[ü]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2011
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OR
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934
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North Carolina
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13-3951308
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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1441 Gardiner Lane, Louisville, Kentucky
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40213
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (502) 874-8300
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Securities registered pursuant to Section 12(b) of the Act
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, no par value
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
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None
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Item 1.
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Business.
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(a)
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General Development of Business
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(b)
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Financial Information about Operating Segments
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(c)
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Narrative Description of Business
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•
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KFC was founded in Corbin, Kentucky by Colonel Harland D. Sanders, an early developer of the quick service food business and a pioneer of the restaurant franchise concept. The Colonel perfected his secret blend of 11 herbs and spices for Kentucky Fried Chicken in 1939 and signed up his first franchisee in 1952.
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•
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KFC operates in 115 countries and territories throughout the world. As of year end 2011, KFC had 3,701 units in China, 8,920 units in YRI and 4,780 units in the U.S. Approximately 79 percent of the China units, 11 percent of the YRI units and 10 percent of the U.S. units are Concept-owned.
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•
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As of year end 2011, KFC was the leader in the U.S. chicken QSR segment among companies featuring chicken-on-the-bone as their primary product offering, with a 39 percent market share in that segment, which is over twice as large as that of its closest national competitor. (Source: The NPD Group, Inc./CREST®, year ending December 2011, based on consumer spending)
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KFC restaurants across the world offer fried and non-fried chicken products such as sandwiches, chicken strips, chicken-on-the-bone and other chicken products marketed under a variety of names. KFC restaurants also offer a variety of side items suited to local preferences and tastes. Restaurant decor throughout the world is characterized by the image of the Colonel.
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The first Pizza Hut restaurant was opened in 1958 in Wichita, Kansas, and within a year, the first franchise unit was opened. Today, Pizza Hut is the largest restaurant chain in the world specializing in the sale of ready-to-eat pizza products.
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Pizza Hut operates in 97 countries and territories throughout the world. As of year end 2011, Pizza Hut had 764 units in China, 5,383 units in YRI and 7,600 units in the U.S. All of the China units and approximately 11 percent of the YRI units and 6 percent of the U.S. units are Concept-owned.
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Pizza Hut operates in the delivery and casual dining segments around the world. Outside of the U.S., Pizza Hut often uses unique branding to differentiate its delivery and casual dining businesses.
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As of year end 2011, Pizza Hut was the leader in the U.S. pizza QSR segment, with a 15 percent market share in that segment. (Source: The NPD Group, Inc./CREST®, year ending December 2011, based on consumer spending)
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Pizza Hut features a variety of pizzas which are marketed under varying names. Each of these pizzas is offered with a variety of different toppings suited to local preferences and tastes. Many Pizza Huts also offer pasta and chicken wings, including over 3,000 stores offering wings under the brand WingStreet, primarily in the U.S. Pizza Hut units feature a distinctive red roof logo on their signage.
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The first Taco Bell restaurant was opened in 1962 by Glen Bell in Downey, California, and in 1964, the first Taco Bell franchise was sold.
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Taco Bell operates in 27 countries and territories throughout the world. As of year end 2011, there were 5,670 Taco Bell units in the U.S. and 275 in YRI. Approximately 21 percent of the U.S. units and 1 percent of the YRI units are Concept-owned.
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As of year end 2011, Taco Bell was the leader in the U.S. Mexican QSR segment, with a 50 percent market share in that segment. (Source: The NPD Group, Inc./CREST®, year ending December 2011, based on consumer spending)
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Taco Bell specializes in Mexican-style food products, including various types of tacos, burritos, quesadillas, salads, nachos and other related items. Taco Bell units feature a distinctive bell logo on their signage.
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(d)
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Financial Information about Geographic Areas
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(e)
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Available Information
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Item 1A.
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Risk Factors.
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Item 1B.
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Unresolved Staff Comments.
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Item 2.
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Properties.
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The China Division leased land, building or both in more than 3,700 units.
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The International Division owned approximately 400 units and leased land, building or both in nearly 1,200 units.
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•
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The U.S. Division owned more than 800 units and leased land, building or both in nearly 1,300 units.
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Item 3.
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Legal Proceedings.
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Item 4.
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Mine Safety Disclosures.
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Item 5.
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Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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2011
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Quarter
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High
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Low
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Dividends
Declared
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Dividends
Paid
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First
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$
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52.85
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$
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46.40
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$
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—
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$
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0.25
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Second
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56.69
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49.42
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0.50
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0.25
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||||||||
Third
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56.75
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47.82
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—
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0.25
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Fourth
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59.58
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48.12
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0.57
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0.285
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2010
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Quarter
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High
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Low
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Dividends
Declared
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Dividends
Paid
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First
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$
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38.64
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$
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32.72
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$
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0.21
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$
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0.21
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Second
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43.94
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37.92
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0.21
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0.21
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Third
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44.35
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38.53
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—
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0.21
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Fourth
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51.90
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43.85
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0.50
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0.25
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Fiscal Periods
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Total number
of shares
purchased(thousands)
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Average price
paid per share
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Total number of shares purchased as part of publicly announced plans or programs (thousands)
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Approximate dollar value of shares that may yet be purchased under the plans or programs (millions)
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Period 10
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647
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$
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50.80
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647
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$
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343
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9/4/11 – 10/1/11
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Period 11
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1,794
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$
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49.73
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1,794
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$
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253
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10/2/11 – 10/29/11
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Period 12
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753
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$
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53.75
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753
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$
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963
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10/30/11 – 11/26/11
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Period 13
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435
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$
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56.93
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435
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$
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938
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11/27/11 – 12/31/11
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Total
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3,629
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$
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51.62
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3,629
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$
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938
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12/29/2006
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12/28/2007
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12/26/2008
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12/24/2009
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12/23/2010
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12/30/2011
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YUM!
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$
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100
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$
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133
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$
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107
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$
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128
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$
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183
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$
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222
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S&P 500
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$
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100
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$
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106
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$
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64
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$
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85
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$
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97
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$
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99
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S&P Consumer Discretionary
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$
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100
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$
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87
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$
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56
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$
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83
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$
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105
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$
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111
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Item 6.
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Selected Financial Data.
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Fiscal Year
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2011
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2010
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2009
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2008
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2007
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Summary of Operations
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Revenues
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Company sales
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$
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10,893
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$
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9,783
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$
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9,413
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$
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9,843
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$
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9,100
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Franchise and license fees and income
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1,733
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1,560
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1,423
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1,461
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1,335
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||||||||||
Total
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12,626
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11,343
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10,836
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11,304
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10,435
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Closures and impairment income (expenses)(a)
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(135
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)
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(47
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)
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(103
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)
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(43
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)
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(35
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)
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Refranchising gain (loss)(a)
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(72
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)
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(63
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)
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26
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5
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11
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Operating Profit(b)
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1,815
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1,769
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1,590
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1,517
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1,357
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Interest expense, net
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156
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175
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194
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226
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166
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Income before income taxes
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1,659
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1,594
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1,396
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1,291
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1,191
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Net Income – including noncontrolling interest
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1,335
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1,178
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1,083
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972
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909
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Net Income – YUM! Brands, Inc.
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1,319
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1,158
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1,071
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964
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909
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Basic earnings per common share
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2.81
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2.44
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2.28
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2.03
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1.74
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Diluted earnings per common share
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2.74
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2.38
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2.22
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1.96
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1.68
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Diluted earnings per common share before Special Items(c)
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2.87
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2.53
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2.17
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1.91
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1.68
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||||||||||
Cash Flow Data
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|||||||||||||||
Provided by operating activities
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$
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2,170
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$
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1,968
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$
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1,404
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$
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1,521
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$
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1,551
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|||||
Capital spending, excluding acquisitions and investments
|
940
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796
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797
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935
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|
726
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||||||||||
Proceeds from refranchising of restaurants
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246
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|
265
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|
194
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|
266
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|
117
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||||||||||
Repurchase shares of Common Stock
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752
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|
371
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—
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|
1,628
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|
1,410
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||||||||||
Dividends paid on Common Stock
|
481
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|
412
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|
362
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|
322
|
|
273
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||||||||||
Balance Sheet
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|||||||||||||||
Total assets
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$
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8,834
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$
|
8,316
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|
$
|
7,148
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|
$
|
6,527
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|
$
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7,188
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|||||
Long-term debt
|
2,997
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|
2,915
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|
3,207
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|
3,564
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|
2,924
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||||||||||
Total debt
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3,317
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|
3,588
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|
3,266
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|
3,589
|
|
3,212
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Other Data
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Number of stores at year end
|
|
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|||||||||||||||
Company
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7,437
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7,271
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7,666
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|
7,568
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|
7,625
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Unconsolidated Affiliates
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587
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|
525
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|
469
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|
645
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|
1,314
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Franchisees(d)
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26,928
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27,852
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26,745
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25,911
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24,297
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Licensees
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2,169
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2,187
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|
2,200
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|
2,168
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|
2,109
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System(d)
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37,121
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37,835
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|
37,080
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|
36,292
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|
35,345
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||||||||||
China Division system sales growth(e)
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Reported
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35
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%
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18
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%
|
11
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%
|
33
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%
|
34
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%
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||||||||||
Local currency(f)
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29
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%
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17
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%
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10
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%
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22
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%
|
28
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%
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YRI system sales growth(e)
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|||||||||||||||
Reported
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13
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%
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10
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%
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(4
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)%
|
10
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%
|
15
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%
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||||||||||
Local currency(f)
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8
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%
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4
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%
|
5
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%
|
8
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%
|
10
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%
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||||||||||
U.S. same store sales growth(e)
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(1
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)%
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1
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%
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(5
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)%
|
2
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%
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—
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%
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||||||||||
Shares outstanding at year end
|
460
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|
469
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|
469
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|
459
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|
499
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||||||||||
Cash dividends declared per Common Stock
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$
|
1.07
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$
|
0.92
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$
|
0.80
|
|
$
|
0.72
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|
$
|
0.45
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|||||
Market price per share at year end
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$
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59.01
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$
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49.66
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$
|
35.38
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$
|
30.28
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|
$
|
38.54
|
|
(a)
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See Note 4 for discussion of Refranchising and Store Closure and Impairment Activity.
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(b)
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Fiscal years 2011, 2010 and 2009 include the impact of Special Items described in further detail within our MD&A. Fiscal year 2009 also included a non-cash charge of $12 million to write-off goodwill related to our Pizza Hut Korea business. Fiscal year 2008 also included a pre-tax gain of $100 million related to the sale of our interest in our unconsolidated affiliate in Japan.
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(c)
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In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) throughout this document, the Company has provided non-GAAP measurements which present operating results on a basis before Special Items. The Company uses earnings before Special Items as a key performance measure of results of operations for the purpose of evaluating performance internally. This non-GAAP measurement is not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of earnings before Special Items provides additional information to investors to facilitate the comparison of past and present operations, excluding items that the Company does not believe are indicative of our ongoing operations due to their size and/or nature. The 2011, 2010 and 2009 Special Items are discussed in further detail within the MD&A.
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(d)
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Franchisee and System units at 2011 reflect the LJS and A&W divestitures. See Restaurant Unit Activity within our MD&A for further detail.
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(e)
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System sales growth includes the results of all restaurants regardless of ownership, including Company-owned, franchise, unconsolidated affiliate and license restaurants. Sales of franchise, unconsolidated affiliate and license restaurants generate franchise and license fees for the Company (typically at a rate of 4% to 6% of sales). Franchise, unconsolidated affiliate and license 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 growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all our revenue drivers, Company and franchise same-store sales as well as net unit development. Same-store sales growth includes the estimated growth in sales of all restaurants that have been open one year or more.
|
(f)
|
Local currency represents the percentage change excluding the impact of foreign currency translation. These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the foreign currency translation impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
The Company provides the percentage changes excluding the impact of foreign currency translation (“FX” or “Forex”). These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the foreign currency translation impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.
|
•
|
System sales growth includes the results of all restaurants regardless of ownership, including Company-owned, franchise, unconsolidated affiliate and license restaurants. Sales of franchise, unconsolidated affiliate and license restaurants generate franchise and license fees for the Company (typically at a rate of 4% to 6% of sales). Franchise, unconsolidated affiliate and license 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 growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all of our revenue drivers, Company and franchise same-store sales as well as net unit development.
|
•
|
Same-store sales is the estimated growth in sales of all restaurants that have been open one year or more.
|
•
|
Company restaurant profit is defined as Company sales less expenses incurred directly by our Company restaurants in generating Company sales. Company restaurant margin as a percentage of sales is defined as Company restaurant profit divided by Company sales.
|
•
|
Operating margin is defined as Operating Profit divided by Total revenue.
|
●
|
Worldwide system sales grew 7% prior to foreign currency translation, including 29% in China and 8% at YRI. System sales in the U.S. were flat.
|
|
|
●
|
Same-store sales grew 19% in China, 3% at YRI and declined 1% in the U.S.
|
|
|
●
|
Record International development with 1,561 new restaurants including 656 in China and 905 at YRI.
|
|
|
●
|
Worldwide operating profit grew 8%, including a positive impact from foreign currency translation of $77 million. Prior to foreign currency translation, operating profit grew 4%, including 15% in China and 9% at YRI, offsetting a 12% decline in the U.S.
|
|
|
●
|
Worldwide restaurant margin declined 0.9 points to 16.0%.
|
|
|
●
|
Increased annual dividend rate to $1.14 per share and repurchased 14.3 million shares totaling $733 million at an average price of $51.
|
●
|
Increased return on invested capital to over 22%
|
|
Amount
|
% B/(W)
|
||||||||||||||||||||
|
2011
|
2010
|
2009
|
2011
|
2010
|
|||||||||||||||||
Company sales
|
$
|
10,893
|
|
$
|
9,783
|
|
$
|
9,413
|
|
11
|
|
|
4
|
|
||||||||
Franchise and license fees and income
|
1,733
|
|
1,560
|
|
1,423
|
|
11
|
|
|
10
|
|
|||||||||||
Total revenues
|
$
|
12,626
|
|
$
|
11,343
|
|
$
|
10,836
|
|
11
|
|
|
5
|
|
||||||||
Company restaurant profit
|
$
|
1,753
|
|
$
|
1,663
|
|
$
|
1,479
|
|
6
|
|
|
12
|
|
|
|||||||
% of Company sales
|
16.1%
|
17.0
|
%
|
15.7
|
%
|
(0.9
|
)
|
ppts.
|
1.3
|
|
ppts.
|
|||||||||||
Operating Profit
|
$
|
1,815
|
|
$
|
1,769
|
|
$
|
1,590
|
|
3
|
|
|
11
|
|
|
|||||||
Interest expense, net
|
156
|
|
175
|
|
194
|
|
11
|
|
|
9
|
|
|
||||||||||
Income tax provision
|
324
|
|
416
|
|
313
|
|
22
|
|
(33
|
)
|
|
|||||||||||
Net Income – including noncontrolling interest
|
1,335
|
|
1,178
|
|
1,083
|
|
13
|
|
|
9
|
|
|
||||||||||
Net Income – noncontrolling interest
|
16
|
|
20
|
|
12
|
|
18
|
|
(60
|
)
|
||||||||||||
Net Income – YUM! Brands, Inc.
|
$
|
1,319
|
|
$
|
1,158
|
|
$
|
1,071
|
|
14
|
|
|
8
|
|
|
|||||||
Diluted EPS(a)
|
$
|
2.74
|
|
$
|
2.38
|
|
$
|
2.22
|
|
15
|
|
|
7
|
|
|
|||||||
Diluted EPS before Special Items(a)
|
$
|
2.87
|
|
$
|
2.53
|
|
$
|
2.17
|
|
14
|
|
|
17
|
|
|
|||||||
Reported Effective tax rate
|
19.5%
|
26.1
|
%
|
22.4
|
%
|
|
|
|
|
|||||||||||||
Effective tax rate before Special Items
|
24.2%
|
25.3
|
%
|
23.1
|
%
|
(a)
|
See Note 3 for the number of shares used in these calculations.
|
|
Year
|
|||||||||||
|
12/31/2011
|
12/25/2010
|
12/26/2009
|
|||||||||
Detail of Special Items
|
|
|
|
|||||||||
U.S. Refranchising gain (loss)
|
$
|
(17
|
)
|
$
|
(18
|
)
|
$
|
34
|
|
|||
Depreciation reduction from KFC U.S. restaurants impaired upon offer to sell
|
10
|
|
9
|
|
—
|
|
||||||
Charges relating to U.S. G&A productivity initiatives and realignment of resources
|
(21
|
)
|
(9
|
)
|
(16
|
)
|
||||||
Investments in our U.S. Brands
|
—
|
|
—
|
|
(32
|
)
|
||||||
LJS and A&W Goodwill impairment charge
|
—
|
|
—
|
|
(26
|
)
|
||||||
Losses and other costs relating to the LJS and A&W divestitures
|
(86
|
)
|
—
|
|
—
|
|
||||||
Losses associated with refranchising equity markets outside the U.S.
|
(76
|
)
|
(59
|
)
|
(10
|
)
|
||||||
Depreciation reduction from Pizza UK restaurants impaired upon decision to sell
|
3
|
|
—
|
|
—
|
|
||||||
Gain upon consolidation of a former unconsolidated affiliate in China
|
—
|
|
—
|
|
68
|
|
||||||
Special Items Income (Expense)
|
(187
|
)
|
(77
|
)
|
18
|
|
||||||
Tax Benefit (Expense) on Special Items(a)
|
123
|
|
7
|
|
5
|
|
||||||
Special Items Income (Expense), net of tax
|
$
|
(64
|
)
|
$
|
(70
|
)
|
$
|
23
|
|
|||
Average diluted shares outstanding
|
481
|
|
486
|
|
483
|
|
||||||
Special Items diluted EPS
|
$
|
(0.13
|
)
|
$
|
(0.15
|
)
|
$
|
0.05
|
|
|||
Reconciliation of Operating Profit Before Special Items to Reported Operating Profit
|
|
|
|
|||||||||
Operating Profit before Special Items
|
$
|
2,002
|
|
$
|
1,846
|
|
$
|
1,572
|
|
|||
Special Items Income (Expense)
|
(187
|
)
|
(77
|
)
|
18
|
|
||||||
Reported Operating Profit
|
$
|
1,815
|
|
$
|
1,769
|
|
$
|
1,590
|
|
|||
Reconciliation of EPS Before Special Items to Reported EPS
|
|
|
|
|||||||||
Diluted EPS before Special Items
|
$
|
2.87
|
|
$
|
2.53
|
|
$
|
2.17
|
|
|||
Special Items EPS
|
(0.13
|
)
|
(0.15
|
)
|
0.05
|
|
||||||
Reported EPS
|
$
|
2.74
|
|
$
|
2.38
|
|
$
|
2.22
|
|
|||
Reconciliation of Effective Tax Rate Before Special Items to Reported Effective Tax Rate
|
|
|
|
|||||||||
Effective Tax Rate before Special Items
|
24.2
|
%
|
25.3
|
%
|
23.1
|
%
|
||||||
Impact on Tax Rate as a result of Special Items(a)
|
(4.7
|
)%
|
0.8
|
%
|
(0.7
|
)%
|
||||||
Reported Effective Tax Rate
|
19.5
|
%
|
26.1
|
%
|
22.4
|
%
|
(a)
|
The tax benefit (expense) was determined based upon the impact of the nature, as well as the jurisdiction of the respective individual components within Special Items.
|
U.S.
|
YRI
|
Unallocated
|
Total
|
|||||||||||||
Revenues
|
||||||||||||||||
Company sales
|
$
|
43
|
|
$
|
29
|
|
$
|
—
|
|
$
|
72
|
|
||||
Franchise and license fees
|
13
|
|
6
|
|
—
|
|
19
|
|
||||||||
Total Revenues
|
$
|
56
|
|
$
|
35
|
|
$
|
—
|
|
$
|
91
|
|
||||
Operating profit
|
||||||||||||||||
Franchise and license fees
|
$
|
13
|
|
$
|
6
|
|
$
|
—
|
|
$
|
19
|
|
||||
Restaurant profit
|
9
|
|
6
|
|
—
|
|
15
|
|
||||||||
General and administrative expenses
|
(4
|
)
|
(4
|
)
|
(1
|
)
|
(9
|
)
|
||||||||
Operating profit(a)
|
$
|
18
|
|
$
|
8
|
|
$
|
(1
|
)
|
$
|
25
|
|
||||
(a)
|
The $25 million benefit was offset throughout 2011 by investments, including franchise development incentives, as well as higher-than-normal spending, such as restaurant closures in the U.S. and YRI.
|
2011
|
2010
|
2009
|
||||||||||
Number of units refranchised
|
529
|
|
949
|
|
613
|
|
||||||
Refranchising proceeds, pre-tax
|
$
|
246
|
|
$
|
265
|
|
$
|
194
|
|
|||
Refranchising (gain) loss, pre-tax
|
$
|
72
|
|
$
|
63
|
|
$
|
(26
|
)
|
|
2011
|
|||||||||||||||
|
China
|
YRI
|
U.S.
|
Worldwide
|
||||||||||||
Decreased Company sales
|
$
|
(36
|
)
|
$
|
(311
|
)
|
$
|
(404
|
)
|
$
|
(751
|
)
|
||||
Increased Franchise and license fees and income
|
6
|
|
25
|
|
27
|
|
58
|
|
||||||||
Decrease in Total revenues
|
$
|
(30
|
)
|
$
|
(286
|
)
|
$
|
(377
|
)
|
$
|
(693
|
)
|
|
2010
|
|||||||||||||||
|
China
|
YRI
|
U.S.
|
Worldwide
|
||||||||||||
Decreased Company sales
|
$
|
(20
|
)
|
$
|
(183
|
)
|
$
|
(401
|
)
|
$
|
(604
|
)
|
||||
Increased Franchise and license fees and income
|
3
|
|
9
|
|
25
|
|
37
|
|
||||||||
Decrease in Total revenues
|
$
|
(17
|
)
|
$
|
(174
|
)
|
$
|
(376
|
)
|
$
|
(567
|
)
|
|
2011
|
|||||||||||||||
|
China
|
YRI
|
U.S.
|
Worldwide
|
||||||||||||
Decreased Restaurant profit
|
$
|
(5
|
)
|
$
|
(25
|
)
|
$
|
(43
|
)
|
$
|
(73
|
)
|
||||
Increased Franchise and license fees and income
|
6
|
|
25
|
|
27
|
|
58
|
|
||||||||
Increased Franchise and license expenses
|
(2
|
)
|
(2
|
)
|
(2
|
)
|
(6
|
)
|
||||||||
Decreased G&A
|
—
|
|
21
|
|
6
|
|
27
|
|
||||||||
Increase (decrease) in Operating Profit
|
$
|
(1
|
)
|
$
|
19
|
|
$
|
(12
|
)
|
$
|
6
|
|
|
2010
|
|||||||||||||||
|
China
|
YRI
|
U.S.
|
Worldwide
|
||||||||||||
Decreased Restaurant profit
|
$
|
(3
|
)
|
$
|
(5
|
)
|
$
|
(44
|
)
|
$
|
(52
|
)
|
||||
Increased Franchise and license fees and income
|
3
|
|
9
|
|
25
|
|
37
|
|
||||||||
Increased Franchise and license expenses
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Decreased G&A
|
—
|
|
9
|
|
6
|
|
15
|
|
||||||||
Increase (decrease) in Operating Profit
|
$
|
—
|
|
$
|
13
|
|
$
|
(13
|
)
|
$
|
—
|
|
Worldwide
|
Franchisees
|
Company
|
Unconsolidated Affiliates
|
Total Excluding Licensees(a)
|
||||
Balance at end of 2009
|
26,745
|
7,666
|
469
|
34,880
|
||||
New Builds
|
952
|
607
|
62
|
1,621
|
||||
Acquisitions
|
(110)
|
110
|
—
|
—
|
||||
Refranchising
|
949
|
(949)
|
—
|
—
|
||||
Closures
|
(668)
|
(163)
|
(6)
|
(837)
|
||||
Other
|
(16)
|
—
|
—
|
(16)
|
||||
Balance at end of 2010
|
27,852
|
7,271
|
525
|
35,648
|
||||
New Builds
|
1,058
|
749
|
73
|
1,880
|
||||
Acquisitions
|
(137)
|
137
|
—
|
—
|
||||
Refranchising
|
529
|
(529)
|
—
|
—
|
||||
Closures
|
(743)
|
(191)
|
(11)
|
(945)
|
||||
LJS & A&W Divestitures(b)
|
(1,633)
|
—
|
—
|
(1,633)
|
||||
Other
|
2
|
—
|
—
|
2
|
||||
Balance at end of 2011
|
26,928
|
7,437
|
587
|
34,952
|
||||
% of Total
|
77%
|
21%
|
2%
|
100%
|
China
|
Franchisees
|
Company
|
Unconsolidated Affiliates
|
Total Excluding Licensees(a)
|
||||
Balance at end of 2009
|
118
|
2,866
|
469
|
3,453
|
||||
New Builds
|
3
|
442
|
62
|
507
|
||||
Acquisitions
|
—
|
—
|
—
|
—
|
||||
Refranchising
|
33
|
(33)
|
—
|
—
|
||||
Closures
|
(1)
|
(47)
|
(6)
|
(54)
|
||||
Other
|
—
|
—
|
—
|
—
|
||||
Balance at end of 2010
|
153
|
3,228
|
525
|
3,906
|
||||
New Builds
|
4
|
579
|
73
|
656
|
||||
Acquisitions
|
—
|
—
|
—
|
—
|
||||
Refranchising
|
47
|
(47)
|
—
|
—
|
||||
Closures
|
(3)
|
(55)
|
(11)
|
(69)
|
||||
Other
|
—
|
—
|
—
|
—
|
||||
Balance at end of 2011
|
201
|
3,705
|
587
|
4,493
|
||||
% of Total
|
4%
|
83%
|
13%
|
100%
|
YRI
|
Franchisees
|
Company
|
Unconsolidated Affiliates
|
Total Excluding Licensees(a)
|
||||
Balance at end of 2009
|
11,808
|
2,000
|
—
|
13,808
|
||||
New Builds
|
801
|
83
|
—
|
884
|
||||
Acquisitions
|
(53)
|
53
|
—
|
—
|
||||
Refranchising
|
512
|
(512)
|
—
|
—
|
||||
Closures
|
(346)
|
(65)
|
—
|
(411)
|
||||
Other
|
—
|
—
|
—
|
—
|
||||
Balance at end of 2010
|
12,722
|
1,559
|
—
|
14,281
|
||||
New Builds
|
823
|
82
|
—
|
905
|
||||
Acquisitions
|
(86)
|
86
|
—
|
—
|
||||
Refranchising
|
78
|
(78)
|
—
|
—
|
||||
Closures
|
(333)
|
(56)
|
—
|
(389)
|
||||
LJS & A&W Divestitures(b)
|
(347)
|
—
|
—
|
(347)
|
||||
Other
|
3
|
—
|
—
|
3
|
||||
Balance at end of 2011
|
12,860
|
1,593
|
—
|
14,453
|
||||
% of Total
|
89%
|
11%
|
—%
|
100%
|
U.S.
|
Franchisees
|
Company
|
Unconsolidated Affiliates
|
Total Excluding Licensees(a)
|
||||
Balance at end of 2009
|
14,819
|
2,800
|
—
|
17,619
|
||||
New Builds
|
148
|
82
|
—
|
230
|
||||
Acquisitions
|
(57)
|
57
|
—
|
—
|
||||
Refranchising
|
404
|
(404)
|
—
|
—
|
||||
Closures
|
(321)
|
(51)
|
—
|
(372)
|
||||
Other
|
(16)
|
—
|
—
|
(16)
|
||||
Balance at end of 2010
|
14,977
|
2,484
|
—
|
17,461
|
||||
New Builds
|
231
|
88
|
—
|
319
|
||||
Acquisitions
|
(51)
|
51
|
—
|
—
|
||||
Refranchising
|
404
|
(404)
|
—
|
—
|
||||
Closures
|
(407)
|
(80)
|
—
|
(487)
|
||||
LJS & A&W Divestitures(b)
|
(1,286)
|
—
|
—
|
(1,286)
|
||||
Other
|
(1)
|
—
|
—
|
(1)
|
||||
Balance at end of 2011
|
13,867
|
2,139
|
—
|
16,006
|
||||
% of Total
|
87%
|
13%
|
—%
|
100%
|
(a)
|
The Worldwide, YRI and U.S. totals exclude 2,169, 125 and 2,044 licensed units, respectively, at December 31, 2011. While there are no licensed units in China, we have excluded from the Worldwide and China totals 7 Company-owned units that are similar to licensed units. The units excluded offer limited menus and operate in non-traditional locations like malls, airports, gasoline service stations, train stations, subways, convenience stores, stadiums and amusement parks where a full scale traditional outlet would not be practical or efficient. As licensed units have lower average unit sales volumes than our traditional units and our current strategy does not place a significant emphasis on expanding our licensed units, we do not believe that providing further detail of licensed unit activity provides significant or meaningful information at this time.
|
(b)
|
The reductions to Worldwide, YRI and U.S. totals of 1,633, 347 and 1,286, respectively during 2011 represent the number of LJS and A&W units as of the beginning of 2011. Therefore, 2011 New Builds and Closures exclude any activity related to LJS and A&W.
|
|
2011 vs. 2010
|
|||||||||||
|
China
|
YRI
|
U.S.
|
Worldwide
|
||||||||
Same store sales growth (decline)
|
19
|
%
|
3
|
%
|
(1
|
)%
|
3
|
%
|
||||
Net unit growth and other
|
10
|
|
4
|
|
(1
|
)
|
3
|
|
||||
Foreign currency translation
|
6
|
|
5
|
|
N/A
|
|
3
|
|
||||
53rd week impact
|
N/A
|
|
1
|
|
2
|
|
1
|
|
||||
% Change
|
35
|
%
|
13
|
%
|
—
|
%
|
10
|
%
|
||||
% Change, excluding forex and 53rd week
|
29
|
%
|
7
|
%
|
(2
|
)%
|
6
|
%
|
||||
|
2010 vs. 2009
|
|||||||||||
|
China
|
YRI
|
U.S.
|
Worldwide
|
||||||||
Same store sales growth (decline)
|
6
|
%
|
—
|
%
|
1
|
%
|
2
|
%
|
||||
Net unit growth and other
|
11
|
|
4
|
|
1
|
|
2
|
|
||||
Foreign currency translation
|
1
|
|
6
|
|
N/A
|
|
3
|
|
||||
% Change
|
18
|
%
|
10
|
%
|
2
|
%
|
7
|
%
|
||||
% Change, excluding forex
|
17
|
%
|
4
|
%
|
N/A
|
|
4
|
%
|
China
|
|
|||||||||||||||||
|
2011 vs. 2010
|
|||||||||||||||||
Income / (Expense)
|
2010
|
Store Portfolio Actions
|
Other
|
FX
|
2011
|
|||||||||||||
Company sales
|
$
|
4,081
|
|
$436
|
$
|
720
|
|
$
|
250
|
|
$
|
5,487
|
|
|||||
Cost of sales
|
(1,362
|
)
|
(150)
|
(346
|
)
|
(89
|
)
|
(1,947
|
)
|
|||||||||
Cost of labor
|
(587
|
)
|
(96)
|
(166
|
)
|
(41
|
)
|
(890
|
)
|
|||||||||
Occupancy and other
|
(1,231
|
)
|
(159)
|
(107
|
)
|
(71
|
)
|
(1,568
|
)
|
|||||||||
Restaurant profit
|
$
|
901
|
|
$31
|
$
|
101
|
|
$
|
49
|
|
$
|
1,082
|
|
|||||
Restaurant margin
|
22.1
|
%
|
|
|
|
19.7
|
%
|
|
2010 vs. 2009
|
|||||||||||||||||||
Income / (Expense)
|
2009
|
Store Portfolio Actions
|
Other
|
FX
|
2010
|
|||||||||||||||
Company sales
|
$
|
3,352
|
|
$
|
484
|
|
$
|
207
|
|
$
|
38
|
|
$
|
4,081
|
|
|||||
Cost of sales
|
(1,175
|
)
|
(162
|
)
|
(12
|
)
|
(13
|
)
|
(1,362
|
)
|
||||||||||
Cost of labor
|
(447
|
)
|
(78
|
)
|
(56
|
)
|
(6
|
)
|
(587
|
)
|
||||||||||
Occupancy and other
|
(1,025
|
)
|
(160
|
)
|
(35
|
)
|
(11
|
)
|
(1,231
|
)
|
||||||||||
Restaurant profit
|
$
|
705
|
|
$
|
84
|
|
$
|
104
|
|
$
|
8
|
|
$
|
901
|
|
|||||
Restaurant margin
|
21.0
|
%
|
|
|
|
22.1
|
%
|
|
||||||||||||||||||||||||
YRI
|
|
|||||||||||||||||||||||
|
2011 vs. 2010
|
|||||||||||||||||||||||
Income / (Expense)
|
2010
|
Store Portfolio Actions
|
Other
|
FX
|
53rd Week
|
2011
|
||||||||||||||||||
Company sales
|
$
|
2,347
|
|
$
|
(148
|
)
|
$
|
62
|
|
$
|
116
|
|
$
|
29
|
|
$
|
2,406
|
|
||||||
Cost of sales
|
(753
|
)
|
67
|
|
(36
|
)
|
(38
|
)
|
(9
|
)
|
(769
|
)
|
||||||||||||
Cost of labor
|
(591
|
)
|
34
|
|
(21
|
)
|
(30
|
)
|
(8
|
)
|
(616
|
)
|
||||||||||||
Occupancy and other
|
(727
|
)
|
49
|
|
(9
|
)
|
(33
|
)
|
(6
|
)
|
(726
|
)
|
||||||||||||
Restaurant profit
|
$
|
276
|
|
$
|
2
|
|
$
|
(4
|
)
|
$
|
15
|
|
$
|
6
|
|
$
|
295
|
|
||||||
Restaurant margin
|
11.7
|
%
|
12.3
|
%
|
|
2010 vs. 2009
|
|||||||||||||||||||
Income / (Expense)
|
2009
|
Store Portfolio Actions
|
Other
|
FX
|
2010
|
|||||||||||||||
Company sales
|
$
|
2,323
|
|
$
|
(49
|
)
|
$
|
(10
|
)
|
$
|
83
|
|
$
|
2,347
|
|
|||||
Cost of sales
|
(758
|
)
|
19
|
|
17
|
|
(31
|
)
|
(753
|
)
|
||||||||||
Cost of labor
|
(586
|
)
|
20
|
|
(8
|
)
|
(17
|
)
|
(591
|
)
|
||||||||||
Occupancy and other
|
(724
|
)
|
21
|
|
—
|
|
(24
|
)
|
(727
|
)
|
||||||||||
Restaurant profit
|
$
|
255
|
|
$
|
11
|
|
$
|
(1
|
)
|
$
|
11
|
|
$
|
276
|
|
|||||
Restaurant margin
|
10.9
|
%
|
11.7
|
%
|
U.S.
|
|
|||||||||||||||||||||
|
2011 vs. 2010
|
|||||||||||||||||||||
Income / (Expense)
|
2010
|
Store Portfolio Actions
|
Other
|
FX
|
53rd Week
|
2011
|
||||||||||||||||
Company sales
|
$
|
3,355
|
|
$
|
(322
|
)
|
$
|
(76
|
)
|
N/A
|
$
|
43
|
|
$
|
3,000
|
|
||||||
Cost of sales
|
(976
|
)
|
95
|
|
(23
|
)
|
N/A
|
(13
|
)
|
(917
|
)
|
|||||||||||
Cost of labor
|
(994
|
)
|
101
|
|
(7
|
)
|
N/A
|
(12
|
)
|
(912
|
)
|
|||||||||||
Occupancy and other
|
(908
|
)
|
95
|
|
13
|
|
N/A
|
(9
|
)
|
(809
|
)
|
|||||||||||
Restaurant profit
|
$
|
477
|
|
$
|
(31
|
)
|
$
|
(93
|
)
|
N/A
|
$
|
9
|
|
$
|
362
|
|
||||||
Restaurant margin
|
14.2
|
%
|
12.1
|
%
|
|
2010 vs. 2009
|
|||||||||||||||||
Income / (Expense)
|
2009
|
Store Portfolio Actions
|
Other
|
FX
|
2010
|
|||||||||||||
Company sales
|
$
|
3,738
|
|
$
|
(378
|
)
|
$
|
(5
|
)
|
N/A
|
$
|
3,355
|
|
|||||
Cost of sales
|
(1,070
|
)
|
103
|
|
(9
|
)
|
N/A
|
(976
|
)
|
|||||||||
Cost of labor
|
(1,121
|
)
|
126
|
|
1
|
|
N/A
|
(994
|
)
|
|||||||||
Occupancy and other
|
(1,028
|
)
|
115
|
|
5
|
|
N/A
|
(908
|
)
|
|||||||||
Restaurant profit
|
$
|
519
|
|
$
|
(34
|
)
|
$
|
(8
|
)
|
N/A
|
$
|
477
|
|
|||||
Restaurant margin
|
13.9
|
%
|
|
|
|
14.2
|
%
|
Amount
|
% Increase
(Decrease)
|
% Increase
(Decrease) excluding
foreign currency translation
|
% Increase
(Decrease) excluding
foreign currency translation
and 53rd week
|
||||||||||||||||||||||||
|
2011
|
2010
|
2009
|
2011
|
2010
|
2011
|
2010
|
2011
|
|||||||||||||||||||
China
|
$
|
79
|
|
$
|
54
|
|
$
|
55
|
|
45
|
|
—
|
|
38
|
|
(1
|
)
|
38
|
|
||||||||
YRI
|
868
|
|
741
|
|
665
|
|
17
|
|
11
|
|
12
|
|
6
|
|
11
|
|
|||||||||||
U.S.
|
786
|
|
765
|
|
735
|
|
3
|
|
4
|
|
N/A
|
|
N/A
|
|
1
|
|
|||||||||||
Unallocated
|
—
|
|
—
|
|
(32
|
)
|
—
|
|
NM
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|||||||||||
Worldwide
|
$
|
1,733
|
|
$
|
1,560
|
|
$
|
1,423
|
|
11
|
|
10
|
|
8
|
|
7
|
|
7
|
|
|
Amount
|
% Increase
(Decrease)
|
% Increase
(Decrease) excluding
foreign currency translation
|
% Increase
(Decrease) excluding
foreign currency translation
and 53rd week
|
|||||||||||||||||||||||
|
2011
|
2010
|
2009
|
2011
|
2010
|
2011
|
2010
|
2011
|
|||||||||||||||||||
China
|
$
|
275
|
|
$
|
216
|
|
$
|
188
|
|
27
|
|
15
|
|
22
|
|
15
|
|
22
|
|
||||||||
YRI
|
422
|
|
378
|
|
362
|
|
12
|
|
4
|
|
8
|
|
1
|
|
7
|
|
|||||||||||
U.S.
|
450
|
|
492
|
|
482
|
|
(8
|
)
|
2
|
|
N/A
|
|
N/A
|
|
(9
|
)
|
|||||||||||
Unallocated
|
225
|
|
191
|
|
189
|
|
18
|
|
1
|
|
N/A
|
|
N/A
|
|
17
|
|
|||||||||||
Worldwide
|
$
|
1,372
|
|
$
|
1,277
|
|
$
|
1,221
|
|
7
|
|
5
|
|
5
|
|
3
|
|
5
|
|
Worldwide Other (Income) Expense
|
2011
|
2010
|
2009
|
|||||||||
Equity income from investments in unconsolidated affiliates
|
$
|
(47
|
)
|
$
|
(42
|
)
|
$
|
(36
|
)
|
|||
Gain upon consolidation of a former unconsolidated affiliate in China(a)
|
—
|
|
—
|
|
(68
|
)
|
||||||
Foreign exchange net (gain) loss and other
|
(6
|
)
|
(1
|
)
|
—
|
|
||||||
Other (income) expense
|
$
|
(53
|
)
|
$
|
(43
|
)
|
$
|
(104
|
)
|
(a)
|
See Note 4 for further discussion of the consolidation of a former unconsolidated affiliate in China.
|
|
Amount
|
% B/(W)
|
% B/(W) excluding foreign currency translation
|
|||||||||||||||||||||||||
|
2011
|
2010
|
2009
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||||
China
|
$
|
908
|
|
$
|
755
|
|
$
|
596
|
|
20
|
|
|
27
|
|
|
15
|
|
26
|
|
|||||||||
YRI
|
673
|
|
589
|
|
497
|
|
14
|
|
|
19
|
|
9
|
|
11
|
|
|||||||||||||
United States
|
589
|
|
668
|
|
647
|
|
(12
|
)
|
|
3
|
|
|
N/A
|
|
N/A
|
|
||||||||||||
Unallocated Franchise and license fees and income
|
—
|
|
—
|
|
(32
|
)
|
NM
|
|
|
NM
|
|
|
N/A
|
|
N/A
|
|
||||||||||||
Unallocated Occupancy and Other
|
14
|
|
9
|
|
—
|
|
58
|
|
|
NM
|
|
|
N/A
|
|
N/A
|
|
||||||||||||
Unallocated and corporate expenses
|
(223
|
)
|
(194
|
)
|
(189
|
)
|
(15
|
)
|
(3
|
)
|
|
N/A
|
|
N/A
|
|
|||||||||||||
Unallocated Closures and impairment expense
|
(80
|
)
|
—
|
|
(26
|
)
|
NM
|
|
|
NM
|
|
|
N/A
|
|
N/A
|
|
||||||||||||
Unallocated Other income (expense)
|
6
|
|
5
|
|
71
|
|
NM
|
|
|
NM
|
|
|
N/A
|
|
N/A
|
|
||||||||||||
Unallocated Refranchising gain (loss)
|
(72
|
)
|
(63
|
)
|
26
|
|
NM
|
|
|
NM
|
|
|
N/A
|
|
N/A
|
|
||||||||||||
Operating Profit
|
$
|
1,815
|
|
$
|
1,769
|
|
$
|
1,590
|
|
3
|
|
|
11
|
|
|
(2
|
)
|
9
|
|
|||||||||
China Operating margin
|
16.3%
|
18.3%
|
17.5%
|
(2.0
|
)
|
ppts.
|
0.8
|
|
ppts.
|
(2.0
|
)
|
0.8
|
|
|||||||||||||||
YRI Operating margin
|
20.6%
|
19.1%
|
16.6%
|
1.5
|
|
ppts.
|
2.5
|
|
ppts.
|
1.4
|
|
2.0
|
|
|||||||||||||||
United States Operating margin
|
15.5%
|
16.2%
|
14.5%
|
(0.7
|
)
|
ppts.
|
1.7
|
|
ppts.
|
N/A
|
|
N/A
|
|
|
2011
|
2010
|
2009
|
|||||||||
Interest expense
|
$
|
184
|
|
$
|
195
|
|
$
|
212
|
|
|||
Interest income
|
(28
|
)
|
(20
|
)
|
(18
|
)
|
||||||
Interest expense, net
|
$
|
156
|
|
$
|
175
|
|
$
|
194
|
|
|
2011
|
2010
|
2009
|
||||||||||||||||||
U.S. federal statutory rate
|
$
|
580
|
|
35.0
|
%
|
$
|
558
|
|
35.0
|
%
|
$
|
489
|
|
35.0
|
%
|
||||||
State income tax, net of federal tax benefit
|
2
|
|
0.1
|
|
12
|
|
0.7
|
|
14
|
|
1.0
|
|
|||||||||
Statutory rate differential attributable to foreign operations
|
(218
|
)
|
(13.1
|
)
|
(235
|
)
|
(14.7
|
)
|
(159
|
)
|
(11.4
|
)
|
|||||||||
Adjustments to reserves and prior years
|
24
|
|
1.4
|
|
55
|
|
3.5
|
|
(9
|
)
|
(0.6
|
)
|
|||||||||
Net benefit from LJS and A&W divestitures
|
(72
|
)
|
(4.3
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Change in valuation allowances
|
22
|
|
1.3
|
|
22
|
|
1.4
|
|
(9
|
)
|
(0.7
|
)
|
|||||||||
Other, net
|
(14
|
)
|
(0.9
|
)
|
4
|
|
0.2
|
|
(13
|
)
|
(0.9
|
)
|
|||||||||
Income Tax Provision
|
$
|
324
|
|
19.5
|
%
|
$
|
416
|
|
26.1
|
%
|
$
|
313
|
|
22.4
|
%
|
|
Total
|
Less than 1 Year
|
1-3 Years
|
3-5 Years
|
More than 5 Years
|
|||||||||||||||
Long-term debt obligations(a)
|
$
|
4,774
|
|
$
|
414
|
|
$
|
339
|
|
$
|
814
|
|
$
|
3,207
|
|
|||||
Capital leases(b)
|
437
|
|
65
|
|
53
|
|
52
|
|
267
|
|
||||||||||
Operating leases(b)
|
5,337
|
|
612
|
|
1,116
|
|
956
|
|
2,653
|
|
||||||||||
Purchase obligations(c)
|
797
|
|
695
|
|
77
|
|
16
|
|
9
|
|
||||||||||
Other(d)
|
72
|
|
37
|
|
16
|
|
7
|
|
12
|
|
||||||||||
Total contractual obligations
|
$
|
11,417
|
|
$
|
1,823
|
|
$
|
1,601
|
|
$
|
1,845
|
|
$
|
6,148
|
|
(a)
|
Debt amounts include principal maturities and expected interest payments. Rates utilized to determine interest payments for variable rate debt are based on the LIBOR forward yield curve. Excludes a fair value adjustment of $26 million included in debt related to interest rate swaps that hedge the fair value of a portion of our debt. See Note 10.
|
(b)
|
These obligations, which are shown on a nominal basis, relate to nearly 6,200 restaurants. See Note 11.
|
(c)
|
Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. We have excluded agreements that are cancelable without penalty. Purchase obligations relate primarily to information technology, marketing, commodity agreements, purchases of property, plant and equipment as well as consulting, maintenance and other agreements.
|
(d)
|
Other consists of 2012 pension plan funding obligations and projected payments for deferred compensation.
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 8.
|
Financial Statements and Supplementary Data.
|
|
Page Reference
|
|
|
Consolidated Financial Statements
|
|
|
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
49
|
|
|
|
|
|
|
Consolidated Statements of Income for the fiscal years ended December 31, 2011,
December 25, 2010 and December 26, 2009
|
50
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2011,
December 25, 2010 and December 26, 2009
|
51
|
|
|
|
|
|
|
Consolidated Balance Sheets as of December 31, 2011 and December 25, 2010
|
52
|
|
|
|
|
|
|
Consolidated Statements of Shareholders’ Equity (Deficit) and Comprehensive
Income (Loss) for the fiscal years ended December 31, 2011, December 25, 2010
and December 26, 2009
|
53
|
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
54-93
|
|
|
|
|
|
|
Management’s Responsibility for Financial Statements
|
94
|
|
|
Consolidated Statements of Income
|
||||||||||||
YUM! Brands, Inc. and Subsidiaries
|
||||||||||||
Fiscal years ended December 31, 2011, December 25, 2010 and December 26, 2009
|
||||||||||||
(in millions, except per share data)
|
||||||||||||
|
2011
|
2010
|
2009
|
|||||||||
Revenues
|
|
|
|
|||||||||
Company sales
|
$
|
10,893
|
|
$
|
9,783
|
|
$
|
9,413
|
|
|||
Franchise and license fees and income
|
1,733
|
|
1,560
|
|
1,423
|
|
||||||
Total revenues
|
12,626
|
|
11,343
|
|
10,836
|
|
||||||
Costs and Expenses, Net
|
||||||||||||
Company restaurants
|
||||||||||||
Food and paper
|
3,633
|
|
3,091
|
|
3,003
|
|
||||||
Payroll and employee benefits
|
2,418
|
|
2,172
|
|
2,154
|
|
||||||
Occupancy and other operating expenses
|
3,089
|
|
2,857
|
|
2,777
|
|
||||||
Company restaurant expenses
|
9,140
|
|
8,120
|
|
7,934
|
|
||||||
General and administrative expenses
|
1,372
|
|
1,277
|
|
1,221
|
|
||||||
Franchise and license expenses
|
145
|
|
110
|
|
118
|
|
||||||
Closures and impairment (income) expenses
|
135
|
|
47
|
|
103
|
|
||||||
Refranchising (gain) loss
|
72
|
|
63
|
|
(26
|
)
|
||||||
Other (income) expense
|
(53
|
)
|
(43
|
)
|
(104
|
)
|
||||||
Total costs and expenses, net
|
10,811
|
|
9,574
|
|
9,246
|
|
||||||
Operating Profit
|
1,815
|
|
1,769
|
|
1,590
|
|
||||||
Interest expense, net
|
156
|
|
175
|
|
194
|
|
||||||
Income Before Income Taxes
|
1,659
|
|
1,594
|
|
1,396
|
|
||||||
Income tax provision
|
324
|
|
416
|
|
313
|
|
||||||
Net Income – including noncontrolling interest
|
1,335
|
|
1,178
|
|
1,083
|
|
||||||
Net Income – noncontrolling interest
|
16
|
|
20
|
|
12
|
|
||||||
Net Income – YUM! Brands, Inc.
|
$
|
1,319
|
|
$
|
1,158
|
|
$
|
1,071
|
|
|||
Basic Earnings Per Common Share
|
$
|
2.81
|
|
$
|
2.44
|
|
$
|
2.28
|
|
|||
Diluted Earnings Per Common Share
|
$
|
2.74
|
|
$
|
2.38
|
|
$
|
2.22
|
|
|||
Dividends Declared Per Common Share
|
$
|
1.07
|
|
$
|
0.92
|
|
$
|
0.80
|
|
|||
See accompanying Notes to Consolidated Financial Statements.
|
Consolidated Statements of Cash Flows
|
||||||||||||
YUM! Brands, Inc. and Subsidiaries
|
||||||||||||
Fiscal years ended December 31, 2011, December 25, 2010 and December 26, 2009
|
||||||||||||
(in millions)
|
||||||||||||
|
2011
|
2010
|
2009
|
|||||||||
Cash Flows – Operating Activities
|
|
|
|
|||||||||
Net Income – including noncontrolling interest
|
$
|
1,335
|
|
$
|
1,178
|
|
$
|
1,083
|
|
|||
Depreciation and amortization
|
628
|
|
589
|
|
580
|
|
||||||
Closures and impairment (income) expenses
|
135
|
|
47
|
|
103
|
|
||||||
Refranchising (gain) loss
|
72
|
|
63
|
|
(26
|
)
|
||||||
Contributions to defined benefit pension plans
|
(63
|
)
|
(52
|
)
|
(280
|
)
|
||||||
Gain upon consolidation of a former unconsolidated affiliate in China
|
—
|
|
—
|
|
(68
|
)
|
||||||
Deferred income taxes
|
(137
|
)
|
(110
|
)
|
72
|
|
||||||
Equity income from investments in unconsolidated affiliates
|
(47
|
)
|
(42
|
)
|
(36
|
)
|
||||||
Distributions of income received from unconsolidated affiliates
|
39
|
|
34
|
|
31
|
|
||||||
Excess tax benefit from share-based compensation
|
(66
|
)
|
(69
|
)
|
(59
|
)
|
||||||
Share-based compensation expense
|
59
|
|
47
|
|
56
|
|
||||||
Changes in accounts and notes receivable
|
(39
|
)
|
(12
|
)
|
3
|
|
||||||
Changes in inventories
|
(75
|
)
|
(68
|
)
|
27
|
|
||||||
Changes in prepaid expenses and other current assets
|
(25
|
)
|
61
|
|
(7
|
)
|
||||||
Changes in accounts payable and other current liabilities
|
144
|
|
61
|
|
(62
|
)
|
||||||
Changes in income taxes payable
|
109
|
|
104
|
|
(95
|
)
|
||||||
Other, net
|
101
|
|
137
|
|
82
|
|
||||||
Net Cash Provided by Operating Activities
|
2,170
|
|
1,968
|
|
1,404
|
|
||||||
Cash Flows – Investing Activities
|
|
|
|
|||||||||
Capital spending
|
(940
|
)
|
(796
|
)
|
(797
|
)
|
||||||
Proceeds from refranchising of restaurants
|
246
|
|
265
|
|
194
|
|
||||||
Acquisitions and investments
|
(81
|
)
|
(62
|
)
|
(139
|
)
|
||||||
Sales of property, plant and equipment
|
30
|
|
33
|
|
34
|
|
||||||
Increase in restricted cash
|
(300
|
)
|
—
|
|
—
|
|
||||||
Other, net
|
39
|
|
(19
|
)
|
(19
|
)
|
||||||
Net Cash Used in Investing Activities
|
(1,006
|
)
|
(579
|
)
|
(727
|
)
|
||||||
Cash Flows – Financing Activities
|
|
|
|
|||||||||
Proceeds from long-term debt
|
404
|
|
350
|
|
499
|
|
||||||
Repayments of long-term debt
|
(666
|
)
|
(29
|
)
|
(528
|
)
|
||||||
Revolving credit facilities, three months or less, net
|
—
|
|
(5
|
)
|
(295
|
)
|
||||||
Short-term borrowings by original maturity
|
|
|
|
|||||||||
More than three months – proceeds
|
—
|
|
—
|
|
—
|
|
||||||
More than three months – payments
|
—
|
|
—
|
|
—
|
|
||||||
Three months or less, net
|
—
|
|
(3
|
)
|
(8
|
)
|
||||||
Repurchase shares of Common Stock
|
(752
|
)
|
(371
|
)
|
—
|
|
||||||
Excess tax benefit from share-based compensation
|
66
|
|
69
|
|
59
|
|
||||||
Employee stock option proceeds
|
59
|
|
102
|
|
113
|
|
||||||
Dividends paid on Common Stock
|
(481
|
)
|
(412
|
)
|
(362
|
)
|
||||||
Other, net
|
(43
|
)
|
(38
|
)
|
(20
|
)
|
||||||
Net Cash Used in Financing Activities
|
(1,413
|
)
|
(337
|
)
|
(542
|
)
|
||||||
Effect of Exchange Rates on Cash and Cash Equivalents
|
21
|
|
21
|
|
(15
|
)
|
||||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
(228
|
)
|
1,073
|
|
120
|
|
||||||
Change in Cash and Cash Equivalents due to consolidation of an entity in China
|
—
|
|
—
|
|
17
|
|
||||||
Cash and Cash Equivalents – Beginning of Year
|
1,426
|
|
353
|
|
216
|
|
||||||
Cash and Cash Equivalents – End of Year
|
$
|
1,198
|
|
$
|
1,426
|
|
$
|
353
|
|
|||
See accompanying Notes to Consolidated Financial Statements.
|
Consolidated Balance Sheets
|
||||||||
YUM! Brands, Inc. and Subsidiaries
|
||||||||
December 31, 2011 and December 25, 2010
|
||||||||
(in millions)
|
||||||||
|
2011
|
2010
|
||||||
ASSETS
|
|
|
||||||
Current Assets
|
|
|
||||||
Cash and cash equivalents
|
$
|
1,198
|
|
$
|
1,426
|
|
||
Accounts and notes receivable, net
|
286
|
|
256
|
|
||||
Inventories
|
273
|
|
189
|
|
||||
Prepaid expenses and other current assets
|
338
|
|
269
|
|
||||
Deferred income taxes
|
112
|
|
61
|
|
||||
Advertising cooperative assets, restricted
|
114
|
|
112
|
|
||||
Total Current Assets
|
2,321
|
|
2,313
|
|
||||
Property, plant and equipment, net
|
4,042
|
|
3,830
|
|
||||
Goodwill
|
681
|
|
659
|
|
||||
Intangible assets, net
|
299
|
|
475
|
|
||||
Investments in unconsolidated affiliates
|
167
|
|
154
|
|
||||
Restricted cash
|
300
|
|
—
|
|
||||
Other assets
|
475
|
|
519
|
|
||||
Deferred income taxes
|
549
|
|
366
|
|
||||
Total Assets
|
$
|
8,834
|
|
$
|
8,316
|
|
||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
||||||
Current Liabilities
|
|
|
||||||
Accounts payable and other current liabilities
|
$
|
1,874
|
|
$
|
1,602
|
|
||
Income taxes payable
|
142
|
|
61
|
|
||||
Short-term borrowings
|
320
|
|
673
|
|
||||
Advertising cooperative liabilities
|
114
|
|
112
|
|
||||
Total Current Liabilities
|
2,450
|
|
2,448
|
|
||||
Long-term debt
|
2,997
|
|
2,915
|
|
||||
Other liabilities and deferred credits
|
1,471
|
|
1,284
|
|
||||
Total Liabilities
|
6,918
|
|
6,647
|
|
||||
Shareholders’ Equity
|
|
|
||||||
Common Stock, no par value, 750 shares authorized; 460 shares and 469 shares issued in 2011 and 2010, respectively
|
18
|
|
86
|
|
||||
Retained earnings
|
2,052
|
|
1,717
|
|
||||
Accumulated other comprehensive loss
|
(247
|
)
|
(227
|
)
|
||||
Total Shareholders’ Equity – YUM! Brands, Inc.
|
1,823
|
|
1,576
|
|
||||
Noncontrolling interests
|
93
|
|
93
|
|
||||
Total Shareholders’ Equity
|
1,916
|
|
1,669
|
|
||||
Total Liabilities and Shareholders’ Equity
|
$
|
8,834
|
|
$
|
8,316
|
|
||
See accompanying Notes to Consolidated Financial Statements.
|
Consolidated Statements of Shareholders’ Equity (Deficit) and Comprehensive Income (Loss)
|
|||||||||||||||||||||||
YUM! Brands, Inc. and Subsidiaries
|
|||||||||||||||||||||||
Fiscal years ended December 31, 2011, December 25, 2010 and December 26, 2009
|
|||||||||||||||||||||||
(in millions)
|
|||||||||||||||||||||||
|
Yum! Brands, Inc.
|
|
|
||||||||||||||||||||
|
Issued Common Stock
|
Retained
|
Accumulated
Other Comprehensive
|
Noncontrolling
|
|
||||||||||||||||||
|
Shares
|
Amount
|
Earnings
|
Income(Loss)
|
Interests
|
Total
|
|||||||||||||||||
Balance at December 27, 2008
|
459
|
|
$
|
7
|
|
$
|
303
|
|
$
|
(418
|
)
|
$
|
14
|
|
$
|
(94
|
)
|
||||||
Net Income
|
|
|
1,071
|
|
|
12
|
|
1,083
|
|
||||||||||||||
Foreign currency translation adjustment
|
|
|
|
176
|
|
|
176
|
|
|||||||||||||||
Pension and post-retirement benefit plans (net of tax impact of $9 million)
|
|
|
|
13
|
|
|
13
|
|
|||||||||||||||
Net unrealized gain on derivative instruments (net of tax impact of $3 million)
|
|
|
|
5
|
|
|
5
|
|
|||||||||||||||
Comprehensive Income
|
|
|
|
|
|
1,277
|
|
||||||||||||||||
Purchase of subsidiary shares from noncontrolling interest
|
70
|
|
70
|
|
|||||||||||||||||||
Dividends declared
|
|
|
(378
|
)
|
|
(7
|
)
|
(385
|
)
|
||||||||||||||
Employee stock option and SARs exercises (includes tax impact of $57 million)
|
10
|
|
168
|
|
|
|
|
168
|
|
||||||||||||||
Compensation-related events (includes tax impact of $2 million)
|
—
|
|
78
|
|
|
|
|
78
|
|
||||||||||||||
Balance at December 26, 2009
|
469
|
|
$
|
253
|
|
$
|
996
|
|
$
|
(224
|
)
|
$
|
89
|
|
$
|
1,114
|
|
||||||
Net Income
|
|
|
1,158
|
|
|
20
|
|
1,178
|
|
||||||||||||||
Foreign currency translation adjustment
|
|
|
|
8
|
|
4
|
|
12
|
|
||||||||||||||
Pension and post-retirement benefit plans (net of tax impact of $7 million)
|
|
|
|
(10
|
)
|
|
(10
|
)
|
|||||||||||||||
Net unrealized loss on derivative instruments (net of tax impact of $1 million)
|
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||||||||||||
Comprehensive Income
|
|
|
|
|
|
1,179
|
|
||||||||||||||||
Dividends declared
|
|
|
(437
|
)
|
|
(20
|
)
|
(457
|
)
|
||||||||||||||
Repurchase of shares of Common Stock
|
(10
|
)
|
(390
|
)
|
(390
|
)
|
|||||||||||||||||
Employee stock option and SARs exercises (includes tax impact of $73 million)
|
9
|
|
168
|
|
|
|
|
168
|
|
||||||||||||||
Compensation-related events (includes tax impact of $7 million)
|
1
|
|
55
|
|
|
|
|
55
|
|
||||||||||||||
Balance at December 25, 2010
|
469
|
|
$
|
86
|
|
$
|
1,717
|
|
$
|
(227
|
)
|
$
|
93
|
|
$
|
1,669
|
|
||||||
Net Income
|
|
|
1,319
|
|
|
16
|
|
1,335
|
|
||||||||||||||
Foreign currency translation adjustment
|
|
|
|
85
|
|
6
|
|
91
|
|
||||||||||||||
Pension and post-retirement benefit plans (net of tax impact of $65 million)
|
|
|
|
(106
|
)
|
|
(106
|
)
|
|||||||||||||||
Net unrealized gain on derivative instruments (net of tax impact of less than $1 million)
|
|
|
|
1
|
|
|
1
|
|
|||||||||||||||
Comprehensive Income
|
|
|
|
|
|
1,321
|
|
||||||||||||||||
Dividends declared
|
|
|
(501
|
)
|
|
(22
|
)
|
(523
|
)
|
||||||||||||||
Repurchase of shares of Common Stock
|
(14
|
)
|
(250
|
)
|
(483
|
)
|
|
|
(733
|
)
|
|||||||||||||
Employee stock option and SARs exercises (includes tax impact of $71 million)
|
5
|
|
119
|
|
|
|
|
119
|
|
||||||||||||||
Compensation-related events (includes tax impact of $5 million)
|
—
|
|
63
|
|
|
|
|
63
|
|
||||||||||||||
Balance at December 31, 2011
|
460
|
|
$
|
18
|
|
$
|
2,052
|
|
$
|
(247
|
)
|
$
|
93
|
|
$
|
1,916
|
|
||||||
See accompanying Notes to Consolidated Financial Statements.
|
Level 1
|
Inputs based upon quoted prices in active markets for identical assets.
|
|
|
Level 2
|
Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.
|
|
|
Level 3
|
Inputs that are unobservable for the asset.
|
|
2011
|
2010
|
||||||
Accounts and notes receivable
|
$
|
308
|
|
$
|
289
|
|
||
Allowance for doubtful accounts
|
(22
|
)
|
(33
|
)
|
||||
Accounts and notes receivable, net
|
$
|
286
|
|
$
|
256
|
|
|
2011
|
2010
|
2009
|
|||||||||
Net Income – YUM! Brands, Inc.
|
$
|
1,319
|
|
$
|
1,158
|
|
$
|
1,071
|
|
|||
Weighted-average common shares outstanding (for basic calculation)
|
469
|
|
474
|
|
471
|
|
||||||
Effect of dilutive share-based employee compensation
|
12
|
|
12
|
|
12
|
|
||||||
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)
|
481
|
|
486
|
|
483
|
|
||||||
Basic EPS
|
$
|
2.81
|
|
$
|
2.44
|
|
$
|
2.28
|
|
|||
Diluted EPS
|
$
|
2.74
|
|
$
|
2.38
|
|
$
|
2.22
|
|
|||
Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation(a)
|
4.2
|
|
2.2
|
|
13.3
|
|
(a)
|
These unexercised employee stock options and stock appreciation rights were not included in the computation of diluted EPS because to do so would have been antidilutive for the periods presented.
|
|
Refranchising (gain) loss
|
||||||||||||||||
|
2011
|
2010
|
2009
|
||||||||||||||
China
|
$
|
(14
|
)
|
$
|
(8
|
)
|
$
|
(3
|
)
|
||||||||
YRI (a)(b)(c)
|
69
|
|
53
|
|
11
|
|
|||||||||||
U.S. (d)
|
17
|
|
18
|
|
(34
|
)
|
|||||||||||
Worldwide
|
$
|
72
|
|
$
|
63
|
|
$
|
(26
|
)
|
(a)
|
During the year ended December 31, 2011 we decided to refranchise or close all of our remaining Company-operated Pizza Hut restaurants in the UK market. While an asset group comprising approximately 350 dine-in restaurants did not meet the criteria for held-for-sale classification as of December 31, 2011, our- decision to sell was considered an impairment indicator. As such we reviewed this asset group for potential impairment and determined that its carrying value was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. Accordingly, we wrote this asset group down to our estimate of its fair value, which is based on the sales price we would expect to receive from a buyer. This fair value determination considered current market conditions, trends in the Pizza Hut UK business, and prices for similar transactions in the restaurant industry and resulted in a non-cash pre-tax write-down of $74 million which was recorded to Refranchising (gain) loss. This impairment charge decreased depreciation expense versus what would have otherwise been recorded by $3 million in 2011. This depreciation reduction was not allocated to the YRI segment, resulting in depreciation expense in the YRI segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the asset group for any further necessary impairment until the date it is sold. The write-down does not include any allocation of the Pizza Hut UK reporting unit goodwill in the asset group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the asset group ultimately meets the criteria to be classified as held for sale. Upon the ultimate sale of the restaurants, depending on the form of the transaction, we could also be required to record a charge for the fair value of any guarantee of future lease payments for any leases we assign to a franchisee and for the cumulative foreign currency translation adjustment associated with Pizza Hut UK. The decision to refranchise or close all remaining Pizza Hut restaurants in the UK was considered to be a goodwill impairment indicator. We determined that the fair value of our
|
(b)
|
In the year ended December 25, 2010 we recorded a $52 million loss on the refranchising of our Mexico equity market as we sold all of our Company-owned restaurants, comprised of 222 KFCs and 123 Pizza Huts, to an existing Latin American franchise partner. The buyer is serving as the master franchisee for Mexico which had 102 KFC and 53 Pizza Hut franchise restaurants at the time of the transaction. The write-off of goodwill included in this loss was minimal as our Mexico reporting unit included an insignificant amount of goodwill. This loss did not result in any related income tax benefit.
|
(c)
|
During the year ended December 26, 2009 we recognized a non-cash $10 million refranchising loss as a result of our decision to offer to refranchise our KFC Taiwan equity market. During the year ended December 25, 2010 we refranchised all of our remaining company restaurants in Taiwan, which consisted of 124 KFCs. We included in our December 25, 2010 financial statements a non-cash write-off of $7 million of goodwill in determining the loss on refranchising of Taiwan. Neither of these losses resulted in a related income tax benefit. The amount of goodwill write-off was based on the relative fair values of the Taiwan business disposed of and the portion of the business that was retained. The fair value of the business disposed of was determined by reference to the discounted value of the future cash flows expected to be generated by the restaurants and retained by the franchisee, which include a deduction for the anticipated royalties the franchisee will pay the Company associated with the franchise agreement entered into in connection with this refranchising transaction. The fair value of the Taiwan business retained consists of expected, net cash flows to be derived from royalties from franchisees, including the royalties associated with the franchise agreement entered into in connection with this refranchising transaction. We believe the terms of the franchise agreement entered into in connection with the Taiwan refranchising are substantially consistent with market. The remaining carrying value of goodwill related to our Taiwan business of $30 million, after the aforementioned write-off, was determined not to be impaired as the fair value of the Taiwan reporting unit exceeded its carrying amount.
|
(d)
|
U.S. refranchising losses in the years ended December 31, 2011 and December 25, 2010 are primarily due to losses on sales of and offers to refranchise KFCs in the U.S. There were approximately 250 and 600 KFC restaurants offered for refranchising as of December 31, 2011 and December 25, 2010, respectively. While we did not yet believe these KFCs met the criteria to be classified as held for sale, we did, consistent with our historical practice, review the restaurants for impairment as a result of our offer to refranchise. We recorded impairment charges where we determined that the carrying value of restaurant groups to be sold was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. For those restaurant groups deemed impaired, we wrote such restaurant groups down to our estimate of their fair values, which were based on the sales price we would expect to receive from a franchisee for each restaurant group. This fair value determination considered current market conditions, real-estate values, trends in the KFC U.S. business, prices for similar transactions in the restaurant industry and preliminary offers for the restaurant groups to date. The non-cash impairment charges that were recorded related to our offers to refranchise these company-operated KFC restaurants in the U.S. decreased depreciation expense versus what would have otherwise been recorded by $10 million and $9 million in the years ended December 31, 2011 and December 25, 2010, respectively. These depreciation reductions were not allocated to the U.S. segment resulting in depreciation expense in the U.S. segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the restaurant groups for any further necessary impairment until the date they are sold. The aforementioned non-cash impairment charges do not include any allocation of the KFC reporting unit goodwill in the restaurant group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the restaurant groups, or any subset of the restaurant groups, ultimately meet the criteria to be classified as held for sale. We will also be required to record a charge for the fair value of our guarantee of future lease payments for leases we assign to the franchisee upon any sale.
|
|
2011
|
|||||||||||||||
|
China
|
YRI
|
U.S.
|
Worldwide
|
||||||||||||
Store closure (income) costs(a)
|
$
|
(1
|
)
|
$
|
4
|
|
$
|
4
|
|
$
|
7
|
|
||||
Store impairment charges
|
13
|
|
18
|
|
17
|
|
48
|
|
||||||||
Closure and impairment (income) expenses
|
$
|
12
|
|
$
|
22
|
|
$
|
21
|
|
$
|
55
|
|
|
2010
|
|||||||||||||||
|
China
|
YRI
|
U.S.
|
Worldwide
|
||||||||||||
Store closure (income) costs(a)
|
$
|
—
|
|
$
|
2
|
|
$
|
3
|
|
$
|
5
|
|
||||
Store impairment charges
|
16
|
|
12
|
|
14
|
|
42
|
|
||||||||
Closure and impairment (income) expenses
|
$
|
16
|
|
$
|
14
|
|
$
|
17
|
|
$
|
47
|
|
|
2009
|
|||||||||||||||
|
China
|
YRI
|
U.S.
|
Worldwide
|
||||||||||||
Store closure (income) costs(a)
|
$
|
(4
|
)
|
$
|
—
|
|
$
|
13
|
|
$
|
9
|
|
||||
Store impairment charges (b)
|
13
|
|
22
|
|
33
|
|
68
|
|
||||||||
Closure and impairment (income) expenses
|
$
|
9
|
|
$
|
22
|
|
$
|
46
|
|
$
|
77
|
|
(a)
|
Store closure (income) costs include the net gain or loss on sales of real estate on which we formerly operated a Company restaurant that was closed, lease reserves established when we cease using a property under an operating lease and subsequent adjustments to those reserves and other facility-related expenses from previously closed stores.
|
(b)
|
The 2009 store impairment charges for YRI include $12 million of goodwill impairment for our Pizza Hut South Korea market.
|
|
Beginning Balance
|
Amounts Used
|
New Decisions
|
Estimate/Decision Changes
|
CTA/
Other
|
Ending Balance
|
||||||||||||||
2011 Activity
|
$
|
28
|
|
(12
|
)
|
17
|
|
2
|
|
(1
|
)
|
$
|
34
|
|
||||||
2010 Activity
|
$
|
27
|
|
(12
|
)
|
8
|
|
—
|
|
5
|
|
$
|
28
|
|
|
2011
|
2010
|
2009
|
|||||||||
Cash Paid For:
|
|
|
|
|||||||||
Interest
|
$
|
199
|
|
$
|
190
|
|
$
|
209
|
|
|||
Income taxes
|
349
|
|
357
|
|
308
|
|
||||||
Significant Non-Cash Investing and Financing Activities:
|
|
|
|
|||||||||
Capital lease obligations incurred
|
$
|
58
|
|
$
|
16
|
|
$
|
7
|
|
|||
Increase (decrease) in accrued capital expenditures
|
55
|
|
51
|
|
(17
|
)
|
|
2011
|
2010
|
2009
|
|||||||||
Initial fees, including renewal fees
|
$
|
68
|
|
$
|
54
|
|
$
|
57
|
|
|||
Initial franchise fees included in Refranchising (gain) loss
|
(21
|
)
|
(15
|
)
|
(17
|
)
|
||||||
|
47
|
|
39
|
|
40
|
|
||||||
Continuing fees and rental income
|
1,686
|
|
1,521
|
|
1,383
|
|
||||||
|
$
|
1,733
|
|
$
|
1,560
|
|
$
|
1,423
|
|
|
2011
|
2010
|
2009
|
|||||||||
Equity income from investments in unconsolidated affiliates
|
$
|
(47
|
)
|
$
|
(42
|
)
|
$
|
(36
|
)
|
|||
Gain upon consolidation of a former unconsolidated affiliate in China(a)
|
—
|
|
—
|
|
(68
|
)
|
||||||
Foreign exchange net (gain) loss and other
|
(6
|
)
|
(1
|
)
|
—
|
|
||||||
Other (income) expense
|
$
|
(53
|
)
|
$
|
(43
|
)
|
$
|
(104
|
)
|
(a)
|
See Note 4 for further discussion of the consolidation of a former unconsolidated affiliate in Shanghai, China.
|
Prepaid Expenses and Other Current Assets
|
2011
|
2010
|
||||||
Income tax receivable
|
$
|
150
|
|
$
|
115
|
|
||
Assets held for sale
|
24
|
|
23
|
|
||||
Other prepaid expenses and current assets
|
164
|
|
131
|
|
||||
|
$
|
338
|
|
$
|
269
|
|
Property, Plant and Equipment
|
2011
|
2010
|
||||||
Land
|
$
|
527
|
|
$
|
542
|
|
||
Buildings and improvements
|
3,856
|
|
3,709
|
|
||||
Capital leases, primarily buildings
|
316
|
|
274
|
|
||||
Machinery and equipment
|
2,568
|
|
2,578
|
|
||||
Property, Plant and equipment, gross
|
7,267
|
|
7,103
|
|
||||
Accumulated depreciation and amortization
|
(3,225
|
)
|
(3,273
|
)
|
||||
Property, Plant and equipment, net
|
$
|
4,042
|
|
$
|
3,830
|
|
Accounts Payable and Other Current Liabilities
|
2011
|
2010
|
||||||
Accounts payable
|
$
|
712
|
|
$
|
540
|
|
||
Accrued capital expenditures
|
229
|
|
174
|
|
||||
Accrued compensation and benefits
|
440
|
|
357
|
|
||||
Dividends payable
|
131
|
|
118
|
|
||||
Accrued taxes, other than income taxes
|
112
|
|
95
|
|
||||
Other current liabilities
|
250
|
|
318
|
|
||||
|
$
|
1,874
|
|
$
|
1,602
|
|
|
China
|
YRI
|
U.S.
|
Worldwide
|
||||||||||||
Balance as of December 26, 2009
|
|
|
|
|
||||||||||||
Goodwill, gross
|
$
|
82
|
|
$
|
249
|
|
$
|
352
|
|
$
|
683
|
|
||||
Accumulated impairment losses
|
—
|
|
(17
|
)
|
(26
|
)
|
(43
|
)
|
||||||||
Goodwill, net
|
82
|
|
232
|
|
326
|
|
640
|
|
||||||||
Acquisitions (a)
|
—
|
|
37
|
|
—
|
|
37
|
|
||||||||
Disposals and other, net(b)
|
3
|
|
(17
|
)
|
(4
|
)
|
(18
|
)
|
||||||||
Balance as of December 25, 2010
|
||||||||||||||||
Goodwill, gross
|
85
|
|
269
|
|
348
|
|
702
|
|
||||||||
Accumulated impairment losses
|
—
|
|
(17
|
)
|
(26
|
)
|
(43
|
)
|
||||||||
Goodwill, net
|
85
|
|
252
|
|
322
|
|
659
|
|
||||||||
Acquisitions(c)
|
—
|
|
32
|
|
—
|
|
32
|
|
||||||||
Disposals and other, net(b)
|
3
|
|
(2
|
)
|
(11
|
)
|
(10
|
)
|
||||||||
Balance as of December 31, 2011(d)
|
||||||||||||||||
Goodwill, gross
|
88
|
|
299
|
|
311
|
|
698
|
|
||||||||
Accumulated impairment losses
|
—
|
|
(17
|
)
|
—
|
|
(17
|
)
|
||||||||
Goodwill, net
|
$
|
88
|
|
$
|
282
|
|
$
|
311
|
|
$
|
681
|
|
(a)
|
We recorded goodwill in our YRI segment related to the July 1, 2010 exercise of our option with our Russian partner to purchase their interest in the co-branded Rostik’s-KFC restaurants across Russia and the Commonwealth of Independent States. See Note 4.
|
(b)
|
Disposals and other, net includes the impact of foreign currency translation on existing balances and goodwill write-offs associated with refranchising.
|
(c)
|
We recorded goodwill in our YRI segment related to the acquisition of 68 stores in South Africa. See Note 4.
|
(d)
|
As a result of the LJS and A&W divestitures in 2011, we disposed of $26 million of goodwill that was fully impaired in 2009.
|
|
2011
|
2010
|
||||||||||||||
|
Gross Carrying Amount
|
Accumulated Amortization
|
Gross Carrying Amount
|
Accumulated Amortization
|
||||||||||||
Definite-lived intangible assets
|
|
|
|
|
||||||||||||
Franchise contract rights
|
$
|
130
|
|
$
|
(77
|
)
|
$
|
163
|
|
$
|
(83
|
)
|
||||
Trademarks/brands
|
28
|
|
(12
|
)
|
234
|
|
(57
|
)
|
||||||||
Lease tenancy rights
|
58
|
|
(12
|
)
|
56
|
|
(12
|
)
|
||||||||
Favorable operating leases
|
29
|
|
(13
|
)
|
27
|
|
(10
|
)
|
||||||||
Reacquired franchise rights
|
167
|
|
(33
|
)
|
143
|
|
(20
|
)
|
||||||||
Other
|
5
|
|
(2
|
)
|
5
|
|
(2
|
)
|
||||||||
|
$
|
417
|
|
$
|
(149
|
)
|
$
|
628
|
|
$
|
(184
|
)
|
||||
Indefinite-lived intangible assets
|
||||||||||||||||
Trademarks/brands
|
$
|
31
|
|
$
|
31
|
|
|
2011
|
2010
|
||||||
Short-term Borrowings
|
|
|
||||||
Current maturities of long-term debt
|
$
|
315
|
|
$
|
668
|
|
||
Current portion of fair value hedge accounting adjustment (See Note 12)
|
5
|
|
5
|
|
||||
Unsecured International Revolving Credit Facility, expires November 2012
|
—
|
|
—
|
|
||||
Unsecured Revolving Credit Facility, expires November 2012
|
—
|
|
—
|
|
||||
$
|
320
|
|
$
|
673
|
|
|||
Long-term Debt
|
|
|
||||||
Senior Unsecured Notes
|
$
|
3,012
|
|
$
|
3,257
|
|
||
Capital lease obligations (See Note 11)
|
279
|
|
236
|
|
||||
Other
|
—
|
|
64
|
|
||||
|
3,291
|
|
3,557
|
|
||||
Less current maturities of long-term debt
|
(315
|
)
|
(668
|
)
|
||||
Long-term debt excluding long-term portion of hedge accounting adjustment
|
2,976
|
|
2,889
|
|
||||
Long-term portion of fair value hedge accounting adjustment (See Note 12)
|
21
|
|
26
|
|
||||
Long-term debt including hedge accounting adjustment
|
$
|
2,997
|
|
$
|
2,915
|
|
|
|
|
Interest Rate
|
|||||||
Issuance Date(a)
|
Maturity Date
|
Principal Amount (in millions)
|
Stated
|
Effective(b)
|
||||||
June 2002
|
July 2012
|
$
|
263
|
|
7.70%
|
8.06%
|
||||
April 2006
|
April 2016
|
$
|
300
|
|
6.25%
|
6.03%
|
||||
October 2007
|
March 2018
|
$
|
600
|
|
6.25%
|
6.38%
|
||||
October 2007
|
November 2037
|
$
|
600
|
|
6.88%
|
7.29%
|
||||
August 2009
|
September 2015
|
$
|
250
|
|
4.25%
|
4.44%
|
||||
August 2009
|
September 2019
|
$
|
250
|
|
5.30%
|
5.59%
|
||||
August 2010
|
November 2020
|
$
|
350
|
|
3.88%
|
4.01%
|
||||
August 2011
|
November 2021
|
$
|
350
|
|
3.75%
|
3.88%
|
||||
September 2011
|
September 2014
|
$
|
56
|
|
2.38%
|
2.92%
|
(a)
|
Interest payments commenced six months after issuance date and are payable semi-annually thereafter.
|
(b)
|
Includes the effects of the amortization of any (1) premium or discount; (2) debt issuance costs; and (3) gain or loss upon settlement of related treasury locks and forward-starting interest rate swaps utilized to hedge the interest rate risk prior to the debt issuance. Excludes the effect of any swaps that remain outstanding as described in Note 12.
|
Year ended:
|
|
||
2012
|
$
|
263
|
|
2013
|
—
|
|
|
2014
|
56
|
|
|
2015
|
250
|
|
|
2016
|
300
|
|
|
Thereafter
|
2,150
|
|
|
Total
|
$
|
3,019
|
|
|
Commitments
|
Lease Receivables
|
||||||||||||||
|
Capital
|
Operating
|
Direct
Financing
|
Operating
|
||||||||||||
2012
|
$
|
65
|
|
$
|
612
|
|
$
|
3
|
|
$
|
49
|
|
||||
2013
|
27
|
|
578
|
|
2
|
|
42
|
|
||||||||
2014
|
26
|
|
538
|
|
2
|
|
39
|
|
||||||||
2015
|
26
|
|
494
|
|
2
|
|
35
|
|
||||||||
2016
|
26
|
|
462
|
|
2
|
|
31
|
|
||||||||
Thereafter
|
267
|
|
2,653
|
|
14
|
|
139
|
|
||||||||
|
$
|
437
|
|
$
|
5,337
|
|
$
|
25
|
|
$
|
335
|
|
|
2011
|
2010
|
2009
|
|||||||||
Rental expense
|
|
|
|
|||||||||
Minimum
|
$
|
625
|
|
$
|
565
|
|
$
|
541
|
|
|||
Contingent
|
233
|
|
158
|
|
123
|
|
||||||
|
$
|
858
|
|
$
|
723
|
|
$
|
664
|
|
|||
Rental income
|
$
|
66
|
|
$
|
44
|
|
$
|
38
|
|
|
Fair Value
|
Consolidated Balance Sheet Location
|
||||||||
|
2011
|
2010
|
|
|||||||
Interest Rate Swaps - Asset
|
$
|
10
|
|
$
|
8
|
|
Prepaid expenses and other current assets
|
|||
Interest Rate Swaps - Asset
|
22
|
|
33
|
|
Other assets
|
|||||
Foreign Currency Forwards - Asset
|
3
|
|
7
|
|
Prepaid expenses and other current assets
|
|||||
Foreign Currency Forwards - Liability
|
(1
|
)
|
(3
|
)
|
Accounts payable and other current liabilities
|
|||||
Total
|
$
|
34
|
|
$
|
45
|
|
|
|
2011
|
2010
|
||||||
Gains (losses) recognized into OCI, net of tax
|
$
|
2
|
|
$
|
32
|
|
||
Gains (losses) reclassified from Accumulated OCI into income, net of tax
|
$
|
1
|
|
$
|
33
|
|
|
Fair Value
|
||||||||||
|
Level
|
2011
|
2010
|
||||||||
Foreign Currency Forwards, net
|
2
|
|
$
|
2
|
|
$
|
4
|
|
|||
Interest Rate Swaps, net
|
2
|
|
32
|
|
41
|
|
|||||
Other Investments
|
1
|
|
15
|
|
14
|
|
|||||
Total
|
|
$
|
49
|
|
$
|
59
|
|
|
|
Fair Value Measurements Using
|
Total Losses
|
|||||||||||||
|
As of
December 31, 2011
|
Level 1
|
Level 2
|
Level 3
|
2011
|
|||||||||||
Long-lived assets held for use
|
$
|
50
|
|
—
|
|
—
|
|
50
|
|
128
|
|
|||||
|
|
Fair Value Measurements Using
|
Total Losses
|
|||||||||||||
|
As of
December 25, 2010
|
Level 1
|
Level 2
|
Level 3
|
2010
|
|||||||||||
Long-lived assets held for use
|
$
|
184
|
|
—
|
|
—
|
|
184
|
|
110
|
|
|||||
|
U.S. Pension Plans
|
International Pension Plans
|
||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Change in benefit obligation
|
|
|
|
|
||||||||||||
Benefit obligation at beginning of year
|
$
|
1,108
|
|
$
|
1,010
|
|
$
|
187
|
|
$
|
176
|
|
||||
Service cost
|
24
|
|
25
|
|
5
|
|
6
|
|
||||||||
Interest cost
|
64
|
|
62
|
|
10
|
|
9
|
|
||||||||
Participant contributions
|
—
|
|
—
|
|
1
|
|
2
|
|
||||||||
Curtailment gain
|
(7
|
)
|
(2
|
)
|
(10
|
)
|
—
|
|
||||||||
Settlement loss
|
—
|
|
1
|
|
—
|
|
—
|
|
||||||||
Special termination benefits
|
5
|
|
1
|
|
—
|
|
—
|
|
||||||||
Exchange rate changes
|
—
|
|
—
|
|
1
|
|
(9
|
)
|
||||||||
Benefits paid
|
(40
|
)
|
(57
|
)
|
(2
|
)
|
(4
|
)
|
||||||||
Settlement payments
|
—
|
|
(9
|
)
|
—
|
|
—
|
|
||||||||
Actuarial (gain) loss
|
227
|
|
77
|
|
(5
|
)
|
7
|
|
||||||||
Benefit obligation at end of year
|
$
|
1,381
|
|
$
|
1,108
|
|
$
|
187
|
|
$
|
187
|
|
||||
Change in plan assets
|
|
|
|
|
||||||||||||
Fair value of plan assets at beginning of year
|
$
|
907
|
|
$
|
835
|
|
$
|
164
|
|
$
|
141
|
|
||||
Actual return on plan assets
|
83
|
|
108
|
|
10
|
|
14
|
|
||||||||
Employer contributions
|
53
|
|
35
|
|
10
|
|
17
|
|
||||||||
Participant contributions
|
—
|
|
—
|
|
1
|
|
2
|
|
||||||||
Settlement payments
|
—
|
|
(9
|
)
|
—
|
|
—
|
|
||||||||
Benefits paid
|
(40
|
)
|
(57
|
)
|
(2
|
)
|
(4
|
)
|
||||||||
Exchange rate changes
|
—
|
|
—
|
|
—
|
|
(6
|
)
|
||||||||
Administrative expenses
|
(5
|
)
|
(5
|
)
|
—
|
|
—
|
|
||||||||
Fair value of plan assets at end of year
|
$
|
998
|
|
$
|
907
|
|
$
|
183
|
|
$
|
164
|
|
||||
Funded status at end of year
|
$
|
(383
|
)
|
$
|
(201
|
)
|
$
|
(4
|
)
|
$
|
(23
|
)
|
Amounts recognized in the Consolidated Balance Sheet:
|
||||||||||||||||
|
U.S. Pension Plans
|
International Pension Plans
|
||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Accrued benefit asset - non-current
|
$
|
—
|
|
$
|
—
|
|
$
|
8
|
|
$
|
—
|
|
||||
Accrued benefit liability – current
|
(14
|
)
|
(10
|
)
|
—
|
|
—
|
|
||||||||
Accrued benefit liability – non-current
|
(369
|
)
|
(191
|
)
|
(12
|
)
|
(23
|
)
|
||||||||
|
$
|
(383
|
)
|
$
|
(201
|
)
|
$
|
(4
|
)
|
$
|
(23
|
)
|
Amounts recognized as a loss in Accumulated Other Comprehensive Income:
|
||||||||||||||||
|
U.S. Pension Plans
|
International Pension Plans
|
||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Actuarial net loss
|
$
|
540
|
|
$
|
359
|
|
$
|
30
|
|
$
|
46
|
|
||||
Prior service cost
|
3
|
|
4
|
|
—
|
|
—
|
|
||||||||
|
$
|
543
|
|
$
|
363
|
|
$
|
30
|
|
$
|
46
|
|
Information for pension plans with an accumulated benefit obligation in excess of plan assets:
|
||||||||||||||||
|
U.S. Pension Plans
|
International Pension Plans
|
||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Projected benefit obligation
|
$
|
1,381
|
|
$
|
1,108
|
|
$
|
—
|
|
$
|
—
|
|
||||
Accumulated benefit obligation
|
1,327
|
|
1,057
|
|
—
|
|
—
|
|
||||||||
Fair value of plan assets
|
998
|
|
907
|
|
—
|
|
—
|
|
Information for pension plans with a projected benefit obligation in excess of plan assets:
|
||||||||||||||||
|
U.S. Pension Plans
|
International Pension Plans
|
||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Projected benefit obligation
|
$
|
1,381
|
|
$
|
1,108
|
|
$
|
99
|
|
$
|
187
|
|
||||
Accumulated benefit obligation
|
1,327
|
|
1,057
|
|
87
|
|
155
|
|
||||||||
Fair value of plan assets
|
998
|
|
907
|
|
87
|
|
164
|
|
|
U.S. Pension Plans
|
International Pension Plans
|
||||||||||||||||||||||
Net periodic benefit cost
|
2011
|
2010
|
2009
|
2011
|
2010
|
2009
|
||||||||||||||||||
Service cost
|
$
|
24
|
|
$
|
25
|
|
$
|
26
|
|
$
|
5
|
|
$
|
6
|
|
$
|
5
|
|
||||||
Interest cost
|
64
|
|
62
|
|
58
|
|
10
|
|
9
|
|
7
|
|
||||||||||||
Amortization of prior service cost(a)
|
1
|
|
1
|
|
1
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Expected return on plan assets
|
(71
|
)
|
(70
|
)
|
(59
|
)
|
(12
|
)
|
(9
|
)
|
(7
|
)
|
||||||||||||
Amortization of net loss
|
31
|
|
23
|
|
13
|
|
2
|
|
2
|
|
2
|
|
||||||||||||
Net periodic benefit cost
|
$
|
49
|
|
$
|
41
|
|
$
|
39
|
|
$
|
5
|
|
$
|
8
|
|
$
|
7
|
|
||||||
Additional loss recognized due to:
Settlement(b)
|
$
|
—
|
|
$
|
3
|
|
$
|
2
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
||||||
Special termination benefits(c)
|
$
|
5
|
|
$
|
1
|
|
$
|
4
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
(a)
|
Prior service costs are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits.
|
(b)
|
Settlement loss results from benefit payments from a non-funded plan exceeding the sum of the service cost and interest cost for that plan during the year.
|
(c)
|
Special termination benefits primarily related to the U.S. business transformation measures taken in 2011, 2010 and 2009.
|
Pension losses in accumulated other comprehensive income (loss):
|
||||||||||||||||
|
U.S. Pension Plans
|
International Pension Plans
|
||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Beginning of year
|
$
|
363
|
|
$
|
346
|
|
$
|
46
|
|
$
|
48
|
|
||||
Net actuarial (gain) loss
|
219
|
|
43
|
|
(5
|
)
|
2
|
|
||||||||
Curtailment gain
|
(7
|
)
|
(2
|
)
|
(10
|
)
|
—
|
|
||||||||
Amortization of net loss
|
(31
|
)
|
(23
|
)
|
(2
|
)
|
(2
|
)
|
||||||||
Amortization of prior service cost
|
(1
|
)
|
(1
|
)
|
—
|
|
—
|
|
||||||||
Exchange rate changes
|
—
|
|
—
|
|
1
|
|
(2
|
)
|
||||||||
End of year
|
$
|
543
|
|
$
|
363
|
|
$
|
30
|
|
$
|
46
|
|
Weighted-average assumptions used to determine benefit obligations at the measurement dates:
|
||||||||||||
|
U.S. Pension Plans
|
International Pension Plans
|
||||||||||
|
2011
|
2010
|
2011
|
2010
|
||||||||
Discount rate
|
4.90
|
%
|
5.90
|
%
|
4.75
|
%
|
5.40
|
%
|
||||
Rate of compensation increase
|
3.75
|
%
|
3.75
|
%
|
3.85
|
%
|
4.42
|
%
|
Weighted-average assumptions used to determine the net periodic benefit cost for fiscal years:
|
||||||||||||||||||
|
U.S. Pension Plans
|
International Pension Plans
|
||||||||||||||||
|
2011
|
2010
|
2009
|
2011
|
2010
|
2009
|
||||||||||||
Discount rate
|
5.90
|
%
|
6.30
|
%
|
6.50
|
%
|
5.40
|
%
|
5.50
|
%
|
5.51
|
%
|
||||||
Long-term rate of return on plan assets
|
7.75
|
%
|
7.75
|
%
|
8.00
|
%
|
6.64
|
%
|
6.66
|
%
|
7.20
|
%
|
||||||
Rate of compensation increase
|
3.75
|
%
|
3.75
|
%
|
3.75
|
%
|
4.41
|
%
|
4.42
|
%
|
4.12
|
%
|
|
U.S. Pension
Plans
|
International
Pension Plans
|
||||||
Level 1:
|
|
|
||||||
Cash(a)
|
$
|
1
|
|
$
|
—
|
|
||
Level 2:
|
|
|
||||||
Cash Equivalents(a)
|
62
|
|
—
|
|
||||
Equity Securities – U.S. Large cap(b)
|
324
|
|
—
|
|
||||
Equity Securities – U.S. Mid cap(b)
|
54
|
|
—
|
|
||||
Equity Securities – U.S. Small cap(b)
|
54
|
|
—
|
|
||||
Equity Securities – Non-U.S.(b)
|
88
|
|
109
|
|
||||
Fixed Income Securities – U.S. Corporate(b)
|
263
|
|
—
|
|
||||
Fixed Income Securities – Non-U.S. Corporate(b)
|
—
|
|
23
|
|
||||
Fixed Income Securities – U.S. Government and Government Agencies(c)
|
164
|
|
—
|
|
||||
Fixed Income Securities – Other(b)(c)
|
39
|
|
11
|
|
||||
Other Investments(b)
|
—
|
|
40
|
|
||||
Total fair value of plan assets(d)
|
$
|
1,049
|
|
$
|
183
|
|
(a)
|
Short-term investments in money market funds
|
(b)
|
Securities held in common trusts
|
(c)
|
Investments held by the Plan are directly held
|
(d)
|
Excludes net payable of $51 million in the U.S. for purchases of assets included in the above that were settled after year end
|
Year ended:
|
U.S.
Pension Plans
|
International
Pension Plans
|
||||||
2012
|
$
|
68
|
|
$
|
1
|
|
||
2013
|
50
|
|
1
|
|
||||
2014
|
47
|
|
1
|
|
||||
2015
|
50
|
|
1
|
|
||||
2016
|
51
|
|
1
|
|
||||
2017 - 2021
|
309
|
|
8
|
|
|
2011
|
2010
|
2009
|
||||||
Risk-free interest rate
|
2.0
|
%
|
2.4
|
%
|
1.9
|
%
|
|||
Expected term (years)
|
5.9
|
|
6.0
|
|
5.9
|
|
|||
Expected volatility
|
28.2
|
%
|
30.0
|
%
|
32.3
|
%
|
|||
Expected dividend yield
|
2.0
|
%
|
2.5
|
%
|
2.6
|
%
|
|
Shares
(in thousands)
|
Weighted-Average Exercise
Price
|
Weighted- Average Remaining Contractual Term
|
Aggregate Intrinsic Value (in millions)
|
||||||||||||
Outstanding at the beginning of the year
|
36,438
|
|
|
$
|
26.91
|
|
|
|
||||||||
Granted
|
5,023
|
|
|
49.59
|
|
|
|
|||||||||
Exercised
|
(6,645
|
)
|
20.33
|
|
|
|
||||||||||
Forfeited or expired
|
(1,308
|
)
|
35.52
|
|
|
|
||||||||||
Outstanding at the end of the year
|
33,508
|
|
(a)
|
$
|
31.28
|
|
5.96
|
|
$
|
929
|
|
|||||
Exercisable at the end of the year
|
18,709
|
|
|
$
|
26.00
|
|
4.48
|
|
$
|
618
|
|
(a)
|
Outstanding awards include 8,161 options and 25,347 SARs with average exercise prices of $21.56 and $34.41, respectively.
|
|
2011
|
2010
|
2009
|
|||||||||
Options and SARs
|
$
|
49
|
|
$
|
40
|
|
$
|
48
|
|
|||
Restricted Stock Units
|
5
|
|
5
|
|
7
|
|
||||||
Performance Share Units
|
5
|
|
2
|
|
1
|
|
||||||
Total Share-based Compensation Expense
|
$
|
59
|
|
$
|
47
|
|
$
|
56
|
|
|||
Deferred Tax Benefit recognized
|
$
|
18
|
|
$
|
13
|
|
$
|
17
|
|
|||
EID compensation expense not share-based
|
$
|
2
|
|
$
|
4
|
|
$
|
4
|
|
|
Shares Repurchased
(thousands)
|
Dollar Value of Shares
Repurchased
|
|||||||||||||||||||||||
Authorization Date
|
2011
|
2010
|
2009
|
2011
|
2010
|
2009
|
|||||||||||||||||||
November 2011
|
—
|
|
—
|
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
||||||||||
January 2011
|
10,864
|
|
—
|
|
—
|
|
562
|
|
—
|
|
—
|
|
|||||||||||||
March 2010
|
3,441
|
|
2,161
|
|
—
|
|
171
|
|
107
|
|
—
|
|
|||||||||||||
September 2009
|
—
|
|
7,598
|
|
—
|
|
—
|
|
283
|
|
—
|
|
|||||||||||||
Total
|
14,305
|
|
(a)
|
9,759
|
|
(a)
|
—
|
|
$
|
733
|
|
(a)
|
$
|
390
|
|
(a)
|
$
|
—
|
|
(a)
|
2011 amount excludes and 2010 amount includes the effect of $19 million in share repurchases (0.4 million shares) with trade dates prior to the 2010 fiscal year end but cash settlement dates subsequent to the 2010 fiscal year.
|
|
2011
|
2010
|
||||||
Foreign currency translation adjustment
|
$
|
140
|
|
$
|
55
|
|
||
Pension and post-retirement losses, net of tax
|
(375
|
)
|
(269
|
)
|
||||
Net unrealized losses on derivative instruments, net of tax
|
(12
|
)
|
(13
|
)
|
||||
Total accumulated other comprehensive loss
|
$
|
(247
|
)
|
$
|
(227
|
)
|
|
2011
|
2010
|
2009
|
|||||||||
U.S.
|
$
|
266
|
|
$
|
345
|
|
$
|
269
|
|
|||
Foreign
|
1,393
|
|
1,249
|
|
1,127
|
|
||||||
|
$
|
1,659
|
|
$
|
1,594
|
|
$
|
1,396
|
|
|
|
2011
|
2010
|
2009
|
||||||||||
Current:
|
Federal
|
$
|
78
|
|
$
|
155
|
|
$
|
(21
|
)
|
||||
|
Foreign
|
374
|
|
356
|
|
251
|
|
|||||||
|
State
|
9
|
|
15
|
|
11
|
|
|||||||
|
|
$
|
461
|
|
$
|
526
|
|
241
|
|
|||||
Deferred:
|
Federal
|
(83
|
)
|
(82
|
)
|
92
|
|
|||||||
|
Foreign
|
(40
|
)
|
(29
|
)
|
(30
|
)
|
|||||||
|
State
|
(14
|
)
|
1
|
|
10
|
|
|||||||
|
|
(137
|
)
|
(110
|
)
|
72
|
|
|||||||
|
|
$
|
324
|
|
$
|
416
|
|
$
|
313
|
|
|
2011
|
2010
|
2009
|
||||||||||||||||||
U.S. federal statutory rate
|
$
|
580
|
|
35.0
|
%
|
$
|
558
|
|
35.0
|
%
|
$
|
489
|
|
35.0
|
%
|
||||||
State income tax, net of federal tax benefit
|
2
|
|
0.1
|
|
12
|
|
0.7
|
|
14
|
|
1.0
|
|
|||||||||
Statutory rate differential attributable to foreign operations
|
(218
|
)
|
(13.1
|
)
|
(235
|
)
|
(14.7
|
)
|
(159
|
)
|
(11.4
|
)
|
|||||||||
Adjustments to reserves and prior years
|
24
|
|
1.4
|
|
55
|
|
3.5
|
|
(9
|
)
|
(0.6
|
)
|
|||||||||
Net benefit from LJS and A&W divestitures
|
(72
|
)
|
(4.3
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Change in valuation allowances
|
22
|
|
1.3
|
|
22
|
|
1.4
|
|
(9
|
)
|
(0.7
|
)
|
|||||||||
Other, net
|
(14
|
)
|
(0.9
|
)
|
4
|
|
0.2
|
|
(13
|
)
|
(0.9
|
)
|
|||||||||
Effective income tax rate
|
$
|
324
|
|
19.5
|
%
|
$
|
416
|
|
26.1
|
%
|
$
|
313
|
|
22.4
|
%
|
|
2011
|
2010
|
||||||
Operating losses and tax credit carryforwards
|
$
|
590
|
|
$
|
335
|
|
||
Employee benefits
|
259
|
|
171
|
|
||||
Share-based compensation
|
106
|
|
102
|
|
||||
Self-insured casualty claims
|
47
|
|
50
|
|
||||
Lease-related liabilities
|
137
|
|
166
|
|
||||
Various liabilities
|
72
|
|
89
|
|
||||
Deferred income and other
|
49
|
|
97
|
|
||||
Gross deferred tax assets
|
1,260
|
|
1,010
|
|
||||
Deferred tax asset valuation allowances
|
(368
|
)
|
(306
|
)
|
||||
Net deferred tax assets
|
$
|
892
|
|
$
|
704
|
|
||
Intangible assets, including goodwill
|
$
|
(147
|
)
|
$
|
(211
|
)
|
||
Property, plant and equipment
|
(92
|
)
|
(108
|
)
|
||||
Other
|
(53
|
)
|
(29
|
)
|
||||
Gross deferred tax liabilities
|
$
|
(292
|
)
|
$
|
(348
|
)
|
||
Net deferred tax assets (liabilities)
|
$
|
600
|
|
$
|
356
|
|
Reported in Consolidated Balance Sheets as:
|
|
|
||||||
Deferred income taxes – current
|
$
|
112
|
|
$
|
61
|
|
||
Deferred income taxes – long-term
|
549
|
|
366
|
|
||||
Accounts payable and other current liabilities
|
(16
|
)
|
(20
|
)
|
||||
Other liabilities and deferred credits
|
(45
|
)
|
(51
|
)
|
||||
|
$
|
600
|
|
$
|
356
|
|
|
Year of Expiration
|
|
||||||||||||||||||
|
2012
|
2013-2016
|
2017-2031
|
Indefinitely
|
Total
|
|||||||||||||||
Foreign
|
$
|
4
|
|
$
|
66
|
|
$
|
136
|
|
$
|
833
|
|
$
|
1,039
|
|
|||||
U.S. federal and state
|
22
|
|
192
|
|
1,770
|
|
5
|
|
1,989
|
|
||||||||||
|
$
|
26
|
|
$
|
258
|
|
$
|
1,906
|
|
$
|
838
|
|
$
|
3,028
|
|
|
2011
|
2010
|
||||||
Beginning of Year
|
$
|
308
|
|
$
|
301
|
|
||
Additions on tax positions - current year
|
85
|
|
45
|
|
||||
Additions for tax positions - prior years
|
38
|
|
35
|
|
||||
Reductions for tax positions - prior years
|
(58
|
)
|
(19
|
)
|
||||
Reductions for settlements
|
(8
|
)
|
(41
|
)
|
||||
Reductions due to statute expiration
|
(22
|
)
|
(10
|
)
|
||||
Foreign currency translation adjustment
|
5
|
|
(3
|
)
|
||||
End of Year
|
$
|
348
|
|
$
|
308
|
|
Jurisdiction
|
|
Open Tax Years
|
U.S. Federal
|
|
2004 – 2011
|
China
|
|
2008 – 2011
|
United Kingdom
|
|
2003 – 2011
|
Mexico
|
|
2005 – 2011
|
Australia
|
|
2007 – 2011
|
|
2011
|
2010
|
||||||
Accrued interest and penalties
|
$
|
53
|
|
$
|
48
|
|
|
Revenues
|
|||||||||||
|
2011
|
2010
|
2009
|
|||||||||
China
|
$
|
5,566
|
|
$
|
4,135
|
|
$
|
3,407
|
|
|||
YRI
|
3,274
|
|
3,088
|
|
2,988
|
|
||||||
U.S.
|
3,786
|
|
4,120
|
|
4,473
|
|
||||||
Unallocated Franchise and license fees and income(a)(b)
|
—
|
|
—
|
|
(32
|
)
|
||||||
|
$
|
12,626
|
|
$
|
11,343
|
|
$
|
10,836
|
|
|
Operating Profit; Interest Expense, Net; and
Income Before Income Taxes
|
|||||||||||
|
2011
|
2010
|
2009
|
|||||||||
China (c)
|
$
|
908
|
|
$
|
755
|
|
$
|
596
|
|
|||
YRI
|
673
|
|
589
|
|
497
|
|
||||||
U.S.
|
589
|
|
668
|
|
647
|
|
||||||
Unallocated Franchise and license fees and income(a)(b)
|
—
|
|
—
|
|
(32
|
)
|
||||||
Unallocated Occupancy and other(b)(d)
|
14
|
|
9
|
|
—
|
|
||||||
Unallocated and corporate expenses(b)(e)
|
(223
|
)
|
(194
|
)
|
(189
|
)
|
||||||
Unallocated Closures and impairment expense(b)(f)
|
(80
|
)
|
—
|
|
(26
|
)
|
||||||
Unallocated Other income (expense)(b)(g)
|
6
|
|
5
|
|
71
|
|
||||||
Unallocated Refranchising gain (loss)(b)(h)
|
(72
|
)
|
(63
|
)
|
26
|
|
||||||
Operating Profit
|
1,815
|
|
1,769
|
|
1,590
|
|
||||||
Interest expense, net
|
(156
|
)
|
(175
|
)
|
(194
|
)
|
||||||
Income Before Income Taxes
|
$
|
1,659
|
|
$
|
1,594
|
|
$
|
1,396
|
|
|
Depreciation and Amortization
|
|||||||||||
|
2011
|
2010
|
2009
|
|||||||||
China
|
$
|
257
|
|
$
|
225
|
|
$
|
184
|
|
|||
YRI
|
186
|
|
159
|
|
165
|
|
||||||
U.S.
|
177
|
|
201
|
|
216
|
|
||||||
Corporate(d)
|
8
|
|
4
|
|
15
|
|
||||||
|
$
|
628
|
|
$
|
589
|
|
$
|
580
|
|
|
Capital Spending
|
|||||||||||
|
2011
|
2010
|
2009
|
|||||||||
China
|
$
|
405
|
|
$
|
272
|
|
$
|
271
|
|
|||
YRI
|
256
|
|
259
|
|
251
|
|
||||||
U.S.
|
256
|
|
241
|
|
270
|
|
||||||
Corporate
|
23
|
|
24
|
|
5
|
|
||||||
|
$
|
940
|
|
$
|
796
|
|
$
|
797
|
|
|
Identifiable Assets
|
|||||||||||
|
2011
|
2010
|
2009
|
|||||||||
China (i)
|
$
|
2,527
|
|
$
|
2,289
|
|
$
|
1,632
|
|
|||
YRI
|
2,899
|
|
2,649
|
|
2,448
|
|
||||||
U.S.
|
2,070
|
|
2,398
|
|
2,575
|
|
||||||
Corporate(j)
|
1,338
|
|
980
|
|
493
|
|
||||||
|
$
|
8,834
|
|
$
|
8,316
|
|
$
|
7,148
|
|
|
Long-Lived Assets(k)
|
|||||||||||
|
2011
|
2010
|
2009
|
|||||||||
China
|
$
|
1,546
|
|
$
|
1,269
|
|
$
|
1,172
|
|
|||
YRI
|
1,635
|
|
1,548
|
|
1,524
|
|
||||||
U.S.
|
1,805
|
|
2,095
|
|
2,260
|
|
||||||
Corporate
|
36
|
|
52
|
|
45
|
|
||||||
|
$
|
5,022
|
|
$
|
4,964
|
|
$
|
5,001
|
|
(a)
|
Amount consists of reimbursements to KFC franchisees for installation costs of ovens for the national launch of Kentucky Grilled Chicken. See Note 4.
|
(b)
|
Amounts have not been allocated to the U.S., YRI or China Division segments for performance reporting purposes.
|
(c)
|
Includes equity income from investments in unconsolidated affiliates of $47 million, $42 million and $36 million in 2011, 2010 and 2009, respectively, for China.
|
(d)
|
2011 and 2010 include depreciation reductions arising from the impairment of KFC restaurants we offered to sell of $10 million and $9 million, respectively. 2011 includes a depreciation reduction arising from the impairment of Pizza Hut UK restaurants we decided to sell in 2011 of $3 million. See Note 4.
|
(e)
|
2011, 2010 and 2009 include approximately $21 million, $9 million and $16 million, respectively, of charges relating to U.S. general and administrative productivity initiatives and realignment of resources. See Note 4.
|
(f)
|
2011 represents net losses resulting from the LJS and A&W divestitures. 2009 includes a $26 million charge to write-off goodwill associated with our LJS and A&W businesses in the U.S. See Note 9.
|
(g)
|
2009 includes a $68 million gain related to the acquisition of additional interest in and consolidation of a former unconsolidated affiliate in China. See Note 4.
|
(h)
|
See Note 4 for further discussion of Refranchising gain (loss).
|
(i)
|
China includes investments in 4 unconsolidated affiliates totaling $167 million, $154 million and $144 million, for 2011, 2010 and 2009, respectively.
|
(j)
|
Primarily includes cash, deferred tax assets and property, plant and equipment, net, related to our office facilities.
|
(k)
|
Includes property, plant and equipment, net, goodwill, and intangible assets, net.
|
|
Beginning Balance
|
Expense
|
Payments
|
Ending Balance
|
||||||||
2011 Activity
|
$150
|
55
|
|
(65
|
)
|
$
|
140
|
|
||||
2010 Activity
|
$173
|
46
|
|
(69
|
)
|
$
|
150
|
|
|
2011
|
|||||||||||||||||||
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Total
|
|||||||||||||||
Revenues:
|
|
|
|
|
|
|||||||||||||||
Company sales
|
$
|
2,051
|
|
$
|
2,431
|
|
$
|
2,854
|
|
$
|
3,557
|
|
$
|
10,893
|
|
|||||
Franchise and license fees and income
|
374
|
|
385
|
|
420
|
|
554
|
|
1,733
|
|
||||||||||
Total revenues
|
2,425
|
|
2,816
|
|
3,274
|
|
4,111
|
|
12,626
|
|
||||||||||
Restaurant profit
|
360
|
|
386
|
|
494
|
|
513
|
|
1,753
|
|
||||||||||
Operating Profit(a)
|
401
|
|
419
|
|
488
|
|
507
|
|
1,815
|
|
||||||||||
Net Income – YUM! Brands, Inc.
|
264
|
|
316
|
|
383
|
|
356
|
|
1,319
|
|
||||||||||
Basic earnings per common share
|
0.56
|
|
0.67
|
|
0.82
|
|
0.77
|
|
2.81
|
|
||||||||||
Diluted earnings per common share
|
0.54
|
|
0.65
|
|
0.80
|
|
0.75
|
|
2.74
|
|
||||||||||
Dividends declared per common share
|
—
|
|
0.50
|
|
—
|
|
0.57
|
|
1.07
|
|
|
2010
|
|||||||||||||||||||
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Total
|
|||||||||||||||
Revenues:
|
|
|
|
|
|
|||||||||||||||
Company sales
|
$
|
1,996
|
|
$
|
2,220
|
|
$
|
2,496
|
|
$
|
3,071
|
|
$
|
9,783
|
|
|||||
Franchise and license fees and income
|
349
|
|
354
|
|
366
|
|
491
|
|
1,560
|
|
||||||||||
Total revenues
|
2,345
|
|
2,574
|
|
2,862
|
|
3,562
|
|
11,343
|
|
||||||||||
Restaurant profit
|
340
|
|
366
|
|
479
|
|
478
|
|
1,663
|
|
||||||||||
Operating Profit(b)
|
364
|
|
421
|
|
544
|
|
440
|
|
1,769
|
|
||||||||||
Net Income – YUM! Brands, Inc.
|
241
|
|
286
|
|
357
|
|
274
|
|
1,158
|
|
||||||||||
Basic earnings per common share
|
0.51
|
|
0.61
|
|
0.76
|
|
0.58
|
|
2.44
|
|
||||||||||
Diluted earnings per common share
|
0.50
|
|
0.59
|
|
0.74
|
|
0.56
|
|
2.38
|
|
||||||||||
Dividends declared per common share
|
0.21
|
|
0.21
|
|
—
|
|
0.50
|
|
0.92
|
|
(a)
|
Includes net losses of $65 million primarily related to the LJS and A&W divestitures, $88 million primarily related to refranchising international markets and $28 million primarily related to the U.S. business transformation measures and U.S. refranchising in the first, third and fourth quarters of 2011, respectively. See Note 4. The fourth quarter of 2011 also includes the $25 million impact of the 53rd week. See Note 2.
|
(b)
|
Includes net losses of $66 million and $19 million in the first and fourth quarters of 2010, respectively, related primarily to the U.S. business transformation measures and refranchising international markets. See Note 4.
|
Item 9.
|
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accountant Fees and Services.
|
Item 15.
|
Exhibits and Financial Statement Schedules.
|
(a)
|
(1
|
)
|
Financial Statements: Consolidated Financial Statements filed as part of this report are listed under Part II, Item 8 of this Form 10-K.
|
|
(2
|
)
|
Financial Statement Schedules: No schedules are required because either the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements thereto filed as a part of this Form 10-K.
|
||
(3
|
)
|
Exhibits: The exhibits listed in the accompanying Index to Exhibits are filed as part of this Form 10-K. The Index to Exhibits specifically identifies each management contract or compensatory plan required to be filed as an exhibit to this Form 10-K.
|
|
SIGNATURES
|
Date:
|
February 20, 2012
|
|
YUM! BRANDS, INC.
|
By:
|
/s/ David C. Novak
|
Signature
|
Title
|
Date
|
||
/s/ David C. Novak
|
Chairman of the Board,
|
February 20, 2012
|
||
David C. Novak
|
Chief Executive Officer and President
|
|||
(principal executive officer)
|
||||
/s/ Richard T. Carucci
|
Chief Financial Officer
|
February 20, 2012
|
||
Richard T. Carucci
|
(principal accounting officer)
|
|||
/s/ David E. Russell
|
Vice President and Corporate Controller
|
February 20, 2012
|
||
David E. Russell
|
(principal accounting officer)
|
|||
/s/ David W. Dorman
|
Director
|
February 20, 2012
|
||
David W. Dorman
|
||||
/s/ Massimo Ferragamo
|
Director
|
February 20, 2012
|
||
Massimo Ferragamo
|
||||
/s/ J. David Grissom
|
Director
|
February 20, 2012
|
||
J. David Grissom
|
||||
/s/ Bonnie G. Hill
|
Director
|
February 20, 2012
|
||
Bonnie G. Hill
|
||||
/s/ Robert Holland, Jr.
|
Director
|
February 20, 2012
|
||
Robert Holland, Jr.
|
||||
/s/ Kenneth G. Langone
|
Director
|
February 20, 2012
|
||
Kenneth G. Langone
|
||||
/s/ Jonathan S. Linen
|
Director
|
February 20, 2012
|
||
Jonathan S. Linen
|
||||
/s/ Thomas C. Nelson
|
Director
|
February 20, 2012
|
||
Thomas C. Nelson
|
||||
/s/ Thomas M. Ryan
|
Director
|
February 20, 2012
|
||
Thomas M. Ryan
|
||||
/s/ Jing-Shyh S. Su
|
Vice-Chairman of the Board
|
February 20, 2012
|
||
Jing-Shyh S. Su
|
||||
/s/ Robert D. Walter
|
Director
|
February 20, 2012
|
||
Robert D. Walter
|
||||
Exhibit
Number
|
|
Description of Exhibits
|
||
|
|
|
||
3.1
|
|
Restated Articles of Incorporation of YUM, effective May 26, 2011, which is incorporated herein by reference from Exhibit 3.1 to YUM's Report on Form 8-K filed on May 31, 2011.
|
||
|
|
|
||
3.2
|
|
Amended and restated Bylaws of YUM, effective May 26, 2011, which are incorporated herein by reference from Exhibit 3.2 to YUM's Report on Form 8-K filed on May 31, 2011.
|
||
|
|
|
||
4.1
|
|
Indenture, dated as of May 1, 1998, between YUM and J.P. Morgan Chase Bank, National Association, successor in interest to The First National Bank of Chicago, which is incorporated herein by reference from Exhibit 4.1 to YUM's Report on Form 8-K filed on May 13, 1998.
|
||
|
|
(i)
|
7.70% Senior Notes due July 1, 2012 issued under the foregoing May 1, 1998 indenture, which notes are incorporated by reference from Exhibit 4.1 to YUM's Report on Form 8-K filed on July 2, 2002.
|
|
|
|
|
||
|
|
(ii)
|
6.25% Senior Notes due April 15, 2016 issued under the foregoing May 1, 1998 indenture, which notes are incorporated by reference from Exhibit 4.2 to YUM's Report on Form 8-K filed on April 17, 2006.
|
|
|
(iii)
|
6.25% Senior Notes due March 15, 2018 issued under the foregoing May 1, 1998 indenture, which notes are incorporated by reference from Exhibit 4.2 to YUM's Report on Form 8-K filed on October 22, 2007.
|
||
|
|
|
||
|
|
(iv)
|
6.875% Senior Notes due November 15, 2037 issued under the foregoing May 1, 1998 indenture, which notes are incorporated by reference from Exhibit 4.3 to YUM's Report on Form 8-K filed on October 22, 2007.
|
|
|
|
|
|
|
|
|
(v)
|
4.25% Senior Notes due September 15, 2015 issued under the foregoing May 1, 1998 indenture, which notes are incorporated by reference from Exhibit 4.1 to YUM's Report on Form 8-K filed on August 25, 2009.
|
|
|
|
|
|
|
|
|
(vi)
|
5.30% Senior Notes due September 15, 2019 issued under the foregoing May 1, 1998 indenture, which notes are incorporated by reference from Exhibit 4.1 to YUM's Report on Form 8-K filed on August 25, 2009.
|
|
|
|
|
||
|
|
(vii)
|
3.875% Senior Notes due November 1, 2020 issued under the foregoing May 1, 1998 indenture, which notes are incorporated by reference from Exhibit 4.2 to YUM's Report on Form 8-K filed on August 31, 2010.
|
|
(viii)
|
3.750% Senior Notes due November 1, 2021 issued under the foregoing May 1, 1998 indenture, which notes are incorporated by reference from Exhibit 4.2 to YUM's Report on Form 8-K filed August 29, 2011.
|
10.1 +
|
|
Master Distribution Agreement between Unified Foodservice Purchasing Co-op, LLC, for and on behalf of itself as well as the Participants, as defined therein (including certain subsidiaries of Yum! Brands, Inc.) and McLane Foodservice, Inc., effective as of January 1, 2011 and Participant Distribution Joinder Agreement between Unified Foodservice Purchasing Co-op, LLC, McLane Foodservice, Inc., and certain subsidiaries of Yum! Brands, Inc., which are incorporated herein by reference from Exhibit 10.1 to YUM's Quarterly Report on Form 10-Q for the quarter ended September 4, 2010.
|
|||
|
|
|
10.2
|
|
Amended and Restated Credit Agreement, dated November 29, 2007 among YUM, the lenders party thereto, JP Morgan Chase Bank, N.A., as Administrative Agent, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as Lead Arrangers and Bookrunners and Citibank N.A., as Syndication Agent, which is incorporated herein by reference from Exhibit 10.6 to YUM's Annual Report on Form 10-K for the fiscal year ended December 29, 2007.
|
|||
|
|
|
|||
10.3†
|
|
YUM Director Deferred Compensation Plan, as effective October 7, 1997, which is incorporated herein by reference from Exhibit 10.7 to YUM's Annual Report on Form 10-K for the fiscal year ended December 27, 1997.
|
|||
|
|
|
|||
10.3.1†
|
|
YUM Director Deferred Compensation Plan, Plan Document for the 409A Program, as effective January 1, 2005, and as Amended through November 14, 2008, which is incorporated by reference from Exhibit 10.7.1 to YUM's Quarterly Report on Form 10-Q for the quarter ended June 13, 2009.
|
|||
|
|
|
|||
10.4†
|
|
YUM 1997 Long Term Incentive Plan, as effective October 7, 1997, which is incorporated herein by reference from Exhibit 10.8 to YUM's Annual Report on Form 10-K for the fiscal year ended December 27, 1997.
|
|||
|
|
|
|||
10.5†
|
|
YUM Executive Incentive Compensation Plan, as effective May 20, 2004, and as Amended through the Second Amendment, as effective May 21, 2009, which is incorporated herein by reference from Exhibit A of YUM's Definitive Proxy Statement on Form DEF 14A for the Annual Meeting of Shareholders held on May 21, 2009.
|
|||
|
|
|
|||
10.6†
|
|
YUM Executive Income Deferral Program, as effective October 7, 1997, and as amended through May 16, 2002, which is incorporated herein by reference from Exhibit 10.10 to YUM's Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
|
|||
|
|
|
|||
10.6.1†
|
|
YUM! Brands Executive Income Deferral Program, Plan Document for the 409A Program, as effective January 1, 2005, and as Amended through June 30, 2009, which is incorporated by reference from Exhibit 10.10.1 to YUM's Quarterly Report on Form 10-Q for the quarter ended June 13, 2009.
|
|||
|
|
|
|||
10.7†
|
|
YUM! Brands Pension Equalization Plan, Plan Document for the Pre-409A Program, as effective January 1, 2005, and as Amended through December 31, 2010, which is incorporated by reference from Exhibit 10.7 to Yum's Quarterly Report on Form 10-Q for the quarter ended March 19, 2011.
|
|||
10.7.1†
|
|
YUM! Brands, Inc. Pension Equalization Plan, Plan Document for the 409A Program, as effective January 1, 2005, and as Amended through December 30, 2008, which is incorporated by reference from Exhibit 10.13.1 to YUM's Quarterly Report on Form 10-Q for the quarter ended June 13, 2009.
|
|||
|
|
|
|||
10.8†
|
|
Form of Directors' Indemnification Agreement, which is incorporated herein by reference from Exhibit 10.17 to YUM's Annual Report on Form 10-K for the fiscal year ended December 27, 1997.
|
|||
|
|
|
|||
10.9†
|
|
Amended and restated form of Severance Agreement (in the event of a change in control), which is incorporated herein by reference from Exhibit 10.17 to YUM's Annual Report on Form 10-K for the fiscal year ended December 30, 2000.
|
|||
|
|
|
|||
10.9.1†
|
|
YUM! Brands, Inc. 409A Addendum to Amended and restated form of Severance Agreement, as effective December 31, 2008, which is incorporated by reference from Exhibit 10.17.1 to YUM's Quarterly Report on Form 10-Q for the quarter ended June 13, 2009.
|
|||
|
|
|
|||
10.10†
|
|
YUM Long Term Incentive Plan, as Amended through the Fourth Amendment, as effective November 21, 2008, which is incorporated by reference from Exhibit 10.18 to YUM's Quarterly Report on Form 10-Q for the quarter ended June 13, 2009.
|
|||
|
|
|
10.11
|
|
Second Amended and Restated YUM Purchasing Co-op Agreement, dated as of January 1, 2012, between YUM and the Unified FoodService Purchasing Co-op, LLC, as filed herewith.
|
|||
|
|
|
|||
10.12†
|
|
YUM Restaurant General Manager Stock Option Plan, as effective April 1, 1999, and as amended through June 23, 2003, which is incorporated herein by reference from Exhibit 10.22 to YUM's Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
|
|||
|
|
|
|||
10.13†
|
|
YUM SharePower Plan, as effective October 7, 1997, and as amended through June 23, 2003, which is incorporated herein by reference from Exhibit 10.23 to YUM's Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
|
|||
|
|
|
|||
10.14†
|
|
Form of YUM Director Stock Option Award Agreement, which is incorporated herein by reference from Exhibit 10.25 to YUM's Quarterly Report on Form 10-Q for the quarter ended September 4, 2004.
|
|||
|
|
|
|||
10.15†
|
|
Form of YUM 1999 Long Term Incentive Plan Award Agreement, which is incorporated herein by reference from Exhibit 10.26 to YUM's Quarterly Report on Form 10-Q for the quarter ended September 4, 2004.
|
|||
|
|
|
|||
10.16†
|
|
YUM! Brands, Inc. International Retirement Plan, as in effect January 1, 2005, which is incorporated herein by reference from Exhibit 10.27 to YUM's Annual Report on Form 10-K for the fiscal year ended December 25, 2004.
|
|||
|
|
|
|||
10.17†
|
|
Letter of Understanding, dated July 13, 2004, and as amended on May 18, 2011, by and between the Company and Samuel Su, which is incorporated herein by reference from Exhibit 10.28 to YUM's Annual Report on Form 10-K for the fiscal year ended December 25, 2004, and from Item 5.02 of Form 8-K on May 24, 2011.
|
|||
|
|
|
|||
10.18†
|
|
Form of 1999 Long Term Incentive Plan Award Agreement (Stock Appreciation Rights) which is incorporated by reference from Exhibit 99.1 to YUM's Report on Form 8-K as filed on January 30, 2006.
|
|||
|
|
|
|||
10.19
|
|
Amended and Restated Credit Agreement, dated November 29, 2007, among YUM, the lenders party thereto, Citigroup Global Markets Ltd. and J.P. Morgan Securities Inc., as Lead Arrangers and Bookrunners, and Citigroup International Plc and Citibank, N.A., Canadian Branch, as Facility Agents, which is incorporated herein by reference from Exhibit 10.30 to YUM's Annual Report on Form 10-K for the fiscal year ended December 29, 2007.
|
10.20†
|
|
YUM! Brands Leadership Retirement Plan, as in effect January 1, 2005, which is incorporated herein by reference from Exhibit 10.32 to YUM's Quarterly Report on Form 10-Q for the quarter ended March 24, 2007.
|
||||
|
|
|
||||
10.20.1†
|
|
YUM! Brands Leadership Retirement Plan, Plan Document for the 409A Program, as effective January 1, 2005, and as Amended through December, 2009, which is incorporated by reference from Exhibit 10.21.1 to YUM's Annual Report on Form 10-K for the fiscal year ended December 26, 2009.
|
||||
|
|
|
||||
10.21†
|
|
1999 Long Term Incentive Plan Award (Restricted Stock Unit Agreement) by and between the Company and David C. Novak, dated as of January 24, 2008, which is incorporated herein by reference from Exhibit 10.33 to YUM's Annual Report on Form 10-K for the fiscal year ended December 29, 2007.
|
||||
|
|
|
||||
10.22†
|
YUM! Performance Share Plan, as effective January 1, 2009, which is incorporated by reference from Exhibit 10.24 to YUM's Annual Report on Form 10-K for the fiscal year ended December 26, 2009.
|
|||||
|
|
10.23†
|
YUM! Brands Third Country National Retirement Plan, as effective January 1, 2009, which is incorporated by reference from Exhibit 10.25 to YUM's Annual Report on Form 10-K for the fiscal year ended December 26, 2009.
|
|||||
|
|
|||||
10.24†
|
2010 YUM! Brands Supplemental Long Term Disability Coverage Summary, as effective January 1, 2010, which is incorporated by reference from Exhibit 10.26 to YUM's Annual Report on Form 10-K for the fiscal year ended December 26, 2009.
|
|||||
10.25†
|
1999 Long Term Incentive Plan Award (Restricted Stock Unit Agreement) by and between the Company and Jing-Shyh S. Su, dated as of May 20, 2010, which is incorporated by reference from Exhibit 10.27 to YUM's Annual Report on Form 10-K for the fiscal year ended December 25, 2010.
|
|||||
12.1
|
Computation of ratio of earnings to fixed charges.
|
|||||
|
|
|||||
21.1
|
Active Subsidiaries of YUM.
|
|||||
|
|
|||||
23.1
|
Consent of KPMG LLP.
|
|||||
|
|
|||||
31.1
|
Certification of the Chairman, Chief Executive Officer and President pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|||||
|
|
|
||||
31.2
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||||
|
|
|
||||
32.1
|
|
Certification of the Chairman, Chief Executive Officer and President pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||||
|
|
|
||||
32.2
|
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||||
|
|
|
||||
101.INS
|
|
XBRL Instance Document
|
||||
|
|
|
||||
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
||||
|
|
|
||||
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
||||
|
|
|
||||
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
||||
|
|
|
||||
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
||||
|
|
|
||||
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
||||
|
|
|
||||
+
|
Confidential treatment has been granted for certain portions which are omitted in the copy of the exhibit electronically filed with the SEC. The omitted information has been filed separately with the SEC pursuant to our application for confidential treatment.
|
|||||
|
|
|
||||
†
|
Indicates a management contract or compensatory plan.
|