[]
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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, 2018
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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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Number of Units
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% of Units International
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Number of Countries and Territories
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% Franchised
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System Sales (in Millions)
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KFC Division
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22,621
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82
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%
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136
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99%
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$
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26,239
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Pizza Hut Division*
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18,431
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59
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%
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111
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99%
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12,212
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Taco Bell Division
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7,072
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7
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%
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27
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93%
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10,786
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YUM*
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48,124
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62
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%
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145
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98%
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$
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49,237
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•
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Building Relevant, Easy and Distinctive Brands
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•
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Developing Unmatched Franchise Operating Capability
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•
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Driving Bold Restaurant Development
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•
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Growing Unrivaled Culture and Talent
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The KFC Division which includes the worldwide operations of the KFC concept
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•
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The Pizza Hut Division which includes the worldwide operations of the Pizza Hut concept
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•
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The Taco Bell Division which includes the worldwide operations of the Taco Bell concept
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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 in the U.S.
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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 regulating the use of certain “hazardous equipment”, 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), 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 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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increasing our exposure to the risk of discontinuance or modification of certain reference rates including LIBOR, which are used to calculate applicable interest rates of our indebtedness and certain derivative instruments that hedge interest rate risk;
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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 primarily 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 72 units.
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The Pizza Hut Division owned land, building or both for 4 units.
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The Taco Bell Division owned land, building or both for 263 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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Quarter
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2018
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2017
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First
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$
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0.36
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$
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0.30
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Second
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0.36
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0.30
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Third
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0.36
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—
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Fourth
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0.36
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0.30
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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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10/1/18 - 10/31/18
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1,249
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$
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89.12
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1,249
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$
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1,691
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11/1/18- 11/30/18
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1,478
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$
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89.44
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1,478
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$
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1,559
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12/1/18 - 12/31/18
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5,032
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$
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90.01
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5,032
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$
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1,106
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Total
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7,759
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7,759
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$
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1,106
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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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12/31/2018
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YUM
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$
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100
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$
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98
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$
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101
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$
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124
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$
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163
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$
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187
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S&P 500
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$
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100
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$
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114
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$
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115
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$
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129
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$
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157
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$
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150
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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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110
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$
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121
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$
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128
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$
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157
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$
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159
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Item 6.
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Selected Financial Data.
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2018
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2017
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2016
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2015
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2014
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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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2,000
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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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Franchise and property revenues
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2,482
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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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Franchise contributions for advertising and other services
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1,206
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—
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—
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—
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—
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Total
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5,688
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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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Refranchising (gain) loss
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(540
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)
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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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)
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Operating Profit
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2,296
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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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Other pension (income) expense
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14
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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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Interest expense, net
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452
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445
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307
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141
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146
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Income from continuing operations before income taxes
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1,839
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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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Income from continuing operations
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1,542
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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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Income from discontinued operations, net of tax
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N/A
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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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Net Income
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1,542
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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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Basic earnings per share from continuing operations
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4.80
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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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Basic earnings per share from discontinued operations
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N/A
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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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Basic earnings per share
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4.80
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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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Diluted earnings per share from continuing operations
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4.69
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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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Diluted earnings per share from discontinued operations
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N/A
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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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Diluted earnings per share
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4.69
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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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Diluted earnings per share from continuing operations excluding Special Items
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3.17
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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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Cash Flow Data
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Provided by operating activities
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$
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1,176
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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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Capital spending
|
234
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|
|
318
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|
|
427
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|
442
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|
508
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|||||
Proceeds from refranchising of restaurants
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825
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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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Repurchase shares of Common Stock
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2,390
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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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|||||
Dividends paid on Common Stock
|
462
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|
416
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|
744
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|
730
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|
669
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Balance Sheet Data
|
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Total assets
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$
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4,130
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|
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$
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5,311
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$
|
5,453
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|
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$
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4,939
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|
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$
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5,073
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Long-term debt
|
9,751
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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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|
|||||
Total debt
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10,072
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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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|
|||||
Other Data
|
|
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||||||||||
Number of units at year end
|
|
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|
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||||||||||
Franchise
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47,268
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|
|
43,603
|
|
|
40,834
|
|
|
39,320
|
|
|
37,959
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|
|||||
Company
|
856
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|
|
1,481
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|
|
2,841
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|
|
3,163
|
|
|
3,279
|
|
|||||
System
|
48,124
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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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|
|||||
System net new unit growth
|
7
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%
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|
3
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%
|
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
|||||
System and same-store sales
|
|
|
|
|
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|
||||||||||
KFC Division System sales
|
$
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26,239
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|
|
$
|
24,515
|
|
|
$
|
23,242
|
|
|
$
|
22,628
|
|
|
$
|
23,458
|
|
System sales growth
|
7
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%
|
|
5
|
%
|
|
3
|
%
|
|
(3
|
)%
|
|
1
|
%
|
|||||
System sales growth, ex FX
|
6
|
%
|
|
6
|
%
|
|
7
|
%
|
|
5
|
%
|
|
4
|
%
|
|||||
Same-store sales growth
|
2
|
%
|
|
3
|
%
|
|
2
|
%
|
|
1
|
%
|
|
1
|
%
|
|||||
Pizza Hut Division System sales
|
$
|
12,212
|
|
|
$
|
12,034
|
|
|
$
|
12,019
|
|
|
$
|
11,999
|
|
|
$
|
12,106
|
|
System sales growth (decline)
|
1
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(1
|
)%
|
|
1
|
%
|
|||||
System sales growth, ex FX
|
1
|
%
|
|
1
|
%
|
|
2
|
%
|
|
3
|
%
|
|
2
|
%
|
|||||
Same-store sales growth (decline)
|
—
|
%
|
|
—
|
%
|
|
(2
|
)%
|
|
—
|
%
|
|
(2
|
)%
|
|||||
Taco Bell Division System sales
|
$
|
10,786
|
|
|
$
|
10,145
|
|
|
$
|
9,660
|
|
|
$
|
9,102
|
|
|
$
|
8,459
|
|
System sales growth
|
6
|
%
|
|
5
|
%
|
|
6
|
%
|
|
8
|
%
|
|
4
|
%
|
|||||
System sales growth, ex FX
|
6
|
%
|
|
5
|
%
|
|
6
|
%
|
|
8
|
%
|
|
4
|
%
|
|||||
Same-store sales growth
|
4
|
%
|
|
4
|
%
|
|
2
|
%
|
|
5
|
%
|
|
3
|
%
|
|||||
Shares outstanding at year end
|
306
|
|
|
332
|
|
|
355
|
|
|
420
|
|
|
434
|
|
|||||
Cash dividends declared per common share
|
$
|
1.44
|
|
|
$
|
0.90
|
|
|
$
|
1.73
|
|
|
$
|
1.74
|
|
|
$
|
1.56
|
|
Market price per share at year end
|
$
|
91.92
|
|
|
$
|
81.61
|
|
|
$
|
63.33
|
|
|
$
|
73.05
|
|
|
$
|
73.14
|
|
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 Relevant, Easy and Distinctive Brands
|
•
|
Developing Unmatched Franchise Operating Capability
|
•
|
Driving Bold Restaurant Development
|
•
|
Growing Unrivaled Culture and Talent
|
•
|
More Franchised. YUM successfully increased franchise restaurant ownership to 98% as of December 31, 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.
|
•
|
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
|
|
+2
|
|
+5
|
|
(2)
|
|
(2)
|
Pizza Hut Division
|
+1
|
|
Even
|
|
+10
|
|
+2
|
|
+2
|
Taco Bell Division
|
+6
|
|
+4
|
|
+3
|
|
+2
|
|
+2
|
Worldwide
|
+5
|
|
+2
|
|
+7
|
|
(17)
|
|
Even
|
•
|
During the year, we opened 1,757 net new units and added 1,282 Telepizza units for 7% net new unit growth.
|
•
|
During the year, we refranchised 660 restaurants, including 364 KFC, 97 Pizza Hut and 199 Taco Bell units, for pre-tax proceeds of $825 million. We recorded net refranchising gains of $540 million in Special Items.
|
•
|
During the year, we repurchased 28.2 million shares totaling $2.4 billion at an average share price of $85.
|
|
% 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)
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
||||||||||||
Company sales
|
$
|
2,000
|
|
|
$
|
3,572
|
|
|
$
|
4,189
|
|
|
(44
|
)
|
|
|
|
(15
|
)
|
|
|
Franchise and property revenues
|
2,482
|
|
|
2,306
|
|
|
2,167
|
|
|
8
|
|
|
|
|
6
|
|
|
|
|||
Franchise contributions for advertising and other services
|
1,206
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|||
Total revenues
|
$
|
5,688
|
|
|
$
|
5,878
|
|
|
$
|
6,356
|
|
|
(3
|
)
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Restaurant profit
|
$
|
366
|
|
|
$
|
618
|
|
|
$
|
700
|
|
|
(41
|
)
|
|
|
|
(12
|
)
|
|
|
Restaurant margin %
|
18.3
|
%
|
|
17.3
|
%
|
|
16.7
|
%
|
|
1.0
|
|
|
ppts.
|
|
0.6
|
|
|
ppts.
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
G&A expenses
|
$
|
895
|
|
|
$
|
999
|
|
|
$
|
1,129
|
|
|
10
|
|
|
|
|
12
|
|
|
|
Franchise and property expenses
|
188
|
|
|
237
|
|
|
201
|
|
|
21
|
|
|
|
|
(18
|
)
|
|
|
|||
Franchise advertising and other services expense
|
1,208
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|||
Refranchising (gain) loss
|
(540
|
)
|
|
(1,083
|
)
|
|
(163
|
)
|
|
(50
|
)
|
|
|
|
NM
|
|
|
|
|||
Other (income) expense
|
7
|
|
|
10
|
|
|
18
|
|
|
NM
|
|
|
|
|
NM
|
|
|
|
|||
Operating Profit
|
$
|
2,296
|
|
|
$
|
2,761
|
|
|
$
|
1,682
|
|
|
(17
|
)
|
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Investment (income) expense, net
|
(9
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|
88
|
|
|
|
|
NM
|
|
|
|
|||
Other pension (income) expense
|
14
|
|
|
47
|
|
|
32
|
|
|
70
|
|
|
|
|
(45
|
)
|
|
|
|||
Interest expense, net
|
452
|
|
|
445
|
|
|
307
|
|
|
(1
|
)
|
|
|
|
(45
|
)
|
|
|
|||
Income tax provision
|
297
|
|
|
934
|
|
|
327
|
|
|
68
|
|
|
|
|
NM
|
|
|
|
|||
Income from continuing operations
|
1,542
|
|
|
1,340
|
|
|
1,018
|
|
|
15
|
|
|
|
|
32
|
|
|
|
|||
Income from discontinued operations, net of tax
|
N/A
|
|
|
N/A
|
|
|
625
|
|
|
NM
|
|
|
|
|
NM
|
|
|
|
|||
Net Income
|
$
|
1,542
|
|
|
$
|
1,340
|
|
|
$
|
1,643
|
|
|
15
|
|
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted EPS from continuing operations(a)
|
$
|
4.69
|
|
|
$
|
3.77
|
|
|
$
|
2.54
|
|
|
24
|
|
|
|
|
48
|
|
|
|
Diluted EPS from discontinued operations(a)
|
N/A
|
|
|
N/A
|
|
|
$
|
1.56
|
|
|
NM
|
|
|
|
|
NM
|
|
|
|
||
Diluted EPS(a)
|
$
|
4.69
|
|
|
$
|
3.77
|
|
|
$
|
4.10
|
|
|
24
|
|
|
|
|
(8
|
)
|
|
|
Effective tax rate - continuing operations
|
16.2%
|
|
41.1%
|
|
24.3%
|
|
24.9
|
|
|
ppts.
|
|
(16.8
|
)
|
|
ppts.
|
(a)
|
See Note 3 for the number of shares used in these calculations.
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
|||||||
Unit Count
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|||||
Franchise(a)
|
47,268
|
|
|
43,603
|
|
|
40,834
|
|
|
8
|
|
|
7
|
|
Company-owned
|
856
|
|
|
1,481
|
|
|
2,841
|
|
|
(42
|
)
|
|
(48
|
)
|
|
48,124
|
|
|
45,084
|
|
|
43,675
|
|
|
7
|
|
|
3
|
|
(a)
|
Includes 1,282 Telepizza units as of December 31, 2018. See description of the Telepizza strategic alliance within this MD&A.
|
|
|
2018
|
|
2017
|
|
2016
|
Same-Store Sales Growth
|
|
2
|
|
2
|
|
1
|
Non-GAAP Items
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
Non-GAAP Items, along with the reconciliation to the most comparable GAAP financial measure, are presented below.
|
|||||||||
|
|
|
|
|
|
|
|||
|
|
2018
|
|
2017
|
|
2016
|
|||
System Sales Growth, reported
|
|
5
|
|
|
4
|
|
|
3
|
|
System Sales Growth, excluding FX
|
|
5
|
|
|
4
|
|
|
5
|
|
System Sales Growth, excluding FX and 53rd week
|
|
N/A
|
|
|
5
|
|
|
4
|
|
Core Operating Profit Growth
|
|
Even
|
|
|
7
|
|
|
11
|
|
Core Operating Profit Growth, excluding 53rd week
|
|
N/A
|
|
|
9
|
|
|
9
|
|
Diluted EPS from Continuing Operations Growth, excluding Special Items
|
|
7
|
|
|
20
|
|
|
7
|
|
Effective Tax Rate excluding Special Items
|
|
20.4
|
%
|
|
18.8
|
%
|
|
26.3
|
%
|
|
|
Year
|
||||||||||
Detail of Special Items
|
|
2018
|
|
2017
|
|
2016
|
||||||
Refranchising gain (loss) (See Note 5)
|
|
$
|
540
|
|
|
$
|
1,083
|
|
|
$
|
163
|
|
YUM's Strategic Transformation Initiatives (See Note 5)
|
|
(8
|
)
|
|
(23
|
)
|
|
(67
|
)
|
|||
Costs associated with Pizza Hut U.S. Transformation Agreement (See Note 5)
|
|
(6
|
)
|
|
(31
|
)
|
|
—
|
|
|||
Costs associated with KFC U.S. Acceleration Agreement (See Note 5)
|
|
(2
|
)
|
|
(17
|
)
|
|
(26
|
)
|
|||
Non-cash credits (charges) associated with share-based compensation (See Note 5)
|
|
3
|
|
|
(18
|
)
|
|
(30
|
)
|
|||
Other Special Items Income (Expense)
|
|
3
|
|
|
7
|
|
|
(5
|
)
|
|||
Special Items Income - Operating Profit
|
|
530
|
|
|
1,001
|
|
|
35
|
|
|||
Special Items - Other Pension Income (Expense) (See Note 5)
|
|
—
|
|
|
(23
|
)
|
|
(26
|
)
|
|||
Special Items Income from Continuing Operations before Income Taxes
|
|
530
|
|
|
978
|
|
|
9
|
|
|||
Tax Benefit (Expense) on Special Items(a)
|
|
(96
|
)
|
|
(256
|
)
|
|
24
|
|
|||
Tax Benefit (Expense) - U.S. Tax Act(b)
|
|
66
|
|
|
(434
|
)
|
|
—
|
|
|||
Special Items Income, net of tax
|
|
$
|
500
|
|
|
$
|
288
|
|
|
$
|
33
|
|
Average diluted shares outstanding
|
|
329
|
|
|
355
|
|
|
400
|
|
|||
Special Items diluted EPS
|
|
$
|
1.52
|
|
|
$
|
0.81
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
||||||
Reconciliation of GAAP Operating Profit to Core Operating Profit and Core Operating Profit, excluding 53rd Week
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Consolidated
|
|
|
|
|
|
|
||||||
GAAP Operating Profit
|
|
$
|
2,296
|
|
|
$
|
2,761
|
|
|
$
|
1,682
|
|
Special Items Income - Operating Profit
|
|
530
|
|
|
1,001
|
|
|
35
|
|
|||
Foreign Currency Impact on Divisional Operating Profit(c)
|
|
1
|
|
|
—
|
|
|
N/A
|
|
|||
Core Operating Profit
|
|
1,765
|
|
|
1,760
|
|
|
1,647
|
|
|||
Impact of 53rd Week
|
|
N/A
|
|
|
N/A
|
|
|
28
|
|
|||
Core Operating Profit, excluding 53rd Week
|
|
$
|
1,765
|
|
|
$
|
1,760
|
|
|
$
|
1,619
|
|
|
|
|
|
|
|
|
||||||
KFC Division
|
|
|
|
|
|
|
||||||
GAAP Operating Profit
|
|
$
|
959
|
|
|
$
|
981
|
|
|
$
|
871
|
|
Foreign Currency Impact on Divisional Operating Profit(c)
|
|
—
|
|
|
4
|
|
|
N/A
|
|
|||
Core Operating Profit
|
|
959
|
|
|
977
|
|
|
871
|
|
|||
Impact of 53rd Week
|
|
N/A
|
|
|
N/A
|
|
|
11
|
|
|||
Core Operating Profit, excluding 53rd Week
|
|
$
|
959
|
|
|
$
|
977
|
|
|
$
|
860
|
|
|
|
|
|
|
|
|
Pizza Hut Division
|
|
|
|
|
|
|
||||||
GAAP Operating Profit
|
|
$
|
348
|
|
|
$
|
341
|
|
|
$
|
367
|
|
Foreign Currency Impact on Divisional Operating Profit(c)
|
|
1
|
|
|
(4
|
)
|
|
N/A
|
|
|||
Core Operating Profit
|
|
347
|
|
|
345
|
|
|
367
|
|
|||
Impact of 53rd Week
|
|
N/A
|
|
|
N/A
|
|
|
5
|
|
|||
Core Operating Profit, excluding 53rd Week
|
|
$
|
347
|
|
|
$
|
345
|
|
|
$
|
362
|
|
|
|
|
|
|
|
|
||||||
Taco Bell Division
|
|
|
|
|
|
|
||||||
GAAP Operating Profit
|
|
$
|
633
|
|
|
$
|
619
|
|
|
$
|
595
|
|
Foreign Currency Impact on Divisional Operating Profit(c)
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|||
Core Operating Profit
|
|
633
|
|
|
619
|
|
|
595
|
|
|||
Impact of 53rd Week
|
|
N/A
|
|
|
N/A
|
|
|
12
|
|
|||
Core Operating Profit, excluding 53rd Week
|
|
$
|
633
|
|
|
$
|
619
|
|
|
$
|
583
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Reconciliation of Diluted EPS from Continuing Operations to Diluted EPS from Continuing Operations, excluding Special Items
|
|
|
|
|
|
|
||||||
Diluted EPS from Continuing Operations
|
|
$
|
4.69
|
|
|
$
|
3.77
|
|
|
$
|
2.54
|
|
Special Items Diluted EPS
|
|
1.52
|
|
|
0.81
|
|
|
0.08
|
|
|||
Diluted EPS from Continuing Operations excluding Special Items
|
|
$
|
3.17
|
|
|
$
|
2.96
|
|
|
$
|
2.46
|
|
|
|
|
|
|
|
|
||||||
Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate, excluding Special Items
|
|
|
|
|
|
|
||||||
GAAP Effective Tax Rate
|
|
16.2
|
%
|
|
41.1
|
%
|
|
24.3
|
%
|
|||
Impact on Tax Rate as a result of Special Items(a)
|
|
(4.2
|
)%
|
|
22.3
|
%
|
|
(2.0
|
)%
|
|||
Effective Tax Rate excluding Special Items(b)
|
|
20.4
|
%
|
|
18.8
|
%
|
|
26.3
|
%
|
|||
|
|
|
|
|
|
|
||||||
Reconciliation of GAAP Company sales to System sales
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Consolidated
|
|
|
|
|
|
|
||||||
GAAP Company sales(d)
|
|
$
|
2,000
|
|
|
$
|
3,572
|
|
|
$
|
4,189
|
|
Franchise sales
|
|
47,237
|
|
|
43,122
|
|
|
40,732
|
|
|||
System sales
|
|
49,237
|
|
|
46,694
|
|
|
44,921
|
|
|||
Foreign Currency Impact on System sales(e)
|
|
186
|
|
|
(90
|
)
|
|
N/A
|
|
|||
System sales, excluding FX
|
|
49,051
|
|
|
46,784
|
|
|
44,921
|
|
|||
Impact of 53rd week
|
|
N/A
|
|
|
N/A
|
|
|
434
|
|
|||
System sales, excluding FX and 53rd Week
|
|
$
|
49,051
|
|
|
$
|
46,784
|
|
|
$
|
44,487
|
|
|
|
|
|
|
|
|
||||||
KFC Division
|
|
|
|
|
|
|
||||||
GAAP Company sales(d)
|
|
$
|
894
|
|
|
$
|
1,928
|
|
|
$
|
2,156
|
|
Franchise sales
|
|
25,345
|
|
|
22,587
|
|
|
21,086
|
|
|||
System sales
|
|
26,239
|
|
|
24,515
|
|
|
23,242
|
|
|||
Foreign Currency Impact on System sales(e)
|
|
142
|
|
|
(28
|
)
|
|
N/A
|
|
|||
System sales, excluding FX
|
|
26,097
|
|
|
24,543
|
|
|
23,242
|
|
|||
Impact of 53rd week
|
|
N/A
|
|
|
N/A
|
|
|
165
|
|
|||
System sales, excluding FX and 53rd Week
|
|
$
|
26,097
|
|
|
$
|
24,543
|
|
|
$
|
23,077
|
|
|
|
|
|
|
|
|
Pizza Hut Division
|
|
|
|
|
|
|
||||||
GAAP Company sales(d)
|
|
$
|
69
|
|
|
$
|
285
|
|
|
$
|
493
|
|
Franchise sales
|
|
12,143
|
|
|
11,749
|
|
|
11,526
|
|
|||
System sales
|
|
12,212
|
|
|
12,034
|
|
|
12,019
|
|
|||
Foreign Currency Impact on System sales(e)
|
|
47
|
|
|
(66
|
)
|
|
N/A
|
|
|||
System sales, excluding FX
|
|
12,165
|
|
|
12,100
|
|
|
12,019
|
|
|||
Impact of 53rd week
|
|
N/A
|
|
|
N/A
|
|
|
113
|
|
|||
System sales, excluding FX and 53rd Week
|
|
$
|
12,165
|
|
|
$
|
12,100
|
|
|
$
|
11,906
|
|
|
|
|
|
|
|
|
||||||
Taco Bell Division
|
|
|
|
|
|
|
||||||
GAAP Company sales(d)
|
|
$
|
1,037
|
|
|
$
|
1,359
|
|
|
$
|
1,540
|
|
Franchise sales
|
|
9,749
|
|
|
8,786
|
|
|
8,120
|
|
|||
System sales
|
|
10,786
|
|
|
10,145
|
|
|
9,660
|
|
|||
Foreign Currency Impact on System sales(e)
|
|
(3
|
)
|
|
4
|
|
|
N/A
|
|
|||
System sales, excluding FX
|
|
10,789
|
|
|
10,141
|
|
|
9,660
|
|
|||
Impact of 53rd week
|
|
N/A
|
|
|
N/A
|
|
|
156
|
|
|||
System sales, excluding FX and 53rd Week
|
|
$
|
10,789
|
|
|
$
|
10,141
|
|
|
$
|
9,504
|
|
|
|
|
|
|
|
|
(a)
|
Tax Benefit (Expense) on Special Items was determined based upon the impact of the nature, as well as the jurisdiction of the respective individual components within Special Items. In 2018, we also recorded a $19 million increase to our Income tax provision for the correction of an error associated with the tax recorded on a prior year divestiture, the effects of which were previously recorded as a Special Item. 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.
|
(b)
|
During the year ended December 31, 2018, we recorded a $35 million decrease related to our provisional tax expense recorded in the fourth quarter of 2017 associated with the Tax Cuts and Jobs Act of 2017 ("Tax Act") that was reported as a Special Item. We also recorded a Special Items tax benefit of $31 million in the year ended December 31, 2018 related to current year U.S. foreign tax credits that became realizable directly as a result of the impact of deemed repatriation tax expense associated with the Tax Act. We recognized $434 million in our 2017 Income tax provision that was reported as a Special Item as a result of the December 22, 2017 enactment of the Tax Act.
|
(c)
|
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.
|
(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.
|
•
|
In Spain and Portugal Telepizza will continue operating the Telepizza brand and will oversee franchisees operating Pizza Hut branded restaurants
|
•
|
In Latin America (excluding Brazil), the Caribbean and Switzerland, Telepizza will progressively convert its existing restaurants to the Pizza Hut brand and oversee franchisees operating Pizza Hut branded restaurants
|
•
|
Telepizza will manage supply chain logistics for the entire master franchise territory and will become an authorized supplier of Pizza Hut branded restaurants
|
•
|
Across the regions covered by the master franchise agreement, Telepizza will target opening at least 1,300 new units over the next ten years and 2,550 units in total over 20 years
|
|
|
2018
|
||||||||||||||||||
Increase (Decrease) vs. Legacy GAAP
|
|
KFC Division
|
|
Pizza Hut Division
|
|
Taco Bell Division
|
|
Unallocated(a)
|
|
Total
|
||||||||||
Amortization of upfront fees
|
|
$
|
40
|
|
|
$
|
16
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
66
|
|
Amortization of franchise incentive payments
|
|
(14
|
)
|
|
(5
|
)
|
|
(1
|
)
|
|
—
|
|
|
(20
|
)
|
|||||
Upfront fee cash received
|
|
(64
|
)
|
|
(15
|
)
|
|
(13
|
)
|
|
—
|
|
|
(92
|
)
|
|||||
Incentive payments made
|
|
1
|
|
|
2
|
|
|
1
|
|
|
18
|
|
|
22
|
|
|||||
Franchise and property revenues
|
|
(37
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
18
|
|
|
(24
|
)
|
|||||
Franchise and property expenses
|
|
1
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
6
|
|
|||||
Refranchising gain
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|||||
Operating Profit
|
|
$
|
(36
|
)
|
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
|
$
|
27
|
|
|
$
|
(14
|
)
|
a)
|
Reflects incentive payments made to or on behalf of franchisees during 2018 that under Legacy GAAP would have been recognized as expense in full in 2018. Due to the size and nature of such payments, we historically would have included such amounts as Special Items and thus in the table above have not allocated their impact to our Divisional results. Such amounts are now being capitalized with related amortization recognized as a reduction of Franchise and property revenues over the period of expected cash flows from the franchise agreements to which the payments relate. Also reflects the recognition as Refranchising gain of deferred franchise fees upon the modification of existing franchise agreements when entering into master franchise agreements.
|
|
KFC Division
|
|
Pizza Hut Division
|
|
Taco Bell Division
|
|
Total
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Company sales
|
$
|
26
|
|
|
$
|
5
|
|
|
$
|
24
|
|
|
$
|
55
|
|
Franchise and property revenues
|
8
|
|
|
6
|
|
|
7
|
|
|
21
|
|
||||
Total revenues
|
$
|
34
|
|
|
$
|
11
|
|
|
$
|
31
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Profit
|
|
|
|
|
|
|
|
||||||||
Franchise and property expenses
|
$
|
8
|
|
|
$
|
6
|
|
|
$
|
7
|
|
|
$
|
21
|
|
Restaurant profit
|
6
|
|
|
1
|
|
|
7
|
|
|
14
|
|
||||
G&A expenses
|
(3
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(7
|
)
|
||||
Operating Profit
|
$
|
11
|
|
|
$
|
5
|
|
|
$
|
12
|
|
|
$
|
28
|
|
|
|
|
|
|
|
|
|
% B/(W)
|
|
% B/(W)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
2018
|
|
2017
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
Reported
|
|
Ex FX
|
|
Reported
|
|
Ex FX
|
|
Ex FX and 53rd Week in 2016
|
||||||||||||||||
System Sales
|
|
$
|
26,239
|
|
|
$
|
24,515
|
|
|
$
|
23,242
|
|
|
7
|
|
|
|
6
|
|
|
|
5
|
|
|
|
6
|
|
|
|
6
|
|
|
Same-Store Sales Growth (Decline)
|
|
|
|
|
|
|
|
2
|
|
|
|
N/A
|
|
|
|
3
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Company sales
|
|
$
|
894
|
|
|
$
|
1,928
|
|
|
$
|
2,156
|
|
|
(54
|
)
|
|
|
(53
|
)
|
|
|
(11
|
)
|
|
|
(12
|
)
|
|
|
(11
|
)
|
|
Franchise and property revenues
|
|
1,294
|
|
|
1,182
|
|
|
1,069
|
|
|
10
|
|
|
|
9
|
|
|
|
11
|
|
|
|
10
|
|
|
|
11
|
|
|
|||
Franchise contributions for advertising and other services
|
|
456
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
||||||||
Total revenues
|
|
$
|
2,644
|
|
|
$
|
3,110
|
|
|
$
|
3,225
|
|
|
(15
|
)
|
|
|
(15
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Restaurant profit
|
|
$
|
119
|
|
|
$
|
289
|
|
|
$
|
317
|
|
|
(59
|
)
|
|
|
(58
|
)
|
|
|
(9
|
)
|
|
|
(10
|
)
|
|
|
(8
|
)
|
|
Restaurant margin %
|
|
13.3
|
%
|
|
15.0
|
%
|
|
14.7
|
%
|
|
(1.7
|
)
|
ppts.
|
|
(1.5
|
)
|
ppts.
|
|
0.3
|
|
ppts.
|
|
0.3
|
|
ppts.
|
|
0.4
|
|
ppts.
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
G&A expenses
|
|
$
|
350
|
|
|
$
|
370
|
|
|
$
|
396
|
|
|
5
|
|
|
|
5
|
|
|
|
7
|
|
|
|
7
|
|
|
|
7
|
|
|
Franchise and property expenses
|
|
107
|
|
|
117
|
|
|
108
|
|
|
8
|
|
|
|
9
|
|
|
|
(8
|
)
|
|
|
(7
|
)
|
|
|
(8
|
)
|
|
|||
Franchise advertising and other services expense
|
|
452
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
||||||||
Operating Profit
|
|
$
|
959
|
|
|
$
|
981
|
|
|
$
|
871
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
13
|
|
|
|
12
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
||||||||
Unit Count
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
||||||
Franchise
|
|
22,297
|
|
|
20,819
|
|
|
19,236
|
|
|
7
|
|
|
8
|
|
|
Company-owned
|
|
324
|
|
|
668
|
|
|
1,407
|
|
|
(51
|
)
|
|
(53
|
)
|
|
Total
|
|
22,621
|
|
|
21,487
|
|
|
20,643
|
|
|
5
|
|
|
4
|
|
|
|
2017
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
2018
|
|||||
Franchise
|
|
20,819
|
|
|
1,576
|
|
|
(462
|
)
|
|
364
|
|
|
22,297
|
|
Company-owned
|
|
668
|
|
|
28
|
|
|
(8
|
)
|
|
(364
|
)
|
|
324
|
|
Total
|
|
21,487
|
|
|
1,604
|
|
|
(470
|
)
|
|
—
|
|
|
22,621
|
|
|
|
2016
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
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
|
|
|
2018 vs. 2017
|
||||||||||||||||||
Income / (Expense)
|
2017
|
|
Store Portfolio Actions
|
|
Other
|
|
FX
|
|
2018
|
||||||||||
Company sales
|
$
|
1,928
|
|
|
$
|
(1,036
|
)
|
|
$
|
17
|
|
|
$
|
(15
|
)
|
|
$
|
894
|
|
Cost of sales
|
(664
|
)
|
|
351
|
|
|
(17
|
)
|
|
6
|
|
|
(324
|
)
|
|||||
Cost of labor
|
(451
|
)
|
|
244
|
|
|
(5
|
)
|
|
2
|
|
|
(210
|
)
|
|||||
Occupancy and other
|
(524
|
)
|
|
283
|
|
|
(4
|
)
|
|
4
|
|
|
(241
|
)
|
|||||
Company restaurant expenses
|
$
|
(1,639
|
)
|
|
$
|
878
|
|
|
$
|
(26
|
)
|
|
$
|
12
|
|
|
$
|
(775
|
)
|
Restaurant profit
|
$
|
289
|
|
|
$
|
(158
|
)
|
|
$
|
(9
|
)
|
|
$
|
(3
|
)
|
|
$
|
119
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% B/(W)
|
|
% B/(W)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
2018
|
|
2017
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
Reported
|
|
Ex FX
|
|
Reported
|
|
Ex FX
|
Ex FX and 53rd Week in 2016
|
|||||||||||||||||
System Sales
|
|
$
|
12,212
|
|
|
$
|
12,034
|
|
|
$
|
12,019
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
2
|
|
|
Same-Store Sales Growth (Decline)
|
|
|
|
|
|
|
|
Even
|
|
|
N/A
|
|
|
|
Even
|
|
|
N/A
|
|
|
|
N/A
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Company sales
|
|
$
|
69
|
|
|
$
|
285
|
|
|
$
|
493
|
|
|
(76
|
)
|
|
|
(76
|
)
|
|
|
(42
|
)
|
|
|
(42
|
)
|
|
|
(41
|
)
|
|
Franchise and property revenues
|
|
598
|
|
|
608
|
|
|
615
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|||
Franchise contributions for advertising and other services
|
|
321
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
||||||||
Total revenues
|
|
$
|
988
|
|
|
$
|
893
|
|
|
$
|
1,108
|
|
|
11
|
|
|
|
10
|
|
|
|
(19
|
)
|
|
|
(19
|
)
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Restaurant profit
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
41
|
|
|
NM
|
|
|
NM
|
|
|
(63
|
)
|
|
|
(63
|
)
|
|
|
(62
|
)
|
|
||
Restaurant margin %
|
|
(0.1
|
)%
|
|
5.3
|
%
|
|
8.3
|
%
|
|
(5.4
|
)
|
ppts.
|
|
(5.3
|
)
|
ppts.
|
|
(3.0
|
)
|
ppts.
|
|
(3.0
|
)
|
ppts.
|
|
(2.9
|
)
|
ppts.
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
G&A expenses
|
|
$
|
197
|
|
|
$
|
211
|
|
|
$
|
242
|
|
|
7
|
|
|
|
7
|
|
|
|
13
|
|
|
|
13
|
|
|
|
12
|
|
|
Franchise and property expenses
|
|
45
|
|
|
68
|
|
|
48
|
|
|
35
|
|
|
|
36
|
|
|
|
(42
|
)
|
|
|
(41
|
)
|
|
|
(41
|
)
|
|
|||
Franchise advertising and other services expense
|
|
328
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
||||||||
Operating Profit
|
|
$
|
348
|
|
|
$
|
341
|
|
|
$
|
367
|
|
|
2
|
|
|
|
2
|
|
|
|
(7
|
)
|
|
|
(6
|
)
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
||||||||
Unit Count
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
||||||
Franchise
|
|
18,369
|
|
|
16,588
|
|
|
15,871
|
|
|
11
|
|
|
5
|
|
|
Company-owned
|
|
62
|
|
|
160
|
|
|
549
|
|
|
(61
|
)
|
|
(71
|
)
|
|
Total
|
|
18,431
|
|
|
16,748
|
|
|
16,420
|
|
|
10
|
|
|
2
|
|
|
|
2017
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
Other(a)
|
|
2018
|
||||||
Franchise
|
|
16,588
|
|
|
1,106
|
|
|
(705
|
)
|
|
97
|
|
|
1,283
|
|
|
18,369
|
|
Company-owned
|
|
160
|
|
|
2
|
|
|
(3
|
)
|
|
(97
|
)
|
|
—
|
|
|
62
|
|
Total
|
|
16,748
|
|
|
1,108
|
|
|
(708
|
)
|
|
—
|
|
|
1,283
|
|
|
18,431
|
|
|
|
2016
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
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
|
|
|
2018 vs. 2017
|
||||||||||||||||||
Income / (Expense)
|
2017
|
|
Store Portfolio Actions
|
|
Other
|
|
FX
|
|
2018
|
||||||||||
Company sales
|
$
|
285
|
|
|
$
|
(218
|
)
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
69
|
|
Cost of sales
|
(83
|
)
|
|
64
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|||||
Cost of labor
|
(94
|
)
|
|
70
|
|
|
(2
|
)
|
|
—
|
|
|
(26
|
)
|
|||||
Occupancy and other
|
(94
|
)
|
|
69
|
|
|
2
|
|
|
(1
|
)
|
|
(24
|
)
|
|||||
Company restaurant expenses
|
$
|
(271
|
)
|
|
$
|
203
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(69
|
)
|
Restaurant profit
|
$
|
14
|
|
|
$
|
(15
|
)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% B/(W)
|
|
% B/(W)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
2018
|
|
2017
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
Reported
|
|
Ex FX
|
|
Reported
|
|
Ex FX
|
|
Ex FX and 53rd Week in 2016
|
||||||||||||||||
System Sales
|
|
$
|
10,786
|
|
|
$
|
10,145
|
|
|
$
|
9,660
|
|
|
6
|
|
|
|
6
|
|
|
|
5
|
|
|
|
5
|
|
|
|
7
|
|
|
Same-Store Sales Growth
|
|
|
|
|
|
|
|
4
|
|
|
|
N/A
|
|
|
|
4
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|||||||
Company sales
|
|
$
|
1,037
|
|
|
$
|
1,359
|
|
|
$
|
1,540
|
|
|
(24
|
)
|
|
|
(24
|
)
|
|
|
(12
|
)
|
|
|
(12
|
)
|
|
|
(10
|
)
|
|
Franchise and property revenues
|
|
590
|
|
|
521
|
|
|
485
|
|
|
13
|
|
|
|
13
|
|
|
|
7
|
|
|
|
7
|
|
|
|
9
|
|
|
|||
Franchise contributions for advertising and other services
|
|
429
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
||||||||
Total revenues
|
|
$
|
2,056
|
|
|
$
|
1,880
|
|
|
$
|
2,025
|
|
|
9
|
|
|
|
9
|
|
|
|
(7
|
)
|
|
|
(7
|
)
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Restaurant profit
|
|
$
|
244
|
|
|
$
|
305
|
|
|
$
|
342
|
|
|
(20
|
)
|
|
|
(20
|
)
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(9
|
)
|
|
Restaurant margin %
|
|
23.5
|
%
|
|
22.4
|
%
|
|
22.2
|
%
|
|
1.1
|
|
ppts.
|
|
1.1
|
|
ppts.
|
|
0.2
|
|
ppts.
|
|
0.2
|
|
ppts.
|
|
0.3
|
|
ppts.
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
G&A expenses
|
|
$
|
177
|
|
|
$
|
188
|
|
|
$
|
211
|
|
|
6
|
|
|
|
6
|
|
|
|
11
|
|
|
|
11
|
|
|
|
10
|
|
|
Franchise and property expenses
|
|
28
|
|
|
22
|
|
|
21
|
|
|
(31
|
)
|
|
|
(31
|
)
|
|
|
(6
|
)
|
|
|
(5
|
)
|
|
|
(6
|
)
|
|
|||
Franchise advertising and other services expense
|
|
428
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
||||||||
Operating Profit
|
|
$
|
633
|
|
|
$
|
619
|
|
|
$
|
595
|
|
|
2
|
|
|
|
2
|
|
|
|
4
|
|
|
|
4
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
||||||||
Unit Count
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
||||||
Franchise
|
|
6,602
|
|
|
6,196
|
|
|
5,727
|
|
|
7
|
|
|
8
|
|
|
Company-owned
|
|
470
|
|
|
653
|
|
|
885
|
|
|
(28
|
)
|
|
(26
|
)
|
|
Total
|
|
7,072
|
|
|
6,849
|
|
|
6,612
|
|
|
3
|
|
|
4
|
|
|
|
2017
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
Other
|
|
2018
|
||||||
Franchise
|
|
6,196
|
|
|
293
|
|
|
(86
|
)
|
|
199
|
|
|
—
|
|
|
6,602
|
|
Company-owned
|
|
653
|
|
|
16
|
|
|
—
|
|
|
(199
|
)
|
|
—
|
|
|
470
|
|
Total
|
|
6,849
|
|
|
309
|
|
|
(86
|
)
|
|
—
|
|
|
—
|
|
|
7,072
|
|
|
|
2016
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
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
|
|
|
2018 vs. 2017
|
||||||||||||||
Income / (Expense)
|
2017
|
|
Store Portfolio Actions
|
|
Other
|
|
2018
|
||||||||
Company sales
|
$
|
1,359
|
|
|
$
|
(363
|
)
|
|
$
|
41
|
|
|
$
|
1,037
|
|
Cost of sales
|
(356
|
)
|
|
96
|
|
|
(1
|
)
|
|
(261
|
)
|
||||
Cost of labor
|
(394
|
)
|
|
103
|
|
|
(8
|
)
|
|
(299
|
)
|
||||
Occupancy and other
|
(304
|
)
|
|
74
|
|
|
(3
|
)
|
|
(233
|
)
|
||||
Company restaurant expense
|
$
|
(1,054
|
)
|
|
$
|
273
|
|
|
$
|
(12
|
)
|
|
$
|
(793
|
)
|
Restaurant profit
|
$
|
305
|
|
|
$
|
(90
|
)
|
|
$
|
29
|
|
|
$
|
244
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% B/(W)
|
||||||||||||
(Expense)/Income
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
||||||||||
Corporate and unallocated G&A
|
|
$
|
(171
|
)
|
|
$
|
(230
|
)
|
|
$
|
(280
|
)
|
|
26
|
|
|
|
18
|
|
|
Unallocated restaurant costs
|
|
3
|
|
|
10
|
|
|
—
|
|
|
(69
|
)
|
|
|
NM
|
|
|
|||
Unallocated Franchise and property revenues
|
|
—
|
|
|
(5
|
)
|
|
(2
|
)
|
|
NM
|
|
|
|
NM
|
|
|
|||
Unallocated Franchise and property expenses
|
|
(8
|
)
|
|
(30
|
)
|
|
(24
|
)
|
|
73
|
|
|
|
(26
|
)
|
|
|||
Refranchising gain (loss) (See Note 5)
|
|
540
|
|
|
1,083
|
|
|
163
|
|
|
(50
|
)
|
|
|
NM
|
|
|
|||
Unallocated Other income (expense)
|
|
(8
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|
NM
|
|
|
|
NM
|
|
|
|||
Investment income (expense), net (See Note 5)
|
|
9
|
|
|
5
|
|
|
2
|
|
|
88
|
|
|
|
NM
|
|
|
|||
Other pension income (expense) (See Note 14)
|
|
(14
|
)
|
|
(47
|
)
|
|
(32
|
)
|
|
70
|
|
|
|
(45
|
)
|
|
|||
Interest expense, net
|
|
(452
|
)
|
|
(445
|
)
|
|
(307
|
)
|
|
(1
|
)
|
|
|
(44
|
)
|
|
|||
Income tax provision (See Note 17)
|
|
(297
|
)
|
|
(934
|
)
|
|
(327
|
)
|
|
68
|
|
|
|
NM
|
|
|
|||
Effective tax rate (See Note 17)
|
|
16.2
|
%
|
|
41.1
|
%
|
|
24.3
|
%
|
|
24.9
|
|
ppts.
|
|
(16.8
|
)
|
ppts.
|
|
|
2016(a)
|
||
Total revenues
|
|
$
|
5,776
|
|
Total income from discontinued operations before income taxes(b)
|
|
571
|
|
|
Income tax (benefit) provision(c)
|
|
(65
|
)
|
|
Income from discontinued operations, net of tax
|
|
625
|
|
(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 for 2016. Such costs primarily related 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.
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025
|
|
2026
|
|
2027
|
|
2028
|
|
2037
|
|
2043
|
|
Total
|
||||||||||||||||||||||||||
Securitization Notes
|
|
$
|
29
|
|
|
$
|
29
|
|
|
$
|
29
|
|
|
$
|
29
|
|
|
$
|
1,281
|
|
|
$
|
16
|
|
|
$
|
16
|
|
|
$
|
921
|
|
|
$
|
6
|
|
|
$
|
572
|
|
|
|
|
|
|
$
|
2,928
|
|
||||
Credit Agreement
|
|
45
|
|
|
51
|
|
|
76
|
|
|
395
|
|
|
20
|
|
|
20
|
|
|
1,836
|
|
|
|
|
|
|
|
|
|
|
|
|
2,443
|
|
||||||||||||||||||
Subsidiary Senior Unsecured Notes
|
|
|
|
|
|
|
|
|
|
|
|
1,050
|
|
|
|
|
1,050
|
|
|
750
|
|
|
|
|
|
|
|
|
2,850
|
|
||||||||||||||||||||||
YUM Senior Unsecured Notes
|
|
250
|
|
|
350
|
|
|
350
|
|
|
|
|
325
|
|
|
|
|
|
|
|
|
|
|
|
|
325
|
|
|
275
|
|
|
1,875
|
|
|||||||||||||||||||
Total
|
|
$
|
324
|
|
|
$
|
430
|
|
|
$
|
455
|
|
|
$
|
424
|
|
|
$
|
1,626
|
|
|
$
|
1,086
|
|
|
$
|
1,852
|
|
|
$
|
1,971
|
|
|
$
|
756
|
|
|
$
|
572
|
|
|
$
|
325
|
|
|
$
|
275
|
|
|
$
|
10,096
|
|
|
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than 5 Years
|
||||||||||
Long-term debt obligations(a)
|
|
$
|
13,477
|
|
|
$
|
773
|
|
|
$
|
1,756
|
|
|
$
|
2,861
|
|
|
$
|
8,087
|
|
Capital leases(b)
|
|
103
|
|
|
10
|
|
|
19
|
|
|
16
|
|
|
58
|
|
|||||
Operating leases(b)
|
|
786
|
|
|
103
|
|
|
167
|
|
|
132
|
|
|
384
|
|
|||||
Purchase obligations(c)
|
|
301
|
|
|
139
|
|
|
149
|
|
|
11
|
|
|
2
|
|
|||||
Benefit plans and other(d)
|
|
220
|
|
|
73
|
|
|
37
|
|
|
34
|
|
|
76
|
|
|||||
Total contractual obligations
|
|
$
|
14,887
|
|
|
$
|
1,098
|
|
|
$
|
2,128
|
|
|
$
|
3,054
|
|
|
$
|
8,607
|
|
(a)
|
Amounts include maturities of debt outstanding as of December 31, 2018 and expected interest payments on those outstanding amounts on a nominal basis. The estimated interest payments related to the variable rate portion of our debt is based on current LIBOR interest rates. See Note 10.
|
(b)
|
These obligations, which are shown on a nominal basis and represent the non cancellable term of the lease, relate primarily to approximately 500 Company-owned restaurants. See Note 11.
|
(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 cancellable without penalty. Purchase obligations relate primarily to marketing, information technology and supply agreements.
|
(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 $43 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 17) and anticipated investments 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
|
|
2018
|
|||||||||||||||
|
|
KFC Division
|
|
Pizza Hut Division
|
|
Taco Bell Division
|
|
Total
|
||||||||
U.S.
|
|
|
|
|
|
|
|
|
||||||||
Company sales
|
|
$
|
72
|
|
|
$
|
37
|
|
|
$
|
1,034
|
|
|
$
|
1,143
|
|
Franchise revenues
|
|
171
|
|
|
284
|
|
|
539
|
|
|
994
|
|
||||
Property revenues
|
|
23
|
|
|
4
|
|
|
27
|
|
|
54
|
|
||||
Franchise contributions for advertising and other services
|
|
9
|
|
|
269
|
|
|
428
|
|
|
706
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
China
|
|
|
|
|
|
|
|
|
||||||||
Franchise revenues
|
|
201
|
|
|
59
|
|
|
—
|
|
|
260
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other
|
|
|
|
|
|
|
|
|
||||||||
Company sales
|
|
822
|
|
|
32
|
|
|
3
|
|
|
857
|
|
||||
Franchise revenues
|
|
825
|
|
|
248
|
|
|
24
|
|
|
1,097
|
|
||||
Property revenues
|
|
74
|
|
|
3
|
|
|
—
|
|
|
77
|
|
||||
Franchise contributions for advertising and other services
|
|
447
|
|
|
52
|
|
|
1
|
|
|
500
|
|
||||
|
|
$
|
2,644
|
|
|
$
|
988
|
|
|
$
|
2,056
|
|
|
$
|
5,688
|
|
|
|
Deferred Franchise Fees
|
||
Balance at January 1, 2018
|
|
$
|
392
|
|
Revenue recognized that was included in unamortized upfront fees received from franchisees at the beginning of the period
|
|
(66
|
)
|
|
Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as revenue during the period
|
|
102
|
|
|
Other(a)
|
|
(14
|
)
|
|
Balance at December 31, 2018
|
|
$
|
414
|
|
(a)
|
Includes impact of foreign currency translation as well as the recognition of deferred franchise fees into Refranchising (gain) loss upon the modification of existing franchise agreements when entering into master franchise agreements.
|
Less than 1 year
|
$
|
60
|
|
|
1 - 2 years
|
55
|
|
|
|
2 - 3 years
|
51
|
|
|
|
3 - 4 years
|
47
|
|
|
|
4 - 5 years
|
42
|
|
|
|
Thereafter
|
159
|
|
|
|
Total
|
$
|
414
|
|
|
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.
|
|
|
2018
|
|
2017
|
||||
Accounts and notes receivable
|
|
$
|
592
|
|
|
$
|
419
|
|
Allowance for doubtful accounts
|
|
(31
|
)
|
|
(19
|
)
|
||
Accounts and notes receivable, net
|
|
$
|
561
|
|
|
$
|
400
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Income from continuing operations
|
|
$
|
1,542
|
|
|
$
|
1,340
|
|
|
$
|
1,018
|
|
Income from discontinued operations
|
|
N/A
|
|
|
N/A
|
|
|
625
|
|
|||
Net Income
|
|
$
|
1,542
|
|
|
$
|
1,340
|
|
|
$
|
1,643
|
|
Weighted-average common shares outstanding (for basic calculation)
|
|
322
|
|
|
347
|
|
|
394
|
|
|||
Effect of dilutive share-based employee compensation
|
|
7
|
|
|
8
|
|
|
6
|
|
|||
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)
|
|
329
|
|
|
355
|
|
|
400
|
|
|||
Basic EPS from continuing operations
|
|
$
|
4.80
|
|
|
$
|
3.86
|
|
|
$
|
2.58
|
|
Basic EPS from discontinued operations
|
|
N/A
|
|
|
N/A
|
|
|
1.59
|
|
|||
Basic EPS
|
|
$
|
4.80
|
|
|
$
|
3.86
|
|
|
$
|
4.17
|
|
Diluted EPS from continuing operations
|
|
$
|
4.69
|
|
|
$
|
3.77
|
|
|
$
|
2.54
|
|
Diluted EPS from discontinued operations
|
|
N/A
|
|
|
N/A
|
|
|
$
|
1.56
|
|
||
Diluted EPS
|
|
$
|
4.69
|
|
|
$
|
3.77
|
|
|
$
|
4.10
|
|
Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation(a)
|
|
2.0
|
|
|
2.3
|
|
|
5.0
|
|
(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)
|
||
Company sales
|
|
$
|
5,667
|
|
Franchise and property revenues
|
|
109
|
|
|
Company restaurant expenses
|
|
(4,766
|
)
|
|
G&A expenses(b)
|
|
(406
|
)
|
|
Franchise and property expenses
|
|
(45
|
)
|
|
Other income (expense)(c)
|
|
(8
|
)
|
|
Refranchising gain
|
|
12
|
|
|
Interest income, net
|
|
8
|
|
|
Income from discontinued operations before income taxes
|
|
571
|
|
|
Income tax benefit(d)
|
|
65
|
|
|
Income from discontinued operations - including noncontrolling interests
|
|
636
|
|
|
Income from discontinued operations - noncontrolling interests
|
|
(11
|
)
|
|
Income from discontinued operations, net of tax
|
|
$
|
625
|
|
|
|
|
(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 for 2016. Such costs primarily relate to transaction advisors, legal and other consulting fees.
|
(c)
|
Includes store closure and impairment expenses and 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
|
|
|
|
|
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
||||||
KFC Division
|
|
$
|
(240
|
)
|
|
$
|
(581
|
)
|
|
$
|
(44
|
)
|
|
|
|
|
|
Pizza Hut Division
|
|
13
|
|
|
(16
|
)
|
|
(48
|
)
|
|
|
|
|
|
|||
Taco Bell Division
|
|
(313
|
)
|
|
(486
|
)
|
|
(71
|
)
|
|
|
|
|
|
|||
Worldwide
|
|
$
|
(540
|
)
|
|
$
|
(1,083
|
)
|
|
$
|
(163
|
)
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET
|
|
|
|
|
|
|
||||||
|
As Reported 12/31/2017
|
|
Adjustments
|
|
|
Balances with Adoption of Topic 606 1/1/2018
|
||||||
ASSETS
|
|
|
|
|
|
|
||||||
Current Assets
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
1,522
|
|
|
$
|
11
|
|
|
|
$
|
1,533
|
|
Accounts and notes receivable, net
|
400
|
|
|
112
|
|
|
|
512
|
|
|||
Prepaid expenses and other current assets
|
384
|
|
|
76
|
|
(a)
|
|
460
|
|
|||
Advertising cooperative assets, restricted
|
201
|
|
|
(201
|
)
|
|
|
—
|
|
|||
Total Current Assets
|
2,507
|
|
|
(2
|
)
|
|
|
2,505
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Property, plant and equipment, net
|
1,594
|
|
|
2
|
|
|
|
1,596
|
|
|||
Goodwill
|
512
|
|
|
—
|
|
|
|
512
|
|
|||
Intangible assets, net
|
214
|
|
|
9
|
|
|
|
223
|
|
|||
Other assets
|
345
|
|
|
118
|
|
|
|
463
|
|
|||
Deferred income taxes
|
139
|
|
|
26
|
|
|
|
165
|
|
|||
Total Assets
|
$
|
5,311
|
|
|
$
|
153
|
|
|
|
$
|
5,464
|
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT
|
|
|
|
|
|
|
||||||
Current Liabilities
|
|
|
|
|
|
|
||||||
Accounts payable and other current liabilities
|
$
|
813
|
|
|
$
|
220
|
|
|
|
$
|
1,033
|
|
Income taxes payable
|
123
|
|
|
—
|
|
|
|
123
|
|
|||
Short-term borrowings
|
375
|
|
|
—
|
|
|
|
375
|
|
|||
Advertising cooperative liabilities
|
201
|
|
|
(201
|
)
|
|
|
—
|
|
|||
Total Current Liabilities
|
1,512
|
|
|
19
|
|
|
|
1,531
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Long-term debt
|
9,429
|
|
|
—
|
|
|
|
9,429
|
|
|||
Other liabilities and deferred credits
|
704
|
|
|
353
|
|
|
|
1,057
|
|
|||
Total Liabilities
|
11,645
|
|
|
372
|
|
|
|
12,017
|
|
|||
|
|
|
|
|
|
|
||||||
Shareholders’ Deficit
|
|
|
|
|
|
|
||||||
Accumulated deficit
|
(6,063
|
)
|
|
(240
|
)
|
|
|
(6,303
|
)
|
|||
Accumulated other comprehensive loss
|
(271
|
)
|
|
21
|
|
|
|
(250
|
)
|
|||
Total Shareholders’ Deficit
|
(6,334
|
)
|
|
(219
|
)
|
|
|
(6,553
|
)
|
|||
Total Liabilities and Shareholders’ Deficit
|
$
|
5,311
|
|
|
$
|
153
|
|
|
|
$
|
5,464
|
|
(a)
|
Includes $58 million of restricted cash related to advertising cooperatives. These balances can only be used to settle obligations of the respective cooperatives.
|
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
||||||
|
Year ended 12/31/2018
|
|||||||||||
Revenues
|
As Reported
|
|
Impact
|
|
|
Balances under Legacy GAAP
|
||||||
Company sales
|
$
|
2,000
|
|
|
$
|
—
|
|
|
|
$
|
2,000
|
|
Franchise and property revenues
|
2,482
|
|
|
43
|
|
|
|
2,525
|
|
|||
Franchise contributions for advertising and other services
|
1,206
|
|
|
(1,206
|
)
|
|
|
—
|
|
|||
Total revenues
|
5,688
|
|
|
(1,163
|
)
|
|
|
4,525
|
|
|||
Costs and Expenses, Net
|
|
|
|
|
|
|
||||||
Company restaurant expenses
|
1,634
|
|
|
—
|
|
|
|
1,634
|
|
|||
General and administrative expenses
|
895
|
|
|
—
|
|
|
|
895
|
|
|||
Franchise and property expenses
|
188
|
|
|
27
|
|
|
|
215
|
|
|||
Franchise advertising and other services expense
|
1,208
|
|
|
(1,208
|
)
|
|
|
—
|
|
|||
Refranchising (gain) loss
|
(540
|
)
|
|
4
|
|
|
|
(536
|
)
|
|||
Other (income) expense
|
7
|
|
|
—
|
|
|
|
7
|
|
|||
Total costs and expenses, net
|
3,392
|
|
|
(1,177
|
)
|
|
|
2,215
|
|
|||
Operating Profit
|
2,296
|
|
|
14
|
|
(a)
|
|
2,310
|
|
|||
Investment (income) expense, net
|
(9
|
)
|
|
—
|
|
|
|
(9
|
)
|
|||
Other pension (income) expense
|
14
|
|
|
—
|
|
|
|
14
|
|
|||
Interest expense, net
|
452
|
|
|
—
|
|
|
|
452
|
|
|||
Income from continuing operations before income taxes
|
1,839
|
|
|
14
|
|
|
|
1,853
|
|
|||
Income tax provision (benefit)
|
297
|
|
|
3
|
|
|
|
300
|
|
|||
Net Income
|
$
|
1,542
|
|
|
$
|
11
|
|
|
|
$
|
1,553
|
|
|
|
|
|
|
|
|
||||||
Basic Earnings Per Common Share
|
$
|
4.80
|
|
|
$
|
0.03
|
|
|
|
$
|
4.83
|
|
|
|
|
|
|
|
|
||||||
Diluted Earnings Per Common Share
|
$
|
4.69
|
|
|
$
|
0.03
|
|
|
|
$
|
4.72
|
|
|
|
|
|
|
|
|
(a)
|
Includes $23 million of franchise incentive payments made to or on behalf of franchisees during 2018 that under Legacy GAAP would have been recognized as expense in full in 2018. Due to the size and nature of such payments, we historically would not have allocated their impact to our Divisional results. Upon the adoption of Topic 606, these payments have been capitalized as assets.
|
CONSOLIDATED BALANCE SHEET
|
|||||||||||
|
As Reported 12/31/2018
|
|
Impact
|
|
Balances under Legacy GAAP 12/31/2018
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Current Assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
292
|
|
|
$
|
(13
|
)
|
|
$
|
279
|
|
Accounts and notes receivable, net
|
561
|
|
|
(120
|
)
|
|
441
|
|
|||
Prepaid expenses and other current assets
|
354
|
|
|
(107
|
)
|
|
247
|
|
|||
Advertising cooperative assets, restricted
|
—
|
|
|
241
|
|
|
241
|
|
|||
Total Current Assets
|
1,207
|
|
|
1
|
|
|
1,208
|
|
|||
|
|
|
|
|
|
||||||
Property, plant and equipment, net
|
1,237
|
|
|
(2
|
)
|
|
1,235
|
|
|||
Goodwill
|
525
|
|
|
—
|
|
|
525
|
|
|||
Intangible assets, net
|
242
|
|
|
(16
|
)
|
|
226
|
|
|||
Other assets
|
724
|
|
|
(127
|
)
|
|
597
|
|
|||
Deferred income taxes
|
195
|
|
|
(25
|
)
|
|
170
|
|
|||
Total Assets
|
$
|
4,130
|
|
|
$
|
(169
|
)
|
|
$
|
3,961
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT
|
|
|
|
|
|
||||||
Current Liabilities
|
|
|
|
|
|
||||||
Accounts payable and other current liabilities
|
$
|
911
|
|
|
$
|
(287
|
)
|
|
$
|
624
|
|
Income taxes payable
|
69
|
|
|
—
|
|
|
69
|
|
|||
Short-term borrowings
|
321
|
|
|
—
|
|
|
321
|
|
|||
Advertising cooperative liabilities
|
—
|
|
|
241
|
|
|
241
|
|
|||
Total Current Liabilities
|
1,301
|
|
|
(46
|
)
|
|
1,255
|
|
|||
|
|
|
|
|
|
||||||
Long-term debt
|
9,751
|
|
|
—
|
|
|
9,751
|
|
|||
Other liabilities and deferred credits
|
1,004
|
|
|
(354
|
)
|
|
650
|
|
|||
Total Liabilities
|
12,056
|
|
|
(400
|
)
|
|
11,656
|
|
|||
|
|
|
|
|
|
||||||
Shareholders’ Deficit
|
|
|
|
|
|
||||||
Accumulated deficit
|
(7,592
|
)
|
|
251
|
|
|
(7,341
|
)
|
|||
Accumulated other comprehensive loss
|
(334
|
)
|
|
(20
|
)
|
|
(354
|
)
|
|||
Total Shareholders’ Deficit
|
(7,926
|
)
|
|
231
|
|
|
(7,695
|
)
|
|||
Total Liabilities and Shareholders’ Deficit
|
$
|
4,130
|
|
|
$
|
(169
|
)
|
|
$
|
3,961
|
|
|
|
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
|
|
|
(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 due to the impact of retrospectively adopting a new accounting standard on Benefit Costs of $32 million.
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash Paid For:
|
|
|
|
|
|
|
||||||
Interest
|
|
$
|
455
|
|
|
$
|
442
|
|
|
$
|
297
|
|
Income taxes
|
|
279
|
|
|
346
|
|
|
314
|
|
|||
Significant Non-Cash Investing and Financing Activities:
|
|
|
|
|
|
|
||||||
Capital lease obligations incurred
|
|
$
|
4
|
|
|
$
|
8
|
|
|
$
|
10
|
|
Capital lease and other debt obligations transferred through refranchising
|
|
(24
|
)
|
|
(35
|
)
|
|
(1
|
)
|
|||
Reconciliation of Cash and cash equivalents to Consolidated Statements of Cash Flows:
|
|
|
|
|
|
|
||||||
Cash and cash equivalents as presented in Consolidated Balance Sheets
|
|
$
|
292
|
|
|
$
|
1,522
|
|
|
$
|
725
|
|
Restricted cash included in Prepaid expenses and other current assets(a)
|
|
151
|
|
|
60
|
|
|
55
|
|
|||
Restricted cash and restricted cash equivalents included in Other assets(b)
|
|
31
|
|
|
17
|
|
|
51
|
|
|||
Cash, Cash Equivalents and Restricted Cash as presented in Consolidated Statements of Cash Flows(c)
|
|
$
|
474
|
|
|
$
|
1,599
|
|
|
$
|
831
|
|
(a)
|
Restricted cash within Prepaid expenses and other current assets reflects the cash related to advertising cooperatives that we consolidate that can only be used to settle obligations of the respective cooperatives and Taco Bell Securitization interest reserves. See Note 10.
|
(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.
|
(c)
|
Upon adoption of Topic 606 we reclassified cash of $11 million and restricted cash of $58 million, respectively, from Advertising cooperative assets, restricted to Cash and cash equivalents and Prepaid expenses and other current assets. These amounts are included in the Beginning of Period balance of Cash, Cash Equivalents, Restricted Cash and Restricted Cash equivalents in our Consolidated Statement of Cash Flows for the year ended December 31, 2018.
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Foreign exchange net (gain) loss and other
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
(6
|
)
|
Loss associated with corporate aircraft(a)
|
|
—
|
|
|
2
|
|
|
9
|
|
|||
Closure and impairment expense
|
|
6
|
|
|
3
|
|
|
15
|
|
|||
Other (income) expense
|
|
$
|
7
|
|
|
$
|
10
|
|
|
$
|
18
|
|
(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
|
|
2018
|
|
2017
|
||||
Income tax receivable
|
|
$
|
36
|
|
|
$
|
175
|
|
Restricted cash(a)
|
|
151
|
|
|
60
|
|
||
Assets held for sale(b)
|
|
24
|
|
|
37
|
|
||
Other prepaid expenses and current assets
|
|
143
|
|
|
112
|
|
||
Prepaid expenses and other current assets
|
|
$
|
354
|
|
|
$
|
384
|
|
Property, Plant and Equipment
|
|
2018
|
|
2017
|
||||
Land
|
|
$
|
422
|
|
|
$
|
452
|
|
Buildings and improvements
|
|
1,349
|
|
|
1,661
|
|
||
Capital leases, primarily buildings
|
|
59
|
|
|
123
|
|
||
Machinery and equipment
|
|
523
|
|
|
700
|
|
||
Property, plant and equipment, gross
|
|
2,353
|
|
|
2,936
|
|
||
Accumulated depreciation and amortization
|
|
(1,116
|
)
|
|
(1,342
|
)
|
||
Property, plant and equipment, net
|
|
$
|
1,237
|
|
|
$
|
1,594
|
|
Other Assets
|
|
2018
|
|
|
2017
|
|
||
Investment in Grubhub common stock(c)
|
|
$
|
214
|
|
|
$
|
—
|
|
Franchise incentives(a)
|
|
141
|
|
|
—
|
|
||
Other
|
|
369
|
|
|
345
|
|
||
Other assets
|
|
$
|
724
|
|
|
$
|
345
|
|
Accounts Payable and Other Current Liabilities
|
|
2018
|
|
2017
|
||||
Accounts payable(a)
|
|
$
|
202
|
|
|
$
|
119
|
|
Accrued compensation and benefits
|
|
206
|
|
|
252
|
|
||
Accrued advertising(a)
|
|
108
|
|
|
9
|
|
||
Accrued taxes, other than income taxes
|
|
48
|
|
|
90
|
|
||
Other current liabilities
|
|
347
|
|
|
343
|
|
||
Accounts payable and other current liabilities
|
|
$
|
911
|
|
|
$
|
813
|
|
(a)
|
Increase from 2017 primarily due to the adoption of Topic 606 beginning with the year ended December 31, 2018. See Note 2.
|
(b)
|
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.
|
(c)
|
Refer to Note 5 for additional discussion regarding our investment in Grubhub.
|
|
|
KFC
|
|
Pizza Hut
|
|
Taco Bell
|
|
Worldwide
|
||||||||
Goodwill, net as of December 31, 2016(a)
|
|
$
|
268
|
|
|
$
|
157
|
|
|
$
|
111
|
|
|
$
|
536
|
|
Disposals and other, net(b)
|
|
(21
|
)
|
|
5
|
|
|
(8
|
)
|
|
(24
|
)
|
||||
Goodwill, net as of December 31, 2017(a)
|
|
247
|
|
|
162
|
|
|
103
|
|
|
512
|
|
||||
Disposal and other, net(b)
|
|
(17
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|
(26
|
)
|
||||
QuikOrder acquisition (See Note 5)
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
||||
Goodwill, net as of December 31, 2018(a)
|
|
$
|
230
|
|
|
$
|
196
|
|
|
$
|
99
|
|
|
$
|
525
|
|
(a)
|
Goodwill, net includes $17 million of accumulated impairment losses for each year presented related to our Pizza Hut segment.
|
(b)
|
Disposals and other, net includes the impact of foreign currency translation on existing balances and goodwill write-offs associated with refranchising.
|
|
|
2018
|
|
2017
|
||||||||||||
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
||||||||
Definite-lived intangible assets
|
|
|
|
|
|
|
|
|
||||||||
Capitalized software costs
|
|
$
|
319
|
|
|
$
|
(156
|
)
|
|
$
|
243
|
|
|
$
|
(139
|
)
|
Reacquired franchise rights
|
|
37
|
|
|
(30
|
)
|
|
60
|
|
|
(42
|
)
|
||||
Franchise contract rights
|
|
99
|
|
|
(79
|
)
|
|
100
|
|
|
(77
|
)
|
||||
Lease tenancy rights
|
|
11
|
|
|
(1
|
)
|
|
32
|
|
|
(6
|
)
|
||||
Other
|
|
38
|
|
|
(27
|
)
|
|
37
|
|
|
(25
|
)
|
||||
|
|
$
|
504
|
|
|
$
|
(293
|
)
|
|
$
|
472
|
|
|
$
|
(289
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
|
||||||||
KFC trademark
|
|
$
|
31
|
|
|
|
|
$
|
31
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
||||
Short-term Borrowings
|
|
|
|
|
||||
Current maturities of long-term debt
|
|
$
|
331
|
|
|
$
|
386
|
|
Less current portion of debt issuance costs and discounts
|
|
(10
|
)
|
|
(11
|
)
|
||
Short-term borrowings
|
|
$
|
321
|
|
|
$
|
375
|
|
|
|
|
|
|
||||
Long-term Debt
|
|
|
|
|
||||
Securitization Notes
|
|
$
|
2,928
|
|
|
$
|
2,271
|
|
Subsidiary Senior Unsecured Notes
|
|
2,850
|
|
|
2,850
|
|
||
Term Loan A Facility
|
|
488
|
|
|
500
|
|
||
Term Loan B Facility
|
|
1,955
|
|
|
1,975
|
|
||
YUM Senior Unsecured Notes
|
|
1,875
|
|
|
2,200
|
|
||
Capital lease obligations (See Note 11)
|
|
71
|
|
|
105
|
|
||
|
|
$
|
10,167
|
|
|
$
|
9,901
|
|
Less debt issuance costs and discounts
|
|
(85
|
)
|
|
(86
|
)
|
||
Less current maturities of long-term debt
|
|
(331
|
)
|
|
(386
|
)
|
||
Long-term debt
|
|
$
|
9,751
|
|
|
$
|
9,429
|
|
|
|
|
|
|
|
Interest Rate
|
|||||
Issuance Date(a)
|
|
Maturity Date
|
|
Principal Amount (in millions)
|
|
Stated
|
|
Effective(b)
|
|||
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:
|
|
||
2019
|
$
|
324
|
|
2020
|
430
|
|
|
2021
|
455
|
|
|
2022
|
424
|
|
|
2023
|
1,626
|
|
|
Thereafter
|
6,837
|
|
|
Total
|
$
|
10,096
|
|
|
|
Commitments
|
|
Lease Receivables
|
||||||||||||
|
|
Capital
|
|
Operating
|
|
Direct
Financing
|
|
Operating
|
||||||||
2019
|
|
$
|
10
|
|
|
$
|
103
|
|
|
$
|
6
|
|
|
$
|
89
|
|
2020
|
|
10
|
|
|
89
|
|
|
5
|
|
|
79
|
|
||||
2021
|
|
9
|
|
|
78
|
|
|
4
|
|
|
74
|
|
||||
2022
|
|
8
|
|
|
71
|
|
|
4
|
|
|
69
|
|
||||
2023
|
|
8
|
|
|
61
|
|
|
3
|
|
|
67
|
|
||||
Thereafter
|
|
58
|
|
|
384
|
|
|
30
|
|
|
638
|
|
||||
|
|
$
|
103
|
|
|
$
|
786
|
|
|
$
|
52
|
|
|
$
|
1,016
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Rental expense
|
|
|
|
|
|
|
||||||
Minimum
|
|
$
|
142
|
|
|
$
|
193
|
|
|
$
|
208
|
|
Contingent
|
|
9
|
|
|
21
|
|
|
26
|
|
|||
|
|
$
|
151
|
|
|
$
|
214
|
|
|
$
|
234
|
|
Rental income
|
|
$
|
131
|
|
|
$
|
86
|
|
|
$
|
73
|
|
|
Gains/(Losses) Recognized in OCI
|
|
(Gains)/Losses Reclassified from AOCI into Net Income
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
(3
|
)
|
|
$
|
4
|
|
|
$
|
(19
|
)
|
|
$
|
2
|
|
Foreign currency contracts
|
22
|
|
|
(56
|
)
|
|
(20
|
)
|
|
56
|
|
||||
Income tax benefit/(expense)
|
1
|
|
|
1
|
|
|
5
|
|
|
(3
|
)
|
|
12/31/2018
|
|
12/31/2017
|
||||||||||||
|
Carrying Value
|
|
Fair Value (Level 2)
|
|
Carrying Value
|
|
Fair Value (Level 2)
|
||||||||
Securitization Notes(a)
|
$
|
2,928
|
|
|
$
|
2,967
|
|
|
$
|
2,271
|
|
|
$
|
2,367
|
|
Subsidiary Senior Unsecured Notes(b)
|
2,850
|
|
|
2,733
|
|
|
2,850
|
|
|
2,983
|
|
||||
Term Loan A Facility(b)
|
488
|
|
|
479
|
|
|
500
|
|
|
503
|
|
||||
Term Loan B Facility(b)
|
1,955
|
|
|
1,915
|
|
|
1,975
|
|
|
1,990
|
|
||||
YUM Senior Unsecured Notes(b)
|
1,875
|
|
|
1,798
|
|
|
2,200
|
|
|
2,277
|
|
||||
|
(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
|
|
2018
|
|
2017
|
|
Consolidated Balance Sheet
|
|||||
Interest Rate Swaps - Asset
|
|
2
|
|
|
$
|
21
|
|
|
$
|
9
|
|
|
Prepaid expenses and other current assets
|
Interest Rate Swaps - Asset
|
|
2
|
|
|
29
|
|
|
40
|
|
|
Other assets
|
||
Interest Rate Swaps - Liability
|
|
2
|
|
|
23
|
|
|
—
|
|
|
Accounts payable and other current liabilities
|
||
Foreign Currency Contracts - Asset
|
|
2
|
|
|
5
|
|
|
5
|
|
|
Prepaid expenses and other current assets
|
||
Foreign Currency Contracts - Liability
|
|
2
|
|
|
24
|
|
|
46
|
|
|
Other Liabilities and deferred credits
|
||
Investment in Grubhub Common Stock
|
|
1
|
|
|
214
|
|
|
—
|
|
|
Other assets
|
||
Other Investments
|
|
1
|
|
|
27
|
|
|
29
|
|
|
Other assets
|
|
|
2018
|
|
2017
|
||||
Change in benefit obligation:
|
|
|
|
|
||||
Benefit obligation at beginning of year
|
|
$
|
1,007
|
|
|
$
|
993
|
|
Service cost
|
|
8
|
|
|
10
|
|
||
Interest cost
|
|
38
|
|
|
41
|
|
||
Plan amendments
|
|
1
|
|
|
2
|
|
||
Curtailments
|
|
—
|
|
|
(2
|
)
|
||
Special termination benefits
|
|
1
|
|
|
2
|
|
||
Benefits paid
|
|
(73
|
)
|
|
(76
|
)
|
||
Settlement payments
|
|
—
|
|
|
(73
|
)
|
||
Actuarial (gain) loss
|
|
(109
|
)
|
|
115
|
|
||
Administrative expense
|
|
—
|
|
|
(5
|
)
|
||
Benefit obligation at end of year
|
|
$
|
873
|
|
|
$
|
1,007
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
$
|
864
|
|
|
$
|
837
|
|
Actual return on plan assets
|
|
(49
|
)
|
|
129
|
|
||
Employer contributions
|
|
13
|
|
|
52
|
|
||
Settlement payments
|
|
—
|
|
|
(73
|
)
|
||
Benefits paid
|
|
(73
|
)
|
|
(76
|
)
|
||
Administrative expenses
|
|
—
|
|
|
(5
|
)
|
||
Fair value of plan assets at end of year
|
|
$
|
755
|
|
|
$
|
864
|
|
Funded status at end of year
|
|
$
|
(118
|
)
|
|
$
|
(143
|
)
|
Amounts recognized in the Consolidated Balance Sheet:
|
||||||||
|
|
2018
|
|
2017
|
||||
Accrued benefit liability - current
|
|
$
|
(5
|
)
|
|
$
|
(8
|
)
|
Accrued benefit liability - non-current
|
|
(113
|
)
|
|
(135
|
)
|
||
|
|
$
|
(118
|
)
|
|
$
|
(143
|
)
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Service cost
|
|
$
|
8
|
|
|
$
|
10
|
|
|
$
|
17
|
|
Interest cost
|
|
38
|
|
|
41
|
|
|
54
|
|
|||
Amortization of prior service cost(a)
|
|
5
|
|
|
6
|
|
|
6
|
|
|||
Expected return on plan assets
|
|
(44
|
)
|
|
(45
|
)
|
|
(65
|
)
|
|||
Amortization of net loss
|
|
16
|
|
|
5
|
|
|
6
|
|
|||
Net periodic benefit cost
|
|
$
|
23
|
|
|
$
|
17
|
|
|
$
|
18
|
|
Additional (gain) loss recognized due to:
Settlement charges(b)
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
32
|
|
Special termination benefits
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
3
|
|
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:
|
||||||||
|
|
2018
|
|
2017
|
||||
Actuarial net loss
|
|
$
|
(101
|
)
|
|
$
|
(134
|
)
|
Prior service cost
|
|
(22
|
)
|
|
(26
|
)
|
||
|
|
$
|
(123
|
)
|
|
$
|
(160
|
)
|
|
|
2018
|
|
2017
|
||||
Level 1:
|
|
|
|
|
||||
Cash
|
|
$
|
3
|
|
|
$
|
3
|
|
Cash Equivalents(a)
|
|
10
|
|
|
12
|
|
||
Fixed Income Securities - U.S. Corporate(b)
|
|
140
|
|
|
177
|
|
||
Equity Securities – U.S. Large cap(b)
|
|
215
|
|
|
257
|
|
||
Equity Securities – U.S. Mid cap(b)
|
|
35
|
|
|
43
|
|
||
Equity Securities – U.S. Small cap(b)
|
|
34
|
|
|
43
|
|
||
Equity Securities – Non-U.S.(b)
|
|
74
|
|
|
87
|
|
||
Level 2:
|
|
|
|
|
||||
Fixed Income Securities – U.S. Corporate(c)
|
|
106
|
|
|
86
|
|
||
Fixed Income Securities – U.S. Government and Government Agencies(d)
|
|
161
|
|
|
177
|
|
||
Fixed Income Securities – Other(d)
|
|
18
|
|
|
35
|
|
||
Total fair value of plan assets(e)
|
|
$
|
796
|
|
|
$
|
920
|
|
(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)
|
2018 and 2017 exclude net unsettled trade payables of $41 million and $56 million, respectively.
|
Year ended:
|
|
|
||
2019
|
|
$
|
39
|
|
2020
|
|
40
|
|
|
2021
|
|
43
|
|
|
2022
|
|
45
|
|
|
2023
|
|
48
|
|
|
2024 - 2028
|
|
269
|
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Risk-free interest rate
|
|
2.5
|
%
|
|
1.9
|
%
|
|
1.4
|
%
|
Expected term (years)
|
|
6.5 years
|
|
|
6.4 years
|
|
|
6.4 years
|
|
Expected volatility
|
|
22.0
|
%
|
|
22.9
|
%
|
|
27.0
|
%
|
Expected dividend yield
|
|
1.8
|
%
|
|
1.8
|
%
|
|
2.6
|
%
|
|
|
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
|
|
18,285
|
|
|
|
|
$
|
44.85
|
|
|
|
|
|
|||
Granted
|
|
2,580
|
|
|
|
|
78.35
|
|
|
|
|
|
||||
Exercised
|
|
(3,832
|
)
|
|
|
|
34.05
|
|
|
|
|
|
||||
Forfeited or expired
|
|
(842
|
)
|
|
|
|
71.72
|
|
|
|
|
|
||||
Outstanding at the end of the year
|
|
16,191
|
|
(a)
|
|
|
51.84
|
|
|
5.50
|
|
|
$
|
626
|
|
|
Exercisable at the end of the year
|
|
10,297
|
|
|
|
|
$
|
43.23
|
|
|
4.02
|
|
|
$
|
501
|
|
(a)
|
Outstanding awards include 753 options and 15,438 SARs with weighted average exercise prices of $42.40 and $52.30, respectively. Outstanding awards represent YUM awards held by employees of both YUM and Yum China.
|
|
|
2018
|
|
2017
|
|
2016
|
|
||||||
Options and SARs
|
|
$
|
37
|
|
|
$
|
30
|
|
|
$
|
38
|
|
|
Restricted Stock Units
|
|
6
|
|
|
26
|
|
|
38
|
|
|
|||
Performance Share Units
|
|
7
|
|
|
9
|
|
|
4
|
|
|
|||
Total Share-based Compensation Expense
|
|
$
|
50
|
|
(a)
|
$
|
65
|
|
(a)
|
$
|
80
|
|
(b)
|
Deferred Tax Benefit recognized
|
|
$
|
9
|
|
|
$
|
22
|
|
(c)
|
$
|
26
|
|
(c)
|
|
|
|
|
|
|
|
|
||||||
EID compensation expense not share-based
|
|
$
|
(2
|
)
|
|
$
|
12
|
|
|
$
|
5
|
|
|
(a)
|
Includes $3 million of appreciation and $18 million of depreciation in the market price of Yum China's stock in 2018 and 2017, respectively. See Note 5.
|
(b)
|
Includes $30 million due to modifications of awards in connection with the Separation that was not allocated to any of our operating segments for performance purposes. See Note 5.
|
|
|
Shares Repurchased
(thousands)
|
|
|
Dollar Value of Shares
Repurchased
|
|
|||||||||||||||||||||
Authorization Date
|
|
2018
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|||
August 2018
|
|
10,003
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
894
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
November 2017
|
|
18,240
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|||
November 2016
|
|
—
|
|
|
|
26,561
|
|
|
|
1,337
|
|
|
|
—
|
|
|
|
1,915
|
|
|
|
85
|
|
|
|||
May 2016
|
|
—
|
|
|
|
—
|
|
|
|
50,435
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,200
|
|
|
|||
March 2016
|
|
—
|
|
|
|
—
|
|
|
|
2,823
|
|
|
|
—
|
|
|
|
—
|
|
|
|
229
|
|
|
|||
December 2015
|
|
—
|
|
|
|
—
|
|
|
|
13,368
|
|
|
|
—
|
|
|
|
—
|
|
|
|
933
|
|
|
|||
Total
|
|
28,243
|
|
(a)
|
|
26,561
|
|
(b)
|
|
67,963
|
|
(b)
|
|
$
|
2,394
|
|
(a)
|
|
$
|
1,915
|
|
(b)
|
|
$
|
5,447
|
|
(b)
|
(a)
|
Includes the effect of $5 million in share repurchases (0.1 million shares) with trade dates on, or prior to, December 31, 2018 but settlement dates subsequent to December 31, 2018.
|
(b)
|
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, 2016, net of tax
|
|
$
|
(336
|
)
|
|
$
|
(127
|
)
|
|
$
|
5
|
|
|
$
|
(458
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
OCI, net of tax
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
162
|
|
|
21
|
|
|
4
|
|
|
187
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2017, net of tax
|
|
$
|
(174
|
)
|
|
$
|
(106
|
)
|
|
$
|
9
|
|
|
$
|
(271
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Adoption of accounting standards
|
|
21
|
|
(d)
|
(17
|
)
|
(e)
|
(2
|
)
|
(e)
|
2
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OCI, net of tax
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Gains (losses) arising during the year classified into AOCI, net of tax
|
|
(88
|
)
|
|
24
|
|
|
20
|
|
|
(44
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
(Gains) losses reclassified from AOCI, net of tax
|
|
(4
|
)
|
|
17
|
|
|
(34
|
)
|
|
(21
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(92
|
)
|
|
41
|
|
|
(14
|
)
|
|
(65
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2018, net of tax
|
|
$
|
(245
|
)
|
|
$
|
(82
|
)
|
|
$
|
(7
|
)
|
|
$
|
(334
|
)
|
|
|
|
|
|
|
|
|
|
(a)
|
Amounts reclassified from AOCI are due to substantially complete liquidations of foreign entities related to the KFC and Pizza Hut Brazil refranchising transactions during 2018 and KFC Turkey, Pizza Hut Turkey, Pizza Hut Thailand and Pizza Hut Korea refranchising transactions during 2017.
|
(b)
|
Amounts reclassified from AOCI for pension and post-retirement benefit plan losses during 2018 include amortization of net losses of $17 million, amortization of prior service cost of $5 million and related income tax benefit of $5 million. 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. See Note 14.
|
(c)
|
See Note 12 for details on amounts reclassified from AOCI.
|
(d)
|
Represents the impact of foreign currency translation from the adoption of Topic 606. See Notes 2 and 5.
|
(e)
|
During the quarter ended March 31, 2018, we adopted a standard that allows for the reclassification from AOCI to Accumulated deficit for stranded tax effects resulting from the Tax Act. See Note 2.
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
U.S.
|
|
$
|
726
|
|
|
$
|
662
|
|
|
$
|
366
|
|
Foreign
|
|
1,113
|
|
|
1,612
|
|
|
979
|
|
|||
|
|
$
|
1,839
|
|
|
$
|
2,274
|
|
|
$
|
1,345
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
Federal
|
|
$
|
102
|
|
|
$
|
(2
|
)
|
|
$
|
126
|
|
|
|
Foreign
|
|
181
|
|
|
290
|
|
|
160
|
|
|||
|
|
State
|
|
25
|
|
|
12
|
|
|
13
|
|
|||
|
|
|
|
$
|
308
|
|
|
$
|
300
|
|
|
$
|
299
|
|
|
|
|
|
|
|
|
|
|
||||||
Deferred:
|
|
Federal
|
|
$
|
(24
|
)
|
|
$
|
603
|
|
|
$
|
19
|
|
|
|
Foreign
|
|
5
|
|
|
19
|
|
|
3
|
|
|||
|
|
State
|
|
8
|
|
|
12
|
|
|
6
|
|
|||
|
|
|
|
$
|
(11
|
)
|
|
$
|
634
|
|
|
$
|
28
|
|
|
|
|
|
$
|
297
|
|
|
$
|
934
|
|
|
$
|
327
|
|
|
|
2018
|
|
2017
|
|
2016
|
|||
U.S. federal statutory rate
|
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income tax, net of federal tax
|
|
1.0
|
|
|
0.5
|
|
|
1.1
|
|
Statutory rate differential attributable to foreign operations
|
|
(12.3
|
)
|
|
(9.3
|
)
|
|
(10.5
|
)
|
Adjustments to reserves and prior years
|
|
2.8
|
|
|
0.5
|
|
|
(0.8
|
)
|
Share-based compensation
|
|
(2.5
|
)
|
|
(5.1
|
)
|
|
—
|
|
Change in valuation allowances
|
|
8.5
|
|
|
1.5
|
|
|
(0.2
|
)
|
Other, net
|
|
(0.4
|
)
|
|
(1.1
|
)
|
|
(0.3
|
)
|
Tax Act Enactment
|
|
(1.9
|
)
|
|
19.1
|
|
|
—
|
|
Effective income tax rate
|
|
16.2
|
%
|
|
41.1
|
%
|
|
24.3
|
%
|
|
|
2018
|
|
2017
|
||||
Operating losses
|
|
$
|
180
|
|
|
$
|
216
|
|
Capital losses
|
|
3
|
|
|
4
|
|
||
Tax credit carryforwards
|
|
266
|
|
|
311
|
|
||
Employee benefits
|
|
72
|
|
|
94
|
|
||
Share-based compensation
|
|
62
|
|
|
58
|
|
||
Self-insured casualty claims
|
|
7
|
|
|
7
|
|
||
Lease-related liabilities
|
|
43
|
|
|
51
|
|
||
Various liabilities
|
|
43
|
|
|
51
|
|
||
Property, plant and equipment
|
|
19
|
|
|
24
|
|
||
Deferred income and other
|
|
53
|
|
|
31
|
|
||
Gross deferred tax assets
|
|
748
|
|
|
847
|
|
||
Deferred tax asset valuation allowances
|
|
(454
|
)
|
|
(421
|
)
|
||
Net deferred tax assets
|
|
$
|
294
|
|
|
$
|
426
|
|
Intangible assets, including goodwill
|
|
$
|
(42
|
)
|
|
$
|
(69
|
)
|
Property, plant and equipment
|
|
(33
|
)
|
|
(18
|
)
|
||
Deemed repatriation tax
|
|
—
|
|
|
(170
|
)
|
||
Other
|
|
(31
|
)
|
|
(36
|
)
|
||
Gross deferred tax liabilities
|
|
$
|
(106
|
)
|
|
$
|
(293
|
)
|
Net deferred tax assets (liabilities)
|
|
$
|
188
|
|
|
$
|
133
|
|
Reported in Consolidated Balance Sheets as:
|
|
|
|
|
||||
Deferred income taxes
|
|
$
|
195
|
|
|
$
|
139
|
|
Other liabilities and deferred credits
|
|
(7
|
)
|
|
(6
|
)
|
||
|
|
$
|
188
|
|
|
$
|
133
|
|
|
|
Year of Expiration
|
|
|
||||||||||||||||
|
|
2019
|
|
2020-2023
|
|
2024-2037
|
|
Indefinitely
|
|
Total
|
||||||||||
Foreign
|
|
$
|
2
|
|
|
$
|
22
|
|
|
$
|
46
|
|
|
$
|
346
|
|
|
$
|
416
|
|
U.S. state
|
|
—
|
|
|
78
|
|
|
941
|
|
|
—
|
|
|
1,019
|
|
|||||
U.S. federal
|
|
—
|
|
|
49
|
|
|
207
|
|
|
—
|
|
|
256
|
|
|||||
|
|
$
|
2
|
|
|
$
|
149
|
|
|
$
|
1,194
|
|
|
$
|
346
|
|
|
$
|
1,691
|
|
|
|
2018
|
|
2017
|
||||
Beginning of Year
|
|
$
|
100
|
|
|
$
|
91
|
|
Additions on tax positions - current year
|
|
19
|
|
|
3
|
|
||
Additions for tax positions - prior years
|
|
—
|
|
|
8
|
|
||
Reductions for tax positions - prior years
|
|
(5
|
)
|
|
—
|
|
||
Reductions for settlements
|
|
—
|
|
|
(1
|
)
|
||
Reductions due to statute expiration
|
|
(1
|
)
|
|
(1
|
)
|
||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
||
End of Year
|
|
$
|
113
|
|
|
$
|
100
|
|
|
|
Revenues
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
KFC Division(a)
|
|
$
|
2,644
|
|
|
$
|
3,110
|
|
|
$
|
3,225
|
|
Pizza Hut Division(a)
|
|
988
|
|
|
893
|
|
|
1,108
|
|
|||
Taco Bell Division(a)
|
|
2,056
|
|
|
1,880
|
|
|
2,025
|
|
|||
Unallocated(b)(f)
|
|
—
|
|
|
(5
|
)
|
|
(2
|
)
|
|||
|
|
$
|
5,688
|
|
|
$
|
5,878
|
|
|
$
|
6,356
|
|
|
|
Operating Profit; Interest Expense, Net; and
Income Before Income Taxes
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
KFC Division
|
|
$
|
959
|
|
|
$
|
981
|
|
|
$
|
871
|
|
Pizza Hut Division
|
|
348
|
|
|
341
|
|
|
367
|
|
|||
Taco Bell Division
|
|
633
|
|
|
619
|
|
|
595
|
|
|||
Corporate and unallocated G&A expenses(b)(g)
|
|
(171
|
)
|
|
(230
|
)
|
|
(280
|
)
|
|||
Unallocated restaurant costs(b)(i)
|
|
3
|
|
|
10
|
|
|
—
|
|
|||
Unallocated Franchise and property revenues(b)(f)
|
|
—
|
|
|
(5
|
)
|
|
(2
|
)
|
|||
Unallocated Franchise and property expenses(b)(f)
|
|
(8
|
)
|
|
(30
|
)
|
|
(24
|
)
|
|||
Unallocated Refranchising gain (loss)(b)
|
|
540
|
|
|
1,083
|
|
|
163
|
|
|||
Unallocated Other income (expense)(b)(h)
|
|
(8
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|||
Operating Profit
|
|
2,296
|
|
|
2,761
|
|
|
1,682
|
|
|||
Investment income (expense), net(b)
|
|
9
|
|
|
5
|
|
|
2
|
|
|||
Other pension income (expense)(b)(j)
|
|
(14
|
)
|
|
(47
|
)
|
|
(32
|
)
|
|||
Interest expense, net(b)
|
|
(452
|
)
|
|
(445
|
)
|
|
(307
|
)
|
|||
Income from continuing operations before income taxes
|
|
$
|
1,839
|
|
|
$
|
2,274
|
|
|
$
|
1,345
|
|
|
|
Depreciation and Amortization
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
KFC Division
|
|
$
|
58
|
|
|
$
|
138
|
|
|
$
|
172
|
|
Pizza Hut Division
|
|
10
|
|
|
26
|
|
|
36
|
|
|||
Taco Bell Division
|
|
61
|
|
|
82
|
|
|
90
|
|
|||
Corporate
|
|
8
|
|
|
7
|
|
|
12
|
|
|||
|
|
$
|
137
|
|
|
$
|
253
|
|
|
$
|
310
|
|
|
|
Capital Spending
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
KFC Division
|
|
$
|
105
|
|
|
$
|
176
|
|
|
$
|
216
|
|
Pizza Hut Division
|
|
38
|
|
|
42
|
|
|
69
|
|
|||
Taco Bell Division
|
|
85
|
|
|
95
|
|
|
132
|
|
|||
Corporate
|
|
6
|
|
|
5
|
|
|
10
|
|
|||
|
|
$
|
234
|
|
|
$
|
318
|
|
|
$
|
427
|
|
|
|
Identifiable Assets(e)
|
||||||
|
|
2018
|
|
2017
|
||||
KFC Division
|
|
$
|
1,481
|
|
|
$
|
1,791
|
|
Pizza Hut Division
|
|
701
|
|
|
628
|
|
||
Taco Bell Division
|
|
1,074
|
|
|
1,086
|
|
||
Corporate(c)
|
|
874
|
|
|
1,806
|
|
||
|
|
$
|
4,130
|
|
|
$
|
5,311
|
|
|
|
Long-Lived Assets(d)
|
||||||
|
|
2018
|
|
2017
|
||||
KFC Division
|
|
$
|
868
|
|
|
$
|
1,200
|
|
Pizza Hut Division
|
|
384
|
|
|
311
|
|
||
Taco Bell Division
|
|
720
|
|
|
778
|
|
||
Corporate
|
|
32
|
|
|
31
|
|
||
|
|
$
|
2,004
|
|
|
$
|
2,320
|
|
(a)
|
U.S. revenues included in the combined KFC, Pizza Hut and Taco Bell Divisions totaled $2.9 billion in 2018, $2.8 billion in 2017 and $3.1 billion in 2016.
|
(e)
|
U.S. identifiable assets included in the combined Corporate and KFC, Pizza Hut and Taco Bell Divisions totaled $2.0 billion and $3.0 billion in 2018 and 2017, 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 2018 include costs related to YUM's Strategic Transformation Initiatives of $8 million, partially offset by non-cash credits associated with modifications of share-based compensation awards of $3 million. 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. See Note 5.
|
(h)
|
Amounts include losses associated with the sale of corporate aircraft related to YUM’s Strategic Transformation Initiatives of $2 million in 2017. See Note 7.
|
(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. See Note 5.
|
|
|
Beginning Balance
|
|
Expense
|
|
Payments
|
|
Ending Balance
|
||||||
2018 Activity
|
|
$
|
84
|
|
|
11
|
|
|
(29
|
)
|
|
$
|
66
|
|
2017 Activity
|
|
$
|
98
|
|
|
27
|
|
|
(41
|
)
|
|
$
|
84
|
|
|
|
2018
|
||||||||||||||||||
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company sales
|
|
$
|
512
|
|
|
$
|
512
|
|
|
$
|
499
|
|
|
$
|
477
|
|
|
$
|
2,000
|
|
Franchise and property revenues
|
|
584
|
|
|
584
|
|
|
605
|
|
|
709
|
|
|
2,482
|
|
|||||
Franchise contributions for advertising and other services
|
|
275
|
|
|
272
|
|
|
287
|
|
|
372
|
|
|
1,206
|
|
|||||
Total revenues
|
|
1,371
|
|
|
1,368
|
|
|
1,391
|
|
|
1,558
|
|
|
5,688
|
|
|||||
Restaurant profit
|
|
74
|
|
|
91
|
|
|
100
|
|
|
101
|
|
|
366
|
|
|||||
Operating Profit(a)
|
|
553
|
|
|
449
|
|
|
553
|
|
|
741
|
|
|
2,296
|
|
|||||
Net Income
|
|
433
|
|
|
321
|
|
|
454
|
|
|
334
|
|
|
1,542
|
|
|||||
Basic earnings per common share from continuing operations
|
|
1.30
|
|
|
0.99
|
|
|
1.43
|
|
|
1.07
|
|
|
4.80
|
|
|||||
Diluted earnings per common share from continuing operations
|
|
1.27
|
|
|
0.97
|
|
|
1.40
|
|
|
1.04
|
|
|
4.69
|
|
|||||
Dividends declared per common share
|
|
0.36
|
|
|
0.36
|
|
|
0.36
|
|
|
0.36
|
|
|
1.44
|
|
|
|
2017
|
||||||||||||||||||
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company sales
|
|
$
|
902
|
|
|
$
|
909
|
|
|
$
|
871
|
|
|
$
|
890
|
|
|
$
|
3,572
|
|
Franchise and property revenues
|
|
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(b)
|
|
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
|
|
(a)
|
Includes net gains from refranchising initiatives of $156 million, $29 million, $100 million and $255 million in the first, second, third and fourth quarters, respectively.
|
(b)
|
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.
|
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 20, 2019
|
|
YUM! BRANDS, INC.
|
By:
|
/s/ Greg Creed
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Greg Creed
|
|
Chief Executive Officer
|
|
February 20, 2019
|
Greg Creed
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
/s/ David W. Gibbs
|
|
President, Chief Operating Officer and Chief Financial Officer
|
|
February 20, 2019
|
David W. Gibbs
|
|
(principal financial officer)
|
|
|
|
|
|
|
|
/s/ David E. Russell
|
|
Senior Vice President, Finance and Corporate Controller
|
|
February 20, 2019
|
David E. Russell
|
|
(principal accounting officer)
|
|
|
|
|
|
|
|
/s/ Paget L. Alves
|
|
Director
|
|
February 20, 2019
|
Paget L. Alves
|
|
|
|
|
|
|
|
|
|
/s/ Michael J. Cavanagh
|
|
Director
|
|
February 20, 2019
|
Michael J. Cavanagh
|
|
|
|
|
|
|
|
|
|
/s/ Christopher M. Connor
|
|
Director
|
|
February 20, 2019
|
Christopher M. Connor
|
|
|
|
|
|
|
|
|
|
/s/ Brian C. Cornell
|
|
Director
|
|
February 20, 2019
|
Brian C. Cornell
|
|
|
|
|
|
|
|
|
|
/s/ Tanya L. Domier
|
|
Director
|
|
February 20, 2019
|
Tanya L. Domier
|
|
|
|
|
|
|
|
|
|
/s/ Mirian M. Graddick-Weir
|
|
Director
|
|
February 20, 2019
|
Mirian M. Graddick-Weir
|
|
|
|
|
|
|
|
|
|
/s/ Thomas C. Nelson
|
|
Director
|
|
February 20, 2019
|
Thomas C. Nelson
|
|
|
|
|
|
|
|
|
|
/s/ P. Justin Skala
|
|
Director
|
|
February 20, 2019
|
P. Justin Skala
|
|
|
|
|
|
|
|
|
|
/s/ Elane B. Stock
|
|
Director
|
|
February 20, 2019
|
Elane B. Stock
|
|
|
|
|
|
|
|
|
|
/s/ Robert D. Walter
|
|
Director
|
|
February 20, 2019
|
Robert D. Walter
|
|
|
|
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description of Exhibits
|
|||
|
|
|
|||
2.1
|
|
||||
|
|
|
|||
3.1
|
|
||||
|
|
|
|||
3.2
|
|
||||
|
|
|
|||
4.1
|
|
||||
|
|
|
|
||
|
|
(i)
|
|||
|
|
|
|
||
|
|
(ii)
|
|||
|
|
|
|||
|
|
(iii)
|
|||
|
|
|
|
||
|
|
(iv)
|
|||
|
|
|
|
||
|
|
(v)
|
|||
|
|
|
|
||
|
|
(vi)
|
|||
|
|
|
|
|
|
10.1
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description of Exhibits
|
||
|
|
|
||
10.1.1
|
|
|||
|
|
|
||
10.1.2
|
|
|||
|
|
|
||
10.1.3
|
|
|||
|
|
|
||
10.2†
|
|
|||
|
|
|
||
10.2.1†
|
|
|||
|
|
|
||
10.3†
|
|
|||
|
|
|
||
10.4†
|
|
|||
|
|
|
||
10.4.1†
|
|
|||
|
|
|
||
10.5†
|
|
|||
|
|
|
||
10.5.1†
|
|
|||
|
|
|
||
10.6†
|
|
|||
|
|
|
||
10.7†
|
|
|||
|
|
|
||
10.8†
|
|
|||
|
|
|
|
|
|
|
|
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
|
|
|||
|
|
|
||
10.22.1
|
|
|||
|
|
|
||
10.22.2
|
|
|||
|
|
|
||
10.22.3
|
|
|||
|
|
|
||
10.22.4
|
|
|||
|
|
|
||
10.24
|
|
|||
|
|
|
||
10.25
|
|
|||
|
|
|
||
10.25.1
|
|
|||
|
|
|
||
10.25.2
|
|
|||
|
|
|
||
10.26
|
|
|||
|
|
|
||
10.27
|
|
|||
|
|
|
||
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.
|
By:
|
/s/ Larry Gathof
|
By:
|
/s/ Antony Bausa
|
Name:
|
Gregory L. McFarland
|
Title:
|
Senior Vice President
|
By:
|
/s/ William L. Gathof
|
By:
|
/s/ William L. Gathof
|
By:
|
/s/ William L. Gathof
|
By:
|
/s/ William L. Gathof
|
By:
|
/s/ William L. Gathof
|
By:
|
/s/ Elizabeth Williams
|
|
Exhibit 21.1
|
SUBSIDIARIES OF YUM! BRANDS, INC.
|
|
AS OF DECEMBER 31, 2018
|
|
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.
|
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
|
Australia
|
A.C.N. 108 123 502 Pty Limited
|
Australia
|
ABR Insurance Company
|
Vermont
|
Ashton Fried Chicken Pty. Limited
|
Australia
|
Cyprus Caramel Restaurants Limited
|
Cyprus
|
Egg Shell Holdings LLC
|
Delaware
|
Finger Licken Good Franchising LLC
|
Delaware
|
Finger Lickin' Chicken Limited
|
United Kingdom
|
GCTB, LLC
|
Virginia
|
Gloucester Properties Pty. Ltd.
|
Australia
|
IPDEV Co., LLC
|
Delaware
|
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
|
Delaware
|
Kentucky Fried Chicken Limited
|
United Kingdom
|
Kentucky Fried Chicken Pty. Ltd.
|
Australia
|
KFC (Pty) Ltd
|
South Africa
|
KFC Advertising, Ltd.
|
United Kingdom
|
KFC APAC B.V. f/k/a KFC Mexico B.V.
|
Netherlands
|
KFC Asia LLC
|
Delaware
|
KFC Asia S.à r.l. f/k/a TB Asia Holdings S.à r.l.
|
Luxembourg
|
KFC Brasil Publicidade e Propaganda Ltda
|
Brazil
|
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
|
Delaware
|
KFC International Holdings I LLC
|
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 Netherlands B.V.
|
Netherlands
|
KFC North America S.à r.l.
|
Luxembourg
|
KFC Operations S.à r.l. f/k/a Yum! Finance Holdings IV S.a.r.l
|
Luxembourg
|
KFC Pacific Holdings Ltd
|
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
|
Malta
|
KFC US, LLC
|
Delaware
|
KFC YFI Holdco S.à r.l.
|
Luxembourg
|
KFC Yum! Franchise I LP
|
Canada (Alberta)
|
KFC Yum! Franchise III
|
Australia
|
Multibranding Pty. Ltd.
|
Australia
|
National Systems, LLC
|
Delaware
|
Newcastle Fried Chicken Pty. Ltd.
|
Australia
|
Northside Fried Chicken Pty Limited
|
Australia
|
Novo BL SAS
|
France
|
Novo Re IMMO SAS
|
France
|
Pacific Bell Franchising LLC
|
Delaware
|
Pacificly Pizza Hut LLC
|
Delaware
|
PH APAC B.V. f/k/a PH Mexico B.V.
|
Netherlands
|
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 DIGITAL VENTURES UK LIMITED
|
United Kingdom
|
PH Europe 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
|
Delaware
|
PH International Holdings I LLC
|
Delaware
|
PH International Holdings II S.à r.l.
|
Luxembourg
|
PH Mexico S.à r.l.
|
Luxembourg
|
PH North America S.à r.l.
|
Luxembourg
|
PH Operations S.à r.l. f/k/a Yum! Asia Holdings II S.a.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
|
PHDV Asia Company Limited
|
Vietnam
|
Pizza Famila Partnership
|
Delaware
|
Pizza Hut (Pty) Ltd
|
South Africa
|
Pizza Hut Connect, LLC
|
Delaware
|
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
|
Delaware
|
Pizza Hut Pacific Holdings Ltd.
|
Malta
|
Pizza Hut Restaurants Asia Pte., Ltd.
|
Singapore
|
Pizza Hut Restaurants China-India Pte. Ltd.
|
Singapore
|
Pizza Hut, LLC
|
Delaware
|
Pizza Pete Franchising LLC
|
Delaware
|
QuikOrder, LLC
|
Delaware
|
Restaurant Concepts LLC
|
Delaware
|
Restaurant Holdings Limited
|
United Kingdom
|
Southern Fast Foods 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
|
Delaware
|
Taco Bell Restaurants Asia Pte., Ltd.
|
Singapore
|
Taco Bell Restaurants China-India Pte. Ltd.
|
Singapore
|
TB APAC B.V.
|
Netherlands
|
TB Asia LLC
|
Delaware
|
TB Asia S.à r.l.
|
Luxembourg
|
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 China Franchising S.à r.l. f/k/a Yum! Finance Holdings V S.a.r.l
|
Luxembourg
|
YRI China Holdings B.V.
|
Netherlands
|
YRI China Licensing LLC
|
Delaware
|
YRI Europe S.a.r.l.
|
Luxembourg
|
YRI Global Liquidity S.a.r.l.
|
Luxembourg
|
YRI Investment Company S.a.r.l.
|
Luxembourg
|
Yum Cyprus Limited
|
Cyprus
|
Yum Restaurant Services Group, LLC
|
Delaware
|
Yum! Asia Franchise Pte Ltd
|
Singapore
|
Yum! Asia Holdings S.a.r.l
|
Luxembourg
|
Yum! Australia Equipment Pty. Ltd.
|
Australia
|
Yum! Brands Mexico Holdings II LLC
|
Delaware
|
YUM! Finance Holdings l Sarl
|
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 Participations LLC
|
Delaware
|
Yum! KFC Australia Holdings I LLC
|
Delaware
|
Yum! KFC Australia Holdings II LLC
|
Delaware
|
Yum! Luxembourg Investments LLC
|
Delaware
|
Yum! Operations China S.à r.l. f/k/a Yum! International Finance II S.a.r.l.
|
Luxembourg
|
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
|
Delaware
|
Yum! Restaurants International Limited
|
United Kingdom
|
Yum! Restaurants International Ltd. & Co. Kommanditgesellschaft
|
Germany
|
Yum! Restaurants International Management LLC
|
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
|
United Kingdom
|
Yum! Restaurants Marketing Private Limited
|
India
|
Yumsop Pty Limited
|
Australia
|
Description
|
Registration Statement Number
|
Form S-3
|
|
Yum! Direct Stock Purchase Program
|
333-46242
|
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, 333-223152
|
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 20, 2019
|
/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 20, 2019
|
/s/ David W. Gibbs
|
|
President, Chief Operating Officer 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 20, 2019
|
/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 20, 2019
|
/s/ David W. Gibbs
|
|
President, Chief Operating Officer and Chief Financial Officer
|