Items Affecting Comparability of Net Income, Financial Position and Cash Flows (Tables)

3 Months Ended

6 Months Ended

Jun. 30, 2018

Jun. 30, 2018

Items Affecting Comparability of Net Income and Cash Flows [Abstract]

Revenue Recognition adjustments made to Condensed Consolidated Balance Sheet [Table Text Block]

As a result, the following adjustments were made to the Condensed Consolidated Balance Sheet as of January 1, 2018:

CONDENSED CONSOLIDATED BALANCE SHEET
	As Reported 12/31/2017			Adjustments				Balances with Adoption of Topic 606 1/1/2018
ASSETS
Current Assets
Cash and cash equivalents	$	1,522		$	11			$	1,533
Accounts and notes receivable, net	400			112				512
Prepaid expenses and other current assets	384			76			(a)	460
Advertising cooperative assets, restricted	201			(201		)		—
Total Current Assets	2,507			(2		)		2,505
Property, plant and equipment, net	1,697			11				1,708
Goodwill	512			—				512
Intangible assets, net	110			—				110
Other assets	346			118				464
Deferred income taxes	139			26				165
Total Assets	$	5,311		$	153			$	5,464
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and other current liabilities	$	813		$	220			$	1,033
Income taxes payable	123			—				123
Short-term borrowings	375			—				375
Advertising cooperative liabilities	201			(201		)		—
Total Current Liabilities	1,512			19				1,531
Long-term debt	9,429			—				9,429
Other liabilities and deferred credits	704			353				1,057
Total Liabilities	11,645			372				12,017
Shareholders’ Deficit
Accumulated deficit	(6,063		)	(240		)		(6,303		)
Accumulated other comprehensive loss	(271		)	21				(250		)
Total Shareholders’ Deficit	(6,334		)	(219		)		(6,553		)
Total Liabilities and Shareholders’ Deficit	$	5,311		$	153			$	5,464

(a)

Includes $58 million of restricted cash related to advertising cooperatives. These balances can only be used to settle obligations of the respective cooperatives.

CONDENSED CONSOLIDATED BALANCE SHEET
	As Reported 6/30/2018			Impact			Balances under Legacy GAAP 6/30/2018
ASSETS
Current Assets
Cash and cash equivalents	$	313		$	(27	)	$	286
Accounts and notes receivable, net	527			(103		)	424
Prepaid expenses and other current assets	363			(46		)	317
Advertising cooperative assets, restricted	—			176			176
Total Current Assets	1,203			—			1,203
Property, plant and equipment, net	1,533			(16		)	1,517
Goodwill	502			—			502
Intangible assets, net	90			—			90
Other assets	787			(118		)	669
Deferred income taxes	211			(25		)	186
Total Assets	$	4,326		$	(159	)	$	4,167
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and other current liabilities	$	822		$	(215	)	$	607
Income taxes payable	48			—			48
Short-term borrowings	54			—			54
Advertising cooperative liabilities	—			176			176
Total Current Liabilities	924			(39		)	885
Long-term debt	9,612			—			9,612
Other liabilities and deferred credits	1,037			(336		)	701
Total Liabilities	11,573			(375		)	11,198
Shareholders’ Deficit
Accumulated deficit	(6,965		)	238			(6,727		)
Accumulated other comprehensive loss	(282		)	(22		)	(304		)
Total Shareholders’ Deficit	(7,247		)	216			(7,031		)
Total Liabilities and Shareholders’ Deficit	$	4,326		$	(159	)	$	4,167

Impact of adopting Topic 606 on our Condensed Consolidated Statements of Income [Table Text Block]

The following tables reflect the impact of the adoption of Topic 606 on our Condensed Consolidated Statement of Income for the quarter and year to date ended June 30, 2018 and our Condensed Consolidated Balance Sheet as of June 30, 2018.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	Quarter ended 6/30/2018
Revenues	As Reported			Impact				Balances under Legacy GAAP
Company sales	$	512		$	—			$	512
Franchise and property revenues	584			7				591
Franchise contributions for advertising and other services	272			(272		)		—
Total revenues	1,368			(265		)		1,103
Costs and Expenses, Net
Company restaurant expenses	421			—				421
General and administrative expenses	208			—				208
Franchise and property expenses	40			5				45
Franchise advertising and other services expense	274			(274		)		—
Refranchising (gain) loss	(29		)	4				(25		)
Other (income) expense	5			—				5
Total costs and expenses, net	919			(265		)		654
Operating Profit	449			—			(a)	449
Investment (income) expense, net	(23		)	—				(23		)
Other pension (income) expense	3			—				3
Interest expense, net	112			—				112
Income before income taxes	357			—				357
Income tax provision	36			—				36
Net Income	$	321		$	—			$	321
Basic Earnings Per Common Share	$	0.99		$	—			$	0.99
Diluted Earnings Per Common Share	$	0.97		$	—			$	0.97

	Year to date ended 6/30/2018
Revenues	As Reported			Impact				Balances under Legacy GAAP
Company sales	$	1,024		$	—			$	1,024
Franchise and property revenues	1,168			12				1,180
Franchise contributions for advertising and other services	547			(547		)		—
Total revenues	2,739			(535		)		2,204
Costs and Expenses, Net
Company restaurant expenses	859			—				859
General and administrative expenses	427			—				427
Franchise and property expenses	87			11				98
Franchise advertising and other services expense	546			(546		)		—
Refranchising (gain) loss	(185		)	4				(181		)
Other (income) expense	3			—				3
Total costs and expenses, net	1,737			(531		)		1,206
Operating Profit	1,002			(4		)	(a)	998
Investment (income) expense, net	(89		)	—				(89		)
Other pension (income) expense	6			—				6
Interest expense, net	219			—				219
Income before income taxes	866			(4		)		862
Income tax provision	112			(1		)		111
Net Income	$	754		$	(3	)		$	751
Basic Earnings Per Common Share	$	2.30		$	(0.01	)		$	2.29
Diluted Earnings Per Common Share	$	2.25		$	(0.01	)		$	2.24

(a)

Includes $5 million and $9 million of franchise incentive payments related to the KFC U.S. Acceleration Agreement or the Pizza Hut U.S. Transformation Agreement that would have been expensed immediately and that we would not have allocated to the KFC Division or the Pizza Hut Division under Legacy GAAP for the quarter and year to date ended June 30, 2018, respectively. Upon the adoption of Topic 606, these payments have been capitalized as assets.