YUM BRANDS INC, 10-Q filed on 7/16/2013
Quarterly Report
Document and Entity Information (USD $)
6 Months Ended
Jun. 15, 2013
Jul. 10, 2013
Jun. 16, 2012
Document And Entity Information [Abstract]
 
 
 
Entity Registrant Name
YUM BRANDS INC 
 
 
Entity Central Index Key
0001041061 
 
 
Current Fiscal Year End Date
--12-28 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Public Float
 
 
$ 29,700,000,000 
Entity Common Stock, Shares Outstanding
 
446,225,089 
 
Document Fiscal Year Focus
2013 
 
 
Document Fiscal Period Focus
Q2 
 
 
Document Type
10-Q 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Jun. 15, 2013 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
Jun. 16, 2012
Revenues
 
 
 
 
Company sales
$ 2,474 
$ 2,762 
$ 4,573 
$ 5,106 
Franchise and license fees and income
430 
406 
866 
805 
Total revenues
2,904 
3,168 
5,439 
5,911 
Costs and Expenses, Net
 
 
 
 
Food and paper
805 
916 
1,485 
1,683 
Payroll and employee benefits
590 
623 
1,080 
1,136 
Occupancy and other operating expenses
769 
800 
1,365 
1,424 
Company restaurant expenses
2,164 
2,339 
3,930 
4,243 
General and administrative expenses
333 
346 
606 
618 
Franchise and license expenses
34 
26 
64 
52 
Closures and impairment (income) expenses
6 
4 
10 
5 
Refranchising (gain) loss
(32)
(13)
(49)
(39)
Other (income) expense
9 
(7)
1 
(86)
Total costs and expenses, net
2,514 
2,695 
4,562 
4,793 
Operating Profit
390 
473 
877 
1,118 
Interest expense, net
32 
38 
63 
75 
Income Before Income Taxes
358 
435 
814 
1,043 
Income tax provision
82 
102 
202 
249 
Net Income – including noncontrolling interests
276 
333 
612 
794 
Net Income (loss) - noncontrolling interests
(5)
2 
(6)
5 
Net Income - YUM! Brands, Inc.
$ 281 
$ 331 
$ 618 
$ 789 
Basic Earnings Per Common Share
$ 0.62 
$ 0.71 
$ 1.36 
$ 1.70 
Diluted Earnings Per Common Share
$ 0.61 
$ 0.69 
$ 1.33 
$ 1.65 
Dividends Declared Per Common Share
$ 0.335 
$ 0.285 
$ 0.67 
$ 0.57 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
Jun. 16, 2012
Net Income - including noncontrolling interests
$ 276 
$ 333 
$ 612 
$ 794 
Other comprehensive income, net of tax
 
 
 
 
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature
8 
(33)
3 
(20)
Tax (expense) benefit
(1)
2 
6 
0 
Reclassification of currency translation adjustments into Net income
0 
0 
0 
3 
Tax (expense) benefit
0 
0 
0 
0 
Net unrealized gains (losses) arising during the year on pension and post-retirement plans
8 
0 
0 
0 
Tax (expense) benefit
(3)
0 
(2)
0 
Reclassification of pension and post-retirement losses to Net Income
14 
16 
39 
31 
Tax (expense) benefit
(5)
(6)
(14)
(12)
Net unrealized gain (loss) on derivative instruments
1 
1 
2 
0 
Tax (expense) benefit
(1)
0 
(1)
0 
Other comprehensive income (loss), net of tax
21 
(20)
33 
2 
Comprehensive Income - including noncontrolling interests
297 
313 
645 
796 
Comprehensive Income (loss) - noncontrolling interests
(3)
0 
(4)
3 
Comprehensive Income - YUM! Brands, Inc.
$ 300 
$ 313 
$ 649 
$ 793 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Cash Flows - Operating Activities
 
 
Net Income - including noncontrolling interests
$ 612 
$ 794 
Depreciation and amortization
300 
285 
Closures and impairment (income) expenses
10 
5 
Refranchising (gain) loss
(49)
(39)
Contributions to defined benefit pension plans
(3)
(43)
Gain upon acquisition of Little Sheep
0 
(74)
Deferred income taxes
(5)
(10)
Equity income from investments in unconsolidated affiliates
(4)
(22)
Distributions of income received from unconsolidated affiliates
12 
15 
Excess tax benefits from share-based compensation
(24)
(46)
Share-based compensation expense
21 
23 
Changes in accounts and notes receivable
4 
16 
Changes in inventories
1 
14 
Changes in prepaid expenses and other current assets
(8)
(9)
Changes in accounts payable and other current liabilities
(229)
(118)
Changes in income taxes payable
62 
70 
Other, net
29 
63 
Net Cash Provided by Operating Activities
729 
924 
Cash Flows - Investing Activities
 
 
Capital spending
(472)
(406)
Proceeds from refranchising of restaurants
155 
132 
Acquisitions
(89)
(542)
Changes in restricted cash
0 
300 
Changes in short-term investments
2 
(82)
Other, net
(6)
2 
Net Cash Used in Investing Activities
(410)
(596)
Cash Flows - Financing Activities
 
 
Repayments of long-term debt
(4)
(15)
Short-term borrowings, more than three months, net
55 
0 
Repurchase shares of Common Stock
(329)
(289)
Excess tax benefits from share-based compensation
24 
46 
Employee stock option proceeds
11 
22 
Dividends paid on Common Stock
(301)
(262)
Other, net
(43)
(41)
Net Cash Used in Financing Activities
(587)
(539)
Effect of Exchange Rates on Cash and Cash Equivalents
(8)
(3)
Net Decrease in Cash and Cash Equivalents
(276)
(214)
Cash and Cash Equivalents - Beginning of Period
776 
1,198 
Cash and Cash Equivalents - End of Period
$ 500 
$ 984 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Jun. 15, 2013
Dec. 29, 2012
Current Assets
 
 
Cash and cash equivalents
$ 500 
$ 776 
Accounts and notes receivable, net
352 
301 
Inventories
319 
313 
Prepaid expenses and other current assets
238 
272 
Deferred income taxes
115 
127 
Advertising cooperative assets, restricted
81 
136 
Total Current Assets
1,605 
1,925 
Property, plant and equipment, net
4,252 
4,250 
Goodwill
1,110 
1,034 
Intangible assets, net
717 
690 
Investments in unconsolidated affiliates
29 
72 
Other assets
571 
575 
Deferred income taxes
480 
467 
Total Assets
8,764 
9,013 
Current Liabilities
 
 
Accounts payable and other current liabilities
1,739 
2,036 
Income taxes payable
102 
97 
Short-term borrowings
68 
10 
Advertising cooperative liabilities
81 
136 
Total Current Liabilities
1,990 
2,279 
Long-term debt
2,918 
2,932 
Other liabilities and deferred credits
1,512 
1,490 
Total Liabilities
6,420 
6,701 
Redeemable noncontrolling interest
59 
59 
Shareholders' Equity
 
 
Common stock, no par value, 750 shares authorized; 447 and 451 shares issued in 2013 and 2012, respectively
0 
0 
Retained earnings
2,324 
2,286 
Accumulated other comprehensive income (loss)
(101)
(132)
Total Shareholders' Equity - YUM! Brands, Inc.
2,223 
2,154 
Noncontrolling interests
62 
99 
Total Shareholders' Equity
2,285 
2,253 
Total Liabilities, Redeemable Noncontrolling Interest and Shareholders’ Equity
$ 8,764 
$ 9,013 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Per Share data, unless otherwise specified
Jun. 15, 2013
Dec. 29, 2012
Shareholders' Equity (Deficit)
 
 
Common Stock, par value
$ 0 
$ 0 
Common Stock, shares authorized
750 
750 
Common Stock, shares issued
447 
451 
Financial Statement Presentation
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 29, 2012 (“2012 Form 10-K”).  Except as disclosed herein, there has been no material change in the information disclosed in our Consolidated Financial Statements included in the 2012 Form 10-K.

YUM! Brands, Inc. and Subsidiaries (collectively referred to herein as “YUM” or the “Company”) comprises primarily the worldwide operations of KFC, Pizza Hut and Taco Bell (collectively the “Concepts”).  References to YUM throughout these Notes to our Financial Statements are made using the first person notations of “we,” “us” or “our.”

YUM’s business consists of four reporting segments:  YUM Restaurants China (“China” or “China Division”), YUM Restaurants International (“YRI” or “International Division”), United States ("U.S." or "U.S. Division") and YUM Restaurants India ("India" or "India Division").  The China Division includes mainland China, and the India Division includes India, Bangladesh, Mauritius, Nepal and Sri Lanka. YRI includes the remainder of our international operations.

Our fiscal year ends on the last Saturday in December and, as a result, a 53rd week is added every five or six years.  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 subsidiaries operate on similar fiscal calendars except that China, India and certain other international subsidiaries operate on a monthly calendar, and thus never have a 53rd week, with two months in the first quarter, three months in the second and third quarters and four months in the fourth quarter.  YRI closes one period earlier to facilitate consolidated reporting.

At the beginning of fiscal 2013, we eliminated the period lag that we previously used to facilitate the reporting of our India Division's results. Accordingly, the India Division's 2013 second quarter results include the months of March through May 2013 and the 2013 year to date results include the months of January through May 2013. Due to the immateriality of the India Division's results we did not restate the prior year operating results for the elimination of this period lag and therefore the 2012 second quarter results continue to include the months of February through April 2012 and the 2012 year to date results include the months of December 2011 through April 2012.

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.

In our opinion, the accompanying Financial Statements include all normal and recurring adjustments considered necessary to present fairly, when read in conjunction with our 2012 Form 10-K, our financial position as of June 15, 2013, and the results of our operations and comprehensive income for the quarters and years to date ended June 15, 2013 and June 16, 2012, and cash flows for the years to date ended June 15, 2013 and June 16, 2012. Our results of operations, comprehensive income and cash flows 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 certain 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 items in the Financial Statements for the prior periods to be comparable with the classification for the quarter and year to date ended June 15, 2013. These reclassifications had no effect on previously reported Net Income - YUM! Brands, Inc.
Earnings Per Common Share ("EPS")
Earnings Per Common Share (EPS)
Earnings Per Common Share (“EPS”)
 
 
Quarter ended
 
Year to date
 
 
6/15/2013

 
6/16/2012

 
6/15/2013

 
6/16/2012

Net Income – YUM! Brands, Inc.
 
$
281

 
$
331

 
$
618

 
$
789

 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (for basic calculation)
 
454

 
465

 
454

 
465

Effect of dilutive share-based employee compensation
 
10

 
12

 
10

 
13

Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)
 
464

 
477

 
464

 
478

Basic EPS
 
$
0.62

 
$
0.71

 
$
1.36

 
$
1.70

Diluted EPS
 
$
0.61

 
$
0.69

 
$
1.33

 
$
1.65

Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation(a)
 
6.0

 
3.5

 
5.2

 
2.7


(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.

Shareholders' Equity
Shareholders' Equity
Shareholders’ Equity

Under the authority of our Board of Directors, we repurchased shares of our Common Stock during the years to date ended June 15, 2013 and June 16, 2012, as indicated below.  All amounts exclude applicable transaction fees.

 
 
 
 
Shares Repurchased (thousands)
 
Dollar Value of Shares Repurchased
 
Remaining Dollar Value of Shares that may be Repurchased
Authorization Date
 
Authorization Expiration Date
 
2013
 
2012
 
2013
 
2012
 
2013
January 2011
 
June 2012
 
—

 
 
2,787

 
 
$
—

 
 
$
188

 
 
$
—

 
November 2011
 
May 2013
 
—

 
 
1,528

 
 
—

 
 
101

 
 
—

 
November 2012
 
May 2014
 
4,778

 
 
—

 
 
324

 
 
—

 
 
629

 
Total
 
 
 
4,778

(a) 
 
4,315

 
 
$
324

(a) 
 
$
289

 
 
$
629

 
 
 
 
 
 

(a)
Amount excludes the effect of $20 million in share repurchases (0.3 million shares) with trade dates prior to the 2012 fiscal year end but cash settlement dates subsequent to the 2012 fiscal year end and includes the effect of $15 million in share repurchases (0.2 million shares) with trade dates prior to June 15, 2013 but cash settlement dates subsequent to June 15, 2013.

Changes in accumulated other comprehensive income ("OCI") are presented below.
 
 
Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Nature
 
Pension and Post-Retirement Benefit Plan Losses (a)
 
Net Unrealized Loss on Derivative Instruments
 
Total
Balance at December 29, 2012, net of tax
 
$
166

 
$
(286
)
 
$
(12
)
 
$
(132
)
 
 
 
 
 
 
 
 
 
Amounts classified into OCI, net of tax
 
7

 
(2
)
 
6

 
11

 
 
 
 
 
 
 
 
 
Amounts reclassified from accumulated OCI, net of tax
 
—

 
25

 
(5
)
 
20

 
 
 
 
 
 
 
 
 
OCI, net of tax
 
7

 
23

 
1

 
31

 
 
 
 
 
 
 
 
 
Balance at June 15, 2013, net of tax
$
173

 
$
(263
)
 
$
(11
)
 
$
(101
)


(a)
Amounts reclassified from accumulated OCI for pension and post-retirement benefit plan losses include amortization of net losses of $28 million, settlement charges of $10 million, amortization of prior service cost of $1 million and the related income tax benefit of $14 million. See Note 10 Pension Benefits for further information.
Items Affecting Comparability of Net Income and/or Cash Flows
Items Affecting Comparability of Net Income and/or Cash Flows
Items Affecting Comparability of Net Income and/or Cash Flows

Little Sheep Acquisition

On February 1, 2012 we acquired an additional 66% interest in Little Sheep Group Limited (“Little Sheep”) for $540 million, net of cash acquired of $44 million, increasing our ownership to 93%.  The acquisition was driven by our strategy to build leading brands across China in every significant category.  Prior to our acquisition of this additional interest, our 27% interest in Little Sheep was accounted for under the equity method of accounting.  As a result of the acquisition we obtained voting control of Little Sheep, and thus we began consolidating Little Sheep upon acquisition.  As required by GAAP, we remeasured our previously held 27% ownership in Little Sheep, which had a recorded value of $107 million at the date of acquisition, at fair value based on Little Sheep's traded share price immediately prior to our offer to purchase the business and recognized a non-cash gain of $74 million.  This gain, which resulted in no related income tax expense, was recorded in Other (income) expense on our Condensed Consolidated Statement of Income during the quarter ended March 24, 2012 and was not allocated to any segment for performance reporting purposes.

Turkey Restaurant Acquisition

In April 2013, we acquired 65 KFC and 41 Pizza Hut restaurants from an existing franchisee in Turkey for $86 million of cash and a potential payment of up to $19 million to be made in 2016 based on results of the business through 2015.

We recognized $85 million of goodwill for the value expected to be generated from the acquisition, primarily through net unit development. The goodwill is not expected to be deductible for income tax purposes and has been allocated to the YRI operating segment.

The impact of consolidating this business on all line-items within our Condensed Consolidated Statement of Income was insignificant for the quarter and year to date ended June 15, 2013. The proforma impact on our results of operations if the acquisition had been completed as of the beginning of 2012 would not have been significant.

Refranchising (Gain) Loss

The Refranchising (gain) loss by reportable segment is presented below. We do not allocate such gains and losses to our segments for performance reporting purposes.

 
 
Quarter ended
 
Year to date
 
 
6/15/2013
 
6/16/2012
 
6/15/2013

 
6/16/2012

China
 
$
(1
)
 
$
(2
)
 
$
(1
)
 
$
(4
)
YRI(a)
 
(3
)
 
(2
)
 
(3
)
 
19

U.S.(b)
 
(28
)
 
(9
)
 
(45
)
 
(54
)
India
 
—

 
—

 
—

 
—

Worldwide
 
$
(32
)
 
$
(13
)
 
$
(49
)
 
$
(39
)

(a)
During the fourth quarter of 2012, we refranchised our remaining 331 Company-owned Pizza Hut dine-in restaurants in the United Kingdom ("UK"). During the year to date ended June 16, 2012 we recorded losses of $23 million due to the then planned refranchising of these restaurants.

(b)
In the quarters and years to date ended June 15, 2013 and June 16, 2012, U.S. Refranchising (gain) loss primarily relates to gains on the sales of Taco Bell restaurants.

Store Closure and Impairment Activity

Store closure (income) costs and Store impairment charges by reportable segment are presented below.
 
Quarter ended June 15, 2013
 
China
 
YRI
 
U.S.
 
India
 
Worldwide
Store closure (income) costs (a)
$
(2
)
 
$
—

 
$
(1
)
 
$
—

 
$
(3
)
Store impairment charges
8

 
—

 
1

 
—

 
9

Closure and impairment (income) expenses
$
6

 
$
—

 
$
—

 
$
—

 
$
6


 
Quarter ended June 16, 2012
 
China
 
YRI
 
U.S.
 
India
 
Worldwide
Store closure (income) costs (a)
$
(2
)
 
$
(2
)
 
$
(1
)
 
$
—

 
$
(5
)
Store impairment charges
4

 
1

 
4

 
—

 
9

Closure and impairment (income) expenses
$
2

 
$
(1
)
 
$
3

 
$
—

 
$
4

 
 
 
 
 
 
 
 
 
 

 
Year to date ended June 15, 2013
 
China
 
YRI
 
U.S.
 
India
 
Worldwide
Store closure (income) costs(a)
$
(3
)
 
$
—

 
$
—

 
$
—

 
$
(3
)
Store impairment charges
11

 
—

 
1

 
1

 
13

Closure and impairment (income) expenses
$
8

 
$
—

 
$
1

 
$
1

 
$
10


 
Year to date ended June 16, 2012
 
China
 
YRI
 
U.S.
 
India
 
Worldwide
Store closure (income) costs(a)
$
(2
)
 
$
(2
)
 
$
(2
)
 
$
—

 
$
(6
)
Store impairment charges
5

 
2

 
4

 
—

 
11

Closure and impairment (income) expenses
$
3

 
$
—

 
$
2

 
$
—

 
$
5


(a)
Store closure (income) costs include the net gain or loss on sales of real estate on which we formerly operated a Company restaurant that was closed, lease reserves established when we cease using a property under an operating lease and subsequent adjustments to those reserves and other facility-related expenses from previously closed stores.
Recently Adopted Accounting Pronouncements
Recently Adopted Accounting Pronouncements
Recently Adopted Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2013-2, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-2), that requires an organization to present the effects on the line items of net income of significant amounts reclassified out of Accumulated OCI, but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. ASU 2013-2 is effective for fiscal years beginning after December 15, 2012. All necessary disclosures have been complied with in these Financial Statements.

Other (Income) Expense
Other (Income) Expense
Other (Income) Expense
 
 
Quarter ended
 
Year to date
 
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
Equity (income) loss from investments in unconsolidated affiliates
$
3

 
$
(9
)
 
$
(4
)
 
$
(22
)
Gain upon acquisition of Little Sheep
—

 
—

 
—

 
(74
)
Foreign exchange net (gain) loss and other(a)
6

 
2

 
5

 
10

Other (income) expense
$
9

 
$
(7
)
 
$
1

 
$
(86
)

 
(a)
The year to date ended June 16, 2012 includes $6 million of deal costs related to the acquisition of Little Sheep that were allocated to the China Division for performance reporting purposes.
Supplemental Balance Sheet Information
Supplemental Balance Sheet Information
Supplemental Balance Sheet Information

Receivables

The Company’s receivables are primarily generated as a result of ongoing business relationships with our franchisees and licensees as a result of royalty and lease agreements.  Trade receivables consisting of royalties from franchisees and licensees are generally due within 30 days of the period in which the corresponding sales occur and are classified as Accounts and notes receivable on our Condensed Consolidated Balance Sheets.  
 
6/15/2013
 
12/29/2012
Accounts and notes receivable
$
365

 
$
313

Allowance for doubtful accounts
(13
)
 
(12
)
Accounts and notes receivable, net
$
352

 
$
301


Property, Plant and Equipment
 
6/15/2013
 
12/29/2012
Property, plant and equipment, gross
$
7,477

 
$
7,389

Accumulated depreciation and amortization
(3,225
)
 
(3,139
)
Property, plant and equipment, net
$
4,252

 
$
4,250



Assets held for sale at June 15, 2013 and December 29, 2012 total $32 million and $56 million, respectively, and are included in Prepaid expenses and other current assets in our Condensed Consolidated Balance Sheets.

Noncontrolling Interests

A reconciliation of the beginning and ending carrying amount of the equity attributable to noncontrolling interests is as follows:

 
Noncontrolling Interests
Balance as of December 29, 2012
$
99

Net Income (loss) – noncontrolling interests
(6
)
Acquisition of Little Sheep store-level non-controlling interests
(15
)
Dividends declared
(18
)
Cumulative translation adjustment arising during the period
2

Balance as of June 15, 2013
$
62




Income Taxes
Income Taxes
Income Taxes

 
Quarter ended
 
Year to date
 
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
Income taxes
$
82

 
$
102

 
$
202

 
$
249

Effective tax rate
22.7
%
 
23.7
%
 
24.8
%
 
23.9
%


Our effective tax rate was lower than the expected U.S. federal statutory rate of 35% primarily due to the majority of our income being earned outside of the U.S. where tax rates are generally lower than the U.S. rate.

Our second quarter effective tax rate was lower than the prior year primarily due to the favorable impact of the resolution of uncertain tax positions in certain tax jurisdictions.

Year to date, our effective tax rate was higher than the prior year due to lapping the positive impact of the one-time $74 million gain recognized upon our acquisition of additional interest in Little Sheep, which resulted in no related tax expense. This was partially offset by the favorable impact of the resolution of uncertain tax positions in certain tax jurisdictions.

On June 23, 2010, the Company received a Revenue Agent Report (RAR) from the Internal Revenue Service (the “IRS”) relating to its examination of our U.S. federal income tax returns for fiscal years 2004 through 2006.  The IRS has proposed an adjustment to increase the taxable value of rights to intangibles used outside the U.S. that YUM transferred to certain of its foreign subsidiaries.  The proposed adjustment would result in approximately $700 million of additional taxes plus net interest to date of approximately $235 million for fiscal years 2004-2006.  On January 9, 2013, the Company received an RAR from the IRS for fiscal years 2007 and 2008. As expected, the IRS proposed an adjustment similar to their proposal for 2004-2006 that would result in approximately $270 million of additional taxes plus net interest to date of approximately $35 million for fiscal years 2007 and 2008. Furthermore, the Company expects the IRS to make similar claims for years subsequent to fiscal 2008. The potential additional taxes for 2009 through 2012, computed on a similar basis to the 2004-2008 additional taxes, would be approximately $130 million plus net interest to date of approximately $5 million.

We believe that the Company has properly reported taxable income and paid taxes in accordance with applicable laws and that the proposed adjustments are inconsistent with applicable income tax laws, Treasury Regulations and relevant case law.  We intend to defend our position vigorously and have filed a protest with the IRS.  As the final resolution of the proposed adjustments remains uncertain, the Company will continue to provide for its position in this matter based on the tax benefit that we believe is the largest amount that is more likely than not to be realized upon settlement of this issue.  There can be no assurance that payments due upon final resolution of this issue will not exceed our currently recorded reserve and such payments could have a material, adverse effect on our financial position.  Additionally, if increases to our reserves are deemed necessary due to future developments related to this issue, such increases could have a material, adverse effect on our results of operations as they are recorded.  The Company does not expect resolution of this matter within twelve months and cannot predict with certainty the timing of such resolution.
Reportable Operating Segments
Reportable Operating Segments
Reportable Operating Segments

We identify our operating segments based on management responsibility.  The China Division includes mainland China and the India Division includes India, Bangladesh, Mauritius, Nepal and Sri Lanka. YRI includes the remainder of our international operations.  We consider our KFC-U.S., Pizza Hut-U.S. and Taco Bell-U.S. operating segments to be similar and therefore have aggregated them into a single reportable operating segment.

The following tables summarize Revenues and Operating Profit for each of our reportable operating segments:

 
Quarter ended
 
Year to date
Revenues
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
China
$
1,449

 
$
1,556

 
$
2,600

 
$
2,774

YRI
713

 
770

 
1,382

 
1,478

U.S.
709

 
818

 
1,404

 
1,618

India
33

 
24

 
53

 
41

 
$
2,904

 
$
3,168

 
$
5,439

 
$
5,911


 
Quarter ended
 
Year to date
Operating Profit (loss)
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
China(a)
$
68

 
$
182

 
$
222

 
$
438

YRI
163

 
150

 
362

 
318

United States
173

 
166

 
338

 
324

India
(4
)
 
(2
)
 
(6
)
 
(1
)
Unallocated Occupancy and other(b)(e)
—

 
5

 
—

 
9

Unallocated and General and administrative expenses(e)
(41
)
 
(41
)
 
(87
)
 
(83
)
Unallocated Other income (expense)(c)(e)
(1
)
 
—

 
(1
)
 
74

Unallocated Refranchising gain (loss)(d)(e)
32

 
13

 
49

 
39

Operating Profit
$
390

 
$
473

 
$
877

 
$
1,118

Interest expense, net
(32
)
 
(38
)
 
(63
)
 
(75
)
Income Before Income Taxes
$
358

 
$
435

 
$
814

 
$
1,043


(a)
Includes equity loss from investments in unconsolidated affiliates of $3 million for the quarter ended June 15, 2013 and equity income from investments in unconsolidated affiliates of $9 million for the quarter ended June 16, 2012. Includes equity income from investments in unconsolidated affiliates of $4 million and $22 million for the years to date ended June 15, 2013 and June 16, 2012, respectively.

(b)
Amounts represent depreciation reduction as a result of impairment losses recognized related to our decisions to refranchise Company operated Pizza Hut dine-in restaurants in the UK (see Note 4) and Company operated KFC restaurants in the U.S.

(c)
Represents gain upon acquisition of Little Sheep of $74 million for the year to date ended June 16, 2012. See Note 4.

(d)
Includes U.S. refranchising gains of $28 million and $9 million for the quarters ended June 15, 2013 and June 16, 2012, respectively. Includes U.S. refranchising gains of $45 million and $54 million for the years to date ended June 15, 2013 and June 16, 2012, respectively, and losses of $23 million related to the planned refranchising of our Pizza Hut UK dine-in business for the year to date ended June 16, 2012. See Note 4.

(e)
Amounts have not been allocated to any segment for performance reporting purposes.
Pension Benefits
Pension Benefits
Pension Benefits

We sponsor 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 while benefits from the other U.S. plan are paid by the Company as incurred.  During 2001, the plans covering our U.S. salaried employees were amended such that any salaried employee hired or rehired by YUM after September 30, 2001 is not eligible to participate in those plans.  We also sponsor various defined benefit pension plans covering certain of our non-U.S. employees, the most significant of which are in the UK. During the quarter ended March 23, 2013, one of our UK plans was frozen such that existing participants can no longer earn future service credits. Our other UK plan was previously frozen to future service credits in 2011.
  
The components of net periodic benefit cost associated with our U.S. pension plans and significant international pension plans are as follows:

 
U.S. Pension Plans
 
International Pension Plans
 
Quarter ended
 
Quarter ended
 
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
Service cost
$
5

 
$
6

 
$
—

 
$
1

Interest cost
12

 
15

 
2

 
2

Expected return on plan assets
(13
)
 
(16
)
 
(2
)
 
(3
)
Amortization of net loss
12

 
14

 
—

 
—

Amortization of prior service cost
1

 
—

 
—

 
—

Net periodic benefit cost
$
17

 
$
19

 
$
—

 
$
—

 
 
 
 
 
 
 
 
Additional loss (gain) recognized due to:
 
 
 
 
 
 
 
Settlement
$
—

 
$
—

 
$
—

 
$
—

Curtailment
$
—

 
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
U.S. Pension Plans
 
International Pension Plans
 
Year to date
 
Year to date
 
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
Service cost
$
10

 
$
12

 
$
—

 
$
1

Interest cost
25

 
30

 
4

 
4

Expected return on plan assets
(27
)
 
(32
)
 
(5
)
 
(5
)
Amortization of net loss
26

 
29

 
1

 
—

Amortization of prior service cost
1

 
—

 
—

 
—

Net periodic benefit cost
$
35

 
$
39

 
$
—

 
$
—

 
 
 
 
 
 
 
 

Additional loss (gain) recognized due to:
 
 
 
 
 
 
 
Settlement (a)
$
10

 
$
—

 
$
—

 
$
—

Curtailment (b)
$
—

 
$
—

 
$
(5
)
 
$
—


(a)
Loss is a result of settlement transactions from a non-funded plan which exceeded the sum of annual service and interest costs for that plan. The loss was recorded in unallocated General and administrative expenses.

(b)
Gain is a result of terminating future service benefits for all participants in one of our UK plans. The gain was recorded in YRI's General and administrative expenses.

We made no contributions to the Plan during the year to date ended June 15, 2013. While we are not required to make any contributions to the Plan in 2013, we may choose to make additional discretionary contributions as part of our overall capital structure strategy. We do not anticipate making any significant contributions to any plan outside of the U.S. in 2013.
Derivative Instruments
Derivative Instruments
Derivative Instruments

The Company is exposed to certain market risks relating to its ongoing business operations.  The primary market risks managed by using derivative instruments are interest rate risk and cash flow volatility arising from foreign currency fluctuations.

We enter into interest rate swaps with the objective of reducing our exposure to interest rate risk and lowering interest expense for a portion of our fixed-rate debt.  At June 15, 2013, our interest rate derivative instruments outstanding had notional amounts of $300 million and have been designated as fair value hedges of a portion of our debt.  These fair value hedges meet the shortcut method requirements and no ineffectiveness has been recorded.

We enter into foreign currency forward contracts with the objective of reducing our exposure to cash flow volatility arising from foreign currency fluctuations associated with certain foreign currency denominated intercompany short-term receivables and payables.  The notional amount, maturity date, and currency of these contracts match those of the underlying receivables or payables.  For those foreign currency exchange forward contracts that we have designated as cash flow hedges, we measure ineffectiveness by comparing the cumulative change in the fair value of the forward contract with the cumulative change in the fair value of the hedged item.  At June 15, 2013, foreign currency forward contracts outstanding had a total notional amount of $493 million.

The fair values of derivatives designated as hedging instruments as of June 15, 2013 and December 29, 2012 were:

 
6/15/2013
 
12/29/2012
 
Condensed Consolidated Balance Sheet Location
Interest Rate Swaps - Asset
$
20

 
$
24

 
Other assets
Foreign Currency Forwards - Asset
5

 
—

 
Prepaid expenses and other current assets
Foreign Currency Forwards - Liability
(1
)
 
(5
)
 
Accounts payable and other current liabilities
Total
$
24

 
$
19

 
 


The unrealized gains associated with our interest rate swaps that hedge the interest rate risk for a portion of our debt have been reported as an addition of $18 million to Long-term debt at June 15, 2013 and as an addition of $22 million to Long-term debt at December 29, 2012.  During the quarter and year to date ended June 15, 2013, Interest expense, net was reduced by $2 million and $4 million, respectively, for recognized gains on interest rate swaps. During the quarter and year to date ended June 16, 2012, Interest expense, net was reduced by $4 million and $8 million, respectively, for recognized gains on these interest rate swaps.

Changes in fair value of derivative instruments:

 
Year to date
 
6/15/2013
 
6/16/2012
Beginning of Year Balance
$
19

 
$
34

Changes in fair value recognized into OCI
9

 
11

Changes in fair value recognized into income
(1
)
 
4

Cash receipts
(3
)
 
(8
)
Ending Balance
$
24

 
$
41



For our foreign currency forward contracts the following effective portions of gains and losses were recognized into Accumulated OCI and reclassified into income from Accumulated OCI in the quarters and years to date ended June 15, 2013 and June 16, 2012:

 
Quarter ended
 
Year to date
 
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
Gains (losses) recognized into Accumulated OCI, net of tax
$
5

 
$
11

 
$
6

 
$
7

Gains (losses) reclassified from Accumulated OCI into income, net of tax
$
5

 
$
10

 
$
5

 
$
7



The gains/losses reclassified from Accumulated OCI into income were recognized as Other income (expense) in our Condensed Consolidated Statements of Income, largely offsetting foreign currency transaction losses/gains recorded when the related intercompany receivables and payables were adjusted for foreign currency fluctuations.  Changes in fair values of the foreign currency forwards recognized directly in our results of operations either from ineffectiveness or exclusion from effectiveness testing were insignificant in the quarters and years to date ended June 15, 2013 and June 16, 2012.

Additionally, we had a net deferred loss of $11 million, net of tax, as of June 15, 2013 within Accumulated OCI due primarily to treasury locks and forward-starting interest rate swaps that were cash settled in prior years.  The majority of this loss arose from the 2007 settlement of forward starting interest rate swaps entered into prior to the issuance of our Senior Unsecured Notes due in 2037, and is being recognized in interest expense through 2037 consistent with interest payments made on the related Senior Unsecured Notes.  In the quarters and years to date ended June 15, 2013 and June 16, 2012, an insignificant amount was reclassified from Accumulated OCI to Interest expense, net as a result of these previously settled cash flow hedges.

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 counterparty credit risk, we only enter into contracts with carefully selected major financial institutions based upon their credit ratings and other factors, and continually assess the creditworthiness of counterparties.  At June 15, 2013, all of the counterparties to our interest rate swaps and foreign currency forwards had investment grade ratings according to the three major ratings agencies.  To date, all counterparties have performed in accordance with their contractual obligations.
Fair Value Measurements
Fair Value Measurements
Fair Value Measurements

At June 15, 2013 the carrying values of cash and cash equivalents, short-term investments, accounts receivable and accounts payable approximated their fair values because of the short-term nature of these instruments.  The fair value of notes receivable net of allowances and lease guarantees less subsequent amortization approximates their carrying value.  The Company’s debt obligations, excluding capital leases, were estimated to have a fair value of $3.2 billion (Level 2), compared to their carrying value of $2.8 billion.  We estimated the fair value of debt using market quotes and calculations based on market rates.

Recurring Fair Value Measurements

The following table presents the 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.  No transfers among the levels within the fair value hierarchy occurred during the year to date ended June 15, 2013.

 
Fair Value
 
Level
 
6/15/2013
 
12/29/2012
Foreign Currency Forwards, net
2
 
$
4

 
$
(5
)
Interest Rate Swaps, net
2
 
20

 
24

Other Investments
1
 
19

 
17

Total
 
 
$
43

 
$
36



The fair value of the Company’s foreign currency forwards and 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 upon observable inputs.   The other investments include investments in mutual funds, which are used to offset fluctuations in deferred compensation liabilities where employees have chosen to invest in phantom shares of a Stock Index Fund or Bond Index Fund.  The other investments are classified as trading securities within Other assets on our Condensed Consolidated Balance Sheets and their fair value was determined based on the closing market prices of the respective mutual funds as of June 15, 2013 and December 29, 2012.


Non-Recurring Fair Value Measurements

(Gains) losses recognized from all non-recurring fair value measurements during the quarters and years to date ended June 15, 2013 and June 16, 2012:
 
 
Quarter ended
 
 
 
June 15, 2013
 
June 16, 2012
 
Restaurant-level impairment (Level 3)
 
$
5

 
$
6

 
Total
 
$
5

 
$
6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year to date
 
 
 
June 15, 2013
 
June 16, 2012
 
Restaurant-level impairment (Level 3)
 
$
5

 
$
6

 
Refranchising related impairment - Pizza Hut UK (Level 2) (a)
 
—

 
20

 
Little Sheep acquisition gain (Level 2) (a)
 
—

 
(74
)
 
Total
 
$
5

 
$
(48
)
 
 
 
 
 
 
 
(a)
See Note 4 for further discussions of Pizza Hut UK dine-in refranchising and the acquisition of Little Sheep.

Restaurant-level impairment charges are recorded in Closures and impairment (income) expenses and resulted from our semi-annual impairment evaluation of long-lived assets of individual restaurants that were being operated at the time of impairment and had not been offered for refranchising. The fair value measurements used in these impairment evaluations were based on discounted cash flow estimates using unobservable inputs (Level 3). The remaining net book value of these assets measured at fair value as of June 15, 2013 and June 16, 2012 subsequent to these impairments was not significant.
Guarantees, Commitments and Contingencies
Guarantees, Commitments and Contingencies
Guarantees, Commitments and Contingencies

Lease Guarantees

As a result of (a) assigning our interest in obligations under real estate leases as a condition to the refranchising of certain Company restaurants; (b) contributing certain Company restaurants to unconsolidated affiliates; and (c) guaranteeing certain other leases, we are frequently contingently liable on lease agreements.  These leases have varying terms, the latest of which expires in 2066.  As of June 15, 2013, the potential amount of undiscounted payments we could be required to make in the event of non-payment by the primary lessees was approximately $750 million.  The present value of these potential payments discounted at our pre-tax cost of debt at June 15, 2013 was approximately $675 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.  Accordingly, the liability recorded for our probable exposure under such leases at June 15, 2013 was not material.

Franchise Loan Pool and Equipment Guarantees

We have agreed to provide financial support, if required, to a variable interest entity that operates a franchisee lending program used primarily to assist franchisees in the development of new restaurants in the U.S. and, to a lesser extent, in connection with the Company’s refranchising programs.  We have provided guarantees of $37 million in support of the franchisee loan program at June 15, 2013.  Loans outstanding under the loan pool totaled $50 million at June 15, 2013 with an additional $30 million available for lending at June 15, 2013. We have determined that we are not required to consolidate this entity as we share the power to direct this entity's lending activity with other parties.

In addition to the guarantee program described above, YUM has provided guarantees of $52 million on behalf of franchisees for several financing programs related to specific initiatives.  The total loans outstanding under these financing programs were approximately $65 million at June 15, 2013.

Insurance Programs

We are self-insured for a substantial portion of our current and prior years’ loss exposures including workers’ compensation, employment practices liability, general liability, automobile liability, product liability and property losses (collectively, “property and casualty losses”).  To mitigate the cost of our exposures for certain property and casualty losses, we self-insure the risks of loss up to defined maximum per occurrence retentions on a line-by-line basis.  The Company then purchases insurance coverage, up to a certain limit, for losses that exceed the self-insurance per occurrence retention.  The insurers’ maximum aggregate loss limits are significantly above our actuarially-determined probable losses; therefore, we believe the likelihood of losses exceeding the insurers’ maximum aggregate loss limits is remote.  As of June 15, 2013 and December 29, 2012, we had liabilities recorded for self-insured property and casualty losses of $134 million and $142 million, respectively.

In the U.S. and in certain other countries, we are also self-insured for healthcare claims and for long-term disability claims for eligible participating employees subject to certain deductibles and limitations.  We have accounted for our retained liabilities for property and casualty losses, healthcare and long-term disability claims, including both reported and incurred but not reported claims, based on information provided by independent actuaries.

Due to the inherent volatility of actuarially-determined property and casualty loss estimates, it is reasonably possible that we could experience changes in estimated losses which could be material to our growth in quarterly and annual Net Income - YUM! Brands, Inc.  We believe that we have recorded reserves for property and casualty losses at a level which has substantially mitigated the potential negative impact of adverse developments and/or volatility.

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.

Beginning on January 24, 2013, four purported class actions were filed in the U.S. District Court for the Central District of California against the Company and certain of its executive officers. The complaints allege claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of a purported class of all persons who purchased or otherwise acquired the Company's publicly traded securities between October 9, 2012 and January 7, 2013 (the “class period”). Plaintiffs allege that during the class period, defendants purportedly made materially false and misleading statements concerning the Company's current and future business and financial condition, thereby inflating the prices at which the Company's securities traded. The complaints seek damages in an undefined amount. On March 25, 2013, two prospective lead plaintiffs filed motions seeking consolidation of the four actions, appointment as lead plaintiff, and approval of their selection of counsel. In addition, on March 26, 2013, the Company filed a motion to transfer venue to the U.S. District Court for the Western District of Kentucky. On May 1, 2013, the court granted: (1) the Company's motion to transfer and (2) Frankfurt Trust Investment GMBH's motions to be appointed lead plaintiff, for consolidation of the cases and for approval of its selection of class counsel. The cases pending in the U.S. District Court for the Central District of California were therefore closed, and the consolidated case is now pending in the U.S. District Court for the Western District of Kentucky. The Company denies liability and intends to vigorously defend against all claims in these complaints. A reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time.

On January 24, 2013, a purported shareholder of the Company (Bert Bauman) submitted a letter demanding that the board of directors initiate an investigation of alleged breaches of fiduciary duties by directors, officers and employees of the Company. The breaches of fiduciary duties are alleged to have arisen primarily as a result of the failure to implement proper controls in connection with the Company's purchases of poultry from suppliers to the Company's China operations. Since that time, similar letters by other purported shareholders have been submitted. Those letters have been referred to a committee of the Board of Directors for consideration. Mr. Bauman subsequently filed a putative derivative action in Kentucky state court as described below.

On February 8, 2013, another purported shareholder of the Company (Jennifer Zona) filed a putative derivative action in the U.S. District Court for the Central District of California against various officers and directors of the Company asserting breaches of fiduciary duty in connection with an alleged scheme to mislead investors about the Company's growth prospects in China. The shareholder plaintiff did not first submit a demand on the board of directors of the Company to bring this action as required under North Carolina law, and on February 13, 2013, the shareholder plaintiff requested voluntary dismissal of the complaint. The case has been designated as “closed” on the court's docket. Ms. Zona subsequently submitted a letter similar to the letters described in the prior paragraph and later filed an action in Federal court in Kentucky as described below.

On May 9, 2013, Mr. Bauman filed a putative derivative action in Jefferson Circuit Court, Commonwealth of Kentucky against various officers and directors of the Company asserting breaches of fiduciary duty in connection with an alleged failure to implement proper controls in the Company's purchases of poultry from suppliers to the Company's China operations and with an alleged scheme to mislead investors about the Company's growth prospects in China. This action is currently stayed pending the completion of the consideration and inquiry of the committee of the Board of Directors. A reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time.

On May 21, 2013, Ms. Zona filed a putative derivative action in the U.S. District Court for the Western District of Kentucky against various officers and directors of the Company asserting claims similar to those asserted by Mr. Bauman. The parties submitted a motion to reassign the case to the same judge that the securities class action is before, which was granted on June 18, 2013. Defendants' answers or responsive pleadings are due on August 9, 2013. A reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time.

Taco Bell was named as a defendant in a number of putative class action suits filed in 2007, 2008, 2009 and 2010 alleging violations of California labor laws including unpaid overtime, failure to timely pay wages on termination, failure to pay accrued vacation wages, failure to pay minimum wage, denial of meal and rest breaks, improper wage statements, unpaid business expenses, wrongful termination, discrimination, conversion and unfair or unlawful business practices in violation of California Business & Professions Code §17200. Some plaintiffs also seek penalties for alleged violations of California's Labor Code under California's Private Attorneys General Act as well as statutory “waiting time” penalties and allege violations of California's Unfair Business Practices Act. Plaintiffs seek to represent a California state-wide class of hourly employees.

On May 19, 2009 the court granted Taco Bell's motion to consolidate these matters, and the consolidated case is styled In Re Taco Bell Wage and Hour Actions. The In Re Taco Bell Wage and Hour Actions plaintiffs filed a consolidated complaint in June 2009, and in March 2010 the court approved the parties' stipulation to dismiss the Company from the action. Plaintiffs filed their motion for class certification on the vacation and final pay claims in December 2010, and on September 26, 2011 the court issued its order denying the certification of the vacation and final pay claims. Plaintiffs then sought to certify four separate meal and rest break classes. On January 2, 2013, the District Court rejected three of the proposed classes but granted certification with respect to the late meal break class.

Taco Bell denies liability and intends to vigorously defend against all claims in this lawsuit. A reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time.

On September 28, 2009, a putative class action styled Marisela Rosales v. Taco Bell Corp. was filed in Orange County Superior Court. The plaintiff, a former Taco Bell crew member, alleges that Taco Bell failed to timely pay her final wages upon termination and seeks restitution and late payment penalties on behalf of herself and similarly situated employees. This case appears to be duplicative of the In Re Taco Bell Wage and Hour Actions case described above. Taco Bell filed a motion to dismiss, stay or transfer the case to the same district court as the In Re Taco Bell Wage and Hour Actions case. The state court granted Taco Bell's motion to stay the Rosales case on May 28, 2010. After the September 2011 denial of class certification in the In Re Taco Bell Wage and Hour Actions, the court granted plaintiff leave to amend her lawsuit, which plaintiff filed and served on January 4, 2012. Taco Bell filed its responsive pleading on February 8, 2012, and plaintiff has since filed two additional amended complaints. On May 22, 2013, the parties agreed to settle this matter. The parties are in the process of submitting the settlement to the court for approval. The costs associated with the settlement were not material.

On December 17, 2002, Taco Bell was named as the defendant in a class action lawsuit filed in the U.S. District Court for the Northern District of California styled Moeller, et al. v. Taco Bell Corp. On August 4, 2003, plaintiffs filed an amended complaint alleging, among other things, that Taco Bell has discriminated against the class of people who use wheelchairs or scooters for mobility by failing to make its approximately 200 Company-owned restaurants in California accessible to the class. Plaintiffs contend that queue rails and other architectural and structural elements of the Taco Bell restaurants relating to the path of travel and use of the facilities by persons with mobility-related disabilities do not comply with the U.S. Americans with Disabilities Act (the “ADA”), the Unruh Civil Rights Act (the “Unruh Act”), and the California Disabled Persons Act (the “CDPA”). Plaintiffs have requested: (a) an injunction from the District Court ordering Taco Bell to comply with the ADA and its implementing regulations; (b) that the District Court declare Taco Bell in violation of the ADA, the Unruh Act, and the CDPA; and (c) monetary relief under the Unruh Act or CDPA. Plaintiffs, on behalf of the class, are seeking the minimum statutory damages per offense of either $4,000 under the Unruh Act or $1,000 under the CDPA for each aggrieved member of the class. Plaintiffs contend that there may be in excess of 100,000 individuals in the class. In February 2004, the District Court granted plaintiffs' motion for class certification. The class included claims for injunctive relief and minimum statutory damages.

In May 2007, a hearing was held on plaintiffs' Motion for Partial Summary Judgment seeking judicial declaration that Taco Bell was in violation of accessibility laws as to three specific issues: indoor seating, queue rails and door opening force. In August 2007, the court granted plaintiffs' motion in part with regard to dining room seating. In addition, the court granted plaintiffs' motion in part with regard to door opening force at some restaurants (but not all) and denied the motion with regard to queue lines.

On December 16, 2009, the court denied Taco Bell's motion for summary judgment on the ADA claims and ordered plaintiffs to select one restaurant to be the subject of a trial. The trial for the exemplar restaurant began on June 6, 2011, and on October 5, 2011 the court issued Findings of Fact and Conclusions of Law ruling that plaintiffs established that classwide injunctive relief was warranted with regard to maintaining compliance as to corporate Taco Bell restaurants in California. The court declined to order injunctive relief at the time, however, citing the pendency of Taco Bell's motions to decertify both the injunctive and damages class. The court also found that twelve specific items at the exemplar store were once out of compliance with applicable state and/or federal accessibility standards.

Taco Bell filed a motion to decertify the class in August 2011, and in July 2012, the court granted Taco Bell's motion to decertify the previously certified state law damages class but denied Taco Bell's motion to decertify the ADA injunctive relief class. On September 13, 2012, the court set a discovery and briefing schedule concerning the trials of the four individual plaintiffs' state law damages claims, which the court stated will be tried before holding further proceedings regarding the possible issuance of an injunction. On September 17, 2012, the court issued an order modifying its October 2011 Findings of Facts and Conclusions of Law deleting the statement that an injunction was warranted. Plaintiffs appealed that order, and on June 24, 2013 the Ninth Circuit Court of Appeals dismissed plaintiff's appeal.

Taco Bell denies liability and intends to vigorously defend against all claims in this lawsuit. Taco Bell has taken steps to address potential architectural and structural compliance issues at the restaurants in accordance with applicable state and federal disability access laws. The costs associated with addressing these issues have not significantly impacted our results of operations. We have provided for a reasonable estimate of the possible loss relating to this lawsuit. However, in view of the inherent uncertainties of litigation, there can be no assurance that this lawsuit will not result in losses in excess of those currently provided for in our Condensed Consolidated Financial Statements. A reasonable estimate of the amount of any possible loss or range of loss in excess of that currently provided for in our Condensed Consolidated Financial Statements cannot be made at this time.

On July 9, 2009, a putative class action styled Mark Smith v. Pizza Hut, Inc. was filed in the U.S. District Court for the District of Colorado. The complaint alleged that Pizza Hut did not properly reimburse its delivery drivers for various automobile costs, uniforms costs, and other job-related expenses and seeks to represent a class of delivery drivers nationwide under the Fair Labor Standards Act (FLSA) and Colorado state law. On January 4, 2010, plaintiffs filed a motion for conditional certification of a nationwide class of current and former Pizza Hut, Inc. delivery drivers. However, on March 11, 2010, the court granted Pizza Hut's pending motion to dismiss for failure to state a claim, with leave to amend. On March 31, 2010, plaintiffs filed an amended complaint, which dropped the uniform claims but, in addition to the federal FLSA claims, asserted state-law class action claims under the laws of sixteen different states. Pizza Hut filed a motion to dismiss the amended complaint, and plaintiffs sought leave to amend their complaint a second time. On August 9, 2010, the court granted plaintiffs' motion to amend. Pizza Hut filed another motion to dismiss the Second Amended Complaint. On July 15, 2011, the Court granted Pizza Hut's motion with respect to plaintiffs' state law claims but allowed the FLSA claims to go forward. Plaintiffs filed their Motion for Conditional Certification on August 31, 2011, and the Court granted plaintiffs' motion April 21, 2012. The opt-in period closed on August 23, 2012, and the parties are working to finalize the list of opt-ins. The final number has yet to be determined but is expected to be approximately 6,000.

Pizza Hut denies liability and intends to vigorously defend against all claims in this lawsuit. A reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time.

On August 6, 2010, a putative class action styled Jacquelyn Whittington v. Yum Brands, Inc., Taco Bell of America, Inc. and Taco Bell Corp. was filed in the U.S. District Court for the District of Colorado. The plaintiff seeks to represent a nationwide class, with the exception of California, of salaried assistant managers who were allegedly misclassified and did not receive compensation for all hours worked and did not receive overtime pay after 40 hours worked in a week. The Company has been dismissed from the case without prejudice. Taco Bell filed its answer on September 20, 2010, and the parties commenced class discovery. On September 16, 2011, plaintiffs filed their motion for conditional certification under the FLSA. The court heard plaintiffs' motion for conditional certification under the FLSA on January 10, 2012, granted conditional certification and ordered the notice of the opt-in class be sent to the putative class members. Approximately 488 individuals submitted opt-in forms. On June 14, 2013, the parties agreed to settle this matter. The parties are in the process of submitting the settlement to the court for approval. The costs associated with the settlement were not material.
Earnings Per Common Share ("EPS") (Tables)
Earnings Per Common Share Table
 
 
Quarter ended
 
Year to date
 
 
6/15/2013

 
6/16/2012

 
6/15/2013

 
6/16/2012

Net Income – YUM! Brands, Inc.
 
$
281

 
$
331

 
$
618

 
$
789

 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (for basic calculation)
 
454

 
465

 
454

 
465

Effect of dilutive share-based employee compensation
 
10

 
12

 
10

 
13

Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)
 
464

 
477

 
464

 
478

Basic EPS
 
$
0.62

 
$
0.71

 
$
1.36

 
$
1.70

Diluted EPS
 
$
0.61

 
$
0.69

 
$
1.33

 
$
1.65

Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation(a)
 
6.0

 
3.5

 
5.2

 
2.7


(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.
Shareholders' Equity (Tables)
Repurchase of Shares of the Company's Common Stock 
Under the authority of our Board of Directors, we repurchased shares of our Common Stock during the years to date ended June 15, 2013 and June 16, 2012, as indicated below.  All amounts exclude applicable transaction fees.

 
 
 
 
Shares Repurchased (thousands)
 
Dollar Value of Shares Repurchased
 
Remaining Dollar Value of Shares that may be Repurchased
Authorization Date
 
Authorization Expiration Date
 
2013
 
2012
 
2013
 
2012
 
2013
January 2011
 
June 2012
 
—

 
 
2,787

 
 
$
—

 
 
$
188

 
 
$
—

 
November 2011
 
May 2013
 
—

 
 
1,528

 
 
—

 
 
101

 
 
—

 
November 2012
 
May 2014
 
4,778

 
 
—

 
 
324

 
 
—

 
 
629

 
Total
 
 
 
4,778

(a) 
 
4,315

 
 
$
324

(a) 
 
$
289

 
 
$
629

 
 
 
 
 
 

(a)
Amount excludes the effect of $20 million in share repurchases (0.3 million shares) with trade dates prior to the 2012 fiscal year end but cash settlement dates subsequent to the 2012 fiscal year end and includes the effect of $15 million in share repurchases (0.2 million shares) with trade dates prior to June 15, 2013 but cash settlement dates subsequent to June 15, 2013.
Schedule of changes in accumulated other comprehensive income 
Changes in accumulated other comprehensive income ("OCI") are presented below.
 
 
Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Nature
 
Pension and Post-Retirement Benefit Plan Losses (a)
 
Net Unrealized Loss on Derivative Instruments
 
Total
Balance at December 29, 2012, net of tax
 
$
166

 
$
(286
)
 
$
(12
)
 
$
(132
)
 
 
 
 
 
 
 
 
 
Amounts classified into OCI, net of tax
 
7

 
(2
)
 
6

 
11

 
 
 
 
 
 
 
 
 
Amounts reclassified from accumulated OCI, net of tax
 
—

 
25

 
(5
)
 
20

 
 
 
 
 
 
 
 
 
OCI, net of tax
 
7

 
23

 
1

 
31

 
 
 
 
 
 
 
 
 
Balance at June 15, 2013, net of tax
$
173

 
$
(263
)
 
$
(11
)
 
$
(101
)


(a)
Amounts reclassified from accumulated OCI for pension and post-retirement benefit plan losses include amortization of net losses of $28 million, settlement charges of $10 million, amortization of prior service cost of $1 million and the related income tax benefit of $14 million. See Note 10 Pension Benefits for further information.
Items Affecting Comparability of Net Income and/or Cash Flows (Tables)
Schedule of refranchising (gain) loss 
The Refranchising (gain) loss by reportable segment is presented below. We do not allocate such gains and losses to our segments for performance reporting purposes.

 
 
Quarter ended
 
Year to date
 
 
6/15/2013
 
6/16/2012
 
6/15/2013

 
6/16/2012

China
 
$
(1
)
 
$
(2
)
 
$
(1
)
 
$
(4
)
YRI(a)
 
(3
)
 
(2
)
 
(3
)
 
19

U.S.(b)
 
(28
)
 
(9
)
 
(45
)
 
(54
)
India
 
—

 
—

 
—

 
—

Worldwide
 
$
(32
)
 
$
(13
)
 
$
(49
)
 
$
(39
)

(a)
During the fourth quarter of 2012, we refranchised our remaining 331 Company-owned Pizza Hut dine-in restaurants in the United Kingdom ("UK"). During the year to date ended June 16, 2012 we recorded losses of $23 million due to the then planned refranchising of these restaurants.

(b)
In the quarters and years to date ended June 15, 2013 and June 16, 2012, U.S. Refranchising (gain) loss primarily relates to gains on the sales of Taco Bell restaurants.

Schedule of closures and impairment (income) expense activity 
Store closure (income) costs and Store impairment charges by reportable segment are presented below.
 
Quarter ended June 15, 2013
 
China
 
YRI
 
U.S.
 
India
 
Worldwide
Store closure (income) costs (a)
$
(2
)
 
$
—

 
$
(1
)
 
$
—

 
$
(3
)
Store impairment charges
8

 
—

 
1

 
—

 
9

Closure and impairment (income) expenses
$
6

 
$
—

 
$
—

 
$
—

 
$
6


 
Quarter ended June 16, 2012
 
China
 
YRI
 
U.S.
 
India
 
Worldwide
Store closure (income) costs (a)
$
(2
)
 
$
(2
)
 
$
(1
)
 
$
—

 
$
(5
)
Store impairment charges
4

 
1

 
4

 
—

 
9

Closure and impairment (income) expenses
$
2

 
$
(1
)
 
$
3

 
$
—

 
$
4

 
 
 
 
 
 
 
 
 
 

 
Year to date ended June 15, 2013
 
China
 
YRI
 
U.S.
 
India
 
Worldwide
Store closure (income) costs(a)
$
(3
)
 
$
—

 
$
—

 
$
—

 
$
(3
)
Store impairment charges
11

 
—

 
1

 
1

 
13

Closure and impairment (income) expenses
$
8

 
$
—

 
$
1

 
$
1

 
$
10


 
Year to date ended June 16, 2012
 
China
 
YRI
 
U.S.
 
India
 
Worldwide
Store closure (income) costs(a)
$
(2
)
 
$
(2
)
 
$
(2
)
 
$
—

 
$
(6
)
Store impairment charges
5

 
2

 
4

 
—

 
11

Closure and impairment (income) expenses
$
3

 
$
—

 
$
2

 
$
—

 
$
5


(a)
Store closure (income) costs include the net gain or loss on sales of real estate on which we formerly operated a Company restaurant that was closed, lease reserves established when we cease using a property under an operating lease and subsequent adjustments to those reserves and other facility-related expenses from previously closed stores.
Other (Income) Expense (Tables)
Other (Income) Expense Table
 
Quarter ended
 
Year to date
 
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
Equity (income) loss from investments in unconsolidated affiliates
$
3

 
$
(9
)
 
$
(4
)
 
$
(22
)
Gain upon acquisition of Little Sheep
—

 
—

 
—

 
(74
)
Foreign exchange net (gain) loss and other(a)
6

 
2

 
5

 
10

Other (income) expense
$
9

 
$
(7
)
 
$
1

 
$
(86
)

 
(a)
The year to date ended June 16, 2012 includes $6 million of deal costs related to the acquisition of Little Sheep that were allocated to the China Division for performance reporting purposes.
Supplemental Balance Sheet Information (Tables)
Accounts and Notes Receivable 
The Company’s receivables are primarily generated as a result of ongoing business relationships with our franchisees and licensees as a result of royalty and lease agreements.  Trade receivables consisting of royalties from franchisees and licensees are generally due within 30 days of the period in which the corresponding sales occur and are classified as Accounts and notes receivable on our Condensed Consolidated Balance Sheets.  
 
6/15/2013
 
12/29/2012
Accounts and notes receivable
$
365

 
$
313

Allowance for doubtful accounts
(13
)
 
(12
)
Accounts and notes receivable, net
$
352

 
$
301


Property, Plant and Equipment 
 
6/15/2013
 
12/29/2012
Property, plant and equipment, gross
$
7,477

 
$
7,389

Accumulated depreciation and amortization
(3,225
)
 
(3,139
)
Property, plant and equipment, net
$
4,252

 
$
4,250

Equity attributable to noncontrolling interests, rollforward 
A reconciliation of the beginning and ending carrying amount of the equity attributable to noncontrolling interests is as follows:

 
Noncontrolling Interests
Balance as of December 29, 2012
$
99

Net Income (loss) – noncontrolling interests
(6
)
Acquisition of Little Sheep store-level non-controlling interests
(15
)
Dividends declared
(18
)
Cumulative translation adjustment arising during the period
2

Balance as of June 15, 2013
$
62

Income Taxes (Tables)
Income Tax And Effective Tax Rate
 
Quarter ended
 
Year to date
 
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
Income taxes
$
82

 
$
102

 
$
202

 
$
249

Effective tax rate
22.7
%
 
23.7
%
 
24.8
%
 
23.9
%
Reportable Operating Segments (Tables)
Schedule of Segment Reporting Information, by Segment
The following tables summarize Revenues and Operating Profit for each of our reportable operating segments:

 
Quarter ended
 
Year to date
Revenues
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
China
$
1,449

 
$
1,556

 
$
2,600

 
$
2,774

YRI
713

 
770

 
1,382

 
1,478

U.S.
709

 
818

 
1,404

 
1,618

India
33

 
24

 
53

 
41

 
$
2,904

 
$
3,168

 
$
5,439

 
$
5,911


 
Quarter ended
 
Year to date
Operating Profit (loss)
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
China(a)
$
68

 
$
182

 
$
222

 
$
438

YRI
163

 
150

 
362

 
318

United States
173

 
166

 
338

 
324

India
(4
)
 
(2
)
 
(6
)
 
(1
)
Unallocated Occupancy and other(b)(e)
—

 
5

 
—

 
9

Unallocated and General and administrative expenses(e)
(41
)
 
(41
)
 
(87
)
 
(83
)
Unallocated Other income (expense)(c)(e)
(1
)
 
—

 
(1
)
 
74

Unallocated Refranchising gain (loss)(d)(e)
32

 
13

 
49

 
39

Operating Profit
$
390

 
$
473

 
$
877

 
$
1,118

Interest expense, net
(32
)
 
(38
)
 
(63
)
 
(75
)
Income Before Income Taxes
$
358

 
$
435

 
$
814

 
$
1,043


(a)
Includes equity loss from investments in unconsolidated affiliates of $3 million for the quarter ended June 15, 2013 and equity income from investments in unconsolidated affiliates of $9 million for the quarter ended June 16, 2012. Includes equity income from investments in unconsolidated affiliates of $4 million and $22 million for the years to date ended June 15, 2013 and June 16, 2012, respectively.

(b)
Amounts represent depreciation reduction as a result of impairment losses recognized related to our decisions to refranchise Company operated Pizza Hut dine-in restaurants in the UK (see Note 4) and Company operated KFC restaurants in the U.S.

(c)
Represents gain upon acquisition of Little Sheep of $74 million for the year to date ended June 16, 2012. See Note 4.

(d)
Includes U.S. refranchising gains of $28 million and $9 million for the quarters ended June 15, 2013 and June 16, 2012, respectively. Includes U.S. refranchising gains of $45 million and $54 million for the years to date ended June 15, 2013 and June 16, 2012, respectively, and losses of $23 million related to the planned refranchising of our Pizza Hut UK dine-in business for the year to date ended June 16, 2012. See Note 4.

(e)
Amounts have not been allocated to any segment for performance reporting purposes.
Pension Benefits (Tables)
Components of Net Periodic Benefit Cost
The components of net periodic benefit cost associated with our U.S. pension plans and significant international pension plans are as follows:

 
U.S. Pension Plans
 
International Pension Plans
 
Quarter ended
 
Quarter ended
 
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
Service cost
$
5

 
$
6

 
$
—

 
$
1

Interest cost
12

 
15

 
2

 
2

Expected return on plan assets
(13
)
 
(16
)
 
(2
)
 
(3
)
Amortization of net loss
12

 
14

 
—

 
—

Amortization of prior service cost
1

 
—

 
—

 
—

Net periodic benefit cost
$
17

 
$
19

 
$
—

 
$
—

 
 
 
 
 
 
 
 
Additional loss (gain) recognized due to:
 
 
 
 
 
 
 
Settlement
$
—

 
$
—

 
$
—

 
$
—

Curtailment
$
—

 
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
U.S. Pension Plans
 
International Pension Plans
 
Year to date
 
Year to date
 
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
Service cost
$
10

 
$
12

 
$
—

 
$
1

Interest cost
25

 
30

 
4

 
4

Expected return on plan assets
(27
)
 
(32
)
 
(5
)
 
(5
)
Amortization of net loss
26

 
29

 
1

 
—

Amortization of prior service cost
1

 
—

 
—

 
—

Net periodic benefit cost
$
35

 
$
39

 
$
—

 
$
—

 
 
 
 
 
 
 
 

Additional loss (gain) recognized due to:
 
 
 
 
 
 
 
Settlement (a)
$
10

 
$
—

 
$
—

 
$
—

Curtailment (b)
$
—

 
$
—

 
$
(5
)
 
$
—


(a)
Loss is a result of settlement transactions from a non-funded plan which exceeded the sum of annual service and interest costs for that plan. The loss was recorded in unallocated General and administrative expenses.

(b)
Gain is a result of terminating future service benefits for all participants in one of our UK plans. The gain was recorded in YRI's General and administrative expenses.
Derivative Instruments (Tables)
Fair Values of Derivatives Designated as Hedging Instruments 
The fair values of derivatives designated as hedging instruments as of June 15, 2013 and December 29, 2012 were:

 
6/15/2013
 
12/29/2012
 
Condensed Consolidated Balance Sheet Location
Interest Rate Swaps - Asset
$
20

 
$
24

 
Other assets
Foreign Currency Forwards - Asset
5

 
—

 
Prepaid expenses and other current assets
Foreign Currency Forwards - Liability
(1
)
 
(5
)
 
Accounts payable and other current liabilities
Total
$
24

 
$
19

 
 
Schedule of Changes in Fair Value of Derivative Instruments 
Changes in fair value of derivative instruments:

 
Year to date
 
6/15/2013
 
6/16/2012
Beginning of Year Balance
$
19

 
$
34

Changes in fair value recognized into OCI
9

 
11

Changes in fair value recognized into income
(1
)
 
4

Cash receipts
(3
)
 
(8
)
Ending Balance
$
24

 
$
41

Other Comprehensive Income (OCI) from the Effective Portions of Gains and Loss of Foreign Currency Forward Contracts Table 
For our foreign currency forward contracts the following effective portions of gains and losses were recognized into Accumulated OCI and reclassified into income from Accumulated OCI in the quarters and years to date ended June 15, 2013 and June 16, 2012:

 
Quarter ended
 
Year to date
 
6/15/2013
 
6/16/2012
 
6/15/2013
 
6/16/2012
Gains (losses) recognized into Accumulated OCI, net of tax
$
5

 
$
11

 
$
6

 
$
7

Gains (losses) reclassified from Accumulated OCI into income, net of tax
$
5

 
$
10

 
$
5

 
$
7

Fair Value Measurements (Tables)
Fair Value Measurements, Recurring 
The following table presents the 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.  No transfers among the levels within the fair value hierarchy occurred during the year to date ended June 15, 2013.

 
Fair Value
 
Level
 
6/15/2013
 
12/29/2012
Foreign Currency Forwards, net
2
 
$
4

 
$
(5
)
Interest Rate Swaps, net
2
 
20

 
24

Other Investments
1
 
19

 
17

Total
 
 
$
43

 
$
36

Fair Value Measurements, Nonrecurring 
(Gains) losses recognized from all non-recurring fair value measurements during the quarters and years to date ended June 15, 2013 and June 16, 2012:
 
 
Quarter ended
 
 
 
June 15, 2013
 
June 16, 2012
 
Restaurant-level impairment (Level 3)
 
$
5

 
$
6

 
Total
 
$
5

 
$
6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year to date
 
 
 
June 15, 2013
 
June 16, 2012
 
Restaurant-level impairment (Level 3)
 
$
5

 
$
6

 
Refranchising related impairment - Pizza Hut UK (Level 2) (a)
 
—

 
20

 
Little Sheep acquisition gain (Level 2) (a)
 
—

 
(74
)
 
Total
 
$
5

 
$
(48
)
 
 
 
 
 
 
 
(a)
See Note 4 for further discussions of Pizza Hut UK dine-in refranchising and the acquisition of Little Sheep.
Financial Statement Presentation (Details)
6 Months Ended
Jun. 15, 2013
weeks
Months
operating_segments
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Number of Reporting Segments
4 
Week added as a result of the fiscal year ending on the last Saturday in December
53 
Frequency of adding a week as a result of the fiscal year ending on the last Saturday in December
five or six 
Number of weeks in each of the first three quarters of each fiscal year
12 
Number of weeks in the fourth quarter of each fiscal year with 52 weeks
16 
Number of weeks in the fourth quarter of each fiscal year with 53 weeks
17 
Number of months in the first quarter for certain international subsidiaries that operate on monthly calendars
2 
Number of months in the second and third quarters for certain international subsidiaries that operate on monthly calendars
3 
Number of months in the fourth quarter for certain international subsidiaries that operate on monthly calendars
4 
Number of periods or months in advance that YRI closes their books
1 
Earnings Per Common Share ("EPS") (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
Jun. 16, 2012
Earnings Per Share [Abstract]
 
 
 
 
Net Income - YUM! Brands, Inc.
$ 281 
$ 331 
$ 618 
$ 789 
Weighted-average common shares outstanding (for basic calculation)
454 
465 
454 
465 
Effect of dilutive share-based employee compensation
10 
12 
10 
13 
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)
464 
477 
464 
478 
Basic EPS
$ 0.62 
$ 0.71 
$ 1.36 
$ 1.70 
Diluted EPS
$ 0.61 
$ 0.69 
$ 1.33 
$ 1.65 
Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation
6.0 1
3.5 1
5.2 1
2.7 1
Shareholders' Equity (Details) (USD $)
In Millions, except Share data, unless otherwise specified
6 Months Ended 12 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Dec. 29, 2012
Repurchase Of Shares Of Common Stock [Line Items]
 
 
 
Dollar Value of Shares Repurchased
$ 324 1
$ 289 
 
Remaining dollar value of shares that may be repurchased
629 
 
 
Shares Repurchased
4,778,000 1
4,315,000 
 
Value Of Share Repurchases In Current Fiscal Quarter But With Settlement Dates In Subsequent Fiscal Quarter
15 
 
20 
Share Repurchases In Current Fiscal Quarter But With Settlement Dates In Subsequent Fiscal Quarter
200,000 
 
300,000 
January 2011 [Member]
 
 
 
Repurchase Of Shares Of Common Stock [Line Items]
 
 
 
Dollar Value of Shares Repurchased
0 
188 
 
Remaining dollar value of shares that may be repurchased
0 
 
 
Expiration Date
June 2012 
 
 
Shares Repurchased
0 
2,787,000 
 
November 2011 [Member]
 
 
 
Repurchase Of Shares Of Common Stock [Line Items]
 
 
 
Dollar Value of Shares Repurchased
0 
101 
 
Remaining dollar value of shares that may be repurchased
0 
 
 
Expiration Date
May 2013 
 
 
Shares Repurchased
0 
1,528,000 
 
November 2012 [Member]
 
 
 
Repurchase Of Shares Of Common Stock [Line Items]
 
 
 
Dollar Value of Shares Repurchased
324 
0 
 
Remaining dollar value of shares that may be repurchased
$ 629 
 
 
Expiration Date
May 2014 
 
 
Shares Repurchased
4,778,000 
0 
 
Shareholders' Equity (Details 2) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
Jun. 16, 2012
Schedule of changes in accumulated other comprehensive income [Abstract]
 
 
 
 
Beginning Balance Accumulated Other Comprehensive Income (Loss), Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of Long-Term Nature
 
 
$ 166 
 
Amounts classified into other comprehensive income, net of tax - translation adjustments and gains (losses) from intra-entity transactions
 
 
7 
 
Amounts reclassified from accumulated other comprehensive income, net of tax - translation adjustments and gains (losses) from intra-entity transactions
 
 
0 
 
OCI, Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Nature
 
 
7 
 
Ending Balance Accumulated Other Comprehensive Income (Loss), Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of Long-Term Nature
173 
 
173 
 
Beginning Balance Accumulated Other Comprehensive Income (Loss), Pension and Postretirement Benefit Plans
 
 
(286)
 
Amounts classified into other comprehensive income, net of tax - pension and post-retirment benefit plans
 
 
(2)
 
Amounts reclassifed from accumulated other comprehensive income, net of tax - pension and post-retirement benefit plans
 
 
25 1
 
OCI, Pension and Postretirement Benefit Plans
 
 
23 
 
Ending Balance Accumulated Other Comprehensive Income (Loss), Pension and Postretirement Benefit Plans
(263)
 
(263)
 
Beginning Balance Accumulated Other Comprehensive Income (Loss), Net Unrealized Loss on Derivative Instruments
 
 
(12)
 
Amounts classified into other comprehensive income, net of tax - derivative instruments
 
 
6 
 
Amounts reclassified from accumulated other comprehensive income, net of tax - derivative instruments
 
 
(5)
 
OCI, Net Unrealized Loss on Derivative Instruments
 
 
1 
 
Ending Balance Accumulated Other Comprehensive Income (Loss), Net Unrealized Loss on Derivative Instruments
(11)
 
(11)
 
Beginning Accumulated Other Comprehensive Income (Loss), Net of Tax
 
 
(132)
 
Amounts classified into other comprehensive income, net of tax
 
 
11 
 
Amounts reclassified from accumulated other comprehensive income, net of tax
 
 
20 
 
Net current-period other comprehensive income
 
 
31 
 
Ending Accumulated Other Comprehensive Income (Loss), Net of Tax
(101)
 
(101)
 
Amortization of net loss
 
 
28 
 
Additional loss (gain) recognized due to Settlement
 
 
10 2
 
Amortization of prior service cost
 
 
1 
 
Tax (expense) benefit
$ (5)
$ (6)
$ (14)
$ (12)
Items Affecting Comparability of Net Income and/or Cash Flows (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended 3 Months Ended 3 Months Ended 6 Months Ended 4 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
China
Jun. 16, 2012
China
Jun. 15, 2013
China
Jun. 16, 2012
China
Jun. 15, 2013
YRI
Jun. 16, 2012
YRI
Jun. 15, 2013
YRI
Jun. 16, 2012
YRI
Jun. 15, 2013
U.S.
Jun. 16, 2012
U.S.
Jun. 15, 2013
U.S.
Jun. 16, 2012
U.S.
Jun. 15, 2013
India
Jun. 16, 2012
India
Jun. 15, 2013
India
Jun. 16, 2012
India
Jun. 15, 2013
Unallocated Amount to Segment [Member]
Jun. 16, 2012
Unallocated Amount to Segment [Member]
Jun. 15, 2013
Unallocated Amount to Segment [Member]
Jun. 16, 2012
Unallocated Amount to Segment [Member]
Jun. 15, 2013
Total amount allocated to segments
Jun. 16, 2012
Total amount allocated to segments
Jun. 15, 2013
Total amount allocated to segments
Jun. 16, 2012
Total amount allocated to segments
Mar. 24, 2012
Little Sheep Group Limited [Member]
Jun. 16, 2012
Little Sheep Group Limited [Member]
Jun. 15, 2013
Little Sheep Group Limited [Member]
Feb. 1, 2012
Little Sheep Group Limited [Member]
Dec. 31, 2011
Little Sheep Group Limited [Member]
Jun. 16, 2012
Little Sheep Group Limited [Member]
China
Jun. 16, 2012
Little Sheep Group Limited [Member]
Unallocated Amount to Segment [Member]
Jun. 15, 2013
TURKEY
Apr. 1, 2013
TURKEY
Apr. 1, 2013
KFC
TURKEY
Apr. 1, 2013
PH
TURKEY
Jun. 16, 2012
PH
UK
Jun. 16, 2012
PH
UK
Dec. 29, 2012
PH
UK
YRI
restaurants
Business Combinations [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional percentage of ownership acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
66.00% 
 
 
 
 
 
 
 
 
 
 
Payments for acquisitions, net of cash acquired
 
 
$ 89 
$ 542 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 540 
 
 
 
 
 
 
$ 86 
 
 
 
 
 
 
Cash acquired due to acquisition
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
44 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ownership percentage in consolidated affiliate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
93.00% 
 
 
 
 
 
 
 
 
 
 
 
Ownership percentage (in hundreths)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27.00% 
 
 
 
 
 
 
 
 
 
Investment in unconsolidated affiliate at date of acquisition
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
107 
 
 
 
 
 
 
 
 
 
 
Gain upon acquisition of Little Sheep
0 
0 
0 
74 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
74 
74 
 
 
 
 
74 1
 
 
 
 
 
 
 
Income tax expense from gain on acquisition of Little Sheep
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 
 
 
 
 
 
 
 
 
 
 
Percentage Impact on Operating Profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.00% 
 
 
 
 
 
 
 
 
Percentage impact on revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.00% 
 
 
 
 
 
 
 
 
Number of restaurants acquired from an existing franchisee in Turkey
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65 
41 
 
 
 
Purchase Price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
104 
 
 
 
 
 
Contingent payment to be made to the existing franchisee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19 
 
 
 
 
 
Goodwill recognized upon acquisition
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
85 
 
 
 
 
 
Facility Actions [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of restaurants refranchised
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
331 
Refranchising (gain) loss
(32)
(13)
(49)
(39)
(1)
(2)
(1)
(4)
(3)
(2)
(3)
19 2
(28)3
(9)3
(45)3
(54)3
0 
0 
0 
0 
(32)4 5
(13)4 5
(49)4 5
(39)4 5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23 
 
Net tax benefit on refranchising gain (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 
 
 
Store closure (income) costs
 
 
 
 
(2)6
(2)6
(3)6
(2)6
0 6
(2)6
0 6
(2)6
(1)6
(1)6
0 6
(2)6
0 6
0 6
0 6
0 6
 
 
 
 
(3)6
(5)6
(3)6
(6)6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Store impairment charges
 
 
 
 
8 
4 
11 
5 
0 
1 
0 
2 
1 
4 
1 
4 
0 
0 
1 
0 
 
 
 
 
9 
9 
13 
11 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closures and impairment (income) expenses
$ 6 
$ 4 
$ 10 
$ 5 
$ 6 
$ 2 
$ 8 
$ 3 
$ 0 
$ (1)
$ 0 
$ 0 
$ 0 
$ 3 
$ 1 
$ 2 
$ 0 
$ 0 
$ 1 
$ 0 
 
 
 
 
$ 6 
$ 4 
$ 10 
$ 5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other (Income) Expense (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
Jun. 16, 2012
Mar. 24, 2012
Little Sheep Group Limited [Member]
Jun. 16, 2012
Little Sheep Group Limited [Member]
Jun. 16, 2012
Little Sheep Group Limited [Member]
China
Other Income and Expenses [Line Items]
 
 
 
 
 
 
 
Equity (income) loss from investments in unconsolidated affiliates
$ 3 
$ (9)
$ (4)
$ (22)
 
 
 
Gain upon acquisition of Little Sheep
0 
0 
0 
74 
74 
74 
 
Foreign exchange net (gain) loss and other
6 
2 
5 
10 1
 
 
 
Other (income) expense
9 
(7)
1 
(86)
 
 
 
Acquisition-related deal costs
 
 
 
 
 
 
$ 6 
Supplemental Balance Sheet Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
days
Jun. 16, 2012
Dec. 29, 2012
Accounts and Notes Receivable [Abstract]
 
 
 
 
 
Number of days from the period in which the corresponding sales occur that trade receivables are generally due
 
 
30 
 
 
Accounts and notes receivable
$ 365 
 
$ 365 
 
$ 313 
Allowance for doubtful accounts
(13)
 
(13)
 
(12)
Accounts and notes receivable, net
352 
 
352 
 
301 
Property, Plant and Equipment [Abstract]
 
 
 
 
 
Property, plant and equipment, gross
7,477 
 
7,477 
 
7,389 
Accumulated depreciation and amortization
(3,225)
 
(3,225)
 
(3,139)
Property, plant and equipment, net
4,252 
 
4,252 
 
4,250 
Assets Held-for-sale, Long Lived
32 
 
32 
 
56 
Noncontrolling Interest [Line Items]
 
 
 
 
 
Noncontrolling interests, beginning of period
 
 
99 
 
 
Net Income (loss) - noncontrolling interests
(5)
2 
(6)
5 
 
Acquisition of Little Sheep store-level non-controlling interests
 
 
(15)
 
 
Dividends declared
 
 
(18)
 
 
Cumulative translation adjustment arising during the period
 
 
2 
 
 
Noncontrolling interest, end of period
$ 62 
 
$ 62 
 
 
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
U.S. federal [Member]
Mar. 24, 2012
Little Sheep Group Limited [Member]
Jun. 16, 2012
Little Sheep Group Limited [Member]
Feb. 1, 2012
Little Sheep Group Limited [Member]
Income Tax And Effective Tax Rate [Abstract]
 
 
 
 
 
 
 
 
Income taxes
$ 82 
$ 102 
$ 202 
$ 249 
 
 
 
 
Effective tax rate
22.70% 
23.70% 
24.80% 
23.90% 
 
 
 
 
U.S. Federal Statutory rate
 
 
 
 
35.00% 
 
 
 
Gain upon acquisition of Little Sheep
0 
0 
0 
74 
 
74 
74 
 
Income tax expense from gain on acquisition of Little Sheep
 
 
 
 
 
 
 
$ 0 
Income Taxes (Details 2) (U.S. federal [Member], USD $)
In Millions, unless otherwise specified
Jun. 15, 2013
2004 - 2006 |
Interest Expense [Member]
 
Income Tax Examination [Line Items]
 
Possible losses due to proposed or expected IRS adjustments to increase the taxable value of rights to intangibles transferred to foreign subsidiaries
$ 235 
2004 - 2006 |
Income Tax Expense (Benefit) [Member]
 
Income Tax Examination [Line Items]
 
Possible losses due to proposed or expected IRS adjustments to increase the taxable value of rights to intangibles transferred to foreign subsidiaries
700 
2007-2008 |
Interest Expense [Member]
 
Income Tax Examination [Line Items]
 
Possible losses due to proposed or expected IRS adjustments to increase the taxable value of rights to intangibles transferred to foreign subsidiaries
35 
2007-2008 |
Income Tax Expense (Benefit) [Member]
 
Income Tax Examination [Line Items]
 
Possible losses due to proposed or expected IRS adjustments to increase the taxable value of rights to intangibles transferred to foreign subsidiaries
270 
2009-2012 |
Interest Expense [Member]
 
Income Tax Examination [Line Items]
 
Possible losses due to proposed or expected IRS adjustments to increase the taxable value of rights to intangibles transferred to foreign subsidiaries
5 
2009-2012 |
Income Tax Expense (Benefit) [Member]
 
Income Tax Examination [Line Items]
 
Possible losses due to proposed or expected IRS adjustments to increase the taxable value of rights to intangibles transferred to foreign subsidiaries
$ 130 
Reportable Operating Segments (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
Jun. 16, 2012
Jun. 16, 2012
PH
UK
Jun. 15, 2013
China
Jun. 16, 2012
China
Jun. 15, 2013
China
Jun. 16, 2012
China
Jun. 15, 2013
YRI
Jun. 16, 2012
YRI
Jun. 15, 2013
YRI
Jun. 16, 2012
YRI
Jun. 15, 2013
U.S.
Jun. 16, 2012
U.S.
Jun. 15, 2013
U.S.
Jun. 16, 2012
U.S.
Jun. 15, 2013
India
Jun. 16, 2012
India
Jun. 15, 2013
India
Jun. 16, 2012
India
Jun. 15, 2013
Unallocated Amount to Segment [Member]
Jun. 16, 2012
Unallocated Amount to Segment [Member]
Jun. 15, 2013
Unallocated Amount to Segment [Member]
Jun. 16, 2012
Unallocated Amount to Segment [Member]
Mar. 24, 2012
Little Sheep Group Limited [Member]
Jun. 16, 2012
Little Sheep Group Limited [Member]
Jun. 16, 2012
Little Sheep Group Limited [Member]
Unallocated Amount to Segment [Member]
Jun. 16, 2012
Level 2
Nonrecurring basis
Unallocated Amount to Segment [Member]
PH
UK
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
$ 2,904 
$ 3,168 
$ 5,439 
$ 5,911 
 
$ 1,449 
$ 1,556 
$ 2,600 
$ 2,774 
$ 713 
$ 770 
$ 1,382 
$ 1,478 
$ 709 
$ 818 
$ 1,404 
$ 1,618 
$ 33 
$ 24 
$ 53 
$ 41 
 
 
 
 
 
 
 
 
Operating Profit (loss)
390 
473 
877 
1,118 
 
68 1
182 1
222 1
438 1
163 
150 
362 
318 
173 
166 
338 
324 
(4)
(2)
(6)
(1)
 
 
 
 
 
 
 
 
Occupancy and other
769 
800 
1,365 
1,424 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 2
(5)2 3
0 2
(9)2 3
 
 
 
 
Corporate expenses, inlcuding GA and franchise and license expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
41 2
41 2
87 2
83 2
 
 
 
 
Other (income) expense
9 
(7)
1 
(86)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 2
0 2
1 2
(74)2 4
 
 
 
 
Refranchising (gain) loss
(32)
(13)
(49)
(39)
23 
(1)
(2)
(1)
(4)
(3)
(2)
(3)
19 5
(28)6
(9)6
(45)6
(54)6
0 
0 
0 
0 
(32)2 7
(13)2 7
(49)2 7
(39)2 7
 
 
 
23 
Interest expense, net
32 
38 
63 
75 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Before Income Taxes
358 
435 
814 
1,043 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity income from investments in unconsolidated affiliates
3 
(9)
(4)
(22)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain upon acquisition of Little Sheep
$ 0 
$ 0 
$ 0 
$ 74 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 74 
$ 74 
$ 74 8
 
Pension Benefits (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
Jun. 16, 2012
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Amortization of net loss
 
 
$ 28 
 
Amortization of prior service cost
 
 
1 
 
Settlement
 
 
10 1
 
U.S. Pension Plans
 
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Service cost
5 
6 
10 
12 
Interest cost
12 
15 
25 
30 
Expected return on plan assets
(13)
(16)
(27)
(32)
Amortization of net loss
12 
14 
26 
29 
Amortization of prior service cost
1 
0 
1 
0 
Net periodic benefit cost
17 
19 
35 
39 
Settlement
0 
0 
10 1
0 
Curtailment
0 
0 
0 
0 
Contribution to the Plan
 
 
0 
 
International Pension Plans
 
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Service cost
0 
1 
0 
1 
Interest cost
2 
2 
4 
4 
Expected return on plan assets
(2)
(3)
(5)
(5)
Amortization of net loss
0 
0 
1 
0 
Amortization of prior service cost
0 
0 
0 
0 
Net periodic benefit cost
0 
0 
0 
0 
Settlement
0 
0 
0 
0 
Curtailment
$ 0 
$ 0 
$ (5)2
$ 0 
Derivative Instruments (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended 3 Months Ended 6 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
Interest Rate Swaps
Jun. 15, 2013
Interest Rate Swaps
Other assets
Dec. 29, 2012
Interest Rate Swaps
Other assets
Jun. 15, 2013
Interest Rate Swaps
Long-term debt
Dec. 29, 2012
Interest Rate Swaps
Long-term debt
Jun. 15, 2013
Foreign Currency Forwards [Member]
Jun. 15, 2013
Foreign Currency Forwards [Member]
Prepaid expenses and other current assets
Dec. 29, 2012
Foreign Currency Forwards [Member]
Prepaid expenses and other current assets
Jun. 15, 2013
Foreign Currency Forwards [Member]
Accounts payable and other current liabilities
Dec. 29, 2012
Foreign Currency Forwards [Member]
Accounts payable and other current liabilities
Jun. 15, 2013
Fair value hedging
Interest Expense [Member]
Interest Rate Swaps
Jun. 16, 2012
Fair value hedging
Interest Expense [Member]
Interest Rate Swaps
Jun. 15, 2013
Fair value hedging
Interest Expense [Member]
Interest Rate Swaps
Jun. 16, 2012
Fair value hedging
Interest Expense [Member]
Interest Rate Swaps
Derivatives, Fair Value [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional amount of interest rate derivative instruments outstanding
 
 
$ 300 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional amount of foreign currency derivative instruments outstanding
 
 
 
 
 
 
 
493 
 
 
 
 
 
 
 
 
Derivative assets
 
 
 
20 
24 
 
 
 
5 
0 
 
 
 
 
 
 
Derivative liability
 
 
 
 
 
 
 
 
 
 
(1)
(5)
 
 
 
 
Unrealized gains associated with interest rate swaps that hedge the interest rate risk for a portion of our debt and reported as an addition to debt
 
 
 
 
 
18 
22 
 
 
 
 
 
 
 
 
 
Derivative assets (liabilites) beg. balance, net
19 
34 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in fair value recognized into OCI
9 
11 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in fair value recognized into income
(1)
4 
 
 
 
 
 
 
 
 
 
 
2 
4 
4 
8 
Cash receipts
(3)
(8)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative assets (liabilites) ending balance, net
$ 24 
$ 41 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Instruments (Details 2) (USD $)
In Millions, unless otherwise specified
6 Months Ended 3 Months Ended 6 Months Ended
Jun. 15, 2013
Dec. 29, 2012
Jun. 15, 2013
FX Forwards, Forward Starting Interest Rate Swaps and T-Locks
Jun. 16, 2012
FX Forwards, Forward Starting Interest Rate Swaps and T-Locks
Jun. 15, 2013
FX Forwards, Forward Starting Interest Rate Swaps and T-Locks
Jun. 16, 2012
FX Forwards, Forward Starting Interest Rate Swaps and T-Locks
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
 
 
Gains (losses) recognized into Accumulated OCI, net of tax
 
 
$ 5 
$ 11 
$ 6 
$ 7 
Gains (losses) reclassified from Accumulated OCI into income, net of tax
5 
 
5 
10 
5 
7 
Net deferred loss within AOCI due to treasury locks and forward starting interest rate swaps that have been cash settled
$ 11 
$ 12 
 
 
 
 
Fair Value Measurements (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 15, 2013
Jun. 16, 2012
Jun. 15, 2013
Jun. 16, 2012
Dec. 29, 2012
Dec. 31, 2011
Jun. 15, 2013
Level 2
Jun. 15, 2013
Nonrecurring basis
Jun. 16, 2012
Nonrecurring basis
Jun. 15, 2013
Nonrecurring basis
Jun. 16, 2012
Nonrecurring basis
Jun. 15, 2013
Recurring basis
Dec. 29, 2012
Recurring basis
Jun. 15, 2013
Recurring basis
Level 1
Dec. 29, 2012
Recurring basis
Level 1
Jun. 15, 2013
Recurring basis
Level 2
Foreign Currency Forwards [Member]
Dec. 29, 2012
Recurring basis
Level 2
Foreign Currency Forwards [Member]
Jun. 15, 2013
Recurring basis
Level 2
Interest Rate Swaps
Dec. 29, 2012
Recurring basis
Level 2
Interest Rate Swaps
Jun. 15, 2013
Unallocated Amount to Segment [Member]
Jun. 16, 2012
Unallocated Amount to Segment [Member]
Jun. 15, 2013
Unallocated Amount to Segment [Member]
Jun. 16, 2012
Unallocated Amount to Segment [Member]
Jun. 15, 2013
U.S.
Jun. 16, 2012
U.S.
Jun. 15, 2013
U.S.
Jun. 16, 2012
U.S.
Jun. 16, 2012
PH
UK
Jun. 16, 2012
PH
UK
Unallocated Amount to Segment [Member]
Nonrecurring basis
Level 2
Mar. 24, 2012
Little Sheep Group Limited [Member]
Jun. 16, 2012
Little Sheep Group Limited [Member]
Jun. 16, 2012
Little Sheep Group Limited [Member]
Unallocated Amount to Segment [Member]
Jun. 15, 2013
Closures and impairment (income) expenses [Member]
Nonrecurring basis
Fair Value, Inputs, Level 3 [Member]
Jun. 16, 2012
Closures and impairment (income) expenses [Member]
Nonrecurring basis
Fair Value, Inputs, Level 3 [Member]
Jun. 15, 2013
Closures and impairment (income) expenses [Member]
Nonrecurring basis
Fair Value, Inputs, Level 3 [Member]
Jun. 16, 2012
Closures and impairment (income) expenses [Member]
Nonrecurring basis
Fair Value, Inputs, Level 3 [Member]
Jun. 15, 2013
Other (income) expense
Little Sheep Group Limited [Member]
Nonrecurring basis
Level 2
Jun. 16, 2012
Other (income) expense
Little Sheep Group Limited [Member]
Nonrecurring basis
Level 2
Jun. 15, 2013
Refranchising (gain) loss
PH
UK
Unallocated Amount to Segment [Member]
Nonrecurring basis
Level 2
Jun. 16, 2012
Refranchising (gain) loss
PH
UK
Unallocated Amount to Segment [Member]
Nonrecurring basis
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt obligations, excluding capital leases, estimate of fair value
 
 
 
 
 
 
$ 3,200 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt obligations, excluding capital leases, carrying amount
2,800 
 
2,800 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative assets (liabilites), net
24 
41 
24 
41 
19 
34 
 
 
 
 
 
 
 
 
 
4 
(5)
20 
24 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
19 
17 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
43 
36 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value, Level 1 to Level 2 Transfers, Amount
 
 
 
 
 
 
 
 
 
 
 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value, Level 2 to Level 1 Transfers, Amount
 
 
 
 
 
 
 
 
 
 
 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restaurant-level impairment (Level 3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 
6 
5 
6 
 
 
 
 
Refranchising related impairment - Pizza Hut UK (Level 2)
(32)
(13)
(49)
(39)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(32)1 2
(13)1 2
(49)1 2
(39)1 2
(28)3
(9)3
(45)3
(54)3
23 
23 
 
 
 
 
 
 
 
 
 
0 
(20)4
Gain upon acquisition of Little Sheep
0 
0 
0 
(74)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(74)
(74)
(74)4
 
 
 
 
0 
(74)4
 
 
Total
 
 
 
 
 
 
 
$ 5 
$ 6 
$ 5 
$ (48)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guarantees, Commitments and Contingencies (Details) (Property Lease Guarantee [Member], USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 15, 2013
Property Lease Guarantee [Member]
 
Guarantor Obligations [Line Items]
 
Year longest lease expires
2066 
Potential amount of undiscounted payments we could be required to make in the event of non-payment by the primary lessee
$ 750 
Present value of potential payments we could be required to make in the event of non-payment by the primary lessee
$ 675 
Guarantees, Commitments and Contingencies (Details 2) (USD $)
6 Months Ended
Jun. 15, 2013
claims
Hours
plaintiffs
States
violations
restaurants
cases
Dec. 29, 2012
Loss Contingencies [Line Items]
 
 
Liabilities recorded for property and casualty losses
$ 134,000,000 
$ 142,000,000 
Number of class actions filed in the United States District Court for the Central District of California against the company and certain of its executive officers
4 
 
Taco Bell Wage and Hour Actions - Number of proposed classes concerning meals and rest breaks at Taco Bell which were rejected by the District Court
3 
 
Moeller v. Taco Bell - Number of company-owned restaurants that may be in the class
200 
 
Rosales v. Taco Bell - Additional amended complaints
2 
 
Moeller v. Taco Bell - Minimum statutory damages per offense under Unruh Act
4,000 
 
Moeller v. Taco Bell - Minimum statutory damages per offense under California Disabled Persons Act
1,000 
 
Moeller v. Taco Bell - Number of individuals contended by plaintiffs that may be in the class
100,000 
 
Number of accessibility laws that Taco Bell was in violation of
3 
 
Moeller v. Taco Bell - Number of restaurant to be subject of trial on ADA claims
1 
 
Moeller v. Taco Bell - Number of specific items that were once out of compliance with applicable accessibility standards
12 
 
Moeller v. Taco Bell, Number of individual plaintiffs' state law damages claims
4 
 
Mark Smith v. Pizza Hut - Number of states that assert state-law class action claims
16 
 
Mark Smith v. Pizza Hut, Inc. - final number of opt-ins, expected approximate
6,000 
 
Whittington v. Yum Brands and Taco Bell - Number of hours worked per week after which overtime pay was allegedly not received
40 
 
Whittington v. Yum Brands and Taco Bell - Approximate number of individuals submitting opt-in forms
488 
 
Taco Bell Wage and Hour Actions - Proposed number of classes concerning meals and rest breaks at Taco Bell in California Supreme Court for which plaintiffs sought certification
4 
 
Number of motions filed by prospective lead plaintiffs in the United States District Court for the Central District of California against the company and certain of its executive officers
2 
 
Franchise lending program guarantee
 
 
Loss Contingencies [Line Items]
 
 
Loss contingency, amount of guarantee
52,000,000 
 
Total loans outstanding
65,000,000 
 
Guarantee of indebtedness of others |
Franchise Loan Pool Guarantees [Member]
 
 
Loss Contingencies [Line Items]
 
 
Loss contingency, amount of guarantee
37,000,000 
 
Total loans outstanding
50,000,000 
 
Additional amount under the franchisee loan pool available for lending
$ 30,000,000