Yum! Brands, Inc. (NYSE: YUM) today reported results for the fourth
quarter ended December 28, 2013, including EPS growth of 4%, or $0.86,
excluding Special Items. Reported EPS was $0.70 for the quarter and
$2.36 for the year.
FULL-YEAR HIGHLIGHTS
-
KFC China sales and profits were significantly impacted by the effects
of the December 2012 poultry supply incident, as well as subsequent
news of avian flu.
-
Worldwide system sales grew 2%, prior to foreign currency translation,
including 5% growth at Yum! Restaurants International (YRI) and 1%
growth in the U.S. System sales declined 4% in China.
-
Same-store sales declined 13% in China. Same-store sales grew 1% at
YRI and were flat in the U.S.
-
Total international development was 1,952 new restaurants; 82% of this
development occurred in emerging markets.
-
Worldwide restaurant margin declined 1.6 percentage points to 15.0%,
including a decline of 2.7 percentage points in China. Restaurant
margin was even at YRI and increased 0.6 percentage points in the U.S.
-
Worldwide operating profit declined 10%, prior to foreign currency
translation, including a decline of 26% in China. Operating profit
grew 10% at YRI and 3% in the U.S.
-
Worldwide effective tax rate, prior to Special Items, increased to
28.0% from 25.8% driven primarily by a tax reserve adjustment in the
third quarter. This charge impacted reported EPS by 2 percentage
points for the full year.
-
A non-cash, Special Items net charge of $258 million related to the
write-down of Little Sheep intangible assets was recorded in the third
quarter. This charge impacted reported EPS by 16 percentage points for
the full year.
-
The company repurchased $550 million of outstanding debt in the fourth
quarter and recorded a Special Items net charge of approximately $75
million, primarily due to premiums paid related to this transaction.
This impacted reported EPS by 22 percentage points for the quarter and
5 percentage points for the full year.
FOURTH-QUARTER HIGHLIGHTS
-
Worldwide system sales grew 3%, prior to foreign currency translation,
including 3% growth in China and 6% growth at YRI. System sales
declined 1% in the U.S.
-
Same-store sales declined 4% in China and 2% in the U.S. Same-store
sales grew 2% at YRI.
-
Worldwide restaurant margin declined 0.2 percentage points to 14.2%,
including declines of 1.4 percentage points at YRI and 0.3 percentage
points in the U.S. China restaurant margin increased 0.4 percentage
points.
-
Worldwide operating profit grew 2%, prior to foreign currency
translation, including 5% in China, 11% at YRI and 2% in the U.S.
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Fourth Quarter
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Full Year
|
|
|
|
2013
|
|
|
2012
|
|
|
% Change
|
|
|
2013
|
|
|
2012
|
|
|
% Change
|
EPS Excluding Special Items
|
|
|
$0.86
|
|
|
|
$0.83
|
|
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|
4%
|
|
|
$2.97
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|
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|
$3.25
|
|
|
(9)%
|
Special Items Gain/(Loss)1
|
|
|
$(0.16
|
)
|
|
|
$(0.11
|
)
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|
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NM
|
|
|
$(0.61
|
)
|
|
|
$0.13
|
|
|
NM
|
EPS
|
|
|
$0.70
|
|
|
|
$0.72
|
|
|
|
(3)%
|
|
|
$2.36
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|
|
|
$3.38
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|
(30)%
|
|
|
|
|
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1 See Reconciliation of Non-GAAP Measurements to GAAP
Results for further detail of the Special Items. Special Items for
2013 are primarily related to the Little Sheep impairment,
expenses related to the extinguishment of debt, U.S. refranchising
gains and Yum! pension settlement charges. Special Items for 2012
comparable periods are primarily related to Yum! pension
settlement charges, Little Sheep acquisition gain, U.S.
refranchising gains and Pizza Hut UK refranchising.
|
|
Note: All comparisons are versus the same period a year ago
and exclude Special Items unless noted.
|
DAVID NOVAK COMMENTS
David C. Novak, Chairman and CEO said, “While 2013 was a challenging
year, I’m pleased to report continued progress as we enter 2014 with
fourth-quarter EPS growth of 4%, excluding Special Items. More
importantly, with the decisive actions we've taken to strengthen our
company across the board, we are well positioned to deliver double-digit
EPS growth in 2014 and the years ahead.
In China, we strengthened our poultry supply chain, made significant
progress rebuilding consumer trust in the KFC brand and made substantial
gains in restaurant productivity. At Pizza Hut Casual Dining, we
increased our asset base by 28%, grew same-store sales by 4% and
expanded breakfast into over 120 restaurants. We also achieved solid
unit economics at Pizza Hut Home Service, and intend to scale this
business over time. Overall, we opened 740 new restaurants in China,
further strengthening our category-leading positions.
Outside of China, our franchise-led system opened over 1,200 new
international restaurants, including more than 70% in high-growth
emerging markets. Additionally, we continued to make investments ahead
of the growth curve in India as we opened over 150 new units. In the
U.S., Taco Bell delivered its eighth consecutive quarter of same-store
sales growth and we are enthusiastic about our upcoming national
breakfast launch. We are also excited about our plans at Pizza Hut to
nationally advertise WingStreet and its award-winning chicken wings for
the first time.
Importantly, as of January 1, 2014, we combined our Yum! Restaurants
International and U.S. divisions into three global brand divisions: KFC,
Pizza Hut and Taco Bell. China and India will remain separate divisions
given their strategic importance and enormous growth potential. This new
structure is designed to drive greater brand focus and lead to even more
aggressive global growth.
We are confident we have the people and resources to deliver at least
20% EPS growth in 2014 and re-establish our track record of double-digit
EPS growth.”
CHINA DIVISION
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Fourth Quarter
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Full Year
|
|
|
|
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% Change
|
|
|
|
|
|
|
|
|
% Change
|
|
|
2013
|
|
|
2012
|
|
|
Reported
|
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|
Ex F/X
|
|
|
2013
|
|
|
2012
|
|
|
Reported
|
|
|
Ex F/X
|
System Sales Growth
|
|
|
|
|
|
|
|
|
+6
|
|
|
+3
|
|
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|
|
|
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|
(1)
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(4)
|
Same-Store Sales Growth (%)
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(4)
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|
(6)
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NM
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|
|
NM
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(13)
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|
+4
|
|
|
NM
|
|
|
NM
|
Restaurant Margin (%)
|
|
|
14.3
|
|
|
13.9
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|
|
0.4
|
|
|
0.4
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|
|
15.4
|
|
|
18.1
|
|
|
(2.7)
|
|
|
(2.7)
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Operating Profit ($MM)
|
|
|
220
|
|
|
203
|
|
|
+9
|
|
|
+5
|
|
|
777
|
|
|
1,015
|
|
|
(23)
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|
|
(26)
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|
|
|
|
|
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-
China Division sales and profits were significantly impacted by
the effects of the December 2012 poultry supply incident, as well as
subsequent news of avian flu.
-
System sales declined 4% for the year and grew 3% in the quarter,
prior to foreign currency translation.
-
KFC same-store sales declined 15% for the year and 4% in the
quarter.
-
Pizza Hut Casual Dining same-store sales grew 4% for the year and
5% in the quarter.
-
China Division opened 740 new units during the year, including 282
units in the quarter. For the year, KFC opened 428 new units, Pizza
Hut Casual Dining opened 247 new units and Pizza Hut Home Service
opened 49 new units.
China Units
|
|
|
Q4 2013
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|
|
% Change2
|
Traditional Restaurants1
|
|
|
6,243
|
|
|
+9
|
KFC
|
|
|
4,563
|
|
|
+7
|
Pizza Hut Casual Dining
|
|
|
1,060
|
|
|
+28
|
Pizza Hut Home Service
|
|
|
203
|
|
|
+28
|
|
|
|
|
|
|
|
1 Total includes East Dawning and Little Sheep units
|
2 Represents year-over-year change
|
|
-
Restaurant margin decreased 2.7 percentage points to 15.4% for the
year, driven by significant sales deleverage, which was partially
offset by restaurant operating efficiencies. Restaurant margin
increased 0.4 percentage points to 14.3% for the quarter. Excluding
Little Sheep, restaurant margin was 16.2% for the year and 15.5% for
the quarter.
-
Foreign currency translation positively impacted operating profit by
$23 million for the year and $8 million for the quarter.
YUM! RESTAURANTS INTERNATIONAL (YRI) DIVISION
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
Full Year
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
|
% Change
|
|
|
|
2013
|
|
|
2012
|
|
|
Reported
|
|
|
Ex F/X
|
|
|
2013
|
|
|
2012
|
|
|
Reported
|
|
|
Ex F/X
|
Traditional Restaurants
|
|
|
15,110
|
|
|
14,500
|
|
|
+4
|
|
|
NA
|
|
|
15,110
|
|
|
14,500
|
|
|
+4
|
|
|
NA
|
System Sales Growth
|
|
|
|
|
|
|
|
|
+1
|
|
|
+6
|
|
|
|
|
|
|
|
|
+1
|
|
|
+5
|
Restaurant Margin (%)
|
|
|
12.7
|
|
|
14.1
|
|
|
(1.4)
|
|
|
(1.4)
|
|
|
12.9
|
|
|
12.9
|
|
|
Even
|
|
|
Even
|
Franchise & License Fees ($MM)
|
|
|
296
|
|
|
283
|
|
|
+5
|
|
|
+9
|
|
|
940
|
|
|
879
|
|
|
+7
|
|
|
+10
|
Operating Profit ($MM)
|
|
|
235
|
|
|
224
|
|
|
+5
|
|
|
+11
|
|
|
760
|
|
|
715
|
|
|
+6
|
|
|
+10
|
Operating Margin (%)
|
|
|
23.5
|
|
|
21.6
|
|
|
1.9
|
|
|
2.5
|
|
|
24.5
|
|
|
21.8
|
|
|
2.7
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
YRI Division system sales increased 5% for the year and 6% for
the quarter, prior to foreign currency translation. The system sales
increases were driven by record new-unit development and same-store
sales growth of 1% for the year and 2% for the quarter.
-
Emerging markets system sales grew 11% for the year, driven by 7%
unit growth and 4% same-store sales growth. For the quarter,
system sales grew 11%, driven by 7% unit growth and 3% same-store
sales growth.
-
Developed markets system sales grew 1% for the year, including 1%
unit growth. Same-store sales were even. For the quarter, system
sales grew 3%, driven by 1% unit growth and 1% same-store sales
growth.
-
YRI opened a record 1,055 new units in 78 countries. This included 488
new units in the fourth quarter.
-
For the year, 703 of these units were opened in emerging markets.
-
89% of all new units during the year were opened by franchisees.
-
Restaurant margin was even for the year. Restaurant margin declined
1.4 percentage points for the quarter, as a result of margin
performance in KFC UK.
-
Operating profit growth was 10% for the year, prior to foreign
currency translation. This included a benefit of 3 percentage points
from refranchising the Pizza Hut UK Dine-In business in the fourth
quarter of 2012.
-
Foreign currency translation negatively impacted operating profit by
$25 million for the year and $14 million for the quarter.
|
|
|
|
|
|
|
YRI MARKETS1
|
|
|
|
|
|
SYSTEM Sales Growth Ex F/X
|
|
|
Percent of YRI2
|
|
|
Fourth Quarter (%)
|
|
|
Full Year (%)
|
Franchise
|
|
|
|
|
|
|
|
|
|
Asia (ex Japan)
|
|
|
17%
|
|
|
+5
|
|
|
+6
|
Latin America
|
|
|
11%
|
|
|
+8
|
|
|
+7
|
Japan
|
|
|
9%
|
|
|
(3)
|
|
|
(6)
|
Middle East3
|
|
|
8%
|
|
|
+13
|
|
|
+7
|
Continental Europe
|
|
|
6%
|
|
|
+5
|
|
|
+3
|
Canada
|
|
|
6%
|
|
|
+2
|
|
|
Even
|
|
|
|
|
|
|
|
|
|
|
Combined Company / Franchise
|
|
|
|
|
|
|
|
|
|
UK
|
|
|
12%
|
|
|
+3
|
|
|
+1
|
Australia / New Zealand
|
|
|
11%
|
|
|
+4
|
|
|
+4
|
Thailand
|
|
|
2%
|
|
|
+4
|
|
|
+9
|
Korea
|
|
|
2%
|
|
|
+4
|
|
|
+5
|
|
|
|
|
|
|
|
|
|
|
Key Growth
|
|
|
|
|
|
|
|
|
|
Africa
|
|
|
7%
|
|
|
+6
|
|
|
+13
|
France
|
|
|
4%
|
|
|
+10
|
|
|
+7
|
Russia
|
|
|
3%
|
|
|
+47
|
|
|
+48
|
Germany / Netherlands
|
|
|
2%
|
|
|
+12
|
|
|
+14
|
|
1 See website www.yum.com
under tab "Investors" for a list of the countries within each of
the YRI markets
|
2 Percentage of Total YRI System Sales for Full Year
2013
|
3 Middle East excludes Turkey, which was acquired from
a franchisee in the second quarter
|
|
U.S. DIVISION
|
|
|
Fourth Quarter
|
|
|
Full Year
|
|
|
|
2013
|
|
|
2012
|
|
|
% Change
|
|
|
2013
|
|
|
2012
|
|
|
% Change
|
Same-Store Sales Growth (%)
|
|
|
(2)
|
|
|
+3
|
|
|
NM
|
|
|
-
|
|
|
+5
|
|
|
NM
|
Restaurant Margin (%)
|
|
|
16.4
|
|
|
16.7
|
|
|
(0.3)
|
|
|
16.9
|
|
|
16.3
|
|
|
0.6
|
Franchise and License Fees ($MM)
|
|
|
251
|
|
|
247
|
|
|
+1
|
|
|
837
|
|
|
802
|
|
|
+4
|
Operating Profit ($MM)
|
|
|
182
|
|
|
180
|
|
|
+2
|
|
|
684
|
|
|
666
|
|
|
+3
|
Operating Margin (%)
|
|
|
21.2
|
|
|
19.0
|
|
|
2.2
|
|
|
23.2
|
|
|
19.9
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
U.S. Division same-store sales were flat for the year;
including growth of 3% at Taco Bell, and declines of 2% at Pizza Hut
and KFC. Same-store sales decreased 2% for the quarter, including
declines of 4% at Pizza Hut and 5% at KFC. This was offset by 1%
growth at Taco Bell, marking the eighth consecutive quarter of
same-store sales growth.
-
Net unit growth was 77 for the full year. This was the second
consecutive year of net unit growth in the U.S.
-
Operating profit growth was 3% for the year. Excluding the impact of
refranchising, operating profit growth was 6%.
INDIA DIVISION
-
India Division system sales increased 20% for the year and 22%
for the quarter, prior to foreign currency translation. The system
sales increase was driven by unit growth of 24%, and offset by a 1%
decline in same-store sales for the year and a 4% decline for the
quarter.
India Units
|
|
|
Q4 2013
|
|
|
% Change2
|
Traditional Restaurants1
|
|
|
733
|
|
|
+24
|
KFC
|
|
|
361
|
|
|
+29
|
Pizza Hut Casual Dining
|
|
|
191
|
|
|
+6
|
Pizza Hut Home Service
|
|
|
176
|
|
|
+36
|
1 Total includes 5 Taco Bell units
|
2 Represents year-over-year change
|
|
OWNERSHIP UPDATE
-
For the year in the U.S., we refranchised 214 units, primarily related
to Taco Bell, for proceeds of $220 million. We recorded pre-tax U.S.
refranchising gains of $91 million in Special Items. At year end, our
company ownership in the U.S. was 10%.
OTHER ITEMS UPDATE
-
In the fourth quarter, we increased our annual dividend rate to $1.48
per share. This 10% increase marked the ninth consecutive year the
dividend increased at a double-digit percentage rate.
-
For the full year, we repurchased 10.9 million shares totaling $750
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 4, 2014. 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 12:45 p.m. Eastern
Time Tuesday, February 4, through midnight Tuesday, March 4, 2014. To
access the playback, dial 855/859-2056 in the United States and
404/537-3406 internationally. The playback pass code is 40244877.
The webcast and the playback can be accessed via the internet by
visiting Yum! Brands' Web site, www.yum.com/investors
and selecting “Q4 2013 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 safety and food-borne illness issues;
economic conditions, consumer preferences, adverse publicity, tax rates,
the regulatory environment, increased competition and other risks in
China, where a significant and growing portion of our restaurants are
located; economic and political conditions in the other countries where
we operate; the success of our international development strategy;
commodity, labor and other operating costs; our ability to secure and
maintain distribution and adequate supply to our restaurants; the
continued viability and success of our franchise and license operators;
the impact or threat of any widespread illness or outbreaks of viruses
or other diseases; a deterioration of the value or perception of our
brands; our ability to manage the accelerating impact of social media;
the impact of a potential suspension of our independent auditor; pending
or future litigation and legal claims or proceedings; our ability to
recruit, develop and retain effective leaders and other key executives;
new and changing government regulations; our effective tax rates and
disagreements with taxing authorities; our ability to protect the
integrity and security of individually identifiable data of our
customers and employees; changes in accounting standards or the
underlying assumptions, estimates or judgments relating to financial
reporting; our ability to protect our service marks and other
intellectual property; changes in global economic conditions, including
consumer spending, consumer confidence and unemployment; competition
within the retail food industry, including with respect to price and
quality, new product development, advertising levels and promotional
initiatives, customer service, reputation, restaurant location, and
attractiveness and maintenance of properties; and risks associated with
the Little Sheep business. 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, has over 40,000
restaurants in more than 125 countries and territories. Yum! is ranked
#201 on the Fortune 500 List with revenues of over $13 billion in 2012
and in 2013 was named among the top 100 Corporate Citizens by Corporate
Responsibility Magazine. 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 over five new restaurants per day, making it a
leader in international retail development.
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Consolidated Summary of Results
(amounts in millions, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
% Change
|
|
|
Year ended
|
|
|
% Change
|
|
|
|
12/28/13
|
|
|
12/29/12
|
|
|
B/(W)
|
|
|
12/28/13
|
|
|
12/29/12
|
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
$
|
3,590
|
|
|
|
$
|
3,585
|
|
|
|
—
|
|
|
$
|
11,184
|
|
|
|
$
|
11,833
|
|
|
|
(5)
|
Franchise and license fees and income
|
|
|
589
|
|
|
|
568
|
|
|
|
4
|
|
|
1,900
|
|
|
|
1,800
|
|
|
|
6
|
Total revenues
|
|
|
4,179
|
|
|
|
4,153
|
|
|
|
1
|
|
|
13,084
|
|
|
|
13,633
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper
|
|
|
1,188
|
|
|
|
1,162
|
|
|
|
(2)
|
|
|
3,669
|
|
|
|
3,874
|
|
|
|
5
|
Payroll and employee benefits
|
|
|
798
|
|
|
|
834
|
|
|
|
4
|
|
|
2,499
|
|
|
|
2,620
|
|
|
|
5
|
Occupancy and other operating expenses
|
|
|
1,095
|
|
|
|
1,070
|
|
|
|
(2)
|
|
|
3,333
|
|
|
|
3,358
|
|
|
|
1
|
Company restaurant expenses
|
|
|
3,081
|
|
|
|
3,066
|
|
|
|
—
|
|
|
9,501
|
|
|
|
9,852
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
479
|
|
|
|
560
|
|
|
|
14
|
|
|
1,412
|
|
|
|
1,510
|
|
|
|
6
|
Franchise and license expenses
|
|
|
50
|
|
|
|
49
|
|
|
|
(2)
|
|
|
158
|
|
|
|
133
|
|
|
|
(19)
|
Closures and impairment (income) expenses
|
|
|
21
|
|
|
|
28
|
|
|
|
25
|
|
|
331
|
|
|
|
37
|
|
|
|
NM
|
Refranchising (gain) loss
|
|
|
(13
|
)
|
|
|
(37
|
)
|
|
|
(66)
|
|
|
(100
|
)
|
|
|
(78
|
)
|
|
|
29
|
Other (income) expense
|
|
|
(10
|
)
|
|
|
(18
|
)
|
|
|
(41)
|
|
|
(16
|
)
|
|
|
(115
|
)
|
|
|
(86)
|
Total costs and expenses, net
|
|
|
3,608
|
|
|
|
3,648
|
|
|
|
1
|
|
|
11,286
|
|
|
|
11,339
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
|
|
|
571
|
|
|
|
505
|
|
|
|
13
|
|
|
1,798
|
|
|
|
2,294
|
|
|
|
(22)
|
Interest expense, net
|
|
|
153
|
|
|
|
42
|
|
|
|
NM
|
|
|
247
|
|
|
|
149
|
|
|
|
(66)
|
Income before income taxes
|
|
|
418
|
|
|
|
463
|
|
|
|
(10)
|
|
|
1,551
|
|
|
|
2,145
|
|
|
|
(28)
|
Income tax provision
|
|
|
103
|
|
|
|
127
|
|
|
|
19
|
|
|
487
|
|
|
|
537
|
|
|
|
9
|
Net income - including noncontrolling interests
|
|
|
315
|
|
|
|
336
|
|
|
|
(6)
|
|
|
1,064
|
|
|
|
1,608
|
|
|
|
(34)
|
Net income (loss) - noncontrolling interests
|
|
|
(6
|
)
|
|
|
(1
|
)
|
|
|
NM
|
|
|
(27
|
)
|
|
|
11
|
|
|
|
NM
|
Net income - YUM! Brands, Inc.
|
|
|
$
|
321
|
|
|
|
$
|
337
|
|
|
|
(5)
|
|
|
$
|
1,091
|
|
|
|
$
|
1,597
|
|
|
|
(32)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
24.6
|
%
|
|
|
27.5
|
%
|
|
|
2.9 ppts.
|
|
|
31.4
|
%
|
|
|
25.0
|
%
|
|
|
(6.4 ppts.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate before special items
|
|
|
27.4
|
%
|
|
|
26.4
|
%
|
|
|
(1.0 ppts.)
|
|
|
28.0
|
%
|
|
|
25.8
|
%
|
|
|
(2.2 ppts.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
|
|
$
|
0.72
|
|
|
|
$
|
0.74
|
|
|
|
(3)
|
|
|
$
|
2.41
|
|
|
|
$
|
3.46
|
|
|
|
(30)
|
Average shares outstanding
|
|
|
448
|
|
|
|
457
|
|
|
|
2
|
|
|
452
|
|
|
|
461
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
|
|
$
|
0.70
|
|
|
|
$
|
0.72
|
|
|
|
(3)
|
|
|
$
|
2.36
|
|
|
|
$
|
3.38
|
|
|
|
(30)
|
Average shares outstanding
|
|
|
458
|
|
|
|
468
|
|
|
|
2
|
|
|
461
|
|
|
|
473
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
|
$
|
0.74
|
|
|
|
$
|
0.67
|
|
|
|
|
|
|
$
|
1.41
|
|
|
|
$
|
1.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
Percentages may not recompute due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
CHINA DIVISION Operating Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
% Change
|
|
|
Year ended
|
|
|
% Change
|
|
|
|
12/28/13
|
|
|
12/29/12
|
|
|
B/(W)
|
|
|
12/28/13
|
|
|
12/29/12
|
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
$
|
2,237
|
|
|
|
$
|
2,105
|
|
|
|
6
|
|
|
$
|
6,800
|
|
|
|
$
|
6,797
|
|
|
|
—
|
Franchise and license fees and income
|
|
|
35
|
|
|
|
31
|
|
|
|
15
|
|
|
105
|
|
|
|
101
|
|
|
|
4
|
Total revenues
|
|
|
2,272
|
|
|
|
2,136
|
|
|
|
6
|
|
|
6,905
|
|
|
|
6,898
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper
|
|
|
750
|
|
|
|
701
|
|
|
|
(7)
|
|
|
2,258
|
|
|
|
2,312
|
|
|
|
2
|
Payroll and employee benefits
|
|
|
453
|
|
|
|
444
|
|
|
|
(2)
|
|
|
1,360
|
|
|
|
1,259
|
|
|
|
(8)
|
Occupancy and other operating expenses
|
|
|
713
|
|
|
|
668
|
|
|
|
(7)
|
|
|
2,132
|
|
|
|
1,993
|
|
|
|
(7)
|
Company restaurant expenses
|
|
|
1,916
|
|
|
|
1,813
|
|
|
|
(6)
|
|
|
5,750
|
|
|
|
5,564
|
|
|
|
(3)
|
General and administrative expenses
|
|
|
124
|
|
|
|
121
|
|
|
|
(3)
|
|
|
357
|
|
|
|
334
|
|
|
|
(7)
|
Franchise and license expenses
|
|
|
5
|
|
|
|
3
|
|
|
|
(27)
|
|
|
13
|
|
|
|
9
|
|
|
|
(41)
|
Closures and impairment (income) expenses
|
|
|
16
|
|
|
|
5
|
|
|
|
NM
|
|
|
30
|
|
|
|
9
|
|
|
|
NM
|
Other (income) expense
|
|
|
(9
|
)
|
|
|
(9
|
)
|
|
|
6
|
|
|
(22
|
)
|
|
|
(33
|
)
|
|
|
(33)
|
|
|
|
2,052
|
|
|
|
1,933
|
|
|
|
(6)
|
|
|
6,128
|
|
|
|
5,883
|
|
|
|
(4)
|
Operating Profit
|
|
|
$
|
220
|
|
|
|
$
|
203
|
|
|
|
9
|
|
|
$
|
777
|
|
|
|
$
|
1,015
|
|
|
|
(23)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
Food and paper
|
|
|
33.5
|
|
|
|
33.3
|
|
|
|
(0.2 ppts.)
|
|
|
33.2
|
|
|
|
34.1
|
|
|
|
0.9 ppts.
|
Payroll and employee benefits
|
|
|
20.3
|
|
|
|
21.1
|
|
|
|
0.8 ppts.
|
|
|
20.0
|
|
|
|
18.5
|
|
|
|
(1.5 ppts.)
|
Occupancy and other operating expenses
|
|
|
31.9
|
|
|
|
31.7
|
|
|
|
(0.2 ppts.)
|
|
|
31.4
|
|
|
|
29.3
|
|
|
|
(2.1 ppts.)
|
Restaurant margin
|
|
|
14.3
|
%
|
|
|
13.9
|
%
|
|
|
0.4 ppts.
|
|
|
15.4
|
%
|
|
|
18.1
|
%
|
|
|
(2.7 ppts.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
9.7
|
%
|
|
|
9.5
|
%
|
|
|
0.2 ppts.
|
|
|
11.3
|
%
|
|
|
14.7
|
%
|
|
|
(3.4 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 ended
|
|
|
% Change
|
|
|
Year ended
|
|
|
% Change
|
|
|
|
12/28/13
|
|
|
12/29/12
|
|
|
B/(W)
|
|
|
12/28/13
|
|
|
12/29/12
|
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
$
|
702
|
|
|
|
$
|
751
|
|
|
|
(7)
|
|
|
$
|
2,159
|
|
|
|
$
|
2,402
|
|
|
|
(10)
|
Franchise and license fees and income
|
|
|
296
|
|
|
|
283
|
|
|
|
5
|
|
|
940
|
|
|
|
879
|
|
|
|
7
|
Total revenues
|
|
|
998
|
|
|
|
1,034
|
|
|
|
(3)
|
|
|
3,099
|
|
|
|
3,281
|
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper
|
|
|
244
|
|
|
|
246
|
|
|
|
1
|
|
|
748
|
|
|
|
787
|
|
|
|
5
|
Payroll and employee benefits
|
|
|
164
|
|
|
|
184
|
|
|
|
11
|
|
|
508
|
|
|
|
599
|
|
|
|
15
|
Occupancy and other operating expenses
|
|
|
205
|
|
|
|
215
|
|
|
|
5
|
|
|
625
|
|
|
|
705
|
|
|
|
12
|
Company restaurant expenses
|
|
|
613
|
|
|
|
645
|
|
|
|
5
|
|
|
1,881
|
|
|
|
2,091
|
|
|
|
10
|
General and administrative expenses
|
|
|
129
|
|
|
|
139
|
|
|
|
6
|
|
|
394
|
|
|
|
414
|
|
|
|
5
|
Franchise and license expenses
|
|
|
21
|
|
|
|
16
|
|
|
|
(25)
|
|
|
65
|
|
|
|
50
|
|
|
|
(29)
|
Closures and impairment (income) expenses
|
|
|
(1
|
)
|
|
|
17
|
|
|
|
NM
|
|
|
(1
|
)
|
|
|
19
|
|
|
|
NM
|
Other (income) expense
|
|
|
1
|
|
|
|
(7
|
)
|
|
|
NM
|
|
|
—
|
|
|
|
(8
|
)
|
|
|
(94)
|
|
|
|
763
|
|
|
|
810
|
|
|
|
6
|
|
|
2,339
|
|
|
|
2,566
|
|
|
|
9
|
Operating Profit
|
|
|
$
|
235
|
|
|
|
$
|
224
|
|
|
|
5
|
|
|
$
|
760
|
|
|
|
$
|
715
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
Food and paper
|
|
|
34.8
|
|
|
|
32.7
|
|
|
|
(2.1 ppts.)
|
|
|
34.7
|
|
|
|
32.8
|
|
|
|
(1.9 ppts.)
|
Payroll and employee benefits
|
|
|
23.4
|
|
|
|
24.5
|
|
|
|
1.1 ppts.
|
|
|
23.5
|
|
|
|
24.9
|
|
|
|
1.4 ppts.
|
Occupancy and other operating expenses
|
|
|
29.1
|
|
|
|
28.7
|
|
|
|
(0.4 ppts.)
|
|
|
28.9
|
|
|
|
29.4
|
|
|
|
0.5 ppts.
|
Restaurant margin
|
|
|
12.7
|
%
|
|
|
14.1
|
%
|
|
|
(1.4 ppts.)
|
|
|
12.9
|
%
|
|
|
12.9
|
%
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
23.5
|
%
|
|
|
21.6
|
%
|
|
|
1.9 ppts.
|
|
|
24.5
|
%
|
|
|
21.8
|
%
|
|
|
2.7 ppts.
|
|
See accompanying notes.
|
|
Percentages may not recompute due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
UNITED STATES DIVISION Operating Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
% Change
|
|
|
Year ended
|
|
|
% Change
|
|
|
|
12/28/13
|
|
|
12/29/12
|
|
|
B/(W)
|
|
|
12/28/13
|
|
|
12/29/12
|
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
$
|
614
|
|
|
|
$
|
700
|
|
|
|
(12)
|
|
|
$
|
2,116
|
|
|
|
$
|
2,550
|
|
|
|
(17)
|
Franchise and license fees and income
|
|
|
251
|
|
|
|
247
|
|
|
|
1
|
|
|
837
|
|
|
|
802
|
|
|
|
4
|
Total revenues
|
|
|
865
|
|
|
|
947
|
|
|
|
(9)
|
|
|
2,953
|
|
|
|
3,352
|
|
|
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper
|
|
|
179
|
|
|
|
203
|
|
|
|
12
|
|
|
615
|
|
|
|
740
|
|
|
|
17
|
Payroll and employee benefits
|
|
|
175
|
|
|
|
202
|
|
|
|
13
|
|
|
615
|
|
|
|
751
|
|
|
|
18
|
Occupancy and other operating expenses
|
|
|
159
|
|
|
|
179
|
|
|
|
10
|
|
|
529
|
|
|
|
643
|
|
|
|
18
|
Company restaurant expenses
|
|
|
513
|
|
|
|
584
|
|
|
|
12
|
|
|
1,759
|
|
|
|
2,134
|
|
|
|
18
|
General and administrative expenses
|
|
|
143
|
|
|
|
145
|
|
|
|
3
|
|
|
427
|
|
|
|
467
|
|
|
|
9
|
Franchise and license expenses
|
|
|
24
|
|
|
|
30
|
|
|
|
16
|
|
|
78
|
|
|
|
74
|
|
|
|
(6)
|
Closures and impairment (income) expenses
|
|
|
5
|
|
|
|
6
|
|
|
|
35
|
|
|
5
|
|
|
|
9
|
|
|
|
41
|
Other (income) expense
|
|
|
(2
|
)
|
|
|
2
|
|
|
|
NM
|
|
|
—
|
|
|
|
2
|
|
|
|
NM
|
|
|
|
683
|
|
|
|
767
|
|
|
|
11
|
|
|
2,269
|
|
|
|
2,686
|
|
|
|
16
|
Operating Profit
|
|
|
$
|
182
|
|
|
|
$
|
180
|
|
|
|
2
|
|
|
$
|
684
|
|
|
|
$
|
666
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
Food and paper
|
|
|
29.0
|
|
|
|
29.0
|
|
|
|
-
|
|
|
29.0
|
|
|
|
29.0
|
|
|
|
-
|
Payroll and employee benefits
|
|
|
28.5
|
|
|
|
28.9
|
|
|
|
0.4 ppts.
|
|
|
29.1
|
|
|
|
29.5
|
|
|
|
0.4 ppts.
|
Occupancy and other operating expenses
|
|
|
26.1
|
|
|
|
25.4
|
|
|
|
(0.7 ppts.)
|
|
|
25.0
|
|
|
|
25.2
|
|
|
|
0.2 ppts.
|
|
|
|
16.4
|
%
|
|
|
16.7
|
%
|
|
|
(0.3 ppts.)
|
|
|
16.9
|
%
|
|
|
16.3
|
%
|
|
|
0.6 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
21.2
|
%
|
|
|
19.0
|
%
|
|
|
2.2 ppts.
|
|
|
23.2
|
%
|
|
|
19.9
|
%
|
|
|
3.3 ppts.
|
|
See accompanying notes.
|
|
Percentages may not recompute due to rounding.
|
|
YUM! Brands, Inc.
Consolidated Balance Sheets
(amounts in millions)
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
12/28/2013
|
|
|
12/29/2012
|
ASSETS
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
573
|
|
|
|
$
|
776
|
|
Accounts and notes receivable, less allowance: $11 in 2013 and $12
in 2012
|
|
|
|
319
|
|
|
|
301
|
|
Inventories
|
|
|
|
294
|
|
|
|
313
|
|
Prepaid expenses and other current assets
|
|
|
|
286
|
|
|
|
272
|
|
Deferred income taxes
|
|
|
|
123
|
|
|
|
127
|
|
Advertising cooperative assets, restricted
|
|
|
|
96
|
|
|
|
136
|
|
Total Current Assets
|
|
|
|
1,691
|
|
|
|
1,925
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net of accumulated depreciation and
amortization of $3,391 in 2013 and $3,139 in 2012
|
|
|
|
4,459
|
|
|
|
4,250
|
|
Goodwill
|
|
|
|
889
|
|
|
|
1,034
|
|
Intangible assets, net
|
|
|
|
638
|
|
|
|
690
|
|
Investments in unconsolidated affiliates
|
|
|
|
53
|
|
|
|
72
|
|
Other assets
|
|
|
|
566
|
|
|
|
575
|
|
Deferred income taxes
|
|
|
|
399
|
|
|
|
467
|
|
Total Assets
|
|
|
$
|
8,695
|
|
|
|
$
|
9,013
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Accounts payable and other current liabilities
|
|
|
$
|
1,929
|
|
|
|
$
|
2,036
|
|
Income taxes payable
|
|
|
|
169
|
|
|
|
97
|
|
Short-term borrowings
|
|
|
|
71
|
|
|
|
10
|
|
Advertising cooperative liabilities
|
|
|
|
96
|
|
|
|
136
|
|
Total Current Liabilities
|
|
|
|
2,265
|
|
|
|
2,279
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
2,918
|
|
|
|
2,932
|
|
Other liabilities and deferred credits
|
|
|
|
1,244
|
|
|
|
1,490
|
|
Total Liabilities
|
|
|
|
6,427
|
|
|
|
6,701
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest
|
|
|
|
39
|
|
|
|
59
|
|
|
|
|
|
|
|
|
Shareholders' Equity
|
|
|
|
|
|
|
Common stock, no par value, 750 shares authorized; 443 shares and
451 shares issued in 2013 and 2012, respectively
|
|
|
|
—
|
|
|
|
—
|
|
Retained earnings
|
|
|
|
2,102
|
|
|
|
2,286
|
|
Accumulated other comprehensive income (loss)
|
|
|
|
64
|
|
|
|
(132
|
)
|
Total Shareholders' Equity - YUM! Brands, Inc.
|
|
|
|
2,166
|
|
|
|
2,154
|
|
Noncontrolling interests
|
|
|
|
63
|
|
|
|
99
|
|
Total Shareholders' Equity
|
|
|
|
2,229
|
|
|
|
2,253
|
|
Total Liabilities, Redeemable Noncontrolling Interest and
Shareholders' Equity
|
|
|
$
|
8,695
|
|
|
|
$
|
9,013
|
|
|
See accompanying notes.
|
|
|
|
|
YUM! Brands, Inc.
Consolidated Statements of Cash Flows
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
(unaudited)
12/28/13
|
|
|
12/29/12
|
Cash Flows - Operating Activities
|
|
|
|
|
|
|
Net income - including noncontrolling interests
|
|
|
$
|
1,064
|
|
|
|
$
|
1,608
|
|
Depreciation and amortization
|
|
|
721
|
|
|
|
665
|
|
Closures and impairment (income) expenses
|
|
|
331
|
|
|
|
37
|
|
Refranchising (gain) loss
|
|
|
(100
|
)
|
|
|
(78
|
)
|
Contributions to defined benefit pension plans
|
|
|
(23
|
)
|
|
|
(119
|
)
|
Pension Plan settlement charges
|
|
|
30
|
|
|
|
89
|
|
Gain upon acquisition of Little Sheep
|
|
|
—
|
|
|
|
(74
|
)
|
Losses and other costs related to the extinguishment of debt
|
|
|
120
|
|
|
|
—
|
|
Deferred income taxes
|
|
|
(24
|
)
|
|
|
28
|
|
Equity income from investments in unconsolidated affiliates
|
|
|
(26
|
)
|
|
|
(47
|
)
|
Distribution of income received from unconsolidated affiliates
|
|
|
43
|
|
|
|
41
|
|
Excess tax benefit from share-based compensation
|
|
|
(44
|
)
|
|
|
(98
|
)
|
Share-based compensation expense
|
|
|
49
|
|
|
|
50
|
|
Changes in accounts and notes receivable
|
|
|
(12
|
)
|
|
|
(18
|
)
|
Changes in inventories
|
|
|
18
|
|
|
|
9
|
|
Changes in prepaid expenses and other current assets
|
|
|
(21
|
)
|
|
|
(14
|
)
|
Changes in accounts payable and other current liabilities
|
|
|
(102
|
)
|
|
|
9
|
|
Changes in income taxes payable
|
|
|
81
|
|
|
|
126
|
|
Other, net
|
|
|
34
|
|
|
|
80
|
|
Net Cash Provided by Operating Activities
|
|
|
2,139
|
|
|
|
2,294
|
|
|
|
|
|
|
|
|
Cash Flows - Investing Activities
|
|
|
|
|
|
|
Capital spending
|
|
|
(1,049
|
)
|
|
|
(1,099
|
)
|
Proceeds from refranchising of restaurants
|
|
|
260
|
|
|
|
364
|
|
Acquisitions
|
|
|
(99
|
)
|
|
|
(543
|
)
|
Changes in restricted cash
|
|
|
—
|
|
|
|
300
|
|
Other, net
|
|
|
2
|
|
|
|
(27
|
)
|
Net Cash Used in Investing Activities
|
|
|
(886
|
)
|
|
|
(1,005
|
)
|
|
|
|
|
|
|
|
Cash Flows - Financing Activities
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
599
|
|
|
|
—
|
|
Repayments of long-term debt
|
|
|
(666
|
)
|
|
|
(282
|
)
|
Short-term borrowings, by original maturity
|
|
|
|
|
|
|
More than three months - proceeds
|
|
|
56
|
|
|
|
—
|
|
More than three months - payments
|
|
|
(56
|
)
|
|
|
—
|
|
Three months or less, net
|
|
|
—
|
|
|
|
—
|
|
Revolving credit facilities, three months or less, net
|
|
|
—
|
|
|
|
—
|
|
Repurchase shares of Common Stock
|
|
|
(770
|
)
|
|
|
(965
|
)
|
Excess tax benefit from share-based compensation
|
|
|
44
|
|
|
|
98
|
|
Employee stock option proceeds
|
|
|
37
|
|
|
|
62
|
|
Dividends paid on Common Stock
|
|
|
(615
|
)
|
|
|
(544
|
)
|
Other, net
|
|
|
(80
|
)
|
|
|
(85
|
)
|
Net Cash Used in Financing Activities
|
|
|
(1,451
|
)
|
|
|
(1,716
|
)
|
Effect of Exchange Rate on Cash and Cash Equivalents
|
|
|
(5
|
)
|
|
|
5
|
|
Net Decrease in Cash and Cash Equivalents
|
|
|
(203
|
)
|
|
|
(422
|
)
|
Cash and Cash Equivalents - Beginning of Period
|
|
|
776
|
|
|
|
1,198
|
|
Cash and Cash Equivalents - End of Period
|
|
|
$
|
573
|
|
|
|
$
|
776
|
|
|
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 results in 2013 and 2012 on a basis before Special Items.
Included in Special Items are U.S. refranchising gain (loss), YUM
pension settlement charges in 2013 and 2012, charges associated
with the impairment of certain Little Sheep assets in 2013, the
gain upon acquisition of Little Sheep in 2012, charges relating to
U.S. General and Administrative ("G&A") productivity initiatives
and realignment of resources, losses associated with the
refranchising of the Pizza Hut UK dine-in business and losses
related to the extinguishment of debt in 2013. These amounts are
described in (c), (d), (e), (f), (g) and (h) in the accompanying
notes. Other Special Items Income (Expense) in the year ended 2012
includes 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 and gains from real estate sales related to our
previously refranchised Mexico business.
|
|
The Company uses earnings before Special Items as a key
performance measure of results 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
results, excluding items in the quarters and years to date ended
December 28, 2013 and December 29, 2012 that the Company does not
believe are indicative of our ongoing operations due to their size
and/or nature.
|
|
|
|
|
Quarter ended
|
|
|
Year ended
|
|
|
|
12/28/13
|
|
|
12/29/12
|
|
|
12/28/13
|
|
|
12/29/12
|
Detail of Special Items
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Refranchising gain (loss)(c)
|
|
|
$
|
9
|
|
|
|
$
|
69
|
|
|
|
$
|
91
|
|
|
|
$
|
122
|
|
YUM pension settlement charges(d)
|
|
|
(6
|
)
|
|
|
(84
|
)
|
|
|
(10
|
)
|
|
|
(84
|
)
|
Little Sheep impairment(e)
|
|
|
—
|
|
|
|
—
|
|
|
|
(295
|
)
|
|
|
—
|
|
Gain upon acquisition of Little Sheep(e)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
74
|
|
Charges relating to U.S. G&A productivity initiatives and
realignment of resources(f)
|
|
|
—
|
|
|
|
—
|
|
|
|
(5
|
)
|
|
|
—
|
|
Losses associated with the refranchising of the Pizza Hut UK dine-in
business(g)
|
|
|
—
|
|
|
|
(46
|
)
|
|
|
(1
|
)
|
|
|
(70
|
)
|
Other Special Items Income (Expense)
|
|
|
(3
|
)
|
|
|
1
|
|
|
|
(2
|
)
|
|
|
16
|
|
Special Items Income (Expense) - Operating Profit
|
|
|
—
|
|
|
|
(60
|
)
|
|
|
(222
|
)
|
|
|
58
|
|
Losses related to the extinguishment of debt - Interest Expense, net(h)
|
|
|
(118
|
)
|
|
|
—
|
|
|
|
(118
|
)
|
|
|
—
|
|
Special Items Income (Expense) before income taxes
|
|
|
(118
|
)
|
|
|
(60
|
)
|
|
|
(340
|
)
|
|
|
58
|
|
Tax Benefit (Expense) on Special Items
|
|
|
44
|
|
|
|
10
|
|
|
|
41
|
|
|
|
1
|
|
Special Items Income (Expense), net of tax - including
noncontrolling interests
|
|
|
$
|
(74
|
)
|
|
|
$
|
(50
|
)
|
|
|
$
|
(299
|
)
|
|
|
$
|
59
|
|
Special Items Income (Expense), net of tax - noncontrolling interests
|
|
|
—
|
|
|
|
—
|
|
|
|
19
|
|
|
|
—
|
|
Special Items Income (Expense), net of tax - Yum Brands, Inc.
|
|
|
(74
|
)
|
|
|
(50
|
)
|
|
|
(280
|
)
|
|
|
59
|
|
Average diluted shares outstanding
|
|
|
458
|
|
|
|
468
|
|
|
|
461
|
|
|
|
473
|
|
Special Items diluted EPS
|
|
|
$
|
(0.16
|
)
|
|
|
$
|
(0.11
|
)
|
|
|
$
|
(0.61
|
)
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Profit Before Special Items
to Reported Operating Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit Before Special Items
|
|
|
$
|
571
|
|
|
|
$
|
565
|
|
|
|
$
|
2,020
|
|
|
|
$
|
2,236
|
|
Special Items Income (Expense) - Operating Profit
|
|
|
—
|
|
|
|
(60
|
)
|
|
|
(222
|
)
|
|
|
58
|
|
Reported Operating Profit
|
|
|
$
|
571
|
|
|
|
$
|
505
|
|
|
|
$
|
1,798
|
|
|
|
$
|
2,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of EPS Before Special Items to Reported EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS Before Special Items
|
|
|
$
|
0.86
|
|
|
|
$
|
0.83
|
|
|
|
$
|
2.97
|
|
|
|
$
|
3.25
|
|
Special Items EPS
|
|
|
(0.16
|
)
|
|
|
(0.11
|
)
|
|
|
(0.61
|
)
|
|
|
0.13
|
|
Reported EPS
|
|
|
$
|
0.70
|
|
|
|
$
|
0.72
|
|
|
|
$
|
2.36
|
|
|
|
$
|
3.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Effective Tax Rate Before Special Items
to Reported Effective Tax Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax Rate Before Special Items
|
|
|
27.4
|
%
|
|
|
26.4
|
%
|
|
|
28.0
|
%
|
|
|
25.8
|
%
|
Impact on Tax Rate as a result of Special Items
|
|
|
(2.8
|
)%
|
|
|
1.1
|
%
|
|
|
3.4
|
%
|
|
|
(0.8
|
)%
|
Reported Effective Tax Rate
|
|
|
24.6
|
%
|
|
|
27.5
|
%
|
|
|
31.4
|
%
|
|
|
25.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Segment Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended 12/28/13
|
|
|
China
|
|
|
YRI
|
|
|
United States
|
|
|
India
|
|
|
Corporate and Unallocated
|
|
|
Consolidated
|
Total revenues
|
|
|
$
|
2,272
|
|
|
|
$
|
998
|
|
|
|
$
|
865
|
|
|
|
$
|
44
|
|
|
|
$
|
—
|
|
|
|
$
|
4,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
1,916
|
|
|
|
613
|
|
|
|
513
|
|
|
|
39
|
|
|
|
—
|
|
|
|
3,081
|
|
General and administrative expenses
|
|
|
124
|
|
|
|
129
|
|
|
|
143
|
|
|
|
9
|
|
|
|
74
|
|
|
|
479
|
|
Franchise and license expenses
|
|
|
5
|
|
|
|
21
|
|
|
|
24
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50
|
|
Closures and impairment (income) expenses
|
|
|
16
|
|
|
|
(1
|
)
|
|
|
5
|
|
|
|
1
|
|
|
|
—
|
|
|
|
21
|
|
Refranchising (gain) loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(13
|
)
|
|
|
(13
|
)
|
Other (income) expense
|
|
|
(9
|
)
|
|
|
1
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(10
|
)
|
|
|
|
2,052
|
|
|
|
763
|
|
|
|
683
|
|
|
|
49
|
|
|
|
61
|
|
|
|
3,608
|
|
Operating Profit (loss)
|
|
|
$
|
220
|
|
|
|
$
|
235
|
|
|
|
$
|
182
|
|
|
|
$
|
(5
|
)
|
|
|
$
|
(61
|
)
|
|
|
$
|
571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 12/28/13
|
|
|
China
|
|
|
YRI
|
|
|
United States
|
|
|
India
|
|
|
Corporate and Unallocated
|
|
|
Consolidated
|
Total revenues
|
|
|
$
|
6,905
|
|
|
|
$
|
3,099
|
|
|
|
$
|
2,953
|
|
|
|
$
|
127
|
|
|
|
$
|
—
|
|
|
|
$
|
13,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
5,750
|
|
|
|
1,881
|
|
|
|
1,759
|
|
|
|
111
|
|
|
|
—
|
|
|
|
9,501
|
|
General and administrative expenses
|
|
|
357
|
|
|
|
394
|
|
|
|
427
|
|
|
|
27
|
|
|
|
207
|
|
|
|
1,412
|
|
Franchise and license expenses
|
|
|
13
|
|
|
|
65
|
|
|
|
78
|
|
|
|
2
|
|
|
|
—
|
|
|
|
158
|
|
Closures and impairment (income) expenses
|
|
|
30
|
|
|
|
(1
|
)
|
|
|
5
|
|
|
|
2
|
|
|
|
295
|
|
|
|
331
|
|
Refranchising (gain) loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(100
|
)
|
|
|
(100
|
)
|
Other (income) expense
|
|
|
(22
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
|
(16
|
)
|
|
|
|
6,128
|
|
|
|
2,339
|
|
|
|
2,269
|
|
|
|
142
|
|
|
|
408
|
|
|
|
11,286
|
|
Operating Profit (loss)
|
|
|
$
|
777
|
|
|
|
$
|
760
|
|
|
|
$
|
684
|
|
|
|
$
|
(15
|
)
|
|
|
$
|
(408
|
)
|
|
|
$
|
1,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended 12/29/12
|
|
|
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
|
|
|
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 28, 2013 are preliminary.
|
|
|
(b)
|
Other (income) expense for the China Division primarily consists
of equity income (loss) 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)
|
During the quarter and year ended December 28, 2013, we recorded
gains of $9 million and $91 million, respectively, related to
refranchising in the U.S., primarily at Taco Bell. During the
quarter and year ended December 29, 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).
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(d)
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During the fourth quarter of 2012 and continuing through 2013, the
Company allowed certain former employees with deferred vested
balances in our U.S. pension plans an opportunity to voluntarily
elect an early payout of their pension benefits. The majority of
these payouts were funded from existing pension plan assets. The
Company recorded pre-tax settlement charges of $6 million and $10
million in the quarter and year ended December 28, 2013,
respectively, and $84 million in the quarter and year ended
December 29, 2012 as a result of these payouts. The charges were
recorded in General and administrative expenses and were not
allocated for segment reporting purposes and are reflected as a
Special Item for certain performance measures (see accompanying
reconciliation to reported results).
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(e)
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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 Condensed
Consolidated Statement of Income during the quarter ended March
24, 2012.
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During the quarter ended September 7, 2013, we recorded an
impairment charge for certain Little Sheep assets totaling $258
million (net of income tax benefit of $18 million and amounts
allocated to noncontrolling interests of $19 million). This charge
was driven by a write down in goodwill from $384 million to $162
million and a write down in trademark from $414 million to $345
million. The gain upon acquisition and the impairment charge were
not allocated for segment reporting purposes and were reflected as
Special Items for certain performance measures (see accompanying
reconciliation to reported results).
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(f)
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During the quarter ended September 7, 2013, as part of our U.S.
G&A productivity initiatives and realignment of resources, we
recorded a one-time charge of $5 million related to the
outsourcing of certain information technology, accounting and
payroll services. This charge was not allocated for segment
reporting purposes and was reflected as a Special Item for certain
performance measures (see accompanying reconciliation to reported
results).
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(g)
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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. These losses
were not allocated for segment reporting purposes and were
reflected as Special Items for certain performance measures (see
accompanying reconciliation to reported results).
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For the quarter ended December 28, 2013, the refranchising of the
Pizza Hut UK dine-in restaurants decreased Company sales by 14%
and increased Franchise and license fees and income and Operating
Profit by 1% and 3%, respectively, for the YRI Division. For the
year ended December 28, 2013, the refranchising of the Pizza Hut
UK dine-in restaurants decreased Company sales by 18% and
increased Franchise and license fees and income and Operating
Profit by 2% and 3%, respectively, for the YRI Division.
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(h)
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During the fourth quarter of 2013, we completed a cash tender
offer to repurchase $550 million of our Senior Unsecured Notes due
either March 2018 or November 2037. This transaction resulted in
$120 million of losses, $118 million of which was classified as
Interest expense, net in our Consolidated Statement of Income. The
repurchase of the Senior Unsecured Notes was funded primarily by
proceeds received of $599 million from the issuance of new Senior
Unsecured Notes. These losses were not allocated for segment
reporting purposes and were reflected as Special Items for certain
performance measures (see accompanying reconciliation to reported
results).
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(i)
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At the beginning of fiscal 2013 we eliminated the period lag that
we previously used to facilitate the reporting of our India
Division's results. Accordingly, the India Division's 2013 fourth
quarter results include the months of September through December
2013, and the 2013 full year results include the months of January
through December 2013. Due to the immateriality of the India
Division's results we did not restate the prior year operating
results for the elimination of this period lag and therefore the
2012 fourth quarter results continue to include the months of
August through November 2012 and the 2012 full year results
include the months of December 2011 through November 2012.
However, we have presented India Division system sales growth,
same-store sales growth and restaurant unit growth within this
release by comparing September through December 2013 to September
through December 2012 for the fourth quarter and January through
December 2013 to January through December 2012 for the full year
to enhance comparability.
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