UNITED STATES | ||
SECURITIES AND EXCHANGE COMMISSION | ||
Washington, D. C. 20549 |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES | |||||||||||
EXCHANGE ACT OF 1934 for the quarterly period ended | |||||||||||
OR | |||||||||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of | (I.R.S. Employer | |||||||||||||||||||
incorporation or organization) | Identification No.) | |||||||||||||||||||
(Address of principal executive offices) | (Zip Code) | |||||||||||||||||||
Registrant’s telephone number, including area code: | |
Securities registered pursuant to Section 12(b) of the Act | |||||||||||
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | |||||||||
☒ | Accelerated Filer | ☐ | ||||||||||||
Non-accelerated Filer | ☐ | Smaller Reporting Company | ||||||||||||
Emerging Growth Company |
Page | ||||||||
No. | ||||||||
Part I. | Financial Information | |||||||
Item 1 - Financial Statements | ||||||||
Condensed Consolidated Statements of Income | ||||||||
Condensed Consolidated Statements of Comprehensive Income | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
Condensed Consolidated Statements of Shareholders' Deficit | ||||||||
Notes to Condensed Consolidated Financial Statements | ||||||||
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||||||
Item 3 - Quantitative and Qualitative Disclosures About Market Risk | ||||||||
Item 4 - Controls and Procedures | ||||||||
Report of Independent Registered Public Accounting Firm | ||||||||
Part II. | Other Information and Signatures | |||||||
Item 1 - Legal Proceedings | ||||||||
Item 1A - Risk Factors | ||||||||
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds | ||||||||
Item 6 - Exhibits | ||||||||
Signatures |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | ||||||||||||||
YUM! BRANDS, INC. AND SUBSIDIARIES | ||||||||||||||
(in millions, except per share data) | ||||||||||||||
Quarter ended | ||||||||||||||
Revenues | 3/31/2023 | 3/31/2022 | ||||||||||||
Company sales | $ | $ | ||||||||||||
Franchise and property revenues | ||||||||||||||
Franchise contributions for advertising and other services | ||||||||||||||
Total revenues | ||||||||||||||
Costs and Expenses, Net | ||||||||||||||
Company restaurant expenses | ||||||||||||||
General and administrative expenses | ||||||||||||||
Franchise and property expenses | ||||||||||||||
Franchise advertising and other services expense | ||||||||||||||
Refranchising (gain) loss | ( | ( | ||||||||||||
Other (income) expense | ( | |||||||||||||
Total costs and expenses, net | ||||||||||||||
Operating Profit | ||||||||||||||
Investment (income) expense, net | ( | |||||||||||||
Other pension (income) expense | ( | |||||||||||||
Interest expense, net | ||||||||||||||
Income Before Income Taxes | ||||||||||||||
Income tax provision (benefit) | ( | |||||||||||||
Net Income | $ | $ | ||||||||||||
Basic Earnings Per Common Share | $ | $ | ||||||||||||
Diluted Earnings Per Common Share | $ | $ | ||||||||||||
Dividends Declared Per Common Share | $ | $ | ||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements. |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) | ||||||||||||||
YUM! BRANDS, INC. AND SUBSIDIARIES | ||||||||||||||
(in millions) | ||||||||||||||
Quarter ended | ||||||||||||||
3/31/2023 | 3/31/2022 | |||||||||||||
Net Income | $ | $ | ||||||||||||
Other comprehensive income, net of tax | ||||||||||||||
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature | ||||||||||||||
Adjustments and gains (losses) arising during the period | ( | |||||||||||||
( | ||||||||||||||
Tax (expense) benefit | ||||||||||||||
( | ||||||||||||||
Changes in pension and post-retirement benefits | ||||||||||||||
Unrealized gains (losses) arising during the period | ||||||||||||||
Reclassification of (gains) losses into Net Income | ||||||||||||||
Tax (expense) benefit | ( | ( | ||||||||||||
( | ||||||||||||||
Changes in derivative instruments | ||||||||||||||
Unrealized gains (losses) arising during the period | ( | |||||||||||||
Reclassification of (gains) losses into Net Income | ( | |||||||||||||
( | ||||||||||||||
Tax (expense) benefit | ( | |||||||||||||
( | ||||||||||||||
Other comprehensive income, net of tax | ( | |||||||||||||
Comprehensive Income | $ | $ | ||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||||||
YUM! BRANDS, INC. AND SUBSIDIARIES | |||||||||||
(in millions) | |||||||||||
Quarter ended | |||||||||||
3/31/2023 | 3/31/2022 | ||||||||||
Cash Flows – Operating Activities | |||||||||||
Net Income | $ | $ | |||||||||
Depreciation and amortization | |||||||||||
Refranchising (gain) loss | ( | ( | |||||||||
Investment (income) expense, net | ( | ||||||||||
Deferred income taxes | ( | ( | |||||||||
Share-based compensation expense | |||||||||||
Changes in accounts and notes receivable | |||||||||||
Changes in prepaid expenses and other current assets | ( | ( | |||||||||
Changes in accounts payable and other current liabilities | ( | ( | |||||||||
Changes in income taxes payable | |||||||||||
Other, net | |||||||||||
Net Cash Provided by Operating Activities | |||||||||||
Cash Flows – Investing Activities | |||||||||||
Capital spending | ( | ( | |||||||||
Proceeds from refranchising of restaurants | |||||||||||
Other, net | ( | ||||||||||
Net Cash Used In Investing Activities | ( | ( | |||||||||
Cash Flows – Financing Activities | |||||||||||
Repayments of long-term debt | ( | ( | |||||||||
Revolving credit facility, three months or less, net | ( | ||||||||||
Repurchase shares of Common Stock | ( | ( | |||||||||
Dividends paid on Common Stock | ( | ( | |||||||||
Other, net | ( | ( | |||||||||
Net Cash Used in Financing Activities | ( | ( | |||||||||
Effect of Exchange Rates on Cash and Cash Equivalents | |||||||||||
Net Decrease in Cash and Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | ( | ( | |||||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period | |||||||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements. |
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
YUM! BRANDS, INC. AND SUBSIDIARIES | |||||||||||
(in millions) | |||||||||||
(Unaudited) 3/31/2023 | 12/31/2022 | ||||||||||
ASSETS | |||||||||||
Current Assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts and notes receivable, net | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total Current Assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Other assets | |||||||||||
Deferred income taxes | |||||||||||
Total Assets | $ | $ | |||||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | |||||||||||
Current Liabilities | |||||||||||
Accounts payable and other current liabilities | $ | $ | |||||||||
Income taxes payable | |||||||||||
Short-term borrowings | |||||||||||
Total Current Liabilities | |||||||||||
Long-term debt | |||||||||||
Other liabilities and deferred credits | |||||||||||
Total Liabilities | |||||||||||
Shareholders’ Deficit | |||||||||||
Common Stock, | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total Shareholders’ Deficit | ( | ( | |||||||||
Total Liabilities and Shareholders’ Deficit | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements. |
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (Unaudited) | ||||||||||||||||||||||||||||||||
YUM! BRANDS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
Quarters ended March 31, 2023 and 2022 | ||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||
Yum! Brands, Inc. | ||||||||||||||||||||||||||||||||
Issued Common Stock | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Shareholders' Deficit | |||||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||
Net Income | ||||||||||||||||||||||||||||||||
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature | ||||||||||||||||||||||||||||||||
Pension and post-retirement benefit plans (net of tax impact of $ | ( | ( | ||||||||||||||||||||||||||||||
Net loss on derivative instruments (net of tax impact of $ | ( | ( | ||||||||||||||||||||||||||||||
Comprehensive Income | ||||||||||||||||||||||||||||||||
Dividends declared | ( | ( | ||||||||||||||||||||||||||||||
Repurchase of shares of Common Stock | ( | ( | ( | |||||||||||||||||||||||||||||
Employee share-based award exercises | ( | ( | ||||||||||||||||||||||||||||||
Share-based compensation events | ||||||||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||
Net Income | ||||||||||||||||||||||||||||||||
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature | ( | ( | ||||||||||||||||||||||||||||||
Pension and post-retirement benefit plans (net of tax impact of $ | ||||||||||||||||||||||||||||||||
Net gain on derivative instruments (net of tax impact of $ | ||||||||||||||||||||||||||||||||
Comprehensive Income | ||||||||||||||||||||||||||||||||
Dividends declared | ( | ( | ||||||||||||||||||||||||||||||
Repurchase of shares of Common Stock | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Employee share-based award exercises | ( | ( | ||||||||||||||||||||||||||||||
Share-based compensation events | ||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements. |
Quarter ended | |||||||||||||||||
2023 | 2022 | ||||||||||||||||
Net Income | $ | $ | |||||||||||||||
Weighted-average common shares outstanding (for basic calculation) | |||||||||||||||||
Effect of dilutive share-based employee compensation | |||||||||||||||||
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation) | |||||||||||||||||
Basic EPS | $ | $ | |||||||||||||||
Diluted EPS | $ | $ | |||||||||||||||
Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation(a) |
Shares Repurchased (thousands) | Dollar Value of Shares Repurchased | Remaining Dollar Value of Shares that may be Repurchased | ||||||||||||||||||||||||||||||||||||||||||
Authorization Date | 2023 | 2022 | 2023 | 2022 | 2023 | |||||||||||||||||||||||||||||||||||||||
May 2021 | — | |||||||||||||||||||||||||||||||||||||||||||
September 2022 | ||||||||||||||||||||||||||||||||||||||||||||
Total | (a) | $ | $ | (a) | $ | |||||||||||||||||||||||||||||||||||||||
Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Nature | Pension and Post-Retirement Benefits | Derivative Instruments | Total | |||||||||||||||||||||||
Balance at December 31, 2022, net of tax | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
OCI, net of tax | ||||||||||||||||||||||||||
Gains (losses) arising during the period classified into AOCI, net of tax | ( | ( | ||||||||||||||||||||||||
(Gains) losses reclassified from AOCI, net of tax | ( | ( | ||||||||||||||||||||||||
( | ( | ( | ||||||||||||||||||||||||
Balance at March 31, 2023, net of tax | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
Quarter ended | |||||||||||||||||
3/31/2023 | 3/31/2022 | ||||||||||||||||
Foreign exchange net (gain) loss | $ | $ | ( | ||||||||||||||
Impairment and closure expense | |||||||||||||||||
Other | ( | ||||||||||||||||
Other (income) expense | $ | $ | ( |
3/31/2023 | 12/31/2022 | ||||||||||
Accounts and notes receivable, gross | $ | $ | |||||||||
Allowance for doubtful accounts | ( | ( | |||||||||
Accounts and notes receivable, net | $ | $ |
3/31/2023 | 12/31/2022 | ||||||||||
Property, plant and equipment, gross | $ | $ | |||||||||
Accumulated depreciation and amortization | ( | ( | |||||||||
Property, plant and equipment, net | $ | $ |
Other Assets | 3/31/2023 | 12/31/2022 | |||||||||
Operating lease right-of-use assets(a) | $ | $ | |||||||||
Franchise incentives | |||||||||||
Investment in Devyani International Limited (See Note 12) | |||||||||||
Other | |||||||||||
Other assets | $ | $ |
3/31/2023 | 12/31/2022 | ||||||||||
Cash and cash equivalents as presented in Condensed Consolidated Balance Sheets | $ | $ | |||||||||
Restricted cash included in Prepaid expenses and other current assets(a) | |||||||||||
Restricted cash and restricted cash equivalents included in Other assets(b) | |||||||||||
Cash and restricted cash related to KFC Russia included in assets held-for-sale | |||||||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents as presented in Condensed Consolidated Statements of Cash Flows | $ | $ |
Quarter ended | |||||||||||
2023 | 2022 | ||||||||||
Income tax (benefit) provision | $ | $ | ( | ||||||||
Effective tax rate | % | ( | % |
Quarter ended 3/31/2023 | ||||||||||||||||||||||||||||||||
KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger Grill Division | Total | ||||||||||||||||||||||||||||
U.S. | ||||||||||||||||||||||||||||||||
Company sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Franchise revenues | ||||||||||||||||||||||||||||||||
Property revenues | ||||||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | ||||||||||||||||||||||||||||||||
China | ||||||||||||||||||||||||||||||||
Franchise revenues | ||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||
Company sales | ||||||||||||||||||||||||||||||||
Franchise revenues | ||||||||||||||||||||||||||||||||
Property revenues | ||||||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | ||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ |
Quarter ended 3/31/2022 | ||||||||||||||||||||||||||||||||
KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger Grill Division | Total | ||||||||||||||||||||||||||||
U.S. | ||||||||||||||||||||||||||||||||
Company sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Franchise revenues | ||||||||||||||||||||||||||||||||
Property revenues | ||||||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | ||||||||||||||||||||||||||||||||
China | ||||||||||||||||||||||||||||||||
Franchise revenues | ||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||
Company sales | ||||||||||||||||||||||||||||||||
Franchise revenues | ||||||||||||||||||||||||||||||||
Property revenues | ||||||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | ||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ |
Deferred Franchise Fees | ||||||||
Balance at December 31, 2022 | $ | |||||||
Revenue recognized that was included in unamortized upfront fees received from franchisees at the beginning of the period | ( | |||||||
Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as revenue during the period | ||||||||
Balance at March 31, 2023 | $ |
Less than 1 year | $ | |||||||
1 - 2 years | ||||||||
2 - 3 years | ||||||||
3 - 4 years | ||||||||
4 - 5 years | ||||||||
Thereafter | ||||||||
Total | $ |
Quarter ended | ||||||||||||||
Revenues | 2023 | 2022 | ||||||||||||
KFC Division | $ | $ | ||||||||||||
Taco Bell Division | ||||||||||||||
Pizza Hut Division | ||||||||||||||
Habit Burger Grill Division | ||||||||||||||
$ | $ |
Quarter ended | ||||||||||||||
Operating Profit | 2023 | 2022 | ||||||||||||
KFC Division | $ | $ | ||||||||||||
Taco Bell Division | ||||||||||||||
Pizza Hut Division | ||||||||||||||
Habit Burger Grill Division | ( | ( | ||||||||||||
Corporate and unallocated G&A expenses(a) | ( | ( | ||||||||||||
Unallocated Franchise and property expenses(a) | ( | |||||||||||||
Unallocated Refranchising gain (loss) | ||||||||||||||
Unallocated Other income (expense)(a) | ( | |||||||||||||
Operating Profit | $ | $ | ||||||||||||
Investment income (expense), net(b) | ( | |||||||||||||
Other pension income (expense) | ||||||||||||||
Interest expense, net | ( | ( | ||||||||||||
Income before income taxes | $ | $ |
Quarter ended | ||||||||||||||
2023 | 2022 | |||||||||||||
Service cost | $ | $ | ||||||||||||
Interest cost | ||||||||||||||
Expected return on plan assets | ( | ( | ||||||||||||
Amortization of net loss | ||||||||||||||
Amortization of prior service cost | ||||||||||||||
Net periodic benefit cost | $ | ( | $ | |||||||||||
Short-term Borrowings | 3/31/2023 | 12/31/2022 | ||||||||||||
Current maturities of long-term debt | $ | $ | ||||||||||||
Less current portion of debt issuance costs and discounts | ( | ( | ||||||||||||
Short-term borrowings | $ | $ | ||||||||||||
Long-term Debt | ||||||||||||||
Securitization Notes | $ | $ | ||||||||||||
Subsidiary Senior Unsecured Notes | ||||||||||||||
Revolving Facility | ||||||||||||||
Term Loan A Facility | ||||||||||||||
Term Loan B Facility | ||||||||||||||
YUM Senior Unsecured Notes | ||||||||||||||
Finance lease obligations | ||||||||||||||
$ | $ | |||||||||||||
Less long-term portion of debt issuance costs and discounts | ( | ( | ||||||||||||
Less current maturities of long-term debt | ( | ( | ||||||||||||
Long-term debt | $ | $ |
Quarter ended | |||||||||||||||||||||||
Gains/(Losses) Recognized in OCI | (Gains)/Losses Reclassified from AOCI into Net Income | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Interest rate swaps | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Income tax benefit/(expense) | ( | ( |
3/31/2023 | 12/31/2022 | ||||||||||||||||||||||
Carrying Value | Fair Value (Level 2) | Carrying Value | Fair Value (Level 2) | ||||||||||||||||||||
Securitization Notes(a) | $ | $ | $ | $ | |||||||||||||||||||
Subsidiary Senior Unsecured Notes(b) | |||||||||||||||||||||||
Term Loan A Facility(b) | |||||||||||||||||||||||
Term Loan B Facility(b) | |||||||||||||||||||||||
YUM Senior Unsecured Notes(b) | |||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||
Condensed Consolidated Balance Sheet | Level | 3/31/2023 | 12/31/2022 | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Investments | Other assets | 1 | $ | $ | ||||||||||||||||||||||
Investments | Other assets | 3 | ||||||||||||||||||||||||
Interest Rate Swaps | Prepaid expenses and other current assets | 2 | ||||||||||||||||||||||||
Interest Rate Swaps | Other assets | 2 | ||||||||||||||||||||||||
% Change | |||||||||||||||||
System Sales, ex FX | Same-Store Sales | Units | GAAP Operating Profit | Core Operating Profit | |||||||||||||
KFC Division | +11 | +9 | +2 | +5 | +12 | ||||||||||||
Taco Bell Division | +12 | +8 | +6 | +10 | +11 | ||||||||||||
Pizza Hut Division | +10 | +7 | +3 | +2 | +7 | ||||||||||||
YUM | +11 | +8 | +3 | +3 | +11 |
First Quarter | |||||||||||
2023 | 2022 | % Change | |||||||||
GAAP EPS | $1.05 | $1.36 | (23) | ||||||||
Special Items EPS | $(0.01) | $0.31 | NM | ||||||||
EPS Excluding Special Items | $1.06 | $1.05 | Even |
Quarter ended | ||||||||||||||||||||
2023 | 2022 | % B/(W) | ||||||||||||||||||
Company sales | $ | 474 | $ | 470 | 1 | |||||||||||||||
Franchise and property revenues | 770 | 714 | 8 | |||||||||||||||||
Franchise contributions for advertising and other services | 401 | 363 | 10 | |||||||||||||||||
Total revenues | 1,645 | 1,547 | 6 | |||||||||||||||||
Company restaurant expenses | 403 | 402 | — | |||||||||||||||||
G&A expenses | 282 | 253 | (11) | |||||||||||||||||
Franchise and property expenses | 36 | 32 | (12) | |||||||||||||||||
Franchise advertising and other services expense | 395 | 361 | (9) | |||||||||||||||||
Refranchising (gain) loss | (4) | (4) | 17 | |||||||||||||||||
Other (income) expense | 10 | (6) | NM | |||||||||||||||||
Total costs and expenses, net | 1,122 | 1,038 | (8) | |||||||||||||||||
Operating Profit | 523 | 509 | 3 | |||||||||||||||||
Investment (income) expense, net | 24 | (7) | NM | |||||||||||||||||
Other pension (income) expense | (2) | — | NM | |||||||||||||||||
Interest expense, net | 130 | 118 | (10) | |||||||||||||||||
Income before income taxes | 371 | 398 | (7) | |||||||||||||||||
Income tax provision (benefit) | 71 | (1) | NM | |||||||||||||||||
Net Income | $ | 300 | $ | 399 | (25) | |||||||||||||||
Diluted EPS(a) | $ | 1.05 | $ | 1.36 | (23) | |||||||||||||||
Effective tax rate | 19.1 | % | (0.2) | % | (19.3) | ppts. | ||||||||||||||
Unit Count | 3/31/2023 | 3/31/2022 | % Increase (Decrease) | ||||||||||||||||||||
Franchise | 54,681 | 52,990 | 3 | ||||||||||||||||||||
Company-owned | 1,002 | 1,062 | (6) | ||||||||||||||||||||
Total | 55,683 | 54,052 | 3 |
Quarter ended | ||||||||||||||
2023 | 2022 | |||||||||||||
Same-store Sales Growth (Decline) % | 8 | 3 | ||||||||||||
System Sales Growth (Decline) %, reported | 6 | 6 | ||||||||||||
System Sales Growth (Decline) %, excluding FX | 11 | 8 | ||||||||||||
Quarter ended | ||||||||||||||
2023 | 2022 | |||||||||||||
Consolidated | ||||||||||||||
Company sales(a) | $ | 474 | $ | 470 | ||||||||||
Franchise sales | 14,541 | 13,676 | ||||||||||||
System sales | 15,015 | 14,146 | ||||||||||||
Foreign Currency Impact on System sales(b) | (641) | N/A | ||||||||||||
System sales, excluding FX | $ | 15,656 | $ | 14,146 | ||||||||||
KFC Division | ||||||||||||||
Company sales(a) | $ | 110 | $ | 126 | ||||||||||
Franchise sales | 7,947 | 7,607 | ||||||||||||
System sales | 8,057 | 7,733 | ||||||||||||
Foreign Currency Impact on System sales(b) | (504) | N/A | ||||||||||||
System sales, excluding FX | $ | 8,561 | $ | 7,733 | ||||||||||
Taco Bell Division | ||||||||||||||
Company sales(a) | $ | 229 | $ | 214 | ||||||||||
Franchise sales | 3,235 | 2,894 | ||||||||||||
System sales | 3,464 | 3,108 | ||||||||||||
Foreign Currency Impact on System sales(b) | (10) | N/A | ||||||||||||
System sales, excluding FX | $ | 3,474 | $ | 3,108 | ||||||||||
Pizza Hut Division | ||||||||||||||
Company sales(a) | $ | 5 | $ | 5 | ||||||||||
Franchise sales | 3,331 | 3,155 | ||||||||||||
System sales | 3,336 | 3,160 | ||||||||||||
Foreign Currency Impact on System sales(b) | (127) | N/A | ||||||||||||
System sales, excluding FX | $ | 3,463 | $ | 3,160 | ||||||||||
Habit Burger Grill Division | ||||||||||||||
Company sales(a) | $ | 130 | $ | 125 | ||||||||||
Franchise sales | 28 | 20 | ||||||||||||
System sales | 158 | 145 | ||||||||||||
Foreign Currency Impact on System sales(b) | — | N/A | ||||||||||||
System sales, excluding FX | $ | 158 | $ | 145 | ||||||||||
Non-GAAP Items | ||||||||||||||
Non-GAAP Items, along with the reconciliation to the most comparable GAAP financial measure, as presented below. | ||||||||||||||
Quarter ended | ||||||||||||||
2023 | 2022 | |||||||||||||
Core Operating Profit Growth (Decline) % | 11 | (5) | ||||||||||||
Diluted EPS Growth (Decline) %, excluding Special Items | Even | (1) | ||||||||||||
Effective Tax Rate excluding Special Items | 19.3 | % | 20.4 | % | ||||||||||
Quarter ended | ||||||||||||||
2023 | 2022 | |||||||||||||
Company restaurant profit | $ | 71 | $ | 68 | ||||||||||
Company restaurant margin % | 14.9 | % | 14.5 | % | ||||||||||
Quarter ended | ||||||||||||||
Detail of Special Items | 2023 | 2022 | ||||||||||||
Gain associated with market-wide refranchisings(a) | $ | 3 | $ | 3 | ||||||||||
Operating profit impact from decision to exit Russia(b) | (3) | 7 | ||||||||||||
Other Special Items Expense | (3) | (1) | ||||||||||||
Special Items Income (Expense) - Operating Profit | (3) | 9 | ||||||||||||
Tax (Expense) Benefit on Special Items(c) | 2 | (2) | ||||||||||||
Tax Benefit - U.S. foreign tax credit regulations issued in January 2022(d) | — | 82 | ||||||||||||
Special Items Income (Expense), net of tax | $ | (1) | $ | 89 | ||||||||||
Average diluted shares outstanding | 285 | 294 | ||||||||||||
Special Items diluted EPS | $ | (0.01) | $ | 0.31 | ||||||||||
Reconciliation of GAAP Operating Profit to Core Operating Profit | Quarter ended | |||||||||||||
2023 | 2022 | |||||||||||||
Consolidated | ||||||||||||||
GAAP Operating Profit | $ | 523 | $ | 509 | ||||||||||
Special Items Income (Expense) | (3) | 9 | ||||||||||||
Foreign Currency Impact on Divisional Operating Profit(a) | (27) | N/A | ||||||||||||
Core Operating Profit | $ | 553 | $ | 500 | ||||||||||
KFC Division | ||||||||||||||
GAAP Operating Profit | $ | 305 | $ | 291 | ||||||||||
Foreign Currency Impact on Divisional Operating Profit(a) | (21) | N/A | ||||||||||||
Core Operating Profit | $ | 326 | $ | 291 | ||||||||||
Taco Bell Division | ||||||||||||||
GAAP Operating Profit | $ | 204 | $ | 185 | ||||||||||
Foreign Currency Impact on Divisional Operating Profit(a) | (1) | N/A | ||||||||||||
Core Operating Profit | $ | 205 | $ | 185 | ||||||||||
Pizza Hut Division | ||||||||||||||
GAAP Operating Profit | $ | 104 | $ | 102 | ||||||||||
Foreign Currency Impact on Divisional Operating Profit(a) | (5) | N/A | ||||||||||||
Core Operating Profit | $ | 109 | $ | 102 | ||||||||||
Habit Burger Grill Division | ||||||||||||||
GAAP Operating Loss | $ | (5) | $ | (8) | ||||||||||
Foreign Currency Impact on Divisional Operating Profit(a) | — | N/A | ||||||||||||
Core Operating Loss | $ | (5) | $ | (8) | ||||||||||
Reconciliation of Diluted EPS to Diluted EPS excluding Special Items | ||||||||||||||
Diluted EPS | $ | 1.05 | $ | 1.36 | ||||||||||
Special Items Diluted EPS | (0.01) | 0.31 | ||||||||||||
Diluted EPS excluding Special Items | $ | 1.06 | $ | 1.05 | ||||||||||
Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items | ||||||||||||||
GAAP Effective Tax Rate | 19.1 | % | (0.2) | % | ||||||||||
Impact on Tax Rate as a result of Special Items | (0.2) | % | (20.6) | % | ||||||||||
Effective Tax Rate excluding Special Items | 19.3 | % | 20.4 | % |
Reconciliation of GAAP Operating Profit to Company Restaurant Profit | ||||||||||||||||||||||||||||||||||||||
Quarter ended 3/31/2023 | ||||||||||||||||||||||||||||||||||||||
KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger Grill Division | Corporate and Unallocated | Consolidated | |||||||||||||||||||||||||||||||||
GAAP Operating Profit (Loss) | $ | 305 | $ | 204 | $ | 104 | $ | (5) | $ | (85) | $ | 523 | ||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||
Franchise and property revenues | 412 | 201 | 155 | 2 | — | 770 | ||||||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | 165 | 142 | 94 | — | — | 401 | ||||||||||||||||||||||||||||||||
Add: | ||||||||||||||||||||||||||||||||||||||
General and administrative expenses | 89 | 45 | 51 | 13 | 84 | 282 | ||||||||||||||||||||||||||||||||
Franchise and property expenses | 26 | 5 | 3 | 1 | 1 | 36 | ||||||||||||||||||||||||||||||||
Franchise advertising and other services expense | 164 | 138 | 93 | — | — | 395 | ||||||||||||||||||||||||||||||||
Refranchising (gain) loss | — | — | — | — | (4) | (4) | ||||||||||||||||||||||||||||||||
Other (income) expense | 7 | 1 | (2) | — | 4 | 10 | ||||||||||||||||||||||||||||||||
Company restaurant profit | $ | 14 | $ | 50 | $ | — | $ | 7 | $ | — | $ | 71 | ||||||||||||||||||||||||||
Company sales | $ | 110 | $ | 229 | $ | 5 | $ | 130 | $ | — | $ | 474 | ||||||||||||||||||||||||||
Company restaurant margin % | 12.0 | % | 22.2 | % | 3.9 | % | 4.9 | % | N/A | 14.9 | % |
Quarter ended 3/31/2022 | ||||||||||||||||||||||||||||||||||||||
KFC Division | Taco Bell Division | Pizza Hut Division | Habit Burger Grill Division | Corporate and Unallocated | Consolidated | |||||||||||||||||||||||||||||||||
GAAP Operating Profit (Loss) | $ | 291 | $ | 185 | $ | 102 | $ | (8) | $ | (61) | $ | 509 | ||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||
Franchise and property revenues | 383 | 179 | 151 | 1 | — | 714 | ||||||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | 151 | 124 | 88 | — | — | 363 | ||||||||||||||||||||||||||||||||
Add: | ||||||||||||||||||||||||||||||||||||||
General and administrative expenses | 84 | 36 | 50 | 12 | 71 | 253 | ||||||||||||||||||||||||||||||||
Franchise and property expenses | 24 | 6 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||||
Franchise advertising and other services expense | 151 | 123 | 87 | — | — | 361 | ||||||||||||||||||||||||||||||||
Refranchising (gain) loss | — | — | — | — | (4) | (4) | ||||||||||||||||||||||||||||||||
Other (income) expense | 2 | — | (2) | — | (6) | (6) | ||||||||||||||||||||||||||||||||
Company restaurant profit | $ | 18 | $ | 47 | $ | — | $ | 3 | $ | — | $ | 68 | ||||||||||||||||||||||||||
Company sales | $ | 126 | $ | 214 | $ | 5 | $ | 125 | $ | — | $ | 470 | ||||||||||||||||||||||||||
Company restaurant margin % | 14.1 | % | 21.9 | % | (0.7) | % | 3.0 | % | N/A | 14.5 | % |
Quarter ended | ||||||||||||||||||||||||||||||||
% B/(W) | ||||||||||||||||||||||||||||||||
2023 | 2022 | Reported | Ex FX | |||||||||||||||||||||||||||||
System Sales | $ | 8,057 | $ | 7,733 | 4 | 11 | ||||||||||||||||||||||||||
Same-Store Sales Growth (Decline) % | 9 | 3 | N/A | N/A | ||||||||||||||||||||||||||||
Company sales | $ | 110 | $ | 126 | (13) | (6) | ||||||||||||||||||||||||||
Franchise and property revenues | 412 | 383 | 8 | 14 | ||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | 165 | 151 | 9 | 12 | ||||||||||||||||||||||||||||
Total revenues | $ | 687 | $ | 660 | 4 | 10 | ||||||||||||||||||||||||||
Company restaurant profit | $ | 14 | $ | 18 | (26) | (20) | ||||||||||||||||||||||||||
Company restaurant margin % | 12.0 | % | 14.1 | % | (2.1) | ppts. | (2.0) | ppts. | ||||||||||||||||||||||||
G&A expenses | $ | 89 | $ | 84 | (6) | (8) | ||||||||||||||||||||||||||
Franchise and property expenses | 26 | 24 | (11) | (19) | ||||||||||||||||||||||||||||
Franchise advertising and other services expense | 164 | 151 | (9) | (12) | ||||||||||||||||||||||||||||
Operating Profit | $ | 305 | $ | 291 | 5 | 12 |
% Increase (Decrease) | |||||||||||||||||||||||||||||
Unit Count | 3/31/2023 | 3/31/2022 | |||||||||||||||||||||||||||
Franchise | 27,785 | 27,081 | 3 | ||||||||||||||||||||||||||
Company-owned | 218 | 291 | (25) | ||||||||||||||||||||||||||
Total | 28,003 | 27,372 | 2 |
Quarter ended | ||||||||||||||||||||||||||||||||
% B/(W) | ||||||||||||||||||||||||||||||||
2023 | 2022 | Reported | Ex FX | |||||||||||||||||||||||||||||
System Sales | $ | 3,464 | $ | 3,108 | 11 | 12 | ||||||||||||||||||||||||||
Same-Store Sales Growth % | 8 | 5 | N/A | N/A | ||||||||||||||||||||||||||||
Company sales | $ | 229 | $ | 214 | 7 | 7 | ||||||||||||||||||||||||||
Franchise and property revenues | 201 | 179 | 12 | 12 | ||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | 142 | 124 | 14 | 14 | ||||||||||||||||||||||||||||
Total revenues | $ | 572 | $ | 517 | 11 | 11 | ||||||||||||||||||||||||||
Company restaurant profit | $ | 50 | $ | 47 | 9 | 9 | ||||||||||||||||||||||||||
Company restaurant margin % | 22.2 | % | 21.9 | % | 0.3 | ppts. | 0.3 | ppts. | ||||||||||||||||||||||||
G&A expenses | $ | 45 | $ | 36 | (25) | (25) | ||||||||||||||||||||||||||
Franchise and property expenses | 5 | 6 | 14 | 16 | ||||||||||||||||||||||||||||
Franchise advertising and other services expense | 138 | 123 | (12) | (12) | ||||||||||||||||||||||||||||
Operating Profit | $ | 204 | $ | 185 | 10 | 11 |
% Increase (Decrease) | |||||||||||||||||||||||||||||
Unit Count | 3/31/2023 | 3/31/2022 | |||||||||||||||||||||||||||
Franchise | 7,806 | 7,367 | 6 | ||||||||||||||||||||||||||
Company-owned | 470 | 464 | 1 | ||||||||||||||||||||||||||
Total | 8,276 | 7,831 | 6 |
Quarter ended | ||||||||||||||||||||||||||||||||
% B/(W) | ||||||||||||||||||||||||||||||||
2023 | 2022 | Reported | Ex FX | |||||||||||||||||||||||||||||
System Sales | $ | 3,336 | $ | 3,160 | 6 | 10 | ||||||||||||||||||||||||||
Same-Store Sales Growth (Decline) % | 7 | Even | N/A | N/A | ||||||||||||||||||||||||||||
Company sales | $ | 5 | $ | 5 | 2 | 2 | ||||||||||||||||||||||||||
Franchise and property revenues | 155 | 151 | 3 | 6 | ||||||||||||||||||||||||||||
Franchise contributions for advertising and other services | 94 | 88 | 7 | 8 | ||||||||||||||||||||||||||||
Total revenues | $ | 254 | $ | 244 | 4 | 7 | ||||||||||||||||||||||||||
Company restaurant profit | $ | — | $ | — | NM | NM | ||||||||||||||||||||||||||
Company restaurant margin % | 3.9 | % | (0.7) | % | 4.6 | ppts. | 4.6 | ppts. | ||||||||||||||||||||||||
G&A expenses | $ | 51 | $ | 50 | (3) | (5) | ||||||||||||||||||||||||||
Franchise and property expenses | 3 | 2 | (30) | (8) | ||||||||||||||||||||||||||||
Franchise advertising and other services expense | 93 | 87 | (7) | (8) | ||||||||||||||||||||||||||||
Operating Profit | $ | 104 | $ | 102 | 2 | 7 |
% Increase (Decrease) | |||||||||||||||||||||||||||||
Unit Count | 3/31/2023 | 3/31/2022 | |||||||||||||||||||||||||||
Franchise | 19,025 | 18,496 | 3 | ||||||||||||||||||||||||||
Company-owned | 21 | 22 | (5) | ||||||||||||||||||||||||||
Total | 19,046 | 18,518 | 3 |
Quarter ended | ||||||||||||||||||||
% B/(W) | ||||||||||||||||||||
2023 | 2022 | Reported | ||||||||||||||||||
System Sales | $ | 158 | $ | 145 | 8 | |||||||||||||||
Same-Store Sales Growth % | — | 3 | N/A | |||||||||||||||||
Total revenues | $ | 132 | $ | 126 | 4 | |||||||||||||||
Operating Profit (Loss) | $ | (5) | $ | (8) | 35 |
Unit Count | 3/31/2023 | 3/31/2022 | % Increase (Decrease) | ||||||||||||||||||||
Franchise | 65 | 46 | 41 | ||||||||||||||||||||
Company-owned | 293 | 285 | 3 | ||||||||||||||||||||
Total | 358 | 331 | 8 |
Quarter ended | |||||||||||||||||||||||
(Expense) / Income | 2023 | 2022 | % B/(W) | ||||||||||||||||||||
Corporate and unallocated G&A | $ | ( | $ | ( | (17) | ||||||||||||||||||
Unallocated Franchise and property expenses (See Note 8) | ( | NM | |||||||||||||||||||||
Unallocated Refranchising gain (loss) | 17 | ||||||||||||||||||||||
Unallocated Other income (expense) (See Note 8) | ( | NM | |||||||||||||||||||||
Investment income (expense), net (See Note 8) | ( | NM | |||||||||||||||||||||
Other pension income (expense) (See Note 9) | NM | ||||||||||||||||||||||
Interest expense, net | ( | ( | (10) | ||||||||||||||||||||
Income tax benefit (provision) (See Note 6) | (71) | 1 | NM | ||||||||||||||||||||
Effective tax rate (See Note 6) | % | ( | % | (19.3) | ppts. |
2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2037 | 2043 | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securitization Notes | $ | 29 | $ | 39 | $ | 39 | $ | 944 | $ | 875 | $ | 582 | $ | 565 | $ | 7 | $ | 683 | $ | 3,763 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Agreement | 25 | 48 | 53 | 662 | 15 | 1,398 | 2,201 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revolving Facility | 194 | 194 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsidiary Senior Unsecured Notes | 750 | 750 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
YUM Senior Unsecured Notes | 325 | 800 | 1,050 | $ | 2,100 | $ | 325 | $ | 275 | 4,875 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 379 | $ | 87 | $ | 92 | $ | 1,800 | $ | 1,640 | $ | 1,980 | $ | 565 | $ | 807 | $ | 1,733 | $ | 2,100 | $ | 325 | $ | 275 | $ | 11,783 |
Fiscal Periods | Total number of shares purchased (thousands) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs (thousands) | Approximate dollar value of shares that may yet be purchased under the plans or programs (millions) | ||||||||||||||||||||||
1/1/23-1/31/23 | — | $— | — | $1,750 | ||||||||||||||||||||||
2/1/23-2/28/23 | 233 | $130.17 | 233 | $1,720 | ||||||||||||||||||||||
3/1/23-3/31/23 | 154 | $127.60 | 154 | $1,700 | ||||||||||||||||||||||
Total | 387 | $129.15 | 387 | $1,700 |
(a) | Exhibit Index | ||||||||||||||||
Exhibit No. | Exhibit Description | ||||||||||||||||
15 | |||||||||||||||||
31.1 | |||||||||||||||||
31.2 | |||||||||||||||||
32.1 | |||||||||||||||||
32.2 | |||||||||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||||||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | ||||||||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||||||||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||||||||
† | Indicates a management contract or compensatory plan. | ||||||||||||||||
YUM! BRANDS, INC. | |||||
(Registrant) |
Date: | May 8, 2023 | /s/ David E. Russell | ||||||
Senior Vice President, Finance and Corporate Controller | ||||||||
(Principal Accounting Officer) |
Date: | May 8, 2023 | /s/ David W. Gibbs | ||||||
Chief Executive Officer |
Date: | May 8, 2023 | /s/ Chris Turner | ||||||
Chief Financial Officer |
Date: | May 8, 2023 | /s/ David W. Gibbs | ||||||
Chief Executive Officer |
Date: | May 8, 2023 | /s/ Chris Turner | ||||||
Chief Financial Officer |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Net Income | $ 300 | $ 399 |
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature | ||
Adjustments and gains (losses) arising during the period | 8 | (23) |
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature, before tax | 8 | (23) |
Tax (expense) benefit | 0 | 0 |
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature, net of tax | 8 | (23) |
Changes in pension and post-retirement benefits | ||
Unrealized gains (losses) arising during period, before Tax | 0 | 0 |
Reclassification of (gains) losses into Net Income | 0 | 5 |
Changes in pension and post-retirement benefits, before Tax | 0 | 5 |
Pension and post-retirement benefit plans, tax | (2) | (1) |
Pension and post-retirement benefit plans, net of tax | (2) | 4 |
Changes in derivative instruments | ||
Unrealized gains (losses) arising during the period | (8) | 57 |
Reclassification of (gains) losses into Net Income | (3) | 12 |
Changes in derivative instruments | (11) | 69 |
Changes in derivatives, Tax | 3 | (17) |
Changes in derivatives, net of tax | (8) | 52 |
Other comprehensive income (loss), net of tax | (2) | 33 |
Comprehensive Income (Loss) | $ 298 | $ 432 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|||
Cash Flows - Operating Activities | ||||
Net Income | $ 300 | $ 399 | ||
Depreciation and amortization | 29 | 37 | ||
Refranchising (gain) loss | (4) | (4) | ||
Investment (income) expense, net | [1] | 24 | (7) | |
Deferred income taxes | (4) | (77) | ||
Share-based compensation expense | 25 | 26 | ||
Changes in accounts and notes receivable | 23 | 29 | ||
Changes in prepaid expenses and other current assets | (7) | (13) | ||
Changes in accounts payable and other current liabilities | (101) | (176) | ||
Changes in income taxes payable | 28 | 29 | ||
Other, net | 36 | 10 | ||
Net Cash Provided by Operating Activities | 349 | 253 | ||
Cash Flows - Investing Activities | ||||
Capital spending | (62) | (42) | ||
Proceeds from refranchising of restaurants | 5 | 24 | ||
Other, net | 1 | (11) | ||
Net Cash Used in Investing Activities | (56) | (29) | ||
Cash Flows - Financing Activities | ||||
Repayments of long-term debt | (20) | (15) | ||
Revolving credit facilities, three months or less, net | (85) | 174 | ||
Repurchase shares of Common Stock | (50) | (343) | ||
Dividends paid on Common Stock | (169) | (165) | ||
Other, net | (10) | (28) | ||
Net Cash Provided by (Used in) Financing Activities | (334) | (377) | ||
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 3 | 0 | ||
Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | (38) | (153) | ||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period | 647 | 771 | ||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period | $ 609 | $ 618 | ||
|
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) shares in Millions, $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Current Assets | ||
Cash and cash equivalents | $ 349 | $ 367 |
Accounts and notes receivable, net | 622 | 648 |
Prepaid Expense and Other Assets, Current | 575 | 594 |
Total Current Assets | 1,546 | 1,609 |
Property, plant and equipment, net | 1,162 | 1,171 |
Goodwill | 639 | 638 |
Intangible assets, net | 351 | 354 |
Other assets | 1,299 | 1,324 |
Deferred Income Taxes | 752 | 750 |
Total Assets | 5,749 | 5,846 |
Current Liabilities | ||
Accounts payable and other current liabilities | 1,128 | 1,251 |
Income taxes payable | 29 | 16 |
Short-term borrowings | 398 | 398 |
Total Current Liabilities | 1,555 | 1,665 |
Long-term debt | 11,349 | 11,453 |
Other liabilities and deferred credits | 1,619 | 1,604 |
Total Liabilities | 14,523 | 14,722 |
Shareholders' Equity | ||
Common Stock, no par value, 750 shares authorized; 285 shares issued in 2022 and 289 issued in 2021 | 0 | 0 |
Accumulated Deficit | (8,403) | (8,507) |
Accumulated other comprehensive loss | (371) | (369) |
Total Shareholders' Deficit | (8,774) | (8,876) |
Total Liabilities and Shareholders' Deficit | $ 5,749 | $ 5,846 |
Common Stock, No Par Value | $ 0 | $ 0 |
Common Stock, Shares Authorized | 750 | 750 |
Common Stock, Shares, Issued | 280 |
CONDENSED STATEMENT OF SHAREHOLDERS EQUITY STATEMENT - USD ($) $ in Millions |
Total |
Issued Common Stock |
Accumulated Deficit |
Accumulated Other Comprehensive Loss |
---|---|---|---|---|
Total Shareholders' Deficit | $ (8,373) | $ 0 | $ (8,048) | $ (325) |
Issued Common Stock, Shares | 289,000,000 | |||
Net Income | 399 | 399 | ||
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature | (23) | (23) | ||
Pension and post-retirement benefit plans, net of tax | 4 | 4 | ||
Pension and post-retirement benefit plans, tax | 1 | |||
Changes in derivatives, net of tax | 52 | 52 | ||
Changes in derivatives, Tax | (17) | |||
Comprehensive Income (Loss) | 432 | |||
Dividends declared | (165) | (165) | ||
Shares Repurchased | (3,359,000) | |||
Repurchase of shares of Common Stock, value | (407) | $ (22) | (385) | |
Employee Stock Option and SARs Exercises, Value | (16) | (16) | ||
Share-based compensation events | 38 | 38 | ||
Total Shareholders' Deficit | (8,491) | $ 0 | (8,199) | (292) |
Issued Common Stock, Shares | 286,000,000 | |||
Total Shareholders' Deficit | (8,876) | $ 0 | (8,507) | (369) |
Issued Common Stock, Shares | 280,000,000 | |||
Net Income | 300 | 300 | ||
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature | 8 | 8 | ||
Pension and post-retirement benefit plans, net of tax | (2) | (2) | ||
Pension and post-retirement benefit plans, tax | 2 | |||
Changes in derivatives, net of tax | (8) | (8) | ||
Changes in derivatives, Tax | 3 | |||
Comprehensive Income (Loss) | 298 | |||
Dividends declared | (170) | (170) | ||
Shares Repurchased | (387,000) | |||
Repurchase of shares of Common Stock, value | (50) | $ (24) | (26) | |
Employee Stock Option and SARs Exercises, Shares | 0 | |||
Employee Stock Option and SARs Exercises, Value | (10) | $ (10) | ||
Share-based compensation events | 34 | 34 | ||
Total Shareholders' Deficit | $ (8,774) | $ 0 | $ (8,403) | $ (371) |
Issued Common Stock, Shares | 280,000,000 |
Financial Statement Presentation |
3 Months Ended |
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Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Financial Statement Presentation | Financial Statement Presentation We have prepared our accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by Generally Accepted Accounting Principles in the United States (“GAAP”) for complete financial statements. Therefore, we suggest that the accompanying Financial Statements be read in conjunction with the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 Form 10-K”). Yum! Brands, Inc. and its Subsidiaries (collectively referred to herein as the “Company,” “YUM,” “we,” “us” or “our”) franchise or operate a system of over 55,000 restaurants in more than 155 countries and territories. As of March 31, 2023, 98% of these restaurants were owned and operated by franchisees. The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style and pizza categories, respectively. The Habit Burger Grill is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. As of March 31, 2023, YUM consisted of four operating segments: •The KFC Division which includes our worldwide operations of the KFC concept •The Taco Bell Division which includes our worldwide operations of the Taco Bell concept •The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept •The Habit Burger Grill Division which includes our worldwide operations of the Habit Burger Grill concept YUM's fiscal year begins on January 1 and ends December 31 of each year, with each quarter comprised of three months. The majority of our U.S. subsidiaries and certain international subsidiaries operate on a weekly periodic calendar where the first three quarters of each fiscal year consist of 12 weeks and the fourth quarter consists of 16 weeks in fiscal years with 52 weeks and 17 weeks in fiscal years with 53 weeks. Our remaining international subsidiaries operate on a monthly calendar similar to that on which YUM operates. Our preparation of the accompanying Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The accompanying Financial Statements include all normal and recurring adjustments considered necessary to present fairly, when read in conjunction with our 2022 Form 10-K, the results of the interim periods presented. Our results of operations, comprehensive income, cash flows and changes in shareholders' deficit for these interim periods are not necessarily indicative of the results to be expected for the full year. Our significant interim accounting policies include the recognition of advertising and marketing costs, generally in proportion to revenue, and the recognition of income taxes using an estimated annual effective tax rate. We have reclassified certain other items in the Financial Statements for the prior periods to be comparable with the classification for the quarter ended March 31, 2023. These reclassifications had no effect on previously reported Net Income. Russia Invasion of Ukraine In the first quarter of 2022, as a result of the Russian invasion of Ukraine, we suspended all investment and restaurant development in Russia. We also suspended all operations of our 70 company-owned KFC restaurants in Russia and began finalizing an agreement to suspend all Pizza Hut operations in Russia, in partnership with our master franchisee. Further, we pledged to redirect any future net profits attributable to Russia subsequent to the date of invasion to humanitarian efforts. During the second quarter of 2022, we completed the transfer of ownership of the Pizza Hut Russia business to a local operator. In April 2023, we completed our exit from the Russian market by selling the KFC business in Russia to Smart Service Ltd., including all Russian company-owned KFC restaurants, operating system, and master franchise rights as well as the trademark for the Rostik’s brand. Under the sale and purchase agreement, the buyer has agreed to lead the process to rebrand KFC restaurants in Russia to Rostik's and to retain the Company's employees in Russia. The fair value of consideration received from the sale is expected to approximate the carrying value of our net assets in Russia of $166 million, which includes $51 million of cumulative foreign currency translation losses, as of the quarter ended March 31, 2023.Our operating results presented herein continue to reflect revenues from and expenses to support the Russian operations for KFC for the entirety of the quarter ended March 31, 2023, and for both Pizza Hut and KFC for the entirety of the quarter ended March 31, 2022, within their historical financial statement line items and operating segments. However, given our decision to exit Russia and our pledge to direct any future net profits attributable to Russia subsequent to the date of invasion to humanitarian efforts, we reclassed the resulting net profits or losses from the Division segment results in which they were earned to Unallocated Other income (expense).
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Earnings Per Common Share ("EPS") |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share (EPS) | Earnings Per Common Share (“EPS”)
(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.
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Shareholders' Deficit |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders' Deficit Under the authority of our Board of Directors, we repurchased shares of our Common Stock during the quarters ended March 31, 2023 and 2022 as indicated below. All amounts exclude applicable transaction fees.
(a) 2022 amount includes the effect of $64 million in share repurchases (0.5 million shares) with trade dates on, or prior to, March 31, 2022, but cash settlement dates subsequent to March 31, 2022. In September 2022, our Board of Directors authorized share repurchases of up to $2 billion (excluding applicable transaction fees) of our outstanding Common Stock through June 30, 2024. As of March 31, 2023, we have remaining capacity to repurchase up to $1.7 billion of Common Stock under the September 2022 authorization. Changes in Accumulated other comprehensive loss (“AOCI”) are presented below.
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Other (Income) Expense |
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Other (Income) Expense | Other (Income) Expense
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Supplemental Balance Sheet Information |
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Supplemental Balance Sheet Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Balance Sheet Information | Supplemental Balance Sheet Information Accounts and Notes Receivable, net The Company’s receivables are primarily generated from ongoing business relationships with our franchisees as a result of franchise and lease agreements. Trade receivables consisting of royalties from franchisees are generally due within 30 days of the period in which the corresponding sales occur and are classified as Accounts and notes receivable, net in our Condensed Consolidated Balance Sheets. Accounts and notes receivable, net also includes receivables generated from advertising cooperatives that we consolidate.
Property, Plant and Equipment, net
Assets held-for-sale totaled $186 million and $190 million as of March 31, 2023 and December 31, 2022, respectively, and are included in Prepaid expenses and other current assets in our Condensed Consolidated Balance Sheets. Liabilities held-for-sale totaled $66 million and $65 million as of March 31, 2023 and December 31, 2022, respectively, and are included in Accounts payable and other current liabilities in our Condensed Consolidated Balance Sheets. KFC Russia assets held-for-sale accounted for $177 million including property, plant and equipment of $58 million, of the $186 million, while KFC Russia liabilities held-for-sale accounted for $62 million of the $66 million as of March 31, 2023.
(a) Non-current operating lease liabilities of $744 million and $731 million as of March 31, 2023 and December 31, 2022, respectively, are included in Other liabilities and deferred credits in our Condensed Consolidated Balance Sheets. Reconciliation of Cash and Cash Equivalents for Condensed Consolidated Statements of Cash Flows
(a) Restricted cash within Prepaid expenses and other current assets reflects the cash related to advertising cooperatives which we consolidate that can only be used to settle obligations of the respective cooperatives and cash held in reserve for Taco Bell Securitization interest payments. (b) Primarily trust accounts related to our self-insurance program.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes
In January 2022, the U.S. Treasury published new regulations impacting foreign tax credit utilization beginning in the Company’s 2022 tax year. These regulations made foreign taxes paid to certain countries no longer creditable in the U.S., which was expected to result in additional foreign tax credit carryforward utilization prospectively. As a result, we reversed a valuation allowance associated with existing foreign tax credit carryforwards. This valuation allowance reversal resulted in a one-time discrete tax benefit of $82 million in the quarter ended March 31, 2022. The U.S. Treasury published clarifying guidance in November 2022 which resulted in foreign taxes originally determined to be non-creditable under the January 2022 regulations to now be treated as creditable taxes. As such, the valuation allowance on foreign tax credit carryforwards that was released in the quarter ended March 31, 2022, was re-established in the quarter ended December 31, 2022.
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Revenue Recognition Accounting Policy |
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Revenue Recognition and Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition Disaggregation of Total Revenues The following tables disaggregate revenue by Concept, for our two most significant markets based on Operating Profit and for all other markets. We believe this disaggregation best reflects the extent to which the nature, amount, timing and uncertainty of our revenues and cash flows are impacted by economic factors.
Contract Liabilities Our contract liabilities are comprised of unamortized upfront fees received from franchisees and are presented within Accounts payable and other current liabilities and Other liabilities and deferred credits in our Condensed Consolidated Balance Sheets. A summary of significant changes to the contract liability balance during 2023 is presented below.
We expect to recognize contract liabilities as revenue over the remaining term of the associated franchise agreement as follows:
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Reportable Operating Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Operating Segments | Reportable Operating Segments We identify our operating segments based on management responsibility. The following tables summarize Revenues and Operating Profit for each of our reportable operating segments:
Our chief operating decision maker (“CODM”) does not consider the impact of Corporate and unallocated amounts when assessing Divisional segment performance. As such, we do not allocate such amounts to our Divisional segments for performance reporting purposes. (a)Our operating results presented herein reflect revenues from and expenses to support the Russian operations for KFC for the entire quarter ended March 31, 2023, as well as for both Pizza Hut and KFC for the quarter ended March 31, 2022 (see Note 1), within their historical financial statement line items and operating segments. However, given our decision to exit Russia and our pledge to direct any future net profits attributable to Russia subsequent to the date of invasion to humanitarian efforts, we reclassed such net profits and losses from the Division segment results in which they were earned to Unallocated Other income (expense). As a result, we reclassed net operating losses of $1 million and net operating profit of $2 million from KFC Division Other income (expense) to Unallocated Other income (expense) during the quarters ended March 31, 2023 and 2022, respectively. Also, included in Unallocated Other income (expense) for the quarter ended March 31, 2022, were $5 million in foreign exchange gains attributable to fluctuations in the value of the Russian Ruble. Additionally, we recorded charges of $1 million to Corporate and unallocated G&A expenses and $1 million to Unallocated Franchise and property expenses during the quarter ended March 31, 2023 for certain expenses related to the transfer of the business and other costs related to our exit from Russia. (b)Includes changes in the value of our investment in Devyani International Limited (see Note 12).
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Pension Benefits |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension Benefits | Pension Benefits We sponsor qualified and supplemental (non-qualified) noncontributory defined benefit pension plans covering certain full-time salaried and hourly U.S. employees. The most significant of these plans, the YUM Retirement Plan (the “Plan”), is funded. We fund our other U.S. plans as benefits are paid. Our two significant U.S. plans, including the Plan and a supplemental plan, were previously amended such that any salaried employee hired or rehired by YUM after September 30, 2001, is not eligible to participate in those plans. Additionally, these two plans in the U.S. are currently closed to new hourly participants. The components of net periodic benefit cost associated with our U.S. pension plans are as follows:
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Short-term Borrowings and Long-term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term Borrowings and Long-term Debt | Short-term Borrowings and Long-term Debt
Details of our Short-term borrowings and Long-term debt as of December 31, 2022 can be found within our 2022 Form 10-K. Cash paid for interest during the quarters ended March 31, 2023 and March 31, 2022, was $117 million and $90 million, respectively.
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Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments We use derivative instruments to manage certain of our market risks related to fluctuations in interest rates and foreign currency exchange rates. Our use of foreign currency contracts to manage foreign currency exchange rates associated with certain foreign currency denominated intercompany receivables and payables is currently not significant. Interest Rate Swaps We have entered into interest rate swaps, with the objective of reducing our exposure to interest rate risk for a portion of our variable-rate debt interest payments primarily under our Term Loan B Facility. At both March 31, 2023 and December 31, 2022, we had interest rate swaps expiring in March 2025 with notional amounts of $1.5 billion. These interest rate swaps have been designated cash flow hedges as the changes in the future cash flows of the swaps are expected to offset changes in expected future interest payments on the related variable-rate debt. There were no other interest rate swaps outstanding as of March 31, 2023 or December 31, 2022. Gains or losses on the interest rate swaps are reported as a component of AOCI and reclassified into Interest expense, net in our Condensed Consolidated Statements of Income in the same period or periods during which the related hedged interest payments affect earnings. Through March 31, 2023, the swaps were highly effective cash flow hedges. Gains and losses on these interest rate swaps recognized in OCI and reclassifications from AOCI into Net Income were as follows:
As of March 31, 2023, the estimated net gain included in AOCI related to our cash flow hedges that will be reclassified into earnings in the next 12 months is $24 million, based on current LIBOR interest rates. Total Return Swaps We have entered into total return swap derivative contracts, with the objective of reducing our exposure to market-driven changes in certain of the liabilities associated with compensation deferrals into our Executive Income Deferral (“EID”) plan. While these total return swaps represent economic hedges, we have not designated them as hedges for accounting purposes. As a result, the changes in the fair value of these derivatives are recognized immediately in earnings within General and administrative expenses in our Condensed Consolidated Statements of Income largely offsetting the changes in the associated EID liabilities. The fair value associated with the total return swaps as of both March 31, 2023 and December 31, 2022, was not significant. As a result of the use of derivative instruments, the Company is exposed to risk that the counterparties will fail to meet their contractual obligations. To mitigate the counterparty credit risk, we only enter into contracts with major financial institutions carefully selected based upon their credit ratings and other factors, and continually assess the creditworthiness of counterparties. At March 31, 2023, all of the counterparties to our derivative instruments had investment grade ratings according to the three major ratings agencies. To date, all counterparties have performed in accordance with their contractual obligations. See Note 12 for the fair value of our derivative assets and liabilities.
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Fair Value Disclosures |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Disclosures As of March 31, 2023, the carrying values of cash and cash equivalents, restricted cash, short-term investments, accounts receivable, short-term borrowings and accounts payable and borrowings under our Revolving Facility approximated their fair values because of the short-term nature of these instruments. The fair value of our notes receivable, net of allowances, and lease guarantees, less reserves for expected losses, approximates their carrying value. The following table presents the carrying value and estimated fair value of the Company’s debt obligations:
(a) We estimated the fair value of the Securitization Notes using market quotes and calculations. The markets in which the Securitization Notes trade are not considered active markets. (b) We estimated the fair value of the YUM and Subsidiary Senior Unsecured Notes, Term Loan A Facility and Term Loan B Facility using market quotes and calculations based on market rates. Recurring Fair Value Measurements The Company has interest rate swaps and other investments, all of which are required to be measured at fair value on a recurring basis (see Note 11 for discussion regarding derivative instruments). The following table presents fair values for those assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall.
The fair value of the Company’s interest rate swaps were determined based on the present value of expected future cash flows considering the risks involved, including nonperformance risk, and using discount rates appropriate for the duration based on observable inputs. Investments primarily include our approximate 5% minority interest in Devyani International Limited (“Devyani”), a franchise entity that operates KFC and Pizza Hut restaurants in India, with a fair value of $93 million and $116 million at March 31, 2023 and December 31, 2022, respectively. For the quarter ended March 31, 2023, we recognized pre-tax investment losses of $23 million, related to changes in fair value of our investment in Devyani.
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Guarantees |
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Mar. 31, 2023 | |
Guarantees and Product Warranties [Abstract] | |
Guarantees, Commitments and Contingencies | Contingencies Internal Revenue Service Proposed Adjustment As a result of an audit by the Internal Revenue Service (“IRS”) for fiscal years 2013 through 2015, in August 2022, we received a Revenue Agent’s Report (“RAR”) from the IRS asserting an underpayment of tax of $2.1 billion plus $418 million in penalties for the 2014 fiscal year. Additionally, interest on the underpayment is estimated to be approximately $830 million through the first quarter of 2023. The proposed underpayment relates primarily to a series of reorganizations we undertook during that year in connection with the business realignment of our corporate and management reporting structure along brand lines. The IRS asserts that these transactions resulted in taxable distributions of approximately $6.0 billion. We disagree with the IRS’s position as asserted in the RAR and intend to contest that position vigorously. In September 2022, we filed a Protest with the IRS Examination Division disputing on multiple grounds the proposed underpayment of tax and penalties. We have received the IRS Examination Division’s Rebuttal to our Protest. We expect the case to be transmitted to the IRS Office of Appeals for independent review within the next several months. The Company does not expect resolution of this matter within twelve months and cannot predict with certainty the timing of such resolution. The Company believes that it is more likely than not the Company’s tax position will be sustained; therefore, no reserve is recorded with respect to this matter. An unfavorable resolution of this matter could have a material, adverse impact on our Condensed Consolidated Financial Statements in future periods. Lease Guarantees As a result of having assigned our interest in obligations under real estate leases as a condition to the refranchising of certain Company-owned restaurants, and guaranteeing certain other leases, we are frequently secondarily liable on lease agreements. These leases have varying terms, the latest of which expires in 2065. As of March 31, 2023, the potential amount of undiscounted payments we could be required to make in the event of non-payment by the primary lessee was approximately $350 million. The present value of these potential payments discounted at our pre-tax cost of debt at March 31, 2023, was approximately $300 million. Our franchisees are the primary lessees under the vast majority of these leases. We generally have cross-default provisions with these franchisees that would put them in default of their franchise agreement in the event of non-payment under the lease. We believe these cross-default provisions significantly reduce the risk that we will be required to make payments under these leases, although such risk may not be reduced in the context of a bankruptcy or other similar restructuring of a large franchisee or group of franchisees. The liability recorded for our expected losses under such leases as of March 31, 2023, was not material. Legal Proceedings We are subject to various claims and contingencies related to lawsuits, real estate, environmental and other matters arising in the normal course of business. An accrual is recorded with respect to claims or contingencies for which a loss is determined to be probable and reasonably estimable. India Regulatory Matter Yum! Restaurants India Private Limited (“YRIPL”), a YUM subsidiary that operates KFC and Pizza Hut restaurants in India, is the subject of a regulatory enforcement action in India (the “Action”). The Action alleges, among other things, that KFC International Holdings, Inc. and Pizza Hut International failed to satisfy certain conditions imposed by the Secretariat for Industrial Approval in 1993 and 1994 when those companies were granted permission for foreign investment and operation in India. The conditions at issue include an alleged minimum investment commitment and store build requirements as well as limitations on the remittance of fees outside of India. The Action originated with a complaint and show cause notice filed in 2009 against YRIPL by the Deputy Director of the Directorate of Enforcement (“DOE”) of the Indian Ministry of Finance following an income tax audit for the years 2002 and 2003. The matter was argued at various hearings in 2015, but no order was issued. Following a change in the incumbent official holding the position of Special Director of DOE (the “Special Director”), the matter resumed in 2018 and several additional hearings were conducted. On January 29, 2020, the Special Director issued an order imposing a penalty on YRIPL and certain former directors of approximately Indian Rupee 11 billion, or approximately $135 million. Of this amount, $130 million relates to the alleged failure to invest a total of $80 million in India within an initial seven-year period. We have been advised by external counsel that the order is flawed and have filed a writ petition with the Delhi High Court, which granted an interim stay of the penalty order on March 5, 2020. In November 2022, YRIPL was notified that an administrative tribunal bench had been constituted to hear an appeal by DOE of certain findings of the January 2020 order, including claims that certain charges had been wrongly dropped and that an insufficient amount of penalty had been imposed. A hearing with the administrative tribunal that had been scheduled for March has been rescheduled to August 3, 2023. The stay order remains in effect and the next hearing in the Delhi High Court is now scheduled for May 16, 2023. We deny liability and intend to continue vigorously defending this matter. We do not consider the risk of any significant loss arising from this order to be probable. Other Matters We are currently engaged in various other legal proceedings and have certain unresolved claims pending, the ultimate liability for which, if any, cannot be determined at this time. However, based upon consultation with legal counsel, we are of the opinion that such proceedings and claims are not expected to have a material adverse effect, individually or in the aggregate, on our Condensed Consolidated Financial Statements.
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Earnings Per Common Share ("EPS") Earnings Per Common Share ("EPS") (Tables) |
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Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
(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.
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Shareholders' Deficit (Tables) |
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Accelerated Share Repurchases |
(a) 2022 amount includes the effect of $64 million in share repurchases (0.5 million shares) with trade dates on, or prior to, March 31, 2022, but cash settlement dates subsequent to March 31, 2022.
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Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in Accumulated other comprehensive loss (“AOCI”) are presented below.
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Other Income and Expenses (Tables) |
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Schedule of Other Operating Cost and Expense, by Component |
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Supplemental Balance Sheet Information (Tables) |
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Accounts and Notes Receivable |
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Schedule of Other Assets |
(a) Non-current operating lease liabilities of $744 million and $731 million as of March 31, 2023 and December 31, 2022, respectively, are included in Other liabilities and deferred credits in our Condensed Consolidated Balance Sheets.
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Schedule of Cash and Cash Equivalents [Table Text Block] |
(a) Restricted cash within Prepaid expenses and other current assets reflects the cash related to advertising cooperatives which we consolidate that can only be used to settle obligations of the respective cooperatives and cash held in reserve for Taco Bell Securitization interest payments. (b) Primarily trust accounts related to our self-insurance program.
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Income Taxes (Tables) |
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Income Tax And Effective Tax Rate |
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Revenue Recognition Accounting Policy (Tables) |
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Disaggregation of Revenue [Table Text Block] |
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Deferred Franchise Fees [Table Text Block] |
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Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block] | We expect to recognize contract liabilities as revenue over the remaining term of the associated franchise agreement as follows:
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Reportable Operating Segments (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Reportable Operating Segments We identify our operating segments based on management responsibility. The following tables summarize Revenues and Operating Profit for each of our reportable operating segments:
Our chief operating decision maker (“CODM”) does not consider the impact of Corporate and unallocated amounts when assessing Divisional segment performance. As such, we do not allocate such amounts to our Divisional segments for performance reporting purposes. (a)Our operating results presented herein reflect revenues from and expenses to support the Russian operations for KFC for the entire quarter ended March 31, 2023, as well as for both Pizza Hut and KFC for the quarter ended March 31, 2022 (see Note 1), within their historical financial statement line items and operating segments. However, given our decision to exit Russia and our pledge to direct any future net profits attributable to Russia subsequent to the date of invasion to humanitarian efforts, we reclassed such net profits and losses from the Division segment results in which they were earned to Unallocated Other income (expense). As a result, we reclassed net operating losses of $1 million and net operating profit of $2 million from KFC Division Other income (expense) to Unallocated Other income (expense) during the quarters ended March 31, 2023 and 2022, respectively. Also, included in Unallocated Other income (expense) for the quarter ended March 31, 2022, were $5 million in foreign exchange gains attributable to fluctuations in the value of the Russian Ruble. Additionally, we recorded charges of $1 million to Corporate and unallocated G&A expenses and $1 million to Unallocated Franchise and property expenses during the quarter ended March 31, 2023 for certain expenses related to the transfer of the business and other costs related to our exit from Russia. (b)Includes changes in the value of our investment in Devyani International Limited (see Note 12).
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Pension Benefits (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost | The components of net periodic benefit cost associated with our U.S. pension plans are as follows:
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Short-term Borrowings and Long-term Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Short-term Borrowings and Long-term Debt |
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Derivative Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains and losses on derivative instruments designated as cash flow hedges recognized in other comprehensive income and reclassifications from AOCI to earnings | Gains and losses on these interest rate swaps recognized in OCI and reclassifications from AOCI into Net Income were as follows:
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Fair Value Disclosures (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | The following table presents the carrying value and estimated fair value of the Company’s debt obligations:
(a) We estimated the fair value of the Securitization Notes using market quotes and calculations. The markets in which the Securitization Notes trade are not considered active markets. (b) We estimated the fair value of the YUM and Subsidiary Senior Unsecured Notes, Term Loan A Facility and Term Loan B Facility using market quotes and calculations based on market rates.
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis |
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Financial Statement Presentation (Details) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023
USD ($)
Months
restaurants
countries_and_territiories
operating_segments
Rate
|
Mar. 31, 2022
USD ($)
|
Dec. 31, 2022
USD ($)
|
|
Number of Stores | restaurants | 55,000 | ||
Number of Countries in which Entity Operates | countries_and_territiories | 155 | ||
Percent Of System Units Located Outside United States | Rate | 98.00% | ||
Number of Reportable Segments | operating_segments | 4 | ||
Fiscal period months standard for each quarter | Months | 3 | ||
Prior Period Reclassification Adjustment | $ 0 | ||
Goodwill | 639 | $ 638 | |
Cash and cash equivalents | 349 | $ 367 | |
KFC Russia | |||
Assets held-for-sale | 177 | ||
Disposal Group, Including Discontinued Operation, Liabilities, Current | $ 62 | ||
RUSSIAN FEDERATION | |||
Number of Stores with Suspended Operations | restaurants | 70 | ||
Translation Adjustment Functional to Reporting Currency, Increase (Decrease), Gross of Tax | $ 51 | ||
Net Assets | $ 166 |
Earnings Per Common Share ("EPS") (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|||
Net Income | $ 300 | $ 399 | ||
Weighted-average common shares outstanding (for basic calculation) | 281.0 | 289.0 | ||
Effect of dilutive share-based employee compensation | 4.0 | 5.0 | ||
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation) | 285.0 | 294.0 | ||
Basic EPS | $ 1.07 | $ 1.38 | ||
Diluted EPS | $ 1.05 | $ 1.36 | ||
Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation | [1] | 1.5 | 1.2 | |
|
Shareholders' Deficit (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Repurchase Of Shares Of Common Stock [Line Items] | ||
Repurchase of shares of Common Stock, value | $ 50 | $ 407 |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | 1,700 | |
Number of shares repurchased with trade dates during the current reporting date but with settlement dates subsequent to the current reporting date | 500,000 | |
Value of share repurchases with trade dates during the current reporting date but with settlement dates subsequent to the current reporting date | $ 64 | |
May 2021 | ||
Repurchase Of Shares Of Common Stock [Line Items] | ||
Repurchase of shares of Common Stock, value | 407 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | 0 | |
September 2022 | ||
Repurchase Of Shares Of Common Stock [Line Items] | ||
Repurchase of shares of Common Stock, value | 50 | $ 0 |
Stock Repurchase Program, Authorized Amount | 2,000 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 1,700 | |
Issued Common Stock | ||
Repurchase Of Shares Of Common Stock [Line Items] | ||
Shares Repurchased | 387,000 | 3,359,000 |
Repurchase of shares of Common Stock, value | $ 24 | $ 22 |
Issued Common Stock | May 2021 | ||
Repurchase Of Shares Of Common Stock [Line Items] | ||
Shares Repurchased | 0 | 3,359,000 |
Issued Common Stock | September 2022 | ||
Repurchase Of Shares Of Common Stock [Line Items] | ||
Shares Repurchased | 387,000 | 0 |
Shareholders' Deficit (Details 2) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Schedule of changes in accumulated comprehensive income [Line Items] | ||
Accumulated other comprehensive loss | $ (369) | |
Gains (losses) arising during the year classified into AOCI, net of tax | 0 | |
(Gains) losses reclassified from AOCI, net of tax | (2) | |
Other comprehensive income (loss), net of tax | (2) | $ 33 |
Accumulated other comprehensive loss | (371) | |
Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Nature | ||
Schedule of changes in accumulated comprehensive income [Line Items] | ||
Accumulated other comprehensive loss | (290) | |
Gains (losses) arising during the year classified into AOCI, net of tax | 8 | |
(Gains) losses reclassified from AOCI, net of tax | 0 | |
Other comprehensive income (loss), net of tax | 8 | |
Accumulated other comprehensive loss | (282) | |
Pension and Post-Retirement Benefits | ||
Schedule of changes in accumulated comprehensive income [Line Items] | ||
Accumulated other comprehensive loss | (94) | |
Gains (losses) arising during the year classified into AOCI, net of tax | (2) | |
(Gains) losses reclassified from AOCI, net of tax | 0 | |
Other comprehensive income (loss), net of tax | (2) | |
Accumulated other comprehensive loss | (96) | |
Derivative Instruments | ||
Schedule of changes in accumulated comprehensive income [Line Items] | ||
Accumulated other comprehensive loss | 15 | |
Gains (losses) arising during the year classified into AOCI, net of tax | (6) | |
(Gains) losses reclassified from AOCI, net of tax | (2) | |
Other comprehensive income (loss), net of tax | (8) | |
Accumulated other comprehensive loss | $ 7 |
Other (Income) Expense (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Other Income and Expenses [Line Items] | ||
Foreign Currency Transaction Gain (Loss), before Tax | $ 3 | $ (4) |
Impairment and closure expense | 1 | 0 |
Other income (expense) excluding foreign exchange gain (loss) | 6 | (2) |
Other (income) expense | 10 | (6) |
Gain (Loss) on Disposition of Assets | (4) | (4) |
Income tax provision | $ 71 | $ (1) |
Supplemental Balance Sheet Information (Details) $ in Millions |
Mar. 31, 2023
USD ($)
days
|
Dec. 31, 2022
USD ($)
|
---|---|---|
Accounts and Notes Receivable [Abstract] | ||
Number of days from the period in which the corresponding sales occur that trade receivables are generally due | days | 30 | |
Accounts and notes receivable, gross | $ 661 | $ 685 |
Allowance for doubtful accounts | (39) | (37) |
Accounts and notes receivable, net | 622 | 648 |
Prepaid Expenses and Other Current Assets [Member] | ||
Assets held-for-sale | 186 | 190 |
Accounts Payable and Accrued Liabilities | ||
Disposal Group, Including Discontinued Operation, Liabilities, Current | 66 | $ 65 |
KFC Russia | ||
Assets held-for-sale | 177 | |
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment, Current | 58 | |
Disposal Group, Including Discontinued Operation, Liabilities, Current | $ 62 |
Supplemental Balance Sheet Information (Details 2) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
||||||
---|---|---|---|---|---|---|---|---|---|---|
Property, plant and equipment, gross | $ 2,465 | $ 2,454 | ||||||||
Accumulated depreciation and amortization | (1,303) | (1,283) | ||||||||
Property, plant and equipment, net | 1,162 | 1,171 | ||||||||
Operating lease, right-of-use assets | [1] | 753 | 742 | |||||||
Other assets | 1,299 | 1,324 | ||||||||
Other Assets, Miscellaneous, Noncurrent | 275 | 294 | ||||||||
Operating Lease, Liability, Noncurrent | 744 | 731 | ||||||||
Cash and cash equivalents as presented in Condensed Consolidated Balance Sheets | 349 | 367 | ||||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 609 | 647 | $ 618 | $ 771 | ||||||
KFC Russia | ||||||||||
Assets held-for-sale | 177 | |||||||||
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Disposal Group, Including Discontinued Operations | 20 | 25 | ||||||||
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Devyani | ||||||||||
Equity Securities, FV-NI | 93 | 116 | ||||||||
Prepaid Expenses and Other Current Assets [Member] | ||||||||||
Assets held-for-sale | 186 | 190 | ||||||||
Restricted Cash and Cash Equivalents | [2] | 206 | 220 | |||||||
Other Current Assets [Member] | ||||||||||
Restricted Cash and Cash Equivalents | [3] | 34 | 35 | |||||||
Franchise Incentive [Member] | ||||||||||
Other assets | $ 178 | $ 172 | ||||||||
|
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Income tax provision | $ (71) | $ 1 |
Effective tax rate | 19.10% | (0.20%) |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ 82 |
Revenue Recognition Accounting Policy (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Revenues | $ 1,645 | $ 1,547 |
Company Sales | ||
Revenues | 474 | 470 |
Franchise and property revenues | ||
Revenues | 770 | 714 |
Franchise contributions for advertising and other services | ||
Revenues | 401 | 363 |
UNITED STATES | Company Sales | ||
Revenues | 380 | 359 |
UNITED STATES | Franchise and property revenues | ||
Revenues | 295 | 267 |
UNITED STATES | Property Revenues | ||
Revenues | 15 | 15 |
UNITED STATES | Franchise contributions for advertising and other services | ||
Revenues | 226 | 201 |
CHINA | Franchise and property revenues | ||
Revenues | 84 | 77 |
Other, Outside the U.S. and China [Member] | Company Sales | ||
Revenues | 94 | 111 |
Other, Outside the U.S. and China [Member] | Franchise and property revenues | ||
Revenues | 363 | 341 |
Other, Outside the U.S. and China [Member] | Property Revenues | ||
Revenues | 13 | 14 |
Other, Outside the U.S. and China [Member] | Franchise contributions for advertising and other services | ||
Revenues | 175 | 162 |
KFC Global Division [Member] | ||
Revenues | 687 | 660 |
KFC Global Division [Member] | UNITED STATES | Company Sales | ||
Revenues | 16 | 15 |
KFC Global Division [Member] | UNITED STATES | Franchise and property revenues | ||
Revenues | 46 | 45 |
KFC Global Division [Member] | UNITED STATES | Property Revenues | ||
Revenues | 3 | 3 |
KFC Global Division [Member] | UNITED STATES | Franchise contributions for advertising and other services | ||
Revenues | 8 | 6 |
KFC Global Division [Member] | CHINA | Franchise and property revenues | ||
Revenues | 66 | 61 |
KFC Global Division [Member] | Other, Outside the U.S. and China [Member] | Company Sales | ||
Revenues | 94 | 111 |
KFC Global Division [Member] | Other, Outside the U.S. and China [Member] | Franchise and property revenues | ||
Revenues | 284 | 260 |
KFC Global Division [Member] | Other, Outside the U.S. and China [Member] | Property Revenues | ||
Revenues | 13 | 14 |
KFC Global Division [Member] | Other, Outside the U.S. and China [Member] | Franchise contributions for advertising and other services | ||
Revenues | 157 | 145 |
Pizza Hut Global Division [Member] | ||
Revenues | 254 | 244 |
Pizza Hut Global Division [Member] | UNITED STATES | Company Sales | ||
Revenues | 5 | 5 |
Pizza Hut Global Division [Member] | UNITED STATES | Franchise and property revenues | ||
Revenues | 70 | 64 |
Pizza Hut Global Division [Member] | UNITED STATES | Property Revenues | ||
Revenues | 1 | 1 |
Pizza Hut Global Division [Member] | UNITED STATES | Franchise contributions for advertising and other services | ||
Revenues | 78 | 72 |
Pizza Hut Global Division [Member] | CHINA | Franchise and property revenues | ||
Revenues | 18 | 16 |
Pizza Hut Global Division [Member] | Other, Outside the U.S. and China [Member] | Company Sales | ||
Revenues | 0 | 0 |
Pizza Hut Global Division [Member] | Other, Outside the U.S. and China [Member] | Franchise and property revenues | ||
Revenues | 66 | 70 |
Pizza Hut Global Division [Member] | Other, Outside the U.S. and China [Member] | Property Revenues | ||
Revenues | 0 | 0 |
Pizza Hut Global Division [Member] | Other, Outside the U.S. and China [Member] | Franchise contributions for advertising and other services | ||
Revenues | 16 | 16 |
Taco Bell Global Division [Member] | ||
Revenues | 572 | 517 |
Taco Bell Global Division [Member] | UNITED STATES | Company Sales | ||
Revenues | 229 | 214 |
Taco Bell Global Division [Member] | UNITED STATES | Franchise and property revenues | ||
Revenues | 178 | 157 |
Taco Bell Global Division [Member] | UNITED STATES | Property Revenues | ||
Revenues | 10 | 11 |
Taco Bell Global Division [Member] | UNITED STATES | Franchise contributions for advertising and other services | ||
Revenues | 140 | 123 |
Taco Bell Global Division [Member] | CHINA | Franchise and property revenues | ||
Revenues | 0 | 0 |
Taco Bell Global Division [Member] | Other, Outside the U.S. and China [Member] | Company Sales | ||
Revenues | 0 | 0 |
Taco Bell Global Division [Member] | Other, Outside the U.S. and China [Member] | Franchise and property revenues | ||
Revenues | 13 | 11 |
Taco Bell Global Division [Member] | Other, Outside the U.S. and China [Member] | Property Revenues | ||
Revenues | 0 | 0 |
Taco Bell Global Division [Member] | Other, Outside the U.S. and China [Member] | Franchise contributions for advertising and other services | ||
Revenues | 2 | 1 |
Habit Division [Member] | ||
Revenues | 132 | 126 |
Habit Division [Member] | UNITED STATES | Company Sales | ||
Revenues | 130 | 125 |
Habit Division [Member] | UNITED STATES | Franchise and property revenues | ||
Revenues | 1 | 1 |
Habit Division [Member] | UNITED STATES | Property Revenues | ||
Revenues | 1 | 0 |
Habit Division [Member] | UNITED STATES | Franchise contributions for advertising and other services | ||
Revenues | 0 | 0 |
Habit Division [Member] | CHINA | Franchise and property revenues | ||
Revenues | 0 | 0 |
Habit Division [Member] | Other, Outside the U.S. and China [Member] | Company Sales | ||
Revenues | 0 | 0 |
Habit Division [Member] | Other, Outside the U.S. and China [Member] | Franchise and property revenues | ||
Revenues | 0 | 0 |
Habit Division [Member] | Other, Outside the U.S. and China [Member] | Property Revenues | ||
Revenues | 0 | 0 |
Habit Division [Member] | Other, Outside the U.S. and China [Member] | Franchise contributions for advertising and other services | ||
Revenues | $ 0 | $ 0 |
Revenue Recognition Accounting Policy (Details 2) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred Revenue | $ 434 | $ 434 |
Revenue recognized that was included in unamortized upfront fees received from franchisees at the beginning of the period | (24) | |
Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as revenue during the period | $ 24 |
Revenue Recognition Accounting Policy (Details 3) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred Revenue | $ 434 | $ 434 |
Less than 1 year | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred Revenue, Revenue Expected to be Recognized | 71 | |
1 - 2 years | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred Revenue, Revenue Expected to be Recognized | 64 | |
2 - 3 years | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred Revenue, Revenue Expected to be Recognized | 58 | |
3 - 4 years | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred Revenue, Revenue Expected to be Recognized | 52 | |
4 - 5 years | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred Revenue, Revenue Expected to be Recognized | 45 | |
Thereafter | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred Revenue, Revenue Expected to be Recognized | $ 144 |
Reportable Operating Segments (Details) - USD ($) $ in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|||||
Segment Reporting Information [Line Items] | ||||||
Revenues | $ 1,645 | $ 1,547 | ||||
Operating Profit | 523 | 509 | ||||
General and Administrative Expense | 282 | 253 | ||||
Company restaurant expenses | 403 | 402 | ||||
Franchise and property expenses | 36 | 32 | ||||
Refranchising (gain) loss | (4) | (4) | ||||
Other (income) expense | (10) | 6 | ||||
Investment (income) expense, net | [1] | 24 | (7) | |||
Other pension income (expense) | 2 | 0 | ||||
Interest Income (Expense), Net | (130) | (118) | ||||
Income Before Income Taxes | 371 | 398 | ||||
Russia, Rubles | ||||||
Segment Reporting Information [Line Items] | ||||||
Other Nonoperating Income (Expense) | 5 | |||||
KFC Global Division [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 687 | 660 | ||||
Operating Profit | 305 | 291 | ||||
Pizza Hut Global Division [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 254 | 244 | ||||
Operating Profit | 104 | 102 | ||||
Taco Bell Global Division [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 572 | 517 | ||||
Operating Profit | 204 | 185 | ||||
Habit Division [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 132 | 126 | ||||
Operating Profit | (5) | (8) | ||||
Unallocated [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
General and Administrative Expense | [2] | 84 | 71 | |||
Franchise and property expenses | [2] | 1 | 0 | |||
Refranchising (gain) loss | (4) | (4) | ||||
Other (income) expense | [2] | (4) | 6 | |||
Unallocated [Member] | RUSSIAN FEDERATION | ||||||
Segment Reporting Information [Line Items] | ||||||
General and Administrative Expense | 1 | |||||
Franchise and property expenses | 1 | |||||
Other (income) expense | $ 1 | |||||
KFC Russia | ||||||
Segment Reporting Information [Line Items] | ||||||
Other Nonoperating Income (Expense) | $ 2 | |||||
|
Pension Benefits (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Net periodic benefit cost | $ (1) | $ 2 |
UNITED STATES | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 1 | 2 |
Interest cost | 10 | 8 |
Expected return on plan assets | (12) | (12) |
Amortization of net loss | 0 | 3 |
Amortization of prior service cost | $ 0 | $ 1 |
Short-term Borrowings and Long-term Debt (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Debt Instrument [Line Items] | |||
Long-term Line of Credit | $ 194 | $ 279 | |
Finance Lease, Liability, Noncurrent | 53 | 57 | |
Long-term debt and capital less obligations, including current maturities and debt issuance costs | 11,836 | 11,943 | |
Less Debt Issuance Costs, Noncurrent, Net | (82) | (85) | |
Long-term debt | 11,349 | 11,453 | |
Interest Paid, Including Capitalized Interest, Operating and Investing Activities | 117 | $ 90 | |
Long-term Debt, Current Maturities | 405 | 405 | |
Less current portion of debt issuance costs and discounts | (7) | (7) | |
Short-term borrowings | 398 | 398 | |
Subsidiary Senior Unsecured Notes [Member] | Unsecured Debt [Member] | |||
Debt Instrument [Line Items] | |||
Senior Notes | 750 | 750 | |
Term Loan A Facility [Member] | Secured Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term Debt | 731 | 736 | |
Term Loan B Facility [Member] | Secured Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term Debt | 1,470 | 1,474 | |
YUM Senior Unsecured Notes [Member] [Domain] | Unsecured Debt [Member] | |||
Debt Instrument [Line Items] | |||
Senior Notes | $ 4,875 | $ 4,875 |
Derivative Instruments (Details) - Cash Flow Hedging [Member] - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | $ (24) | |
Forward-starting interest rate swap [Member] | ||
Derivative, Maturity Date | Mar. 01, 2025 | |
Derivative, Notional Amount | $ 1,500 | $ 1,500 |
Derivative Instruments (Details 2) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized gains (losses) arising during the period | $ (8) | $ 57 |
Cash Flow Hedging [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, Tax | 2 | (14) |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax | 1 | (3) |
Interest Rate Swap [Member] | Cash Flow Hedging [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized gains (losses) arising during the period | (7) | 59 |
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | $ (5) | $ 11 |
Fair Value Disclosures (Details) - USD ($) $ in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Investment Owned, at Fair Value | $ 93 | $ 116 | ||||
Unrealized Gain (Loss) on Investments | $ 23 | |||||
Devyani | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Equity Method Investment, Ownership Percentage | 5.00% | |||||
Secured Debt [Member] | Securitization Notes [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Senior Notes, Noncurrent | $ 3,763 | 3,772 | ||||
Secured Debt [Member] | Securitization Notes [Member] | Fair Value, Inputs, Level 2 [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Long-term Debt, Fair Value | [1] | 3,346 | 3,273 | |||
Secured Debt [Member] | Term Loan A Facility [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Debt obligations, excluding capital leases, carrying amount | 731 | 736 | ||||
Secured Debt [Member] | Term Loan A Facility [Member] | Fair Value, Inputs, Level 2 [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Long-term Debt, Fair Value | [2] | 725 | 729 | |||
Secured Debt [Member] | Term Loan B Facility [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Debt obligations, excluding capital leases, carrying amount | 1,470 | 1,474 | ||||
Secured Debt [Member] | Term Loan B Facility [Member] | Fair Value, Inputs, Level 2 [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Long-term Debt, Fair Value | [2] | 1,468 | 1,459 | |||
Unsecured Debt [Member] | Subsidiary Senior Unsecured Notes [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Senior Notes, Noncurrent | 750 | 750 | ||||
Unsecured Debt [Member] | Subsidiary Senior Unsecured Notes [Member] | Fair Value, Inputs, Level 2 [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Long-term Debt, Fair Value | [2] | 741 | 731 | |||
Unsecured Debt [Member] | YUM Senior Unsecured Notes [Member] [Domain] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Senior Notes, Noncurrent | 4,875 | 4,875 | ||||
Unsecured Debt [Member] | YUM Senior Unsecured Notes [Member] [Domain] | Fair Value, Inputs, Level 2 [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Long-term Debt, Fair Value | [2] | 4,644 | 4,473 | |||
Other Assets [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Investments, Fair Value Disclosure | 95 | 118 | ||||
Other Assets [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Investments, Fair Value Disclosure | 5 | 5 | ||||
Other Assets [Member] | Interest Rate Swap [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Derivative Asset, Subject to Master Netting Arrangement, before Offset | 6 | 16 | ||||
Prepaid Expenses and Other Current Assets [Member] | Interest Rate Swap [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Derivative Asset, Subject to Master Netting Arrangement, before Offset | $ 24 | $ 26 | ||||
|
Contingencies (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
| |
Guarantor Obligations [Line Items] | |
Deferred Tax Liability Not Recognized, Events that Would Cause Temporary Difference to be Taxable, Undistributed Earnings of Foreign Subsidiaries | As a result of an audit by the Internal Revenue Service (“IRS”) for fiscal years 2013 through 2015, in August 2022, we received a Revenue Agent’s Report (“RAR”) from the IRS asserting an underpayment of tax of $2.1 billion plus $418 million in penalties for the 2014 fiscal year. Additionally, interest on the underpayment is estimated to be approximately $830 million through the first quarter of 2023. The proposed underpayment relates primarily to a series of reorganizations we undertook during that year in connection with the business realignment of our corporate and management reporting structure along brand lines. The IRS asserts that these transactions resulted in taxable distributions of approximately $6.0 billion.We disagree with the IRS’s position as asserted in the RAR and intend to contest that position vigorously. In September 2022, we filed a Protest with the IRS Examination Division disputing on multiple grounds the proposed underpayment of tax and penalties. We have received the IRS Examination Division’s Rebuttal to our Protest. We expect the case to be transmitted to the IRS Office of Appeals for independent review within the next several months.The Company does not expect resolution of this matter within twelve months and cannot predict with certainty the timing of such resolution. The Company believes that it is more likely than not the Company’s tax position will be sustained; therefore, no reserve is recorded with respect to this matter.An unfavorable resolution of this matter could have a material, adverse impact on our Condensed Consolidated Financial Statements in future periods. |
Property Lease Guarantee [Member] | |
Guarantor Obligations [Line Items] | |
Year longest lease expires | 2065 |
Guarantor Obligations, Maximum Exposure | $ 350 |
Guarantee Obligations Maximum Exposure At Present Value | $ 300 |
Contingencies (Details 2) |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Loss Contingencies [Line Items] | |
Deferred Tax Liability Not Recognized, Events that Would Cause Temporary Difference to be Taxable, Undistributed Earnings of Foreign Subsidiaries | As a result of an audit by the Internal Revenue Service (“IRS”) for fiscal years 2013 through 2015, in August 2022, we received a Revenue Agent’s Report (“RAR”) from the IRS asserting an underpayment of tax of $2.1 billion plus $418 million in penalties for the 2014 fiscal year. Additionally, interest on the underpayment is estimated to be approximately $830 million through the first quarter of 2023. The proposed underpayment relates primarily to a series of reorganizations we undertook during that year in connection with the business realignment of our corporate and management reporting structure along brand lines. The IRS asserts that these transactions resulted in taxable distributions of approximately $6.0 billion.We disagree with the IRS’s position as asserted in the RAR and intend to contest that position vigorously. In September 2022, we filed a Protest with the IRS Examination Division disputing on multiple grounds the proposed underpayment of tax and penalties. We have received the IRS Examination Division’s Rebuttal to our Protest. We expect the case to be transmitted to the IRS Office of Appeals for independent review within the next several months.The Company does not expect resolution of this matter within twelve months and cannot predict with certainty the timing of such resolution. The Company believes that it is more likely than not the Company’s tax position will be sustained; therefore, no reserve is recorded with respect to this matter.An unfavorable resolution of this matter could have a material, adverse impact on our Condensed Consolidated Financial Statements in future periods. |
INDIA | |
Loss Contingencies [Line Items] | |
Litigation, Nature | On January 29, 2020, the Special Director issued an order imposing a penalty on YRIPL and certain former directors of approximately Indian Rupee 11 billion, or approximately $135 million. Of this amount, $130 million relates to the alleged failure to invest a total of $80 million in India within an initial seven-year period. We have been advised by external counsel that the order is flawed and have filed a writ petition with the Delhi High Court, which granted an interim stay of the penalty order on March 5, 2020. In November 2022, YRIPL was notified that an administrative tribunal bench had been constituted to hear an appeal by DOE of certain findings of the January 2020 order, including claims that certain charges had been wrongly dropped and that an insufficient amount of penalty had been imposed. A hearing with the administrative tribunal that had been scheduled for March has been rescheduled to August 3, 2023. The stay order remains in effect and the next hearing in the Delhi High Court is now scheduled for May 16, 2023. We deny liability and intend to continue vigorously defending this matter. We do not consider the risk of any significant loss arising from this order to be probable. |
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