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

12 Months Ended

Dec. 31, 2018

Facility Actions [Line Items]

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 Consolidated Statement of Income for the year ended December 31, 2018 and our Consolidated Balance Sheet as of December 31, 2018.

CONSOLIDATED STATEMENT OF INCOME
	Year ended 12/31/2018
Revenues	As Reported			Impact				Balances under Legacy GAAP
Company sales	$	2,000		$	—			$	2,000
Franchise and property revenues	2,482			43				2,525
Franchise contributions for advertising and other services	1,206			(1,206		)		—
Total revenues	5,688			(1,163		)		4,525
Costs and Expenses, Net
Company restaurant expenses	1,634			—				1,634
General and administrative expenses	895			—				895
Franchise and property expenses	188			27				215
Franchise advertising and other services expense	1,208			(1,208		)		—
Refranchising (gain) loss	(540		)	4				(536		)
Other (income) expense	7			—				7
Total costs and expenses, net	3,392			(1,177		)		2,215
Operating Profit	2,296			14			(a)	2,310
Investment (income) expense, net	(9		)	—				(9		)
Other pension (income) expense	14			—				14
Interest expense, net	452			—				452
Income from continuing operations before income taxes	1,839			14				1,853
Income tax provision (benefit)	297			3				300
Net Income	$	1,542		$	11			$	1,553
Basic Earnings Per Common Share	$	4.80		$	0.03			$	4.83
Diluted Earnings Per Common Share	$	4.69		$	0.03			$	4.72

(a)

Includes $23 million of franchise incentive payments made to or on behalf of franchisees during 2018 that under Legacy GAAP would have been recognized as expense in full in 2018. Due to the size and nature of such payments, we historically would not have allocated their impact to our Divisional results. Upon the adoption of Topic 606, these payments have been capitalized as assets.

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

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

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	1,594			2				1,596
Goodwill	512			—				512
Intangible assets, net	214			9				223
Other assets	345			118				463
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.

CONSOLIDATED BALANCE SHEET
	As Reported 12/31/2018			Impact			Balances under Legacy GAAP 12/31/2018
ASSETS
Current Assets
Cash and cash equivalents	$	292		$	(13	)	$	279
Accounts and notes receivable, net	561			(120		)	441
Prepaid expenses and other current assets	354			(107		)	247
Advertising cooperative assets, restricted	—			241			241
Total Current Assets	1,207			1			1,208
Property, plant and equipment, net	1,237			(2		)	1,235
Goodwill	525			—			525
Intangible assets, net	242			(16		)	226
Other assets	724			(127		)	597
Deferred income taxes	195			(25		)	170
Total Assets	$	4,130		$	(169	)	$	3,961
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and other current liabilities	$	911		$	(287	)	$	624
Income taxes payable	69			—			69
Short-term borrowings	321			—			321
Advertising cooperative liabilities	—			241			241
Total Current Liabilities	1,301			(46		)	1,255
Long-term debt	9,751			—			9,751
Other liabilities and deferred credits	1,004			(354		)	650
Total Liabilities	12,056			(400		)	11,656
Shareholders’ Deficit
Accumulated deficit	(7,592		)	251			(7,341		)
Accumulated other comprehensive loss	(334		)	(20		)	(354		)
Total Shareholders’ Deficit	(7,926		)	231			(7,695		)
Total Liabilities and Shareholders’ Deficit	$	4,130		$	(169	)	$	3,961

Impact of Change in Reporting Calendar [Table Text Block]

The impacts on our Consolidated Financial Statements of retrospectively applying these changes are included below:

	2016
	As Previously Reported		Adjustments				After Change in Reporting Calendar
Total revenues	$	6,366	$	(10	)		$	6,356
Operating Profit	1,625		25			(a)	1,650		(b)
Income from continuing operations	994		24				1,018
Income from discontinued operations, net of tax	625		—				625
Net Income	$	1,619	$	24			$	1,643
Diluted EPS from continuing operations	$	2.48	$	0.06			$	2.54
Diluted EPS from discontinued operations	1.56		—				1.56
Diluted EPS	$	4.04	$	0.06			$	4.10

(a) Primarily represents gains of $24 million related to the refranchising of certain international restaurants which occurred in December 2016.

(b)

Amount does not reconcile to our Consolidated Statements of Income for the year ended December 31, 2016 due to the impact of retrospectively adopting a new accounting standard on Benefit Costs of $32 million.

Refranchising (gain) loss [Member]

Facility Actions [Line Items]

Facility Actions

Refranchising (Gain) Loss

The Refranchising (gain) loss by reportable segment is presented below. Given the size and volatility of recent refranchising initiatives, our chief operating decision maker ("CODM") does not consider the impact of Refranchising (gain) loss when assessing segment performance. As such, we do not allocate such gains and losses to our segments for performance reporting purposes.

During the years ended December 31, 2018, 2017 and 2016, we refranchised 660, 1,470 and 432 restaurants, respectively. We received $825 million, $1,773 million and $370 million in pre-tax proceeds in 2018, 2017 and 2016, respectively, related to these transactions.

A summary of Refranchising (gain) loss is as follows:

	Refranchising (gain) loss
	2018			2017			2016
KFC Division	$	(240	)	$	(581	)	$	(44	)
Pizza Hut Division	13			(16		)	(48		)
Taco Bell Division	(313		)	(486		)	(71		)
Worldwide	$	(540	)	$	(1,083	)	$	(163	)

As a result of classifying restaurant and related assets as held-for-sale and ceasing depreciation expense as well as recording any related write-downs to fair value, depreciation expense was reduced versus what would have otherwise been recorded by $3 million and $10 million during the years ended December 31, 2018 and 2017, respectively. Our CODM does not consider the impact of these depreciation reductions, which were recorded within Company restaurant expenses when assessing segment performance. These depreciation reductions were not allocated to the Division segments resulting in depreciation expense continuing to be recorded within our Divisional results at the rate at which it was prior to the held-for-sale classification.