
)
|
|
|
(18
|
)
|
|
|
(8
|
)
|
|
|
(6
|
)
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Restaurant profit
|
|
$
|
14
|
|
|
$
|
41
|
|
|
$
|
58
|
|
|
(63
|
)
|
|
|
(63
|
)
|
|
|
(62
|
)
|
|
|
(31
|
)
|
|
|
(31
|
)
|
|
|
(31
|
)
|
|
Restaurant margin %
|
|
5.3
|
%
|
|
8.3
|
%
|
|
9.8
|
%
|
|
(3.0
|
)
|
ppts.
|
|
(3.0
|
)
|
ppts.
|
|
(2.9
|
)
|
ppts.
|
|
(1.5)
|
|
ppts.
|
|
(1.7)
|
|
ppts.
|
|
(1.7
|
)
|
ppts.
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
G&A expenses
|
|
$
|
211
|
|
|
$
|
242
|
|
|
$
|
262
|
|
|
13
|
|
|
|
13
|
|
|
|
12
|
|
|
|
7
|
|
|
|
6
|
|
|
|
6
|
|
|
Operating Profit
|
|
$
|
341
|
|
|
$
|
367
|
|
|
$
|
351
|
|
|
(7
|
)
|
|
|
(6
|
)
|
|
|
(5
|
)
|
|
|
4
|
|
|
|
6
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
||||||||
Unit Count
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
||||||
Franchise
|
|
16,588
|
|
|
15,871
|
|
|
15,334
|
|
|
5
|
|
|
4
|
|
|
Company-owned
|
|
160
|
|
|
549
|
|
|
750
|
|
|
(71
|
)
|
|
(27
|
)
|
|
|
|
16,748
|
|
|
16,420
|
|
|
16,084
|
|
|
2
|
|
|
2
|
|
|
|
2016
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
Acquired
|
|
Other
|
|
2017
|
|||||||
Franchise
|
|
15,871
|
|
|
1,035
|
|
|
(708
|
)
|
|
389
|
|
|
—
|
|
|
1
|
|
|
16,588
|
|
Company-owned
|
|
549
|
|
|
12
|
|
|
(12
|
)
|
|
(389
|
)
|
|
—
|
|
|
—
|
|
|
160
|
|
Total
|
|
16,420
|
|
|
1,047
|
|
|
(720
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
16,748
|
|
|
|
2015
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
Acquired
|
|
Other
|
|
2016
|
|||||||
Franchise
|
|
15,334
|
|
|
885
|
|
|
(554
|
)
|
|
206
|
|
|
—
|
|
|
—
|
|
|
15,871
|
|
Company-owned
|
|
750
|
|
|
40
|
|
|
(35
|
)
|
|
(206
|
)
|
|
—
|
|
|
—
|
|
|
549
|
|
Total
|
|
16,084
|
|
|
925
|
|
|
(589
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,420
|
|
|
2017 vs. 2016
|
||||||||||||||||||||||
Income / (Expense)
|
2016
|
|
Store Portfolio Actions
|
|
Other
|
|
FX
|
|
53rd Week
|
|
2017
|
||||||||||||
Company sales
|
$
|
493
|
|
|
$
|
(193
|
)
|
|
$
|
(9
|
)
|
|
$
|
(1
|
)
|
|
$
|
(5
|
)
|
|
$
|
285
|
|
Cost of sales
|
(137
|
)
|
|
56
|
|
|
(4
|
)
|
|
—
|
|
|
2
|
|
|
(83
|
)
|
||||||
Cost of labor
|
(156
|
)
|
|
61
|
|
|
(1
|
)
|
|
1
|
|
|
1
|
|
|
(94
|
)
|
||||||
Occupancy and other
|
(159
|
)
|
|
61
|
|
|
3
|
|
|
—
|
|
|
1
|
|
|
(94
|
)
|
||||||
Company restaurant expenses
|
$
|
(452
|
)
|
|
$
|
178
|
|
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
(271
|
)
|
Restaurant profit
|
$
|
41
|
|
|
$
|
(15
|
)
|
|
$
|
(11
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 vs. 2015
|
||||||||||||||||||||||
Income / (Expense)
|
2015
|
|
Store Portfolio Actions
|
|
Other
|
|
FX
|
|
53rd Week
|
|
2016
|
||||||||||||
Company sales
|
$
|
601
|
|
|
$
|
(120
|
)
|
|
$
|
16
|
|
|
$
|
(9
|
)
|
|
$
|
5
|
|
|
$
|
493
|
|
Cost of sales
|
(167
|
)
|
|
34
|
|
|
(5
|
)
|
|
3
|
|
|
(2
|
)
|
|
(137
|
)
|
||||||
Cost of labor
|
(187
|
)
|
|
40
|
|
|
(11
|
)
|
|
3
|
|
|
(1
|
)
|
|
(156
|
)
|
||||||
Occupancy and other
|
(189
|
)
|
|
33
|
|
|
(5
|
)
|
|
3
|
|
|
(1
|
)
|
|
(159
|
)
|
||||||
Company restaurant expenses
|
$
|
(543
|
)
|
|
$
|
107
|
|
|
$
|
(21
|
)
|
|
$
|
9
|
|
|
$
|
(4
|
)
|
|
$
|
(452
|
)
|
Restaurant profit
|
$
|
58
|
|
|
$
|
(13
|
)
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% B/(W)
|
|
% B/(W)
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
2017
|
|
2016
|
||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
Reported
|
|
Ex FX
|
|
Ex FX and 53rd Week in 2016
|
|
Reported
|
|
Ex FX
|
|
Ex FX and 53rd Week in 2016
|
||||||||||||||||||
System Sales
|
|
$
|
10,145
|
|
|
$
|
9,660
|
|
|
$
|
9,102
|
|
|
5
|
|
|
|
5
|
|
|
|
7
|
|
|
|
6
|
|
|
|
6
|
|
|
|
5
|
|
|
Same-Store Sales Growth
|
|
|
|
|
|
|
|
4
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
2
|
|
|
|
N/A
|
|
|
|
N/A
|
|
||||||||
Company sales
|
|
$
|
1,359
|
|
|
$
|
1,540
|
|
|
$
|
1,544
|
|
|
(12
|
)
|
|
|
(12
|
)
|
|
|
(10
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
Franchise and license fees and income
|
|
521
|
|
|
485
|
|
|
447
|
|
|
7
|
|
|
|
7
|
|
|
|
9
|
|
|
|
9
|
|
|
|
9
|
|
|
|
7
|
|
|
|||
Total revenues
|
|
$
|
1,880
|
|
|
$
|
2,025
|
|
|
$
|
1,991
|
|
|
(7
|
)
|
|
|
(7
|
)
|
|
|
(6
|
)
|
|
|
2
|
|
|
|
2
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Restaurant profit
|
|
$
|
305
|
|
|
$
|
342
|
|
|
$
|
344
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(9
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
Restaurant margin %
|
|
22.4
|
%
|
|
22.2
|
%
|
|
22.2
|
%
|
|
0.2
|
|
ppts.
|
|
0.2
|
|
ppts.
|
|
0.3
|
|
ppts.
|
|
—
|
|
ppts.
|
|
—
|
|
ppts.
|
|
(0.2
|
)
|
ppts.
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
G&A expenses
|
|
$
|
188
|
|
|
$
|
211
|
|
|
$
|
221
|
|
|
11
|
|
|
|
11
|
|
|
|
10
|
|
|
|
4
|
|
|
|
4
|
|
|
|
5
|
|
|
Operating Profit
|
|
$
|
619
|
|
|
$
|
595
|
|
|
$
|
546
|
|
|
4
|
|
|
|
4
|
|
|
|
6
|
|
|
|
9
|
|
|
|
9
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
||||||||
Unit Count
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
||||||
Franchise
|
|
6,196
|
|
|
5,727
|
|
|
5,513
|
|
|
8
|
|
|
4
|
|
|
Company-owned
|
|
653
|
|
|
885
|
|
|
900
|
|
|
(26
|
)
|
|
(2
|
)
|
|
|
|
6,849
|
|
|
6,612
|
|
|
6,413
|
|
|
4
|
|
|
3
|
|
|
|
2016
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
Acquired
|
|
Other
|
|
2017
|
|||||||
Franchise
|
|
5,727
|
|
|
293
|
|
|
(78
|
)
|
|
253
|
|
|
—
|
|
|
1
|
|
|
6,196
|
|
Company-owned
|
|
885
|
|
|
21
|
|
|
—
|
|
|
(253
|
)
|
|
—
|
|
|
—
|
|
|
653
|
|
Total
|
|
6,612
|
|
|
314
|
|
|
(78
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
6,849
|
|
|
|
2015
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
Acquired
|
|
Other
|
|
2016
|
|||||||
Franchise
|
|
5,513
|
|
|
263
|
|
|
(95
|
)
|
|
46
|
|
|
(1
|
)
|
|
1
|
|
|
5,727
|
|
Company-owned
|
|
900
|
|
|
34
|
|
|
(4
|
)
|
|
(46
|
)
|
|
1
|
|
|
—
|
|
|
885
|
|
Total
|
|
6,413
|
|
|
297
|
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
6,612
|
|
|
2017 vs. 2016
|
||||||||||||||||||
Income / (Expense)
|
2016
|
|
Store Portfolio Actions
|
|
Other
|
|
53rd Week
|
|
2017
|
||||||||||
Company sales
|
$
|
1,540
|
|
|
$
|
(195
|
)
|
|
$
|
38
|
|
|
$
|
(24
|
)
|
|
$
|
1,359
|
|
Cost of sales
|
(397
|
)
|
|
50
|
|
|
(15
|
)
|
|
6
|
|
|
(356
|
)
|
|||||
Cost of labor
|
(443
|
)
|
|
55
|
|
|
(13
|
)
|
|
7
|
|
|
(394
|
)
|
|||||
Occupancy and other
|
(358
|
)
|
|
44
|
|
|
6
|
|
|
4
|
|
|
(304
|
)
|
|||||
Company restaurant expense
|
$
|
(1,198
|
)
|
|
$
|
149
|
|
|
$
|
(22
|
)
|
|
$
|
17
|
|
|
$
|
(1,054
|
)
|
Restaurant profit
|
$
|
342
|
|
|
$
|
(46
|
)
|
|
$
|
16
|
|
|
$
|
(7
|
)
|
|
$
|
305
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 vs. 2015
|
||||||||||||||||||
Income / (Expense)
|
2015
|
|
Store Portfolio Actions
|
|
Other
|
|
53rd Week
|
|
2016
|
||||||||||
Company sales
|
$
|
1,544
|
|
|
$
|
(37
|
)
|
|
$
|
9
|
|
|
$
|
24
|
|
|
$
|
1,540
|
|
Cost of sales
|
(422
|
)
|
|
11
|
|
|
20
|
|
|
(6
|
)
|
|
(397
|
)
|
|||||
Cost of labor
|
(427
|
)
|
|
10
|
|
|
(19
|
)
|
|
(7
|
)
|
|
(443
|
)
|
|||||
Occupancy and other
|
(351
|
)
|
|
7
|
|
|
(10
|
)
|
|
(4
|
)
|
|
(358
|
)
|
|||||
Company restaurant expense
|
$
|
(1,200
|
)
|
|
$
|
28
|
|
|
$
|
(9
|
)
|
|
$
|
(17
|
)
|
|
$
|
(1,198
|
)
|
Restaurant profit
|
$
|
344
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% B/(W)
|
||||||||||||
Income/(Expense)
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
||||||||||
Corporate and unallocated G&A
|
|
$
|
(230
|
)
|
|
$
|
(280
|
)
|
|
$
|
(180
|
)
|
|
18
|
|
|
|
(56
|
)
|
|
Unallocated restaurant costs
|
|
10
|
|
|
—
|
|
|
—
|
|
|
NM
|
|
|
|
NM
|
|
|
|||
Unallocated Franchise and license fees and income
|
|
(5
|
)
|
|
(2
|
)
|
|
—
|
|
|
NM
|
|
|
|
NM
|
|
|
|||
Unallocated Franchise and license expenses
|
|
(30
|
)
|
|
(24
|
)
|
|
(71
|
)
|
|
(26
|
)
|
|
|
67
|
|
|
|||
Refranchising gain (loss) (See Note 5)
|
|
1,083
|
|
|
163
|
|
|
(23
|
)
|
|
NM
|
|
|
|
NM
|
|
|
|||
Unallocated Other income (expense)
|
|
(8
|
)
|
|
(8
|
)
|
|
(24
|
)
|
|
3
|
|
|
|
65
|
|
|
|||
Other pension income (expense) (See Note 15)
|
|
(47
|
)
|
|
(32
|
)
|
|
(40
|
)
|
|
(45
|
)
|
|
|
18
|
|
|
|||
Interest expense, net
|
|
(440
|
)
|
|
(305
|
)
|
|
(141
|
)
|
|
(44
|
)
|
|
|
(117
|
)
|
|
|||
Income tax provision (See Note 18)
|
|
(934
|
)
|
|
(327
|
)
|
|
(327
|
)
|
|
NM
|
|
|
|
—
|
|
|
|||
Effective tax rate (See Note 18)
|
|
41.1
|
%
|
|
24.3
|
%
|
|
26.1
|
%
|
|
(16.8
|
)
|
ppts.
|
|
1.8
|
|
ppts.
|
|
|
2016(a)
|
|
2015
|
||||
Total revenues
|
|
$
|
5,776
|
|
|
$
|
6,909
|
|
Total income from discontinued operations before income taxes(b)
|
|
571
|
|
|
526
|
|
||
Income tax (benefit) provision(c)
|
|
(65
|
)
|
|
164
|
|
||
Income from discontinued operations, net of tax
|
|
625
|
|
|
357
|
|
(a)
|
Includes Yum China financial results from January 1, 2016 to October 31, 2016.
|
(b)
|
Includes costs incurred to execute the Separation of $68 million and $9 million for 2016 and 2015, respectively. Such costs primarily relate to transaction advisors, legal and other consulting fees.
|
(c)
|
During 2016, we recorded a tax benefit of $233 million related to previously recorded losses associated with our Little Sheep business. The tax benefit associated with these losses was able to be recognized as a result of legal entity restructuring completed in anticipation of the China spin-off.
|
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025
|
|
2026
|
|
2027
|
|
2037
|
|
2043
|
|
Total
|
||||||||||||||||||||||||||
Securitization Notes
|
|
$
|
23
|
|
|
$
|
23
|
|
|
$
|
789
|
|
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
479
|
|
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
907
|
|
|
|
|
|
|
|
|
$
|
2,271
|
|
||||||
Credit Agreement
|
|
32
|
|
|
45
|
|
|
51
|
|
|
76
|
|
|
395
|
|
|
1,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,475
|
|
|||||||||||||||||||
Subsidiary Senior Unsecured Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,050
|
|
|
|
|
1,050
|
|
|
750
|
|
|
|
|
|
|
2,850
|
|
||||||||||||||||||||||
YUM Senior Unsecured Notes
|
|
325
|
|
|
250
|
|
|
350
|
|
|
350
|
|
|
|
|
325
|
|
|
|
|
|
|
|
|
|
|
325
|
|
|
275
|
|
|
2,200
|
|
||||||||||||||||||
Total
|
|
$
|
380
|
|
|
$
|
318
|
|
|
$
|
1,190
|
|
|
$
|
441
|
|
|
$
|
410
|
|
|
$
|
2,680
|
|
|
$
|
1,060
|
|
|
$
|
10
|
|
|
$
|
1,957
|
|
|
$
|
750
|
|
|
$
|
325
|
|
|
$
|
275
|
|
|
$
|
9,796
|
|
|
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than 5 Years
|
||||||||||
Long-term debt obligations(a)
|
|
$
|
12,970
|
|
|
$
|
801
|
|
|
$
|
2,301
|
|
|
$
|
1,538
|
|
|
$
|
8,330
|
|
Capital leases(b)
|
|
136
|
|
|
13
|
|
|
25
|
|
|
22
|
|
|
76
|
|
|||||
Operating leases(b)
|
|
899
|
|
|
124
|
|
|
198
|
|
|
142
|
|
|
435
|
|
|||||
Purchase obligations(c)
|
|
377
|
|
|
216
|
|
|
123
|
|
|
38
|
|
|
—
|
|
|||||
Benefit plans and other(d)
|
|
284
|
|
|
100
|
|
|
66
|
|
|
26
|
|
|
92
|
|
|||||
Total contractual obligations
|
|
$
|
14,666
|
|
|
$
|
1,254
|
|
|
$
|
2,713
|
|
|
$
|
1,766
|
|
|
$
|
8,933
|
|
(a)
|
Amounts include maturities of debt outstanding as of December 31, 2017 and expected interest payments on those outstanding amounts on a nominal basis. See Note 11.
|
(b)
|
These obligations, which are shown on a nominal basis, relate primarily to approximately 900 Company-owned restaurants. See Note 12.
|
(c)
|
Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. We have excluded agreements that are cancelable without penalty. Purchase obligations relate primarily to supply agreements, marketing, information technology, purchases of PP&E as well as consulting, maintenance and other agreements. Amounts include estimated payments for our incremental advertising contributions related to the KFC U.S. Acceleration Agreement and the Pizza Hut U.S. Transformation Agreement. See Note 5.
|
(d)
|
Includes actuarially-determined timing of payments from our most significant unfunded pension plan as well as scheduled payments from our deferred compensation plan and other unfunded benefit plans where payment dates are determinable. This table excludes $39 million of future benefit payments for deferred compensation and other unfunded benefit plans to be paid upon separation of employee's service or retirement from the company, as we cannot reasonably estimate the dates of these future cash payments. Other amounts include a cash tax obligation related to the mandatory deemed repatriation tax provisions of the Tax Act (see Note 18) and anticipated investments, other than incremental advertising, related to the KFC U.S. Acceleration Agreement and the Pizza Hut U.S. Transformation Agreement (see Note 5).
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 8.
|
Financial Statements and Supplementary Data.
|
|
Page Reference
|
|
Consolidated Financial Statements
|
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
|
|
Consolidated Statements of Income
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
Consolidated Statements of Shareholders’ Equity (Deficit)
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
•
|
The KFC Division which includes our worldwide operations of the KFC concept
|
•
|
The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept
|
•
|
The Taco Bell Division which includes our worldwide operations of the Taco Bell concept
|
Level 1
|
Inputs based upon quoted prices in active markets for identical assets.
|
|
|
Level 2
|
Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.
|
|
|
Level 3
|
Inputs that are unobservable for the asset.
|
|
|
2017
|
|
2016
|
||||
Accounts and notes receivable
|
|
$
|
419
|
|
|
$
|
384
|
|
Allowance for doubtful accounts
|
|
(19
|
)
|
|
(14
|
)
|
||
Accounts and notes receivable, net
|
|
$
|
400
|
|
|
$
|
370
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Income from continuing operations
|
|
$
|
1,340
|
|
|
$
|
1,018
|
|
|
$
|
926
|
|
Income from discontinued operations
|
|
N/A
|
|
|
625
|
|
|
357
|
|
|||
Net Income
|
|
$
|
1,340
|
|
|
$
|
1,643
|
|
|
$
|
1,283
|
|
Weighted-average common shares outstanding (for basic calculation)
|
|
347
|
|
|
394
|
|
|
435
|
|
|||
Effect of dilutive share-based employee compensation
|
|
8
|
|
|
6
|
|
|
8
|
|
|||
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)
|
|
355
|
|
|
400
|
|
|
443
|
|
|||
Basic EPS from continuing operations
|
|
$
|
3.86
|
|
|
$
|
2.58
|
|
|
$
|
2.13
|
|
Basic EPS from discontinued operations
|
|
N/A
|
|
|
1.59
|
|
|
0.82
|
|
|||
Basic EPS
|
|
$
|
3.86
|
|
|
$
|
4.17
|
|
|
$
|
2.95
|
|
Diluted EPS from continuing operations
|
|
$
|
3.77
|
|
|
$
|
2.54
|
|
|
$
|
2.09
|
|
Diluted EPS from discontinued operations
|
|
N/A
|
|
|
1.56
|
|
|
$
|
0.81
|
|
||
Diluted EPS
|
|
$
|
3.77
|
|
|
$
|
4.10
|
|
|
$
|
2.90
|
|
Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation(a)
|
|
2.3
|
|
|
5.0
|
|
|
4.5
|
|
(a)
|
These unexercised employee stock options and stock appreciation rights were not included in the computation of diluted EPS because to do so would have been antidilutive for the periods presented.
|
|
|
2016(a)
|
|
2015
|
||||
Company sales
|
|
$
|
5,667
|
|
|
$
|
6,789
|
|
Franchise and license fees and income
|
|
109
|
|
|
120
|
|
||
Company restaurant expenses
|
|
(4,766
|
)
|
|
(5,913
|
)
|
||
G&A expenses(b)
|
|
(406
|
)
|
|
(405
|
)
|
||
Franchise and license expenses
|
|
(45
|
)
|
|
(48
|
)
|
||
Closures and impairment expenses
|
|
(57
|
)
|
|
(64
|
)
|
||
Refranchising gain
|
|
12
|
|
|
13
|
|
||
Other income(c)
|
|
49
|
|
|
27
|
|
||
Interest income, net
|
|
8
|
|
|
7
|
|
||
Income from discontinued operations before income taxes
|
|
571
|
|
|
526
|
|
||
Income tax benefit (provision)(d)
|
|
65
|
|
|
(164
|
)
|
||
Income from discontinued operations - including noncontrolling interests
|
|
636
|
|
|
362
|
|
||
(Income) loss from discontinued operations - noncontrolling interests
|
|
(11
|
)
|
|
(5
|
)
|
||
Income from discontinued operations, net of tax
|
|
$
|
625
|
|
|
$
|
357
|
|
(a)
|
Includes Yum China financial results from January 1, 2016 to October 31, 2016.
|
(b)
|
Includes costs incurred to execute the Separation of $68 million and $9 million for 2016 and 2015, respectively. Such costs primarily relate to transaction advisors, legal and other consulting fees.
|
(c)
|
Primarily relates to equity income from KFC franchisees in which Yum China owns a minority interest.
|
(d)
|
During 2016, we recorded a tax benefit of $233 million related to previously recorded losses associated with our Little Sheep business. The tax benefit associated with these losses was able to be recognized as a result of legal entity restructuring completed in anticipation of the Separation.
|
|
|
Refranchising (gain) loss
|
|
|
|
|
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
|
|
||||||
KFC Division(a)
|
|
$
|
(581
|
)
|
|
$
|
(44
|
)
|
|
$
|
32
|
|
|
|
|
|
|
Pizza Hut Division(a)
|
|
(16
|
)
|
|
(48
|
)
|
|
56
|
|
|
|
|
|
|
|||
Taco Bell Division
|
|
(486
|
)
|
|
(71
|
)
|
|
(65
|
)
|
|
|
|
|
|
|||
Worldwide
|
|
$
|
(1,083
|
)
|
|
$
|
(163
|
)
|
|
$
|
23
|
|
|
|
|
|
|
(a)
|
In 2010, we refranchised our then-remaining Company-operated restaurants in Mexico. To the extent we owned it, we did not sell the real estate related to certain of these restaurants, instead leasing it to the franchisee. During 2015, we sold the real estate for approximately $58 million. While these proceeds exceeded the book value of the real estate, the sale represented a substantial liquidation of our Mexican foreign entities under GAAP. As such, the accumulated translation losses associated with our Mexican business were included in our loss on the sale. We recorded charges of $80 million representing the excess of the sum of the book value of the real estate and other related assets and our accumulated translation losses over the sales price. Consistent with the classification of the original Mexico market-wide refranchising transaction, these charges were classified as Refranchising (gain) loss. Refranchising losses of $40 million were associated with both the KFC and Pizza Hut Divisions. We continue to earn U.S. dollar-denominated franchise fees, most of which are sales-based royalties, under our existing franchise contracts with our Mexico franchisee.
|
|
|
2017
|
||||||||||||||
|
|
KFC
|
|
Pizza Hut
|
|
Taco Bell
|
|
Worldwide
|
||||||||
Store closure (income) costs(a)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
Store impairment charges
|
|
2
|
|
|
1
|
|
|
1
|
|
|
4
|
|
||||
Closure and impairment (income) expenses
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
|
2016
|
||||||||||||||
|
|
KFC
|
|
Pizza Hut
|
|
Taco Bell
|
|
Worldwide
|
||||||||
Store closure (income) costs(a)
|
|
$
|
3
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
Store impairment charges
|
|
8
|
|
|
6
|
|
|
3
|
|
|
17
|
|
||||
Closure and impairment (income) expenses
|
|
$
|
11
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
15
|
|
|
|
2015
|
||||||||||||||
|
|
KFC
|
|
Pizza Hut
|
|
Taco Bell
|
|
Worldwide
|
||||||||
Store closure (income) costs(a)
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
Store impairment charges
|
|
8
|
|
|
5
|
|
|
4
|
|
|
17
|
|
||||
Closure and impairment (income) expenses
|
|
$
|
9
|
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
16
|
|
(a)
|
Store closure (income) costs include the net gain or loss on sales of real estate on which we formerly operated a Company-owned restaurant that was closed, lease reserves established when we cease using a property under an operating lease and subsequent adjustments to those reserves and other facility-related expenses from previously closed stores. Remaining lease obligations for closed stores were not material at December 31, 2017 or December 31, 2016.
|
|
|
2016
|
|||||||||||
|
|
As Previously Reported
|
|
Adjustments
|
|
After Change in Reporting Calendar
|
|||||||
Total revenues
|
|
$
|
6,366
|
|
|
$
|
(10
|
)
|
|
$
|
6,356
|
|
|
Operating Profit
|
|
1,625
|
|
|
25
|
|
(a)
|
1,650
|
|
(b)
|
|||
Income from continuing operations
|
|
994
|
|
|
24
|
|
|
1,018
|
|
|
|||
Income from discontinued operations, net of tax
|
|
625
|
|
|
—
|
|
|
625
|
|
|
|||
Net Income
|
|
$
|
1,619
|
|
|
$
|
24
|
|
|
1,643
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Diluted EPS from continuing operations
|
|
$
|
2.48
|
|
|
$
|
0.06
|
|
|
$
|
2.54
|
|
|
Diluted EPS from discontinued operations
|
|
1.56
|
|
|
—
|
|
|
1.56
|
|
|
|||
Diluted EPS
|
|
$
|
4.04
|
|
|
$
|
0.06
|
|
|
$
|
4.10
|
|
|
|
|
2015
|
|||||||||||
|
|
As Previously Reported
|
|
Adjustments
|
|
After Change in Reporting Calendar
|
|||||||
Total revenues
|
|
$
|
6,440
|
|
|
$
|
(22
|
)
|
|
$
|
6,418
|
|
|
Operating Profit
|
|
1,402
|
|
|
(8
|
)
|
|
1,394
|
|
(b)
|
|||
Income from continuing operations
|
|
936
|
|
|
(10
|
)
|
|
926
|
|
|
|||
Income from discontinued operations, net of tax
|
|
357
|
|
|
—
|
|
|
357
|
|
|
|||
Net Income
|
|
$
|
1,293
|
|
|
$
|
(10
|
)
|
|
$
|
1,283
|
|
|
|
|
|
|
|
|
|
|
||||||
Diluted EPS from continuing operations
|
|
$
|
2.11
|
|
|
$
|
(0.02
|
)
|
|
$
|
2.09
|
|
|
Diluted EPS from discontinued operations
|
|
0.81
|
|
|
—
|
|
|
0.81
|
|
|
|||
Diluted EPS
|
|
$
|
2.92
|
|
|
$
|
(0.02
|
)
|
|
$
|
2.90
|
|
|
(a)
|
Primarily represents gains of $24 million related to the refranchising of certain international restaurants which occurred in December 2016.
|
(b)
|
Amount does not reconcile to our Consolidated Statements of Income for the year ended December 31, 2016 and December 31, 2015 due to the impact of retrospectively adopting a new accounting standard on Benefit Costs of $32 million and $40 million, respectively. See Note 2.
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash Paid For:
|
|
|
|
|
|
|
||||||
Interest
|
|
$
|
442
|
|
|
$
|
297
|
|
|
$
|
141
|
|
Income taxes
|
|
346
|
|
|
314
|
|
|
392
|
|
|||
Significant Non-Cash Investing and Financing Activities:
|
|
|
|
|
|
|
||||||
Capital lease obligations incurred
|
|
$
|
8
|
|
|
$
|
10
|
|
|
$
|
26
|
|
Capital lease and other debt obligations transferred through refranchising
|
|
(35
|
)
|
|
(1
|
)
|
|
—
|
|
|||
Reconciliation of Cash and cash equivalents to Consolidated Statements of Cash Flows:
|
|
|
|
|
|
|
||||||
Cash and cash equivalents as presented in Consolidated Balance Sheets
|
|
$
|
1,522
|
|
|
$
|
725
|
|
|
$
|
345
|
|
Restricted cash included in Prepaid expenses and other current assets(a)
|
|
60
|
|
|
55
|
|
|
—
|
|
|||
Restricted cash included in Other assets(b)
|
|
17
|
|
|
51
|
|
|
20
|
|
|||
Cash, Cash Equivalents and Restricted Cash as presented in Consolidated Statements of Cash Flows
|
|
$
|
1,599
|
|
|
$
|
831
|
|
|
$
|
365
|
|
(a)
|
Restricted cash within Prepaid expenses and other current assets reflects the Taco Bell Securitization interest reserves. See Note 11.
|
(b)
|
Primarily trust accounts related to our self-insurance program. 2016 also includes cash balances required, to the extent necessary, to meet statutory minimum net worth requirements for legal entities which enter into U.S. franchise agreements.
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Initial fees, including renewal fees
|
|
$
|
96
|
|
|
$
|
72
|
|
|
$
|
71
|
|
Continuing fees and rental income
|
|
2,210
|
|
|
2,095
|
|
|
2,011
|
|
|||
Franchise and license fees and income
|
|
$
|
2,306
|
|
|
$
|
2,167
|
|
|
$
|
2,082
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Foreign exchange net (gain) loss and other
|
|
$
|
5
|
|
|
$
|
(6
|
)
|
|
$
|
20
|
|
Loss associated with corporate aircraft(a)
|
|
2
|
|
|
9
|
|
|
—
|
|
|||
Other (income) expense
|
|
$
|
7
|
|
|
$
|
3
|
|
|
$
|
20
|
|
(a)
|
During 2016, we made the decision to no longer operate a corporate aircraft fleet and offered our owned aircraft for sale, one of which was sold during 2016 and one that was sold in 2017. The losses associated with these sales reflect the shortfall of the proceeds, including estimated proceeds in held-for-sale impairment evaluations, less any selling costs, over the carrying value of the aircraft.
|
Prepaid Expenses and Other Current Assets
|
|
2017
|
|
2016
|
||||
Income tax receivable
|
|
$
|
175
|
|
|
$
|
44
|
|
Assets held for sale(a)
|
|
37
|
|
|
57
|
|
||
Other prepaid expenses and current assets
|
|
159
|
|
|
135
|
|
||
Prepaid expenses and other current assets
|
|
$
|
371
|
|
|
$
|
236
|
|
(a)
|
Reflects the carrying value of restaurants we have offered for sale to franchisees and excess properties that we do not intend to use for restaurant operations in the future. 2016 amounts also include a corporate aircraft sold in 2017.
|
Property, Plant and Equipment
|
|
2017
|
|
2016
|
||||
Land
|
|
$
|
452
|
|
|
$
|
438
|
|
Buildings and improvements
|
|
1,661
|
|
|
2,149
|
|
||
Capital leases, primarily buildings
|
|
123
|
|
|
141
|
|
||
Machinery and equipment
|
|
941
|
|
|
1,380
|
|
||
Property, plant and equipment, gross
|
|
3,177
|
|
|
4,108
|
|
||
Accumulated depreciation and amortization
|
|
(1,480
|
)
|
|
(1,995
|
)
|
||
Property, plant and equipment, net
|
|
$
|
1,697
|
|
|
$
|
2,113
|
|
Accounts Payable and Other Current Liabilities
|
|
2017
|
|
2016
|
||||
Accounts payable
|
|
$
|
119
|
|
|
$
|
142
|
|
Accrued capital expenditures
|
|
21
|
|
|
39
|
|
||
Accrued compensation and benefits
|
|
252
|
|
|
372
|
|
||
Dividends payable
|
|
—
|
|
|
106
|
|
||
Accrued taxes, other than income taxes
|
|
90
|
|
|
66
|
|
||
Other current liabilities
|
|
331
|
|
|
342
|
|
||
Accounts payable and other current liabilities
|
|
$
|
813
|
|
|
$
|
1,067
|
|
|
|
KFC
|
|
Pizza Hut
|
|
Taco Bell
|
|
Worldwide
|
||||||||
Balance as of December 31, 2015
|
|
|
|
|
|
|
|
|
||||||||
Goodwill, gross
|
|
$
|
266
|
|
|
$
|
206
|
|
|
$
|
113
|
|
|
$
|
585
|
|
Accumulated impairment losses
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
(17
|
)
|
||||
Goodwill, net
|
|
266
|
|
|
189
|
|
|
113
|
|
|
568
|
|
||||
Disposals and other, net(a)
|
|
2
|
|
|
(32
|
)
|
|
(2
|
)
|
|
(32
|
)
|
||||
Balance as of December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Goodwill, gross
|
|
268
|
|
|
174
|
|
|
111
|
|
|
553
|
|
||||
Accumulated impairment losses
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
(17
|
)
|
||||
Goodwill, net
|
|
268
|
|
|
157
|
|
|
111
|
|
|
536
|
|
||||
Disposals and other, net(a)
|
|
(21
|
)
|
|
5
|
|
|
(8
|
)
|
|
(24
|
)
|
||||
Balance as of December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Goodwill, gross
|
|
247
|
|
|
179
|
|
|
103
|
|
|
529
|
|
||||
Accumulated impairment losses
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
(17
|
)
|
||||
Goodwill, net
|
|
$
|
247
|
|
|
$
|
162
|
|
|
$
|
103
|
|
|
$
|
512
|
|
(a)
|
Disposals and other, net includes the impact of foreign currency translation on existing balances and goodwill write-offs associated with refranchising.
|
|
|
2017
|
|
2016
|
||||||||||||
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
||||||||
Definite-lived intangible assets
|
|
|
|
|
|
|
|
|
||||||||
Reacquired franchise rights
|
|
$
|
60
|
|
|
$
|
(42
|
)
|
|
$
|
83
|
|
|
$
|
(49
|
)
|
Franchise contract rights
|
|
100
|
|
|
(77
|
)
|
|
99
|
|
|
(73
|
)
|
||||
Lease tenancy rights
|
|
32
|
|
|
(6
|
)
|
|
56
|
|
|
(9
|
)
|
||||
Other
|
|
37
|
|
|
(25
|
)
|
|
36
|
|
|
(23
|
)
|
||||
|
|
$
|
229
|
|
|
$
|
(150
|
)
|
|
$
|
274
|
|
|
$
|
(154
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
|
||||||||
KFC trademark
|
|
$
|
31
|
|
|
|
|
$
|
31
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
||||
Short-term Borrowings
|
|
|
|
|
||||
Current maturities of long-term debt
|
|
$
|
386
|
|
|
$
|
66
|
|
Other
|
|
—
|
|
|
8
|
|
||
|
|
$
|
386
|
|
|
$
|
74
|
|
Less current portion of debt issuance costs and discounts
|
|
(11
|
)
|
|
(8
|
)
|
||
Short-term borrowings
|
|
$
|
375
|
|
|
$
|
66
|
|
|
|
|
|
|
||||
Long-term Debt
|
|
|
|
|
||||
Securitization Notes
|
|
$
|
2,271
|
|
|
$
|
2,294
|
|
Subsidiary Senior Unsecured Notes
|
|
2,850
|
|
|
2,100
|
|
||
Term Loan A Facility
|
|
500
|
|
|
500
|
|
||
Term Loan B Facility
|
|
1,975
|
|
|
1,990
|
|
||
YUM Senior Unsecured Notes
|
|
2,200
|
|
|
2,200
|
|
||
Capital lease obligations (See Note 12)
|
|
105
|
|
|
120
|
|
||
|
|
9,901
|
|
|
9,204
|
|
||
Less debt issuance costs and discounts
|
|
(86
|
)
|
|
(79
|
)
|
||
Less current maturities of long-term debt
|
|
(386
|
)
|
|
(66
|
)
|
||
Long-term debt
|
|
$
|
9,429
|
|
|
$
|
9,059
|
|
|
|
|
|
|
|
Interest Rate
|
||||||
Issuance Date(a)
|
|
Maturity Date
|
|
Principal Amount (in millions)
|
|
Stated
|
|
Effective(b)
|
||||
October 2007
|
|
March 2018
|
|
$
|
325
|
|
|
6.25
|
%
|
|
6.36
|
%
|
October 2007
|
|
November 2037
|
|
325
|
|
|
6.88
|
%
|
|
7.45
|
%
|
|
August 2009
|
|
September 2019
|
|
250
|
|
|
5.30
|
%
|
|
5.59
|
%
|
|
August 2010
|
|
November 2020
|
|
350
|
|
|
3.88
|
%
|
|
4.01
|
%
|
|
August 2011
|
|
November 2021
|
|
350
|
|
|
3.75
|
%
|
|
3.88
|
%
|
|
October 2013
|
|
November 2023
|
|
325
|
|
|
3.88
|
%
|
|
4.01
|
%
|
|
October 2013
|
|
November 2043
|
|
275
|
|
|
5.35
|
%
|
|
5.42
|
%
|
(a)
|
Interest payments commenced approximately six months after issuance date and are payable semi-annually thereafter.
|
(b)
|
Includes the effects of the amortization of any (1) premium or discount; (2) debt issuance costs; and (3) gain or loss upon settlement of related treasury locks and forward starting interest rate swaps utilized to hedge the interest rate risk prior to debt issuance.
|
Year ended:
|
|
||
2018
|
$
|
380
|
|
2019
|
318
|
|
|
2020
|
1,190
|
|
|
2021
|
441
|
|
|
2022
|
410
|
|
|
Thereafter
|
7,057
|
|
|
Total
|
$
|
9,796
|
|
|
|
Commitments
|
|
Lease Receivables
|
||||||||||||
|
|
Capital
|
|
Operating
|
|
Direct
Financing
|
|
Operating
|
||||||||
2018
|
|
$
|
13
|
|
|
$
|
124
|
|
|
$
|
5
|
|
|
$
|
64
|
|
2019
|
|
13
|
|
|
111
|
|
|
4
|
|
|
58
|
|
||||
2020
|
|
12
|
|
|
87
|
|
|
4
|
|
|
51
|
|
||||
2021
|
|
11
|
|
|
75
|
|
|
3
|
|
|
47
|
|
||||
2022
|
|
11
|
|
|
67
|
|
|
3
|
|
|
44
|
|
||||
Thereafter
|
|
76
|
|
|
435
|
|
|
24
|
|
|
415
|
|
||||
|
|
$
|
136
|
|
|
$
|
899
|
|
|
$
|
43
|
|
|
$
|
679
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Rental expense
|
|
|
|
|
|
|
||||||
Minimum
|
|
$
|
193
|
|
|
$
|
208
|
|
|
$
|
225
|
|
Contingent
|
|
21
|
|
|
26
|
|
|
29
|
|
|||
|
|
$
|
214
|
|
|
$
|
234
|
|
|
$
|
254
|
|
Rental income
|
|
$
|
86
|
|
|
$
|
73
|
|
|
$
|
73
|
|
|
Gains/(Losses) Recognized in AOCI
|
|
(Gains)/Losses Reclassified from AOCI into Net Income
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
4
|
|
|
$
|
47
|
|
|
$
|
2
|
|
|
$
|
(4
|
)
|
Foreign currency contracts
|
(56
|
)
|
|
10
|
|
|
56
|
|
|
(18
|
)
|
||||
Income tax benefit/(expense)
|
1
|
|
|
(20
|
)
|
|
(3
|
)
|
|
4
|
|
|
12/31/2017
|
|
12/31/2016
|
||||||||||||
|
Carrying Value
|
|
Fair Value (Level 2)
|
|
Carrying Value
|
|
Fair Value (Level 2)
|
||||||||
Debt obligations
|
|
|
|
|
|
|
|
||||||||
Securitization Notes(a)
|
$
|
2,271
|
|
|
$
|
2,367
|
|
|
$
|
2,294
|
|
|
$
|
2,315
|
|
Subsidiary Senior Unsecured Notes(b)
|
2,850
|
|
|
2,983
|
|
|
2,100
|
|
|
2,175
|
|
||||
Term Loan A Facility(b)
|
500
|
|
|
503
|
|
|
500
|
|
|
501
|
|
||||
Term Loan B Facility(b)
|
1,975
|
|
|
1,990
|
|
|
1,990
|
|
|
2,016
|
|
||||
YUM Senior Unsecured Notes(b)
|
2,200
|
|
|
2,277
|
|
|
2,200
|
|
|
2,216
|
|
||||
|
(a)
|
We estimated the fair value of the Securitization Notes by obtaining broker quotes from two separate brokerage firms that are knowledgeable about the Company’s Securitization Notes and, at times, trade these notes. The markets in which the Securitization Notes trade are not considered active markets.
|
(b)
|
We estimated the fair value of the YUM and Subsidiary Senior Unsecured Notes, Term Loan A Facility, and Term Loan B Facility using market quotes and calculations based on market rates.
|
|
|
|
|
Fair Value
|
|
||||||||
|
|
Level
|
|
2017
|
|
2016
|
|
Consolidated Balance Sheet
|
|||||
Interest Rate Swaps - Liability
|
|
2
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
Accounts payable and other current liabilities
|
Interest Rate Swaps - Asset
|
|
2
|
|
|
9
|
|
|
—
|
|
|
Prepaid expenses and other current assets
|
||
Interest Rate Swaps - Asset
|
|
2
|
|
|
40
|
|
|
47
|
|
|
Other assets
|
||
Foreign Currency Contracts - Liability
|
|
2
|
|
|
46
|
|
|
—
|
|
|
Other Liabilities and deferred credits
|
||
Foreign Currency Contracts - Asset
|
|
2
|
|
|
5
|
|
|
6
|
|
|
Prepaid expenses and other current assets
|
||
Foreign Currency Contracts - Asset
|
|
2
|
|
|
—
|
|
|
10
|
|
|
Other assets
|
||
Other Investments
|
|
1
|
|
|
29
|
|
|
24
|
|
|
Other assets
|
|
|
2017
|
|
2016
|
|
||||
Aircraft impairment(a)
|
|
$
|
—
|
|
|
$
|
3
|
|
|
Restaurant-level impairment(b)
|
|
2
|
|
|
9
|
|
|
||
Total
|
|
$
|
2
|
|
|
$
|
12
|
|
|
(a)
|
During 2016, we made the decision to dispose of a corporate aircraft. The loss associated with this then planned sale reflected the shortfall of the expected proceeds, less any selling costs, over the carrying value of the aircraft. The expected proceeds were based on actual bids received from potential buyers for similar assets (Level 2).
|
(b)
|
Restaurant-level impairment charges are recorded in Closures and impairment (income) expenses and resulted primarily from our semi-annual impairment evaluation of long-lived assets of individual restaurants that were being operated at the time of impairment and had not been offered for refranchising. The fair value measurements used in these impairment evaluations were based on discounted cash flow estimates using unobservable inputs (Level 3).
|
|
|
2017
|
|
2016
|
||||
Change in benefit obligation:
|
|
|
|
|
||||
Benefit obligation at beginning of year
|
|
$
|
993
|
|
|
$
|
1,134
|
|
Service cost
|
|
10
|
|
|
17
|
|
||
Interest cost
|
|
41
|
|
|
54
|
|
||
Plan amendments
|
|
2
|
|
|
4
|
|
||
Curtailments
|
|
(2
|
)
|
|
(4
|
)
|
||
Special termination benefits
|
|
2
|
|
|
3
|
|
||
Benefits paid
|
|
(76
|
)
|
|
(26
|
)
|
||
Settlement payments(a)
|
|
(73
|
)
|
|
(260
|
)
|
||
Actuarial (gain) loss
|
|
115
|
|
|
77
|
|
||
Administrative expense
|
|
(5
|
)
|
|
(6
|
)
|
||
Benefit obligation at end of year
|
|
$
|
1,007
|
|
|
$
|
993
|
|
|
|
|
|
|
||||
Change in plan assets:
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
$
|
837
|
|
|
$
|
1,004
|
|
Actual return on plan assets
|
|
129
|
|
|
87
|
|
||
Employer contributions
|
|
52
|
|
|
38
|
|
||
Settlement payments(a)
|
|
(73
|
)
|
|
(260
|
)
|
||
Benefits paid
|
|
(76
|
)
|
|
(26
|
)
|
||
Administrative expenses
|
|
(5
|
)
|
|
(6
|
)
|
||
Fair value of plan assets at end of year
|
|
$
|
864
|
|
|
$
|
837
|
|
Funded status at end of year
|
|
$
|
(143
|
)
|
|
$
|
(156
|
)
|
(a)
|
For discussion of the settlement payments made in connection with the deferred vested program in 2016, see Note 5.
|
Amounts recognized in the Consolidated Balance Sheet:
|
||||||||
|
|
2017
|
|
2016
|
||||
Accrued benefit liability - current
|
|
$
|
(8
|
)
|
|
$
|
(16
|
)
|
Accrued benefit liability - non-current
|
|
(135
|
)
|
|
(140
|
)
|
||
|
|
$
|
(143
|
)
|
|
$
|
(156
|
)
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Service cost
|
|
$
|
10
|
|
|
$
|
17
|
|
|
$
|
18
|
|
Interest cost
|
|
41
|
|
|
54
|
|
|
55
|
|
|||
Amortization of prior service cost(a)
|
|
6
|
|
|
6
|
|
|
1
|
|
|||
Expected return on plan assets
|
|
(45
|
)
|
|
(65
|
)
|
|
(62
|
)
|
|||
Amortization of net loss
|
|
5
|
|
|
6
|
|
|
45
|
|
|||
Net periodic benefit cost
|
|
$
|
17
|
|
|
$
|
18
|
|
|
$
|
57
|
|
Additional (gain) loss recognized due to:
Settlement charges(b)
|
|
$
|
19
|
|
|
$
|
32
|
|
|
$
|
5
|
|
Special termination benefits
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
1
|
|
Pension data adjustment(c)
|
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(a)
|
Prior service costs are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits.
|
(b)
|
Settlement losses result when benefit payments exceed the sum of the service cost and interest cost within a plan during the year. These losses were recorded in Other pension (income) expense.
|
(c)
|
Reflects a non-cash, out-of-year charge related to the adjustment of certain historical deferred vested liability balances in the Plan during the first quarter of 2017 recorded in Other pension (income) expense. See Note 5.
|
Accumulated pre-tax losses recognized within AOCI:
|
||||||||
|
|
2017
|
|
2016
|
||||
Actuarial net loss
|
|
$
|
(134
|
)
|
|
$
|
(150
|
)
|
Prior service cost
|
|
(26
|
)
|
|
(30
|
)
|
||
|
|
$
|
(160
|
)
|
|
$
|
(180
|
)
|
|
|
2017
|
|
2016
|
||||
Level 1:
|
|
|
|
|
||||
Cash
|
|
$
|
3
|
|
|
$
|
2
|
|
Cash Equivalents(a)
|
|
12
|
|
|
12
|
|
||
Fixed Income Securities - U.S. Corporate(b)
|
|
177
|
|
|
172
|
|
||
Equity Securities – U.S. Large cap(b)
|
|
257
|
|
|
244
|
|
||
Equity Securities – U.S. Mid cap(b)
|
|
43
|
|
|
41
|
|
||
Equity Securities – U.S. Small cap(b)
|
|
43
|
|
|
43
|
|
||
Equity Securities – Non-U.S.(b)
|
|
87
|
|
|
83
|
|
||
Level 2:
|
|
|
|
|
||||
Fixed Income Securities – U.S. Corporate(c)
|
|
86
|
|
|
76
|
|
||
Fixed Income Securities – U.S. Government and Government Agencies(d)
|
|
177
|
|
|
152
|
|
||
Fixed Income Securities – Other(d)
|
|
35
|
|
|
31
|
|
||
Total fair value of plan assets(e)
|
|
$
|
920
|
|
|
$
|
856
|
|
(a)
|
Short-term investments in money market funds.
|
(b)
|
Securities held in common trusts.
|
(c)
|
Investments held directly by the Plan.
|
(d)
|
Includes securities held in common trusts and investments held directly by the Plan.
|
(e)
|
2017 and 2016 exclude net unsettled trade payables of $56 million and $19 million, respectively.
|
Year ended:
|
|
|
||
2018
|
|
$
|
65
|
|
2019
|
|
37
|
|
|
2020
|
|
39
|
|
|
2021
|
|
42
|
|
|
2022
|
|
44
|
|
|
2023 - 2027
|
|
257
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Risk-free interest rate
|
|
1.9
|
%
|
|
1.4
|
%
|
|
1.3
|
%
|
Expected term (years)
|
|
6.4 years
|
|
|
6.4 years
|
|
|
6.4 years
|
|
Expected volatility
|
|
22.9
|
%
|
|
27.0
|
%
|
|
26.9
|
%
|
Expected dividend yield
|
|
1.8
|
%
|
|
2.6
|
%
|
|
2.2
|
%
|
|
|
Shares
(in thousands)
|
|
Weighted-Average Exercise
Price
|
|
Weighted- Average Remaining Contractual Term (years)
|
|
Aggregate Intrinsic Value (in millions)
|
||||||||
Outstanding at the beginning of the year
|
|
21,242
|
|
|
|
|
$
|
40.78
|
|
|
|
|
|
|||
Granted
|
|
2,879
|
|
|
|
|
67.93
|
|
|
|
|
|
||||
Exercised
|
|
(4,269
|
)
|
|
|
|
36.45
|
|
|
|
|
|
||||
Forfeited or expired
|
|
(1,567
|
)
|
|
|
|
54.98
|
|
|
|
|
|
||||
Outstanding at the end of the year
|
|
18,285
|
|
(a)
|
|
|
44.85
|
|
|
5.42
|
|
|
$
|
672
|
|
|
Exercisable at the end of the year
|
|
11,971
|
|
|
|
|
$
|
38.07
|
|
|
4.00
|
|
|
$
|
521
|
|
(a)
|
Outstanding awards include 943 options and 17,342 SARs with weighted average exercise prices of $36.63 and $45.30, respectively. Outstanding awards represent YUM awards held by employees of both YUM and Yum China.
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Options and SARs
|
|
$
|
30
|
|
|
$
|
38
|
|
|
$
|
41
|
|
Restricted Stock Units
|
|
26
|
|
|
38
|
|
|
3
|
|
|||
Performance Share Units
|
|
9
|
|
|
4
|
|
|
2
|
|
|||
Total Share-based Compensation Expense
|
|
$
|
65
|
|
(a)
|
$
|
80
|
|
(b)
|
$
|
46
|
|
Deferred Tax Benefit recognized
|
|
$
|
22
|
|
(c)
|
$
|
26
|
|
|
$
|
15
|
|
|
|
|
|
|
|
|
||||||
EID compensation expense not share-based
|
|
$
|
12
|
|
|
$
|
5
|
|
|
$
|
1
|
|
|
|
Shares Repurchased
(thousands)
|
|
|
Dollar Value of Shares
Repurchased
|
|
|||||||||||||||||||||
Authorization Date
|
|
2017
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|||
November 2017
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
November 2016
|
|
26,561
|
|
|
|
1,337
|
|
|
|
—
|
|
|
|
1,915
|
|
|
|
85
|
|
|
|
—
|
|
|
|||
May 2016
|
|
—
|
|
|
|
50,435
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,200
|
|
|
|
—
|
|
|
|||
March 2016
|
|
—
|
|
|
|
2,823
|
|
|
|
—
|
|
|
|
—
|
|
|
|
229
|
|
|
|
—
|
|
|
|||
December 2015
|
|
—
|
|
|
|
13,368
|
|
|
|
932
|
|
|
|
—
|
|
|
|
933
|
|
|
|
67
|
|
|
|||
November 2014
|
|
—
|
|
|
|
—
|
|
|
|
13,231
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000
|
|
|
|||
November 2013
|
|
—
|
|
|
|
—
|
|
|
|
1,779
|
|
|
|
—
|
|
|
|
—
|
|
|
|
133
|
|
|
|||
Total
|
|
26,561
|
|
(a)
|
|
67,963
|
|
(a)
|
|
15,942
|
|
|
|
$
|
1,915
|
|
(a)
|
|
$
|
5,447
|
|
(a)
|
|
$
|
1,200
|
|
|
(a)
|
2017 amount excludes and 2016 amount includes the effect of $45 million in share repurchases (0.7 million shares) with trade dates prior to December 31, 2016 but settlement dates subsequent to December 31, 2016.
|
|
|
Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Nature(a)
|
|
Pension and Post-Retirement Benefits(b)
|
|
Derivative Instruments(c)
|
|
Total
|
||||||||
Balance at December 31, 2015, net of tax
|
|
$
|
(125
|
)
|
|
$
|
(113
|
)
|
|
$
|
(14
|
)
|
|
$
|
(252
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Gains (losses) arising during the year classified into AOCI, net of tax
|
|
(153
|
)
|
|
(41
|
)
|
|
37
|
|
|
(157
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
(Gains) losses reclassified from AOCI, net of tax
|
|
(11
|
)
|
|
27
|
|
|
(18
|
)
|
|
(2
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OCI, net of tax
|
|
(164
|
)
|
|
(14
|
)
|
|
19
|
|
|
(159
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Separation of China business
|
|
(47
|
)
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2016, net of tax
|
|
$
|
(336
|
)
|
|
$
|
(127
|
)
|
|
$
|
5
|
|
|
$
|
(458
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Gains (losses) arising during the year classified into AOCI, net of tax
|
|
107
|
|
|
(13
|
)
|
|
(51
|
)
|
|
43
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
(Gains) losses reclassified from AOCI, net of tax
|
|
55
|
|
|
34
|
|
|
55
|
|
|
144
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OCI, net of tax
|
|
162
|
|
|
21
|
|
|
4
|
|
|
187
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2017, net of tax
|
|
$
|
(174
|
)
|
|
$
|
(106
|
)
|
|
$
|
9
|
|
|
(271
|
)
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Amounts reclassified from AOCI are due to substantially complete liquidations of foreign entities related to KFC Turkey, Pizza Hut Turkey, Pizza Hut Thailand and Pizza Hut Korea refranchising transactions during 2017 and the Pizza Hut Australia refranchising transaction during 2016.
|
(b)
|
Amounts reclassified from AOCI for pension and post-retirement benefit plan losses during 2017 include amortization of net losses of $5 million, historical pension data adjustment of $22 million, settlement charges of $20 million, amortization of prior service cost of $5 million and related income tax benefit of $18 million. Amounts reclassified from AOCI for pension and post-retirement benefit plan losses during 2016 include amortization of net losses of $6 million, settlement charges of $33 million, amortization of prior service cost of $5 million and related income tax benefit of $17 million. See Note 15.
|
(c)
|
See Note 13 for details on amounts reclassified from AOCI.
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
U.S.
|
|
$
|
662
|
|
|
$
|
366
|
|
|
$
|
480
|
|
Foreign
|
|
1,612
|
|
|
979
|
|
|
773
|
|
|||
|
|
$
|
2,274
|
|
|
$
|
1,345
|
|
|
$
|
1,253
|
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
Federal
|
|
$
|
(2
|
)
|
|
$
|
126
|
|
|
$
|
267
|
|
|
|
Foreign
|
|
290
|
|
|
160
|
|
|
133
|
|
|||
|
|
State
|
|
12
|
|
|
13
|
|
|
28
|
|
|||
|
|
|
|
$
|
300
|
|
|
$
|
299
|
|
|
428
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deferred:
|
|
Federal
|
|
$
|
603
|
|
|
$
|
19
|
|
|
(116
|
)
|
|
|
|
Foreign
|
|
19
|
|
|
3
|
|
|
15
|
|
|||
|
|
State
|
|
12
|
|
|
6
|
|
|
—
|
|
|||
|
|
|
|
$
|
634
|
|
|
$
|
28
|
|
|
$
|
(101
|
)
|
|
|
|
|
$
|
934
|
|
|
$
|
327
|
|
|
$
|
327
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
U.S. federal statutory rate
|
|
$
|
797
|
|
|
35.0
|
%
|
|
$
|
473
|
|
|
35.0
|
%
|
|
$
|
438
|
|
|
35.0
|
%
|
State income tax, net of federal tax benefit
|
|
11
|
|
|
0.5
|
|
|
15
|
|
|
1.1
|
|
|
12
|
|
|
0.9
|
|
|||
Statutory rate differential attributable to foreign operations
|
|
(212
|
)
|
|
(9.3
|
)
|
|
(143
|
)
|
|
(10.5
|
)
|
|
(175
|
)
|
|
(13.7
|
)
|
|||
Adjustments to reserves and prior years
|
|
12
|
|
|
0.5
|
|
|
(11
|
)
|
|
(0.8
|
)
|
|
13
|
|
|
1.0
|
|
|||
Share-based payments
|
|
(117
|
)
|
|
(5.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Change in valuation allowances
|
|
34
|
|
|
1.5
|
|
|
(3
|
)
|
|
(0.2
|
)
|
|
41
|
|
|
3.0
|
|
|||
Other, net
|
|
(25
|
)
|
|
(1.1
|
)
|
|
(4
|
)
|
|
(0.3
|
)
|
|
(2
|
)
|
|
(0.1
|
)
|
|||
Tax Act Enactment
|
|
434
|
|
|
19.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Effective income tax rate
|
|
$
|
934
|
|
|
41.1
|
%
|
|
$
|
327
|
|
|
24.3
|
%
|
|
$
|
327
|
|
|
26.1
|
%
|
|
|
2017
|
|
2016
|
||||
Operating losses
|
|
$
|
216
|
|
|
$
|
172
|
|
Capital losses
|
|
4
|
|
|
184
|
|
||
Tax credit carryforwards
|
|
311
|
|
|
284
|
|
||
Employee benefits
|
|
94
|
|
|
185
|
|
||
Share-based compensation
|
|
58
|
|
|
100
|
|
||
Self-insured casualty claims
|
|
7
|
|
|
32
|
|
||
Lease-related liabilities
|
|
51
|
|
|
65
|
|
||
Various liabilities
|
|
51
|
|
|
56
|
|
||
Property, plant and equipment
|
|
24
|
|
|
37
|
|
||
Deferred income and other
|
|
31
|
|
|
32
|
|
||
Gross deferred tax assets
|
|
847
|
|
|
1,147
|
|
||
Deferred tax asset valuation allowances
|
|
(421
|
)
|
|
(195
|
)
|
||
Net deferred tax assets
|
|
$
|
426
|
|
|
$
|
952
|
|
Intangible assets, including goodwill
|
|
$
|
(69
|
)
|
|
$
|
(107
|
)
|
Property, plant and equipment
|
|
(18
|
)
|
|
(46
|
)
|
||
Deemed repatriation tax
|
|
(170
|
)
|
|
—
|
|
||
Other
|
|
(36
|
)
|
|
(34
|
)
|
||
Gross deferred tax liabilities
|
|
$
|
(293
|
)
|
|
$
|
(187
|
)
|
Net deferred tax assets (liabilities)
|
|
$
|
133
|
|
|
$
|
765
|
|
Reported in Consolidated Balance Sheets as:
|
|
|
|
|
||||
Deferred income taxes
|
|
$
|
139
|
|
|
$
|
772
|
|
Other liabilities and deferred credits
|
|
(6
|
)
|
|
(7
|
)
|
||
|
|
$
|
133
|
|
|
$
|
765
|
|
|
|
Year of Expiration
|
|
|
||||||||||||||||
|
|
2018
|
|
2019-2022
|
|
2023-2036
|
|
Indefinitely
|
|
Total
|
||||||||||
Foreign
|
|
$
|
9
|
|
|
$
|
46
|
|
|
$
|
85
|
|
|
$
|
376
|
|
|
$
|
516
|
|
U.S. state
|
|
—
|
|
|
61
|
|
|
1,012
|
|
|
—
|
|
|
1,073
|
|
|||||
U.S. federal
|
|
—
|
|
|
67
|
|
|
238
|
|
|
—
|
|
|
305
|
|
|||||
|
|
$
|
9
|
|
|
$
|
174
|
|
|
$
|
1,335
|
|
|
$
|
376
|
|
|
$
|
1,894
|
|
|
|
2017
|
|
2016
|
||||
Beginning of Year
|
|
$
|
91
|
|
|
$
|
98
|
|
Additions on tax positions - current year
|
|
3
|
|
|
—
|
|
||
Additions for tax positions - prior years
|
|
8
|
|
|
1
|
|
||
Reductions for tax positions - prior years
|
|
—
|
|
|
(5
|
)
|
||
Reductions for settlements
|
|
(1
|
)
|
|
(1
|
)
|
||
Reductions due to statute expiration
|
|
(1
|
)
|
|
(2
|
)
|
||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
||
End of Year
|
|
$
|
100
|
|
|
$
|
91
|
|
|
|
2017
|
|
2016
|
||||
Accrued interest and penalties
|
|
$
|
14
|
|
|
$
|
9
|
|
|
|
Revenues
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
KFC Division(a)
|
|
$
|
3,110
|
|
|
$
|
3,225
|
|
|
$
|
3,222
|
|
Pizza Hut Division(a)
|
|
893
|
|
|
1,108
|
|
|
1,205
|
|
|||
Taco Bell Division(a)
|
|
1,880
|
|
|
2,025
|
|
|
1,991
|
|
|||
Unallocated(b)(f)
|
|
(5
|
)
|
|
(2
|
)
|
|
—
|
|
|||
|
|
$
|
5,878
|
|
|
$
|
6,356
|
|
|
$
|
6,418
|
|
|
|
Operating Profit; Interest Expense, Net; and
Income Before Income Taxes
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
KFC Division
|
|
$
|
981
|
|
|
$
|
871
|
|
|
$
|
835
|
|
Pizza Hut Division
|
|
341
|
|
|
367
|
|
|
351
|
|
|||
Taco Bell Division
|
|
619
|
|
|
595
|
|
|
546
|
|
|||
Unallocated Franchise and license fees and income(b)(f)
|
|
(5
|
)
|
|
(2
|
)
|
|
—
|
|
|||
Unallocated restaurant costs(b)(i)
|
|
10
|
|
|
—
|
|
|
—
|
|
|||
Unallocated Franchise and license expenses(b)(f)
|
|
(30
|
)
|
|
(24
|
)
|
|
(71
|
)
|
|||
Corporate and unallocated G&A expenses(b)(g)
|
|
(230
|
)
|
|
(280
|
)
|
|
(180
|
)
|
|||
Unallocated Refranchising gain (loss)(b)
|
|
1,083
|
|
|
163
|
|
|
(23
|
)
|
|||
Unallocated Other income (expense)(b)(h)
|
|
(8
|
)
|
|
(8
|
)
|
|
(24
|
)
|
|||
Operating Profit
|
|
2,761
|
|
|
1,682
|
|
|
1,434
|
|
|||
Other pension income (expense)(b)(j)
|
|
(47
|
)
|
|
(32
|
)
|
|
(40
|
)
|
|||
Interest expense, net(b)
|
|
(440
|
)
|
|
(305
|
)
|
|
(141
|
)
|
|||
Income from continuing operations before income taxes
|
|
$
|
2,274
|
|
|
$
|
1,345
|
|
|
$
|
1,253
|
|
|
|
Depreciation and Amortization
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
KFC Division
|
|
$
|
138
|
|
|
$
|
172
|
|
|
180
|
|
|
Pizza Hut Division
|
|
26
|
|
|
36
|
|
|
40
|
|
|||
Taco Bell Division
|
|
82
|
|
|
90
|
|
|
89
|
|
|||
Corporate
|
|
7
|
|
|
12
|
|
|
10
|
|
|||
|
|
$
|
253
|
|
|
$
|
310
|
|
|
$
|
319
|
|
|
|
Capital Spending
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
KFC Division
|
|
$
|
176
|
|
|
$
|
216
|
|
|
$
|
260
|
|
Pizza Hut Division
|
|
42
|
|
|
69
|
|
|
54
|
|
|||
Taco Bell Division
|
|
95
|
|
|
132
|
|
|
116
|
|
|||
Corporate
|
|
5
|
|
|
10
|
|
|
12
|
|
|||
|
|
$
|
318
|
|
|
$
|
427
|
|
|
$
|
442
|
|
|
|
Identifiable Assets
|
||||||
|
|
2017
|
|
2016
|
||||
KFC Division(e)
|
|
$
|
1,791
|
|
|
$
|
2,158
|
|
Pizza Hut Division(e)
|
|
628
|
|
|
639
|
|
||
Taco Bell Division(e)
|
|
1,086
|
|
|
1,178
|
|
||
Corporate(c)(e)
|
|
1,806
|
|
|
1,478
|
|
||
|
|
$
|
5,311
|
|
|
$
|
5,453
|
|
|
|
Long-Lived Assets(d)
|
||||||
|
|
2017
|
|
2016
|
||||
KFC Division
|
|
$
|
1,200
|
|
|
$
|
1,537
|
|
Pizza Hut Division
|
|
310
|
|
|
372
|
|
||
Taco Bell Division
|
|
778
|
|
|
859
|
|
||
Corporate
|
|
31
|
|
|
32
|
|
||
|
|
$
|
2,319
|
|
|
$
|
2,800
|
|
(a)
|
U.S. revenues included in the combined KFC, Pizza Hut and Taco Bell Divisions totaled $2.8 billion in 2017, $3.1 billion in 2016 and $3.1 billion in 2015.
|
(e)
|
U.S. identifiable assets included in the combined Corporate and KFC, Pizza Hut and Taco Bell Divisions totaled $3.0 billion and $3.1 billion in 2017 and 2016, respectively.
|
(f)
|
Represents costs associated with the KFC U.S. Acceleration Agreement and Pizza Hut U.S. Transformation Agreement. See Note 5.
|
(g)
|
Amounts in 2017 include costs related to YUM’s Strategic Transformation Initiatives of $21 million, non-cash charges associated with modifications of share-based compensation awards of $18 million and costs associated with the Pizza Hut U.S. Transformation Agreement of $13 million. Amounts in 2016 included costs related to YUM's Strategic Transformation Initiatives of $61 million and non-cash charges associated with the modifications of share-based compensation awards of $30 million. See Note 5.
|
(h)
|
Amounts include losses associated with the sale of corporate aircraft related to YUM’s Strategic Transformation Initiatives of $2 million and $9 million in 2017 and 2016, respectively. See Note 8.
|
(i)
|
Represents depreciation reductions arising primarily from KFC restaurants that were held-for-sale. See Note 5.
|
(j)
|
Amounts in 2017 include a non-cash charge of $22 million related to the adjustment of certain historical deferred vested liability balances in our qualified U.S. plan. Amounts in 2016 include a settlement charge of $24 million related to the Company allowing certain former employees with deferred vested balances in the Yum Retirement Plan an opportunity to voluntarily elect early payout of their pension benefits. See Note 5.
|
|
|
Beginning Balance
|
|
Expense
|
|
Payments
|
|
Ending Balance
|
||||||
2017 Activity
|
|
$
|
98
|
|
|
27
|
|
|
(41
|
)
|
|
$
|
84
|
|
2016 Activity
|
|
$
|
102
|
|
|
42
|
|
|
(46
|
)
|
|
$
|
98
|
|
|
|
2017
|
||||||||||||||||||
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company sales
|
|
$
|
902
|
|
|
$
|
909
|
|
|
$
|
871
|
|
|
$
|
890
|
|
|
$
|
3,572
|
|
Franchise and license fees and income
|
|
515
|
|
|
539
|
|
|
565
|
|
|
687
|
|
|
2,306
|
|
|||||
Total revenues
|
|
1,417
|
|
|
1,448
|
|
|
1,436
|
|
|
1,577
|
|
|
5,878
|
|
|||||
Restaurant profit
|
|
144
|
|
|
161
|
|
|
154
|
|
|
159
|
|
|
618
|
|
|||||
Operating Profit(a)
|
|
484
|
|
|
419
|
|
|
643
|
|
|
1,215
|
|
|
2,761
|
|
|||||
Net Income
|
|
280
|
|
|
206
|
|
|
418
|
|
|
436
|
|
|
1,340
|
|
|||||
Basic earnings per common share from continuing operations
|
|
0.78
|
|
|
0.59
|
|
|
1.21
|
|
|
1.29
|
|
|
3.86
|
|
|||||
Diluted earnings per common share from continuing operations
|
|
0.77
|
|
|
0.58
|
|
|
1.18
|
|
|
1.26
|
|
|
3.77
|
|
|||||
Dividends declared per common share
|
|
0.30
|
|
|
0.30
|
|
|
—
|
|
|
0.30
|
|
|
0.90
|
|
|
|
2016
|
||||||||||||||||||
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company sales
|
|
$
|
953
|
|
|
$
|
1,006
|
|
|
$
|
992
|
|
|
$
|
1,238
|
|
|
$
|
4,189
|
|
Franchise and license fees and income
|
|
490
|
|
|
503
|
|
|
526
|
|
|
648
|
|
|
2,167
|
|
|||||
Total revenues
|
|
1,443
|
|
|
1,509
|
|
|
1,518
|
|
|
1,886
|
|
|
6,356
|
|
|||||
Restaurant profit
|
|
148
|
|
|
167
|
|
|
161
|
|
|
224
|
|
|
700
|
|
|||||
Operating Profit(b)
|
|
349
|
|
|
415
|
|
|
398
|
|
|
520
|
|
|
1,682
|
|
|||||
Income from continuing operations, net of tax
|
|
226
|
|
|
266
|
|
|
218
|
|
|
308
|
|
|
1,018
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
|
138
|
|
|
70
|
|
|
422
|
|
|
(5
|
)
|
|
625
|
|
|||||
Net Income
|
|
364
|
|
|
336
|
|
|
640
|
|
|
303
|
|
|
1,643
|
|
|||||
Basic earnings per common share from continuing operations
|
|
0.55
|
|
|
0.65
|
|
|
0.56
|
|
|
0.84
|
|
|
2.58
|
|
|||||
Basic earnings (loss) per common share from discontinued operations
|
|
0.33
|
|
|
0.17
|
|
|
1.09
|
|
|
(0.01
|
)
|
|
1.59
|
|
|||||
Basic earnings per common share
|
|
0.88
|
|
|
0.82
|
|
|
1.65
|
|
|
0.83
|
|
|
4.17
|
|
|||||
Diluted earnings per common share from continuing operations
|
|
0.54
|
|
|
0.64
|
|
|
0.55
|
|
|
0.83
|
|
|
2.54
|
|
|||||
Diluted earnings (loss) per common share from discontinued operations
|
|
0.33
|
|
|
0.17
|
|
|
1.07
|
|
|
(0.01
|
)
|
|
1.56
|
|
|||||
Diluted earnings per common share
|
|
0.87
|
|
|
0.81
|
|
|
1.62
|
|
|
0.82
|
|
|
4.10
|
|
|||||
Dividends declared per common share
|
|
0.46
|
|
|
0.46
|
|
|
0.51
|
|
|
0.30
|
|
|
1.73
|
|
(a)
|
Includes net gains from refranchising initiatives of $111 million, $19 million, $201 million and $752 million in the first, second, third and fourth quarters, respectively, costs associated with YUM’s Strategic Transformation Initiatives of $7 million, $4 million, $4 million and $8 million in the first, second, third and fourth quarters, respectively, costs associated with the Pizza Hut U.S. Transformation Agreement of $12 million, $8 million and $11 million in the second, third and fourth quarters, respectively, costs associated with the KFC U.S. Acceleration Agreement of $3 million, $5 million, $4 million and $5 million in the first, second, third and fourth quarters, respectively and non-cash charges associated with the modification of share-based compensation awards in connection with the Separation of $2 million and $16 million in the first and second quarters, respectively.
|
(b)
|
Includes net gains from refranchising initiatives of $54 million, $21 million and $88 million in the second, third and fourth quarters, respectively, costs associated with YUM’s Strategic Transformation Initiatives of $4 million, $30 million and $33 million in the second, third and fourth quarters, respectively, a non-cash charge primarily associated with the modification of share-based compensation awards in connection with the Separation of $30 million in the fourth quarter and costs associated with KFC U.S. Acceleration Agreement of $9 million, $8 million and $9 million in the first, second and fourth quarters, respectively. See Note 5.
|
Item 9.
|
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accountant Fees and Services.
|
Item 15.
|
Exhibits and Financial Statement Schedules.
|
(a)
|
(1
|
)
|
|
Financial Statements: Consolidated Financial Statements filed as part of this report are listed under Part II, Item 8 of this Form 10-K.
|
|
|
|
|
|
|
(2
|
)
|
|
Financial Statement Schedules: No schedules are required because either the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements thereto filed as a part of this Form 10-K.
|
|
|
|
|
|
|
(3
|
)
|
|
Exhibits: The exhibits listed in the accompanying Exhibit Index are filed as part of this Form 10-K. The Index to Exhibits specifically identifies each management contract or compensatory plan required to be filed as an exhibit to this Form 10-K.
|
|
SIGNATURES
|
Date:
|
February 21, 2018
|
|
YUM! BRANDS, INC.
|
By:
|
/s/ Greg Creed
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Greg Creed
|
|
Chief Executive Officer
|
|
February 21, 2018
|
Greg Creed
|
|
(principal executive officer)
|
|
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|
/s/ David W. Gibbs
|
|
President and Chief Financial Officer
|
|
February 21, 2018
|
David W. Gibbs
|
|
(principal financial officer)
|
|
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|
|
|
|
/s/ David E. Russell
|
|
Senior Vice President, Finance and Corporate Controller
|
|
February 21, 2018
|
David E. Russell
|
|
(principal accounting officer)
|
|
|
|
|
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|
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/s/ Paget L. Alves
|
|
Director
|
|
February 21, 2018
|
Paget L. Alves
|
|
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/s/ Michael J. Cavanagh
|
|
Director
|
|
February 21, 2018
|
Michael J. Cavanagh
|
|
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|
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/s/ Christopher M. Connor
|
|
Director
|
|
February 21, 2018
|
Christopher M. Connor
|
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/s/ Brian C. Cornell
|
|
Director
|
|
February 21, 2018
|
Brian C. Cornell
|
|
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|
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|
|
/s/ Tanya L. Domier
|
|
Director
|
|
February 21, 2018
|
Tanya L. Domier
|
|
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|
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|
|
|
/s/ Mirian M. Graddick-Weir
|
|
Director
|
|
February 21, 2018
|
Mirian M. Graddick-Weir
|
|
|
|
|
|
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|
|
|
/s/ Thomas C. Nelson
|
|
Director
|
|
February 21, 2018
|
Thomas C. Nelson
|
|
|
|
|
|
|
|
|
|
/s/ P. Justin Skala
|
|
Director
|
|
February 21, 2018
|
P. Justin Skala
|
|
|
|
|
|
|
|
|
|
/s/ Elane B. Stock
|
|
Director
|
|
February 21, 2018
|
Elane B. Stock
|
|
|
|
|
|
|
|
|
|
/s/ Robert D. Walter
|
|
Director
|
|
February 21, 2018
|
Robert D. Walter
|
|
|
|
|
|
|
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|
|
Exhibit
Number
|
|
Description of Exhibits
|
||
|
|
|
||
2.1
|
|
|||
|
|
|
||
3.1
|
|
|||
|
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||
3.2
|
|
|||
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||
4.1
|
|
|||
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(i)
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||
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||
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|
(ii)
|
||
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(iii)
|
||
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||
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(iv)
|
||
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(v)
|
||
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|
(vi)
|
||
|
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|
(vii)
|
|
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|
Exhibit
Number
|
|
Description of Exhibits
|
||
10.1
|
|
|||
|
|
|
||
10.1.1
|
|
|
||
|
|
|
||
10.1.2
|
|
|||
|
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|
||
10.2†
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|
|||
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|
||
10.2.1†
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|
|||
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|
||
10.3†
|
|
|||
|
|
|
||
10.4†
|
|
|||
|
|
|
||
10.4.1†
|
|
|||
|
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||
10.5†
|
|
|||
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||
10.5.1†
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|
|||
|
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||
10.6†
|
|
|||
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|
||
10.7†
|
|
|||
|
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|
||
10.8†
|
|
|||
|
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|
|
Exhibit
Number
|
|
Description of Exhibits
|
||
10.9†
|
|
|||
|
|
|
||
10.10†
|
|
|||
|
|
|
||
10.11†
|
|
|||
|
|
|
||
10.11.1†
|
|
|||
|
|
|
||
10.11.2†
|
|
|||
|
|
|
||
10.12†
|
|
|||
|
|
|
||
10.13†
|
|
|||
|
|
|
|
|
10.13.1†
|
|
|||
|
|
|||
10.13.2†
|
|
|||
|
|
|
|
|
10.14†
|
|
|||
|
|
|
||
10.14.1†
|
|
|||
|
|
|
||
10.15†
|
|
|||
|
|
|
||
10.16†
|
|
|||
|
|
|
||
10.17†
|
|
|||
|
|
|
||
10.18†
|
|
|||
|
|
|
||
10.19†
|
|
|||
|
|
|
Exhibit
Number
|
|
Description of Exhibits
|
||
10.20
|
|
|||
|
|
|
||
10.21
|
|
|||
|
|
|
||
10.22
|
|
|||
|
|
|
||
10.23
|
|
|||
|
|
|
||
10.24
|
|
|||
|
|
|
||
10.25
|
|
|||
|
|
|
||
10.26
|
|
|||
|
|
|
||
10.27
|
|
|||
|
|
|
||
12.1
|
|
|||
|
|
|
||
21.1
|
|
|||
|
|
|
Exhibit
Number
|
|
Description of Exhibits
|
||
23.1
|
|
|||
|
|
|
||
31.1
|
|
|||
|
|
|
||
31.2
|
|
|||
|
|
|
||
32.1
|
|
|||
|
|
|
||
32.2
|
|
|||
|
|
|
||
101.INS
|
|
Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
||
|
|
|
||
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
||
|
|
|
||
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
||
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
||
|
|
|
||
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
||
|
|
|
||
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
||
|
|
|
|
|
†
|
Indicates a management contract or compensatory plan.
|
|
|
|
Page No.
|
|
|
|
|
ARTICLE I
|
1
|
||
|
|
|
|
FOREWORD
|
1
|
||
|
|
|
|
DEFINITIONS AND CONSTRUCTION
|
3
|
||
|
2.1
|
DEFINITIONS:
|
3
|
|
2.2
|
CONSTRUCTION:
|
18
|
|
|
|
|
ARTICLE III
|
20
|
||
|
|
|
|
PARTICIPATION AND SERVICE
|
20
|
||
|
3.1
|
PARTICIPATION:
|
20
|
|
3.2
|
SERVICE:
|
20
|
|
3.3
|
CREDITED SERVICE:
|
20
|
|
|
|
|
ARTICLE IV
|
22
|
||
|
|
|
|
REQUIREMENTS FOR BENEFITS
|
22
|
||
|
4.1
|
NORMAL 409A RETIREMENT PENSION:
|
22
|
|
4.2
|
EARLY 409A RETIREMENT PENSION:
|
22
|
|
4.3
|
409A VESTED PENSION:
|
22
|
|
4.4
|
LATE 409A RETIREMENT PENSION:
|
23
|
|
4.5
|
409A DISABILITY PENSION:
|
23
|
|
4.6
|
PRE-RETIREMENT SPOUSE'S 409A PENSION:
|
23
|
|
4.7
|
VESTING:
|
25
|
|
4.8
|
TIME OF PAYMENT:
|
25
|
|
4.9
|
CASHOUT DISTRIBUTIONS:
|
25
|
|
4.10
|
REEMPLOYMENT OF CERTAIN PARTICIPANTS:
|
28
|
|
|
|
|
AMOUNT OF RETIREMENT PENSION
|
30
|
||
|
5.1
|
PARTICIPANT’S 409A PENSION:
|
30
|
|
5.2
|
PEP GUARANTEE:
|
30
|
|
5.3
|
AMOUNT OF PRE-RETIREMENT SPOUSE'S 409A PENSION:
|
36
|
|
5.4
|
CERTAIN ADJUSTMENTS:
|
39
|
|
5.5
|
EXCLUDABLE EMPLOYMENT:
|
40
|
|
5.6
|
PRE-409A PENSION:
|
40
|
|
|
|
|
DISTRIBUTION OF BENEFITS
|
41
|
||
|
6.1
|
FORM AND TIMING OF DISTRIBUTIONS:
|
41
|
|
6.2
|
AVAILABLE FORMS OF PAYMENT:
|
44
|
|
6.3
|
PROCEDURES FOR ELECTIONS:
|
47
|
|
6.4
|
DETERMINATION OF MARITAL STATUS:
|
49
|
|
6.5
|
DESIGNATION OF BENEFICIARY:
|
50
|
|
6.6
|
REQUIRED DELAY FOR KEY EMPLOYEES:
|
51
|
|
6.7
|
PAYMENT OF FICA AND RELATED INCOME TAXES:
|
52
|
|
6.8
|
CORRECTION OF PAYMENTS AFFECTED BY OTHER NONQUALIFIED PLANS.
|
54
|
|
|
|
|
ADMINISTRATION
|
56
|
||
|
7.1
|
AUTHORITY TO ADMINISTER PLAN:
|
56
|
|
7.2
|
FACILITY OF PAYMENT:
|
56
|
|
7.3
|
CLAIMS PROCEDURE:
|
57
|
|
|
|
Page No.
|
|
|
|
|
|
7.4
|
PLAN ADMINISTRATOR DISCRETION:
|
58
|
|
|
|
|
MISCELLANEOUS
|
60
|
||
|
8.1
|
NONGUARANTEE OF EMPLOYMENT:
|
60
|
|
8.2
|
NONALIENATION OF BENEFITS:
|
60
|
|
8.3
|
UNFUNDED PLAN:
|
60
|
|
8.4
|
ACTION BY THE COMPANY:
|
61
|
|
8.5
|
INDEMNIFICATION:
|
61
|
|
8.6
|
COMPLIANCE WITH SECTION 409A:
|
61
|
|
8.7
|
SECTION 457A.
|
62
|
|
8.8
|
MISCONDUCT.
|
64
|
|
8.9
|
MISSING PARTICIPANTS OF BENEFICIARIES:
|
66
|
|
|
|
|
AMENDMENT AND TERMINATION
|
67
|
||
|
9.1
|
CONTINUATION OF THE PLAN:
|
67
|
|
9.2
|
AMENDMENTS:
|
67
|
|
9.3
|
TERMINATION:
|
68
|
|
9.4
|
CHANGE IN CONTROL:
|
68
|
|
|
|
|
ERISA PLAN STRUCTURE
|
69
|
||
|
|
|
|
APPLICABLE LAW
|
71
|
||
|
|
|
|
SIGNATURE
|
72
|
||
|
|
|
|
APPENDIX ARTICLE A
|
74
|
||
|
|
|
|
TRANSITION PROVISIONS
|
74
|
||
|
A.1
|
SCOPE.
|
74
|
|
A.2
|
DEFINITION OF ACTUARIAL EQUIVALENT.
|
74
|
|
A.3
|
TRANSITION RULES FOR ARTICLE VI (DISTRIBUTIONS):
|
74
|
|
A.4
|
CONFORMANCE WITH SECTION 409A:
|
75
|
|
A.5
|
EMIL BROLICK-19(C):
|
76
|
|
A.6
|
CERTAIN 19(C) ELECTIONS:
|
76
|
|
|
|
|
APPENDIX ARTICLE B
|
78
|
||
|
|
|
|
COMPUTATION OF EARNINGS AND SERVICE
|
78
|
||
|
|
|
|
DURING CERTAIN SEVERANCE WINDOWS
|
78
|
||
|
B.1
|
DEFINITIONS:
|
78
|
|
B.2
|
INCLUSION OF SALARY AND ELIGIBLE BONUS:
|
78
|
|
B.3
|
INCLUSION OF CREDITED SERVICE:
|
79
|
|
B.4
|
INCLUSION OF SERVICE:
|
79
|
|
B.5
|
REDUCTION TO REFLECT EARLY PAYMENT:
|
80
|
|
|
|
|
APPENDIX ARTICLE C
|
81
|
||
|
|
|
|
CEO’S PENSION
|
81
|
||
|
C.1
|
SCOPE AND PURPOSE:
|
81
|
|
C.2
|
FREEZE AS OF JANUARY 1, 2012:
|
81
|
|
C.3
|
EARLY COMMENCEMENT REDUCTION:
|
82
|
|
C.4
|
DETERMINATION OF PENSION BEGINNING JANUARY 1, 2013.
|
82
|
|
|
|
Page No.
|
|
|
|
|
DE-GRANDFATHERED PARTICIPANTS
|
85
|
||
|
D.1
|
SCOPE:
|
85
|
|
D.2
|
MARCH 1, 2010 DE-GRANDFATHERING:
|
85
|
|
D.3
|
DE-GRANDFATHERING OF CERTAIN PRE-2005 PARTICIPANTS FOR 2012 LUMP SUM WINDOW:
|
86
|
|
D.4
|
FURTHER DE-GRANDFATHERING OF PARTICIPANTS UNDER THE 409A PROGRAM:
|
87
|
|
|
|
|
APPENDIX ARTICLE P
|
88
|
||
|
|
|
|
RETIREMENT WINDOW BENEFIT
|
88
|
||
|
P.1
|
SCOPE:
|
88
|
|
P.2
|
DEFINITIONS:
|
88
|
|
P.3
|
PEP BRIDGE BENEFIT:
|
89
|
|
P.4
|
PEP WINDOW BENEFIT:
|
93
|
|
|
|
|
APPENDIX ARTICLE Q
|
101
|
||
|
|
|
|
AUSTRALIAN PARTICIPANTS
|
101
|
||
|
Q.1
|
SCOPE:
|
101
|
|
Q.2
|
DEFINITIONS:
|
101
|
|
Q.3
|
BENEFIT FORMULA FOR AUSTRALIAN EMPLOYEES:
|
103
|
|
Q.4
|
ALTERNATIVE ARRANGEMENTS PERMITTED:
|
104
|
|
|
|
|
APPENDIX ARTICLE R
|
105
|
||
|
|
|
|
PARTICIPANTS ON TEMPORARY ASSIGNMENT
|
105
|
||
|
R.1
|
SCOPE:
|
105
|
|
R.2
|
ASSIGNMENT IN CANADA:
|
105
|
|
R.3
|
ASSIGNMENT IN THE UNITED KINGDOM:
|
106
|
|
R.4
|
ASSIGNMENT IN INDIA:
|
106
|
|
R.5
|
ASSIGNMENT IN SINGAPORE:
|
107
|
|
R.6
|
ASSIGNMENT IN RUSSIA:
|
107
|
|
R.7
|
ASSIGNMENT IN SOUTH AFRICA:
|
108
|
|
R.8
|
ASSIGNMENT IN THAILAND:
|
108
|
|
R.9
|
ELIMINATION OF ELIGIBLE CLASSIFICATION REQUIREMENT:
|
108
|
|
|
|
|
ARTICLE S - LIMITATION ON BENEFIT ENHANCEMENTS
|
110
|
||
|
|
|
|
THAT ARE SUBJECT TO SECTION 457A
|
110
|
||
|
S.1
|
SCOPE.
|
110
|
|
S.2
|
SECTION 457A.
|
110
|
DATE
|
MORTALITY TABLE FACTORS
|
INTEREST RATE FACTOR
|
JANUARY 1, 2009-PRESENT
|
[INSERT]
|
[INSERT]
|
|
|
|
|
(b) Adjustment for Increased Pension Under Other Plans: If the benefit paid under a specified plan on behalf of a Participant is increased after PEP benefits on his behalf have been determined (whether the increase is by order of a court, by agreement of the plan administrator of the specified plan, or otherwise), then the PEP benefit for the
|
6.3
|
Procedures for Elections:
|
A.1
|
Scope.
|
A.2
|
Definition of Actuarial Equivalent.
|
A.3
|
Transition Rules for Article VI (Distributions):
|
A.4
|
Conformance with Section 409A:
|
A.5
|
Emil Brolick-19(c):
|
A.6
|
Certain 19(c) Elections:
|
B.1
|
Definitions:
|
B.2
|
Inclusion of Salary and Eligible Bonus:
|
B.3
|
Inclusion of Credited Service:
|
B.4
|
Inclusion of Service:
|
B.5
|
Reduction to Reflect Early Payment:
|
C.1
|
Scope and Purpose:
|
C.2
|
Freeze as of January 1, 2012:
|
C.3
|
Early Commencement Reduction:
|
C.4
|
Determination of Pension Beginning January 1, 2013.
|
D.1
|
Scope:
|
D.2
|
March 1, 2010 De-Grandfathering:
|
D.3
|
De-Grandfathering of Certain Pre-2005 Participants for 2012 Lump Sum Window:
|
P.1
|
Scope:
|
P.2
|
Definitions:
|
P.3
|
PEP Bridge Benefit:
|
P.4
|
PEP Window Benefit:
|
Q.1
|
Scope:
|
Q.2
|
Definitions:
|
Q.3
|
Benefit Formula for Australian Employees:
|
Q.4
|
Alternative Arrangements Permitted:
|
R.1
|
Scope:
|
R.2
|
Assignment in Canada:
|
R.3
|
Assignment in the United Kingdom:
|
R.4
|
Assignment in India:
|
R.5
|
Assignment in Singapore:
|
R.6
|
Assignment in Russia:
|
R.7
|
Assignment in South Africa:
|
R.8
|
Assignment in Thailand:
|
R.9
|
Elimination of Eligible Classification Requirement:
|
Exhibit 12.1
YUM! Brands, Inc.
Ratio of Earnings to Fixed Charges Years Ended 2017 - 2013
(In millions except ratio amounts)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
52 Weeks
|
|
53 Weeks
|
|
52 Weeks
|
||||||||||||||
|
|
2017
|
|
2016
(As Restated)
|
|
2015
(As Restated)
|
|
2014
|
|
2013
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pretax income from continuing operations before cumulative effect of accounting changes
|
|
$
|
2,274
|
|
|
$
|
1,345
|
|
|
$
|
1,253
|
|
|
$
|
1,374
|
|
|
$
|
1,279
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
50% or less owned Affiliates' interests, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest Expense
|
|
478
|
|
|
330
|
|
|
158
|
|
|
162
|
|
|
282
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest portion of net rent expense
|
|
40
|
|
|
50
|
|
|
57
|
|
|
62
|
|
|
64
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings available for fixed charges
|
|
$
|
2,792
|
|
|
$
|
1,725
|
|
|
$
|
1,468
|
|
|
$
|
1,598
|
|
|
$
|
1,625
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest Expense
|
|
$
|
478
|
|
|
$
|
330
|
|
|
$
|
158
|
|
|
$
|
164
|
|
|
$
|
283
|
|
Interest portion of net rent expense
|
|
40
|
|
|
50
|
|
|
57
|
|
|
62
|
|
|
64
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total fixed charges
|
|
$
|
518
|
|
|
$
|
380
|
|
|
$
|
215
|
|
|
$
|
226
|
|
|
$
|
347
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
|
5.39
|
|
|
4.54
|
|
|
6.83
|
|
|
7.07
|
|
|
4.68
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 21.1
|
SUBSIDIARIES OF YUM! BRANDS, INC.
|
|
AS OF DECEMBER 31, 2017
|
|
Name of Subsidiary
|
State or Country of
Incorporation
|
A.C.N. 003 190 163 Pty. Limited
|
Australia
|
A.C.N. 003 190 172 Pty. Limited
|
Australia
|
A.C.N. 003 273 854 Pty. Limited
|
Australia
|
A.C.N. 054 055 917 Pty. Ltd.
|
Australia
|
A.C.N. 054 121 416 Pty. Ltd. f/k/a Pizza Hut Australia Pty Limited f/k/a ACN 054 121 416 Pty. Ltd.
|
Australia
|
A.C.N. 085 239 961 Pty. Ltd. (SA1)
|
Australia
|
A.C.N. 085 239 998 Pty. Ltd. (SA2)
|
Australia
|
A.C.N. 107 434 882 Pty Limited f/k/a/ Yum! Restaurants KFC Australia Services Pty Ltd f/k/a Yum! Restaurants Australia Services Pty Ltd
|
Australia
|
A.C.N. 108 123 502 Pty Limited f/k/a/ Yum! Restaurants New Zealand Services Pty. Ltd
|
Australia
|
ABR Insurance Company
|
Vermont
|
Ashton Fried Chicken Pty. Limited
|
Australia
|
Cyprus Caramel Restaurants Limited
|
Cyprus
|
Demipower (Eastern) Limited
|
United Kingdom
|
Finger Lickin' Chicken Limited
|
United Kingdom
|
GCTB, LLC f/k/a GCTB, Inc.
|
Virginia
|
Gloucester Properties Pty. Ltd.
|
Australia
|
Inventure Restaurantes Ltda.
|
Brazil
|
Kentucky Fried Chicken (Germany) Restaurant Holdings GmbH
|
Germany
|
Kentucky Fried Chicken (Great Britain) Limited
|
United Kingdom
|
Kentucky Fried Chicken (Great Britain) Services Limited
|
United Kingdom
|
Kentucky Fried Chicken Canada Company
|
Canada
|
Kentucky Fried Chicken International Holdings, LLC f/k/a Kentucky Fried Chicken International Holdings, Inc.
|
Delaware
|
Kentucky Fried Chicken Limited f/k/a Norfolk Fast Foods Limited
|
United Kingdom
|
Kentucky Fried Chicken Pty. Ltd.
|
Australia
|
KFC (Pty) Ltd f/k/a Yum Restaurants International (Proprietary) Limited
|
South Africa
|
KFC Advertising, Ltd.
|
United Kingdom
|
KFC Asia LLC
|
Delaware
|
KFC Brasil Publicidade e Propaganda Ltda
|
Brazil
|
KFC Chamnord SAS
|
France
|
KFC Corporation
|
Delaware
|
KFC Europe S.à r.l.
|
Luxembourg
|
KFC France SAS
|
France
|
KFC Global Holdings, Inc.
|
Delaware
|
KFC Holding Co.
|
Delaware
|
KFC Holding SAS
|
France
|
KFC Holdings B.V.
|
Netherlands
|
KFC Intermediate Holdings S.à r.l.
|
Luxembourg
|
KFC International Finance Company LLC f/k/a KFC International Finance Company S.à r.l.
|
Delaware
|
KFC International Holdings I LLC f/k/a KFC International Holdings I S.à r.l. f/k/a Yum! Finance Holdings ll Sarl f/k/a Stealth Investments Sarl
|
Delaware
|
KFC International Holdings II S.à r.l.
|
Luxembourg
|
KFC Italy S.r.l.
|
Italy
|
KFC Menapak LLC
|
Delaware
|
KFC MENAPAK S.à r.l.
|
Luxembourg
|
KFC Mexico B.V.
|
Netherlands
|
KFC Netherlands B.V.
|
Netherlands
|
KFC North America S.à r.l.
|
Luxembourg
|
KFC Pacific Holdings Ltd f/k/a THC II Limited
|
Malta
|
KFC Pacific LLC
|
Delaware
|
KFC Real Estate B.V.
|
Netherlands
|
KFC Restaurants Asia Pte., Ltd.
|
Singapore
|
KFC Restaurants Spain S.L.
|
Spain
|
KFC Russia Holdings I S.à r.l.
|
Luxembourg
|
KFC South Africa Holdings B.V.
|
Netherlands
|
KFC THC V Ltd f/k/a THC V Limited
|
Malta
|
KFC Turkey LLC
|
Delaware
|
KFC US, LLC f/k/a KFC Franchisor, LLC
|
Delaware
|
KFC YFI Holdco S.à r.l.
|
Luxembourg
|
KFC Yum! Franchise I LP
|
Canada (Alberta)
|
KFC Yum! Franchise III f/k/a Yum! Franchise III
|
Australia
|
KZ Catering Ltd.
|
United Kingdom
|
MFIT Foods Ltd.
|
United Kingdom
|
Multibranding Pty. Ltd.
|
Australia
|
Newcastle Fried Chicken Pty. Ltd.
|
Australia
|
Northside Fried Chicken Pty Limited
|
Australia
|
Novo BL SAS
|
France
|
Novo Re IMMO SAS
|
France
|
PH Asia Holdings S.à r.l.
|
Luxembourg
|
PH Asia LLC
|
Delaware
|
PH Canada Company
|
Canada
|
PH Canada Holdco Company
|
Canada
|
PH Digico LLC
|
Delaware
|
PH Europe LLC f/k/a PH US LLC
|
Delaware
|
PH Europe S.à r.l.
|
Luxembourg
|
PH Global Holdings, Inc.
|
Delaware
|
PH Intermediate Holdings S.à r.l.
|
Luxembourg
|
PH International Finance Company LLC f/k/a PH International Finance Company S.à r.l.
|
Delaware
|
PH International Holdings I LLC f/k/a PH International Holdings I S.à r.l. f/k/a Yum! Finance Holdings lll Sarl f/k/a ITRAS Holdings Sarl
|
Delaware
|
PH International Holdings II S.à r.l.
|
Luxembourg
|
PH Mexico B.V.
|
Netherlands
|
PH Mexico S.à r.l.
|
Luxembourg
|
PH North America S.à r.l.
|
Luxembourg
|
PH Restaurant Holdings GmbH
|
Germany
|
PH South Africa Holdings B.V.
|
Netherlands
|
PH THC V Ltd
|
Malta
|
PH YFI Holdco S.à r.l.
|
Luxembourg
|
PH Yum! Franchise I LP
|
Canada (Alberta)
|
PH Yum! Franchise III
|
Australia
|
Pizza Hut (Pty) Ltd f/k/a Friedshelf 1503 Proprietary Limited
|
South Africa
|
Pizza Hut Delivery Germany GmbH
|
Germany
|
Pizza Hut Europe Limited
|
United Kingdom
|
Pizza Hut Gida ve Ticaret Anonim Sirketi
|
Turkey
|
Pizza Hut Guarantor, LLC
|
Delaware
|
Pizza Hut Holdings, LLC
|
Delaware
|
Pizza Hut HSR Advertising Limited
|
United Kingdom
|
Pizza Hut International, LLC
|
Delaware
|
Pizza Hut MENAPAK Counsulting FZE
|
U.A.E.
|
Pizza Hut MENAPAK S.à r.l.
|
Luxembourg
|
Pizza Hut of America, LLC f/k/a Pizza Hut of America, Inc.
|
Delaware
|
Pizza Hut Pacific Holdings Ltd.
|
Malta
|
Pizza Hut Restaurants Asia Pte., Ltd.
|
Singapore
|
Pizza Hut Restaurants China-India Pte. Ltd.
|
Singapore
|
Pizza Hut Turkey LLC
|
Delaware
|
Pizza Hut, LLC
|
Delaware
|
Restaurant Concepts LLC
|
Delaware
|
Restaurant Holdings Limited
|
United Kingdom
|
SASA Foods Limited
|
United Kingdom
|
Scotco One Five Five Limited
|
United Kingdom
|
Scotco Trowbridge Limited
|
United Kingdom
|
Southern Fast Foods Limited f/k/a Milne Fast Foods Limited
|
United Kingdom
|
Splendid Restaurants (Harland) Limited
|
United Kingdom
|
Suffolk Fast Foods Limited
|
United Kingdom
|
Taco Bell Cantina Corp.
|
Delaware
|
Taco Bell Corp
|
California
|
Taco Bell Franchise Holder 1, LLC
|
Delaware
|
Taco Bell Franchisor Holdings, LLC
|
Delaware
|
Taco Bell Franchisor, LLC
|
Delaware
|
Taco Bell Funding, LLC
|
Delaware
|
Taco Bell IP Holder, LLC
|
Delaware
|
Taco Bell of America, LLC f/k/a Taco Bell of America, Inc.
|
Delaware
|
Taco Bell Restaurants Asia Pte., Ltd.
|
Singapore
|
Taco Bell Restaurants China-India Pte. Ltd.
|
Singapore
|
TB Asia Holdings S.à r.l.
|
Luxembourg
|
TB Asia LLC
|
Delaware
|
TB Canada Company
|
Canada
|
TB Cantina, LLC
|
Delaware
|
TB Global Holdings, Inc.
|
Delaware
|
TB International Holdings II S.à r.l.
|
Luxembourg
|
TB North America S.à r.l.
|
Luxembourg
|
TB YFI Holdco S.à r.l.
|
Luxembourg
|
TB Yum! Franchise I LP
|
Canada (Alberta)
|
TBA Services, LLC
|
Delaware
|
Tricon Global Restaurants, Inc.
|
North Carolina
|
Versailles Resto S.A.S.
|
France
|
YA Company One Pty. Ltd.
|
Australia
|
YCH S.a.r.l.
|
Luxembourg
|
YEB Holdings LLC
|
Delaware
|
YEB III LLC
|
Delaware
|
YRH Holdco Limited
|
United Kingdom
|
YRI Europe S.a.r.l.
|
Luxembourg
|
YRI Global Liquidity S.a.r.l. f/k/a Bolden Holding Sarl
|
Luxembourg
|
YRI Investment Company S.a.r.l. f/k/a Brownstone Holdings Sarl
|
Luxembourg
|
Yum Cyprus Limited
|
Cyprus
|
Yum Restaurant Services Group, LLC f/k/a Yum Restaurant Services Group, Inc.
|
Delaware
|
Yum! Asia Franchise Pte Ltd
|
Singapore
|
Yum! Asia Holdings II S.a.r.l
|
Luxembourg
|
Yum! Asia Holdings S.a.r.l
|
Luxembourg
|
Yum! Australia Equipment Pty. Ltd.
|
Australia
|
Yum! Brands Mexico Holdings II LLC
|
Delaware
|
Yum! Finance Holdings IV S.a.r.l
|
Luxembourg
|
YUM! Finance Holdings l Sarl f/k/a Sunhill Holdings Sarl
|
Luxembourg
|
Yum! Finance Holdings V S.a.r.l
|
Luxembourg
|
Yum! Franchise de Mexico, S.a.r.l.
|
Luxembourg
|
Yum! Franchise II LLP
|
United Kingdom
|
Yum! III (UK) Limited
|
United Kingdom
|
Yum! International Finance Company S.a.r.l.
|
Luxembourg
|
Yum! International Finance II S.a.r.l.
|
Luxembourg
|
Yum! International Participations LLC f/k/a Yum! International Participations S.a.r.l
|
Delaware
|
Yum! KFC Australia Holdings I LLC f/k/a Yum! Australia Holdings I LLC
|
Delaware
|
Yum! KFC Australia Holdings II LLC f/k/a Yum! Australia Holdings II LLC
|
Delaware
|
Yum! Luxembourg Investments LLC f/k/a Yum! Luxembourg Investments S.a.r.l.
|
Delaware
|
Yum! PH Australia Holdings I LLC
|
Delaware
|
Yum! PH Australia Holdings II LLC
|
Delaware
|
Yum! Restaurant Holdings
|
United Kingdom
|
Yum! Restaurantes do Brasil Ltda.
|
Brazil
|
Yum! Restaurants (India) Private Limited
|
India
|
Yum! Restaurants (NZ) Ltd.
|
New Zealand
|
Yum! Restaurants Asia Pte. Ltd.
|
Singapore
|
Yum! Restaurants Australia Pty Limited
|
Australia
|
Yum! Restaurants Europe Limited
|
United Kingdom
|
Yum! Restaurants Germany GmbH
|
Germany
|
Yum! Restaurants International (MENAPAK) Co. S.P.C.
|
Bahrain
|
Yum! Restaurants International (Thailand) Co., Ltd.
|
Thailand
|
Yum! Restaurants International Holdings, LLC f/k/a Yum! Restaurants International Holdings, Ltd.
|
Delaware
|
Yum! Restaurants International Limited
|
United Kingdom
|
Yum! Restaurants International Ltd. & Co. Kommanditgesellschaft
|
Germany
|
Yum! Restaurants International Management LLC f/k/a Yum! Restaurants International Management S.a.r.l.
|
Delaware
|
YUM! Restaurants International MENAPAK Consulting FZE.
|
U.A.E.
|
Yum! Restaurants International Russia and CIS LLC
|
Russian Federation
|
Yum! Restaurants International Russia LLC
|
Russian Federation
|
Yum! Restaurants International, Inc.
|
Delaware
|
Yum! Restaurants International, S de RL de CV
|
Mexico
|
Yum! Restaurants Limited f/k/a Valleythorn Limited
|
United Kingdom
|
Yum! Restaurants Marketing Private Limited
|
India
|
Yumsop Pty Limited
|
Australia
|
Description
|
Registration Statement Number
|
Form S-3
|
|
Debt Securities
|
333-188216
|
Form S-8
|
|
Restaurant Deferred Compensation Program
|
333-36877, 333-32050
|
Executive Income Deferral Program
|
333-36955
|
SharePower Stock Option Plan
|
333-36961
|
YUM! Brands 401 (k) Plan
|
333-36893, 333-32048, 333-109300
|
YUM! Brands, Inc. Restaurant General Manager Stock Option Plan
|
333-64547
|
YUM! Brands, Inc. Long-Term Incentive Plan
|
333-32052, 333-109299, 333-170929
|
1.
|
I have reviewed this report on Form 10-K of YUM! Brands, Inc.;
|
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report.
|
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
(c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
(d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
|
|
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
February 21, 2018
|
/s/ Greg Creed
|
|
Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-K of YUM! Brands, Inc.;
|
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report.
|
|
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
(c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
(d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
|
|
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: February 21, 2018
|
/s/ David W. Gibbs
|
|
President and Chief Financial Officer
|
1.
|
the Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 21, 2018
|
/s/ Greg Creed
|
|
Chief Executive Officer
|
1.
|
the Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 21, 2018
|
/s/ David W. Gibbs
|
|
President and Chief Financial Officer
|