LOUISVILLE, Ky.--(BUSINESS WIRE)--
Yum! Brands, Inc. (NYSE: YUM) today reported results for the third
quarter ended September 30, 2017. Third-quarter GAAP EPS was $1.18, an
increase of 115%. Third-quarter EPS excluding Special Items was $0.68,
an increase of 22%.
This press release features multimedia. View the full release here:
http://www.businesswire.com/news/home/20171102005405/en/
GREG CREED COMMENTS
Greg Creed, CEO, said “I’m pleased to report another strong quarter with
11% core operating profit growth and 22% EPS growth excluding special
items, as a result of the continued focus on our four key growth
drivers. We are maintaining our full-year 2017 guidance and remain
on-track with our multi-year transformation strategy. As we celebrate
both our 1st anniversary from the spin-off of Yum China and
our 20th anniversary as an independent company, I am proud of
our accomplishments. I’m especially proud of our ability to leverage our
culture to rapidly transform to a more focused, more franchised and more
efficient company which delivers more growth to our shareholders.”
THIRD-QUARTER HIGHLIGHTS
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Worldwide system sales grew 6%, with KFC at 7%, Taco Bell at 6% and
Pizza Hut at 3%.
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We opened 362 net new units for 3% net unit growth.
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We refranchised 209 restaurants, including 72 KFC, 46 Pizza Hut and
91 Taco Bell units, for gross proceeds of $395 million. We recorded
net refranchising gains of $201 million in Special Items. As of
quarter end, our global franchise ownership mix increased to 95%.
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We repurchased 6.6 million shares totaling $501 million at an
average price of $75.
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Foreign currency translation favorably impacted divisional operating
profit by $2 million.
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% Change
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System Sales
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Same-Store
Sales
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Net New Units
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GAAP
Operating Profit
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Core
Operating Profit
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KFC Division
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+7
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+4
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+4
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+14
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+13
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Pizza Hut Division
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+3
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+1
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+2
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(1)
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Even
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Taco Bell Division
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+6
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+3
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+3
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+3
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+3
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Worldwide
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+6
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+3
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+3
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+61
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+11
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Third Quarter
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Year-to-Date
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2017
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2016
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% Change
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2017
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2016
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% Change
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GAAP EPS
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$1.18
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$0.55
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+115
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$2.52
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$1.73
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+46
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Special Items EPS1
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$0.50
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$(0.01)
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NM
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$0.51
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$0.05
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NM
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EPS Excluding Special Items
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$0.68
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$0.56
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+22
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$2.01
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$1.68
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+20
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1See Reconciliation of GAAP results to non-GAAP measurements
within this release for further detail of Special Items.
System sales growth figures exclude foreign currency translation ("F/X")
and core operating profit growth figures exclude F/X and Special Items.
Special Items are not allocated to any segment and therefore only impact
worldwide GAAP results. See reconciliation of GAAP results to non-GAAP
measurements within this release for further details.
All comparisons are versus the same period a year ago. Effective January
2017, we removed the reporting lags from our international subsidiary
fiscal calendars. To accommodate these changes, Yum! Brands now reports
on a monthly calendar basis though certain subsidiaries, including our
U.S. subsidiaries, continue to be included in our consolidated results
on a periodic basis with 3, 3, 3 & 4 four-week periods in each quarter,
respectively. Prior year figures in this earnings release have been
restated to present comparable results. An 8-K was filed on April 13,
2017 with restated quarterly 2016 results.
KFC DIVISION
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Third Quarter
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Year-to-Date
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%/ppts Change
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%/ppts Change
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2017
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2016
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Reported
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Ex F/X
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2017
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2016
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Reported
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Ex F/X
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Restaurants
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21,063
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20,284
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+4
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N/A
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21,063
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20,284
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+4
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N/A
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System Sales ($MM)
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6,282
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5,833
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+8
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+7
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17,688
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16,818
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+5
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+6
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Same-Store Sales Growth (%)
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+4
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+2
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NM
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NM
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+3
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+2
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NM
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NM
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Franchise & License Fees ($MM)
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296
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267
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+11
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+11
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831
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761
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+9
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+10
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Restaurant Margin (%)
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15.9
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15.0
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0.9
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0.8
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15.1
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14.4
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0.7
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0.7
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Operating Profit ($MM)
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260
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230
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+14
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+13
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710
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618
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+15
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+16
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Operating Margin (%)
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32.8
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29.2
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3.6
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3.9
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30.9
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26.8
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4.1
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4.3
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Third Quarter (% Change)
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Int'l Emerging Markets
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Int'l Developed Markets
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U.S.
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System Sales Growth (Ex F/X)
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+11
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+6
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Even
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Same-Store Sales Growth
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+5
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+2
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+1
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KFC Division opened 291 new international restaurants in 51
countries, including 249 units in emerging markets.
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Operating margin increased 3.6 percentage points driven by
refranchising and same-store sales growth.
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Foreign currency translation favorably impacted GAAP operating
profit by $2 million.
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KFC Markets1
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Percent of KFC
System Sales2
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System Sales Growth Ex F/X
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Third Quarter (%)
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Year-to-Date (%)
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Emerging Markets
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China3
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26%
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+14
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+8
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Asia (e.g. Malaysia, Indonesia, Philippines)
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6%
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+7
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+8
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Middle East / Turkey / North Africa
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5%
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(4)
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(1)
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Latin America (e.g. Mexico, Peru)
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4%
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+12
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+13
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Africa
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4%
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+3
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+4
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Russia
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3%
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+22
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+24
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Thailand
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2%
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+9
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+4
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Continental Europe (e.g. Poland)
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2%
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+15
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+17
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India
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1%
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+8
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+6
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Developed Markets
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U.S.
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19%
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Even
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+1
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Asia (e.g. Japan, Korea, Taiwan)
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7%
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(2)
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Even
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Australia
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7%
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+6
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+8
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U.K.
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6%
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+9
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+7
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Continental Europe (e.g. France, Germany)
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5%
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+14
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+11
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Canada
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2%
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+4
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+4
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Latin America (e.g. Puerto Rico)
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1%
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(2)
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(1)
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1Refer to www.yum.com/investors/financial-information/financial-reports
for a list of the countries within each of the markets.
2Reflects
Full Year 2016.
3Includes July, August and September;
YUMC Q3 reported results include June, July and August.
PIZZA HUT DIVISION
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Third Quarter
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Year-to-Date
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%/ppts Change
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%/ppts Change
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2017
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2016
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Reported
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Ex F/X
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2017
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2016
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Reported
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Ex F/X
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Restaurants
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16,551
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16,215
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+2
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N/A
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16,551
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16,215
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+2
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N/A
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System Sales ($MM)
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2,966
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2,884
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+3
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+3
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8,665
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8,629
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Even
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+2
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Same-Store Sales Growth (%)
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+1
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(1)
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NM
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NM
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(1)
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(1)
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NM
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NM
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Franchise & License Fees ($MM)
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148
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145
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+2
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+2
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433
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433
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Even
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+1
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Restaurant Margin (%)
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1.9
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3.5
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(1.6)
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(1.6)
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6.0
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7.9
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(1.9)
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(1.9)
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Operating Profit ($MM)
|
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82
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84
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(1)
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Even
|
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250
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256
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(2)
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Even
|
|
Operating Margin (%)
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40.5
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33.3
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7.2
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7.3
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38.0
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32.0
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6.0
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6.3
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|
|
|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
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Third Quarter (% Change)
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Int'l Emerging Markets
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Int'l Developed Markets
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U.S.
|
|
System Sales Growth (Ex F/X)
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+7
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|
|
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+7
|
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|
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(1)
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Same-Store Sales Growth
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Even
|
|
|
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+4
|
|
|
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Even
|
|
|
|
|
|
|
|
|
|
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●
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Pizza Hut Division opened 192 new international restaurants in 47
countries, including 144 units in emerging markets.
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Operating margin increased 7.2 percentage points driven by
refranchising partially offset by higher franchise and
license expense due to incremental advertising spend associated
with the Transformation Agreement.
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Pizza Hut Markets1
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Percent of Pizza
Hut System Sales2
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|
System Sales Growth Ex F/X
|
|
|
|
Third Quarter (%)
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|
Year-to-Date (%)
|
|
Emerging Markets
|
|
|
|
|
|
|
|
China3
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17%
|
|
+7
|
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+7
|
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Latin America (e.g. Mexico, Peru)
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5%
|
|
+5
|
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+5
|
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Middle East / Turkey / Africa
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4%
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(2)
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+2
|
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Asia (e.g. Malaysia, Indonesia, Philippines)
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4%
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+16
|
|
+13
|
|
India
|
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1%
|
|
+7
|
|
+7
|
|
Continental Europe (e.g. Poland)
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1%
|
|
+13
|
|
+11
|
|
Developed Markets
|
|
|
|
|
|
|
|
U.S.
|
|
48%
|
|
(1)
|
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(4)
|
|
Asia (e.g. Japan, Korea, Taiwan)
|
|
7%
|
|
+1
|
|
+2
|
|
U.K.
|
|
5%
|
|
+14
|
|
+7
|
|
Continental Europe (e.g. France, Germany)
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|
4%
|
|
+6
|
|
+4
|
|
Canada
|
|
2%
|
|
Even
|
|
+3
|
|
Australia
|
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1%
|
|
+35
|
|
+25
|
|
Latin America (e.g. Puerto Rico)
|
|
1%
|
|
(2)
|
|
Even
|
1Refer to www.yum.com/investors/financial-information/financial-reports
for a list of the countries within each of the markets.
2Reflects
Full Year 2016.
3Includes July, August and September;
YUMC Q3 reported results include June, July and August.
TACO BELL DIVISION
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Year-to-Date
|
|
|
|
|
|
|
|
%/ppts Change
|
|
|
|
|
|
%/ppts Change
|
|
|
|
2017
|
|
2016
|
|
Reported
|
|
Ex F/X
|
|
2017
|
|
2016
|
|
Reported
|
|
Ex F/X
|
|
Restaurants
|
|
6,738
|
|
6,515
|
|
+3
|
|
N/A
|
|
6,738
|
|
6,515
|
|
+3
|
|
N/A
|
|
System Sales ($MM)
|
|
2,423
|
|
2,293
|
|
+6
|
|
+6
|
|
7,058
|
|
6,523
|
|
+8
|
|
+8
|
|
Same-Store Sales Growth (%)
|
|
+3
|
|
+3
|
|
NM
|
|
NM
|
|
+5
|
|
+1
|
|
NM
|
|
NM
|
|
Franchise & License Fees ($MM)
|
|
124
|
|
115
|
|
+7
|
|
+7
|
|
358
|
|
327
|
|
+9
|
|
+9
|
|
Restaurant Margin (%)
|
|
21.9
|
|
21.7
|
|
0.2
|
|
0.2
|
|
22.1
|
|
21.7
|
|
0.4
|
|
0.4
|
|
Operating Profit ($MM)
|
|
147
|
|
143
|
|
+3
|
|
+3
|
|
440
|
|
400
|
|
+10
|
|
+10
|
|
Operating Margin (%)
|
|
33.3
|
|
29.8
|
|
3.5
|
|
3.5
|
|
32.6
|
|
29.2
|
|
3.4
|
|
3.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
●
|
Taco Bell Division opened 70 new restaurants, including 15
international new restaurants.
|
|
●
|
Operating margin increased 3.5 percentage points driven by
refranchising and same-store sales growth partially offset by food
and labor inflation.
|
OTHER ITEMS
|
●
|
Year-to-date through the end of the third quarter, we refranchised
574 restaurants, including 143 KFC, 245 Pizza Hut and 186 Taco Bell
units, for gross proceeds of $716 million, recording net
refranchising gains of $331 million in Special Items.
|
|
●
|
Year-to-date through the end of the third quarter, we repurchased
19.1 million shares totaling $1.3 billion at an average price of
$69. As of quarter end, there was $588 million remaining under our
current share repurchase authorization.
|
|
●
|
Disclosures pertaining to outstanding debt in our Restricted Group
capital structure will be provided at the time of the filing of
the third-quarter Form 10-Q.
|
CONFERENCE CALL
Yum! Brands, Inc. will host a conference call to review the company's
financial performance and strategies at 8:15 a.m. Eastern Time Thursday,
November 2, 2017. The number is 877/815-2029 for U.S. callers and
706/645-9271 for international callers, conference ID 93593025.
The call will be available for playback beginning at 11:15 a.m. Eastern
Time Thursday, November 2, 2017 through Wednesday, December 6, 2017. To
access the playback, dial 855/859-2056 in the U.S. and 404/537-3406
internationally, conference ID 93593025.
The webcast and the playback can be accessed via the internet by
visiting Yum! Brands' website, www.yum.com/investors/events-presentations
and selecting “Q3 2017 Yum! Brands, Inc. Earnings Conference Call.”
ADDITIONAL INFORMATION ONLINE
Quarter end dates for each division, restaurant count details,
definitions of terms and Restricted Group financial information are
available at www.yum.com/investors/financial-information/financial-reports.
Reconciliation of non-GAAP financial measures to the most directly
comparable GAAP measures are included within this release.
FORWARD-LOOKING STATEMENTS
This announcement 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
generally can be identified by the fact that they do not relate strictly
to historical or current facts and by the use of forward-looking words
such as “expect,” “expectation,” “believe,” “anticipate,” “may,”
“could,” “intend,” “belief,” “plan,” “estimate,” “target,” “predict,”
“likely,” “seek,” “project,” “model,” “ongoing,” “will,” “should,”
“forecast,” “outlook” or similar terminology. These statements are based
on and reflect our current expectations, estimates, assumptions and/or
projections, our perception of historical trends and current conditions,
as well as other factors that we believe are appropriate and reasonable
under the circumstances. Forward-looking statements are neither
predictions nor guarantees of future events, circumstances or
performance and are inherently subject to known and unknown risks,
uncertainties and assumptions that could cause our actual results to
differ materially from those indicated by those statements. There can be
no assurance that our expectations, estimates, assumptions and/or
projections, including with respect to the future earnings and
performance or capital structure of Yum! Brands, will prove to be
correct or that any of our expectations, estimates or projections will
be achieved.
Numerous factors could cause our actual results and events to differ
materially from those expressed or implied by forward-looking
statements, including, without limitation: food safety and food
borne-illness issues; health concerns arising from outbreaks of viruses
or other diseases; changes in economic and political conditions in
countries and territories outside of the U.S. where we operate; our
ability to protect the integrity and security of individually
identifiable data of our customers and employees; the impact of social
media; our ability to secure and maintain distribution and adequate
supply to our restaurants; the success of our development strategy in
emerging markets; changes in commodity, labor and other operating costs;
the success of our franchisees and licensees; pending or future
litigation and legal claims or proceedings; changes in or noncompliance
with government regulations, including labor standards and anti-bribery
or anti-corruption laws; tax matters, including disagreements with
taxing authorities; consumer preferences and perceptions of our brands;
changes in consumer discretionary spending and general economic
conditions; competition within the retail food industry; and risks
relating to our significant amount of indebtedness. In addition, other
risks and uncertainties not presently known to us or that we currently
believe to be immaterial could affect the accuracy of any such
forward-looking statements. All forward-looking statements should be
evaluated with the understanding of their inherent uncertainty.
The forward-looking statements included in this announcement are only
made as of the date of this announcement and we disclaim any obligation
to publicly update any forward-looking statement to reflect subsequent
events or circumstances. 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 most recently filed Annual Report on Form 10-K and Quarterly Report
on Form 10-Q) for additional detail about factors that could affect our
financial and other results.
Yum! Brands, Inc., based in Louisville, Kentucky, has over 44,000
restaurants in more than 135 countries and territories and is one of the
Aon Hewitt Top Companies for Leaders in North America. In 2017, Yum!
Brands was named to the Dow Jones Sustainability North America Index and
among the top 100 Best 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. Worldwide, the Yum! Brands system opens over six new
restaurants per day on average, making it a leader in global retail
development.
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|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Condensed Consolidated Summary of Results
(amounts in millions, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
% Change
|
|
Year to date
|
|
% Change
|
|
|
|
9/30/17
|
|
9/30/16
|
|
B/(W)
|
|
9/30/17
|
|
9/30/16
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
$
|
871
|
|
|
$
|
992
|
|
|
(12)
|
|
$
|
2,682
|
|
|
$
|
2,951
|
|
|
(9)
|
|
Franchise and license fees and income
|
|
565
|
|
|
526
|
|
|
7
|
|
1,619
|
|
|
1,519
|
|
|
7
|
|
Total revenues
|
|
1,436
|
|
|
1,518
|
|
|
(5)
|
|
4,301
|
|
|
4,470
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper
|
|
275
|
|
|
303
|
|
|
10
|
|
831
|
|
|
897
|
|
|
7
|
|
Payroll and employee benefits
|
|
224
|
|
|
260
|
|
|
14
|
|
707
|
|
|
780
|
|
|
9
|
|
Occupancy and other operating expenses
|
|
218
|
|
|
268
|
|
|
18
|
|
685
|
|
|
798
|
|
|
14
|
|
Company restaurant expenses
|
|
717
|
|
|
831
|
|
|
14
|
|
2,223
|
|
|
2,475
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
215
|
|
|
270
|
|
|
20
|
|
699
|
|
|
767
|
|
|
9
|
|
Franchise and license expenses
|
|
61
|
|
|
40
|
|
|
(53)
|
|
161
|
|
|
145
|
|
|
(12)
|
|
Closures and impairment (income) expenses
|
|
1
|
|
|
1
|
|
|
74
|
|
3
|
|
|
10
|
|
|
77
|
|
Refranchising (gain) loss
|
|
(201
|
)
|
|
(21
|
)
|
|
NM
|
|
(331
|
)
|
|
(75
|
)
|
|
NM
|
|
Other (income) expense
|
|
—
|
|
|
(1
|
)
|
|
NM
|
|
—
|
|
|
(14
|
)
|
|
NM
|
|
Total costs and expenses, net
|
|
793
|
|
|
1,120
|
|
|
29
|
|
2,755
|
|
|
3,308
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
|
|
643
|
|
|
398
|
|
|
61
|
|
1,546
|
|
|
1,162
|
|
|
33
|
|
Other pension (income) expense
|
|
10
|
|
|
(1
|
)
|
|
NM
|
|
42
|
|
|
(2
|
)
|
|
NM
|
|
Interest expense, net
|
|
109
|
|
|
98
|
|
|
(11)
|
|
322
|
|
|
191
|
|
|
(69)
|
|
Income from continuing operations before income taxes
|
|
524
|
|
|
301
|
|
|
75
|
|
1,182
|
|
|
973
|
|
|
22
|
|
Income tax provision
|
|
106
|
|
|
83
|
|
|
(28)
|
|
278
|
|
|
263
|
|
|
(6)
|
|
Income from continuing operations
|
|
418
|
|
|
218
|
|
|
92
|
|
904
|
|
|
710
|
|
|
27
|
|
Income from discontinued operations, net of tax
|
|
—
|
|
|
422
|
|
|
NM
|
|
—
|
|
|
630
|
|
|
NM
|
|
Net Income
|
|
418
|
|
|
640
|
|
|
(35)
|
|
904
|
|
|
1,340
|
|
|
(33)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate from Continuing Operations
|
|
20.2
|
%
|
|
27.5
|
%
|
|
7.3 ppts.
|
|
23.5
|
%
|
|
27.0
|
%
|
|
3.5 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS from Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
|
$
|
1.21
|
|
|
$
|
0.56
|
|
|
116
|
|
$
|
2.58
|
|
|
$
|
1.76
|
|
|
47
|
|
Average shares outstanding
|
|
345
|
|
|
388
|
|
|
11
|
|
351
|
|
|
404
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
|
$
|
1.18
|
|
|
$
|
0.55
|
|
|
115
|
|
$
|
2.52
|
|
|
$
|
1.73
|
|
|
46
|
|
Average shares outstanding
|
|
353
|
|
|
395
|
|
|
11
|
|
358
|
|
|
410
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS from Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
|
N/A
|
|
$
|
1.09
|
|
|
NM
|
|
N/A
|
|
$
|
1.56
|
|
|
NM
|
|
Average shares outstanding
|
|
N/A
|
|
388
|
|
|
NM
|
|
N/A
|
|
404
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
|
N/A
|
|
$
|
1.07
|
|
|
NM
|
|
N/A
|
|
$
|
1.54
|
|
|
NM
|
|
Average shares outstanding
|
|
N/A
|
|
395
|
|
|
NM
|
|
N/A
|
|
410
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
$
|
—
|
|
|
$
|
0.51
|
|
|
|
|
$
|
0.60
|
|
|
$
|
1.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
Percentages may not recompute due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
KFC DIVISION Operating Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
% Change
|
|
Year to date
|
|
% Change
|
|
|
|
9/30/17
|
|
9/30/16
|
|
B/(W)
|
|
9/30/17
|
|
9/30/16
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
$
|
498
|
|
|
$
|
520
|
|
|
(4)
|
|
$
|
1,465
|
|
|
$
|
1,541
|
|
|
(5)
|
|
Franchise and license fees and income
|
|
296
|
|
|
267
|
|
|
11
|
|
831
|
|
|
761
|
|
|
9
|
|
Total revenues
|
|
794
|
|
|
787
|
|
|
1
|
|
2,296
|
|
|
2,302
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper
|
|
172
|
|
|
178
|
|
|
3
|
|
504
|
|
|
526
|
|
|
4
|
|
Payroll and employee benefits
|
|
114
|
|
|
120
|
|
|
5
|
|
345
|
|
|
362
|
|
|
5
|
|
Occupancy and other operating expenses
|
|
133
|
|
|
144
|
|
|
8
|
|
395
|
|
|
432
|
|
|
9
|
|
Company restaurant expenses
|
|
419
|
|
|
442
|
|
|
5
|
|
1,244
|
|
|
1,320
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
85
|
|
|
89
|
|
|
5
|
|
259
|
|
|
276
|
|
|
6
|
|
Franchise and license expenses
|
|
29
|
|
|
26
|
|
|
(11)
|
|
80
|
|
|
82
|
|
|
2
|
|
Closures and impairment (income) expenses
|
|
1
|
|
|
—
|
|
|
NM
|
|
3
|
|
|
6
|
|
|
51
|
|
Other (income) expense
|
|
—
|
|
|
—
|
|
|
NM
|
|
—
|
|
|
—
|
|
|
NM
|
|
Total costs and expenses, net
|
|
534
|
|
|
557
|
|
|
4
|
|
1,586
|
|
|
1,684
|
|
|
6
|
|
Operating Profit
|
|
$
|
260
|
|
|
$
|
230
|
|
|
14
|
|
$
|
710
|
|
|
$
|
618
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
Food and paper
|
|
34.5
|
%
|
|
34.2
|
%
|
|
(0.3) ppts.
|
|
34.4
|
%
|
|
34.1
|
%
|
|
(0.3) ppts.
|
|
Payroll and employee benefits
|
|
23.0
|
%
|
|
23.2
|
%
|
|
0.2 ppts.
|
|
23.6
|
%
|
|
23.5
|
%
|
|
(0.1) ppts.
|
|
Occupancy and other operating expenses
|
|
26.6
|
%
|
|
27.6
|
%
|
|
1.0 ppts.
|
|
26.9
|
%
|
|
28.0
|
%
|
|
1.1 ppts.
|
|
Restaurant margin
|
|
15.9
|
%
|
|
15.0
|
%
|
|
0.9 ppts.
|
|
15.1
|
%
|
|
14.4
|
%
|
|
0.7 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
32.8
|
%
|
|
29.2
|
%
|
|
3.6 ppts.
|
|
30.9
|
%
|
|
26.8
|
%
|
|
4.1 ppts.
|
|
|
|
See accompanying notes.
|
|
|
|
Percentages may not recompute due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
PIZZA HUT DIVISION Operating Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
% Change
|
|
Year to date
|
|
% Change
|
|
|
|
9/30/17
|
|
9/30/16
|
|
B/(W)
|
|
9/30/17
|
|
9/30/16
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
$
|
55
|
|
|
$
|
106
|
|
|
(47)
|
|
$
|
226
|
|
|
$
|
366
|
|
|
(38)
|
|
Franchise and license fees and income
|
|
148
|
|
|
145
|
|
|
2
|
|
433
|
|
|
433
|
|
|
—
|
|
Total revenues
|
|
203
|
|
|
251
|
|
|
(19)
|
|
659
|
|
|
799
|
|
|
(17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper
|
|
16
|
|
|
29
|
|
|
46
|
|
65
|
|
|
101
|
|
|
36
|
|
Payroll and employee benefits
|
|
19
|
|
|
35
|
|
|
45
|
|
74
|
|
|
116
|
|
|
36
|
|
Occupancy and other operating expenses
|
|
19
|
|
|
38
|
|
|
49
|
|
73
|
|
|
120
|
|
|
38
|
|
Company restaurant expenses
|
|
54
|
|
|
102
|
|
|
47
|
|
212
|
|
|
337
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
44
|
|
|
55
|
|
|
21
|
|
151
|
|
|
170
|
|
|
12
|
|
Franchise and license expenses
|
|
21
|
|
|
11
|
|
|
(91)
|
|
44
|
|
|
35
|
|
|
(27)
|
|
Closures and impairment (income) expenses
|
|
—
|
|
|
1
|
|
|
NM
|
|
—
|
|
|
3
|
|
|
NM
|
|
Other (income) expense
|
|
2
|
|
|
(2
|
)
|
|
NM
|
|
2
|
|
|
(2
|
)
|
|
NM
|
|
Total costs and expenses, net
|
|
121
|
|
|
167
|
|
|
28
|
|
409
|
|
|
543
|
|
|
25
|
|
Operating Profit
|
|
$
|
82
|
|
|
$
|
84
|
|
|
(1)
|
|
$
|
250
|
|
|
$
|
256
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
Food and paper
|
|
29.0
|
%
|
|
28.1
|
%
|
|
(0.9) ppts.
|
|
28.7
|
%
|
|
27.7
|
%
|
|
(1.0) ppts.
|
|
Payroll and employee benefits
|
|
34.4
|
%
|
|
33.0
|
%
|
|
(1.4) ppts.
|
|
32.7
|
%
|
|
31.8
|
%
|
|
(0.9) ppts.
|
|
Occupancy and other operating expenses
|
|
34.7
|
%
|
|
35.4
|
%
|
|
0.7 ppts.
|
|
32.6
|
%
|
|
32.6
|
%
|
|
—
|
|
Restaurant margin
|
|
1.9
|
%
|
|
3.5
|
%
|
|
(1.6) ppts.
|
|
6.0
|
%
|
|
7.9
|
%
|
|
(1.9) ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
40.5
|
%
|
|
33.3
|
%
|
|
7.2 ppts.
|
|
38.0
|
%
|
|
32.0
|
%
|
|
6.0 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
|
|
Percentages may not recompute due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
TACO BELL DIVISION Operating Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
% Change
|
|
Year to date
|
|
% Change
|
|
|
|
9/30/17
|
|
9/30/16
|
|
B/(W)
|
|
9/30/17
|
|
9/30/16
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
$
|
318
|
|
|
$
|
366
|
|
|
(13)
|
|
$
|
991
|
|
|
$
|
1,044
|
|
|
(5)
|
|
Franchise and license fees and income
|
|
124
|
|
|
115
|
|
|
7
|
|
358
|
|
|
327
|
|
|
9
|
|
Total revenues
|
|
442
|
|
|
481
|
|
|
(8)
|
|
1,349
|
|
|
1,371
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper
|
|
87
|
|
|
96
|
|
|
10
|
|
262
|
|
|
270
|
|
|
3
|
|
Payroll and employee benefits
|
|
91
|
|
|
105
|
|
|
13
|
|
288
|
|
|
302
|
|
|
5
|
|
Occupancy and other operating expenses
|
|
71
|
|
|
86
|
|
|
17
|
|
222
|
|
|
246
|
|
|
10
|
|
Company restaurant expenses
|
|
249
|
|
|
287
|
|
|
13
|
|
772
|
|
|
818
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
41
|
|
|
48
|
|
|
15
|
|
122
|
|
|
141
|
|
|
14
|
|
Franchise and license expenses
|
|
6
|
|
|
4
|
|
|
(97)
|
|
16
|
|
|
13
|
|
|
(30)
|
|
Closures and impairment (income) expenses
|
|
—
|
|
|
—
|
|
|
NM
|
|
—
|
|
|
1
|
|
|
NM
|
|
Other (income) expense
|
|
(1
|
)
|
|
(1
|
)
|
|
NM
|
|
(1
|
)
|
|
(2
|
)
|
|
(69)
|
|
Total costs and expenses, net
|
|
295
|
|
|
338
|
|
|
13
|
|
909
|
|
|
971
|
|
|
6
|
|
Operating Profit
|
|
$
|
147
|
|
|
$
|
143
|
|
|
3
|
|
$
|
440
|
|
|
$
|
400
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
Food and paper
|
|
27.0
|
%
|
|
26.1
|
%
|
|
(0.9) ppts.
|
|
26.5
|
%
|
|
25.9
|
%
|
|
(0.6) ppts.
|
|
Payroll and employee benefits
|
|
28.6
|
%
|
|
28.6
|
%
|
|
—
|
|
29.0
|
%
|
|
28.9
|
%
|
|
(0.1) ppts.
|
|
Occupancy and other operating expenses
|
|
22.5
|
%
|
|
23.6
|
%
|
|
1.1 ppts.
|
|
22.4
|
%
|
|
23.5
|
%
|
|
1.1 ppts.
|
|
Restaurant margin
|
|
21.9
|
%
|
|
21.7
|
%
|
|
0.2 ppts.
|
|
22.1
|
%
|
|
21.7
|
%
|
|
0.4 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
33.3
|
%
|
|
29.8
|
%
|
|
3.5 ppts.
|
|
32.6
|
%
|
|
29.2
|
%
|
|
3.4 ppts.
|
|
|
|
See accompanying notes.
|
|
|
|
Percentages may not recompute due to rounding.
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Condensed Consolidated Balance Sheets
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
9/30/17
|
|
|
12/31/16
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
980
|
|
|
|
$
|
725
|
|
|
Accounts and notes receivable, less allowance: $20 in 2017 and $14
in 2016
|
|
358
|
|
|
|
370
|
|
|
Inventories
|
|
15
|
|
|
|
37
|
|
|
Prepaid expenses and other current assets
|
|
465
|
|
|
|
236
|
|
|
Advertising cooperative assets, restricted
|
|
181
|
|
|
|
137
|
|
|
Total Current Assets
|
|
1,999
|
|
|
|
1,505
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net of accumulated depreciation and
amortization of $1,761 in 2017 and $1,995 in 2016
|
|
1,861
|
|
|
|
2,113
|
|
|
Goodwill
|
|
525
|
|
|
|
536
|
|
|
Intangible assets, net
|
|
116
|
|
|
|
151
|
|
|
Other assets
|
|
304
|
|
|
|
376
|
|
|
Deferred income taxes
|
|
649
|
|
|
|
772
|
|
|
Total Assets
|
|
$
|
5,454
|
|
|
|
$
|
5,453
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Accounts payable and other current liabilities
|
|
$
|
823
|
|
|
|
$
|
1,067
|
|
|
Income taxes payable
|
|
27
|
|
|
|
32
|
|
|
Short-term borrowings
|
|
372
|
|
|
|
66
|
|
|
Advertising cooperative liabilities
|
|
181
|
|
|
|
137
|
|
|
Total Current Liabilities
|
|
1,403
|
|
|
|
1,302
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
9,479
|
|
|
|
9,059
|
|
|
Other liabilities and deferred credits
|
|
693
|
|
|
|
704
|
|
|
Total Liabilities
|
|
11,575
|
|
|
|
11,065
|
|
|
|
|
|
|
|
|
|
Shareholders' Deficit
|
|
|
|
|
|
|
Common stock, no par value, 750 shares authorized; 339 shares and
355 shares issued in 2017 and 2016, respectively
|
|
—
|
|
|
|
—
|
|
|
Retained earnings (accumulated deficit)
|
|
(5,817
|
)
|
|
|
(5,158
|
)
|
|
Accumulated other comprehensive income (loss)
|
|
(304
|
)
|
|
|
(454
|
)
|
|
Total Shareholders' Deficit
|
|
(6,121
|
)
|
|
|
(5,612
|
)
|
|
Total Liabilities and Shareholders' Deficit
|
|
$
|
5,454
|
|
|
|
$
|
5,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
Year to Date
|
|
|
|
9/30/17
|
|
9/30/16
|
|
Cash Flows - Operating Activities from Continuing Operations
|
|
|
|
|
|
Net income
|
|
$
|
904
|
|
|
$
|
1,340
|
|
|
Income from discontinued operations, net of tax
|
|
—
|
|
|
(630
|
)
|
|
Depreciation and amortization
|
|
195
|
|
|
224
|
|
|
Closures and impairment (income) expenses
|
|
3
|
|
|
10
|
|
|
Refranchising (gain) loss
|
|
(331
|
)
|
|
(75
|
)
|
|
Contributions to defined benefit pension plans
|
|
(47
|
)
|
|
(7
|
)
|
|
Deferred income taxes
|
|
122
|
|
|
29
|
|
|
Share-based compensation expense
|
|
35
|
|
|
42
|
|
|
Changes in accounts and notes receivable
|
|
17
|
|
|
31
|
|
|
Changes in inventories
|
|
7
|
|
|
6
|
|
|
Changes in prepaid expenses and other current assets
|
|
(14
|
)
|
|
19
|
|
|
Changes in accounts payable and other current liabilities
|
|
(168
|
)
|
|
(54
|
)
|
|
Changes in income taxes payable
|
|
(125
|
)
|
|
8
|
|
|
Other, net
|
|
120
|
|
|
(7
|
)
|
|
Net Cash Provided by Operating Activities from Continuing
Operations
|
|
718
|
|
|
936
|
|
|
|
|
|
|
|
|
Cash Flows - Investing Activities from Continuing Operations
|
|
|
|
|
|
Capital spending
|
|
(228
|
)
|
|
(292
|
)
|
|
Proceeds from refranchising of restaurants
|
|
716
|
|
|
147
|
|
|
Other, net
|
|
1
|
|
|
18
|
|
|
Net Cash Provided by (Used in) Investing Activities from
Continuing Operations
|
|
489
|
|
|
(127
|
)
|
|
|
|
|
|
|
|
Cash Flows - Financing Activities from Continuing Operations
|
|
|
|
|
|
Proceeds from long-term debt
|
|
1,088
|
|
|
6,900
|
|
|
Repayments of long-term debt
|
|
(372
|
)
|
|
(310
|
)
|
|
Revolving credit facilities, three months or less, net
|
|
35
|
|
|
(685
|
)
|
|
Short-term borrowings by original maturity
|
|
|
|
|
|
More than three months - proceeds
|
|
—
|
|
|
1,400
|
|
|
More than three months - payments
|
|
—
|
|
|
(2,000
|
)
|
|
Three months or less, net
|
|
—
|
|
|
—
|
|
|
Repurchase shares of Common Stock
|
|
(1,348
|
)
|
|
(4,316
|
)
|
|
Dividends paid on Common Stock
|
|
(315
|
)
|
|
(559
|
)
|
|
Debt issuance costs
|
|
(32
|
)
|
|
(86
|
)
|
|
Net transfers from discontinued operations
|
|
—
|
|
|
180
|
|
|
Other, net
|
|
(85
|
)
|
|
(82
|
)
|
|
Net Cash Provided by (Used in) Financing Activities from
Continuing Operations
|
|
(1,029
|
)
|
|
442
|
|
|
Effect of Exchange Rate on Cash and Cash Equivalents
|
|
42
|
|
|
(8
|
)
|
|
Net Increase in Cash and Cash Equivalents, Restricted Cash and
Restricted Cash Equivalents - Continuing Operations
|
|
220
|
|
|
1,243
|
|
|
Cash, Cash Equivalents, Restricted Cash and Restricted Cash
Equivalents - Beginning of Period
|
|
831
|
|
|
351
|
|
|
Cash, Cash Equivalents, Restricted Cash and Restricted Cash
Equivalents - End of Period
|
|
$
|
1,051
|
|
|
$
|
1,594
|
|
|
|
|
|
|
|
|
Cash Provided by Operating Activities from Discontinued Operations
|
|
$
|
—
|
|
|
$
|
761
|
|
|
Cash Used in Investing Activities from Discontinued Operations
|
|
—
|
|
|
(231
|
)
|
|
Cash Used in Financing Activities from Discontinued Operations
|
|
—
|
|
|
(186
|
)
|
|
|
|
|
|
|
|
|
|
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 Diluted Earnings Per Share from Continuing Operations
excluding Special Items, our Effective Tax Rate excluding Special
Items, System Sales and Core Operating Profit. Core Operating Profit
excludes Special Items and foreign currency translation and we use
Core Operating Profit for the purposes of evaluating performance
internally. Special Items are not included in any of our division
segment results, and we believe the elimination of the foreign
currency translation impact provides better year-to-year
comparability without the distortion of foreign currency
fluctuations. The Special Items are described in (b), (c), (d), (e),
(f) and (g) in the accompanying notes.
|
|
|
|
These non-GAAP measurements are not intended to replace the
presentation of our financial results in accordance with GAAP.
Rather, the Company believes that the presentation of Diluted
Earnings Per Share from Continuing Operations excluding Special
Items, our Effective Tax Rate excluding Special Items and Core
Operating Profit provide additional information to investors to
facilitate the comparison of past and present operations,
excluding items in the quarters and years to date ended September
30, 2017 and September 30, 2016 that the Company does not believe
are indicative of our ongoing operations due to their size and/or
nature. System sales and system sales growth include the results
of all restaurants regardless of ownership, including
company-owned and franchise restaurants that operate our Concepts.
Sales of franchise restaurants typically generate ongoing
franchise and license fees for the Company at a rate of 3% to 6%
of sales. Franchise restaurant sales are not included in Company
sales on the Consolidated Statements of Income; however, the
franchise and license fees are included in the Company’s revenues.
We believe system sales and system sales growth are useful to
investors as significant indicators of the overall strength of our
business as they incorporate all of our revenue drivers, Company
and franchise same-store sales as well as net unit growth.
|
|
|
|
|
|
Quarter ended
|
|
Year to date
|
|
|
|
9/30/17
|
|
9/30/16
|
|
9/30/17
|
|
9/30/16
|
|
Detail of Special Items
|
|
|
|
|
|
|
|
|
|
Refranchising gain (loss)(b)
|
|
$
|
201
|
|
|
$
|
21
|
|
|
$
|
331
|
|
|
$
|
75
|
|
|
YUM's Strategic Transformation Initiatives(c)
|
|
(4
|
)
|
|
(30
|
)
|
|
(15
|
)
|
|
(34
|
)
|
|
Costs associated with Pizza Hut U.S. Transformation Agreement(d)
|
|
(8
|
)
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
Costs associated with KFC U.S. Acceleration Agreement(e)
|
|
(4
|
)
|
|
—
|
|
|
(12
|
)
|
|
(17
|
)
|
|
Non-cash charges associated with share-based compensation(f)
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
Other Special Items Income (Expense)
|
|
5
|
|
|
(1
|
)
|
|
3
|
|
|
(3
|
)
|
|
Special Items Income (Expense) - Operating Profit
|
|
190
|
|
|
(10
|
)
|
|
269
|
|
|
21
|
|
|
Special Items - Other Pension Income (Expense)(g)
|
|
(1
|
)
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
Special Items Income (Expense) from Continuing Operations before
Income Taxes
|
|
189
|
|
|
(10
|
)
|
|
246
|
|
|
21
|
|
|
Tax Benefit (Expense) on Special Items
|
|
(13
|
)
|
|
5
|
|
|
(64
|
)
|
|
—
|
|
|
Special Items Income (Expense), net of tax
|
|
176
|
|
|
(5
|
)
|
|
182
|
|
|
21
|
|
|
Average diluted shares outstanding
|
|
353
|
|
|
395
|
|
|
358
|
|
|
410
|
|
|
Special Items diluted EPS
|
|
$
|
0.50
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.51
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Operating Profit to Core Operating Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
GAAP Operating Profit
|
|
$
|
643
|
|
|
$
|
398
|
|
|
$
|
1,546
|
|
|
1,162
|
|
|
Special Items Income (Expense)
|
|
190
|
|
|
(10
|
)
|
|
269
|
|
|
21
|
|
|
Foreign Currency Impact on Reported Operating Profit
|
|
2
|
|
|
N/A
|
|
(9
|
)
|
|
N/A
|
|
Core Operating Profit
|
|
$
|
451
|
|
|
$
|
408
|
|
|
$
|
1,286
|
|
|
$
|
1,141
|
|
|
|
|
|
|
|
|
|
|
|
|
KFC Division
|
|
|
|
|
|
|
|
|
|
GAAP Operating Profit
|
|
$
|
260
|
|
|
$
|
230
|
|
|
$
|
710
|
|
|
$
|
618
|
|
|
Foreign Currency Impact on Reported Operating Profit
|
|
2
|
|
|
N/A
|
|
(5
|
)
|
|
N/A
|
|
Core Operating Profit
|
|
$
|
258
|
|
|
$
|
230
|
|
|
$
|
715
|
|
|
$
|
618
|
|
|
|
|
|
|
|
|
|
|
|
|
Pizza Hut Division
|
|
|
|
|
|
|
|
|
|
GAAP Operating Profit
|
|
$
|
82
|
|
|
$
|
84
|
|
|
$
|
250
|
|
|
$
|
256
|
|
|
Foreign Currency Impact on Reported Operating Profit
|
|
—
|
|
|
N/A
|
|
(4
|
)
|
|
N/A
|
|
Core Operating Profit
|
|
$
|
82
|
|
|
$
|
84
|
|
|
$
|
254
|
|
|
$
|
256
|
|
|
|
|
|
|
|
|
|
|
|
|
Taco Bell Division
|
|
|
|
|
|
|
|
|
|
GAAP Operating Profit
|
|
$
|
147
|
|
|
$
|
143
|
|
|
$
|
440
|
|
|
$
|
400
|
|
|
Foreign Currency Impact on Reported Operating Profit
|
|
—
|
|
|
N/A
|
|
—
|
|
|
N/A
|
|
Core Operating Profit
|
|
$
|
147
|
|
|
$
|
143
|
|
|
$
|
440
|
|
|
$
|
400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Measurements to GAAP Results
(Continued)
(amounts in millions, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
Year to date
|
|
|
|
9/30/17
|
|
9/30/16
|
|
9/30/17
|
|
9/30/16
|
|
Reconciliation of Diluted EPS from Continuing Operations to
Diluted EPS from Continuing Operations excluding Special Items
|
|
|
|
|
|
|
|
|
|
Diluted EPS from Continuing Operations
|
|
$
|
1.18
|
|
|
$
|
0.55
|
|
|
$
|
2.52
|
|
|
$
|
1.73
|
|
|
Special Items Diluted EPS
|
|
0.50
|
|
|
(0.01
|
)
|
|
0.51
|
|
|
0.05
|
|
|
Diluted EPS from Continuing Operations excluding Special Items
|
|
$
|
0.68
|
|
|
$
|
0.56
|
|
|
$
|
2.01
|
|
|
$
|
1.68
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate
excluding Special Items
|
|
|
|
|
|
|
|
|
|
GAAP Effective Tax Rate
|
|
20.2
|
%
|
|
27.5
|
%
|
|
23.5
|
%
|
|
27.0
|
%
|
|
Impact on Tax Rate as a result of Special Items
|
|
(7.6
|
)%
|
|
(0.5
|
)%
|
|
0.7
|
%
|
|
(0.6
|
)%
|
|
Effective Tax Rate excluding Special Items
|
|
27.8
|
%
|
|
28.0
|
%
|
|
22.8
|
%
|
|
27.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Company Sales to System Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
GAAP Company sales
|
|
$
|
871
|
|
|
$
|
992
|
|
|
$
|
2,682
|
|
|
$
|
2,951
|
|
|
Franchise sales
|
|
10,800
|
|
|
10,018
|
|
|
30,729
|
|
|
29,019
|
|
|
System sales
|
|
$
|
11,671
|
|
|
$
|
11,010
|
|
|
$
|
33,411
|
|
|
$
|
31,970
|
|
|
|
|
|
|
|
|
|
|
|
|
KFC Division
|
|
|
|
|
|
|
|
|
|
GAAP Company sales
|
|
$
|
498
|
|
|
$
|
520
|
|
|
$
|
1,465
|
|
|
$
|
1,541
|
|
|
Franchise sales
|
|
5,784
|
|
|
5,313
|
|
|
16,223
|
|
|
15,277
|
|
|
System sales
|
|
$
|
6,282
|
|
|
$
|
5,833
|
|
|
$
|
17,688
|
|
|
$
|
16,818
|
|
|
|
|
|
|
|
|
|
|
|
|
Pizza Hut Division
|
|
|
|
|
|
|
|
|
|
GAAP Company sales
|
|
$
|
55
|
|
|
$
|
106
|
|
|
$
|
226
|
|
|
$
|
366
|
|
|
Franchise sales
|
|
2,911
|
|
|
2,778
|
|
|
8,439
|
|
|
8,263
|
|
|
System sales
|
|
$
|
2,966
|
|
|
$
|
2,884
|
|
|
$
|
8,665
|
|
|
$
|
8,629
|
|
|
|
|
|
|
|
|
|
|
|
|
Taco Bell Division
|
|
|
|
|
|
|
|
|
|
GAAP Company sales
|
|
$
|
318
|
|
|
$
|
366
|
|
|
$
|
991
|
|
|
$
|
1,044
|
|
|
Franchise sales
|
|
2,105
|
|
|
1,927
|
|
|
6,067
|
|
|
5,479
|
|
|
System sales
|
|
$
|
2,423
|
|
|
$
|
2,293
|
|
|
$
|
7,058
|
|
|
$
|
6,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Segment Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended 9/30/17
|
|
|
|
|
|
KFC
|
|
Pizza Hut
|
|
Taco Bell
|
|
Corporate
and
Unallocated
|
|
Consolidated
|
|
Total revenues
|
|
|
|
|
|
$
|
|
|
|
794
|
|
|
$
|
203
|
|
|
$
|
442
|
|
|
$
|
(3
|
)
|
|
$
|
1,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
|
|
|
419
|
|
|
54
|
|
|
249
|
|
|
(5
|
)
|
|
717
|
|
|
General and administrative expenses
|
|
|
|
|
|
85
|
|
|
44
|
|
|
41
|
|
|
45
|
|
|
215
|
|
|
Franchise and license expenses
|
|
|
|
|
|
29
|
|
|
21
|
|
|
6
|
|
|
5
|
|
|
61
|
|
|
Closures and impairment (income) expenses
|
|
|
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
Refranchising (gain) loss
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(201
|
)
|
|
(201
|
)
|
|
Other (income) expense
|
|
|
|
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
Total costs and expenses, net
|
|
|
|
|
|
534
|
|
|
121
|
|
|
295
|
|
|
(157
|
)
|
|
793
|
|
|
Operating Profit (loss)
|
|
|
|
|
|
$
|
|
|
|
260
|
|
|
$
|
82
|
|
|
$
|
147
|
|
|
$
|
154
|
|
|
$
|
643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended 9/30/16
|
|
|
|
|
|
KFC
|
|
Pizza Hut
|
|
Taco Bell
|
|
Corporate
and
Unallocated
|
|
Consolidated
|
|
Total revenues
|
|
|
|
|
|
$
|
|
|
|
787
|
|
|
$
|
251
|
|
|
$
|
481
|
|
|
$
|
(1
|
)
|
|
$
|
1,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
|
|
|
|
442
|
|
|
102
|
|
|
287
|
|
|
—
|
|
|
831
|
|
|
General and administrative expenses
|
|
|
|
|
|
89
|
|
|
55
|
|
|
48
|
|
|
78
|
|
|
270
|
|
|
Franchise and license expenses
|
|
|
|
|
|
26
|
|
|
11
|
|
|
4
|
|
|
(1
|
)
|
|
40
|
|
|
Closures and impairment (income) expenses
|
|
|
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
Refranchising (gain) loss
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
|
(21
|
)
|
|
Other (income) expense
|
|
|
|
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
|
2
|
|
|
(1
|
)
|
|
Total costs and expenses, net
|
|
|
|
|
|
557
|
|
|
167
|
|
|
338
|
|
|
58
|
|
|
1,120
|
|
|
Operating Profit (loss)
|
|
|
|
|
|
$
|
|
|
|
230
|
|
|
$
|
84
|
|
|
$
|
143
|
|
|
$
|
(59
|
)
|
|
$
|
398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The above tables reconcile segment information, which is based on
management responsibility, with our Condensed 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 to Date 9/30/17
|
|
KFC
|
|
Pizza Hut
|
|
Taco Bell
|
|
Corporate
and
Unallocated
|
|
Consolidated
|
|
Total revenues
|
|
$
|
2,296
|
|
|
$
|
659
|
|
|
$
|
1,349
|
|
|
$
|
(3
|
)
|
|
$
|
4,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
1,244
|
|
|
212
|
|
|
772
|
|
|
(5
|
)
|
|
2,223
|
|
|
General and administrative expenses
|
|
259
|
|
|
151
|
|
|
122
|
|
|
167
|
|
|
699
|
|
|
Franchise and license expenses
|
|
80
|
|
|
44
|
|
|
16
|
|
|
21
|
|
|
161
|
|
|
Closures and impairment (income) expenses
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
Refranchising (gain) loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(331
|
)
|
|
(331
|
)
|
|
Other (income) expense
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
Total costs and expenses, net
|
|
1,586
|
|
|
409
|
|
|
909
|
|
|
(149
|
)
|
|
2,755
|
|
|
Operating Profit (loss)
|
|
$
|
710
|
|
|
$
|
250
|
|
|
$
|
440
|
|
|
$
|
146
|
|
|
$
|
1,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year to Date 9/30/16
|
|
KFC
|
|
Pizza Hut
|
|
Taco Bell
|
|
Corporate
and
Unallocated
|
|
Consolidated
|
|
Total revenues
|
|
$
|
2,302
|
|
|
$
|
799
|
|
|
$
|
1,371
|
|
|
$
|
(2
|
)
|
|
$
|
4,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
1,320
|
|
|
337
|
|
|
818
|
|
|
—
|
|
|
2,475
|
|
|
General and administrative expenses
|
|
276
|
|
|
170
|
|
|
141
|
|
|
180
|
|
|
767
|
|
|
Franchise and license expenses
|
|
82
|
|
|
35
|
|
|
13
|
|
|
15
|
|
|
145
|
|
|
Closures and impairment (income) expenses
|
|
6
|
|
|
3
|
|
|
1
|
|
|
—
|
|
|
10
|
|
|
Refranchising (gain) loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|
(75
|
)
|
|
Other (income) expense
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
(10
|
)
|
|
(14
|
)
|
|
Total costs and expenses, net
|
|
1,684
|
|
|
543
|
|
|
971
|
|
|
110
|
|
|
3,308
|
|
|
Operating Profit (loss)
|
|
$
|
618
|
|
|
$
|
256
|
|
|
$
|
400
|
|
|
$
|
(112
|
)
|
|
$
|
1,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The above tables reconcile segment information, which is based on
management responsibility, with our Condensed 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 Condensed Consolidated Summary of Results,
Condensed Consolidated Balance Sheets
|
|
and Condensed Consolidated Statements of Cash Flows
|
|
(amounts in millions)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Amounts presented as of and for the quarters and years to date
ended September 30, 2017 and 2016 are preliminary.
|
|
|
|
|
|
(b)
|
|
In connection with our previously announced plans to have at least
98% franchise restaurant ownership by the end of 2018, we recorded
net refranchising gains during the quarters ended September 30,
2017 and 2016 of $201 million and $21 million, respectively, that
have been reflected as Special Items. During the years to date
ended September 30, 2017 and 2016, we recorded net refranchising
gains of $331 million and $75 million, respectively, that have
been reflected as Special Items.
|
|
|
|
|
|
|
|
The third quarter 2017 net refranchising gains relate primarily to
refranchising Taco Bell restaurants in the U.S. The third quarter
2016 net refranchising gains relate primarily to refranchising Pizza
Hut and Taco Bell restaurants in the U.S.
|
|
|
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(c)
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In the fourth quarter of 2016, we announced our plan to transform
our business. Major features of the Company's strategic
transformation plans involve being more focused on development of
our three brands, increasing our franchise ownership and creating
a leaner, more efficient cost structure (“YUM’s Strategic
Transformation Initiatives”). During the quarters ended September
30, 2017 and 2016, we recognized Special Item charges of $4
million and $30 million, respectively, related to these
initiatives. During the years to date ended September 30, 2017 and
2016, we recognized Special Item charges of $15 million and $34
million, respectively. These costs primarily related to severance
and relocation costs that were recorded within G&A.
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(d)
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On May 1, 2017, we reached an agreement with Pizza Hut U.S.
franchisees that will improve brand marketing alignment,
accelerate enhancements in operations and technology and includes
a permanent commitment to incremental advertising contributions by
franchisees beginning in 2018. During the quarter and year to date
ended September 30, 2017, we recorded Special Item charges of $8
million and $20 million, respectively, for these investments.
These amounts were recorded as Franchise and license expenses or
G&A.
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(e)
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During the first quarter of 2015, we reached an agreement with our
KFC U.S. franchisees that gave us brand marketing control as well
as an accelerated path to improved assets and customer experience.
In connection with this agreement, we recognized Special Item
charges of $4 million and less than $1 million for the quarters
ended September 30, 2017 and 2016, respectively. During the years
to date ended September 30, 2017 and 2016, we recognized Special
Item charges of $12 million and $17 million, respectively. The
majority of these costs were recorded as Franchise and license
expenses.
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(f)
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In connection with the separation of Yum China, we modified
certain share-based compensation awards held as part of our
Executive Income Deferral Plan in YUM stock to provide one Yum
China share-based award for each outstanding YUM share-based
award. These Yum China awards may now be settled in cash, as
opposed to stock, which requires recognition of the fair value of
these awards each quarter within G&A in our Condensed Consolidated
Income Statement. During the quarter and year to date ended
September 30, 2017, we recorded non-cash Special Item charges of
less than $1 million and $18 million, respectively, related to
these awards.
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(g)
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Reflects a non-cash charge of $22 million related to the
adjustment of certain historical deferred vested liability
balances in our qualified U.S. plan during the first quarter of
2017. Additionally, during the fourth quarter of 2016 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. In connection with this
program we incurred an additional Special Items settlement charge
of $1 million during the quarter ended September 30, 2017. These
charges are recorded in Other pension (income) expense.
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(h)
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In March 2017, the Financial Accounting Standards Board (“FASB”)
issued guidance on the presentation of net periodic pension cost
and net periodic postretirement benefit cost. The standard
requires that an employer report the service cost component in the
same line item or items as other compensation costs arising from
services rendered by employees during the period. The other
components of net benefit cost are required to be presented in the
income statement separately from the service cost component and
outside a subtotal of income from operations. We early adopted the
standard beginning with the quarter ended March 31, 2017 on a
retrospective basis and have reported the other components of net
benefit costs within Other pension (income) expense for the
quarters and years to date ended September 30, 2017 and 2016.
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(i)
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In March 2016, the FASB issued guidance related to stock-based
compensation which is intended to simplify several aspects of the
accounting for employee share-based payment transactions,
including their income tax consequences, classification of awards
as either equity or liabilities and classification on the
statement of cash flows. We adopted this standard beginning with
the quarter ended March 31, 2017. The primary impact of adoption
of this standard was that beginning January 1, 2017 we are
required to report excess tax benefits associated with share-based
compensation, which we previously recognized within Common Stock,
within our Income tax provision.
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View source version on businesswire.com: http://www.businesswire.com/news/home/20171102005405/en/
Yum! Brands, Inc.
Analysts are invited to contact:
Keith
Siegner, 888-298-6986
Vice President, Investor Relations, Corporate
Strategy and Treasurer
or
Kelly Knybel, 888-298-6986
Director,
Investor Relations
or
Members of the media are invited to
contact:
Virginia Ferguson, 502-874-8200
Director, Public
Relations
Source: Yum! Brands, Inc.