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UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D. C. 20549
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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934 for the quarterly period ended
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June 30, 2020
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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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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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Page
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No.
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Part I.
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Financial Information
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Item 1 - Financial Statements
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Condensed Consolidated Statements of Income
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Condensed Consolidated Statements of Comprehensive Income
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Condensed Consolidated Statements of Cash Flows
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Condensed Consolidated Balance Sheets
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Condensed Consolidated Statements of Shareholders' Deficit
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Notes to Condensed Consolidated Financial Statements
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Item 2 - Management’s Discussion and Analysis of Financial Condition
and Results of Operations
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Item 3 - Quantitative and Qualitative Disclosures About Market Risk
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Item 4 – Controls and Procedures
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Report of Independent Registered Public Accounting Firm
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Part II.
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Other Information and Signatures
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Item 1 – Legal Proceedings
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Item 1A – Risk Factors
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Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
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Item 6 – Exhibits
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Signatures
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Item 1.
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Financial Statements
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•
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The KFC Division which includes our worldwide operations of the KFC concept
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•
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The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept
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•
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The Taco Bell Division which includes our worldwide operations of the Taco Bell concept
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•
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The Habit Burger Grill Division which includes our worldwide operations of the Habit Burger Grill concept
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Total Current Assets
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$
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12
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Property, plant and equipment, net
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129
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Habit Burger Grill brand (included in Intangible assets, net)
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98
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Operating lease right-of-use assets (included in Other assets)
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163
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Other assets
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22
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Total Assets
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424
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Total Current Liabilities
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(68
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)
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Operating lease liabilities (included in Other liabilities and deferred credits)
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(165
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)
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Other liabilities
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(2
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)
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Total Liabilities
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(235
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)
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Total identifiable net assets
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189
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Goodwill
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219
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Net consideration transferred
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$
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408
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Quarter ended
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Year to date
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||||||||||||
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2020
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2019
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2020
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2019
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||||||||
Net Income
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$
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206
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$
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289
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$
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289
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$
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551
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||||||||
Weighted-average common shares outstanding (for basic calculation)
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303
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307
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302
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307
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Effect of dilutive share-based employee compensation
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4
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7
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5
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7
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Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)
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307
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314
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307
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314
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Basic EPS
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$
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0.68
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$
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0.94
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$
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0.96
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$
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1.79
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Diluted EPS
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$
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0.67
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$
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0.92
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$
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0.94
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$
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1.75
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Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation(a)
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5.2
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2.3
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4.7
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1.8
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(a)
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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.
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Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Nature
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Pension and Post-Retirement Benefits
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Derivative Instruments
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Total
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||||||||
Balance at March 31, 2020, net of tax
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$
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(323
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)
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$
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(100
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)
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$
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(126
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)
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$
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(549
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)
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||||||||
OCI, net of tax
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||||||||
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||||||||
Gains (losses) arising during the period classified into AOCI, net of tax
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68
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—
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(14
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)
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54
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||||
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||||||||
(Gains) losses reclassified from AOCI, net of tax
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—
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4
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3
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7
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||||
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68
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4
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(11
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)
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61
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||||
Balance at June 30, 2020, net of tax
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$
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(255
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)
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$
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(96
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)
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$
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(137
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)
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$
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(488
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)
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||||||||
Balance at December 31, 2019, net of tax
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$
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(221
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)
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$
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(104
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)
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$
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(63
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)
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$
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(388
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)
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||||||||
OCI, net of tax
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||||||||
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||||||||
Gains (losses) arising during the period classified into AOCI, net of tax
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(34
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)
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—
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(70
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)
|
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(104
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)
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||||
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|
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||||||||
(Gains) losses reclassified from AOCI, net of tax
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—
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|
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8
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(4
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)
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4
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||||
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(34
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)
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8
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|
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(74
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)
|
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(100
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)
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||||
Balance at June 30, 2020, net of tax
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|
$
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(255
|
)
|
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$
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(96
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)
|
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$
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(137
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)
|
|
$
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(488
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)
|
|
|
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Quarter ended
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Year to date
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||||||||||||
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6/30/2020
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6/30/2019
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6/30/2020
|
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6/30/2019
|
||||||||
Foreign exchange net (gain) loss and other(a)
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$
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(8
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)
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$
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5
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$
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4
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$
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5
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Closure and impairment expense(b)
|
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6
|
|
|
1
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|
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146
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|
|
1
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Other (income) expense
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|
$
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(2
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)
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|
$
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6
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$
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150
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|
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$
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6
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(a)
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The quarter and year to date ended June 30, 2019 includes the settlement of contingent consideration associated with our 2013 acquisition of the KFC Turkey and Pizza Hut Turkey businesses of $8 million.
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(b)
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The year to date ended June 30, 2020 includes a charge of $139 million related to the impairment of Habit Burger Grill goodwill. See Note 2. The quarter and year to date ended June 30, 2020 also includes a charge of $6 million related to the write-off of software no longer being used.
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6/30/2020
|
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12/31/2019
|
||||
Accounts and notes receivable, gross
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$
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631
|
|
|
$
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656
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Allowance for doubtful accounts
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(101
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)
|
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(72
|
)
|
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Accounts and notes receivable, net
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$
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530
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|
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$
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584
|
|
|
6/30/2020
|
|
12/31/2019
|
||||
Property, plant and equipment, gross
|
$
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2,432
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|
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$
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2,306
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Accumulated depreciation and amortization
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(1,167
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)
|
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(1,136
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)
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Property, plant and equipment, net
|
$
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1,265
|
|
|
$
|
1,170
|
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Other Assets
|
6/30/2020
|
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12/31/2019
|
||||
Operating lease right-of-use assets
|
$
|
794
|
|
|
$
|
642
|
|
Investment in Grubhub, Inc. common stock(a)
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—
|
|
|
137
|
|
||
Franchise incentives
|
170
|
|
|
174
|
|
||
Other
|
349
|
|
|
360
|
|
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Other assets
|
$
|
1,313
|
|
|
$
|
1,313
|
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(a)
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Our investment in Grubhub, Inc. common stock is presented within Prepaid expenses and other current assets as of June 30, 2020 (see Note 13).
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6/30/2020
|
|
12/31/2019
|
||||
Cash and cash equivalents as presented in Condensed Consolidated Balance Sheets
|
$
|
1,243
|
|
|
$
|
605
|
|
Restricted cash included in Prepaid expenses and other current assets(a)
|
175
|
|
|
138
|
|
||
Restricted cash and restricted cash equivalents included in Other assets(b)
|
30
|
|
|
25
|
|
||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents as presented in Condensed Consolidated Statements of Cash Flows
|
$
|
1,448
|
|
|
$
|
768
|
|
(a)
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Restricted cash within Prepaid expenses and other current assets reflects Taco Bell Securitization interest reserves and the cash related to advertising cooperatives which we consolidate that can only be used to settle obligations of the respective cooperatives.
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(b)
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Primarily trust accounts related to our self-insurance program.
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Quarter ended
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Year to date
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Income tax provision
|
$
|
51
|
|
|
$
|
88
|
|
|
$
|
63
|
|
|
$
|
125
|
|
Effective tax rate
|
19.8
|
%
|
|
23.3
|
%
|
|
17.8
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%
|
|
18.5
|
%
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Quarter ended 6/30/2020
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KFC Division
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Pizza Hut Division
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Taco Bell Division
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Habit Burger Grill Division
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Total
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||||||||||
U.S.
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||||||||||
Company sales
|
|
$
|
13
|
|
|
$
|
5
|
|
|
$
|
194
|
|
|
$
|
104
|
|
|
$
|
316
|
|
Franchise revenues
|
|
44
|
|
|
66
|
|
|
132
|
|
|
1
|
|
|
243
|
|
|||||
Property revenues
|
|
3
|
|
|
2
|
|
|
11
|
|
|
—
|
|
|
16
|
|
|||||
Franchise contributions for advertising and other services
|
|
5
|
|
|
78
|
|
|
107
|
|
|
—
|
|
|
190
|
|
|||||
|
|
|
|
|
|
|
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|
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|
||||||||||
China
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Franchise revenues
|
|
47
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company sales
|
|
73
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
87
|
|
|||||
Franchise revenues
|
|
146
|
|
|
46
|
|
|
4
|
|
|
—
|
|
|
196
|
|
|||||
Property revenues
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||
Franchise contributions for advertising and other services
|
|
67
|
|
|
12
|
|
|
1
|
|
|
—
|
|
|
80
|
|
|||||
|
|
$
|
409
|
|
|
$
|
235
|
|
|
$
|
449
|
|
|
$
|
105
|
|
|
$
|
1,198
|
|
|
Quarter ended 6/30/2019
|
|||||||||||||||
|
|
KFC Division
|
|
Pizza Hut Division
|
|
Taco Bell Division
|
|
Total
|
||||||||
U.S.
|
|
|
|
|
|
|
|
|
||||||||
Company sales
|
|
$
|
18
|
|
|
$
|
5
|
|
|
$
|
212
|
|
|
$
|
235
|
|
Franchise revenues
|
|
41
|
|
|
67
|
|
|
140
|
|
|
248
|
|
||||
Property revenues
|
|
5
|
|
|
1
|
|
|
11
|
|
|
17
|
|
||||
Franchise contributions for advertising and other services
|
|
3
|
|
|
78
|
|
|
109
|
|
|
190
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
China
|
|
|
|
|
|
|
|
|
||||||||
Franchise revenues
|
|
52
|
|
|
15
|
|
|
—
|
|
|
67
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other
|
|
|
|
|
|
|
|
|
||||||||
Company sales
|
|
117
|
|
|
6
|
|
|
1
|
|
|
124
|
|
||||
Franchise revenues
|
|
218
|
|
|
60
|
|
|
7
|
|
|
285
|
|
||||
Property revenues
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||
Franchise contributions for advertising and other services
|
|
114
|
|
|
14
|
|
|
—
|
|
|
128
|
|
||||
|
|
$
|
584
|
|
|
$
|
246
|
|
|
$
|
480
|
|
|
$
|
1,310
|
|
|
Year to date ended 6/30/2020
|
|||||||||||||||||||
|
|
KFC Division
|
|
Pizza Hut Division
|
|
Taco Bell Division
|
|
Habit Burger Grill Division
|
|
Total
|
||||||||||
U.S.
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company sales
|
|
$
|
29
|
|
|
$
|
10
|
|
|
$
|
392
|
|
|
$
|
113
|
|
|
$
|
544
|
|
Franchise revenues
|
|
82
|
|
|
128
|
|
|
263
|
|
|
1
|
|
|
474
|
|
|||||
Property revenues
|
|
7
|
|
|
3
|
|
|
21
|
|
|
—
|
|
|
31
|
|
|||||
Franchise contributions for advertising and other services
|
|
9
|
|
|
148
|
|
|
214
|
|
|
—
|
|
|
371
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
China
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Franchise revenues
|
|
94
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
116
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company sales
|
|
187
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
214
|
|
|||||
Franchise revenues
|
|
358
|
|
|
105
|
|
|
11
|
|
|
—
|
|
|
474
|
|
|||||
Property revenues
|
|
25
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|||||
Franchise contributions for advertising and other services
|
|
184
|
|
|
26
|
|
|
1
|
|
|
—
|
|
|
211
|
|
|||||
|
|
$
|
975
|
|
|
$
|
470
|
|
|
$
|
902
|
|
|
$
|
114
|
|
|
$
|
2,461
|
|
|
Year to date ended 6/30/2019
|
|||||||||||||||
|
|
KFC Division
|
|
Pizza Hut Division
|
|
Taco Bell Division
|
|
Total
|
||||||||
U.S.
|
|
|
|
|
|
|
|
|
||||||||
Company sales
|
|
$
|
34
|
|
|
$
|
10
|
|
|
$
|
408
|
|
|
$
|
452
|
|
Franchise revenues
|
|
79
|
|
|
134
|
|
|
268
|
|
|
481
|
|
||||
Property revenues
|
|
11
|
|
|
3
|
|
|
21
|
|
|
35
|
|
||||
Franchise contributions for advertising and other services
|
|
5
|
|
|
152
|
|
|
213
|
|
|
370
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
China
|
|
|
|
|
|
|
|
|
||||||||
Franchise revenues
|
|
108
|
|
|
30
|
|
|
—
|
|
|
138
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other
|
|
|
|
|
|
|
|
|
||||||||
Company sales
|
|
226
|
|
|
12
|
|
|
2
|
|
|
240
|
|
||||
Franchise revenues
|
|
423
|
|
|
120
|
|
|
13
|
|
|
556
|
|
||||
Property revenues
|
|
34
|
|
|
1
|
|
|
—
|
|
|
35
|
|
||||
Franchise contributions for advertising and other services
|
|
230
|
|
|
27
|
|
|
—
|
|
|
257
|
|
||||
|
|
$
|
1,150
|
|
|
$
|
489
|
|
|
$
|
925
|
|
|
$
|
2,564
|
|
|
|
Deferred Franchise Fees
|
||
Balance at December 31, 2019
|
|
$
|
441
|
|
Revenue recognized that was included in unamortized upfront fees received from franchisees at the beginning of the period
|
|
(37
|
)
|
|
Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as revenue during the period
|
|
24
|
|
|
Other(a)
|
|
(8
|
)
|
|
Balance at June 30, 2020
|
|
$
|
420
|
|
(a)
|
Primarily includes impact of foreign currency translation.
|
Less than 1 year
|
$
|
64
|
|
|
1 - 2 years
|
59
|
|
|
|
2 - 3 years
|
54
|
|
|
|
3 - 4 years
|
50
|
|
|
|
4 - 5 years
|
44
|
|
|
|
Thereafter
|
149
|
|
|
|
Total
|
$
|
420
|
|
|
|
Quarter ended
|
|
Year to date
|
||||||||||||
Revenues
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
KFC Division
|
$
|
409
|
|
|
$
|
584
|
|
|
$
|
975
|
|
|
$
|
1,150
|
|
Pizza Hut Division
|
235
|
|
|
246
|
|
|
470
|
|
|
489
|
|
||||
Taco Bell Division
|
449
|
|
|
480
|
|
|
902
|
|
|
925
|
|
||||
Habit Burger Grill Division
|
105
|
|
|
—
|
|
|
114
|
|
|
—
|
|
||||
|
$
|
1,198
|
|
|
$
|
1,310
|
|
|
$
|
2,461
|
|
|
$
|
2,564
|
|
|
Quarter ended
|
|
Year to date
|
||||||||||||
Operating Profit
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
KFC Division
|
$
|
153
|
|
|
$
|
261
|
|
|
$
|
377
|
|
|
$
|
497
|
|
Pizza Hut Division
|
87
|
|
|
96
|
|
|
163
|
|
|
193
|
|
||||
Taco Bell Division
|
154
|
|
|
159
|
|
|
298
|
|
|
297
|
|
||||
Habit Burger Grill Division
|
(6
|
)
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
||||
Corporate and unallocated G&A expenses(a)
|
(98
|
)
|
|
(38
|
)
|
|
(148
|
)
|
|
(81
|
)
|
||||
Unallocated Company restaurant expenses
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Unallocated Franchise and property expenses
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(3
|
)
|
||||
Unallocated Refranchising gain (loss)
|
8
|
|
|
4
|
|
|
21
|
|
|
10
|
|
||||
Unallocated Other income (expense) (See Note 5)
|
3
|
|
|
(9
|
)
|
|
(149
|
)
|
|
(9
|
)
|
||||
Operating Profit
|
$
|
300
|
|
|
$
|
471
|
|
|
$
|
550
|
|
|
$
|
904
|
|
Investment income (expense), net(b)
|
91
|
|
|
25
|
|
|
57
|
|
|
9
|
|
||||
Other pension income (expense) (See Note 10)
|
(2
|
)
|
|
—
|
|
|
(5
|
)
|
|
(3
|
)
|
||||
Interest expense, net
|
(132
|
)
|
|
(119
|
)
|
|
(250
|
)
|
|
(234
|
)
|
||||
Income before income taxes
|
$
|
257
|
|
|
$
|
377
|
|
|
$
|
352
|
|
|
$
|
676
|
|
(a)
|
Includes a $50 million contribution to Yum! Brands Foundation, Inc. (a stand-alone, not-for-profit organization that is not consolidated in the Company's results) in the second quarter of 2020 related to our "Unlocking Opportunity Initiative". Also included are costs related to our acquisition of Habit Burger Grill in the quarter and year to date ended June 30, 2020 of $3 million and $9 million, respectively.
|
(b)
|
Includes changes in the value of Grubhub, Inc. common stock and other investments (see Note 13).
|
|
Quarter ended
|
|
Year to date
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Service cost
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
3
|
|
Interest cost
|
8
|
|
|
10
|
|
|
17
|
|
|
20
|
|
||||
Expected return on plan assets
|
(11
|
)
|
|
(11
|
)
|
|
(22
|
)
|
|
(22
|
)
|
||||
Amortization of net loss
|
3
|
|
|
1
|
|
|
7
|
|
|
1
|
|
||||
Amortization of prior service cost
|
2
|
|
|
1
|
|
|
3
|
|
|
2
|
|
||||
Net periodic benefit cost
|
$
|
4
|
|
|
$
|
2
|
|
|
$
|
9
|
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
||||||||
Additional loss recognized due to settlements(a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
(a)
|
Loss is a result of settlement transactions which exceeded the sum of annual service and interest costs for the applicable plan. These losses were recorded in Other pension (income) expense.
|
Short-term Borrowings
|
|
6/30/2020
|
|
12/31/2019
|
|
|||
Current maturities of long-term debt
|
|
$
|
444
|
|
|
$
|
437
|
|
Other
|
|
—
|
|
|
4
|
|
||
|
|
444
|
|
|
441
|
|
||
Less current portion of debt issuance costs and discounts
|
|
(10
|
)
|
|
(10
|
)
|
||
Short-term borrowings
|
|
$
|
434
|
|
|
$
|
431
|
|
|
|
|
|
|
||||
Long-term Debt
|
|
|
|
|
||||
Securitization Notes
|
|
$
|
2,883
|
|
|
$
|
2,898
|
|
Subsidiary Senior Unsecured Notes
|
|
2,850
|
|
|
2,850
|
|
||
Revolving Facility
|
|
575
|
|
|
—
|
|
||
Term Loan A Facility
|
|
450
|
|
|
463
|
|
||
Term Loan B Facility
|
|
1,926
|
|
|
1,935
|
|
||
YUM Senior Unsecured Notes
|
|
3,025
|
|
|
2,425
|
|
||
Finance lease obligations
|
|
71
|
|
|
77
|
|
||
|
|
$
|
11,780
|
|
|
$
|
10,648
|
|
Less debt issuance costs and discounts
|
|
(84
|
)
|
|
(80
|
)
|
||
Less current maturities of long-term debt
|
|
(444
|
)
|
|
(437
|
)
|
||
Long-term debt
|
|
$
|
11,252
|
|
|
$
|
10,131
|
|
|
Quarter ended
|
|
Year to date
|
||||||||||||||||||||||||||||
|
Gains/(Losses) Recognized in OCI
|
|
(Gains)/Losses Reclassified from AOCI into Net Income
|
|
Gains/(Losses) Recognized in OCI
|
|
(Gains)/Losses Reclassified from AOCI into Net Income
|
||||||||||||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate swaps
|
$
|
(17
|
)
|
|
$
|
(43
|
)
|
|
$
|
3
|
|
|
$
|
(5
|
)
|
|
$
|
(98
|
)
|
|
$
|
(70
|
)
|
|
$
|
2
|
|
|
$
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency contracts
|
(2
|
)
|
|
(1
|
)
|
|
1
|
|
|
6
|
|
|
5
|
|
|
10
|
|
|
(7
|
)
|
|
(4
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Income tax benefit/(expense)
|
5
|
|
|
11
|
|
|
(1
|
)
|
|
—
|
|
|
23
|
|
|
16
|
|
|
1
|
|
|
3
|
|
|
6/30/2020
|
|
12/31/2019
|
||||||||||||
|
Carrying Value
|
|
Fair Value (Level 2)
|
|
Carrying Value
|
|
Fair Value (Level 2)
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Securitization Notes(a)
|
$
|
2,883
|
|
|
$
|
2,993
|
|
|
$
|
2,898
|
|
|
$
|
3,040
|
|
Subsidiary Senior Unsecured Notes(b)
|
2,850
|
|
|
2,932
|
|
|
2,850
|
|
|
3,004
|
|
||||
Term Loan A Facility(b)
|
450
|
|
|
434
|
|
|
463
|
|
|
464
|
|
||||
Term Loan B Facility(b)
|
1,926
|
|
|
1,868
|
|
|
1,935
|
|
|
1,949
|
|
||||
YUM Senior Unsecured Notes(b)
|
3,025
|
|
|
3,158
|
|
|
2,425
|
|
|
2,572
|
|
||||
|
(a)
|
We estimated the fair value of the Securitization Notes by obtaining broker quotes from two separate brokerage firms that are knowledgeable about 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
|
|||||||
|
|
Condensed Consolidated Balance Sheet
|
|
Level
|
|
6/30/2020
|
|
12/31/2019
|
|||||
Assets
|
|
|
|
|
|
|
|
|
|||||
Interest Rate Swaps
|
|
Prepaid expenses and other current assets
|
|
2
|
|
|
$
|
—
|
|
|
$
|
6
|
|
Foreign Currency Contracts
|
|
Prepaid expenses and other current assets
|
|
2
|
|
|
4
|
|
|
—
|
|
||
Investment in Grubhub, Inc. Common Stock
|
|
Prepaid expenses and other current assets
|
|
1
|
|
|
198
|
|
|
—
|
|
||
Interest Rate Swaps
|
|
Other assets
|
|
2
|
|
|
—
|
|
|
3
|
|
||
Investment in Grubhub, Inc. Common Stock
|
|
Other assets
|
|
1
|
|
|
—
|
|
|
137
|
|
||
Other Investments
|
|
Other assets
|
|
1
|
|
|
37
|
|
|
43
|
|
||
|
|
|
|
|
|
|
|
|
|||||
Liabilities
|
|
|
|
|
|
|
|
|
|||||
Interest Rate Swaps
|
|
Accounts payable and other current liabilities
|
|
2
|
|
|
15
|
|
|
—
|
|
||
Interest Rate Swaps
|
|
Other liabilities and deferred credits
|
|
2
|
|
|
143
|
|
|
71
|
|
Item 2.
|
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
|
•
|
The Habit Burger Grill Division which includes our worldwide operations of the Habit Burger Grill 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
|
•
|
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 (with the exception of Habit Burger Grill restaurants we recently acquired), 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. During the first two quarters of 2020 we had a significant number of restaurants that were temporarily closed including restaurants closed due to government restrictions as of a result of COVID-19. The sales of restaurants we deem temporarily closed remain in our base for purposes of determining same-store sales growth and the restaurants remain in our unit count (see below). 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.
|
•
|
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.
|
•
|
System sales and System sales excluding the impacts of foreign currency translation (“FX”) reflect 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 Condensed Consolidated Statements of Income; however, the franchise and license fees are included in the Company’s revenues. We believe System sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates our primary revenue drivers, Company and franchise same-store sales as well as net unit growth.
|
•
|
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 restaurants.
|
•
|
Diluted Earnings Per Share excluding Special Items (as defined below);
|
•
|
Effective Tax Rate excluding Special Items;
|
•
|
Core Operating Profit. 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
|
(18)
|
(21)
|
+6
|
(41)
|
(40)
|
Pizza Hut Division
|
(10)
|
(9)
|
(1)
|
(9)
|
(8)
|
Taco Bell Division
|
(6)
|
(8)
|
+4
|
(3)
|
(3)
|
Worldwide(1)
|
(12)
|
(15)
|
+3
|
(36)
|
(25)
|
|
% Change
|
||||
|
System Sales, ex FX
|
Same-Store Sales
|
Net New Units
|
GAAP Operating Profit
|
Core Operating Profit
|
KFC Division
|
(10)
|
(15)
|
+6
|
(24)
|
(22)
|
Pizza Hut Division
|
(10)
|
(10)
|
(1)
|
(15)
|
(14)
|
Taco Bell Division
|
(1)
|
(4)
|
+4
|
Even
|
Even
|
Worldwide(1)
|
(8)
|
(11)
|
+3
|
(39)
|
(16)
|
(1)
|
Worldwide system sales ex F/X and net-new units include the benefit of our acquisition of Habit Burger Grill on March 18, 2020. Same-store sales reflects the inclusion of Habit Burger Grill in the prior year base. Operating profit results of Habit Burger Grill for the period subsequent to our acquisition are reflected in the consolidated figures.
|
•
|
Net units declined by 118 for the quarter and increased 223 for the year to date (including our acquisition of Habit Burger Grill in the first quarter of 2020).
|
•
|
During the quarter, we recognized pre-tax income of $84 million related to the change in fair value of our investment in Grubhub, Inc. common stock (“Grubhub”), which added $0.21 to diluted EPS for the quarter. When coupled with $24 million of pre-tax investment income recorded in the second quarter of 2019, which added $0.06 to EPS, our Grubhub investment favorably impacted year-over-year EPS growth by $0.15.
|
•
|
For the year to date ended June 30, 2020, we recognized pre-tax income of $62 million related to the change in fair value of our investment in Grubhub, Inc. common stock, which added $0.15 to diluted EPS for the year to date. When coupled with $4 million of pre-tax investment income for the year to date ended June 30, 2019, which added $0.01 to EPS, our Grubhub investment favorably impacted year-over-year EPS growth by $0.14.
|
•
|
Foreign currency translation unfavorably impacted Divisional Operating Profit for the quarter and year to date by $6 million and $12 million, respectively.
|
|
Quarter ended
|
|
Year to date
|
||||||||||||||||||||
|
2020
|
|
2019
|
|
% B/(W)
|
|
2020
|
|
2019
|
|
% B/(W)
|
||||||||||||
Company sales
|
$
|
403
|
|
|
$
|
359
|
|
|
12
|
|
|
|
$
|
758
|
|
|
$
|
692
|
|
|
10
|
|
|
Franchise and property revenues
|
525
|
|
|
633
|
|
|
(17
|
)
|
|
|
1,121
|
|
|
1,245
|
|
|
(10
|
)
|
|
||||
Franchise contributions for advertising and other services
|
270
|
|
|
318
|
|
|
(15
|
)
|
|
|
582
|
|
|
627
|
|
|
(7
|
)
|
|
||||
Total revenues
|
$
|
1,198
|
|
|
$
|
1,310
|
|
|
(9
|
)
|
|
|
$
|
2,461
|
|
|
$
|
2,564
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Restaurant profit
|
$
|
54
|
|
|
$
|
73
|
|
|
(25
|
)
|
|
|
$
|
111
|
|
|
$
|
134
|
|
|
(16
|
)
|
|
Restaurant margin %
|
13.4
|
%
|
|
20.0
|
%
|
|
(6.6
|
)
|
ppts.
|
|
14.7
|
%
|
|
19.2
|
%
|
|
(4.5
|
)
|
ppts.
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
G&A expenses
|
$
|
259
|
|
|
$
|
198
|
|
|
(30
|
)
|
|
|
$
|
467
|
|
|
$
|
409
|
|
|
(14
|
)
|
|
Franchise and property expenses
|
36
|
|
|
38
|
|
|
5
|
|
|
|
94
|
|
|
81
|
|
|
(17
|
)
|
|
||||
Franchise advertising and other services expense
|
264
|
|
|
315
|
|
|
16
|
|
|
|
574
|
|
|
616
|
|
|
7
|
|
|
||||
Refranchising (gain) loss
|
(8
|
)
|
|
(4
|
)
|
|
82
|
|
|
|
(21
|
)
|
|
(10
|
)
|
|
NM
|
|
|
||||
Other (income) expense
|
(2
|
)
|
|
6
|
|
|
NM
|
|
|
|
150
|
|
|
6
|
|
|
NM
|
|
|
||||
Operating Profit
|
$
|
300
|
|
|
$
|
471
|
|
|
(36
|
)
|
|
|
$
|
550
|
|
|
$
|
904
|
|
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment (income) expense, net
|
$
|
(91
|
)
|
|
$
|
(25
|
)
|
|
NM
|
|
|
|
$
|
(57
|
)
|
|
$
|
(9
|
)
|
|
NM
|
|
|
Other pension (income) expense
|
2
|
|
|
—
|
|
|
NM
|
|
|
|
5
|
|
|
3
|
|
|
(57
|
)
|
|
||||
Interest expense, net
|
132
|
|
|
119
|
|
|
(10
|
)
|
|
|
250
|
|
|
234
|
|
|
(7
|
)
|
|
||||
Income tax provision
|
51
|
|
|
88
|
|
|
42
|
|
|
|
63
|
|
|
125
|
|
|
50
|
|
|
||||
Net Income
|
$
|
206
|
|
|
$
|
289
|
|
|
(29
|
)
|
|
|
$
|
289
|
|
|
$
|
551
|
|
|
(48
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted EPS(a)
|
$
|
0.67
|
|
|
$
|
0.92
|
|
|
(27
|
)
|
|
|
$
|
0.94
|
|
|
$
|
1.75
|
|
|
(46
|
)
|
|
Effective tax rate
|
19.8
|
%
|
|
23.3
|
%
|
|
3.5
|
|
ppts.
|
|
17.8
|
%
|
|
18.5
|
%
|
|
0.7
|
|
ppts.
|
(a)
|
See Note 3 for the number of shares used in this calculation.
|
Unit Count
|
6/30/2020
|
|
|
6/30/2019
|
|
|
% Increase (Decrease)
|
||
Franchise
|
49,249
|
|
|
47,910
|
|
|
3
|
||
Company-owned
|
1,144
|
|
|
859
|
|
|
33
|
||
Total
|
50,393
|
|
|
48,769
|
|
|
3
|
|
Quarter ended
|
|
Year to date
|
||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||
Same-store Sales Growth (Decline) %
|
(15
|
)
|
|
5
|
|
(11
|
)
|
|
4
|
System Sales Growth (Decline) %, reported
|
(14
|
)
|
|
7
|
|
(9
|
)
|
|
5
|
System Sales Growth (Decline) %, excluding FX
|
(12
|
)
|
|
10
|
|
(8
|
)
|
|
9
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
Year to date
|
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Consolidated
|
|
|
|
|
|
|
|
|
||||||||
Company sales(a)
|
|
$
|
403
|
|
|
$
|
359
|
|
|
$
|
758
|
|
|
$
|
692
|
|
Franchise sales
|
|
10,312
|
|
|
12,114
|
|
|
21,651
|
|
|
23,965
|
|
||||
System sales
|
|
10,715
|
|
|
12,473
|
|
|
22,409
|
|
|
24,657
|
|
||||
Foreign Currency Impact on System sales(b)
|
|
(214
|
)
|
|
N/A
|
|
|
(391
|
)
|
|
N/A
|
|
||||
System sales, excluding FX
|
|
$
|
10,929
|
|
|
$
|
12,473
|
|
|
$
|
22,800
|
|
|
$
|
24,657
|
|
|
|
|
|
|
|
|
|
|
||||||||
KFC Division
|
|
|
|
|
|
|
|
|
||||||||
Company sales(a)
|
|
$
|
86
|
|
|
$
|
135
|
|
|
$
|
216
|
|
|
$
|
260
|
|
Franchise sales
|
|
5,202
|
|
|
6,513
|
|
|
11,359
|
|
|
12,935
|
|
||||
System sales
|
|
5,288
|
|
|
6,648
|
|
|
11,575
|
|
|
13,195
|
|
||||
Foreign Currency Impact on System sales(b)
|
|
(172
|
)
|
|
N/A
|
|
|
(314
|
)
|
|
N/A
|
|
||||
System sales, excluding FX
|
|
$
|
5,460
|
|
|
$
|
6,648
|
|
|
$
|
11,889
|
|
|
$
|
13,195
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pizza Hut Division
|
|
|
|
|
|
|
|
|
||||||||
Company sales(a)
|
|
$
|
19
|
|
|
$
|
11
|
|
|
$
|
37
|
|
|
$
|
22
|
|
Franchise sales
|
|
2,734
|
|
|
3,087
|
|
|
5,517
|
|
|
6,207
|
|
||||
System sales
|
|
2,753
|
|
|
3,098
|
|
|
5,554
|
|
|
6,229
|
|
||||
Foreign Currency Impact on System sales(b)
|
|
(40
|
)
|
|
N/A
|
|
|
(74
|
)
|
|
N/A
|
|
||||
System sales, excluding FX
|
|
$
|
2,793
|
|
|
$
|
3,098
|
|
|
$
|
5,628
|
|
|
$
|
6,229
|
|
|
|
|
|
|
|
|
|
|
||||||||
Taco Bell Division
|
|
|
|
|
|
|
|
|
||||||||
Company sales(a)
|
|
$
|
194
|
|
|
$
|
213
|
|
|
$
|
392
|
|
|
$
|
410
|
|
Franchise sales
|
|
2,370
|
|
|
2,514
|
|
|
4,768
|
|
|
4,823
|
|
||||
System sales
|
|
2,564
|
|
|
2,727
|
|
|
5,160
|
|
|
5,233
|
|
||||
Foreign Currency Impact on System sales(b)
|
|
(2
|
)
|
|
N/A
|
|
|
(3
|
)
|
|
N/A
|
|
||||
System sales, excluding FX
|
|
$
|
2,566
|
|
|
$
|
2,727
|
|
|
$
|
5,163
|
|
|
$
|
5,233
|
|
|
|
|
|
|
|
|
|
|
||||||||
Habit Burger Grill Division
|
|
|
|
|
|
|
|
|
||||||||
Company sales(a)
|
|
$
|
104
|
|
|
N/A
|
|
|
$
|
113
|
|
|
N/A
|
|
||
Franchise sales
|
|
6
|
|
|
N/A
|
|
|
7
|
|
|
N/A
|
|
||||
System sales
|
|
110
|
|
|
N/A
|
|
|
120
|
|
|
N/A
|
|
||||
Foreign Currency Impact on System sales(b)
|
|
—
|
|
|
N/A
|
|
|
—
|
|
|
N/A
|
|
||||
System sales, excluding FX
|
|
$
|
110
|
|
|
N/A
|
|
|
$
|
120
|
|
|
N/A
|
|
||
|
|
|
|
|
|
|
|
|
(a)
|
Company sales represents sales from our Company-operated stores as presented on our Condensed Consolidated Statements of Income.
|
(b)
|
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.
|
Non-GAAP Items
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Non-GAAP Items, along with the reconciliation to the most comparable GAAP financial measure, as presented below.
|
||||||||||||
|
|
|
|
|
|
|
|
|
||||
|
|
Quarter ended
|
|
Year to date
|
||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Core Operating Profit Growth (Decline) %
|
|
(25
|
)
|
|
18
|
|
|
(16
|
)
|
|
15
|
|
Diluted EPS Growth (Decline) %, excluding Special Items
|
|
(12
|
)
|
|
15
|
|
|
(17
|
)
|
|
2
|
|
Effective Tax Rate excluding Special Items
|
|
18.8
|
%
|
|
23.7
|
%
|
|
18.7
|
%
|
|
18.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
Year to date
|
||||||||||||
Detail of Special Items
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Refranchising gain (loss)(a)
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
6
|
|
|
$
|
10
|
|
Costs associated with acquisition and integration of Habit Burger Grill (See Note 2)
|
|
(3
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
||||
Impairment of Habit Burger Grill goodwill (See Note 2)
|
|
—
|
|
|
—
|
|
|
(139
|
)
|
|
—
|
|
||||
Unlocking Opportunity Initiative contribution(b)
|
|
(50
|
)
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
||||
Other Special Items Expense(c)
|
|
(4
|
)
|
|
(9
|
)
|
|
(7
|
)
|
|
(11
|
)
|
||||
Special Items Expense - Operating Profit
|
|
(54
|
)
|
|
(5
|
)
|
|
(199
|
)
|
|
(1
|
)
|
||||
Interest expense, net(c)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||
Special Items Expense before Income Taxes
|
|
(54
|
)
|
|
(7
|
)
|
|
(199
|
)
|
|
(3
|
)
|
||||
Tax Benefit on Special Items(d)
|
|
7
|
|
|
3
|
|
|
40
|
|
|
2
|
|
||||
Special Items Expense, net of tax
|
|
$
|
(47
|
)
|
|
$
|
(4
|
)
|
|
$
|
(159
|
)
|
|
$
|
(1
|
)
|
Average diluted shares outstanding
|
|
307
|
|
|
314
|
|
|
307
|
|
|
314
|
|
||||
Special Items diluted EPS
|
|
$
|
(0.15
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.52
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation of GAAP Operating Profit to Core Operating Profit
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Consolidated
|
|
|
|
|
|
|
|
|
||||||||
GAAP Operating Profit
|
|
$
|
300
|
|
|
$
|
471
|
|
|
$
|
550
|
|
|
$
|
904
|
|
Special Items Expense
|
|
(54
|
)
|
|
(5
|
)
|
|
(199
|
)
|
|
(1
|
)
|
||||
Foreign Currency Impact on Divisional Operating Profit(e)
|
|
(6
|
)
|
|
N/A
|
|
|
(12
|
)
|
|
N/A
|
|
||||
Core Operating Profit
|
|
$
|
360
|
|
|
$
|
476
|
|
|
$
|
761
|
|
|
$
|
905
|
|
|
|
|
|
|
|
|
|
|
||||||||
KFC Division
|
|
|
|
|
|
|
|
|
||||||||
GAAP Operating Profit
|
|
$
|
153
|
|
|
$
|
261
|
|
|
$
|
377
|
|
|
$
|
497
|
|
Foreign Currency Impact on Divisional Operating Profit(e)
|
|
(5
|
)
|
|
N/A
|
|
|
(10
|
)
|
|
N/A
|
|
||||
Core Operating Profit
|
|
$
|
158
|
|
|
$
|
261
|
|
|
$
|
387
|
|
|
$
|
497
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pizza Hut Division
|
|
|
|
|
|
|
|
|
||||||||
GAAP Operating Profit
|
|
$
|
87
|
|
|
$
|
96
|
|
|
$
|
163
|
|
|
$
|
193
|
|
Foreign Currency Impact on Divisional Operating Profit(e)
|
|
(1
|
)
|
|
N/A
|
|
|
(2
|
)
|
|
N/A
|
|
||||
Core Operating Profit
|
|
$
|
88
|
|
|
$
|
96
|
|
|
$
|
165
|
|
|
$
|
193
|
|
|
|
|
|
|
|
|
|
|
||||||||
Taco Bell Division
|
|
|
|
|
|
|
|
|
||||||||
GAAP Operating Profit
|
|
$
|
154
|
|
|
$
|
159
|
|
|
$
|
298
|
|
|
$
|
297
|
|
Foreign Currency Impact on Divisional Operating Profit(e)
|
|
—
|
|
|
N/A
|
|
|
—
|
|
|
N/A
|
|
||||
Core Operating Profit
|
|
$
|
154
|
|
|
$
|
159
|
|
|
$
|
298
|
|
|
$
|
297
|
|
|
|
|
|
|
|
|
|
|
||||||||
Habit Burger Grill Division
|
|
|
|
|
|
|
|
|
||||||||
GAAP Operating Profit
|
|
$
|
(6
|
)
|
|
N/A
|
|
|
$
|
(8
|
)
|
|
N/A
|
|
||
Foreign Currency Impact on Divisional Operating Profit(e)
|
|
—
|
|
|
N/A
|
|
|
—
|
|
|
N/A
|
|
||||
Core Operating Profit
|
|
$
|
(6
|
)
|
|
N/A
|
|
|
$
|
(8
|
)
|
|
N/A
|
|
||
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation of Diluted EPS to Diluted EPS excluding Special Items
|
|
|
|
|
|
|
|
|
||||||||
Diluted EPS
|
|
$
|
0.67
|
|
|
$
|
0.92
|
|
|
$
|
0.94
|
|
|
$
|
1.75
|
|
Special Items Diluted EPS
|
|
(0.15
|
)
|
|
(0.01
|
)
|
|
(0.52
|
)
|
|
(0.01
|
)
|
||||
Diluted EPS excluding Special Items
|
|
$
|
0.82
|
|
|
$
|
0.93
|
|
|
$
|
1.46
|
|
|
$
|
1.76
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items
|
|
|
|
|
|
|
|
|
||||||||
GAAP Effective Tax Rate
|
|
19.8
|
%
|
|
23.3
|
%
|
|
17.8
|
%
|
|
18.5
|
%
|
||||
Impact on Tax Rate as a result of Special Items(d)
|
|
1.0
|
%
|
|
(0.4
|
)%
|
|
(0.9
|
)%
|
|
(0.2
|
)%
|
||||
Effective Tax Rate excluding Special Items
|
|
18.8
|
%
|
|
23.7
|
%
|
|
18.7
|
%
|
|
18.7
|
%
|
(a)
|
We have reflected as Special Items those refranchising gains and losses that were recorded in connection with 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 the quarters and years to date ended June 30, 2020 and 2019 as Special Items primarily include true-ups to refranchising gains and losses recorded prior to December 31, 2018.
|
(b)
|
On June 24, 2020, the YUM! Brands, Inc. Board of Directors approved the establishment of the Company’s new global “Unlocking Opportunity Initiative” including a $100 million investment over the next five years to fight inequality by unlocking opportunities for employees, restaurant team members and communities. The Company contributed $50 million in the quarter ended June 30, 2020 to Yum! Brands Foundation, Inc. (a stand-alone, not-for-profit organization that is not consolidated in the Company's results) as part of these efforts and investment. As a result of the size and specific nature of this contribution we have reflected the associated expense as a Special Item.
|
(c)
|
During the quarter ended June 30, 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 associated with our 2013 acquisition of the KFC Turkey and Pizza Hut Turkey businesses. Consistent with prior adjustments to the recorded contingent consideration, we have reflected this as a Special Item.
|
(d)
|
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 $5 million in the quarter ended June 30, 2020 to record a reserve against the tax recorded on a prior year divestiture, the effects of which were previously recorded as a Special Item.
|
(e)
|
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 GAAP Operating Profit adjusted only for any prior year Special Items Income (Expense).
|
|
|
Quarter ended
|
|
Year to date
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
% B/(W)
|
|
|
|
|
|
% B/(W)
|
||||||||||||||||||||
|
|
2020
|
|
2019
|
|
Reported
|
|
Ex FX
|
|
2020
|
|
2019
|
|
Reported
|
|
Ex FX
|
||||||||||||||||
System Sales
|
|
$
|
5,288
|
|
|
$
|
6,648
|
|
|
(20
|
)
|
|
|
(18
|
)
|
|
|
$
|
11,575
|
|
|
$
|
13,195
|
|
|
(12
|
)
|
|
|
(10
|
)
|
|
Same-Store Sales Growth (Decline) %
|
|
(21
|
)
|
|
6
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
(15
|
)
|
|
5
|
|
|
N/A
|
|
|
|
N/A
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Company sales
|
|
$
|
86
|
|
|
$
|
135
|
|
|
(36
|
)
|
|
|
(31
|
)
|
|
|
$
|
216
|
|
|
$
|
260
|
|
|
(17
|
)
|
|
|
(13
|
)
|
|
Franchise and property revenues
|
|
251
|
|
|
332
|
|
|
(24
|
)
|
|
|
(22
|
)
|
|
|
566
|
|
|
655
|
|
|
(14
|
)
|
|
|
(11
|
)
|
|
||||
Franchise contributions for advertising and other services
|
|
72
|
|
|
117
|
|
|
(38
|
)
|
|
|
(35
|
)
|
|
|
193
|
|
|
235
|
|
|
(18
|
)
|
|
|
(15
|
)
|
|
||||
Total revenues
|
|
$
|
409
|
|
|
$
|
584
|
|
|
(30
|
)
|
|
|
(27
|
)
|
|
|
$
|
975
|
|
|
$
|
1,150
|
|
|
(15
|
)
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Restaurant profit
|
|
$
|
3
|
|
|
$
|
22
|
|
|
(89
|
)
|
|
|
(90
|
)
|
|
|
$
|
18
|
|
|
$
|
39
|
|
|
(55
|
)
|
|
|
(54
|
)
|
|
Restaurant margin %
|
|
2.7
|
%
|
|
15.8
|
%
|
|
(13.1
|
)
|
ppts.
|
|
(13.5
|
)
|
ppts.
|
|
8.1
|
%
|
|
15.0
|
%
|
|
(6.9
|
)
|
ppts.
|
|
(7.1
|
)
|
ppts.
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
G&A expenses
|
|
$
|
70
|
|
|
$
|
75
|
|
|
6
|
|
|
|
3
|
|
|
|
$
|
143
|
|
|
$
|
153
|
|
|
6
|
|
|
|
4
|
|
|
Franchise and property expenses
|
|
29
|
|
|
19
|
|
|
(52
|
)
|
|
|
(61
|
)
|
|
|
62
|
|
|
47
|
|
|
(32
|
)
|
|
|
(37
|
)
|
|
||||
Franchise advertising and other services expense
|
|
70
|
|
|
116
|
|
|
40
|
|
|
|
37
|
|
|
|
190
|
|
|
232
|
|
|
18
|
|
|
|
15
|
|
|
||||
Operating Profit
|
|
$
|
153
|
|
|
$
|
261
|
|
|
(41
|
)
|
|
|
(40
|
)
|
|
|
$
|
377
|
|
|
$
|
497
|
|
|
(24
|
)
|
|
|
(22
|
)
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
|
|||||
Unit Count
|
|
6/30/2020
|
|
|
6/30/2019
|
|
|
|
||||
Franchise
|
|
24,063
|
|
|
22,789
|
|
|
6
|
|
|
||
Company-owned
|
|
327
|
|
|
329
|
|
|
(1
|
)
|
|
||
Total
|
|
24,390
|
|
|
23,118
|
|
|
6
|
|
|
|
|
Quarter ended
|
|
Year to date
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
% B/(W)
|
|
|
|
|
|
% B/(W)
|
||||||||||||||||||||
|
|
2020
|
|
2019
|
|
Reported
|
|
Ex FX
|
|
2020
|
|
2019
|
|
Reported
|
|
Ex FX
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
System Sales
|
|
$
|
2,753
|
|
|
$
|
3,098
|
|
|
(11
|
)
|
|
|
(10
|
)
|
|
|
$
|
5,554
|
|
|
$
|
6,229
|
|
|
(11
|
)
|
|
|
(10
|
)
|
|
Same-Store Sales Growth (Decline) %
|
|
(9
|
)
|
|
2
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
(10
|
)
|
|
1
|
|
|
N/A
|
|
|
|
N/A
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Company sales
|
|
$
|
19
|
|
|
$
|
11
|
|
|
71
|
|
|
|
76
|
|
|
|
$
|
37
|
|
|
$
|
22
|
|
|
66
|
|
|
|
70
|
|
|
Franchise and property revenues
|
|
126
|
|
|
143
|
|
|
(12
|
)
|
|
|
(11
|
)
|
|
|
259
|
|
|
288
|
|
|
(10
|
)
|
|
|
(10
|
)
|
|
||||
Franchise contributions for advertising and other services
|
|
90
|
|
|
92
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
174
|
|
|
179
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
||||
Total revenues
|
|
$
|
235
|
|
|
$
|
246
|
|
|
(4
|
)
|
|
|
(3
|
)
|
|
|
$
|
470
|
|
|
$
|
489
|
|
|
(4
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Restaurant profit
|
|
$
|
1
|
|
|
$
|
1
|
|
|
NM
|
|
|
|
NM
|
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
(49
|
)
|
|
|
(49
|
)
|
|
Restaurant margin %
|
|
4.5
|
%
|
|
1.6
|
%
|
|
2.9
|
|
ppts.
|
|
2.8
|
|
ppts.
|
|
0.8
|
%
|
|
2.7
|
%
|
|
(1.9
|
)
|
ppts.
|
|
(1.9
|
)
|
ppts.
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
G&A expenses
|
|
$
|
44
|
|
|
$
|
44
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
$
|
90
|
|
|
$
|
91
|
|
|
—
|
|
|
|
—
|
|
|
Franchise and property expenses
|
|
1
|
|
|
9
|
|
|
89
|
|
|
|
86
|
|
|
|
13
|
|
|
14
|
|
|
6
|
|
|
|
3
|
|
|
||||
Franchise advertising and other services expense
|
|
87
|
|
|
89
|
|
|
2
|
|
|
|
2
|
|
|
|
171
|
|
|
172
|
|
|
1
|
|
|
|
1
|
|
|
||||
Operating Profit
|
|
$
|
87
|
|
|
$
|
96
|
|
|
(9
|
)
|
|
|
(8
|
)
|
|
|
$
|
163
|
|
|
$
|
193
|
|
|
(15
|
)
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
|
|||||
Unit Count
|
|
6/30/2020
|
|
|
6/30/2019
|
|
|
|
||||
Franchise
|
|
18,229
|
|
|
18,459
|
|
|
(1
|
)
|
|
||
Company-owned
|
|
97
|
|
|
56
|
|
|
73
|
|
|
||
Total
|
|
18,326
|
|
|
18,515
|
|
|
(1
|
)
|
|
|
|
Quarter ended
|
|
Year to date
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
% B/(W)
|
|
|
|
|
|
% B/(W)
|
||||||||||||||||||||
|
|
2020
|
|
2019
|
|
Reported
|
|
Ex FX
|
|
2020
|
|
2019
|
|
Reported
|
|
Ex FX
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
System Sales
|
|
$
|
2,564
|
|
|
$
|
2,727
|
|
|
(6
|
)
|
|
|
(6
|
)
|
|
|
$
|
5,160
|
|
|
$
|
5,233
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Same-Store Sales Growth %
|
|
(8
|
)
|
|
7
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
(4
|
)
|
|
6
|
|
|
N/A
|
|
|
|
N/A
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Company sales
|
|
$
|
194
|
|
|
$
|
213
|
|
|
(9
|
)
|
|
|
(9
|
)
|
|
|
$
|
392
|
|
|
$
|
410
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
Franchise and property revenues
|
|
147
|
|
|
158
|
|
|
(7
|
)
|
|
|
(6
|
)
|
|
|
295
|
|
|
302
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
||||
Franchise contributions for advertising and other services
|
|
108
|
|
|
109
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
215
|
|
|
213
|
|
|
—
|
|
|
|
—
|
|
|
||||
Total revenues
|
|
$
|
449
|
|
|
$
|
480
|
|
|
(7
|
)
|
|
|
(7
|
)
|
|
|
$
|
902
|
|
|
$
|
925
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Restaurant profit
|
|
$
|
47
|
|
|
$
|
50
|
|
|
(6
|
)
|
|
|
(6
|
)
|
|
|
$
|
92
|
|
|
$
|
94
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
Restaurant margin %
|
|
24.5
|
%
|
|
23.6
|
%
|
|
0.9
|
|
ppts.
|
|
0.9
|
|
ppts.
|
|
23.5
|
%
|
|
22.8
|
%
|
|
0.7
|
|
ppts.
|
|
0.7
|
|
ppts.
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
G&A expenses
|
|
$
|
37
|
|
|
$
|
41
|
|
|
10
|
|
|
|
10
|
|
|
|
$
|
75
|
|
|
$
|
84
|
|
|
11
|
|
|
|
11
|
|
|
Franchise and property expenses
|
|
5
|
|
|
8
|
|
|
38
|
|
|
|
38
|
|
|
|
16
|
|
|
17
|
|
|
5
|
|
|
|
5
|
|
|
||||
Franchise advertising and other services expense
|
|
107
|
|
|
110
|
|
|
3
|
|
|
|
3
|
|
|
|
213
|
|
|
212
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
||||
Operating Profit
|
|
$
|
154
|
|
|
$
|
159
|
|
|
(3)
|
|
|
(3)
|
|
|
$
|
298
|
|
|
$
|
297
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
% Increase (Decrease)
|
|
|||||
Unit Count
|
|
6/30/2020
|
|
|
6/30/2019
|
|
|
|
||||
Franchise
|
|
6,927
|
|
|
6,662
|
|
|
4
|
|
|
||
Company-owned
|
|
473
|
|
|
474
|
|
|
—
|
|
|
||
Total
|
|
7,400
|
|
|
7,136
|
|
|
4
|
|
|
|
|
Quarter ended
|
|
Year to date
|
||||||||||||||||||||
(Expense) / Income
|
|
2020
|
|
2019
|
|
% B/(W)
|
|
2020
|
|
2019
|
|
% B/(W)
|
||||||||||||
Corporate and unallocated G&A
|
|
$
|
(98
|
)
|
|
$
|
(38
|
)
|
|
(151
|
)
|
|
|
$
|
(148
|
)
|
|
$
|
(81
|
)
|
|
(81
|
)
|
|
Unallocated Company restaurant expenses
|
|
—
|
|
|
—
|
|
|
NM
|
|
|
|
(1
|
)
|
|
—
|
|
|
NM
|
|
|
||||
Unallocated Franchise and property expenses
|
|
(1
|
)
|
|
(2
|
)
|
|
26
|
|
|
|
(3
|
)
|
|
(3
|
)
|
|
(7
|
)
|
|
||||
Unallocated Refranchising gain (loss)
|
|
8
|
|
|
4
|
|
|
82
|
|
|
|
21
|
|
|
10
|
|
|
NM
|
|
|
||||
Unallocated Other income (expense)
|
|
3
|
|
|
(9
|
)
|
|
NM
|
|
|
|
(149
|
)
|
|
(9
|
)
|
|
NM
|
|
|
||||
Investment income (expense), net (See Note 9)
|
|
91
|
|
|
25
|
|
|
NM
|
|
|
|
57
|
|
|
9
|
|
|
NM
|
|
|
||||
Other pension income (expense) (See Note 10)
|
|
(2
|
)
|
|
—
|
|
|
NM
|
|
|
|
(5
|
)
|
|
(3
|
)
|
|
(57
|
)
|
|
||||
Interest expense, net
|
|
(132
|
)
|
|
(119
|
)
|
|
(10)
|
|
|
|
(250
|
)
|
|
(234
|
)
|
|
(7
|
)
|
|
||||
Income tax provision (See Note 7)
|
|
(51
|
)
|
|
(88
|
)
|
|
42
|
|
|
|
(63
|
)
|
|
(125
|
)
|
|
50
|
|
|
||||
Effective tax rate (See Note 7)
|
|
19.8
|
%
|
|
23.3
|
%
|
|
3.5
|
|
ppts.
|
|
17.8
|
%
|
|
18.5
|
%
|
|
0.7
|
|
ppts.
|
•
|
During the first quarter of 2020, we suspended our share repurchase program, pursuant to which the Company's Board of Directors previously authorized repurchases of up to $2 billion of the Company's common stock through June 30, 2021 (the “Share Repurchase Program”). We ended this suspension in July of 2020. We may resume share repurchases should business trends persist and should we continue to gain confidence in the timeline for achieving a healthy balance sheet including continued repayment of borrowings under our Revolving Facility and growing back into our ~5.0x EBITDA consolidated net leverage target over time. As of the date of this filing, no shares have been repurchased under the Share Repurchase Program.
|
•
|
On March 24, 2020, Pizza Hut Holdings, LLC, KFC Holding Co. and Taco Bell of America, LLC (collectively, the “Borrowers”), each a wholly-owned subsidiary of YUM! Brands, Inc., borrowed $525 million under our existing Revolving Facility. This borrowing, together with $425 million borrowed under the Revolving Facility on March 18, 2020 to fund amounts associated with the acquisition of The Habit Restaurants, Inc., resulted in an aggregate of $950 million outstanding under the Revolving Facility as of March 31, 2020. In the second quarter of 2020 we made repayments of $375 million under the Revolving Facility that resulted in an outstanding balance of $575 million as of June 30, 2020. The current interest rate for borrowings under the Revolving Facility is LIBOR plus 1.50%.
|
•
|
On April 1, 2020, YUM! Brands, Inc. issued $600 million aggregate principal amount of 7.75% YUM Senior Unsecured Notes due April 1, 2025. See Note 11 for more detail.
|
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025
|
|
2026
|
|
2027
|
|
2028
|
|
2030
|
|
2037
|
|
2043
|
|
Total
|
||||||||||||||||||||||||||
Securitization Notes
|
|
$
|
14
|
|
|
$
|
29
|
|
|
$
|
29
|
|
|
$
|
1,281
|
|
|
$
|
16
|
|
|
$
|
16
|
|
|
$
|
921
|
|
|
$
|
6
|
|
|
$
|
571
|
|
|
|
|
|
|
|
|
$
|
2,883
|
|
||||||
Credit Agreement
|
|
29
|
|
|
76
|
|
|
970
|
|
|
20
|
|
|
20
|
|
|
1,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,951
|
|
|||||||||||||||||||
Subsidiary Senior Unsecured Notes
|
|
|
|
|
|
|
|
|
|
1,050
|
|
|
|
|
1,050
|
|
|
750
|
|
|
|
|
|
|
|
|
|
|
2,850
|
|
||||||||||||||||||||||
YUM Senior Unsecured Notes
|
|
350
|
|
|
350
|
|
|
|
|
325
|
|
|
|
|
600
|
|
|
|
|
|
|
|
|
$
|
800
|
|
|
$
|
325
|
|
|
$
|
275
|
|
|
3,025
|
|
|||||||||||||||
Total
|
|
$
|
393
|
|
|
$
|
455
|
|
|
$
|
999
|
|
|
$
|
1,626
|
|
|
$
|
1,086
|
|
|
$
|
2,452
|
|
|
$
|
1,971
|
|
|
$
|
756
|
|
|
$
|
571
|
|
|
$
|
800
|
|
|
$
|
325
|
|
|
$
|
275
|
|
|
$
|
11,709
|
|
|
YUM! BRANDS, INC.
|
|
(Registrant)
|
Date:
|
August 5, 2020
|
/s/ David E. Russell
|
|
|
Senior Vice President, Finance and Corporate Controller
|
|
|
(Principal Accounting Officer)
|
Description
|
|
Registration Statement Number
|
Form S-8
|
|
|
Restaurant Deferred Compensation Program
|
|
333-36877, 333-32050
|
Executive Income Deferral Program
|
|
333-36955
|
SharePower Stock Option Plan
|
|
333-36961
|
YUM! Brands 401 (k) Plan
|
|
333-36893, 333-32048, 333-109300
|
YUM! Brands, Inc. Restaurant General Manager Stock Option Plan
|
|
333-64547
|
YUM! Brands, Inc. Long-Term Incentive Plan
|
|
333-32052, 333-109299, 333-170929, 333-223152
|
1.
|
I have reviewed this report on Form 10-Q of YUM! Brands, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report.
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 5, 2020
|
/s/ David W. Gibbs
|
|
|
Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-Q of YUM! Brands, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report.
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 5, 2020
|
/s/ Chris Turner
|
|
|
Chief Financial Officer
|
1.
|
the Periodic Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 5, 2020
|
/s/ David W. Gibbs
|
|
|
Chief Executive Officer
|
1.
|
the Periodic Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 5, 2020
|
/s/ Chris Turner
|
|
|
Chief Financial Officer
|