LOUISVILLE, Ky.--(BUSINESS WIRE)--
Yum! Brands, Inc. (NYSE: YUM) today reported results for the third
quarter ended September 30, 2018. Third-quarter GAAP EPS was $1.40, an
increase of 18%. Third-quarter EPS excluding Special Items was $1.04, an
increase of 52%.
This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20181031005264/en/
GREG CREED COMMENTS
Greg Creed, CEO, said, “We are pleased to deliver third-quarter system
sales growth of 5%, consisting of same store sales growth of 2% and net
new unit growth of 4%. Core operating profit growth of 2% was consistent
with our expectations. We are now two years into our three year
transformation and remain firmly on-track to becoming more focused, more
franchised and more efficient. The collective power of our three iconic
brands, anchored by our four key growth drivers, is helping us deliver
long-term sustainable growth and higher returns for our stakeholders."
THIRD-QUARTER HIGHLIGHTS
|
•
|
Worldwide system sales excluding foreign currency translation grew
5%, with Taco Bell at 8%, KFC at 7%, and Pizza Hut flat.
|
|
•
|
We opened 410 net new units for 4% net new unit growth.
|
|
•
|
We refranchised 134 restaurants, including 57 KFC, 31 Pizza Hut and
46 Taco Bell units, for pre-tax proceeds of $193 million. We
recorded net refranchising gains of $100 million in Special Items.
As of quarter end, our global franchise ownership mix was 97%.
|
|
•
|
We repurchased 6.3 million shares totaling $527 million at an
average price of $83.
|
|
•
|
We reflected the change in fair value of our investment in Grubhub
by recording $94 million of pre-tax investment income, resulting in
$0.22 in EPS.
|
|
•
|
Foreign currency translation unfavorably impacted divisional
operating profit by $9 million.
|
|
|
|
% Change
|
|
|
|
System Sales
Ex F/X
|
|
Same-Store
Sales
|
|
Net New Units
|
|
GAAP
Operating Profit
|
|
Core
Operating Profit
|
|
KFC Division
|
|
+7
|
|
+3
|
|
+5
|
|
(5)
|
|
(2)
|
|
Pizza Hut Division
|
|
Even
|
|
(1)
|
|
+2
|
|
+7
|
|
+9
|
|
Taco Bell Division
|
|
+8
|
|
+5
|
|
+3
|
|
+10
|
|
+10
|
|
Worldwide
|
|
+5
|
|
+2
|
|
+4
|
|
(14)
|
|
+2
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Year-to-Date
|
|
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
|
GAAP EPS
|
|
$1.40
|
|
$1.18
|
|
+18
|
|
$3.64
|
|
$2.52
|
|
+44
|
|
Special Items EPS1
|
|
$0.36
|
|
$0.50
|
|
NM
|
|
$0.89
|
|
$0.51
|
|
NM
|
|
EPS Excluding Special Items
|
|
$1.04
|
|
$0.68
|
|
+52
|
|
$2.75
|
|
$2.01
|
|
+37
|
|
1See Reconciliation of Non-GAAP Measurements to GAAP
Results within this release for further detail of Special Items.
|
|
|
|
|
All comparisons are versus the same period a year ago. As required,
we adopted a new accounting standard on revenue recognition
effective January 1, 2018. Prior year results have not been restated
for this change. See the Other Items section of this release for
further details.
|
|
|
|
|
System sales growth figures exclude foreign currency translation
("F/X") and core operating profit growth figures exclude F/X and
Special Items. Special Items are not allocated to any segment and
therefore only impact worldwide GAAP results. See reconciliation of
Non-GAAP Measurements to GAAP Results within this release for
further details.
|
|
|
KFC DIVISION
|
|
|
Third Quarter
|
|
Year-to-Date
|
|
|
|
|
|
|
|
%/ppts Change
|
|
|
|
|
|
%/ppts Change
|
|
|
|
2018
|
|
2017
|
|
Reported
|
|
Ex F/X
|
|
2018
|
|
2017
|
|
Reported
|
|
Ex F/X
|
|
Restaurants
|
|
22,104
|
|
21,063
|
|
+5
|
|
N/A
|
|
22,104
|
|
21,063
|
|
+5
|
|
N/A
|
|
System Sales ($MM)
|
|
6,555
|
|
6,282
|
|
+4
|
|
+7
|
|
19,190
|
|
17,688
|
|
+8
|
|
+6
|
|
Same-Store Sales Growth (%)
|
|
+3
|
|
+4
|
|
NM
|
|
NM
|
|
+2
|
|
+3
|
|
NM
|
|
NM
|
|
Franchise and Property Revenues ($MM)
|
|
320
|
|
296
|
|
+8
|
|
+11
|
|
937
|
|
831
|
|
+13
|
|
+10
|
|
Operating Profit ($MM)
|
|
248
|
|
260
|
|
(5)
|
|
(2)
|
|
704
|
|
710
|
|
(1)
|
|
(3)
|
|
Operating Margin (%)
|
|
38.2
|
|
32.8
|
|
5.4
|
|
5.4
|
|
36.0
|
|
30.9
|
|
5.1
|
|
4.8
|
|
|
|
|
|
|
|
|
|
Third Quarter (% Change)
|
|
Year-to-Date (% Change)
|
|
|
|
International
|
|
U.S.
|
|
International
|
|
U.S.
|
|
System Sales Growth Ex F/X
|
|
+8
|
|
Even
|
|
+8
|
|
Even
|
|
Same-Store Sales Growth
|
|
+3
|
|
+1
|
|
+2
|
|
Even
|
|
•
|
KFC Division opened 345 gross new international restaurants in 48
countries.
|
|
•
|
Operating margin increased 5.4 percentage points driven by
refranchising and same-store sales growth, partially offset by the
gross up of advertising fund revenues and franchise service
activities.
|
|
•
|
Foreign currency translation unfavorably impacted operating profit
by $8 million.
|
|
KFC Markets1
|
|
Percent of KFC
System Sales2
|
|
System Sales Growth Ex F/X
|
|
|
|
Third Quarter
(% Change)
|
|
Year-to-Date
(% Change)
|
|
China
|
|
27%
|
|
+6
|
|
+6
|
|
United States
|
|
18%
|
|
Even
|
|
Even
|
|
Asia
|
|
12%
|
|
+7
|
|
+5
|
|
Australia
|
|
7%
|
|
+6
|
|
+5
|
|
Russia & Eastern Europe
|
|
7%
|
|
+22
|
|
+22
|
|
United Kingdom
|
|
6%
|
|
+1
|
|
(4)
|
|
Latin America
|
|
5%
|
|
+9
|
|
+11
|
|
Western Europe
|
|
5%
|
|
+9
|
|
+11
|
|
Africa
|
|
4%
|
|
+11
|
|
+7
|
|
Middle East / Turkey / North Africa
|
|
4%
|
|
+14
|
|
+12
|
|
Canada
|
|
2%
|
|
Even
|
|
+2
|
|
Thailand
|
|
2%
|
|
+15
|
|
+9
|
|
India
|
|
1%
|
|
+25
|
|
+21
|
PIZZA HUT DIVISION
|
|
|
Third Quarter
|
|
Year-to-Date
|
|
|
|
|
|
|
|
%/ppts Change
|
|
|
|
|
|
%/ppts Change
|
|
|
|
2018
|
|
2017
|
|
Reported
|
|
Ex F/X
|
|
2018
|
|
2017
|
|
Reported
|
|
Ex F/X
|
|
Restaurants
|
|
16,930
|
|
16,551
|
|
+2
|
|
N/A
|
|
16,930
|
|
16,551
|
|
+2
|
|
N/A
|
|
System Sales ($MM)
|
|
2,929
|
|
2,966
|
|
(1)
|
|
Even
|
|
8,855
|
|
8,665
|
|
+2
|
|
+1
|
|
Same-Store Sales Growth (%)
|
|
(1)
|
|
+1
|
|
NM
|
|
NM
|
|
(1)
|
|
(1)
|
|
NM
|
|
NM
|
|
Franchise and Property Revenues ($MM)
|
|
143
|
|
148
|
|
(3)
|
|
(2)
|
|
432
|
|
433
|
|
Even
|
|
(1)
|
|
Operating Profit ($MM)
|
|
88
|
|
82
|
|
+7
|
|
+9
|
|
257
|
|
250
|
|
+3
|
|
+2
|
|
Operating Margin (%)
|
|
38.7
|
|
40.5
|
|
(1.8)
|
|
(1.4)
|
|
36.1
|
|
38.0
|
|
(1.9)
|
|
(2.0)
|
|
|
|
|
|
|
Third Quarter (% Change)
|
Year-to-Date (% Change)
|
|
|
International
|
U.S.
|
International
|
U.S.
|
|
System Sales Growth Ex F/X
|
+1
|
(1)
|
+1
|
Even
|
|
Same-Store Sales Growth
|
(3)
|
+1
|
(2)
|
+2
|
|
•
|
Pizza Hut Division opened 184 gross new international restaurants in
43 countries.
|
|
•
|
Operating margin decreased 1.8 percentage points driven by the gross
up of advertising fund revenues and franchise service activities.
|
|
•
|
Foreign currency translation unfavorably impacted operating profit
by $1 million.
|
|
Pizza Hut Markets1
|
|
Percent of Pizza
Hut System Sales2
|
|
System Sales Growth Ex F/X
|
|
|
|
Third Quarter
(% Change)
|
|
Year-to-Date
(% Change)
|
|
United States
|
|
46%
|
|
(1)
|
|
Even
|
|
China
|
|
18%
|
|
(2)
|
|
(1)
|
|
Asia
|
|
13%
|
|
+2
|
|
+4
|
|
Europe
|
|
10%
|
|
(1)
|
|
Even
|
|
Latin America
|
|
6%
|
|
+3
|
|
+1
|
|
Middle East / Turkey / North Africa
|
|
4%
|
|
+5
|
|
+3
|
|
Canada
|
|
2%
|
|
+3
|
|
+2
|
|
India
|
|
1%
|
|
+20
|
|
+21
|
|
Africa
|
|
<1%
|
|
+52
|
|
+41
|
TACO BELL DIVISION
|
|
|
Third Quarter
|
|
Year-to-Date
|
|
|
|
|
|
|
|
%/ppts Change
|
|
|
|
|
|
%/ppts Change
|
|
|
|
2018
|
|
2017
|
|
Reported
|
|
Ex F/X
|
|
2018
|
|
2017
|
|
Reported
|
|
Ex F/X
|
|
Restaurants
|
|
6,942
|
|
6,738
|
|
+3
|
|
N/A
|
|
6,942
|
|
6,738
|
|
+3
|
|
N/A
|
|
System Sales ($MM)
|
|
2,604
|
|
2,423
|
|
+7
|
|
+8
|
|
7,440
|
|
7,058
|
|
+5
|
|
+5
|
|
Same-Store Sales Growth (%)
|
|
+5
|
|
+3
|
|
NM
|
|
NM
|
|
+3
|
|
+5
|
|
NM
|
|
NM
|
|
Franchise and Property Revenues ($MM)
|
|
142
|
|
124
|
|
+15
|
|
+15
|
|
404
|
|
358
|
|
+13
|
|
+13
|
|
Operating Profit ($MM)
|
|
161
|
|
147
|
|
+10
|
|
+10
|
|
442
|
|
440
|
|
—
|
|
+1
|
|
Operating Margin (%)
|
|
31.5
|
|
33.3
|
|
(1.8)
|
|
(1.8)
|
|
30.3
|
|
32.6
|
|
(2.3)
|
|
(2.3)
|
|
•
|
Taco Bell Division opened 59 gross new restaurants, including 22
gross new international restaurants.
|
|
•
|
Operating margin decreased 1.8 percentage points driven by the gross
up of advertising fund revenues and franchise service activities,
partially offset by refranchising, same-store sales growth and the
expansion of equity restaurant margins.
|
OTHER ITEMS
|
•
|
Effective January 1, 2018, we adopted the new accounting standard on
revenue recognition. As a result, we are now required to recognize
upfront fees, such as initial and renewal fees we receive from
franchisees, as revenue over the term of the related franchise
agreement. We also record incentive payments we may make to
franchisees (e.g., equipment funding provided under the KFC U.S.
Acceleration Agreement) as a reduction of revenue over the period of
expected cash flows from the franchise agreements to which the
payment relates. Under our historical accounting, we recognized
upfront fees from franchisees in full upon commencement of the
related franchise agreements and incentive payments made to
franchisees when we were obligated to make the payment.
Additionally, the new accounting standard requires us to begin
recording other revenues we receive from franchisees and the
related expenses on a gross basis within our Income Statement.
Previously, these revenues and expenses, the largest of which
relate to franchisee contributions to and subsequent expenditures
from advertising cooperatives we consolidate, were reported on a
net basis within our Income Statement. We have reported these
revenues and expenses in our Income Statement on the two new line
items of Franchise contributions for advertising and other
services and Franchise advertising and other services expense.
Prior results have not been restated for the impact of this
accounting change and therefore remain reported as they have been
historically. However, the adoption was done on a modified
retrospective basis resulting in the current year impact being
reported as if the now-required accounting had been in place since
the inception of currently active franchise agreements or when
franchise incentive payments were originally made. On a full-year
basis we anticipate that the non-cash impacts of adopting the new
revenue recognition standard will negatively impact core operating
profit growth by 2 to 3 percentage points. As a result of the new
standard, core operating profit growth was negatively impacted by
one percentage point during the third quarter and one percentage
point year-to-date through September 30, 2018. A significant
portion of our new unit development for which we receive upfront
fees, which will now be spread versus recognized upfront, is
expected to occur in the fourth quarter.
|
|
|
|
|
•
|
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 October
31, 2018. The number is 877/815-2029 for U.S. callers and 706/645-9271
for international callers, conference ID 4690947.
The call will be available for playback beginning at 11:00 a.m. Eastern
Time October 31, 2018 through December 12, 2018. To access the playback,
dial 855/859-2056 in the U.S. and 404/537-3406 internationally,
conference ID 4690947.
The webcast and the playback can be accessed via the internet by
visiting Yum! Brands' website, investors.yum.com/events-and-presentations
and selecting “Q3 2018 Yum! Brands, Inc. Earnings Call.”
ADDITIONAL INFORMATION ONLINE
Quarter end dates for each division, restaurant count details,
definitions of terms and Restricted Group financial information are
available at investors.yum.com.
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; the success of our franchisees and licensees, and the
success of our transformation initiatives, including our refranchising
strategy; our significant exposure to the Chinese market; 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; our increasing dependence on digital commerce platforms and
information technology systems; 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; 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; recent Tax Legislation (defined
below) and other 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.
Information regarding the impact of the Tax Cuts and Jobs Act of 2017
(“Tax Legislation”) consists of preliminary estimates which are
forward-looking statements and are subject to change. Information
regarding the impact of Tax Legislation is based on our current
calculations, as well our current interpretations, assumptions and
expectations relating to Tax Legislation, which are subject to further
ongoing change.
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 45,000
restaurants in more than 140 countries and territories and is one of the
Aon Hewitt Top Companies for Leaders in North America. In 2018, Yum!
Brands was recognized as part of the inaugural Bloomberg Gender-Equality
Index and ranked among the top 100 Best Corporate Citizens by Corporate
Responsibility Magazine. In 2017, Yum! Brands was named to the Dow
Jones Sustainability North America Index. 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 seven new restaurants per day on average,
making it a leader in global retail development.
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Condensed Consolidated Summary of Results
(amounts in millions, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
% Change
|
|
Year to date
|
|
% Change
|
|
|
|
9/30/18
|
|
9/30/17
|
|
B/(W)
|
|
9/30/18
|
|
9/30/17
|
|
B/(W)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
$
|
499
|
|
|
$
|
871
|
|
|
(43)
|
|
$
|
1,523
|
|
|
$
|
2,682
|
|
|
(43)
|
|
Franchise and property revenues
|
|
605
|
|
|
565
|
|
|
7
|
|
1,773
|
|
|
1,619
|
|
|
10
|
|
Franchise contributions for advertising and other services
|
|
287
|
|
|
—
|
|
|
N/A
|
|
834
|
|
|
—
|
|
|
N/A
|
|
Total revenues
|
|
1,391
|
|
|
1,436
|
|
|
(3)
|
|
4,130
|
|
|
4,301
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
399
|
|
|
717
|
|
|
44
|
|
1,258
|
|
|
2,223
|
|
|
43
|
|
General and administrative expenses
|
|
204
|
|
|
215
|
|
|
5
|
|
631
|
|
|
699
|
|
|
10
|
|
Franchise and property expenses
|
|
40
|
|
|
61
|
|
|
35
|
|
127
|
|
|
161
|
|
|
21
|
|
Franchise advertising and other services expense
|
|
288
|
|
|
—
|
|
|
N/A
|
|
834
|
|
|
—
|
|
|
N/A
|
|
Refranchising (gain) loss
|
|
(100
|
)
|
|
(201
|
)
|
|
(50)
|
|
(285
|
)
|
|
(331
|
)
|
|
(14)
|
|
Other (income) expense
|
|
7
|
|
|
1
|
|
|
NM
|
|
10
|
|
|
3
|
|
|
NM
|
|
Total costs and expenses, net
|
|
838
|
|
|
793
|
|
|
(6)
|
|
2,575
|
|
|
2,755
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
|
|
553
|
|
|
643
|
|
|
(14)
|
|
1,555
|
|
|
1,546
|
|
|
1
|
|
Investment (income) expense, net
|
|
(96
|
)
|
|
(1
|
)
|
|
NM
|
|
(185
|
)
|
|
(3
|
)
|
|
NM
|
|
Other pension (income) expense
|
|
4
|
|
|
10
|
|
|
59
|
|
10
|
|
|
42
|
|
|
76
|
|
Interest expense, net
|
|
111
|
|
|
110
|
|
|
—
|
|
330
|
|
|
325
|
|
|
(1)
|
|
Income before income taxes
|
|
534
|
|
|
524
|
|
|
2
|
|
1,400
|
|
|
1,182
|
|
|
18
|
|
Income tax provision
|
|
80
|
|
|
106
|
|
|
24
|
|
192
|
|
|
278
|
|
|
31
|
|
Net Income
|
|
$
|
454
|
|
|
$
|
418
|
|
|
9
|
|
$
|
1,208
|
|
|
$
|
904
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
15.1
|
%
|
|
20.2
|
%
|
|
5.1 ppts.
|
|
13.7
|
%
|
|
23.5
|
%
|
|
9.8 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
|
$
|
1.43
|
|
|
$
|
1.21
|
|
|
18
|
|
$
|
3.72
|
|
|
$
|
2.58
|
|
|
44
|
|
Average shares outstanding
|
|
318
|
|
|
345
|
|
|
8
|
|
325
|
|
|
351
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
|
$
|
1.40
|
|
|
$
|
1.18
|
|
|
18
|
|
$
|
3.64
|
|
|
$
|
2.52
|
|
|
44
|
|
Average shares outstanding
|
|
325
|
|
|
353
|
|
|
8
|
|
332
|
|
|
358
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
$
|
0.36
|
|
|
$
|
—
|
|
|
|
|
$
|
1.08
|
|
|
$
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
9/30/18
|
|
9/30/17
|
|
B/(W)
|
|
9/30/18
|
|
9/30/17
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
$
|
221
|
|
|
$
|
498
|
|
|
(55)
|
|
$
|
707
|
|
|
$
|
1,465
|
|
|
(52)
|
|
Franchise and property revenues
|
|
320
|
|
|
296
|
|
|
8
|
|
937
|
|
|
831
|
|
|
13
|
|
Franchise contributions for advertising and other services
|
|
108
|
|
|
—
|
|
|
N/A
|
|
314
|
|
|
—
|
|
|
N/A
|
|
Total revenues
|
|
649
|
|
|
794
|
|
|
(18)
|
|
1,958
|
|
|
2,296
|
|
|
(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
187
|
|
|
419
|
|
|
55
|
|
617
|
|
|
1,244
|
|
|
50
|
|
General and administrative expenses
|
|
81
|
|
|
85
|
|
|
5
|
|
247
|
|
|
259
|
|
|
5
|
|
Franchise and property expenses
|
|
24
|
|
|
29
|
|
|
17
|
|
78
|
|
|
80
|
|
|
4
|
|
Franchise advertising and other services expense
|
|
107
|
|
|
—
|
|
|
N/A
|
|
312
|
|
|
—
|
|
|
N/A
|
|
Other (income) expense
|
|
2
|
|
|
1
|
|
|
NM
|
|
—
|
|
|
3
|
|
|
NM
|
|
Total costs and expenses, net
|
|
401
|
|
|
534
|
|
|
25
|
|
1,254
|
|
|
1,586
|
|
|
21
|
|
Operating Profit
|
|
$
|
248
|
|
|
$
|
260
|
|
|
(5)
|
|
$
|
704
|
|
|
$
|
710
|
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant margin
|
|
15.4
|
%
|
|
15.9
|
%
|
|
(0.5) ppts.
|
|
12.7
|
%
|
|
15.1
|
%
|
|
(2.4) ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
38.2
|
%
|
|
32.8
|
%
|
|
5.4 ppts.
|
|
36.0
|
%
|
|
30.9
|
%
|
|
5.1 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
|
|
|
|
9/30/18
|
|
9/30/17
|
|
B/(W)
|
|
9/30/18
|
|
9/30/17
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
$
|
13
|
|
|
$
|
55
|
|
|
(77)
|
|
$
|
55
|
|
|
$
|
226
|
|
|
(76)
|
|
Franchise and property revenues
|
|
143
|
|
|
148
|
|
|
(3)
|
|
432
|
|
|
433
|
|
|
Even
|
|
Franchise contributions for advertising and other services
|
|
73
|
|
|
—
|
|
|
N/A
|
|
226
|
|
|
—
|
|
|
N/A
|
|
Total revenues
|
|
229
|
|
|
203
|
|
|
12
|
|
713
|
|
|
659
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
13
|
|
|
54
|
|
|
76
|
|
56
|
|
|
212
|
|
|
74
|
|
General and administrative expenses
|
|
45
|
|
|
44
|
|
|
(2)
|
|
141
|
|
|
151
|
|
|
6
|
|
Franchise and property expenses
|
|
9
|
|
|
21
|
|
|
61
|
|
28
|
|
|
44
|
|
|
37
|
|
Franchise advertising and other services expense
|
|
74
|
|
|
—
|
|
|
N/A
|
|
229
|
|
|
—
|
|
|
N/A
|
|
Other (income) expense
|
|
—
|
|
|
2
|
|
|
NM
|
|
2
|
|
|
2
|
|
|
NM
|
|
Total costs and expenses, net
|
|
141
|
|
|
121
|
|
|
(16)
|
|
456
|
|
|
409
|
|
|
(11)
|
|
Operating Profit
|
|
$
|
88
|
|
|
$
|
82
|
|
|
7
|
|
$
|
257
|
|
|
$
|
250
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant margin
|
|
(2.2
|
)%
|
|
1.9
|
%
|
|
(4.1) ppts.
|
|
(1.3
|
)%
|
|
6.0
|
%
|
|
(7.3) ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
38.7
|
%
|
|
40.5
|
%
|
|
(1.8) ppts.
|
|
36.1
|
%
|
|
38.0
|
%
|
|
(1.9) 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
|
|
|
|
9/30/18
|
|
9/30/17
|
|
B/(W)
|
|
9/30/18
|
|
9/30/17
|
|
B/(W)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company sales
|
|
$
|
265
|
|
|
$
|
318
|
|
|
(17)
|
|
$
|
761
|
|
|
$
|
991
|
|
|
(23)
|
|
Franchise and property revenues
|
|
142
|
|
|
124
|
|
|
15
|
|
404
|
|
|
358
|
|
|
13
|
|
Franchise contributions for advertising and other services
|
|
106
|
|
|
—
|
|
|
N/A
|
|
294
|
|
|
—
|
|
|
N/A
|
|
Total revenues
|
|
513
|
|
|
442
|
|
|
16
|
|
1,459
|
|
|
1,349
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
200
|
|
|
249
|
|
|
20
|
|
587
|
|
|
772
|
|
|
24
|
|
General and administrative expenses
|
|
40
|
|
|
41
|
|
|
3
|
|
121
|
|
|
122
|
|
|
1
|
|
Franchise and property expenses
|
|
5
|
|
|
6
|
|
|
9
|
|
17
|
|
|
16
|
|
|
(10)
|
|
Franchise advertising and other services expense
|
|
107
|
|
|
—
|
|
|
N/A
|
|
293
|
|
|
—
|
|
|
N/A
|
|
Other (income) expense
|
|
—
|
|
|
(1
|
)
|
|
NM
|
|
(1
|
)
|
|
(1
|
)
|
|
NM
|
|
Total costs and expenses, net
|
|
352
|
|
|
295
|
|
|
(19)
|
|
1,017
|
|
|
909
|
|
|
(12)
|
|
Operating Profit
|
|
$
|
161
|
|
|
$
|
147
|
|
|
10
|
|
$
|
442
|
|
|
$
|
440
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant margin
|
|
24.7
|
%
|
|
21.9
|
%
|
|
2.8 ppts.
|
|
22.9
|
%
|
|
22.1
|
%
|
|
0.8 ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
31.5
|
%
|
|
33.3
|
%
|
|
(1.8) ppts.
|
|
30.3
|
%
|
|
32.6
|
%
|
|
(2.3) ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentages may not recompute due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Condensed Consolidated Balance Sheets
(amounts in millions)
|
|
|
|
|
|
|
|
|
|
(unaudited)
9/30/18
|
|
12/31/17
|
|
ASSETS
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
198
|
|
|
$
|
1,522
|
|
|
Accounts and notes receivable, less allowance: $32 in 2018 and $19
in 2017
|
|
528
|
|
|
400
|
|
|
Prepaid expenses and other current assets
|
|
443
|
|
|
384
|
|
|
Advertising cooperative assets, restricted
|
|
—
|
|
|
201
|
|
|
Total Current Assets
|
|
1,169
|
|
|
2,507
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net of accumulated depreciation and
amortization of $1,291 in 2018 and $1,480 in 2017
|
|
1,378
|
|
|
1,697
|
|
|
Goodwill
|
|
489
|
|
|
512
|
|
|
Intangible assets, net
|
|
84
|
|
|
110
|
|
|
Other assets
|
|
886
|
|
|
346
|
|
|
Deferred income taxes
|
|
149
|
|
|
139
|
|
|
Total Assets
|
|
$
|
4,155
|
|
|
$
|
5,311
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
Accounts payable and other current liabilities
|
|
$
|
885
|
|
|
$
|
813
|
|
|
Income taxes payable
|
|
14
|
|
|
123
|
|
|
Short-term borrowings
|
|
295
|
|
|
375
|
|
|
Advertising cooperative liabilities
|
|
—
|
|
|
201
|
|
|
Total Current Liabilities
|
|
1,194
|
|
|
1,512
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
9,405
|
|
|
9,429
|
|
|
Other liabilities and deferred credits
|
|
1,014
|
|
|
704
|
|
|
Total Liabilities
|
|
11,613
|
|
|
11,645
|
|
|
|
|
|
|
|
|
Shareholders' Deficit
|
|
|
|
|
|
Common stock, no par value, 750 shares authorized; 313 shares and
332 shares issued in 2018 and 2017, respectively
|
|
—
|
|
|
—
|
|
|
Accumulated deficit
|
|
(7,141
|
)
|
|
(6,063
|
)
|
|
Accumulated other comprehensive loss
|
|
(317
|
)
|
|
(271
|
)
|
|
Total Shareholders' Deficit
|
|
(7,458
|
)
|
|
(6,334
|
)
|
|
Total Liabilities and Shareholders' Deficit
|
|
$
|
4,155
|
|
|
$
|
5,311
|
|
|
See accompanying notes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
Year to date
|
|
|
|
9/30/18
|
|
9/30/17
|
|
Cash Flows - Operating Activities
|
|
|
|
|
|
Net Income
|
|
$
|
1,208
|
|
|
$
|
904
|
|
|
Depreciation and amortization
|
|
103
|
|
|
195
|
|
|
Refranchising (gain) loss
|
|
(285
|
)
|
|
(331
|
)
|
|
Investment (income) expense, net
|
|
(185
|
)
|
|
(3
|
)
|
|
Contributions to defined benefit pension plans
|
|
(9
|
)
|
|
(47
|
)
|
|
Deferred income taxes
|
|
32
|
|
|
122
|
|
|
Share-based compensation expense
|
|
36
|
|
|
53
|
|
|
Changes in accounts and notes receivable
|
|
(35
|
)
|
|
17
|
|
|
Changes in prepaid expenses and other current assets
|
|
10
|
|
|
(7
|
)
|
|
Changes in accounts payable and other current liabilities
|
|
(81
|
)
|
|
(168
|
)
|
|
Changes in income taxes payable
|
|
(47
|
)
|
|
(125
|
)
|
|
Other, net
|
|
49
|
|
|
108
|
|
|
Net Cash Provided by Operating Activities
|
|
796
|
|
|
718
|
|
|
|
|
|
|
|
|
Cash Flows - Investing Activities
|
|
|
|
|
|
Capital spending
|
|
(147
|
)
|
|
(228
|
)
|
|
Investment in Grubhub Inc. common stock
|
|
(200
|
)
|
|
—
|
|
|
Proceeds from refranchising of restaurants
|
|
445
|
|
|
716
|
|
|
Other, net
|
|
(9
|
)
|
|
1
|
|
|
Net Cash Provided by Investing Activities
|
|
89
|
|
|
489
|
|
|
|
|
|
|
|
|
Cash Flows - Financing Activities
|
|
|
|
|
|
Proceeds from long-term debt
|
|
106
|
|
|
1,088
|
|
|
Repayments of long-term debt
|
|
(462
|
)
|
|
(372
|
)
|
|
Revolving credit facilities, three months or less, net
|
|
273
|
|
|
35
|
|
|
Short-term borrowings by original maturity
|
|
|
|
|
|
More than three months - proceeds
|
|
59
|
|
|
—
|
|
|
More than three months - payments
|
|
(59
|
)
|
|
—
|
|
|
Three months or less, net
|
|
—
|
|
|
—
|
|
|
Repurchase shares of Common Stock
|
|
(1,684
|
)
|
|
(1,348
|
)
|
|
Dividends paid on Common Stock
|
|
(349
|
)
|
|
(315
|
)
|
|
Debt issuance costs
|
|
—
|
|
|
(32
|
)
|
|
Other, net
|
|
(45
|
)
|
|
(85
|
)
|
|
Net Cash Used in Financing Activities
|
|
(2,161
|
)
|
|
(1,029
|
)
|
|
Effect of Exchange Rate on Cash and Cash Equivalents
|
|
(55
|
)
|
|
42
|
|
|
Net Increase (Decrease) in Cash and Cash Equivalents, Restricted
Cash and Restricted Cash Equivalents
|
|
(1,331
|
)
|
|
220
|
|
|
Cash, Cash Equivalents, Restricted Cash and Restricted Cash
Equivalents - Beginning of Period
|
|
1,668
|
|
|
831
|
|
|
Cash, Cash Equivalents, Restricted Cash and Restricted Cash
Equivalents - End of Period
|
|
$
|
337
|
|
|
$
|
1,051
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Generally
Accepted Accounting Principles in the United States of America
("GAAP"), the Company provides the following non-GAAP measurements.
|
|
|
|
• System sales and System sales excluding the impacts of foreign
currency translation ("FX"). System sales 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 Condensed Consolidated Statements of Income; however, the
franchise and license fees are included in the Company’s revenues.
We believe System sales growth is useful to investors as a
significant indicator of the overall strength of our business as
it incorporates our primary revenue drivers, Company and franchise
same-store sales as well as net unit growth.
|
|
|
|
• Diluted Earnings Per Share excluding Special Items (as defined
below);
|
|
|
|
• Effective Tax Rate excluding Special Items;
|
|
|
|
• Core Operating Profit. Core Operating Profit excludes Special
Items and FX and we use Core Operating Profit for the purposes of
evaluating performance internally.
|
|
|
|
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 these non-GAAP
measurements provide additional information to investors to
facilitate the comparison of past and present operations.
|
|
|
|
Special Items are not included in any of our Division segment
results as the Company does not believe they are indicative of our
ongoing operations due to their size and/or nature. Our chief
operating decision maker does not consider the impact of Special
Items when assessing segment performance. The Special Items are
described in (b), (c), (d), (e), (f), (g), (h) and (i) in the
accompanying notes.
|
|
|
|
Certain non-GAAP measurements are presented excluding the impact of
FX. These amounts are derived by translating current year results at
prior year average exchange rates. We believe the elimination of the
FX impact provides better year-to-year comparability without the
distortion of foreign currency fluctuations.
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
Year to date
|
|
|
|
9/30/18
|
|
9/30/17
|
|
9/30/18
|
|
9/30/17
|
|
Detail of Special Items
|
|
|
|
|
|
|
|
|
|
Refranchising gain (loss)(b)
|
|
$
|
100
|
|
|
$
|
201
|
|
|
$
|
285
|
|
|
$
|
331
|
|
|
YUM's Strategic Transformation Initiatives(c)
|
|
(1
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|
(15
|
)
|
|
Costs associated with Pizza Hut U.S. Transformation Agreement(d)
|
|
(1
|
)
|
|
(8
|
)
|
|
(3
|
)
|
|
(20
|
)
|
|
Costs associated with KFC U.S. Acceleration Agreement(e)
|
|
—
|
|
|
(4
|
)
|
|
(2
|
)
|
|
(12
|
)
|
|
Non-cash credits (charges) associated with share-based compensation(f)
|
|
2
|
|
|
—
|
|
|
3
|
|
|
(18
|
)
|
|
Other Special Items Income (Expense)
|
|
—
|
|
|
5
|
|
|
1
|
|
|
3
|
|
|
Special Items Income (Expense) - Operating Profit
|
|
100
|
|
|
190
|
|
|
282
|
|
|
269
|
|
|
Special Items - Other Pension Income (Expense)(g)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(23
|
)
|
|
Special Items Income (Expense) before Income Taxes
|
|
100
|
|
|
189
|
|
|
282
|
|
|
246
|
|
|
Tax Benefit (Expense) on Special Items(h)
|
|
(12
|
)
|
|
(13
|
)
|
|
(49
|
)
|
|
(64
|
)
|
|
Tax Benefit (Expense) - U.S. Tax Act(i)
|
|
28
|
|
|
—
|
|
|
62
|
|
|
—
|
|
|
Special Items Income (Expense), net of tax
|
|
116
|
|
|
176
|
|
|
295
|
|
|
182
|
|
|
Average diluted shares outstanding
|
|
325
|
|
|
353
|
|
|
332
|
|
|
358
|
|
|
Special Items diluted EPS
|
|
$
|
0.36
|
|
|
$
|
0.50
|
|
|
$
|
0.89
|
|
|
$
|
0.51
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Operating Profit to Core Operating Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
GAAP Operating Profit
|
|
$
|
553
|
|
|
$
|
643
|
|
|
$
|
1,555
|
|
|
$
|
1,546
|
|
|
Special Items Income (Expense)
|
|
100
|
|
|
190
|
|
|
282
|
|
|
269
|
|
|
Foreign Currency Impact on Divisional Operating Profit
|
|
(9
|
)
|
|
N/A
|
|
15
|
|
|
N/A
|
|
Core Operating Profit
|
|
$
|
462
|
|
|
$
|
453
|
|
|
$
|
1,258
|
|
|
$
|
1,277
|
|
|
|
|
|
|
|
|
|
|
|
|
KFC Division
|
|
|
|
|
|
|
|
|
|
GAAP Operating Profit
|
|
$
|
248
|
|
|
$
|
260
|
|
|
$
|
704
|
|
|
$
|
710
|
|
|
Foreign Currency Impact on Divisional Operating Profit
|
|
(8
|
)
|
|
N/A
|
|
12
|
|
|
N/A
|
|
Core Operating Profit
|
|
$
|
256
|
|
|
$
|
260
|
|
|
$
|
692
|
|
|
$
|
710
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Measurements to GAAP Results
(Continued)
(amounts in millions, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
Year to date
|
|
|
|
9/30/18
|
|
9/30/17
|
|
9/30/18
|
|
9/30/17
|
|
Pizza Hut Division
|
|
|
|
|
|
|
|
|
|
GAAP Operating Profit
|
|
$
|
88
|
|
|
$
|
82
|
|
|
$
|
257
|
|
|
$
|
250
|
|
|
Foreign Currency Impact on Divisional Operating Profit
|
|
(1
|
)
|
|
N/A
|
|
3
|
|
|
N/A
|
|
Core Operating Profit
|
|
$
|
89
|
|
|
$
|
82
|
|
|
$
|
254
|
|
|
$
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
Taco Bell Division
|
|
|
|
|
|
|
|
|
|
GAAP Operating Profit
|
|
$
|
161
|
|
|
$
|
147
|
|
|
$
|
442
|
|
|
$
|
440
|
|
|
Foreign Currency Impact on Divisional Operating Profit
|
|
—
|
|
|
N/A
|
|
—
|
|
|
N/A
|
|
Core Operating Profit
|
|
$
|
161
|
|
|
$
|
147
|
|
|
$
|
442
|
|
|
$
|
440
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Diluted EPS to Diluted EPS excluding Special
Items
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
1.40
|
|
|
$
|
1.18
|
|
|
$
|
3.64
|
|
|
$
|
2.52
|
|
|
Special Items Diluted EPS
|
|
0.36
|
|
|
0.50
|
|
|
0.89
|
|
|
0.51
|
|
|
Diluted EPS excluding Special Items
|
|
$
|
1.04
|
|
|
$
|
0.68
|
|
|
$
|
2.75
|
|
|
$
|
2.01
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate
excluding Special Items
|
|
|
|
|
|
|
|
|
|
GAAP Effective Tax Rate
|
|
15.1
|
%
|
|
20.2
|
%
|
|
13.7
|
%
|
|
23.5
|
%
|
|
Impact on Tax Rate as a result of Special Items
|
|
(7.2
|
)%
|
|
(7.6
|
)%
|
|
(4.7
|
)%
|
|
0.7
|
%
|
|
Effective Tax Rate excluding Special Items
|
|
22.3
|
%
|
|
27.8
|
%
|
|
18.4
|
%
|
|
22.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Company sales to System sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
GAAP Company sales
|
|
$
|
499
|
|
|
$
|
871
|
|
|
$
|
1,523
|
|
|
$
|
2,682
|
|
|
Franchise sales
|
|
11,589
|
|
|
10,800
|
|
|
33,962
|
|
|
30,729
|
|
|
System sales
|
|
12,088
|
|
|
11,671
|
|
|
35,485
|
|
|
33,411
|
|
|
Foreign Currency Impact on System sales
|
|
(203
|
)
|
|
N/A
|
|
526
|
|
|
N/A
|
|
System sales, excluding FX
|
|
$
|
12,291
|
|
|
$
|
11,671
|
|
|
$
|
34,959
|
|
|
$
|
33,411
|
|
|
|
|
|
|
|
|
|
|
|
|
KFC Division
|
|
|
|
|
|
|
|
|
|
GAAP Company sales
|
|
$
|
221
|
|
|
$
|
498
|
|
|
$
|
707
|
|
|
$
|
1,465
|
|
|
Franchise sales
|
|
6,334
|
|
|
5,784
|
|
|
18,483
|
|
|
16,223
|
|
|
System sales
|
|
6,555
|
|
|
6,282
|
|
|
19,190
|
|
|
17,688
|
|
|
Foreign Currency Impact on System sales
|
|
(158
|
)
|
|
N/A
|
|
408
|
|
|
N/A
|
|
System sales, excluding FX
|
|
$
|
6,713
|
|
|
$
|
6,282
|
|
|
$
|
18,782
|
|
|
$
|
17,688
|
|
|
|
|
|
|
|
|
|
|
|
|
Pizza Hut Division
|
|
|
|
|
|
|
|
|
|
GAAP Company sales
|
|
$
|
13
|
|
|
$
|
55
|
|
|
$
|
55
|
|
|
$
|
226
|
|
|
Franchise sales
|
|
2,916
|
|
|
2,911
|
|
|
8,800
|
|
|
8,439
|
|
|
System sales
|
|
2,929
|
|
|
2,966
|
|
|
8,855
|
|
|
8,665
|
|
|
Foreign Currency Impact on System sales
|
|
(43
|
)
|
|
N/A
|
|
116
|
|
|
N/A
|
|
System sales, excluding FX
|
|
$
|
2,972
|
|
|
$
|
2,966
|
|
|
$
|
8,739
|
|
|
$
|
8,665
|
|
|
|
|
|
|
|
|
|
|
|
|
Taco Bell Division
|
|
|
|
|
|
|
|
|
|
GAAP Company sales
|
|
$
|
265
|
|
|
$
|
318
|
|
|
$
|
761
|
|
|
$
|
991
|
|
|
Franchise sales
|
|
2,339
|
|
|
2,105
|
|
|
6,679
|
|
|
6,067
|
|
|
System sales
|
|
2,604
|
|
|
2,423
|
|
|
7,440
|
|
|
7,058
|
|
|
Foreign Currency Impact on System sales
|
|
(2
|
)
|
|
N/A
|
|
2
|
|
|
N/A
|
|
System sales, excluding FX
|
|
$
|
2,606
|
|
|
$
|
2,423
|
|
|
$
|
7,438
|
|
|
$
|
7,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YUM! Brands, Inc.
Segment Results
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended 9/30/18
|
|
KFC
|
|
Pizza Hut
|
|
Taco Bell
|
|
Corporate
and
Unallocated
|
|
Consolidated
|
|
Total revenues
|
|
$
|
649
|
|
|
$
|
229
|
|
|
$
|
513
|
|
|
$
|
—
|
|
|
$
|
1,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
187
|
|
|
13
|
|
|
200
|
|
|
(1
|
)
|
|
399
|
|
|
General and administrative expenses
|
|
81
|
|
|
45
|
|
|
40
|
|
|
38
|
|
|
204
|
|
|
Franchise and property expenses
|
|
24
|
|
|
9
|
|
|
5
|
|
|
2
|
|
|
40
|
|
|
Franchise advertising and other services expense
|
|
107
|
|
|
74
|
|
|
107
|
|
|
—
|
|
|
288
|
|
|
Refranchising (gain) loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(100
|
)
|
|
(100
|
)
|
|
Other (income) expense
|
|
2
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
7
|
|
|
Total costs and expenses, net
|
|
401
|
|
|
141
|
|
|
352
|
|
|
(56
|
)
|
|
838
|
|
|
Operating Profit
|
|
$
|
248
|
|
|
$
|
88
|
|
|
$
|
161
|
|
|
$
|
56
|
|
|
$
|
553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 property expenses
|
|
29
|
|
|
21
|
|
|
6
|
|
|
5
|
|
|
61
|
|
|
Refranchising (gain) loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(201
|
)
|
|
(201
|
)
|
|
Other (income) expense
|
|
1
|
|
|
2
|
|
|
(1
|
)
|
|
(1
|
)
|
|
1
|
|
|
Total costs and expenses, net
|
|
534
|
|
|
121
|
|
|
295
|
|
|
(157
|
)
|
|
793
|
|
|
Operating Profit
|
|
$
|
260
|
|
|
$
|
82
|
|
|
$
|
147
|
|
|
$
|
154
|
|
|
$
|
643
|
|
|
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 9/30/18
|
|
KFC
|
|
Pizza Hut
|
|
Taco Bell
|
|
Corporate
and
Unallocated
|
|
Consolidated
|
|
Total revenues
|
|
$
|
1,958
|
|
|
$
|
713
|
|
|
$
|
1,459
|
|
|
$
|
—
|
|
|
$
|
4,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company restaurant expenses
|
|
617
|
|
|
56
|
|
|
587
|
|
|
(2
|
)
|
|
1,258
|
|
|
General and administrative expenses
|
|
247
|
|
|
141
|
|
|
121
|
|
|
122
|
|
|
631
|
|
|
Franchise and property expenses
|
|
78
|
|
|
28
|
|
|
17
|
|
|
4
|
|
|
127
|
|
|
Franchise advertising and other services expense
|
|
312
|
|
|
229
|
|
|
293
|
|
|
—
|
|
|
834
|
|
|
Refranchising (gain) loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(285
|
)
|
|
(285
|
)
|
|
Other (income) expense
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
|
9
|
|
|
10
|
|
|
Total costs and expenses, net
|
|
1,254
|
|
|
456
|
|
|
1,017
|
|
|
(152
|
)
|
|
2,575
|
|
|
Operating Profit
|
|
$
|
704
|
|
|
$
|
257
|
|
|
$
|
442
|
|
|
$
|
152
|
|
|
$
|
1,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 property expenses
|
|
80
|
|
|
44
|
|
|
16
|
|
|
21
|
|
|
161
|
|
|
Refranchising (gain) loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(331
|
)
|
|
(331
|
)
|
|
Other (income) expense
|
|
3
|
|
|
2
|
|
|
(1
|
)
|
|
(1
|
)
|
|
3
|
|
|
Total costs and expenses, net
|
|
1,586
|
|
|
409
|
|
|
909
|
|
|
(149
|
)
|
|
2,755
|
|
|
Operating Profit
|
|
$
|
710
|
|
|
$
|
250
|
|
|
$
|
440
|
|
|
$
|
146
|
|
|
$
|
1,546
|
|
|
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, 2018 and 2017 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,
2018 and 2017 of $100 million and $201 million, respectively, that
have been reflected as Special Items. During the years to dated
ended September 30, 2018 and 2017, we recorded net refranchising
gains of $285 million and $331 million, respectively, that have
been reflected as Special Items.
|
|
|
|
|
|
|
|
The third quarter 2018 net refranchising gains relate primarily to
refranchising Taco Bell restaurants in the U.S. and KFC restaurants
in the UK. The third quarter 2017 net refranchising gains relate
primarily to refranchising Taco Bell restaurants in the U.S.
|
|
|
|
|
|
(c)
|
|
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, 2018 and 2017, we recognized Special Item charges of $1
million and $4 million, respectively, related to these
initiatives. During the years to date ended September 30, 2018 and
2017, we recognized Special Item charges of $2 million and $15
million, respectively, related to these initiatives. These costs
primarily related to severance and relocation costs that were
recorded within G&A.
|
|
|
|
|
|
(d)
|
|
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 quarters ended September
30, 2018 and 2017, we recorded Special Item charges of $1 million
and $8 million, respectively, for these investments. During the
years to date ended September 30, 2018 and 2017, we recorded
Special Item charges of $3 million and $20 million, respectively,
for these investments. The majority of these costs were recorded
within Franchise and property expenses.
|
|
|
|
|
|
(e)
|
|
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 less than $1 million and $4 million for the quarters
ended September 30, 2018 and 2017, respectively. During the years
to date ended September 30, 2018 and 2017, we recognized Special
Item charges of $2 million and $12 million, respectively. The
majority of these costs were recorded within Franchise and
property expenses.
|
|
|
|
|
|
(f)
|
|
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 Consolidated
Statements of Income. During the quarter and year to date ended
September 30, 2018, we recorded Special Item credits of $2 million
and $3 million, respectively, due to depreciation in the market
price of Yum China's stock. During the quarter and year to date
ended September 30, 2017, we recorded Special Item charges of less
than $1 million and $18 million, respectively, related to these
awards.
|
|
|
|
|
|
(g)
|
|
We recorded 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.
|
|
|
|
|
|
(h)
|
|
Tax Benefit (Expense) on Special Items was determined based upon
the impact of the nature, as well as the jurisdiction of the
respective individual components within Special Items.
Additionally, during the second quarter of 2018, we recorded a $19
million increase to our Income tax provision for the correction of
an error associated with the tax recorded on a prior year
divestiture, the effects of which were previously recorded as a
Special Item.
|
|
|
|
|
|
(i)
|
|
During the quarter and year to date ended September 30, 2018 we
recorded $16 million and $32 million decreases, respectively,
related to our provisional deemed repatriation tax expense
recorded in the fourth quarter of 2017 associated with the Tax
Cuts and Jobs Act of 2017 ("Tax Act") that was reported as a
Special Item. We also recorded benefit in the quarter and year to
date ended September 30, 2018 related to current year U.S. foreign
tax credits that became realizable directly as a result of the
impact of the deemed repatriation.
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181031005264/en/
Yum! Brands, Inc.
Analysts:
Keith Siegner, 888-298-6986
Vice
President, Investor Relations, Corporate Strategy and Treasurer
or
Kelly
Knybel, Director, Investor Relations, 888-298-6986
or
Media:
Virginia
Ferguson, 502-874-8200
Director, Public Relations
Source: Yum! Brands, Inc.