Yum! Brands Announces Full-Year 2012 EPS Growth of 13%, or $3.25 Per Share, Excluding Special Items; Opens a Record 1,976 New International Restaurants; Adverse Publicity Regarding Poultry Supply Continues to Significantly Impact China KFC Sales
Yum! Brands Inc. (NYSE: YUM) today reported results for the fourth
quarter ended December 29, 2012 including EPS of $0.83, excluding
Special Items. Reported EPS was $0.72 for the quarter and $3.38 for the
year.
FULL-YEAR HIGHLIGHTS
-
Worldwide system sales grew 5%, prior to foreign currency translation.
-
Worldwide system sales growth was 8%, excluding the 2011
divestiture of Long John Silver’s (LJS) and A&W All American
Restaurants (A&W), the 53rd-week impact and the acquisition of
Little Sheep, including 17% in China, 7% at Yum! Restaurants
International (YRI) and 5% in the U.S. The 2011 fourth-quarter and
full-year results reflect the benefit of an additional (53rd) week.
-
Same-store sales grew 4% in China, 3% at YRI and 5% in the U.S.
-
Worldwide restaurant margin increased 0.6 percentage points to 16.6%.
-
Worldwide operating profit grew 12%, prior to foreign currency
translation.
-
Record international development with 1,976 new restaurants opened,
including 889 new units in China, 949 new units at YRI and 138 in
India Division; 83% of this development occurred in emerging markets.
FOURTH-QUARTER HIGHLIGHTS
-
China Division KFC same-store sales turned sharply negative during the
last two weeks of December as a result of adverse publicity from the
poultry supply situation.
-
Worldwide system sales were flat, prior to foreign currency
translation.
-
Worldwide system sales growth was 5%, excluding the 2011
divestiture of LJS and A&W, the 53rd week impact and the
acquisition of Little Sheep, including 7% in China, 7% at YRI and
3% in the U.S.
-
Same-store sales grew 3% at YRI and 3% in the U.S. Same-store sales
declined 6% in China.
-
Worldwide restaurant margin increased 0.1 percentage point to 14.4%.
-
Worldwide operating profit grew 6%, prior to foreign currency
translation. Operating profit grew 10% at YRI, declined 5% in China
and declined 5% in the U.S.
-
Excluding the 53rd-week impact, worldwide operating profit grew
11%, including 15% at YRI and 5% in the U.S.
The current negative sales trend in our China KFC business will
adversely impact 2013 EPS. See next page for details.
|
|
|
Fourth Quarter
|
|
Full Year
|
|
|
2012
|
|
2011
|
|
% Change
|
|
2012
|
|
2011
|
|
% Change
|
EPS Excluding Special Items
|
|
$0.83
|
|
$0.75
|
|
10%
|
|
$3.25
|
|
$2.87
|
|
13%
|
Special Items Gain/(Loss)1 |
|
$(0.11)
|
|
$0.00
|
|
NM
|
|
$0.13
|
|
$(0.13)
|
|
NM
|
EPS
|
|
$0.72
|
|
$0.75
|
|
(3)%
|
|
$3.38
|
|
$2.74
|
|
23%
|
1 See Reconciliation of Non-GAAP Measurements to GAAP
Results for further detail of the Special Items. Special Items for
2012 are primarily related to the U.S. pension settlement charge,
Little Sheep acquisition gain, U.S. refranchising gains and loss
on refranchising of our Pizza Hut UK Dine-in restaurants.
|
|
Note: All comparisons are versus the same period a year ago
and exclude Special Items unless noted.
|
|
CHINA UPDATE
KFC sales in the last two weeks of the fourth quarter were significantly
impacted by the intense media attention surrounding an investigation by
the Shanghai FDA (SFDA) into poultry supply management at Yum! China.
The investigation was prompted by a report broadcast on China’s national
television (CCTV), which aired on December 18, 2012. The report showed
that a few poultry farmers were ignoring laws and regulations by using
excessive levels of antibiotics in chicken. Regrettably, some of this
product was purchased by two poultry suppliers of KFC China. The
investigation caused further media attention, including social media
commentary, and this negatively affected consumer perceptions of poultry
safety, and KFC in particular.
On January 25, 2013, the SFDA concluded its investigation and released
its recommendations. We appreciate their thorough and diligent review.
The SFDA identified issues and provided “Supervisory Recommendations” to
Yum! China to strengthen our poultry supply chain practices including
refined voluntary self testing procedures, improved reporting and
communications and enhanced supplier management. Our team in China has
taken a comprehensive review of our current system and is in the process
of incorporating all of the SFDA’s recommendations. We have always
recognized the importance of building a world-class supply chain in
China, which is why we have implemented a wide range of quality
assurance and testing practices over the years above legal and
regulatory standards. The SFDA’s recommendations will further strengthen
those practices. The SFDA did not bring a case against Yum! China and no
fine was assessed.
The past seven weeks of media attention have been intense and negative
towards the KFC brand image. Even though this is a very disappointing
setback, we are more committed than ever to continue to strengthen our
efforts, restore the confidence of our customers and win back their
brand loyalty. To that end, the China team will soon be launching a
brand reputation quality campaign to re-assure consumers of our high
quality food, along with aggressive marketing plans.
2013 OUTLOOK
We are confident the YRI and U.S. businesses will deliver annual
operating profit growth consistent with our ongoing growth model. Given
current uncertainties related to KFC sales in China, it is difficult to
confidently forecast our overall financial performance. We have made the
assumption that KFC China same-store sales will improve as the year
progresses and will be positive in the fourth quarter. With these
assumptions, we estimate a mid-single digit EPS decline in 2013 versus
prior year, excluding Special Items. This includes an expectation for a
significant decline in EPS performance in the first half of the year
followed by EPS growth in the second half.
The first quarter for our China business includes only the months of
January and February and is highly impacted by consumer spending during
the Chinese New Year holiday. The timing of this holiday changes each
year. This year it is important to note that while the timing impact of
Chinese New Year is neutral to our first quarter, there is a significant
negative impact to January sales and a corresponding significant benefit
to February sales due to the timing of this week-long holiday. We expect
that the underlying performance of our China business will remain
relatively unchanged for the balance of the first quarter, with a
same-store sales decline of approximately 25% for January and February
combined (China’s first quarter).
DAVID NOVAK COMMENTS
David C. Novak, Chairman and CEO, said, “We delivered full-year 2012 EPS
growth of 13% or $3.25 per share, excluding Special Items. This marks
the 11th consecutive year we delivered at least 13% growth,
which puts us in an elite group of high-growth companies. We also take
satisfaction with our record level of international development in 2012
which lays the foundation for future growth and makes Yum! a leader in
emerging market development. With new-unit development at the core of
our growth model and the continued rapid expansion of the consuming
class overseas, we believe our opportunity for long-term growth has
never been better.
“We are obviously proud of our track record of achieving double-digit
EPS growth, and I am as confident as ever we can deliver this
performance over the long term. However, as a result of adverse
publicity from the poultry supply situation in mid-December, China KFC
sales experienced a sharp decline. Due to continued negative same-store
sales and our assumption that it will take time to recover consumer
confidence, we no longer expect to achieve EPS growth in 2013.
“Although we cannot predict how long it will take to restore sales, we
are steadfast in our belief that the power and popularity of the KFC
brand in China will ultimately drive a full sales recovery. Having
weathered other storms in the past, we know that our brands are
resilient. As a result, we will stay the course with our target to
develop at least 700 new units in 2013 in China to lay the foundation
for future growth, and will not let this event detract from our
unparalleled China growth opportunity.
“Our growth strategies are unchanged, in China, Yum! Restaurants
International, India and the U.S. With our category-leading brands and
outstanding people capability, I’m confident we will bounce back
strongly and restore our track record of double-digit EPS growth in the
years ahead.”
|
CHINA DIVISION
|
|
|
|
Fourth Quarter
|
|
Full Year1
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
|
2012
|
|
2011
|
|
Reported
|
|
Ex F/X
|
|
2012
|
|
2011
|
|
Reported
|
|
Ex F/X
|
System Sales Growth
|
|
|
|
|
|
+12
|
|
+11
|
|
|
|
|
|
+23
|
|
+20
|
Same-Store Sales Growth (%)
|
|
(6)
|
|
+21
|
|
NM
|
|
NM
|
|
+4
|
|
+19
|
|
NM
|
|
NM
|
Restaurant Margin (%)
|
|
13.9
|
|
15.8
|
|
(1.9)
|
|
(1.9)
|
|
18.1
|
|
19.7
|
|
(1.6)
|
|
(1.6)
|
Operating Profit ($MM)
|
|
203
|
|
210
|
|
(3)
|
|
(5)
|
|
1,015
|
|
908
|
|
+12
|
|
+9
|
1 The second quarter of 2012 is the first quarter to
include the consolidated operating results of Little Sheep.
|
|
-
China Division KFC same-store sales turned sharply negative
during the last two weeks of December as a result of adverse publicity
from the China poultry supply situation.
-
China system sales increased 20% for the year and 11% in the
fourth quarter, prior to foreign currency translation.
-
KFC same-store sales grew 3% for the year and declined 8% in the
fourth quarter.
-
Pizza Hut Casual Dining same-store sales grew 10% for the year and
7% in the fourth quarter.
-
We estimate the timing of Chinese New Year had a negative mid teen
impact on January same-store sales growth for both KFC and Pizza Hut
Casual Dining. We expect this negative impact of Chinese New Year to
reverse in February. January 2013 estimated same-store sales declined
37%, including 41% for KFC and 15% at Pizza Hut Casual Dining.
-
China opened a record 889 new units during the year, including 369 in
the fourth quarter.
China Units
|
|
Q4 2012
|
|
% Change2 |
Traditional Restaurants1 |
|
5,275
|
|
+17
|
KFC
|
|
4,260
|
|
+15
|
Pizza Hut Casual Dining
|
|
826
|
|
+32
|
1 Total includes Pizza Hut Home Service and East
Dawning; excludes Little Sheep units
|
2 Annual Rate of Change excludes Little Sheep units for
comparability of core business
|
|
|
-
Restaurant margin decreased 1.6 percentage points to 18.1% for the
year, driven by wage rate inflation of 10%, commodity inflation of 1%
and higher start-up costs from an increased pace of development.
Restaurant margin decreased 1.9 percentage points to 13.9% in the
fourth quarter, driven by a decline in same-store transactions.
-
Foreign currency translation positively impacted operating profit by
$26 million for the year and $3 million in the quarter.
-
For the year, the Little Sheep acquisition had a positive impact of 3
percentage points on system sales growth, a negative impact of 0.4
percentage points on restaurant margin and a negative impact of 1
percentage point on operating profit. For the quarter, the Little
Sheep acquisition had a positive impact of 4 percentage points on
system sales growth, a negative impact of 0.3 percentage points on
restaurant margin and a negligible impact on operating profit.
|
YUM! RESTAURANTS INTERNATIONAL (YRI)
DIVISION
|
|
|
|
Fourth Quarter
|
|
Full Year
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
|
|
2012
|
|
2011
|
|
Reported
|
|
Ex F/X
|
|
2012
|
|
2011
|
|
Reported
|
|
Ex F/X
|
Traditional Restaurants
|
|
14,500
|
|
13,987
|
|
+4
|
|
NA
|
|
14,500
|
|
13,987
|
|
+4
|
|
NA
|
System Sales Growth
|
|
|
|
|
|
+1
|
|
+3
|
|
|
|
|
|
+2
|
|
+5
|
Restaurant Margin (%)
|
|
14.1
|
|
11.9
|
|
2.2
|
|
2.2
|
|
12.9
|
|
12.4
|
|
0.5
|
|
0.5
|
Franchise & License Fees ($MM)
|
|
283
|
|
268
|
|
+5
|
|
+8
|
|
879
|
|
851
|
|
+3
|
|
+7
|
Operating Profit ($MM)
|
|
224
|
|
206
|
|
+8
|
|
+10
|
|
715
|
|
673
|
|
+6
|
|
+10
|
Operating Margin (%)
|
|
21.6
|
|
20.3
|
|
1.3
|
|
1.4
|
|
21.8
|
|
21.1
|
|
0.7
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
YRI Division system sales increased 5% for the year and 3% in
the fourth quarter, prior to foreign currency translation. The system
sales increases were driven by record new-unit development and 3%
same-store sales growth for both the quarter and the year.
-
The 2011 divestiture of LJS / A&W and 53rd week had a negative
impact of 2% on system sales for the year.
-
Emerging markets system sales grew 12% for the year, driven by 7%
same-store sales growth and 7% unit growth.
-
Developed markets system sales grew 1% for the year, driven by 1%
same-store sales growth and 1% unit growth.
-
YRI opened a record 949 new units in 78 countries. This included 473
new units in the fourth quarter.
-
For the year, 617 new units were opened in emerging markets.
-
Our franchise partners opened 92% of all new units.
-
Foreign currency negatively impacted operating profit by $26 million
for the year and $5 million in the fourth quarter.
-
The 2011 divestiture of LJS / A&W had a negative impact of 1% on
operating profit growth for the year.
|
YRI MARKETS1 |
|
|
|
SYSTEM Sales Growth
Ex F/X and Ex 53rd Week
|
|
Percent of YRI2 |
|
Fourth Quarter (%)
|
|
Full Year (%)
|
Franchise
|
|
|
|
|
|
|
Asia (ex Japan)
|
|
16%
|
|
+1
|
|
+2
|
Japan
|
|
10%
|
|
(4)
|
|
(2)
|
Latin America
|
|
11%
|
|
+9
|
|
+9
|
Middle East
|
|
8%
|
|
+10
|
|
+11
|
Continental Europe
|
|
7%
|
|
+2
|
|
+4
|
Canada
|
|
6%
|
|
+1
|
|
Flat
|
|
|
|
|
|
|
|
Combined Company / Franchise
|
|
|
|
|
|
|
UK
|
|
12%
|
|
+3
|
|
+4
|
Australia / New Zealand
|
|
11%
|
|
+4
|
|
+2
|
Thailand
|
|
2%
|
|
+20
|
|
+14
|
Korea
|
|
2%
|
|
+16
|
|
+11
|
|
|
|
|
|
|
|
Key Growth
|
|
|
|
|
|
|
Africa
|
|
7%
|
|
+21
|
|
+17
|
France
|
|
4%
|
|
+5
|
|
+8
|
Germany / Netherlands
|
|
2%
|
|
+12
|
|
+11
|
Russia
|
|
2%
|
|
+47
|
|
+46
|
1 See website www.yum.com
under tab "Investors" for a list of the countries within each of
the YRI markets.
|
2 Percentage of Total YRI System Sales for Full Year
2012.
|
|
|
U.S. DIVISION
|
|
|
|
|
Fourth Quarter
|
|
|
Full Year
|
|
|
|
2012
|
|
|
2011
|
|
|
% Change
|
|
|
2012
|
|
|
2011
|
|
|
% Change
|
Same-Store Sales Growth (%)
|
|
|
+3
|
|
|
+1
|
|
|
NM
|
|
|
+5
|
|
|
(1)
|
|
|
NM
|
Restaurant Margin (%)
|
|
|
16.7
|
|
|
13.4
|
|
|
3.3
|
|
|
16.3
|
|
|
12.1
|
|
|
4.2
|
Franchise and License Fees ($MM)
|
|
|
247
|
|
|
252
|
|
|
(2)
|
|
|
802
|
|
|
786
|
|
|
+2
|
Operating Profit ($MM)
|
|
|
180
|
|
|
191
|
|
|
(5)
|
|
|
666
|
|
|
589
|
|
|
+13
|
Operating Margin (%)
|
|
|
19.0
|
|
|
16.1
|
|
|
2.9
|
|
|
19.9
|
|
|
15.5
|
|
|
4.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
U.S. Division same-store sales increased 5% for the year,
including growth of 8% at Taco Bell, 3% at Pizza Hut and 3% at KFC. In
the fourth quarter, same-store sales increased 3%, driven by growth of
5% at Taco Bell, 4% at KFC and offset by a decline of 1% at Pizza Hut.
-
Restaurant margin increased 4.2 percentage points for the year, driven
primarily by strong sales leverage. In the fourth quarter, restaurant
margin increased 3.3 percentage points.
-
Positive net-unit development of 21 units for the year.
-
The 2011 divestiture of LJS / A&W and the 53rd week negatively
impacted franchise and license fees by 7 percentage points and
operating profit by 1 percentage point for the year; and negatively
impacted franchise and license fees by 10 percentage points and
operating profit by 12 percentage points for the quarter.
INDIA DIVISION
-
India Division system sales increased 29% for the year and 24%
for the fourth quarter, prior to foreign currency translation. The
system sales increase was driven by unit growth of 27% and same-store
sales growth of 5% for the year.
|
|
|
|
|
India Units
|
|
Q4 2012
|
|
% Change1 |
Traditional Restaurants2 |
|
593
|
|
+27
|
KFC
|
|
280
|
|
+38
|
Pizza Hut Casual Dining
|
|
181
|
|
+9
|
Pizza Hut Home Service
|
|
129
|
|
+37
|
1 Annual rate of change
|
2 Total includes 3 Taco Bell units
|
|
OWNERSHIP / SPECIAL ITEMS UPDATE
-
For the year in the U.S., we refranchised 468 units for proceeds of
$311 million, primarily related to Taco Bell. We recorded pre-tax U.S.
refranchising gains of $122 million in Special Items. At fiscal year
end, our company ownership in the U.S. is 11%.
-
During the quarter, we refranchised our Pizza Hut UK Dine-In business,
which included 331 units. This resulted in a Special Items charge of
$46 million for the quarter. At fiscal year end, our company ownership
at YRI is 8%.
-
During the quarter, in an effort to reduce ongoing volatility and
administration expense in connection with the Company’s U.S. pension
obligation, the Company offered certain former employees the limited
opportunity to voluntarily elect an early payout of their pension
benefits funded from existing pension plan assets. As a result of the
program, we recorded a pre-tax non-cash pension settlement charge of
$84 million in Special Items for the quarter.
OTHER ITEMS UPDATE
-
For the year, worldwide effective tax rate, prior to Special Items,
increased 1.6 percentage points to 25.8%.
-
Increased annual dividend rate to $1.34 per share. This 18% increase
marked the eighth consecutive year the dividend increased at a
double-digit percentage rate.
-
For the year, we repurchased 14.9 million shares totaling $985 million
at an average of $66. In the quarter, we repurchased 4.1 million
shares for $283 million at an average price of $69.
CONFERENCE CALL
Yum! Brands Inc. will host a conference call to review the company’s
financial performance and strategies at 9:15 a.m. Eastern Time Tuesday,
February 5, 2013. The number is 877/815-2029 for U.S. callers and
706/645-9271 for international callers.
The call will be available for playback beginning at noon Eastern Time
Tuesday, February 5, through midnight Tuesday, February 19, 2013. To
access the playback, dial 855/859-2056 in the United States and
404/537-3406 internationally. The playback pass code is 92461813.
The webcast and the playback can be accessed via the internet by
visiting Yum! Brands’ Web site, www.yum.com/investors
and selecting “Q4 2012 Earnings Conference Call” under “Investment
Events.” A podcast will be available within 24 hours.
ADDITIONAL INFORMATION ONLINE
Quarter end dates for each division, restaurant-count details and
definitions of terms are available online at www.yum.com
under “Investors.”
This announcement, any related announcements and the related webcast may
contain “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. We intend all forward-looking statements to be covered by
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Forward-looking statements can be identified by the fact
that they do not relate strictly to historical or current facts. Our
forward-looking statements are subject to risks and uncertainties, which
may cause actual results to differ materially from those projected.
Factors that can cause our actual results to differ materially include,
but are not limited to: food borne-illness or food safety issues;
economic and political conditions in the countries where we operate;
currency exchange and interest rates; commodity, labor and other
operating costs; our ability to secure and maintain distribution and
adequate supply to our restaurants; the effectiveness of our operating
initiatives and marketing; the success of our strategies for
refranchising and international development; the continued viability and
success of our franchise and license operators; publicity that may
impact our business and/or industry; pending or future legal claims; the
impact of any widespread illness; our effective tax rates; our
actuarially determined casualty loss estimates; government regulations;
accounting policies and practices; and competition, consumer preferences
or perceptions. You should consult our filings with the Securities and
Exchange Commission (including the information set forth under the
captions “Risk Factors” and “Forward-Looking Statements” in our Annual
Report on Form 10-K) for additional detail about factors that could
affect our financial and other results. Forward-looking statements are
based on current expectations and assumptions and currently available
data and are neither predictions nor guarantees of future events or
performance. You should not place undue reliance on forward-looking
statements, which speak only as of the date hereof. We are not
undertaking to update any of these statements.
Yum! Brands, Inc., based in Louisville, Kentucky, is the world’s largest
restaurant company in terms of system restaurants with over 39,000
restaurants in more than 120 countries and territories. Yum! is ranked
#213 on the Fortune 500 List with revenues of more than $12 billion in
2011. The Company’s restaurant brands - KFC, Pizza Hut and Taco Bell -
are the global leaders of the chicken, pizza and Mexican-style food
categories. Outside the United States, the Yum! Brands system opened
approximately five new restaurants each day of the year, making it a
leader in international retail development.
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Consolidated Summary of Results
(amounts in millions, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
% Change
|
|
|
Year
|
|
|
% Change
|
|
|
|
12/29/12
|
|
|
12/31/11
|
|
|
B/(W)
|
|
|
12/29/12
|
|
|
12/31/11
|
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
$
|
3,585
|
|
|
|
$
|
3,557
|
|
|
|
1
|
|
|
$
|
11,833
|
|
|
|
$
|
10,893
|
|
|
|
9
|
Franchise and license fees and income
|
|
|
568
|
|
|
|
554
|
|
|
|
2
|
|
|
1,800
|
|
|
|
1,733
|
|
|
|
4
|
Total revenues
|
|
|
4,153
|
|
|
|
4,111
|
|
|
|
1
|
|
|
13,633
|
|
|
|
12,626
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper
|
|
|
1,162
|
|
|
|
1,209
|
|
|
|
4
|
|
|
3,874
|
|
|
|
3,633
|
|
|
|
(7)
|
Payroll and employee benefits
|
|
|
834
|
|
|
|
809
|
|
|
|
(3)
|
|
|
2,620
|
|
|
|
2,418
|
|
|
|
(8)
|
Occupancy and other operating expenses
|
|
|
1,070
|
|
|
|
1,026
|
|
|
|
(4)
|
|
|
3,358
|
|
|
|
3,089
|
|
|
|
(9)
|
Company restaurant expenses
|
|
|
3,066
|
|
|
|
3,044
|
|
|
|
(1)
|
|
|
9,852
|
|
|
|
9,140
|
|
|
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
560
|
|
|
|
499
|
|
|
|
(12)
|
|
|
1,510
|
|
|
|
1,372
|
|
|
|
(10)
|
Franchise and license expenses
|
|
|
49
|
|
|
|
41
|
|
|
|
(21)
|
|
|
133
|
|
|
|
145
|
|
|
|
8
|
Closures and impairment (income) expenses
|
|
|
28
|
|
|
|
22
|
|
|
|
(23)
|
|
|
37
|
|
|
|
135
|
|
|
|
73
|
Refranchising (gain) loss
|
|
|
(37
|
)
|
|
|
3
|
|
|
|
NM
|
|
|
(78
|
)
|
|
|
72
|
|
|
|
NM
|
Other (income) expense
|
|
|
(18
|
)
|
|
|
(5
|
)
|
|
|
NM
|
|
|
(115
|
)
|
|
|
(53
|
)
|
|
|
NM
|
Total costs and expenses, net
|
|
|
3,648
|
|
|
|
3,604
|
|
|
|
(1)
|
|
|
11,339
|
|
|
|
10,811
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
|
|
|
505
|
|
|
|
507
|
|
|
|
(1)
|
|
|
2,294
|
|
|
|
1,815
|
|
|
|
26
|
Interest expense, net
|
|
|
42
|
|
|
|
46
|
|
|
|
11
|
|
|
149
|
|
|
|
156
|
|
|
|
5
|
Income before income taxes
|
|
|
463
|
|
|
|
461
|
|
|
|
—
|
|
|
2,145
|
|
|
|
1,659
|
|
|
|
29
|
Income tax provision
|
|
|
127
|
|
|
|
104
|
|
|
|
(22)
|
|
|
537
|
|
|
|
324
|
|
|
|
(66)
|
Net income - including noncontrolling interests
|
|
|
336
|
|
|
|
357
|
|
|
|
(6)
|
|
|
1,608
|
|
|
|
1,335
|
|
|
|
20
|
Net income - noncontrolling interests
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
NM
|
|
|
11
|
|
|
|
16
|
|
|
|
35
|
Net income - YUM! Brands, Inc.
|
|
|
$
|
337
|
|
|
|
$
|
356
|
|
|
|
(5)
|
|
|
$
|
1,597
|
|
|
|
$
|
1,319
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
27.5
|
%
|
|
|
22.6
|
%
|
|
|
(4.9 ppts.)
|
|
|
25.0
|
%
|
|
|
19.5
|
%
|
|
|
(5.5 ppts.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate before special items
|
|
|
26.4
|
%
|
|
|
26.7
|
%
|
|
|
0.3 ppts.
|
|
|
25.8
|
%
|
|
|
24.2
|
%
|
|
|
(1.6 ppts.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
|
|
$
|
0.74
|
|
|
|
$
|
0.77
|
|
|
|
(4)
|
|
|
$
|
3.46
|
|
|
|
$
|
2.81
|
|
|
|
23
|
Average shares outstanding
|
|
|
457
|
|
|
|
465
|
|
|
|
2
|
|
|
461
|
|
|
|
469
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
|
|
$
|
0.72
|
|
|
|
$
|
0.75
|
|
|
|
(3)
|
|
|
$
|
3.38
|
|
|
|
$
|
2.74
|
|
|
|
23
|
Average shares outstanding
|
|
|
468
|
|
|
|
477
|
|
|
|
2
|
|
|
473
|
|
|
|
481
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
|
$
|
0.67
|
|
|
|
$
|
0.57
|
|
|
|
|
|
|
$
|
1.24
|
|
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
Percentages may not recompute due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
CHINA DIVISION Operating Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
% Change
|
|
|
Year
|
|
|
% Change
|
|
|
|
12/29/12
|
|
|
12/31/11
|
|
|
B/(W)
|
|
|
12/29/12
|
|
|
12/31/11
|
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
$
|
2,105
|
|
|
|
$
|
1,853
|
|
|
|
14
|
|
|
$
|
6,797
|
|
|
|
$
|
5,487
|
|
|
|
24
|
Franchise and license fees and income
|
|
|
31
|
|
|
|
27
|
|
|
|
16
|
|
|
101
|
|
|
|
79
|
|
|
|
29
|
Total revenues
|
|
|
2,136
|
|
|
|
1,880
|
|
|
|
14
|
|
|
6,898
|
|
|
|
5,566
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper
|
|
|
701
|
|
|
|
673
|
|
|
|
(4)
|
|
|
2,312
|
|
|
|
1,947
|
|
|
|
(19)
|
Payroll and employee benefits
|
|
|
444
|
|
|
|
334
|
|
|
|
(33)
|
|
|
1,259
|
|
|
|
890
|
|
|
|
(41)
|
Occupancy and other operating expenses
|
|
|
668
|
|
|
|
553
|
|
|
|
(21)
|
|
|
1,993
|
|
|
|
1,568
|
|
|
|
(27)
|
|
|
|
1,813
|
|
|
|
1,560
|
|
|
|
(16)
|
|
|
5,564
|
|
|
|
4,405
|
|
|
|
(26)
|
General and administrative expenses
|
|
|
121
|
|
|
|
104
|
|
|
|
(15)
|
|
|
334
|
|
|
|
275
|
|
|
|
(21)
|
Franchise and license expenses
|
|
|
3
|
|
|
|
1
|
|
|
|
(81)
|
|
|
9
|
|
|
|
4
|
|
|
|
NM
|
Closures and impairment (income) expenses
|
|
|
5
|
|
|
|
9
|
|
|
|
46
|
|
|
9
|
|
|
|
12
|
|
|
|
23
|
Other (income) expense
|
|
|
(9
|
)
|
|
|
(4
|
)
|
|
|
72
|
|
|
(33
|
)
|
|
|
(38
|
)
|
|
|
(15)
|
|
|
|
1,933
|
|
|
|
1,670
|
|
|
|
(16)
|
|
|
5,883
|
|
|
|
4,658
|
|
|
|
(26)
|
Operating Profit
|
|
|
$
|
203
|
|
|
|
$
|
210
|
|
|
|
(3)
|
|
|
$
|
1,015
|
|
|
|
$
|
908
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
Food and paper
|
|
|
33.3
|
|
|
|
36.3
|
|
|
|
3.0 ppts.
|
|
|
34.1
|
|
|
|
35.5
|
|
|
|
1.4 ppts.
|
Payroll and employee benefits
|
|
|
21.1
|
|
|
|
18.1
|
|
|
|
(3.0 ppts.)
|
|
|
18.5
|
|
|
|
16.2
|
|
|
|
(2.3 ppts.)
|
Occupancy and other operating expenses
|
|
|
31.7
|
|
|
|
29.8
|
|
|
|
(1.9 ppts.)
|
|
|
29.3
|
|
|
|
28.6
|
|
|
|
(0.7 ppts.)
|
Restaurant margin
|
|
|
13.9
|
%
|
|
|
15.8
|
%
|
|
|
(1.9 ppts.)
|
|
|
18.1
|
%
|
|
|
19.7
|
%
|
|
|
(1.6 ppts.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
9.5
|
%
|
|
|
11.2
|
%
|
|
|
(1.7 ppts.)
|
|
|
14.7
|
%
|
|
|
16.3
|
%
|
|
|
(1.6 ppts.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
Percentages may not recompute due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
YUM! RESTAURANTS INTERNATIONAL DIVISION Operating Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
% Change
|
|
|
Year
|
|
|
% Change
|
|
|
|
12/29/12
|
|
|
12/31/11
|
|
|
B/(W)
|
|
|
12/29/12
|
|
|
12/31/11
|
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
$
|
751
|
|
|
|
$
|
757
|
|
|
|
(1)
|
|
|
$
|
2,402
|
|
|
|
$
|
2,341
|
|
|
|
3
|
Franchise and license fees and income
|
|
|
283
|
|
|
|
268
|
|
|
|
5
|
|
|
879
|
|
|
|
851
|
|
|
|
3
|
Total revenues
|
|
|
1,034
|
|
|
|
1,025
|
|
|
|
1
|
|
|
3,281
|
|
|
|
3,192
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper
|
|
|
246
|
|
|
|
245
|
|
|
|
(1)
|
|
|
787
|
|
|
|
743
|
|
|
|
(6)
|
Payroll and employee benefits
|
|
|
184
|
|
|
|
195
|
|
|
|
6
|
|
|
599
|
|
|
|
608
|
|
|
|
2
|
Occupancy and other operating expenses
|
|
|
215
|
|
|
|
228
|
|
|
|
5
|
|
|
705
|
|
|
|
700
|
|
|
|
(1)
|
|
|
|
645
|
|
|
|
668
|
|
|
|
3
|
|
|
2,091
|
|
|
|
2,051
|
|
|
|
(2)
|
General and administrative expenses
|
|
|
139
|
|
|
|
137
|
|
|
|
(1)
|
|
|
414
|
|
|
|
400
|
|
|
|
(3)
|
Franchise and license expenses
|
|
|
16
|
|
|
|
15
|
|
|
|
(23)
|
|
|
50
|
|
|
|
51
|
|
|
|
—
|
Closures and impairment (income) expenses
|
|
|
17
|
|
|
|
4
|
|
|
|
NM
|
|
|
19
|
|
|
|
22
|
|
|
|
15
|
Other (income) expense
|
|
|
(7
|
)
|
|
|
(5
|
)
|
|
|
46
|
|
|
(8
|
)
|
|
|
(5
|
)
|
|
|
55
|
|
|
|
810
|
|
|
|
819
|
|
|
|
1
|
|
|
2,566
|
|
|
|
2,519
|
|
|
|
(2)
|
Operating Profit
|
|
|
$
|
224
|
|
|
|
$
|
206
|
|
|
|
8
|
|
|
$
|
715
|
|
|
|
$
|
673
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
Food and paper
|
|
|
32.7
|
|
|
|
32.2
|
|
|
|
(0.5 ppts.)
|
|
|
32.8
|
|
|
|
31.7
|
|
|
|
(1.1 ppts.)
|
Payroll and employee benefits
|
|
|
24.5
|
|
|
|
25.8
|
|
|
|
1.3 ppts.
|
|
|
24.9
|
|
|
|
26.0
|
|
|
|
1.1 ppts.
|
Occupancy and other operating expenses
|
|
|
28.7
|
|
|
|
30.1
|
|
|
|
1.4 ppts.
|
|
|
29.4
|
|
|
|
29.9
|
|
|
|
0.5 ppts.
|
Restaurant margin
|
|
|
14.1
|
%
|
|
|
11.9
|
%
|
|
|
2.2 ppts.
|
|
|
12.9
|
%
|
|
|
12.4
|
%
|
|
|
0.5 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
21.6
|
%
|
|
|
20.3
|
%
|
|
|
1.3 ppts.
|
|
|
21.8
|
%
|
|
|
21.1
|
%
|
|
|
0.7 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
Percentages may not recompute due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
UNITED STATES DIVISION Operating Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
% Change
|
|
|
Year
|
|
|
% Change
|
|
|
|
12/29/12
|
|
|
12/31/11
|
|
|
B/(W)
|
|
|
12/29/12
|
|
|
12/31/11
|
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
$
|
700
|
|
|
|
$
|
925
|
|
|
|
(24)
|
|
|
$
|
2,550
|
|
|
|
$
|
3,000
|
|
|
|
(15)
|
Franchise and license fees and income
|
|
|
247
|
|
|
|
252
|
|
|
|
(2)
|
|
|
802
|
|
|
|
786
|
|
|
|
2
|
Total revenues
|
|
|
947
|
|
|
|
1,177
|
|
|
|
(20)
|
|
|
3,352
|
|
|
|
3,786
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper
|
|
|
203
|
|
|
|
283
|
|
|
|
28
|
|
|
740
|
|
|
|
917
|
|
|
|
19
|
Payroll and employee benefits
|
|
|
202
|
|
|
|
277
|
|
|
|
27
|
|
|
751
|
|
|
|
912
|
|
|
|
18
|
Occupancy and other operating expenses
|
|
|
179
|
|
|
|
242
|
|
|
|
26
|
|
|
643
|
|
|
|
809
|
|
|
|
21
|
|
|
|
584
|
|
|
|
802
|
|
|
|
27
|
|
|
2,134
|
|
|
|
2,638
|
|
|
|
19
|
General and administrative expenses
|
|
|
145
|
|
|
|
148
|
|
|
|
2
|
|
|
467
|
|
|
|
450
|
|
|
|
(4)
|
Franchise and license expenses
|
|
|
30
|
|
|
|
26
|
|
|
|
(14)
|
|
|
74
|
|
|
|
92
|
|
|
|
20
|
Closures and impairment (income) expenses
|
|
|
6
|
|
|
|
11
|
|
|
|
47
|
|
|
9
|
|
|
|
21
|
|
|
|
58
|
Other (income) expense
|
|
|
2
|
|
|
|
(1
|
)
|
|
|
NM
|
|
|
2
|
|
|
|
(4
|
)
|
|
|
NM
|
|
|
|
767
|
|
|
|
986
|
|
|
|
22
|
|
|
2,686
|
|
|
|
3,197
|
|
|
|
16
|
Operating Profit
|
|
|
$
|
180
|
|
|
|
$
|
191
|
|
|
|
(5)
|
|
|
$
|
666
|
|
|
|
$
|
589
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
Food and paper
|
|
|
29.0
|
|
|
|
30.5
|
|
|
|
1.5 ppts.
|
|
|
29.0
|
|
|
|
30.5
|
|
|
|
1.5 ppts.
|
Payroll and employee benefits
|
|
|
28.9
|
|
|
|
29.9
|
|
|
|
1.0 ppts.
|
|
|
29.5
|
|
|
|
30.4
|
|
|
|
0.9 ppts.
|
Occupancy and other operating expenses
|
|
|
25.4
|
|
|
|
26.2
|
|
|
|
0.8 ppts.
|
|
|
25.2
|
|
|
|
27.0
|
|
|
|
1.8 ppts.
|
|
|
|
16.7
|
%
|
|
|
13.4
|
%
|
|
|
3.3 ppts.
|
|
|
16.3
|
%
|
|
|
12.1
|
%
|
|
|
4.2 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
19.0
|
%
|
|
|
16.1
|
%
|
|
|
2.9 ppts.
|
|
|
19.9
|
%
|
|
|
15.5
|
%
|
|
|
4.4 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
Percentages may not recompute due to rounding.
|
|
YUM! Brands, Inc.
Consolidated Balance Sheets
(amounts in millions)
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
12/29/12
|
|
|
12/31/11
|
ASSETS
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
776
|
|
|
|
$
|
1,198
|
|
Accounts and notes receivable, less allowance: $12 in 2012 and $22
in 2011
|
|
|
301
|
|
|
|
286
|
|
Inventories
|
|
|
313
|
|
|
|
273
|
|
Prepaid expenses and other current assets
|
|
|
272
|
|
|
|
338
|
|
Deferred income taxes
|
|
|
111
|
|
|
|
112
|
|
Advertising cooperative assets, restricted
|
|
|
136
|
|
|
|
114
|
|
Total Current Assets
|
|
|
1,909
|
|
|
|
2,321
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net of accumulated depreciation and
amortization of $3,139 in 2012 and $3,225 in 2011
|
|
|
|
|
|
|
|
|
4,250
|
|
|
|
4,042
|
|
Goodwill
|
|
|
1,034
|
|
|
|
681
|
|
Intangible assets, net
|
|
|
690
|
|
|
|
299
|
|
Investments in unconsolidated affiliates
|
|
|
72
|
|
|
|
167
|
|
Restricted cash
|
|
|
—
|
|
|
|
300
|
|
Other assets
|
|
|
575
|
|
|
|
475
|
|
Deferred income taxes
|
|
|
481
|
|
|
|
549
|
|
Total Assets
|
|
|
$
|
9,011
|
|
|
|
$
|
8,834
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Accounts payable and other current liabilities
|
|
|
$
|
1,945
|
|
|
|
$
|
1,874
|
|
Income taxes payable
|
|
|
97
|
|
|
|
142
|
|
Short-term borrowings
|
|
|
10
|
|
|
|
320
|
|
Advertising cooperative liabilities
|
|
|
136
|
|
|
|
114
|
|
Total Current Liabilities
|
|
|
2,188
|
|
|
|
2,450
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
2,932
|
|
|
|
2,997
|
|
Other liabilities and deferred credits
|
|
|
1,579
|
|
|
|
1,471
|
|
Total Liabilities
|
|
|
6,699
|
|
|
|
6,918
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest
|
|
|
59
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Shareholders' Equity
|
|
|
|
|
|
|
Common stock, no par value, 750 shares authorized; 451 shares and
460 shares issued in 2012 and 2011, respectively
|
|
|
—
|
|
|
|
18
|
|
Retained earnings
|
|
|
2,286
|
|
|
|
2,052
|
|
Accumulated other comprehensive income (loss)
|
|
|
(132
|
)
|
|
|
(247
|
)
|
Total Shareholders' Equity - YUM! Brands, Inc.
|
|
|
2,154
|
|
|
|
1,823
|
|
Noncontrolling interests
|
|
|
99
|
|
|
|
93
|
|
Total Shareholders' Equity
|
|
|
2,253
|
|
|
|
1,916
|
|
Total Liabilities, Redeemable Noncontrolling Interest and
Shareholders' Equity
|
|
|
$
|
9,011
|
|
|
|
$
|
8,834
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
|
|
|
YUM! Brands, Inc.
Consolidated Statements of Cash Flows
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
Year
|
|
|
|
12/29/2012
|
|
|
12/31/2011
|
Cash Flows - Operating Activities
|
|
|
|
|
|
|
Net income - including noncontrolling interests
|
|
|
$
|
1,608
|
|
|
|
$
|
1,335
|
|
Depreciation and amortization
|
|
|
645
|
|
|
|
628
|
|
Closures and impairment (income) expenses
|
|
|
37
|
|
|
|
135
|
|
Refranchising (gain) loss
|
|
|
(78
|
)
|
|
|
72
|
|
Contributions to defined benefit pension plans
|
|
|
(119
|
)
|
|
|
(63
|
)
|
YUM Retirement Plan settlement charge
|
|
|
84
|
|
|
|
—
|
|
Gain upon acquisition of Little Sheep
|
|
|
(74
|
)
|
|
|
—
|
|
Deferred income taxes
|
|
|
28
|
|
|
|
(137
|
)
|
Equity income from investments in unconsolidated affiliates
|
|
|
(47
|
)
|
|
|
(47
|
)
|
Distributions of income received from unconsolidated affiliates
|
|
|
41
|
|
|
|
39
|
|
Excess tax benefit from share-based compensation
|
|
|
(98
|
)
|
|
|
(66
|
)
|
Share-based compensation expense
|
|
|
50
|
|
|
|
59
|
|
Changes in accounts and notes receivable
|
|
|
(18
|
)
|
|
|
(39
|
)
|
Changes in inventories
|
|
|
9
|
|
|
|
(75
|
)
|
Changes in prepaid expenses and other current assets
|
|
|
(14
|
)
|
|
|
(25
|
)
|
Changes in accounts payable and other current liabilities
|
|
|
9
|
|
|
|
144
|
|
Changes in income taxes payable
|
|
|
126
|
|
|
|
109
|
|
Other, net
|
|
|
105
|
|
|
|
101
|
|
Net Cash Provided by Operating Activities
|
|
|
2,294
|
|
|
|
2,170
|
|
|
|
|
|
|
|
|
Cash Flows - Investing Activities
|
|
|
|
|
|
|
Capital spending
|
|
|
(1,099
|
)
|
|
|
(940
|
)
|
Proceeds from refranchising of restaurants
|
|
|
364
|
|
|
|
246
|
|
Acquisitions
|
|
|
(543
|
)
|
|
|
(81
|
)
|
Changes in restricted cash
|
|
|
300
|
|
|
|
(300
|
)
|
Other, net
|
|
|
(27
|
)
|
|
|
69
|
|
Net Cash Used in Investing Activities
|
|
|
(1,005
|
)
|
|
|
(1,006
|
)
|
|
|
|
|
|
|
|
Cash Flows - Financing Activities
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
—
|
|
|
|
404
|
|
Repayments of long-term debt
|
|
|
(282
|
)
|
|
|
(666
|
)
|
Short-term borrowings, three months or less, net
|
|
|
—
|
|
|
|
—
|
|
Revolving credit facilities, three months or less, net
|
|
|
—
|
|
|
|
—
|
|
Repurchase shares of Common Stock
|
|
|
(965
|
)
|
|
|
(752
|
)
|
Excess tax benefit from share-based compensation
|
|
|
98
|
|
|
|
66
|
|
Employee stock option proceeds
|
|
|
62
|
|
|
|
59
|
|
Dividends paid on Common Stock
|
|
|
(544
|
)
|
|
|
(481
|
)
|
Other, net
|
|
|
(85
|
)
|
|
|
(43
|
)
|
Net Cash Used in Financing Activities
|
|
|
(1,716
|
)
|
|
|
(1,413
|
)
|
Effect of Exchange Rate on Cash and Cash Equivalents
|
|
|
5
|
|
|
|
21
|
|
Net Decrease in Cash and Cash Equivalents
|
|
|
(422
|
)
|
|
|
(228
|
)
|
Cash and Cash Equivalents - Beginning of Year
|
|
|
1,198
|
|
|
|
1,426
|
|
Cash and Cash Equivalents - End of Year
|
|
|
$
|
776
|
|
|
|
$
|
1,198
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Measurements to GAAP Results
|
(amounts in millions, except per share amounts)
|
(unaudited)
|
|
In addition to the results provided in accordance with U.S.
Generally Accepted Accounting Principles ("GAAP") throughout this
document, the Company has provided non-GAAP measurements which
present operating results in 2012 and 2011 on a basis before
Special Items. Included in Special Items are the U.S.
refranchising gain (loss), the YUM Retirement Plan settlement
charge, the gain on the acquisition of Little Sheep, losses
associated with the refranchising of the Pizza Hut UK dine-in
business and the losses, other costs and tax benefits in 2011
relating to our divestiture of the Long John Silver's ("LJS") and
A&W All-American Food Restaurants ("A&W") brands. These amounts
are described in (d), (e), (f), (g) and (h) in the accompanying
notes. Other Special Items include the depreciation reductions
from Pizza Hut UK and KFC U.S. restaurants impaired upon our
decision or offer to refranchise that remained Company stores for
some or all of the periods presented, gains from sales of real
estate related to our previously refranchised Mexico business and
charges relating to U.S. General and Administrative ("G&A")
productivity initiatives and realignment of resources.
|
|
The Company uses earnings before Special Items as a key
performance measure of results of operations for the purpose of
evaluating performance internally and Special Items are not
included in any of our segment results. This non-GAAP measurement
is not intended to replace the presentation of our financial
results in accordance with GAAP. Rather, the Company believes that
the presentation of earnings before Special Items provides
additional information to investors to facilitate the comparison
of past and present operations, excluding items in 2012 and 2011
that the Company does not believe are indicative of our ongoing
operations due to their size and/or nature.
|
|
|
|
|
|
|
|
Quarter
|
|
Year
|
|
|
12/29/12
|
|
12/31/11
|
|
12/29/12
|
|
12/31/11
|
Detail of Special Items
|
|
|
|
|
|
|
|
|
U.S. Refranchising gain (loss)(d) |
|
$
|
69
|
|
|
$
|
(14
|
)
|
|
$
|
122
|
|
|
$
|
(17
|
)
|
YUM Retirement Plan settlement charge(e) |
|
(84
|
)
|
|
—
|
|
|
(84
|
)
|
|
—
|
|
Gain upon acquisition of Little Sheep(f) |
|
—
|
|
|
—
|
|
|
74
|
|
|
—
|
|
Loss associated with the refranchising of the Pizza Hut UK dine-in
business(g) |
|
(46
|
)
|
|
—
|
|
|
(70
|
)
|
|
(76
|
)
|
Losses and other costs relating to the LJS and A&W divestitures(h) |
|
—
|
|
|
—
|
|
|
—
|
|
|
(86
|
)
|
Other Special Items Income (Expense)
|
|
1
|
|
|
(14
|
)
|
|
16
|
|
|
(8
|
)
|
Total Special Items Income (Expense)
|
|
(60
|
)
|
|
(28
|
)
|
|
58
|
|
|
(187
|
)
|
Tax Benefit (Expense) on Special Items
|
|
10
|
|
|
27
|
|
|
1
|
|
|
123
|
|
Special Items Income (Expense), net of tax
|
|
$
|
(50
|
)
|
|
$
|
(1
|
)
|
|
$
|
59
|
|
|
$
|
(64
|
)
|
Average diluted shares outstanding
|
|
468
|
|
|
477
|
|
|
473
|
|
|
481
|
|
Special Items diluted EPS
|
|
$
|
(0.11
|
)
|
|
$
|
—
|
|
|
$
|
0.13
|
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Profit Before Special Items to
Reported Operating Profit
|
|
|
|
|
|
|
|
|
Operating Profit Before Special Items
|
|
$
|
565
|
|
|
$
|
535
|
|
|
$
|
2,236
|
|
|
$
|
2,002
|
|
Special Items Income (Expense)
|
|
(60
|
)
|
|
(28
|
)
|
|
58
|
|
|
(187
|
)
|
Reported Operating Profit
|
|
$
|
505
|
|
|
$
|
507
|
|
|
$
|
2,294
|
|
|
$
|
1,815
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of EPS Before Special Items to Reported EPS
|
|
|
|
|
|
|
|
|
Diluted EPS Before Special Items
|
|
$
|
0.83
|
|
|
$
|
0.75
|
|
|
$
|
3.25
|
|
|
$
|
2.87
|
|
Special Items EPS
|
|
(0.11
|
)
|
|
—
|
|
|
0.13
|
|
|
(0.13
|
)
|
Reported EPS
|
|
$
|
0.72
|
|
|
$
|
0.75
|
|
|
$
|
3.38
|
|
|
$
|
2.74
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Effective Tax Rate Before Special Items to
Reported Effective Tax Rate
|
|
|
|
|
|
|
|
|
Effective Tax Rate Before Special Items
|
|
26.4
|
%
|
|
26.7
|
%
|
|
25.8
|
%
|
|
24.2
|
%
|
Impact on Tax Rate as a result of Special Items
|
|
1.1
|
%
|
|
(4.1
|
)%
|
|
(0.8
|
)%
|
|
(4.7
|
)%
|
Reported Effective Tax Rate
|
|
27.5
|
%
|
|
22.6
|
%
|
|
25.0
|
%
|
|
19.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Segment Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended 12/29/12
|
|
|
China
|
|
|
YRI
|
|
|
United
States
|
|
|
India
|
|
|
Corporate
and
Unallocated
|
|
|
Consolidated
|
Total revenues
|
|
|
$
|
2,136
|
|
|
|
$
|
1,034
|
|
|
|
$
|
947
|
|
|
|
$
|
36
|
|
|
|
$
|
—
|
|
|
|
$
|
4,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
1,813
|
|
|
|
645
|
|
|
|
584
|
|
|
|
28
|
|
|
|
(4
|
)
|
|
|
3,066
|
|
General and administrative expenses
|
|
|
121
|
|
|
|
139
|
|
|
|
145
|
|
|
|
8
|
|
|
|
147
|
|
|
|
560
|
|
Franchise and license expenses
|
|
|
3
|
|
|
|
16
|
|
|
|
30
|
|
|
|
—
|
|
|
|
—
|
|
|
|
49
|
|
Closures and impairment (income) expenses
|
|
|
5
|
|
|
|
17
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28
|
|
Refranchising (gain) loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(37
|
)
|
|
|
(37
|
)
|
Other (income) expense
|
|
|
(9
|
)
|
|
|
(7
|
)
|
|
|
2
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
(18
|
)
|
|
|
|
1,933
|
|
|
|
810
|
|
|
|
767
|
|
|
|
36
|
|
|
|
102
|
|
|
|
3,648
|
|
Operating Profit (loss)
|
|
|
$
|
203
|
|
|
|
$
|
224
|
|
|
|
$
|
180
|
|
|
|
$
|
—
|
|
|
|
$
|
(102
|
)
|
|
|
$
|
505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended 12/31/11
|
|
|
China
|
|
|
YRI
|
|
|
United
States
|
|
|
India
|
|
|
Corporate
and
Unallocated
|
|
|
Consolidated
|
Total revenues
|
|
|
$
|
1,880
|
|
|
|
$
|
1,025
|
|
|
|
$
|
1,177
|
|
|
|
$
|
29
|
|
|
|
$
|
—
|
|
|
|
$
|
4,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
1,560
|
|
|
|
668
|
|
|
|
802
|
|
|
|
20
|
|
|
|
(6
|
)
|
|
|
3,044
|
|
General and administrative expenses
|
|
|
104
|
|
|
|
137
|
|
|
|
148
|
|
|
|
8
|
|
|
|
102
|
|
|
|
499
|
|
Franchise and license expenses
|
|
|
1
|
|
|
|
15
|
|
|
|
26
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
41
|
|
Closures and impairment (income) expenses
|
|
|
9
|
|
|
|
4
|
|
|
|
11
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
22
|
|
Refranchising (gain) loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
|
3
|
|
Other (income) expense
|
|
|
(4
|
)
|
|
|
(5
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
5
|
|
|
|
(5
|
)
|
|
|
|
1,670
|
|
|
|
819
|
|
|
|
986
|
|
|
|
28
|
|
|
|
101
|
|
|
|
3,604
|
|
Operating Profit (loss)
|
|
|
$
|
210
|
|
|
|
$
|
206
|
|
|
|
$
|
191
|
|
|
|
$
|
1
|
|
|
|
$
|
(101
|
)
|
|
|
$
|
507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The above tables reconcile segment information, which is based on
management responsibility, with our Consolidated Summary of Results.
Corporate and unallocated expenses comprise items that are not
allocated to segments for performance reporting purposes.
|
|
The Corporate and Unallocated column in the above tables includes,
among other amounts, all amounts that we have deemed Special Items.
See Reconciliation of Non-GAAP Measurements to GAAP Results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Segment Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended 12/31/12
|
|
|
China
|
|
|
YRI
|
|
|
United
States
|
|
|
India
|
|
|
Corporate
and
Unallocated
|
|
|
Consolidated
|
Total revenues
|
|
|
$
|
6,898
|
|
|
|
$
|
3,281
|
|
|
|
$
|
3,352
|
|
|
|
$
|
102
|
|
|
|
$
|
—
|
|
|
|
$
|
13,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
5,564
|
|
|
|
2,091
|
|
|
|
2,134
|
|
|
|
79
|
|
|
|
(16
|
)
|
|
|
9,852
|
|
General and administrative expenses
|
|
|
334
|
|
|
|
414
|
|
|
|
467
|
|
|
|
24
|
|
|
|
271
|
|
|
|
1,510
|
|
Franchise and license expenses
|
|
|
9
|
|
|
|
50
|
|
|
|
74
|
|
|
|
—
|
|
|
|
—
|
|
|
|
133
|
|
Closures and impairment (income) expenses
|
|
|
9
|
|
|
|
19
|
|
|
|
9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
37
|
|
Refranchising (gain) loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(78
|
)
|
|
|
(78
|
)
|
Other (income) expense
|
|
|
(33
|
)
|
|
|
(8
|
)
|
|
|
2
|
|
|
|
—
|
|
|
|
(76
|
)
|
|
|
(115
|
)
|
|
|
|
5,883
|
|
|
|
2,566
|
|
|
|
2,686
|
|
|
|
103
|
|
|
|
101
|
|
|
|
11,339
|
|
Operating Profit (loss)
|
|
|
$
|
1,015
|
|
|
|
$
|
715
|
|
|
|
$
|
666
|
|
|
|
$
|
(1
|
)
|
|
|
$
|
(101
|
)
|
|
|
$
|
2,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended 12/31/11
|
|
|
China
|
|
|
YRI
|
|
|
United
States
|
|
|
India
|
|
|
Corporate
and
Unallocated
|
|
|
Consolidated
|
Total revenues
|
|
|
$
|
5,566
|
|
|
|
$
|
3,192
|
|
|
|
$
|
3,786
|
|
|
|
$
|
82
|
|
|
|
$
|
—
|
|
|
|
$
|
12,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
4,405
|
|
|
|
2,051
|
|
|
|
2,638
|
|
|
|
60
|
|
|
|
(14
|
)
|
|
|
9,140
|
|
General and administrative expenses
|
|
|
275
|
|
|
|
400
|
|
|
|
450
|
|
|
|
22
|
|
|
|
225
|
|
|
|
1,372
|
|
Franchise and license expenses
|
|
|
4
|
|
|
|
51
|
|
|
|
92
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
145
|
|
Closures and impairment (income) expenses
|
|
|
12
|
|
|
|
22
|
|
|
|
21
|
|
|
|
—
|
|
|
|
80
|
|
|
|
135
|
|
Refranchising (gain) loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
72
|
|
|
|
72
|
|
Other (income) expense
|
|
|
(38
|
)
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
(6
|
)
|
|
|
(53
|
)
|
|
|
|
4,658
|
|
|
|
2,519
|
|
|
|
3,197
|
|
|
|
82
|
|
|
|
355
|
|
|
|
10,811
|
|
Operating Profit (loss)
|
|
|
$
|
908
|
|
|
|
$
|
673
|
|
|
|
$
|
589
|
|
|
|
$
|
—
|
|
|
|
$
|
(355
|
)
|
|
|
$
|
1,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The above tables reconcile segment information, which is based on
management responsibility, with our Consolidated Summary of Results.
Corporate and unallocated expenses comprise items that are not
allocated to segments for performance reporting purposes.
|
|
The Corporate and Unallocated column in the above tables includes,
among other amounts, all amounts that we have deemed Special Items.
See Reconciliation of Non-GAAP Measurements to GAAP Results.
|
|
Notes to the Consolidated Summary of Results, Consolidated
Balance Sheets
|
and Consolidated Statements of Cash Flows
|
(amounts in millions, except per share amounts)
|
(unaudited)
|
|
(a)
|
|
Amounts presented as of and for the quarter and year ended December
29, 2012 are preliminary.
|
|
(b)
|
|
Other (income) expense for the China Division primarily consists
of equity income from investments in unconsolidated affiliates.
The year ended December 29, 2012 also includes costs related to
the acquisition of Little Sheep Group Limited ("Little Sheep").
|
|
(c)
|
|
Beginning the first quarter of 2012, our India Division is being
reported as a standalone reporting segment separate from YRI as a
result of changes to our management reporting structure. While our
consolidated results are not impacted, our historical segment
information has been restated to be consistent with the current
period presentation. This new segment also includes the franchise
businesses in the neighboring countries of Bangladesh, Mauritius,
Nepal and Sri Lanka.
|
|
(d)
|
|
As part of our plan to transform our U.S. business we took certain
measures ("the U.S. business transformation measures") in 2012 and
2011 which includes the continuation of our U.S. refranchising,
potentially reducing our Company ownership in the U.S. to less than
10%, including a reduction of Taco Bell Company ownership to 16%.
During the quarter and year ended December 28, 2012, we recorded
gains of $69 million and $122 million, respectively, related to
refranchising in the U.S., primarily at Taco Bell. We have
traditionally not allocated refranchising (gains) losses for segment
reporting purposes. Additionally, U.S. refranchising (gains) losses
have been reflected as Special Items for certain performance
measures (see accompanying reconciliation to reported results).
|
|
(e)
|
|
During the quarter ended December 29, 2012, the Company allowed
certain former employees with deferred vested balances in the YUM
Retirement Plan an opportunity to voluntarily elect an early
payout of their pension benefits. These payouts were funded from
existing pension plan assets. The Company recorded a pre-tax
settlement charge of $84 million as a result of these payouts in
the quarter ended December 29, 2012. This charge was recorded in
General and administrative expenses, was not allocated for segment
reporting purposes and is reflected as a Special Item for certain
performance measures (see accompanying reconciliation to reported
results).
|
|
(f)
|
|
On February 1, 2012 we acquired an additional 66% interest in
Little Sheep for $540 million, net of cash acquired of $44
million, increasing our ownership to 93%. The acquisition was
driven by our strategy to build leading brands across China in
every significant category. Prior to our acquisition of this
additional interest, our 27% interest in Little Sheep was
accounted for under the equity method of accounting. As a result
of the acquisition we obtained voting control of Little Sheep, and
thus we began consolidating Little Sheep upon acquisition. As
required by GAAP, we remeasured our previously held 27% ownership
in Little Sheep, which had a recorded value of $107 million at the
date of acquisition, at fair value and recognized a non-cash gain
of $74 million. This gain, which resulted in no related income tax
expense, was recorded in Other (income) expense on our
Consolidated Statement of Income during the year ended December
29, 2012, was not allocated for segment reporting purposes and is
reflected as a Special Item for certain performance measures (see
accompanying reconciliation to reported results).
|
|
|
|
Consolidated Little Sheep results are included in the China
Division from the beginning of the second quarter of 2012. Little
Sheep impacted China Division revenues by 4% and 3% for the
quarter and year ended December 29, 2012, respectively. Other than
the $74 million gain discussed above, Little Sheep did not have a
significant impact on China Division's Operating Profit or Net
Income - YUM! Brands, Inc. for the quarter and year ended December
29, 2012. China Division and Worldwide system sales include sales
from Little Sheep's company-owned restaurants but exclude sales
from Little Sheep's franchise restaurants. Our Consolidated
Balance Sheet at December 29, 2012 reflects the consolidation of
this entity, including $376 million of goodwill, $421 million of
other intangible assets and a $59 million redeemable
noncontrolling interest. Also, in the year ended December 29,
2012, we released from escrow $300 million of cash that was deemed
restricted prior to our acquisition of Little Sheep.
|
|
(g)
|
|
During the quarter ended December 29, 2012, we refranchised our
remaining 331 Pizza Hut UK dine-in restaurants and recorded a loss
of $46 million to Refranchising (gain) loss. During the quarter
ended March 24, 2012, we recorded pre-tax losses of $24 million to
Refranchising (gain) loss primarily to adjust the carrying amount of
the asset group to its then estimated fair value. We had previously
recorded $76 million of pre-tax losses to Refranchising (gain) loss
in 2011 primarily to reduce the carrying amount of the asset group
to its then estimated fair value upon our initial decision to sell
the Pizza Hut dine-in business. These charges were not allocated for
segment reporting purposes and were reflected as Special Items for
certain performance measures (see accompanying reconciliation to
reported results).
|
|
(h)
|
|
In 2011 we sold the Long John Silver's and A&W All American Food
Restaurants brands to key franchise leaders and strategic investors
in separate transactions. During 2011, we recognized $86 million of
pre-tax losses and other costs primarily in Closures and impairment
(income) expenses and $104 million of tax benefits as a result of
these sales. These amounts were not allocated for segment reporting
purposes and were reflected as Special Items for certain performance
measures (see accompanying reconciliation to reported results).
|
Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20130204006530/en/