☒
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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
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December 31, 2019
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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 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,
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Louisville,
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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:
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(502)
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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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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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Common Stock, no par value
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YUM
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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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Large Accelerated Filer
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☒
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Accelerated Filer
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☐
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Non-accelerated Filer
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☐
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Smaller Reporting Company
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☐
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Emerging Growth Company
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☐
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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(a) (in Millions)
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||||||
KFC Division
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24,104
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83
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%
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144
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99
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%
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$
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27,900
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Pizza Hut Division
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18,703
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61
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%
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113
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99
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%
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12,900
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Taco Bell Division
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7,363
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8
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%
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30
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94
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%
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11,784
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YUM
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50,170
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64
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%
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152
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98
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%
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$
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52,584
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(a)
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Constitutes sales of all restaurants, both Company-owned and franchised. See further discussion of this non-GAAP measure within Part II, Item 7 of this Form 10-K.
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•
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Unrivaled Culture and Talent: Leverage our culture and people capability to fuel brand performance and franchise success
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•
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Unmatched Operating Capability: Recruit and equip the best restaurant operators in the world to deliver great customer experiences
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•
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Relevant, Easy and Distinctive Brands: Innovate and elevate iconic restaurant brands people trust and champion
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•
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Bold Restaurant Development: Drive market and franchise expansion with strong economics and value
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•
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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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•
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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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•
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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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•
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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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•
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Laws and regulations relating to nutritional content, nutritional labeling, product safety, product marketing and menu labeling.
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•
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Laws relating to state and local licensing.
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•
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Laws relating to the relationship between franchisors and franchisees.
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•
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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”, building and zoning, and fire safety and prevention.
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•
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Laws and regulations relating to union organizing rights and activities.
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•
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Laws relating to information security, privacy (including the European Union's GDPR and California's CCPA), cashless payments, and consumer protection.
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•
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Laws relating to currency conversion or exchange.
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•
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Laws relating to international trade and sanctions.
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•
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Tax laws and regulations.
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•
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Anti-bribery and anti-corruption laws.
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•
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Environmental laws and regulations.
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•
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Federal and state immigration laws and regulations in the U.S.
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•
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expenses, delays or difficulties in integrating acquired companies, joint venture operations, strategic partnerships or investments into our organization, including the failure to realize expected synergies and/or the inability to retain key personnel;
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•
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diversion of management’s attention from other initiatives and/or day-to-day operations to effectively execute our growth strategy;
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•
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inability to generate sufficient revenue, profit, and cash flow from acquired companies, joint ventures, strategic partnerships or investments;
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•
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the possibility that we have acquired substantial contingent or unanticipated liabilities in connection with acquisitions or other strategic transactions; and
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•
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the possibility that investments we have made may decline significantly in value.
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•
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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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•
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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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•
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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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•
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restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;
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•
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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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•
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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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•
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increasing our exposure to the risk of discontinuance, replacement 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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•
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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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•
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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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•
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imposing restrictive covenants on our operations as the result of the terms of our indebtedness, 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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•
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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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•
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The KFC Division owned land, building or both for 73 restaurants.
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•
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The Pizza Hut Division owned land, building or both for 5 restaurants.
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•
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The Taco Bell Division owned land, building or both for 259 restaurants.
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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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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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||||
10/1/19 - 10/31/19
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1,108
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$
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110.34
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1,108
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$
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507
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11/1/19- 11/30/19
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2,140
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$
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98.63
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2,140
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$
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2,296
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12/1/19 - 12/31/19
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—
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$
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—
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—
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$
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2,000
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Total
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3,248
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3,248
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|
|
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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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12/31/2019
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||||||||||||
YUM
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$
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100
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|
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$
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103
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|
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$
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127
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|
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$
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166
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|
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$
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190
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|
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$
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212
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S&P 500
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$
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100
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$
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101
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|
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$
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113
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$
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138
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|
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$
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132
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|
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$
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174
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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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$
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117
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$
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144
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|
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$
|
145
|
|
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$
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185
|
|
Item 6.
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Selected Financial Data.
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||||||||||||||||||
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2019
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2018
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2017
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2016
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2015
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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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1,546
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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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$
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4,189
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|
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$
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4,336
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Franchise and property revenues
|
2,660
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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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Franchise contributions for advertising and other services
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1,391
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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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5,597
|
|
|
5,688
|
|
|
5,878
|
|
|
6,356
|
|
|
6,418
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|
|||||
Refranchising (gain) loss
|
(37
|
)
|
|
(540
|
)
|
|
(1,083
|
)
|
|
(163
|
)
|
|
23
|
|
|||||
Operating Profit
|
1,930
|
|
|
2,296
|
|
|
2,761
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|
|
1,682
|
|
|
1,434
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|
|||||
Other pension (income) expense
|
4
|
|
|
14
|
|
|
47
|
|
|
32
|
|
|
40
|
|
|||||
Interest expense, net
|
486
|
|
|
452
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|
|
445
|
|
|
307
|
|
|
141
|
|
|||||
Income from continuing operations before income taxes
|
1,373
|
|
|
1,839
|
|
|
2,274
|
|
|
1,345
|
|
|
1,253
|
|
|||||
Income from continuing operations
|
1,294
|
|
|
1,542
|
|
|
1,340
|
|
|
1,018
|
|
|
926
|
|
|||||
Income from discontinued operations, net of tax
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
625
|
|
|
357
|
|
|||||
Net Income
|
1,294
|
|
|
1,542
|
|
|
1,340
|
|
|
1,643
|
|
|
1,283
|
|
|||||
Basic earnings per share from continuing operations
|
4.23
|
|
|
4.80
|
|
|
3.86
|
|
|
2.58
|
|
|
2.13
|
|
|||||
Basic earnings per share from discontinued operations
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
1.59
|
|
|
0.82
|
|
|||||
Basic earnings per share
|
4.23
|
|
|
4.80
|
|
|
3.86
|
|
|
4.17
|
|
|
2.95
|
|
|||||
Diluted earnings per share from continuing operations
|
4.14
|
|
|
4.69
|
|
|
3.77
|
|
|
2.54
|
|
|
2.09
|
|
|||||
Diluted earnings per share from discontinued operations
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
1.56
|
|
|
0.81
|
|
|||||
Diluted earnings per share
|
4.14
|
|
|
4.69
|
|
|
3.77
|
|
|
4.10
|
|
|
2.90
|
|
|||||
Diluted earnings per share from continuing operations excluding Special Items
|
3.55
|
|
|
3.17
|
|
|
2.96
|
|
|
2.46
|
|
|
2.31
|
|
|||||
Cash Flow Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Provided by operating activities
|
$
|
1,315
|
|
|
$
|
1,176
|
|
|
$
|
1,030
|
|
|
$
|
1,248
|
|
|
$
|
1,260
|
|
Capital spending
|
196
|
|
|
234
|
|
|
318
|
|
|
427
|
|
|
442
|
|
|||||
Proceeds from refranchising of restaurants
|
110
|
|
|
825
|
|
|
1,773
|
|
|
370
|
|
|
213
|
|
|||||
Repurchase shares of Common Stock
|
815
|
|
|
2,390
|
|
|
1,960
|
|
|
5,403
|
|
|
1,200
|
|
|||||
Dividends paid on Common Stock
|
511
|
|
|
462
|
|
|
416
|
|
|
744
|
|
|
730
|
|
|||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
5,231
|
|
|
$
|
4,130
|
|
|
$
|
5,311
|
|
|
$
|
5,453
|
|
|
$
|
4,939
|
|
Long-term debt
|
10,131
|
|
|
9,751
|
|
|
9,429
|
|
|
9,059
|
|
|
2,988
|
|
|||||
Total debt
|
10,562
|
|
|
10,072
|
|
|
9,804
|
|
|
9,125
|
|
|
3,908
|
|
|||||
Other Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Number of units at year end
|
|
|
|
|
|
|
|
|
|
||||||||||
Franchise
|
49,257
|
|
|
47,268
|
|
|
43,603
|
|
|
40,834
|
|
|
39,320
|
|
|||||
Company
|
913
|
|
|
856
|
|
|
1,481
|
|
|
2,841
|
|
|
3,163
|
|
|||||
System
|
50,170
|
|
|
48,124
|
|
|
45,084
|
|
|
43,675
|
|
|
42,483
|
|
|||||
System net new unit growth
|
4
|
%
|
|
7
|
%
|
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
|||||
System and same-store sales
|
|
|
|
|
|
|
|
|
|
||||||||||
KFC Division System sales
|
$
|
27,900
|
|
|
$
|
26,239
|
|
|
$
|
24,515
|
|
|
$
|
23,242
|
|
|
$
|
22,628
|
|
System sales growth (decline)
|
6
|
%
|
|
7
|
%
|
|
5
|
%
|
|
3
|
%
|
|
(3
|
)%
|
|||||
System sales growth, ex FX and 53rd week
|
9
|
%
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
|
5
|
%
|
|||||
Same-store sales growth
|
4
|
%
|
|
2
|
%
|
|
3
|
%
|
|
2
|
%
|
|
1
|
%
|
|||||
Pizza Hut Division System sales
|
$
|
12,900
|
|
|
$
|
12,212
|
|
|
$
|
12,034
|
|
|
$
|
12,019
|
|
|
$
|
11,999
|
|
System sales growth (decline)
|
6
|
%
|
|
1
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(1
|
)%
|
|||||
System sales growth, ex FX and 53rd week
|
7
|
%
|
|
1
|
%
|
|
2
|
%
|
|
1
|
%
|
|
3
|
%
|
|||||
Same-store sales growth (decline)
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(2
|
)%
|
|
—
|
%
|
|||||
Taco Bell Division System sales
|
$
|
11,784
|
|
|
$
|
10,786
|
|
|
$
|
10,145
|
|
|
$
|
9,660
|
|
|
$
|
9,102
|
|
System sales growth
|
9
|
%
|
|
6
|
%
|
|
5
|
%
|
|
6
|
%
|
|
8
|
%
|
|||||
System sales growth, ex FX and 53rd week
|
8
|
%
|
|
6
|
%
|
|
7
|
%
|
|
5
|
%
|
|
8
|
%
|
|||||
Same-store sales growth
|
5
|
%
|
|
4
|
%
|
|
4
|
%
|
|
2
|
%
|
|
5
|
%
|
|||||
Shares outstanding at year end
|
300
|
|
|
306
|
|
|
332
|
|
|
355
|
|
|
420
|
|
|||||
Cash dividends declared per common share
|
$
|
1.68
|
|
|
$
|
1.44
|
|
|
$
|
0.90
|
|
|
$
|
1.73
|
|
|
$
|
1.74
|
|
Market price per share at year end
|
$
|
100.73
|
|
|
$
|
91.92
|
|
|
$
|
81.61
|
|
|
$
|
63.33
|
|
|
$
|
73.05
|
|
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
|
•
|
Unrivaled Culture and Talent: Leverage our culture and people capability to fuel brand performance and franchise success
|
•
|
Unmatched Operating Capability: Recruit and equip the best restaurant operators in the world to deliver great customer experiences
|
•
|
Relevant, Easy and Distinctive Brands: Innovate and elevate iconic restaurant brands people trust and champion
|
•
|
Bold Restaurant Development: Drive market and franchise expansion with strong economics and value
|
•
|
More Focused. By focusing on four growth drivers similar to those that make up our Recipe for Growth above we accelerated system sales growth to 8% in 2019 (excluding the impacts of the 53rd week and foreign currency translation).
|
•
|
More Franchised. The Company successfully increased franchise restaurant ownership to 98% as of the end of 2018.
|
•
|
More Efficient. The Company revamped its financial profile, improving the efficiency of its organization and cost structure globally, by:
|
•
|
Reducing annual capital expenditures associated with Company-operated restaurant maintenance and other projects and funded additional capital for new Company units through the refranchising of existing Company units. Capital spending in 2019 net of refranchising proceeds was $86 million.
|
•
|
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.
|
•
|
Maintain a capital structure of ~5.0x EBITDA leverage;
|
•
|
Invest capital in a manner consistent with an asset light, franchisor model; and
|
•
|
Allocate G&A in an efficient manner that provides leverage to operating profit growth while at the same time opportunistically investing in strategic growth initiatives.
|
•
|
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, including those temporarily closed. From time-to-time restaurants may be temporarily closed due to remodeling or image enhancement, rebuilding, natural disasters, health epidemic or pandemic, landlord disputes or other issues. We believe same-store sales growth is useful to investors because our results are heavily dependent on the results of our Concepts' existing store base. Additionally, same-store sales growth is reflective of the strength of our Brands, the effectiveness of our operational and advertising initiatives and local economic and consumer trends. In 2019, when calculating same-store sales growth we also included in our prior year base the sales of stores that were added as a result of the Telepizza strategic alliance in December 2018 and that were open for one year or more. See description of the Telepizza strategic alliance within this MD&A.
|
•
|
Net new unit growth reflects new unit openings offset by store closures, by us and our franchisees. To determine whether a restaurant meets the definition of a unit we consider whether the restaurant has operations that are ongoing and independent from another YUM unit, serves the primary product of one of our Concepts, operates under a separate franchise agreement (if operated by a franchisee) and has substantial and sustainable sales. We believe net new unit growth is useful to investors because we depend on net new units for a significant portion of our growth. Additionally, net new unit growth is generally reflective of the economic returns to us and our franchisees from opening and operating our Concept restaurants.
|
•
|
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. Restaurant profit is useful to investors as it provides a measure of profitability for our Company-owned stores.
|
•
|
System sales, System sales excluding the impacts of foreign currency translation ("FX"), and, in 2019, System sales excluding FX and the impact of the 53rd week for our U.S. subsidiaries and certain international subsidiaries that operate on a weekly periodic calendar. System sales include the results of all restaurants regardless of ownership, including Company-owned and franchise restaurants. Sales at 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 derived from franchise restaurants 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 significant revenue drivers, Company and franchise same-store sales as well as net unit growth.
|
•
|
Diluted Earnings Per Share excluding Special Items (as defined below);
|
•
|
Effective Tax Rate excluding Special Items;
|
•
|
Core Operating Profit and, in 2019, Core Operating Profit excluding the impact of the 53rd week. 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
|
+10
|
|
+4
|
|
+7
|
|
+10
|
|
+14
|
Pizza Hut Division
|
+8
|
|
Even
|
|
+1
|
|
+6
|
|
+8
|
Taco Bell Division
|
+9
|
|
+5
|
|
+4
|
|
+8
|
|
+8
|
Worldwide
|
+9
|
|
+3
|
|
+4
|
|
(16)
|
|
+12
|
|
Results Excluding 53rd Week in 2019
(% Change)
|
||
|
System Sales, ex FX
|
|
Core Operating Profit
|
KFC Division
|
+9
|
|
+13
|
Pizza Hut Division
|
+7
|
|
+7
|
Taco Bell Division
|
+8
|
|
+6
|
Worldwide
|
+8
|
|
+11
|
•
|
Adjusting the prior year base to include units added as a result of our fourth quarter 2018 strategic alliance with Telepizza, system sales growth, excluding the impacts of foreign currency translation and 53rd week, would have been 7% and 2% for Worldwide and the Pizza Hut Division, respectively.
|
•
|
During the year, we opened 2,040 net new units for 4% net new unit growth.
|
•
|
During the year, we refranchised 25 restaurants and sold certain restaurant assets associated with existing franchise restaurants to the franchisee for total pre-tax proceeds of $110 million. We recorded net refranchising gains of $37 million related to these transactions.
|
•
|
During the year, we repurchased 7.8 million shares totaling $810 million at an average price of $104.
|
•
|
During the year, we recognized pre-tax expense of $77 million related to the change in fair value of our investment in Grubhub, which resulted in a negative ($0.19) impact to diluted EPS on the year.
|
•
|
Foreign currency translation impacted Divisional Operating Profit unfavorably for the year by $46 million.
|
•
|
Our effective tax rate for the year was 5.7% and our effective tax rate, excluding Special Items, was 19.8%.
|
|
Amount
|
|
% B/(W)
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
||||||||||||
Company sales
|
$
|
1,546
|
|
|
$
|
2,000
|
|
|
$
|
3,572
|
|
|
(23
|
)
|
|
|
|
(44
|
)
|
|
|
Franchise and property revenues
|
2,660
|
|
|
2,482
|
|
|
2,306
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|||
Franchise contributions for advertising and other services
|
1,391
|
|
|
1,206
|
|
|
—
|
|
|
15
|
|
|
|
|
N/A
|
|
|
|
|||
Total revenues
|
$
|
5,597
|
|
|
$
|
5,688
|
|
|
$
|
5,878
|
|
|
(2
|
)
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Restaurant profit
|
$
|
311
|
|
|
$
|
366
|
|
|
$
|
618
|
|
|
(15
|
)
|
|
|
|
(41
|
)
|
|
|
Restaurant margin %
|
20.1
|
%
|
|
18.3
|
%
|
|
17.3
|
%
|
|
1.8
|
|
|
ppts.
|
|
1.0
|
|
|
ppts.
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
G&A expenses
|
$
|
917
|
|
|
$
|
895
|
|
|
$
|
999
|
|
|
(2
|
)
|
|
|
|
10
|
|
|
|
Franchise and property expenses
|
180
|
|
|
188
|
|
|
237
|
|
|
4
|
|
|
|
|
21
|
|
|
|
|||
Franchise advertising and other services expense
|
1,368
|
|
|
1,208
|
|
|
—
|
|
|
(13
|
)
|
|
|
|
N/A
|
|
|
|
|||
Refranchising (gain) loss
|
(37
|
)
|
|
(540
|
)
|
|
(1,083
|
)
|
|
(93
|
)
|
|
|
|
(50
|
)
|
|
|
|||
Other (income) expense
|
4
|
|
|
7
|
|
|
10
|
|
|
NM
|
|
|
|
|
NM
|
|
|
|
|||
Operating Profit
|
$
|
1,930
|
|
|
$
|
2,296
|
|
|
$
|
2,761
|
|
|
(16
|
)
|
|
|
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Investment (income) expense, net
|
67
|
|
|
(9
|
)
|
|
(5
|
)
|
|
NM
|
|
|
|
|
88
|
|
|
|
|||
Other pension (income) expense
|
4
|
|
|
14
|
|
|
47
|
|
|
71
|
|
|
|
|
70
|
|
|
|
|||
Interest expense, net
|
486
|
|
|
452
|
|
|
445
|
|
|
(8
|
)
|
|
|
|
(1
|
)
|
|
|
|||
Income tax provision
|
79
|
|
|
297
|
|
|
934
|
|
|
74
|
|
|
|
|
68
|
|
|
|
|||
Net Income
|
$
|
1,294
|
|
|
$
|
1,542
|
|
|
$
|
1,340
|
|
|
(16
|
)
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted EPS(a)
|
$
|
4.14
|
|
|
$
|
4.69
|
|
|
$
|
3.77
|
|
|
(12
|
)
|
|
|
|
24
|
|
|
|
Effective tax rate
|
5.7
|
%
|
|
16.2
|
%
|
|
41.1
|
%
|
|
10.5
|
|
|
ppts.
|
|
24.9
|
|
|
ppts.
|
(a)
|
See Note 3 for the number of shares used in this calculation.
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
||||||
Unit Count
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018(a)
|
||||
Franchise
|
49,257
|
|
|
47,268
|
|
|
43,603
|
|
|
4
|
|
8
|
|
Company-owned
|
913
|
|
|
856
|
|
|
1,481
|
|
|
7
|
|
(42
|
)
|
Total
|
50,170
|
|
|
48,124
|
|
|
45,084
|
|
|
4
|
|
7
|
|
(a)
|
2018 unit growth includes units added as a result of our fourth quarter 2018 strategic alliance with Telepizza.
|
|
|
2019
|
|
2018
|
|
2017
|
Same-Store Sales Growth %
|
|
3
|
|
2
|
|
2
|
Non-GAAP Items
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
Non-GAAP Items, along with the reconciliation to the most comparable GAAP financial measure, are presented below.
|
|||||||||
|
|
|
|
|
|
|
|||
|
|
2019
|
|
2018
|
|
2017
|
|||
System Sales Growth %, reported
|
|
7
|
|
|
5
|
|
|
4
|
|
System Sales Growth %, excluding FX
|
|
9
|
|
|
5
|
|
|
4
|
|
System Sales Growth %, excluding FX and 53rd week
|
|
8
|
|
|
N/A
|
|
|
5
|
|
Core Operating Profit Growth %
|
|
12
|
|
|
Even
|
|
|
7
|
|
Core Operating Profit Growth %, excluding 53rd week
|
|
11
|
|
|
N/A
|
|
|
9
|
|
Diluted EPS Growth %, excluding Special Items
|
|
12
|
|
|
7
|
|
|
20
|
|
Effective Tax Rate excluding Special Items
|
|
19.8
|
%
|
|
20.4
|
%
|
|
18.8
|
%
|
|
|
Year
|
||||||||||
Detail of Special Items
|
|
2019
|
|
2018
|
|
2017
|
||||||
Refranchising gain (loss)(a)
|
|
$
|
12
|
|
|
$
|
540
|
|
|
$
|
1,083
|
|
YUM's Strategic Transformation Initiatives (See Note 4)
|
|
—
|
|
|
(8
|
)
|
|
(23
|
)
|
|||
Costs associated with Pizza Hut U.S. Transformation Agreement (See Note 4)
|
|
(13
|
)
|
|
(6
|
)
|
|
(31
|
)
|
|||
Costs associated with KFC U.S. Acceleration Agreement (See Note 4)
|
|
—
|
|
|
(2
|
)
|
|
(17
|
)
|
|||
Non-cash credits (charges) associated with share-based compensation (See Note 4)
|
|
—
|
|
|
3
|
|
|
(18
|
)
|
|||
Other Special Items Income (Expense)(b)
|
|
(10
|
)
|
|
3
|
|
|
7
|
|
|||
Special Items Income (Expense) - Operating Profit
|
|
(11
|
)
|
|
530
|
|
|
1,001
|
|
|||
Special Items - Other Pension Income (Expense) (See Note 4)
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|||
Interest expense, net(b)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|||
Special Items Income (Expense) before Income Taxes
|
|
(13
|
)
|
|
530
|
|
|
978
|
|
|||
Tax Expense on Special Items(c)
|
|
(30
|
)
|
|
(96
|
)
|
|
(256
|
)
|
|||
Tax Benefit - Intercompany transfer of intellectual property(d)
|
|
226
|
|
|
—
|
|
|
—
|
|
|||
Tax Benefit (Expense) - U.S. Tax Act(e)
|
|
—
|
|
|
66
|
|
|
(434
|
)
|
|||
Special Items Income, net of tax
|
|
$
|
183
|
|
|
$
|
500
|
|
|
$
|
288
|
|
Average diluted shares outstanding
|
|
313
|
|
|
329
|
|
|
355
|
|
|||
Special Items diluted EPS
|
|
$
|
0.59
|
|
|
$
|
1.52
|
|
|
$
|
0.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Reconciliation of GAAP Company sales to System sales, System sales, excluding FX and System sales, excluding FX and 53rd week
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Consolidated
|
|
|
|
|
|
|
||||||
GAAP Company sales(g)
|
|
$
|
1,546
|
|
|
$
|
2,000
|
|
|
$
|
3,572
|
|
Franchise sales
|
|
51,038
|
|
|
47,237
|
|
|
43,122
|
|
|||
System sales
|
|
52,584
|
|
|
49,237
|
|
|
46,694
|
|
|||
Foreign Currency Impact on System sales(h)
|
|
(1,169
|
)
|
|
186
|
|
|
N/A
|
|
|||
System sales, excluding FX
|
|
53,753
|
|
|
49,051
|
|
|
46,694
|
|
|||
Impact of 53rd week
|
|
454
|
|
|
N/A
|
|
|
N/A
|
|
|||
System sales, excluding FX and 53rd Week
|
|
$
|
53,299
|
|
|
$
|
49,051
|
|
|
$
|
46,694
|
|
|
|
|
|
|
|
|
||||||
KFC Division
|
|
|
|
|
|
|
||||||
GAAP Company sales(g)
|
|
$
|
571
|
|
|
$
|
894
|
|
|
$
|
1,928
|
|
Franchise sales
|
|
27,329
|
|
|
25,345
|
|
|
22,587
|
|
|||
System sales
|
|
27,900
|
|
|
26,239
|
|
|
24,515
|
|
|||
Foreign Currency Impact on System sales(h)
|
|
(898
|
)
|
|
142
|
|
|
N/A
|
|
|||
System sales, excluding FX
|
|
28,798
|
|
|
26,097
|
|
|
24,515
|
|
|||
Impact of 53rd week
|
|
167
|
|
|
N/A
|
|
|
N/A
|
|
|||
System sales, excluding FX and 53rd Week
|
|
$
|
28,631
|
|
|
$
|
26,097
|
|
|
$
|
24,515
|
|
|
|
|
|
|
|
|
||||||
Pizza Hut Division
|
|
|
|
|
|
|
||||||
GAAP Company sales(g)
|
|
$
|
54
|
|
|
$
|
69
|
|
|
$
|
285
|
|
Franchise sales
|
|
12,846
|
|
|
12,143
|
|
|
11,749
|
|
|||
System sales
|
|
12,900
|
|
|
12,212
|
|
|
12,034
|
|
|||
Foreign Currency Impact on System sales(h)
|
|
(259
|
)
|
|
47
|
|
|
N/A
|
|
|||
System sales, excluding FX
|
|
13,159
|
|
|
12,165
|
|
|
12,034
|
|
|||
Impact of 53rd week
|
|
103
|
|
|
N/A
|
|
|
N/A
|
|
|||
System sales, excluding FX and 53rd Week
|
|
$
|
13,056
|
|
|
$
|
12,165
|
|
|
$
|
12,034
|
|
|
|
|
|
|
|
|
||||||
Taco Bell Division
|
|
|
|
|
|
|
||||||
GAAP Company sales(g)
|
|
$
|
921
|
|
|
$
|
1,037
|
|
|
$
|
1,359
|
|
Franchise sales
|
|
10,863
|
|
|
9,749
|
|
|
8,786
|
|
|||
System sales
|
|
11,784
|
|
|
10,786
|
|
|
10,145
|
|
|||
Foreign Currency Impact on System sales(h)
|
|
(12
|
)
|
|
(3
|
)
|
|
N/A
|
|
|||
System sales, excluding FX
|
|
11,796
|
|
|
10,789
|
|
|
10,145
|
|
|||
Impact of 53rd week
|
|
184
|
|
|
N/A
|
|
|
N/A
|
|
|||
System sales, excluding FX and 53rd Week
|
|
$
|
11,612
|
|
|
$
|
10,789
|
|
|
$
|
10,145
|
|
|
|
|
|
|
|
|
(a)
|
We have reflected as Special Items those refranchising gains and losses that were recorded in connection with or prior to our previously announced plans to have at least 98% franchise restaurant ownership by the end of 2018. As such, refranchising gains and losses recorded during 2019 as Special Items primarily include gains or losses associated with sales of underlying real estate associated with stores that were franchised as of December 31, 2018 or true-ups to refranchising gains and losses recorded prior to December 31, 2018.
|
(b)
|
In the second quarter of 2019 we recorded charges of $8 million and $2 million to Other (income) expense and Interest expense, net, respectively, related to cash payments in excess of our recorded liability to settle contingent consideration
|
(c)
|
Tax 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. Additionally, we increased our Income tax provision by $34 million in the fourth quarter of 2019 to record a reserve against and by $19 million in the second quarter of 2018 to correct an error related to the tax recorded on a prior year divestiture, the effects of which were previously recorded as a Special Item.
|
(d)
|
During the year ended December 31, 2019 we completed intercompany transfers of certain intellectual property rights. As a result of the transfer of certain of these rights, largely to subsidiaries in the United Kingdom, we received a step-up in tax basis to current fair value under applicable tax law. To the extent this step-up in basis will be amortizable against future taxable income, we recognized a one-time deferred tax benefit of $226 million as a Special Item in the year ended December 31, 2019. See Note 17 for further discussion.
|
(e)
|
In 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 2018 related to 2018 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.
|
(f)
|
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.
|
(g)
|
Company sales represents sales from our Company-operated stores as presented on our Consolidated Statements of Income.
|
(h)
|
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.
|
|
KFC Division
|
|
Pizza Hut Division
|
|
Taco Bell Division
|
|
Total
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Company sales
|
$
|
8
|
|
|
$
|
1
|
|
|
$
|
15
|
|
|
$
|
24
|
|
Franchise and property revenues
|
9
|
|
|
5
|
|
|
10
|
|
|
24
|
|
||||
Franchise contributions for advertising and other services
|
5
|
|
|
5
|
|
|
8
|
|
|
18
|
|
||||
Total revenues
|
$
|
22
|
|
|
$
|
11
|
|
|
$
|
33
|
|
|
$
|
66
|
|
|
|
|
|
|
|
|
|
||||||||
Operating Profit
|
|
|
|
|
|
|
|
||||||||
Franchise and property revenues
|
$
|
9
|
|
|
$
|
5
|
|
|
$
|
10
|
|
|
$
|
24
|
|
Franchise contributions for advertising and other services
|
5
|
|
|
5
|
|
|
8
|
|
|
18
|
|
||||
Restaurant profit
|
1
|
|
|
—
|
|
|
5
|
|
|
6
|
|
||||
Franchise and property expenses
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Franchise for advertising and other services expenses
|
(5
|
)
|
|
(5
|
)
|
|
(8
|
)
|
|
(18
|
)
|
||||
G&A expenses
|
(2
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(5
|
)
|
||||
Operating Profit
|
$
|
8
|
|
|
$
|
3
|
|
|
$
|
13
|
|
|
$
|
24
|
|
•
|
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
|
|
|
|
|
|
|
|
|
% B/(W)
|
|
% B/(W)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
2019
|
|
2018
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
Reported
|
|
Ex FX
|
|
Ex FX and 53rd Week in 2019
|
|
Reported
|
|
Ex FX
|
||||||||||||||||
System Sales
|
|
$
|
27,900
|
|
|
$
|
26,239
|
|
|
$
|
24,515
|
|
|
6
|
|
|
|
10
|
|
|
|
9
|
|
|
|
7
|
|
|
|
6
|
|
|
Same-Store Sales Growth %
|
|
|
|
|
|
|
|
4
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
2
|
|
|
|
N/A
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Company sales
|
|
$
|
571
|
|
|
$
|
894
|
|
|
$
|
1,928
|
|
|
(36
|
)
|
|
|
(33
|
)
|
|
|
(34
|
)
|
|
|
(54
|
)
|
|
|
(53
|
)
|
|
Franchise and property revenues
|
|
1,390
|
|
|
1,294
|
|
|
1,182
|
|
|
7
|
|
|
|
11
|
|
|
|
10
|
|
|
|
10
|
|
|
|
9
|
|
|
|||
Franchise contributions for advertising and other services
|
|
530
|
|
|
456
|
|
|
—
|
|
|
16
|
|
|
|
21
|
|
|
|
20
|
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Total revenues
|
|
$
|
2,491
|
|
|
$
|
2,644
|
|
|
$
|
3,110
|
|
|
(6
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(15
|
)
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Restaurant profit
|
|
$
|
87
|
|
|
$
|
119
|
|
|
$
|
289
|
|
|
(26
|
)
|
|
|
(23
|
)
|
|
|
(24
|
)
|
|
|
(59
|
)
|
|
|
(58
|
)
|
|
Restaurant margin %
|
|
15.3
|
%
|
|
13.3
|
%
|
|
15.0
|
%
|
|
2.0
|
|
ppts.
|
|
2.0
|
|
ppts.
|
|
2.0
|
|
ppts.
|
|
(1.7)
|
|
ppts.
|
|
(1.5)
|
|
ppts.
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
G&A expenses
|
|
$
|
346
|
|
|
$
|
350
|
|
|
$
|
370
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
5
|
|
|
|
5
|
|
|
Franchise and property expenses
|
|
89
|
|
|
107
|
|
|
117
|
|
|
17
|
|
|
|
13
|
|
|
|
13
|
|
|
|
8
|
|
|
|
9
|
|
|
|||
Franchise advertising and other services expense
|
|
520
|
|
|
452
|
|
|
—
|
|
|
(15
|
)
|
|
|
(20
|
)
|
|
|
(19
|
)
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Operating Profit
|
|
$
|
1,052
|
|
|
$
|
959
|
|
|
$
|
981
|
|
|
10
|
|
|
|
14
|
|
|
|
13
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
|||||||
Unit Count
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|||||
Franchise
|
|
23,759
|
|
|
22,297
|
|
|
20,819
|
|
|
7
|
|
7
|
|
|
Company-owned
|
|
345
|
|
|
324
|
|
|
668
|
|
|
6
|
|
(51
|
)
|
|
Total
|
|
24,104
|
|
|
22,621
|
|
|
21,487
|
|
|
7
|
|
5
|
|
|
|
|
|
|
|
|
|
% B/(W)
|
|
% B/(W)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
2019
|
|
2018
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
Reported
|
|
Ex FX
|
|
Ex FX and 53rd Week in 2019
|
|
Reported
|
|
Ex FX
|
||||||||||||||||
System Sales
|
|
$
|
12,900
|
|
|
$
|
12,212
|
|
|
$
|
12,034
|
|
|
6
|
|
|
|
8
|
|
|
|
7
|
|
|
|
1
|
|
|
|
1
|
|
|
Same-Store Sales Growth (Decline) %
|
|
|
|
|
|
|
|
Even
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Even
|
|
|
N/A
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Company sales
|
|
$
|
54
|
|
|
$
|
69
|
|
|
$
|
285
|
|
|
(23
|
)
|
|
|
(21
|
)
|
|
|
(21
|
)
|
|
|
(76
|
)
|
|
|
(76
|
)
|
|
Franchise and property revenues
|
|
597
|
|
|
598
|
|
|
608
|
|
|
Even
|
|
|
1
|
|
|
|
1
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
||||
Franchise contributions for advertising and other services
|
|
376
|
|
|
321
|
|
|
—
|
|
|
17
|
|
|
|
18
|
|
|
|
16
|
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Total revenues
|
|
$
|
1,027
|
|
|
$
|
988
|
|
|
$
|
893
|
|
|
4
|
|
|
|
5
|
|
|
|
4
|
|
|
|
11
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Restaurant profit
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
NM
|
|
|
NM
|
|
|
NM
|
|
|
NM
|
|
|
NM
|
|
|||||
Restaurant margin %
|
|
4.2
|
%
|
|
(0.1
|
)%
|
|
5.3
|
%
|
|
4.3
|
|
ppts.
|
|
4.2
|
|
ppts.
|
|
4.1
|
|
ppts.
|
|
(5.4)
|
|
ppts.
|
|
(5.3)
|
|
ppts.
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
G&A expenses
|
|
$
|
202
|
|
|
$
|
197
|
|
|
$
|
211
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
7
|
|
|
|
7
|
|
|
Franchise and property expenses
|
|
39
|
|
|
45
|
|
|
68
|
|
|
12
|
|
|
|
11
|
|
|
|
13
|
|
|
|
35
|
|
|
|
36
|
|
|
|||
Franchise advertising and other services expense
|
|
367
|
|
|
328
|
|
|
—
|
|
|
(12
|
)
|
|
|
(12
|
)
|
|
|
(11
|
)
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Operating Profit
|
|
$
|
369
|
|
|
$
|
348
|
|
|
$
|
341
|
|
|
6
|
|
|
|
8
|
|
|
|
7
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
|||||||
Unit Count
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018(a)
|
|||||
Franchise
|
|
18,603
|
|
|
18,369
|
|
|
16,588
|
|
|
1
|
|
11
|
|
|
Company-owned
|
|
100
|
|
|
62
|
|
|
160
|
|
|
61
|
|
(61
|
)
|
|
Total
|
|
18,703
|
|
|
18,431
|
|
|
16,748
|
|
|
1
|
|
10
|
|
|
|
|
|
|
|
|
|
% B/(W)
|
|
% B/(W)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
2019
|
|
2018
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
Reported
|
|
Ex FX
|
|
Ex FX and 53rd Week in 2019
|
|
Reported
|
|
Ex FX
|
||||||||||||||||
System Sales
|
|
$
|
11,784
|
|
|
$
|
10,786
|
|
|
$
|
10,145
|
|
|
9
|
|
|
|
9
|
|
|
|
8
|
|
|
|
6
|
|
|
|
6
|
|
|
Same-Store Sales Growth %
|
|
|
|
|
|
|
|
5
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
4
|
|
|
|
N/A
|
|
|
|||||||
Company sales
|
|
$
|
921
|
|
|
$
|
1,037
|
|
|
$
|
1,359
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(13
|
)
|
|
|
(24
|
)
|
|
|
(24
|
)
|
|
Franchise and property revenues
|
|
673
|
|
|
590
|
|
|
521
|
|
|
14
|
|
|
|
14
|
|
|
|
12
|
|
|
|
13
|
|
|
|
13
|
|
|
|||
Franchise contributions for advertising and other services
|
|
485
|
|
|
429
|
|
|
—
|
|
|
13
|
|
|
|
13
|
|
|
|
11
|
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Total revenues
|
|
$
|
2,079
|
|
|
$
|
2,056
|
|
|
$
|
1,880
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
9
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Restaurant profit
|
|
$
|
221
|
|
|
$
|
244
|
|
|
$
|
305
|
|
|
(9
|
)
|
|
|
(9
|
)
|
|
|
(11
|
)
|
|
|
(20
|
)
|
|
|
(20
|
)
|
|
Restaurant margin %
|
|
24.0
|
%
|
|
23.5
|
%
|
|
22.4
|
%
|
|
0.5
|
|
ppts.
|
|
0.5
|
|
ppts.
|
|
0.4
|
|
ppts.
|
|
1.1
|
|
ppts.
|
|
1.1
|
|
ppts.
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
G&A expenses
|
|
$
|
181
|
|
|
$
|
177
|
|
|
$
|
188
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
6
|
|
|
|
6
|
|
|
Franchise and property expenses
|
|
38
|
|
|
28
|
|
|
22
|
|
|
(33
|
)
|
|
|
(33
|
)
|
|
|
(32
|
)
|
|
|
(31
|
)
|
|
|
(31
|
)
|
|
|||
Franchise advertising and other services expense
|
|
481
|
|
|
428
|
|
|
—
|
|
|
(12
|
)
|
|
|
(12
|
)
|
|
|
(11
|
)
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Operating Profit
|
|
$
|
683
|
|
|
$
|
633
|
|
|
$
|
619
|
|
|
8
|
|
|
|
8
|
|
|
|
6
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
||||||||
Unit Count
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
||||||
Franchise
|
|
6,895
|
|
|
6,602
|
|
|
6,196
|
|
|
4
|
|
|
7
|
|
|
Company-owned
|
|
468
|
|
|
470
|
|
|
653
|
|
|
—
|
|
|
(28
|
)
|
|
Total
|
|
7,363
|
|
|
7,072
|
|
|
6,849
|
|
|
4
|
|
|
3
|
|
|
|
|
|
|
|
|
|
% B/(W)
|
||||||||||||
(Expense)/Income
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
||||||||||
Corporate and unallocated G&A
|
|
$
|
(188
|
)
|
|
$
|
(171
|
)
|
|
$
|
(230
|
)
|
|
(10
|
)
|
|
|
26
|
|
|
Unallocated restaurant costs
|
|
—
|
|
|
3
|
|
|
10
|
|
|
(95
|
)
|
|
|
(69
|
)
|
|
|||
Unallocated Franchise and property revenues
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
NM
|
|
|
|
NM
|
|
|
|||
Unallocated Franchise and property expenses
|
|
(14
|
)
|
|
(8
|
)
|
|
(30
|
)
|
|
(72
|
)
|
|
|
73
|
|
|
|||
Refranchising gain (loss) (See Note 4)
|
|
37
|
|
|
540
|
|
|
1,083
|
|
|
(93
|
)
|
|
|
(50
|
)
|
|
|||
Unallocated Other income (expense) (See Note 4)
|
|
(9
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|
NM
|
|
|
|
NM
|
|
|
|||
Investment income (expense), net (See Note 4)
|
|
(67
|
)
|
|
9
|
|
|
5
|
|
|
NM
|
|
|
|
88
|
|
|
|||
Other pension income (expense) (See Note 14)
|
|
(4
|
)
|
|
(14
|
)
|
|
(47
|
)
|
|
71
|
|
|
|
70
|
|
|
|||
Interest expense, net
|
|
(486
|
)
|
|
(452
|
)
|
|
(445
|
)
|
|
(8
|
)
|
|
|
(1
|
)
|
|
|||
Income tax provision (See Note 17)
|
|
(79
|
)
|
|
(297
|
)
|
|
(934
|
)
|
|
74
|
|
|
|
68
|
|
|
|||
Effective tax rate (See Note 17)
|
|
5.7
|
%
|
|
16.2
|
%
|
|
41.1
|
%
|
|
10.5
|
|
ppts.
|
|
24.9
|
|
ppts.
|
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025
|
|
2026
|
|
2027
|
|
2028
|
|
2030
|
|
2037
|
|
2043
|
|
Total
|
||||||||||||||||||||||||||
Securitization Notes
|
|
$
|
29
|
|
|
$
|
29
|
|
|
$
|
29
|
|
|
$
|
1,281
|
|
|
$
|
16
|
|
|
$
|
16
|
|
|
$
|
921
|
|
|
$
|
6
|
|
|
$
|
571
|
|
|
|
|
|
|
|
|
$
|
2,898
|
|
||||||
Credit Agreement
|
|
51
|
|
|
76
|
|
|
395
|
|
|
20
|
|
|
20
|
|
|
1,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,398
|
|
|||||||||||||||||||
Subsidiary Senior Unsecured Notes
|
|
|
|
|
|
|
|
|
|
1,050
|
|
|
|
|
1,050
|
|
|
750
|
|
|
|
|
|
|
|
|
|
|
2,850
|
|
||||||||||||||||||||||
YUM Senior Unsecured Notes
|
|
350
|
|
|
350
|
|
|
|
|
325
|
|
|
|
|
|
|
|
|
|
|
|
|
800
|
|
|
325
|
|
|
275
|
|
|
2,425
|
|
|||||||||||||||||||
Total
|
|
$
|
430
|
|
|
$
|
455
|
|
|
$
|
424
|
|
|
$
|
1,626
|
|
|
$
|
1,086
|
|
|
$
|
1,852
|
|
|
$
|
1,971
|
|
|
$
|
756
|
|
|
$
|
571
|
|
|
$
|
800
|
|
|
$
|
325
|
|
|
$
|
275
|
|
|
$
|
10,571
|
|
|
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than 5 Years
|
||||||||||
Long-term debt obligations(a)
|
|
$
|
13,911
|
|
|
$
|
895
|
|
|
$
|
1,804
|
|
|
$
|
3,505
|
|
|
$
|
7,707
|
|
Finance leases(b)
|
|
110
|
|
|
11
|
|
|
20
|
|
|
17
|
|
|
62
|
|
|||||
Operating leases(b)
|
|
987
|
|
|
105
|
|
|
192
|
|
|
159
|
|
|
531
|
|
|||||
Purchase obligations(c)
|
|
297
|
|
|
159
|
|
|
124
|
|
|
13
|
|
|
1
|
|
|||||
Benefit plans and other(d)
|
|
290
|
|
|
155
|
|
|
32
|
|
|
30
|
|
|
73
|
|
|||||
Total contractual obligations
|
|
$
|
15,595
|
|
|
$
|
1,325
|
|
|
$
|
2,172
|
|
|
$
|
3,724
|
|
|
$
|
8,374
|
|
(a)
|
Amounts include maturities of debt outstanding as of December 31, 2019 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 600 Company-owned restaurants and 400 units that we sublease land, building or both to our franchisees. 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 $40 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 an income tax audit expected to conclude in 2020 and anticipated investments related to the Pizza Hut U.S. Transformation Agreement (See Note 4).
|
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’ Deficit
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
•
|
Obtaining an understanding of the Company’s implementation of tax planning strategies;
|
•
|
Identifying new tax positions created by tax planning strategies and comparing the results to the Company’s identification of uncertain tax positions;
|
•
|
Evaluating the Company’s interpretation of tax laws and court rulings by developing an independent assessment; and
|
•
|
Performing an independent assessment to identify tax positions that may not be sustained upon examination by the respective taxing authority and comparing the results to the Company’s assessment.
|
•
|
Evaluating the Company’s interpretation of UK tax laws and regulations applicable to the intercompany transfer; and
|
•
|
Assessing the Company’s measurement of the tax basis of the intellectual property rights transferred to the UK, including the portion of the tax basis that is amortizable under UK tax law.
|
•
|
The KFC Division which includes our worldwide operations of the KFC concept
|
•
|
The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept
|
•
|
The Taco Bell Division which includes our worldwide operations of the Taco Bell concept
|
Level 1
|
Inputs based upon quoted prices in active markets for identical assets.
|
|
|
Level 2
|
Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.
|
|
|
Level 3
|
Inputs that are unobservable for the asset.
|
|
|
2019
|
|
2018
|
||||
Accounts and notes receivable
|
|
$
|
656
|
|
|
$
|
592
|
|
Allowance for doubtful accounts
|
|
(72
|
)
|
|
(31
|
)
|
||
Accounts and notes receivable, net
|
|
$
|
584
|
|
|
$
|
561
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net Income
|
|
$
|
1,294
|
|
|
$
|
1,542
|
|
|
$
|
1,340
|
|
Weighted-average common shares outstanding (for basic calculation)
|
|
306
|
|
|
322
|
|
|
347
|
|
|||
Effect of dilutive share-based employee compensation
|
|
7
|
|
|
7
|
|
|
8
|
|
|||
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)
|
|
313
|
|
|
329
|
|
|
355
|
|
|||
|
|
|
|
|
|
|
||||||
Basic EPS
|
|
$
|
4.23
|
|
|
$
|
4.80
|
|
|
$
|
3.86
|
|
|
|
|
|
|
|
|
||||||
Diluted EPS
|
|
$
|
4.14
|
|
|
$
|
4.69
|
|
|
$
|
3.77
|
|
Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation(a)
|
|
2.0
|
|
|
2.0
|
|
|
2.3
|
|
(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.
|
|
|
Refranchising (gain) loss
|
|
|
|
|
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
|
|
|
|
||||||
KFC Division
|
|
$
|
(6
|
)
|
|
$
|
(240
|
)
|
|
$
|
(581
|
)
|
|
|
|
|
|
Pizza Hut Division
|
|
—
|
|
|
13
|
|
|
(16
|
)
|
|
|
|
|
|
|||
Taco Bell Division
|
|
(31
|
)
|
|
(313
|
)
|
|
(486
|
)
|
|
|
|
|
|
|||
Worldwide
|
|
$
|
(37
|
)
|
|
$
|
(540
|
)
|
|
$
|
(1,083
|
)
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET
|
|||||||||||
|
As Reported 12/31/2018
|
|
Adjustments
|
|
Balances with Adoption of Topic 842 1/1/2019
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Current Assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
292
|
|
|
$
|
—
|
|
|
$
|
292
|
|
Accounts and notes receivable, net
|
561
|
|
|
—
|
|
|
561
|
|
|||
Prepaid expenses and other current assets
|
354
|
|
|
(10
|
)
|
|
344
|
|
|||
Total Current Assets
|
1,207
|
|
|
(10
|
)
|
|
1,197
|
|
|||
|
|
|
|
|
|
||||||
Property, plant and equipment, net
|
1,237
|
|
|
—
|
|
|
1,237
|
|
|||
Goodwill
|
525
|
|
|
—
|
|
|
525
|
|
|||
Intangible assets, net
|
242
|
|
|
—
|
|
|
242
|
|
|||
Other assets
|
724
|
|
|
689
|
|
|
1,413
|
|
|||
Deferred income taxes
|
195
|
|
|
—
|
|
|
195
|
|
|||
Total Assets
|
$
|
4,130
|
|
|
$
|
679
|
|
|
$
|
4,809
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT
|
|
|
|
|
|
||||||
Current Liabilities
|
|
|
|
|
|
||||||
Accounts payable and other current liabilities
|
$
|
911
|
|
|
$
|
76
|
|
|
$
|
987
|
|
Income taxes payable
|
69
|
|
|
—
|
|
|
69
|
|
|||
Short-term borrowings
|
321
|
|
|
—
|
|
|
321
|
|
|||
Total Current Liabilities
|
1,301
|
|
|
76
|
|
|
1,377
|
|
|||
|
|
|
|
|
|
||||||
Long-term debt
|
9,751
|
|
|
—
|
|
|
9,751
|
|
|||
Other liabilities and deferred credits
|
1,004
|
|
|
605
|
|
|
1,609
|
|
|||
Total Liabilities
|
12,056
|
|
|
681
|
|
|
12,737
|
|
|||
|
|
|
|
|
|
||||||
Shareholders’ Deficit
|
|
|
|
|
|
||||||
Accumulated deficit
|
(7,592
|
)
|
|
(2
|
)
|
|
(7,594
|
)
|
|||
Accumulated other comprehensive loss
|
(334
|
)
|
|
—
|
|
|
(334
|
)
|
|||
Total Shareholders’ Deficit
|
(7,926
|
)
|
|
(2
|
)
|
|
(7,928
|
)
|
|||
Total Liabilities and Shareholders’ Deficit
|
$
|
4,130
|
|
|
$
|
679
|
|
|
$
|
4,809
|
|
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 Revenue 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 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 Revenue 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 Revenue 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
|
|
|
2019
|
|||||||||||||||
|
|
KFC Division
|
|
Pizza Hut Division
|
|
Taco Bell Division
|
|
Total
|
||||||||
U.S.
|
|
|
|
|
|
|
|
|
||||||||
Company sales
|
|
$
|
74
|
|
|
$
|
21
|
|
|
$
|
919
|
|
|
$
|
1,014
|
|
Franchise revenues
|
|
175
|
|
|
282
|
|
|
602
|
|
|
1,059
|
|
||||
Property revenues
|
|
20
|
|
|
6
|
|
|
44
|
|
|
70
|
|
||||
Franchise contributions for advertising and other services
|
|
10
|
|
|
318
|
|
|
483
|
|
|
811
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
China
|
|
|
|
|
|
|
|
|
||||||||
Franchise revenues
|
|
214
|
|
|
60
|
|
|
—
|
|
|
274
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other
|
|
|
|
|
|
|
|
|
||||||||
Company sales
|
|
497
|
|
|
33
|
|
|
2
|
|
|
532
|
|
||||
Franchise revenues
|
|
912
|
|
|
246
|
|
|
27
|
|
|
1,185
|
|
||||
Property revenues
|
|
69
|
|
|
3
|
|
|
—
|
|
|
72
|
|
||||
Franchise contributions for advertising and other services
|
|
520
|
|
|
58
|
|
|
2
|
|
|
580
|
|
||||
|
|
$
|
2,491
|
|
|
$
|
1,027
|
|
|
$
|
2,079
|
|
|
$
|
5,597
|
|
|
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
|
|
Revenue recognized that was included in unamortized upfront fees received from franchisees at the beginning of the period
|
|
(70
|
)
|
|
Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as revenue during the period
|
|
93
|
|
|
Other(a)
|
|
4
|
|
|
Balance at December 31, 2019
|
|
$
|
441
|
|
(a)
|
Includes impact of foreign currency translation as well as, in 2018, 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
|
$
|
65
|
|
|
1 - 2 years
|
60
|
|
|
|
2 - 3 years
|
56
|
|
|
|
3 - 4 years
|
51
|
|
|
|
4 - 5 years
|
46
|
|
|
|
Thereafter
|
163
|
|
|
|
Total
|
$
|
441
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash Paid For:
|
|
|
|
|
|
|
||||||
Interest
|
|
$
|
497
|
|
|
$
|
455
|
|
|
$
|
442
|
|
Income taxes
|
|
283
|
|
|
279
|
|
|
346
|
|
|||
Significant Non-Cash Investing and Financing Activities:
|
|
|
|
|
|
|
||||||
Finance lease obligations incurred
|
|
$
|
14
|
|
|
$
|
4
|
|
|
$
|
8
|
|
Finance lease and other debt obligations transferred through refranchising
|
|
(1
|
)
|
|
(24
|
)
|
|
(35
|
)
|
|||
Reconciliation of Cash and cash equivalents to Consolidated Statements of Cash Flows:
|
|
|
|
|
|
|
||||||
Cash and cash equivalents as presented in Consolidated Balance Sheets
|
|
$
|
605
|
|
|
$
|
292
|
|
|
$
|
1,522
|
|
Restricted cash included in Prepaid expenses and other current assets(a)
|
|
138
|
|
|
151
|
|
|
60
|
|
|||
Restricted cash and restricted cash equivalents included in Other assets(b)
|
|
25
|
|
|
31
|
|
|
17
|
|
|||
Cash, Cash Equivalents and Restricted Cash as presented in Consolidated Statements of Cash Flows(c)
|
|
$
|
768
|
|
|
$
|
474
|
|
|
$
|
1,599
|
|
(a)
|
Restricted cash within Prepaid expenses and other current assets reflects Taco Bell Securitization interest reserves (See Note 10) and the cash related to advertising cooperatives that we consolidate that can only be used to settle obligations of the respective cooperatives.
|
(b)
|
Primarily trust accounts related to our self-insurance program.
|
(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 Year 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.
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Foreign exchange net (gain) loss and other(a)
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
7
|
|
Closure and impairment expense
|
|
5
|
|
|
6
|
|
|
3
|
|
|||
Other (income) expense
|
|
$
|
4
|
|
|
$
|
7
|
|
|
$
|
10
|
|
(a)
|
2019 includes settlement of contingent consideration associated with our 2013 acquisition of the KFC Turkey and Pizza Hut Turkey businesses (See Note 4).
|
Prepaid Expenses and Other Current Assets
|
|
2019
|
|
2018
|
||||
Income tax receivable
|
|
$
|
39
|
|
|
$
|
36
|
|
Restricted cash
|
|
138
|
|
|
151
|
|
||
Assets held for sale(a)
|
|
25
|
|
|
24
|
|
||
Other prepaid expenses and current assets
|
|
136
|
|
|
143
|
|
||
Prepaid expenses and other current assets
|
|
$
|
338
|
|
|
$
|
354
|
|
Property, Plant and Equipment
|
|
2019
|
|
2018
|
||||
Land
|
|
$
|
408
|
|
|
$
|
422
|
|
Buildings and improvements
|
|
1,325
|
|
|
1,349
|
|
||
Finance leases, primarily buildings
|
|
68
|
|
|
59
|
|
||
Machinery, equipment and other
|
|
505
|
|
|
523
|
|
||
Property, plant and equipment, gross
|
|
2,306
|
|
|
2,353
|
|
||
Accumulated depreciation and amortization
|
|
(1,136
|
)
|
|
(1,116
|
)
|
||
Property, plant and equipment, net
|
|
$
|
1,170
|
|
|
$
|
1,237
|
|
Other Assets
|
|
2019
|
|
2018
|
||||
Operating lease right-of-use assets(b)
|
|
$
|
642
|
|
|
$
|
—
|
|
Investment in Grubhub common stock(c)
|
|
137
|
|
|
214
|
|
||
Franchise incentives
|
|
174
|
|
|
141
|
|
||
Other
|
|
360
|
|
|
369
|
|
||
Other assets
|
|
$
|
1,313
|
|
|
$
|
724
|
|
Accounts Payable and Other Current Liabilities
|
|
2019
|
|
2018
|
||||
Accounts payable
|
|
$
|
173
|
|
|
$
|
202
|
|
Accrued compensation and benefits
|
|
223
|
|
|
206
|
|
||
Accrued advertising
|
|
96
|
|
|
108
|
|
||
Operating lease liabilities(b)
|
|
67
|
|
|
—
|
|
||
Accrued taxes, other than income taxes
|
|
52
|
|
|
48
|
|
||
Other current liabilities
|
|
349
|
|
|
347
|
|
||
Accounts payable and other current liabilities
|
|
$
|
960
|
|
|
$
|
911
|
|
(a)
|
Reflects the carrying value of restaurants we have offered for sale to franchisees and excess properties that we do not intend to use for restaurant operations in the future.
|
(b)
|
Increase from 2018 primarily due to the adoption of Topic 842 beginning with the year ended December 31, 2019. See Notes 2 and 4 for further discussion.
|
(c)
|
Refer to Note 4 for additional discussion regarding our investment in Grubhub.
|
|
|
KFC
|
|
Pizza Hut
|
|
Taco Bell
|
|
Worldwide
|
||||||||
Goodwill, net as of December 31, 2017(a)
|
|
$
|
247
|
|
|
$
|
162
|
|
|
$
|
103
|
|
|
$
|
512
|
|
Disposal and other, net(b)
|
|
(17
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|
(26
|
)
|
||||
QuikOrder acquisition(c)
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
||||
Goodwill, net as of December 31, 2018(a)
|
|
$
|
230
|
|
|
$
|
196
|
|
|
$
|
99
|
|
|
$
|
525
|
|
Disposal and other, net(b)
|
|
3
|
|
|
3
|
|
|
(1
|
)
|
|
5
|
|
||||
Goodwill, net as of December 31, 2019(a)
|
|
$
|
233
|
|
|
$
|
199
|
|
|
$
|
98
|
|
|
$
|
530
|
|
(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.
|
(c)
|
In December 2018, we completed the acquisition of QuikOrder, LLC, an online ordering software and service provider for the restaurant industry (“QuikOrder”), who was a provider of services to Company and franchise restaurants of our Pizza Hut U.S. business for nearly two decades. The purchase price allocated for accounting purposes of $77 million consisted of cash, net of cash acquired, in the amount of $66 million, settlement of a prepaid asset of $6 million related to our preexisting contractual relationship with QuikOrder and contingent consideration of $5 million. The contingent consideration was paid in the year ended December 31, 2019. The acquisition was part of our strategy to deliver an easy and personalized online ordering experience and accelerate digital innovation. Subsequent to the acquisition, fees paid by franchisees for use of the QuikOrder software are being presented within Franchise contributions for advertising and other services. Associated costs we incur are being presented within Franchise advertising and other services expense and G&A.
|
|
|
2019
|
|
2018
|
||||||||||||
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
||||||||
Definite-lived intangible assets
|
|
|
|
|
|
|
|
|
||||||||
Capitalized software costs
|
|
$
|
306
|
|
|
$
|
(130
|
)
|
|
$
|
319
|
|
|
$
|
(156
|
)
|
Reacquired franchise rights
|
|
38
|
|
|
(32
|
)
|
|
37
|
|
|
(30
|
)
|
||||
Franchise contract rights
|
|
100
|
|
|
(83
|
)
|
|
99
|
|
|
(79
|
)
|
||||
Lease tenancy rights
|
|
5
|
|
|
(1
|
)
|
|
11
|
|
|
(1
|
)
|
||||
Other
|
|
38
|
|
|
(28
|
)
|
|
38
|
|
|
(27
|
)
|
||||
|
|
$
|
487
|
|
|
$
|
(274
|
)
|
|
$
|
504
|
|
|
$
|
(293
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
|
||||||||
KFC trademark
|
|
$
|
31
|
|
|
|
|
$
|
31
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
||||
Short-term Borrowings
|
|
|
|
|
||||
Current maturities of long-term debt
|
|
$
|
437
|
|
|
$
|
331
|
|
Other
|
|
4
|
|
|
—
|
|
||
|
|
441
|
|
|
331
|
|
||
Less current portion of debt issuance costs and discounts
|
|
(10
|
)
|
|
(10
|
)
|
||
Short-term borrowings
|
|
$
|
431
|
|
|
$
|
321
|
|
|
|
|
|
|
||||
Long-term Debt
|
|
|
|
|
||||
Securitization Notes
|
|
$
|
2,898
|
|
|
$
|
2,928
|
|
Subsidiary Senior Unsecured Notes
|
|
2,850
|
|
|
2,850
|
|
||
Term Loan A Facility
|
|
463
|
|
|
488
|
|
||
Term Loan B Facility
|
|
1,935
|
|
|
1,955
|
|
||
YUM Senior Unsecured Notes
|
|
2,425
|
|
|
1,875
|
|
||
Finance lease obligations (See Note 11)
|
|
77
|
|
|
71
|
|
||
|
|
$
|
10,648
|
|
|
$
|
10,167
|
|
Less debt issuance costs and discounts
|
|
(80
|
)
|
|
(85
|
)
|
||
Less current maturities of long-term debt
|
|
(437
|
)
|
|
(331
|
)
|
||
Long-term debt
|
|
$
|
10,131
|
|
|
$
|
9,751
|
|
|
|
|
|
|
|
Interest Rate
|
||||||
Issuance Date
|
|
Anticipated Repayment Date(a)
|
|
Outstanding Principal
(in millions)
|
|
Stated
|
|
Effective(b)
|
||||
May 2016
|
|
May 2023
|
|
$
|
488
|
|
|
4.377
|
%
|
|
4.59
|
%
|
May 2016
|
|
May 2026
|
|
$
|
975
|
|
|
4.970
|
%
|
|
5.14
|
%
|
November 2018
|
|
November 2023
|
|
$
|
816
|
|
|
4.318
|
%
|
|
4.53
|
%
|
November 2018
|
|
November 2028
|
|
$
|
619
|
|
|
4.940
|
%
|
|
5.06
|
%
|
(a)
|
The legal final maturity dates of the Securitization Notes issued in 2016 and 2018 are May 2046 and November 2048, respectively. If the Issuer has not repaid or refinanced a series of Securitization Notes prior to its respective Anticipated Repayment Dates, rapid amortization of principal on all Securitization Notes will occur and additional interest will accrue on the Securitization Notes.
|
(b)
|
Includes the effects of the amortization of any discount and debt issuance costs.
|
|
|
|
|
|
|
|
|
Interest Rate
|
||||||
|
|
Issuance Date
|
|
Maturity Date
|
|
Outstanding Principal
(in millions)
|
|
Stated
|
|
Effective(b)
|
||||
Term Loan A Facility
|
|
June 2016
|
|
June 2022
|
|
$
|
463
|
|
|
(a)
|
|
|
3.46
|
%
|
Term Loan B Facility
|
|
June 2016
|
|
April 2025
|
|
$
|
1,935
|
|
|
(a)
|
|
|
3.65
|
%
|
Senior Note Due 2024
|
|
June 2016
|
|
June 2024
|
|
$
|
1,050
|
|
|
5.00
|
%
|
|
5.16
|
%
|
Senior Note Due 2026
|
|
June 2016
|
|
June 2026
|
|
$
|
1,050
|
|
|
5.25
|
%
|
|
5.39
|
%
|
Senior Note Due 2027
|
|
June 2017
|
|
June 2027
|
|
$
|
750
|
|
|
4.75
|
%
|
|
4.90
|
%
|
(a)
|
The interest rates applicable to the Term Loan A Facility as well as the Revolving Facility range from 1.25% to 1.75% plus LIBOR or from 0.25% to 0.75% plus the Base Rate (as defined in the Credit Agreement), at the Borrowers’ election, based upon the total leverage ratio of the Borrowers and the Specified Guarantors (as defined in the Credit Agreement). As of December 31, 2019 the interest rate spreads on the LIBOR and Base Rate applicable to our Term Loan A Facility were 1.50% and 0.50%, respectively.
|
(b)
|
Includes the effects of the amortization of any discount and debt issuance costs as well as the impact of the interest rate swaps on the Term Loan B Facility (See Note 12). The effective rates related to our Term Loan A and B Facilities are based on current LIBOR-based interest rates at December 31, 2019.
|
|
|
|
|
|
|
Interest Rate
|
||||||
Issuance Date
|
|
Maturity Date
|
|
Principal Amount (in millions)
|
|
Stated
|
|
Effective(a)
|
||||
October 2007
|
|
November 2037
|
|
$
|
325
|
|
|
6.88
|
%
|
|
7.45
|
%
|
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
|
%
|
September 2019
|
|
January 2030
|
|
$
|
800
|
|
|
4.75
|
%
|
|
4.90
|
%
|
(a)
|
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:
|
|
||
2020
|
$
|
434
|
|
2021
|
455
|
|
|
2022
|
424
|
|
|
2023
|
1,626
|
|
|
2024
|
1,086
|
|
|
Thereafter
|
6,550
|
|
|
Total
|
$
|
10,575
|
|
|
|
|
|
2019
|
||
Operating lease cost
|
|
|
|
$
|
115
|
|
Finance lease cost
|
|
|
|
|
||
Amortization of right-of-use assets
|
|
|
|
3
|
|
|
Interest on lease liabilities
|
|
|
|
3
|
|
|
Total finance lease cost
|
|
|
|
6
|
|
|
Sublease income
|
|
|
|
(69
|
)
|
|
|
2019
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
||
Operating cash flows from operating leases
|
|
$
|
104
|
|
Operating cash flows from finance leases
|
|
3
|
|
|
Financing cash flows from finance leases
|
|
4
|
|
|
Right-of-use assets obtained in exchange for lease obligations
|
|
|
||
Operating leases
|
|
79
|
|
|
Finance leases
|
|
14
|
|
|
|
2019
|
|
Consolidated Balance Sheet
|
||
Assets
|
|
|
|
|
||
Operating lease right-of-use assets
|
|
$
|
642
|
|
|
Other assets
|
Finance lease right-of-use assets
|
|
42
|
|
|
Property, plant and equipment, net
|
|
Total right-of-use assets(a)
|
|
$
|
684
|
|
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
||
Current
|
|
|
|
|
||
Operating
|
|
$
|
67
|
|
|
Accounts payable and other current liabilities
|
Finance
|
|
7
|
|
|
Short-term borrowings
|
|
Non-current
|
|
|
|
|
||
Operating
|
|
640
|
|
|
Other liabilities and deferred credits
|
|
Finance
|
|
70
|
|
|
Long-term debt
|
|
Total lease liabilities(a)
|
|
$
|
784
|
|
|
|
|
|
|
|
|
||
Weighted-average Remaining Lease Term (in years)
|
|
|
|
|
||
Operating leases
|
|
12.3
|
|
|
|
|
Finance leases
|
|
12.7
|
|
|
|
|
|
|
|
|
|
||
Weighted-average Discount Rate
|
|
|
|
|
||
Operating leases
|
|
5.6
|
%
|
|
|
|
Finance leases
|
|
6.6
|
%
|
|
|
(a)
|
U.S. operating lease right-of-use assets and liabilities totaled $283 million and $337 million, respectively, as of December 31, 2019. These amounts primarily related to Taco Bell U.S. including leases related to Company-operated restaurants, leases related to franchise-operated restaurants we sublease and the Taco Bell restaurant support center.
|
|
|
Commitments
|
|
Lease Receivables
|
||||||||||||
|
|
Finance
|
|
Operating
|
|
Direct Financing
|
|
Operating
|
||||||||
2020
|
|
$
|
11
|
|
|
$
|
105
|
|
|
$
|
5
|
|
|
$
|
81
|
|
2021
|
|
11
|
|
|
100
|
|
|
4
|
|
|
76
|
|
||||
2022
|
|
9
|
|
|
92
|
|
|
4
|
|
|
72
|
|
||||
2023
|
|
9
|
|
|
83
|
|
|
4
|
|
|
69
|
|
||||
2024
|
|
8
|
|
|
76
|
|
|
3
|
|
|
65
|
|
||||
Thereafter
|
|
62
|
|
|
531
|
|
|
28
|
|
|
601
|
|
||||
Total lease payments/receipts
|
|
110
|
|
|
987
|
|
|
48
|
|
|
$
|
964
|
|
|||
Less imputed interest/unearned income
|
|
(33
|
)
|
|
(280
|
)
|
|
(18
|
)
|
|
|
|||||
Total lease liabilities/receivables
|
|
$
|
77
|
|
|
$
|
707
|
|
|
$
|
30
|
|
|
|
|
|
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
|
|
|
Gains/(Losses) Recognized in OCI
|
|
(Gains)/Losses Reclassified from AOCI into Net Income
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate swaps
|
$
|
(71
|
)
|
|
$
|
(3
|
)
|
|
$
|
4
|
|
|
$
|
(17
|
)
|
|
$
|
(19
|
)
|
|
$
|
2
|
|
Foreign currency contracts
|
20
|
|
|
22
|
|
|
(56
|
)
|
|
(8
|
)
|
|
(20
|
)
|
|
56
|
|
||||||
Income tax benefit/(expense)
|
16
|
|
|
1
|
|
|
1
|
|
|
4
|
|
|
5
|
|
|
(3
|
)
|
|
2019
|
|
2018
|
||||||||||||
|
Carrying Value
|
|
Fair Value (Level 2)
|
|
Carrying Value
|
|
Fair Value (Level 2)
|
||||||||
Securitization Notes(a)
|
$
|
2,898
|
|
|
$
|
3,040
|
|
|
$
|
2,928
|
|
|
$
|
2,967
|
|
Subsidiary Senior Unsecured Notes(b)
|
2,850
|
|
|
3,004
|
|
|
2,850
|
|
|
2,733
|
|
||||
Term Loan A Facility(b)
|
463
|
|
|
464
|
|
|
488
|
|
|
479
|
|
||||
Term Loan B Facility(b)
|
1,935
|
|
|
1,949
|
|
|
1,955
|
|
|
1,915
|
|
||||
YUM Senior Unsecured Notes(b)
|
2,425
|
|
|
2,572
|
|
|
1,875
|
|
|
1,798
|
|
||||
|
(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
|
|||||||
|
|
Consolidated Balance Sheet
|
|
Level
|
|
2019
|
|
2018
|
|||||
Assets
|
|
|
|
|
|
|
|
|
|||||
Interest Rate Swaps
|
|
Prepaid expenses and other current assets
|
|
2
|
|
|
$
|
6
|
|
|
$
|
21
|
|
Foreign Currency Contracts
|
|
Prepaid expenses and other current assets
|
|
2
|
|
|
—
|
|
|
5
|
|
||
Interest Rate Swaps
|
|
Other assets
|
|
2
|
|
|
3
|
|
|
29
|
|
||
Investment in Grubhub Common Stock
|
|
Other assets
|
|
1
|
|
|
137
|
|
|
214
|
|
||
Other Investments
|
|
Other assets
|
|
1
|
|
|
43
|
|
|
27
|
|
||
|
|
|
|
|
|
|
|
|
|||||
Liabilities
|
|
|
|
|
|
|
|
|
|||||
Interest Rate Swaps
|
|
Other liabilities and deferred credits
|
|
2
|
|
|
71
|
|
|
23
|
|
||
Foreign Currency Contracts
|
|
Other liabilities and deferred credits
|
|
2
|
|
|
—
|
|
|
24
|
|
|
|
2019
|
|
2018
|
||||
Change in benefit obligation:
|
|
|
|
|
||||
Benefit obligation at beginning of year
|
|
$
|
873
|
|
|
$
|
1,007
|
|
Service cost
|
|
6
|
|
|
8
|
|
||
Interest cost
|
|
39
|
|
|
38
|
|
||
Plan amendments
|
|
2
|
|
|
1
|
|
||
Special termination benefits
|
|
—
|
|
|
1
|
|
||
Benefits paid
|
|
(57
|
)
|
|
(73
|
)
|
||
Settlement payments
|
|
(1
|
)
|
|
—
|
|
||
Actuarial (gain) loss
|
|
153
|
|
|
(109
|
)
|
||
Benefit obligation at end of year
|
|
$
|
1,015
|
|
|
$
|
873
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
$
|
755
|
|
|
$
|
864
|
|
Actual return on plan assets
|
|
176
|
|
|
(49
|
)
|
||
Employer contributions
|
|
12
|
|
|
13
|
|
||
Benefits paid
|
|
(57
|
)
|
|
(73
|
)
|
||
Fair value of plan assets at end of year
|
|
$
|
886
|
|
|
$
|
755
|
|
Funded status at end of year
|
|
$
|
(129
|
)
|
|
$
|
(118
|
)
|
Amounts recognized in the Consolidated Balance Sheet:
|
||||||||
|
|
2019
|
|
2018
|
||||
Accrued benefit liability - current
|
|
$
|
(4
|
)
|
|
$
|
(5
|
)
|
Accrued benefit liability - non-current
|
|
(125
|
)
|
|
(113
|
)
|
||
|
|
$
|
(129
|
)
|
|
$
|
(118
|
)
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Service cost
|
|
$
|
6
|
|
|
$
|
8
|
|
|
$
|
10
|
|
Interest cost
|
|
39
|
|
|
38
|
|
|
41
|
|
|||
Amortization of prior service cost(a)
|
|
6
|
|
|
5
|
|
|
6
|
|
|||
Expected return on plan assets
|
|
(44
|
)
|
|
(44
|
)
|
|
(45
|
)
|
|||
Amortization of net loss
|
|
1
|
|
|
16
|
|
|
5
|
|
|||
Net periodic benefit cost
|
|
$
|
8
|
|
|
$
|
23
|
|
|
$
|
17
|
|
Additional (gain) loss recognized due to:
Settlement charges(b)
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
19
|
|
Special termination benefits
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
2
|
|
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 4.
|
Accumulated pre-tax losses recognized within AOCI:
|
||||||||
|
|
2019
|
|
2018
|
||||
Actuarial net loss
|
|
$
|
(118
|
)
|
|
$
|
(101
|
)
|
Prior service cost
|
|
(18
|
)
|
|
(22
|
)
|
||
|
|
$
|
(136
|
)
|
|
$
|
(123
|
)
|
|
|
2019
|
|
2018
|
||||
Level 1:
|
|
|
|
|
||||
Cash
|
|
$
|
5
|
|
|
$
|
3
|
|
Cash Equivalents(a)
|
|
13
|
|
|
10
|
|
||
Fixed Income Securities - U.S. Corporate(b)
|
|
161
|
|
|
140
|
|
||
Equity Securities – U.S. Large cap(b)
|
|
268
|
|
|
215
|
|
||
Equity Securities – U.S. Mid cap(b)
|
|
44
|
|
|
35
|
|
||
Equity Securities – U.S. Small cap(b)
|
|
43
|
|
|
34
|
|
||
Equity Securities – Non-U.S.(b)
|
|
88
|
|
|
74
|
|
||
Level 2:
|
|
|
|
|
||||
Fixed Income Securities – U.S. Corporate(c)
|
|
120
|
|
|
106
|
|
||
Fixed Income Securities – U.S. Government and Government Agencies(d)
|
|
274
|
|
|
161
|
|
||
Fixed Income Securities – Other(d)
|
|
39
|
|
|
18
|
|
||
Total fair value of plan assets(e)
|
|
$
|
1,055
|
|
|
$
|
796
|
|
(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)
|
2019 and 2018 exclude net unsettled trade payables of $169 million and $41 million, respectively.
|
Year ended:
|
|
|
||
2020
|
|
$
|
43
|
|
2021
|
|
47
|
|
|
2022
|
|
49
|
|
|
2023
|
|
52
|
|
|
2024
|
|
53
|
|
|
2025 - 2029
|
|
287
|
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Risk-free interest rate
|
|
2.5
|
%
|
|
2.5
|
%
|
|
1.9
|
%
|
Expected term
|
|
6.5 years
|
|
|
6.5 years
|
|
|
6.4 years
|
|
Expected volatility
|
|
22.0
|
%
|
|
22.0
|
%
|
|
22.9
|
%
|
Expected dividend yield
|
|
1.8
|
%
|
|
1.8
|
%
|
|
1.8
|
%
|
|
|
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
|
|
16,191
|
|
|
|
|
$
|
51.84
|
|
|
|
|
|
|||
Granted
|
|
2,332
|
|
|
|
|
93.52
|
|
|
|
|
|
||||
Exercised
|
|
(3,210
|
)
|
|
|
|
38.16
|
|
|
|
|
|
||||
Forfeited or expired
|
|
(449
|
)
|
|
|
|
75.29
|
|
|
|
|
|
||||
Outstanding at the end of the year
|
|
14,864
|
|
(a)
|
|
|
60.76
|
|
|
5.62
|
|
|
$
|
594
|
|
|
Exercisable at the end of the year
|
|
9,283
|
|
|
|
|
$
|
49.38
|
|
|
4.10
|
|
|
$
|
477
|
|
(a)
|
Outstanding awards include 782 options and 14,082 SARs with weighted average exercise prices of $45.03 and $61.64, respectively. Outstanding awards represent YUM awards held by employees of both YUM and Yum China.
|
|
|
2019
|
|
2018
|
|
2017
|
|
||||||
Options and SARs
|
|
$
|
39
|
|
|
$
|
37
|
|
|
$
|
30
|
|
|
Restricted Stock Units
|
|
12
|
|
|
6
|
|
|
26
|
|
|
|||
Performance Share Units
|
|
8
|
|
|
7
|
|
|
9
|
|
|
|||
Total Share-based Compensation Expense
|
|
$
|
59
|
|
|
$
|
50
|
|
(a)
|
$
|
65
|
|
(a)
|
Deferred Tax Benefit recognized
|
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
22
|
|
(b)
|
|
|
|
|
|
|
|
|
||||||
EID compensation expense not share-based
|
|
$
|
17
|
|
|
$
|
(2
|
)
|
|
$
|
12
|
|
|
(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 4.
|
|
|
Shares Repurchased
(thousands)
|
|
|
Dollar Value of Shares
Repurchased
|
|
|||||||||||||||||||||
Authorization Date
|
|
2019
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2019
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|||
August 2018
|
|
7,788
|
|
|
|
10,003
|
|
|
|
—
|
|
|
|
810
|
|
|
|
894
|
|
|
|
—
|
|
|
|||
November 2017
|
|
—
|
|
|
|
18,240
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,500
|
|
|
|
—
|
|
|
|||
November 2016
|
|
—
|
|
|
|
—
|
|
|
|
26,561
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,915
|
|
|
|||
Total
|
|
7,788
|
|
(a)
|
|
28,243
|
|
(a)
|
|
26,561
|
|
(b)
|
|
$
|
810
|
|
(a)
|
|
$
|
2,394
|
|
(a)
|
|
$
|
1,915
|
|
(b)
|
(a)
|
2019 amount excludes and 2018 amount 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 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, 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
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
OCI, net of tax
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Gains (losses) arising during the year classified into AOCI, net of tax
|
|
24
|
|
|
(30
|
)
|
|
(35
|
)
|
|
(41
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
(Gains) losses reclassified from AOCI, net of tax
|
|
—
|
|
|
8
|
|
|
(21
|
)
|
|
(13
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
24
|
|
|
(22
|
)
|
|
(56
|
)
|
|
(54
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2019, net of tax
|
|
$
|
(221
|
)
|
|
$
|
(104
|
)
|
|
$
|
(63
|
)
|
|
$
|
(388
|
)
|
|
|
|
|
|
|
|
|
|
(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.
|
(b)
|
Amounts reclassified from AOCI for pension and post-retirement benefit plans losses during 2019 include amortization of net losses of $2 million, amortization of prior service cost of $5 million, settlement charges of $3 million and related income tax benefit of $2 million. 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. 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 4.
|
(e)
|
During the quarter ended March 31, 2018, we adopted a standard that allowed for the reclassification from AOCI to Accumulated deficit for stranded tax effects resulting from the Tax Act.
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
U.S.
|
|
$
|
466
|
|
|
$
|
726
|
|
|
$
|
662
|
|
Foreign
|
|
907
|
|
|
1,113
|
|
|
1,612
|
|
|||
|
|
$
|
1,373
|
|
|
$
|
1,839
|
|
|
$
|
2,274
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
Federal
|
|
$
|
129
|
|
|
$
|
102
|
|
|
$
|
(2
|
)
|
|
|
Foreign
|
|
166
|
|
|
181
|
|
|
290
|
|
|||
|
|
State
|
|
16
|
|
|
25
|
|
|
12
|
|
|||
|
|
|
|
$
|
311
|
|
|
$
|
308
|
|
|
$
|
300
|
|
|
|
|
|
|
|
|
|
|
||||||
Deferred:
|
|
Federal
|
|
$
|
(16
|
)
|
|
$
|
(24
|
)
|
|
$
|
603
|
|
|
|
Foreign
|
|
(213
|
)
|
|
5
|
|
|
19
|
|
|||
|
|
State
|
|
(3
|
)
|
|
8
|
|
|
12
|
|
|||
|
|
|
|
$
|
(232
|
)
|
|
$
|
(11
|
)
|
|
$
|
634
|
|
|
|
|
|
$
|
79
|
|
|
$
|
297
|
|
|
$
|
934
|
|
|
|
2019
|
|
2018
|
|
2017
|
|||
U.S. federal statutory rate
|
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State income tax, net of federal tax
|
|
0.8
|
|
|
1.0
|
|
|
0.5
|
|
Statutory rate differential attributable to foreign operations
|
|
1.6
|
|
|
(12.3
|
)
|
|
(9.3
|
)
|
Adjustments to reserves and prior years
|
|
4.2
|
|
|
2.8
|
|
|
0.5
|
|
Share-based compensation
|
|
(4.0
|
)
|
|
(2.5
|
)
|
|
(5.1
|
)
|
Change in valuation allowances
|
|
(2.6
|
)
|
|
8.5
|
|
|
1.5
|
|
Intercompany restructuring
|
|
(16.1
|
)
|
|
—
|
|
|
—
|
|
Tax Act Enactment
|
|
—
|
|
|
(1.9
|
)
|
|
19.1
|
|
Other, net
|
|
0.8
|
|
|
(0.4
|
)
|
|
(1.1
|
)
|
Effective income tax rate
|
|
5.7
|
%
|
|
16.2
|
%
|
|
41.1
|
%
|
|
|
2019
|
|
2018
|
||||
Operating losses
|
|
$
|
176
|
|
|
$
|
180
|
|
Capital losses
|
|
3
|
|
|
3
|
|
||
Tax credit carryforwards
|
|
230
|
|
|
266
|
|
||
Employee benefits
|
|
85
|
|
|
72
|
|
||
Share-based compensation
|
|
55
|
|
|
62
|
|
||
Self-insured casualty claims
|
|
6
|
|
|
7
|
|
||
Lease-related liabilities
|
|
199
|
|
|
43
|
|
||
Various liabilities
|
|
43
|
|
|
43
|
|
||
Intangible assets
|
|
602
|
|
|
8
|
|
||
Property, plant and equipment
|
|
21
|
|
|
19
|
|
||
Deferred income and other
|
|
85
|
|
|
45
|
|
||
Gross deferred tax assets
|
|
1,505
|
|
|
748
|
|
||
Deferred tax asset valuation allowances
|
|
(787
|
)
|
|
(454
|
)
|
||
Net deferred tax assets
|
|
$
|
718
|
|
|
$
|
294
|
|
Intangible assets, including goodwill
|
|
$
|
(40
|
)
|
|
$
|
(42
|
)
|
Property, plant and equipment
|
|
(44
|
)
|
|
(33
|
)
|
||
Operating lease right-of-use assets
|
|
(156
|
)
|
|
—
|
|
||
Other
|
|
(31
|
)
|
|
(31
|
)
|
||
Gross deferred tax liabilities
|
|
$
|
(271
|
)
|
|
$
|
(106
|
)
|
Net deferred tax assets (liabilities)
|
|
$
|
447
|
|
|
$
|
188
|
|
Reported in Consolidated Balance Sheets as:
|
|
|
|
|
||||
Deferred income taxes
|
|
$
|
447
|
|
|
$
|
195
|
|
Other liabilities and deferred credits
|
|
—
|
|
|
(7
|
)
|
||
|
|
$
|
447
|
|
|
$
|
188
|
|
|
|
Year of Expiration
|
|
|
||||||||||||||||
|
|
2020
|
|
2021-2024
|
|
2025-2038
|
|
Indefinitely
|
|
Total
|
||||||||||
Foreign
|
|
$
|
10
|
|
|
$
|
26
|
|
|
$
|
36
|
|
|
$
|
336
|
|
|
$
|
408
|
|
U.S. state
|
|
2
|
|
|
111
|
|
|
1,021
|
|
|
—
|
|
|
1,134
|
|
|||||
U.S. federal
|
|
—
|
|
|
36
|
|
|
178
|
|
|
—
|
|
|
214
|
|
|||||
|
|
$
|
12
|
|
|
$
|
173
|
|
|
$
|
1,235
|
|
|
$
|
336
|
|
|
$
|
1,756
|
|
|
|
2019
|
|
2018
|
||||
Beginning of Year
|
|
$
|
113
|
|
|
$
|
100
|
|
Additions on tax positions - current year
|
|
84
|
|
|
19
|
|
||
Additions for tax positions - prior years
|
|
54
|
|
|
—
|
|
||
Reductions for tax positions - prior years
|
|
(30
|
)
|
|
(5
|
)
|
||
Reductions for settlements
|
|
(31
|
)
|
|
—
|
|
||
Reductions due to statute expiration
|
|
(2
|
)
|
|
(1
|
)
|
||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
||
End of Year
|
|
$
|
188
|
|
|
$
|
113
|
|
|
|
Revenues
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
KFC Division(a)
|
|
$
|
2,491
|
|
|
$
|
2,644
|
|
|
$
|
3,110
|
|
Pizza Hut Division(a)
|
|
1,027
|
|
|
988
|
|
|
893
|
|
|||
Taco Bell Division(a)
|
|
2,079
|
|
|
2,056
|
|
|
1,880
|
|
|||
Unallocated(b)(f)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||
|
|
$
|
5,597
|
|
|
$
|
5,688
|
|
|
$
|
5,878
|
|
|
|
Operating Profit
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
KFC Division
|
|
$
|
1,052
|
|
|
$
|
959
|
|
|
$
|
981
|
|
Pizza Hut Division
|
|
369
|
|
|
348
|
|
|
341
|
|
|||
Taco Bell Division
|
|
683
|
|
|
633
|
|
|
619
|
|
|||
Corporate and unallocated G&A expenses(b)(g)
|
|
(188
|
)
|
|
(171
|
)
|
|
(230
|
)
|
|||
Unallocated Company restaurant expenses(b)(h)
|
|
—
|
|
|
3
|
|
|
10
|
|
|||
Unallocated Franchise and property revenues(b)(f)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||
Unallocated Franchise and property expenses(b)(f)
|
|
(14
|
)
|
|
(8
|
)
|
|
(30
|
)
|
|||
Unallocated Refranchising gain (loss)(b)
|
|
37
|
|
|
540
|
|
|
1,083
|
|
|||
Unallocated Other income (expense)(b)
|
|
(9
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|||
Operating Profit
|
|
1,930
|
|
|
2,296
|
|
|
2,761
|
|
|||
Investment income (expense), net(b)
|
|
(67
|
)
|
|
9
|
|
|
5
|
|
|||
Other pension income (expense)(b)(i)
|
|
(4
|
)
|
|
(14
|
)
|
|
(47
|
)
|
|||
Interest expense, net(b)
|
|
(486
|
)
|
|
(452
|
)
|
|
(445
|
)
|
|||
Income before income taxes
|
|
$
|
1,373
|
|
|
$
|
1,839
|
|
|
$
|
2,274
|
|
|
|
Depreciation and Amortization
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
KFC Division
|
|
$
|
30
|
|
|
$
|
58
|
|
|
$
|
138
|
|
Pizza Hut Division
|
|
15
|
|
|
10
|
|
|
26
|
|
|||
Taco Bell Division
|
|
59
|
|
|
61
|
|
|
82
|
|
|||
Corporate
|
|
8
|
|
|
8
|
|
|
7
|
|
|||
|
|
$
|
112
|
|
|
$
|
137
|
|
|
$
|
253
|
|
|
|
Capital Spending
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
KFC Division
|
|
$
|
81
|
|
|
$
|
105
|
|
|
$
|
176
|
|
Pizza Hut Division
|
|
33
|
|
|
38
|
|
|
42
|
|
|||
Taco Bell Division
|
|
76
|
|
|
85
|
|
|
95
|
|
|||
Corporate
|
|
6
|
|
|
6
|
|
|
5
|
|
|||
|
|
$
|
196
|
|
|
$
|
234
|
|
|
$
|
318
|
|
|
|
Identifiable Assets(d)
|
||||||
|
|
2019
|
|
2018
|
||||
KFC Division
|
|
$
|
2,042
|
|
|
$
|
1,481
|
|
Pizza Hut Division
|
|
801
|
|
|
701
|
|
||
Taco Bell Division
|
|
1,330
|
|
|
1,074
|
|
||
Corporate(c)
|
|
1,058
|
|
|
874
|
|
||
|
|
$
|
5,231
|
|
|
$
|
4,130
|
|
|
|
Long-Lived Assets(e)
|
||||||
|
|
2019
|
|
2018
|
||||
KFC Division
|
|
$
|
1,179
|
|
|
$
|
868
|
|
Pizza Hut Division
|
|
427
|
|
|
384
|
|
||
Taco Bell Division
|
|
938
|
|
|
720
|
|
||
Corporate
|
|
42
|
|
|
32
|
|
||
|
|
$
|
2,586
|
|
|
$
|
2,004
|
|
(a)
|
U.S. revenues included in the combined KFC, Pizza Hut and Taco Bell Divisions totaled $3.0 billion in 2019, $2.9 billion in 2018 and $2.8 billion in 2017.
|
(d)
|
U.S. identifiable assets included in the combined Corporate and KFC, Pizza Hut and Taco Bell Divisions totaled $2.7 billion and $2.0 billion in 2019 and 2018, respectively.
|
(e)
|
Includes PP&E, goodwill, intangible assets, net and in 2019, Operating lease right-of-use assets.
|
(f)
|
Represents costs associated with the KFC U.S. Acceleration Agreement and Pizza Hut U.S. Transformation Agreement. See Note 4.
|
(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 4.
|
(h)
|
Represents depreciation reductions arising primarily from KFC restaurants that were held for sale. See Note 4.
|
(i)
|
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 4.
|
|
|
Beginning Balance
|
|
Expense
|
|
Payments
|
|
Ending Balance
|
||||||
2019 Activity
|
|
$
|
66
|
|
|
9
|
|
|
(21
|
)
|
|
$
|
54
|
|
2018 Activity
|
|
$
|
84
|
|
|
11
|
|
|
(29
|
)
|
|
$
|
66
|
|
|
|
2019
|
||||||||||||||||||
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company sales
|
|
$
|
333
|
|
|
$
|
359
|
|
|
$
|
364
|
|
|
$
|
490
|
|
|
$
|
1,546
|
|
Franchise and property revenues
|
|
612
|
|
|
633
|
|
|
645
|
|
|
770
|
|
|
2,660
|
|
|||||
Franchise contributions for advertising and other services
|
|
309
|
|
|
318
|
|
|
330
|
|
|
434
|
|
|
1,391
|
|
|||||
Total revenues
|
|
1,254
|
|
|
1,310
|
|
|
1,339
|
|
|
1,694
|
|
|
5,597
|
|
|||||
Restaurant profit
|
|
61
|
|
|
73
|
|
|
72
|
|
|
105
|
|
|
311
|
|
|||||
Operating Profit(a)
|
|
433
|
|
|
471
|
|
|
480
|
|
|
546
|
|
|
1,930
|
|
|||||
Net Income
|
|
262
|
|
|
289
|
|
|
255
|
|
|
488
|
|
|
1,294
|
|
|||||
Basic earnings per common share
|
|
0.85
|
|
|
0.94
|
|
|
0.83
|
|
|
1.61
|
|
|
4.23
|
|
|||||
Diluted earnings per common share
|
|
0.83
|
|
|
0.92
|
|
|
0.81
|
|
|
1.58
|
|
|
4.14
|
|
|||||
Dividends declared per common share
|
|
0.42
|
|
|
0.42
|
|
|
0.42
|
|
|
0.42
|
|
|
1.68
|
|
|
|
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(b)
|
|
553
|
|
|
449
|
|
|
553
|
|
|
741
|
|
|
2,296
|
|
|||||
Net Income
|
|
433
|
|
|
321
|
|
|
454
|
|
|
334
|
|
|
1,542
|
|
|||||
Basic earnings per common share
|
|
1.30
|
|
|
0.99
|
|
|
1.43
|
|
|
1.07
|
|
|
4.80
|
|
|||||
Diluted earnings per common share
|
|
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
|
|
(a)
|
Includes net gains from refranchising initiatives of $6 million, $4 million, $8 million and $19 million in the first, second, third and fourth quarters, respectively.
|
(b)
|
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.
|
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 19, 2020
|
|
YUM! BRANDS, INC.
|
By:
|
/s/ David W. Gibbs
|
Signature
|
|
Title
|
|
|
|
|
|
/s/ David W. Gibbs
|
|
Chief Executive Officer
|
|
David W. Gibbs
|
|
(principal executive officer)
|
|
|
|
|
|
/s/ Chris Turner
|
|
Chief Financial Officer
|
|
Chris Turner
|
|
(principal financial officer)
|
|
|
|
|
|
/s/ David E. Russell
|
|
Senior Vice President, Finance and Corporate Controller
|
|
David E. Russell
|
|
(principal accounting officer)
|
|
|
|
|
|
/s/ Paget L. Alves
|
|
Director
|
|
Paget L. Alves
|
|
|
|
|
|
|
|
/s/ Keith Barr
|
|
Director
|
|
Keith Barr
|
|
|
|
|
|
|
|
/s/ Michael J. Cavanagh
|
|
Director
|
|
Michael J. Cavanagh
|
|
|
|
|
|
|
|
/s/ Christopher M. Connor
|
|
Director
|
|
Christopher M. Connor
|
|
|
|
|
|
|
|
/s/ Brian C. Cornell
|
|
Director
|
|
Brian C. Cornell
|
|
|
|
|
|
|
|
/s/ Greg Creed
|
|
Director
|
|
Greg Creed
|
|
|
|
|
|
|
|
/s/ Tanya L. Domier
|
|
Director
|
|
Tanya L. Domier
|
|
|
|
|
|
|
|
/s/ Mirian M. Graddick-Weir
|
|
Director
|
|
Mirian M. Graddick-Weir
|
|
|
|
|
|
|
|
/s/ Thomas C. Nelson
|
|
Director
|
|
Thomas C. Nelson
|
|
|
|
|
|
|
|
/s/ P. Justin Skala
|
|
Director
|
|
P. Justin Skala
|
|
|
|
|
|
|
|
/s/ Elane B. Stock
|
|
Director
|
|
Elane B. Stock
|
|
|
|
|
|
|
|
/s/ Robert D. Walter
|
|
Director
|
|
Robert D. Walter
|
|
|
|
|
|
|
|
/s/ Annie Young-Scrivner
|
|
Director
|
|
Annie Young-Scrivner
|
|
|
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description of Exhibits
|
|||
|
|
|
|||
2.1
|
|
||||
|
|
|
|||
3.1
|
|
||||
|
|
|
|||
3.2
|
|
||||
|
|
|
|||
4.1
|
|
||||
|
|
|
|
||
|
|
(i)
|
|||
|
|
|
|||
|
|
(ii)
|
|||
|
|
|
|
||
|
|
(iii)
|
|||
|
|
|
|
||
|
|
(iv)
|
|||
|
|
|
|
||
|
|
(v)
|
|||
|
|
|
|
|
|
4.2
|
|
|
|
||
|
|
|
|
|
|
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†
|
|
|||
|
|
|
||
10.11.3†
|
|
|||
|
|
|
||
10.12†
|
|
|||
|
|
|
||
10.13†
|
|
|||
|
|
|
|
|
10.13.1†
|
|
|||
|
|
|||
10.13.2†
|
|
|||
|
|
|
|
|
10.13.3†
|
|
|||
|
|
|
|
|
10.13.4†
|
|
|||
|
|
|
|
|
10.14†
|
|
|||
|
|
|
||
10.14.1†
|
|
|||
|
|
|
||
10.15†
|
|
|||
|
|
|
||
10.16†
|
|
|||
|
|
|
||
10.17†
|
|
|||
|
|
|
||
10.18†
|
|
Exhibit
Number
|
|
Description of Exhibits
|
||
10.19†
|
|
|||
|
|
|
||
10.20
|
|
|||
|
|
|
||
10.21
|
|
|||
|
|
|
||
10.22
|
|
|||
|
|
|
||
10.22.1
|
|
|||
|
|
|
||
10.22.2
|
|
|||
|
|
|
||
10.22.3
|
|
|||
|
|
|
||
10.22.4
|
|
|||
|
|
|
||
10.23
|
|
|||
|
|
|
||
10.24
|
|
|||
|
|
|
||
10.24.1
|
|
|||
|
|
|
||
10.24.2
|
|
|||
|
|
|
||
10.25
|
|
|
||
|
|
|
||
10.26
|
|
|||
|
|
|
Exhibit
Number
|
|
Description of Exhibits
|
||
10.27
|
|
|||
|
|
|
||
10.28†
|
|
|||
|
|
|
||
10.29†
|
|
|||
|
|
|
||
21.1
|
|
|||
|
|
|
||
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
|
||
|
|
|
|
|
104
|
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
|
|
|
|
|
†
|
Indicates a management contract or compensatory plan.
|
•
|
Start Date: To be determined
|
•
|
Salary: You will be paid bi-weekly in the amount of $34,615.38 per pay period, ($900,000 if annualized), less applicable taxes and withholdings.
|
•
|
Bonus: In addition to your annual salary, you are also eligible for our Yum! Leaders' Bonus. This annual bonus recognizes and rewards you for our overall performance as a company as well as your individual contributions to the business.
|
◦
|
Your payout from the Team Performance Factor is based on the year-end results of Taco Bell’s (75% weight) and Yum!’s (25% weight) annual performance and can range from 0 to 200% of your target bonus.
|
◦
|
Likewise, depending on how well you perform against the personal goals and objectives set by you and your manager, your Individual Performance Factor could range from 0 to 150% of your target bonus.
|
◦
|
If we achieved the maximum 200% Team Factor multiplied by the maximum 150% Individual Factor this would result in a bonus award 3 times your target.
|
◦
|
For your first year in an eligible position, your reward will be prorated based on the number of days in position.
|
•
|
Long-Term Incentives: The target value of your annual award is $1,500,000 in economic value on the date of the grant. The actual award you receive will be based on management’s assessment of your performance. This award will be delivered 50% in Stock Appreciation Rights (SARs) and 50% in Performance Shares. Awards are typically granted annually in February.
|
◦
|
Stock Appreciation Rights: Our performance-based stock appreciation rights program allows you to have a stake in the long-term growth of the company by granting you the right to the appreciation or gain in Yum!'s stock price over time.
|
◦
|
Performance Share Plan: Your actual payout can range from 0% to 200% of the value granted to you depending on Yum!’s performance against pre-defined metrics over a three year performance period. Payment of your Performance Share Plan awards will be subject to approval of the satisfaction of the pre-defined performance metrics by the Management Planning and Development Committee following the end of the applicable performance period.
|
•
|
Sign-on and Anniversary Bonuses: You will also receive $1,500,000 in cash bonuses payable in equal installments of $500,000 on each of the following dates described below provided that as of each applicable date, you have not: (i) been terminated by the Company for Cause (as defined in Exhibit A attached hereto and incorporated herein by this reference); or (ii) voluntarily terminated your employment with the Company without Good Reason (as defined in Exhibit A attached hereto and incorporated herein by this reference):
|
◦
|
Within 30 days of hire
|
◦
|
Within 30 days of your one-year service anniversary
|
◦
|
Within 30 days of our two-year service anniversary
|
•
|
Sign-on Grant: You will also receive a Restricted Stock Unit sign-on grant of $2,500,000 in economic value on the date of the grant. This grant will vest one-third (33%) per year.
|
•
|
Ownership Guidelines: To be eligible to receive an annual long-term incentive grant, you must be on trend with your Ownership Guidelines. Ownership guidelines are set by a multiple of your base salary and you have five years to reach these guidelines through a variety of ownership vehicles. For your level, you must hold a multiple of 3 times your salary.
|
•
|
Executive Income Deferral: The Executive Income Deferral Program (EID) provides our leaders with an opportunity to enjoy tax-deferred investment returns by deferring up to 100% of your annual bonus and/or up to 85% of your annual base salary. There are several investment choices for your deferred money. As an executive officer, you will be eligible to defer your income through any of the investment options in the Yum!'s Executive Income Deferral Program (EID) except for the Yum! Matching Stock Fund for bonus deferrals and the Yum Stock Fund for base salary deferrals.
|
•
|
Executive Physical: You will be eligible for an annual physical examination.
|
•
|
Retirement: In addition, after 60 days of employment, you are also eligible to participate in the YUM! Brands 401(k) Plan (the “401(k) Plan”). The 401(k) Plan will match your contribution $1 for $1 on up to 6% of eligible pay per pay period-starting with your very first contribution. Information regarding the 401(k) Plan, including enrollment and investment options, will be sent to your home address prior to your eligibility date.
|
•
|
Leadership Retirement Plan (LRP): The LRP is a nonqualified plan with 4 percent of Base Pay and Target Bonus credited on your behalf each year employed. Annual credits are subject to the actual plan provisions, including eligibility and vesting terms. After three years of service with Yum!, you will be vested in the LRP.
|
•
|
Benefits: A variety of benefits are available to you as a Yum! Employee.
|
◦
|
Medical, dental, vision, and legal are available to you effective on your first day of employment. However, you must enroll before your 45th day in order to receive coverage for 2019 and it will be backdated to day one of employment.
|
◦
|
There are other benefits available to you immediately, including but not limited to 24/7/365 physician access for only $20, wellness programs and information security protection.
|
◦
|
You can learn more about these benefits, and others, by visiting HRonline.yum.com. You will have access to HRonline.yum.com after your first day of work.
|
•
|
Vacation: You are eligible to receive four weeks of vacation.
|
•
|
Tax Provisions: The “Tax Provisions” set forth on Exhibit A are hereby incorporated into and made a part of this offer letter.
|
•
|
Sign Offer Letter and Confidentiality Agreement: We are thrilled to extend this offer, and look forward to your acceptance. Enclosed you will find two copies of this letter. Please sign and return one copy to me to accept this offer. The second copy of the offer letter is for your records.
|
•
|
Change in Control: You will be provided a Change in Control agreement.
|
•
|
Complete Background Check: This offer of employment is contingent upon a satisfactory background check and proof of your work eligibility. Federal law requires that you provide documentation, which verifies your identity and your eligibility to work in the United States.
|
•
|
Agreement to Arbitrate: This offer of employment is also contingent upon your agreement and signature on our Agreement to Arbitrate form, which is enclosed with this letter. The Agreement to Arbitrate is intended to provide all employees and the company with an efficient and fair procedure to resolve any disputes that may relate to your employment. It is an alternative solution to litigation that often provides faster results for all parties involved.
|
•
|
And remember, your employment at Yum! is at-will. This means that either you or Yum! can end the employment relationship at any time. An at-will employee’s status (for example, position, salary change, promotions, demotions, etc.) may also be changed at-will, with or without cause and with or without notice, at any time by Yum!.
|
|
|
|
|
|
Signature - Mark King
|
|
Date
|
|
1.
|
Key Definitions. For purposes of this offer letter:
|
2.
|
Tax Provisions.
|
•
|
Section 409A:
|
•
|
Section 280G:
|
|
Exhibit 21.1
|
SUBSIDIARIES OF YUM! BRANDS, INC.
|
|
AS OF DECEMBER 31, 2019
|
|
|
State or Country of
|
Name of Subsidiary
|
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 Limited
|
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 Ltd
|
Australia
|
A.C.N. 108 123 502 Pty Ltd
|
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
|
Gotham Newco 1 Limited
|
United Kingdom
|
Gotham Newco 2 Limited
|
United Kingdom
|
Gotham Newco 3 Limited
|
United Kingdom
|
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 Franchise Pte. Ltd. f/k/a Taco Bell Restaurants China-India Pte. Ltd.
|
Singapore
|
KFC Asia ELP Management, LLC
|
Delaware
|
KFC Asia Holdings LLC f/k/a KFC Asia S.à r.l. f/k/a TB Asia Holdings S.à r.l.
|
Delaware
|
KFC Asia Holdings, LP
|
United Kingdom
|
KFC Australia IP Holdings, LLC
|
Delaware
|
KFC Brasil Publicidade e Propaganda Ltda
|
Brazil
|
KFC Canada, LLC
|
Delaware
|
KFC Corporation
|
Delaware
|
KFC Europe S.à r.l.
|
Luxembourg
|
KFC France SAS
|
France
|
KFC Holding Co.
|
Delaware
|
KFC Holding SAS
|
France
|
KFC Holdings B.V.
|
Netherlands
|
KFC International Holdings II LLC f/k/a .KFC International Holdings II S.à r.l.
|
Delaware
|
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 LLC f/k/a KFC North America S.à r.l.
|
Delaware
|
KFC Operations LLC f/k/a KFC Operations S.à r.l. f/k/a Yum! Finance Holdings IV S.a.r.l
|
Delaware
|
KFC Pacific Holdings Ltd
|
Malta
|
KFC Real Estate B.V.
|
Netherlands
|
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
|
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 Canada 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 MENAPAK Co. S.P.C.
|
Bahrain
|
PH Mexico LLC f/k/a PH Mexico S.à r.l.
|
Delaware
|
PH North America LLC f/k/a PH North America S.à r.l.
|
Delaware
|
PH Operations LLC f/k/a PH Operations S.à r.l. f/k/a Yum! Asia Holdings II S.a.r.l
|
Delaware
|
PH Restaurant Holdings GmbH
|
Germany
|
PH South Africa Holdings B.V.
|
Netherlands
|
PH Yum! Franchise III
|
Australia
|
PHDV Asia Company Limited
|
Vietnam
|
Pizza Famila Partnership
|
Delaware
|
Pizza Hut (Pty) Ltd
|
South Africa
|
Pizza Hut Asia Franchising, LP
|
United Kingdom
|
Pizza Hut Asia Pacific Franchise Pte. Ltd. f/k/a Pizza Hut Restaurants China-India Pte. Ltd.
|
Singapore
|
Pizza Hut Canada, LLC
|
Delaware
|
Pizza Hut Connect, LLC
|
Delaware
|
Pizza Hut Delivery Germany GmbH
|
Germany
|
Pizza Hut ELP Management, LLC
|
Delaware
|
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 Holdings, LLC
|
Delaware
|
Pizza Hut MENAPAK S.à r.l.
|
Luxembourg
|
Pizza Hut of America, LLC
|
Delaware
|
Pizza Hut Pacific Holdings LLC f/k/a PH Asia Holdings S.à r.l.
|
Delaware
|
Pizza Hut Pacific Holdings Ltd.
|
Malta
|
Pizza Hut Technology Ventures, LLC
|
Delaware
|
Pizza Hut, LLC
|
Delaware
|
Pizza Pete Franchising LLC
|
Delaware
|
QuikOrder, LLC
|
Delaware
|
Restaurant Concepts LLC
|
Delaware
|
Restaurant Holdings Limited
|
United Kingdom
|
South China Sea Investments LLC
|
Delaware
|
Southern Fast Foods Limited
|
United Kingdom
|
Suffolk Fast Foods Limited
|
United Kingdom
|
Taco Bell Asia Franchising, LLC f/k/a TB Asia S.à r.l.
|
Delaware
|
Taco Bell Asia Franchising, LP
|
United Kingdom
|
Taco Bell Canada, LLC
|
Delaware
|
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 UK and Europe Limited f/k/a Yum! Restaurants Limited
|
United Kingdom
|
TB APAC B.V.
|
Netherlands
|
TB Asia LLC
|
Delaware
|
TB Canada Company
|
Canada
|
TB Cantina, LLC
|
Delaware
|
TB ELP Management, LLC
|
Delaware
|
TB International Holdings II LLC f/k/a TB International Holdings II S.à r.l.
|
Delaware
|
TB North America LLC f/k/a TB North America S.à r.l.
|
Delaware
|
TBA Services, LLC
|
Delaware
|
Tricon Global Restaurants, Inc.
|
North Carolina
|
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 LLC f/k/a YRI China Franchising S.à r.l. f/k/a Yum! Finance Holdings V S.a.r.l
|
Delaware
|
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
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Yum Connect, LLC
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Delaware
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Yum Cyprus Limited
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Cyprus
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Yum Restaurant Services Group, LLC
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Delaware
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Yum! Asia Franchise Pte Ltd
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Singapore
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Yum! Asia Holdings LLC f/k/a Yum! Asia Holdings S.a.r.l
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Delaware
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Yum! Australia Equipment Pty. Ltd.
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Australia
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Yum! Brands Mexico Holdings II LLC
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Delaware
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Yum! China ELP Management, LLC
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Delaware
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Yum! China Franchising, LP
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United Kingdom
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Yum! Europe Holdings, LP
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United Kingdom
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Yum! Europe Management, LLC
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Delaware
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YUM! Finance Holdings l Sarl
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Luxembourg
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Yum! Franchise de Mexico LLC f/k/a Yum! Franchise de Mexico, S.a.r.l.
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Delaware
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Yum! Franchise II LLP
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United Kingdom
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Yum! III (UK) Limited
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United Kingdom
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Yum! International Finance Company f/k/a Yum! International Finance Company S.a.r.l.
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Delaware
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Yum! KFC Australia Holdings I LLC
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Delaware
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Yum! PH Australia Holdings I LLC
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Delaware
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Yum! PH Australia Holdings II LLC
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Delaware
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Yum! Restaurant Holdings
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United Kingdom
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Yum! Restaurantes do Brasil Ltda.
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Brazil
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Yum! Restaurants (India) Private Limited
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India
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Yum! Restaurants (NZ) Ltd.
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New Zealand
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Yum! Restaurants Asia Pte. Ltd.
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Singapore
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Yum! Restaurants Australia Pty Limited
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Australia
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Yum! Restaurants Europe Limited
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United Kingdom
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Yum! Restaurants International (MENAPAK) Co. S.P.C.
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Bahrain
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Yum! Restaurants International (Thailand) Co., Ltd.
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Thailand
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Yum! Restaurants International Holdings, LLC
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Delaware
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Yum! Restaurants International Limited
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United Kingdom
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Yum! Restaurants International Ltd. & Co. Kommanditgesellschaft
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Germany
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Yum! Restaurants International Management LLC
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Delaware
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YUM! Restaurants International MENAPAK Consulting FZE.
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U.A.E.
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Yum! Restaurants International Russia and CIS LLC
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Russian Federation
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Yum! Restaurants International Russia LLC
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Russian Federation
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Yum! Restaurants International, Inc.
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Delaware
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Yum! Restaurants International, S de RL de CV
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Mexico
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Yum! Restaurants Marketing Private Limited
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India
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Yumsop Pty Limited
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Australia
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Description
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Registration Statement Number
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Form S-3
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YUM! Direct Stock Purchase Program
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333-46242
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Debt Securities
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333-188216
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Form S-8
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Restaurant Deferred Compensation Program
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333-36877, 333-32050
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Executive Income Deferral Program
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333-36955
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SharePower Stock Option Plan
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333-36961
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YUM! Brands 401(k) Plan
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333-36893, 333-32048, 333-109300
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Yum! Brands, Inc. Restaurant General Manager Stock Option Plan
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333-64547
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Yum! Brands, Inc. Long-Term Incentive Plan
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333-32052, 333-109299, 333-170929, 333-223152
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1.
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I have reviewed this report on Form 10-K of YUM! Brands, Inc.;
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2.
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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;
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3.
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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.
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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February 19, 2020
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/s/ David W. Gibbs
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Chief Executive Officer
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1.
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I have reviewed this report on Form 10-K of YUM! Brands, Inc.;
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2.
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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;
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3.
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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.
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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Date: February 19, 2020
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/s/ Chris Turner
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Chief Financial Officer
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1.
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the Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: February 19, 2020
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/s/ David W. Gibbs
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Chief Executive Officer
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1.
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the Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: February 19, 2020
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/s/ Chris Turner
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Chief Financial Officer
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