YUM BRANDS INC, 10-Q filed on 7/21/2015
Quarterly Report
Document and Entity Information (USD $)
6 Months Ended
Jun. 13, 2015
Jul. 15, 2015
Jun. 14, 2014
Document And Entity Information [Abstract]
 
 
 
Entity Registrant Name
YUM BRANDS INC 
 
 
Entity Central Index Key
0001041061 
 
 
Current Fiscal Year End Date
--12-26 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Public Float
 
 
$ 34,800,000,000 
Entity Common Stock, Shares Outstanding
 
431,205,561 
 
Document Fiscal Year Focus
2015 
 
 
Document Fiscal Period Focus
Q2 
 
 
Document Type
10-Q 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Jun. 13, 2015 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 13, 2015
Jun. 14, 2014
Jun. 13, 2015
Jun. 14, 2014
Revenues
 
 
 
 
Company sales
$ 2,659 
$ 2,758 
$ 4,838 
$ 5,050 
Franchise and license fees and income
446 
446 
889 
878 
Total revenues
3,105 
3,204 
5,727 
5,928 
Costs and Expenses, Net
 
 
 
 
Food and paper
841 
886 
1,529 
1,611 
Payroll and employee benefits
602 
620 
1,095 
1,113 
Occupancy and other operating expenses
805 
824 
1,421 
1,457 
Company restaurant expenses
2,248 
2,330 
4,045 
4,181 
General and administrative expenses
353 
352 
648 
623 
Franchise and license expenses
47 
34 
81 
67 
Closures and impairment (income) expenses
24 
21 
27 
24 
Refranchising (gain) loss
68 
(4)
58 
(7)
Other (income) expense
(6)
(8)
(9)
(10)
Total costs and expenses, net
2,734 
2,725 
4,850 
4,878 
Operating Profit
371 
479 
877 
1,050 
Interest expense, net
33 
29 
67 
62 
Income Before Income Taxes
338 
450 
810 
988 
Income tax provision
102 
112 
213 
251 
Net Income – including noncontrolling interests
236 
338 
597 
737 
Net Income (loss) - noncontrolling interests
1 
4 
0 
4 
Net Income - YUM! Brands, Inc.
$ 235 
$ 334 
$ 597 
$ 733 
Basic Earnings Per Common Share
$ 0.54 
$ 0.75 
$ 1.36 
$ 1.64 
Diluted Earnings Per Common Share
$ 0.53 
$ 0.73 
$ 1.34 
$ 1.61 
Dividends Declared Per Common Share
$ 0.82 
$ 0.37 
$ 0.82 
$ 0.74 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 13, 2015
Jun. 14, 2014
Jun. 13, 2015
Jun. 14, 2014
Net Income - including noncontrolling interests
$ 236 
$ 338 
$ 597 
$ 737 
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature
 
 
 
 
Adjustments and gains (losses) arising during the year
39 
(25)
(52)
(62)
Reclassification of adjustments and (gains) losses into Net Income
68 
2 
68 
2 
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature, before tax
107 
(23)
16 
(60)
Tax (expense) benefit
(2)
(1)
0 
(3)
Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature, net of tax
105 
(24)
16 
(63)
Changes in pension and post-retirement benefits
 
 
 
 
Unrealized gains (losses) arising during the year
2 
(5)
2 
(11)
Reclassification of (gains) losses into Net Income
12 
6 
23 
14 
Changes in pension and post-retirement benefits, before tax
14 
1 
25 
3 
Tax (expense) benefit
(5)
0 
(9)
(1)
Changes in pension and post-retirement benefits, net of tax
9 
1 
16 
2 
Changes in derivative instruments
 
 
 
 
Unrealized gains (losses) arising during the year
(1)
(5)
12 
0 
Reclassification of (gains) losses into Net Income
1 
3 
(12)
(1)
Changes in derivative instruments, before tax
0 
(2)
0 
(1)
Tax (expense) benefit
0 
0 
0 
0 
Changes in derivative instruments, net of tax
0 
(2)
0 
(1)
Other comprehensive income (loss), net of tax
114 
(25)
32 
(62)
Comprehensive Income - including noncontrolling interests
350 
313 
629 
675 
Comprehensive Income (loss) - noncontrolling interests
1 
0 
(1)
0 
Comprehensive Income - YUM! Brands, Inc.
$ 349 
$ 313 
$ 630 
$ 675 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 13, 2015
Jun. 14, 2014
Cash Flows - Operating Activities
 
 
Net Income - including noncontrolling interests
$ 597 
$ 737 
Depreciation and amortization
326 
320 
Closures and impairment (income) expenses
27 
24 
Refranchising (gain) loss
58 
(7)
Contributions to defined benefit pension plans
(78)
(14)
Deferred income taxes
(77)
(10)
Equity income from investments in unconsolidated affiliates
(16)
(22)
Distributions of income received from unconsolidated affiliates
4 
7 
Excess tax benefits from share-based compensation
(40)
(25)
Share-based compensation expense
28 
25 
Changes in accounts and notes receivable
16 
12 
Changes in inventories
21 
5 
Changes in prepaid expenses and other current assets
(27)
(11)
Changes in accounts payable and other current liabilities
11 
(27)
Changes in income taxes payable
91 
96 
Other, net
6 
(26)
Net Cash Provided by Operating Activities
947 
1,084 
Cash Flows - Investing Activities
 
 
Capital spending
(404)
(408)
Changes in short-term investments, net
(16)
(227)
Proceeds from refranchising of restaurants
29 
17 
Other, net
39 
4 
Net Cash Used in Investing Activities
(352)
(614)
Cash Flows - Financing Activities
 
 
Repayments of long-term debt
(7)
(5)
Short-term borrowings by original maturity
 
 
More than three months - proceeds
0 
0 
More than three months - payments
0 
0 
Three months or less, net
0 
0 
Revolving credit facilities, three months or less, net
65 
178 
Repurchase shares of Common Stock
(287)
(300)
Excess tax benefits from share-based compensation
40 
25 
Employee stock option proceeds
11 
16 
Dividends paid on Common Stock
(355)
(327)
Other, net
(43)
(20)
Net Cash Used in Financing Activities
(576)
(433)
Effect of Exchange Rates on Cash and Cash Equivalents
39 
(13)
Net Increase (Decrease) in Cash and Cash Equivalents
58 
24 
Cash and Cash Equivalents - Beginning of Period
578 
573 
Cash and Cash Equivalents - End of Period
$ 636 
$ 597 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Jun. 13, 2015
Dec. 27, 2014
Current Assets
 
 
Cash and cash equivalents
$ 636 
$ 578 
Accounts and notes receivable, net
350 
325 
Inventories
279 
301 
Prepaid expenses and other current assets
276 
254 
Deferred income taxes
104 
93 
Advertising cooperative assets, restricted
84 
95 
Total Current Assets
1,729 
1,646 
Property, plant and equipment, net
4,372 
4,498 
Goodwill
684 
700 
Intangible assets, net
294 
318 
Investments in unconsolidated affiliates
39 
52 
Other assets
554 
560 
Deferred income taxes
622 
571 
Total Assets
8,294 
8,345 
Current Liabilities
 
 
Accounts payable and other current liabilities
1,881 
1,972 
Income taxes payable
156 
77 
Short-term borrowings
568 
267 
Advertising cooperative liabilities
84 
95 
Total Current Liabilities
2,689 
2,411 
Long-term debt
2,831 
3,077 
Other liabilities and deferred credits
1,141 
1,244 
Total Liabilities
6,661 
6,732 
Redeemable noncontrolling interest
8 
9 
Shareholders' Equity
 
 
Common Stock, no par value, 750 shares authorized; 432 and 434 shares issued in 2015 and 2014, respectively
0 
0 
Retained earnings
1,726 
1,737 
Accumulated other comprehensive income (loss)
(157)
(190)
Total Shareholders' Equity - YUM! Brands, Inc.
1,569 
1,547 
Noncontrolling interests
56 
57 
Total Shareholders' Equity
1,625 
1,604 
Total Liabilities, Redeemable Noncontrolling Interest and Shareholders’ Equity
$ 8,294 
$ 8,345 
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $)
In Millions, except Per Share data, unless otherwise specified
Jun. 13, 2015
Dec. 27, 2014
Statement of Financial Position [Abstract]
 
 
Common Stock, No Par Value
$ 0 
$ 0 
Common Stock, Shares Authorized
750 
750 
Common Stock, Shares, Issued
432 
434 
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 27, 2014 (“2014 Form 10-K”).  

YUM! Brands, Inc. and Subsidiaries (collectively referred to herein as “YUM” or the “Company”) comprise 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 consists of five reporting segments:  

•
YUM China (“China” or “China Division”) which includes all operations in mainland China
•
YUM India ("India" or "India Division") which includes all operations in India, Bangladesh, Nepal and Sri Lanka
•
The KFC Division which includes all operations of the KFC concept outside of China Division and India Division
•
The Pizza Hut Division which includes all operations of the Pizza Hut concept outside of China Division and India Division
•
The Taco Bell Division which includes all operations of the Taco Bell concept outside of India Division

YUM’s fiscal year ends on the last Saturday in December.  The first three quarters of each fiscal year consist of 12 weeks and the fourth quarter consists of 16 weeks. Our subsidiaries operate on similar fiscal calendars except that China, India and certain other international subsidiaries operate on a monthly calendar with two months in the first quarter, three months in the second and third quarters and four months in the fourth quarter.  International businesses within our KFC, Pizza Hut and Taco Bell divisions close approximately one month earlier to facilitate consolidated reporting.

Our preparation of the accompanying Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Financial Statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.

The accompanying Financial Statements include all normal and recurring adjustments considered necessary to present fairly, when read in conjunction with our 2014 Form 10-K, our financial position as of June 13, 2015, and the results of our operations and comprehensive income for the quarters and years to date ended June 13, 2015 and June 14, 2014 and cash flows for the years to date ended June 13, 2015 and June 14, 2014. 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 13, 2015. 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
 
 
2015
 
2014
 
2015
 
2014
Net Income – YUM! Brands, Inc.
 
$
235

 
$
334

 
$
597

 
$
733

 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (for basic calculation)
 
437


446

 
437

 
446

Effect of dilutive share-based employee compensation
 
8

 
9

 
9

 
10

Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)
 
445


455

 
446


456

Basic EPS
 
$
0.54

 
$
0.75

 
$
1.36

 
$
1.64

Diluted EPS
 
$
0.53

 
$
0.73

 
$
1.34

 
$
1.61

Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation(a)
 
4.3

 
5.9

 
5.3

 
6.1


(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 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
 
2015
 
2014
 
2015
 
2014
 
2015
 
 
November 2012
 
—

 
 
2,737

 
 
$
—

 
 
$
203

 
 
$
—

 
 
 
November 2013
 
1,779

 
 
1,270

 
 
133

 
 
97

 
 
—

 
 
 
November 2014
 
1,901

 
 
—

 
 
162

 
 
—

 
 
838

 
 
 
Total
 
3,680

(a) 
 
4,007

 
 
$
295

(a) 
 
$
300

 
 
$
838

 
 
 
 
 
 
 

(a)
Includes the effect of $8 million in share repurchases (0.1 million shares) with trade dates prior to June 13, 2015 but cash settlement dates subsequent to June 13, 2015.

Changes in accumulated other comprehensive income (loss) ("OCI") are presented below.
 
 
Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Nature
 
Pension and Post-Retirement Benefits
 
Derivative Instruments
 
Total
Balance at December 27, 2014, net of tax
 
$
29

 
$
(210
)
 
$
(9
)
 
$
(190
)
 
 
 
 
 
 
 
 
 
Gains (losses) arising during the year classified into accumulated OCI, net of tax
 
(51
)
 
1

 
8

 
(42
)
 
 
 
 
 
 
 
 
 
(Gains) losses reclassified from accumulated OCI, net of tax
 
68

 
15

 
(8
)
 
75

 
 
 
 
 
 
 
 
 
OCI, net of tax
 
17

 
16

 
—

 
33

 
 
 
 
 
 
 
 
 
Balance at June 13, 2015, net of tax
$
46

 
$
(194
)
 
$
(9
)
 
$
(157
)
Items Affecting Comparability of Net Income and Cash Flows
Comparability of Prior Year Financial Data
Items Affecting Comparability of Net Income and Cash Flows

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
 
 
2015
 
2014
 
2015
 
2014
China
 
$
(2
)
 
$
(5
)
 
$
(4
)
 
$
(6
)
KFC Division(a)
 
35

 
1

 
32

 
—

Pizza Hut Division(a)
 
36

 
(1
)
 
37

 
(1
)
Taco Bell Division
 
(1
)
 
—

 
(7
)
 
(1
)
India
 
—

 
1

 
—

 
1

Worldwide
 
$
68

 
$
(4
)
 
$
58

 
$
(7
)

(a)
In 2010 we refranchised our then-remaining Company-operated restaurants in Mexico. To the extent we owned real estate related to these restaurants, we did not sell the real estate, but instead have leased it to the franchisee. During the quarter ended June 13, 2015 we initiated plans to sell this real estate and determined it was held for sale in accordance with GAAP. The sales price we expect to receive for this real estate exceeds its book value. However, the sale of the real estate will represent a substantial liquidation of our Mexican operations under GAAP. Accordingly, we are required to include accumulated translation losses associated with our Mexican business within our held for sale impairment evaluations. As such, we recorded a $68 million non-cash charge to Refranchising Loss, consisting of losses of $36 million and $32 million for our KFC and Pizza Hut Divisions, respectively. This loss represents the excess of the sum of the book value of the real estate and related assets, an insignificant amount of goodwill and our accumulated translation losses over the expected sales price. Our current expectation is that the real estate sale will close late in 2015 with limited, if any, additional pre-tax gain or loss. The sale is ultimately expected to result in a taxable gain as the anticipated proceeds will exceed the tax basis in the real estate, though the related tax expense will not be recognized until the sale closes.

Our KFC and Pizza Hut Divisions earned approximately $3 million and $1 million, respectively, of rental income in 2014 related to this real estate that will transfer to the buyer subsequent to the sale of the real estate. We will continue to earn U.S. dollar denominated franchise fees, most of which are sales-based royalties, under our existing franchise contracts.


KFC U.S. Acceleration Agreement

During the first quarter of 2015, we reached an agreement with our KFC U.S. franchisees that gave us brand marketing control as well as an accelerated path to improved assets and customer experience. In connection with this agreement we anticipate investing approximately $125 million over the next three years primarily to fund new back-of-house equipment for franchisees and to provide incentives to accelerate franchisee store remodels. We have recorded charges of $8 million and $10 million for the quarter and year to date ended June 13, 2015, respectively, for these investments. We currently expect a total charge of approximately $90 million in 2015 for these investments, with the remaining charge split between 2016 and 2017. These charges are not being allocated to the KFC Division segment operating results.

In addition to the investments above we have agreed to fund incremental system advertising dollars of $60 million. We currently expect to fund approximately $10 million of such advertising in 2015 with the remaining funding split between 2016 and 2017. These amounts are being recorded in the KFC Division segment operating results. During the quarter and year to date ended June 13, 2015, we expensed $3 million in incremental system advertising expense.
Other (Income) Expense
Other (Income) Expense
Other (Income) Expense
 
Quarter ended
 
Year to date
 
2015
 
2014
 
2015
 
2014
Equity (income) loss from investments in unconsolidated affiliates
$
(7
)
 
$
(9
)
 
$
(16
)
 
$
(22
)
Foreign exchange net (gain) loss and other
1

 
1

 
7

 
12

Other (income) expense
$
(6
)
 
$
(8
)
 
$
(9
)
 
$
(10
)
Supplemental Balance Sheet Information
Supplemental Balance Sheet Information
Supplemental Balance Sheet Information

Accounts and Notes Receivable, net

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.  
 
6/13/2015
 
12/27/2014
Accounts and notes receivable, gross
$
366

 
$
337

Allowance for doubtful accounts
(16
)
 
(12
)
Accounts and notes receivable, net
$
350

 
$
325


Property, Plant and Equipment, net
 
6/13/2015
 
12/27/2014
Property, plant and equipment, gross
$
8,076

 
$
8,082

Accumulated depreciation and amortization
(3,704
)
 
(3,584
)
Property, plant and equipment, net
$
4,372

 
$
4,498



Assets held for sale, included in Prepaid expenses and other current assets on our Condensed Consolidated Balance Sheets, total $31 million at June 13, 2015, including $16 million related to our Mexico business. Assets held for sale at December 27, 2014 totaled $14 million.

Noncontrolling Interests

Noncontrolling interests include the ownership interests of minority shareholders of the entities that operate KFC restaurants in Beijing and Shanghai, China.  The redeemable noncontrolling interest comprises the 7% ownership interest in Little Sheep that continues to be held by the Little Sheep founding shareholders, and is classified outside of permanent equity on our Condensed Consolidated Balance Sheets due to redemption rights held by the founding Little Sheep shareholders. A reconciliation of the beginning and ending carrying amount of the equity attributable to noncontrolling interests is as follows:

 
Noncontrolling Interests
 
Reedemable Noncontrolling Interest
Balance at December 27, 2014
$
57

 
$
9

Net Income (loss) – noncontrolling interests
—


—

Currency translation adjustments and other
(1
)
 
(1
)
Balance at June 13, 2015
$
56

 
$
8



Income Taxes
Income Taxes
Income Taxes
 
Quarter ended
 
Year to date
 
2015
 
2014
 
2015
 
2014
Income tax provision
$
102


$
112

 
$
213


$
251

Effective tax rate
30.4
%
 
24.9
%
 
26.3
%
 
25.4
%


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

Our second quarter and year to date effective tax rates were higher than the prior year primarily due to the $68 million non-cash refranchising loss with no associated tax benefit related to the decision to dispose of our real estate in Mexico, the unfavorable impact of the resolution of uncertain tax positions in certain jurisdictions, and lapping the favorable resolution of uncertain tax positions in the prior year, partially offset by a reduction in the cost of repatriating expected current year foreign earnings.
Reportable Operating Segments
Reportable Operating Segments
Reportable Operating Segments

We identify our operating segments based on management responsibility. See Note 1 for a description of our operating segments. The following tables summarize Revenues and Operating Profit (loss) for each of our reportable operating segments:
 
Quarter ended
 
Year to date
Revenues
2015
 
2014
 
2015
 
2014
China
$
1,636

 
$
1,709

 
$
2,892

 
$
3,088

KFC Division
694

 
754

 
1,336

 
1,418

Pizza Hut Division
264

 
265

 
535

 
532

Taco Bell Division
476


439

 
907


830

India
35


37

 
57


60

 
$
3,105


$
3,204


$
5,727


$
5,928

 
Quarter ended
 
Year to date
Operating Profit (loss)
2015
 
2014
 
2015
 
2014
China(a)
$
144


$
194


$
334


$
479

KFC Division
152


155


321


318

Pizza Hut Division
60


63


141


147

Taco Bell Division
140


109

 
255


193

India
(3
)

(1
)

(7
)

(4
)
Unallocated and General and administrative expenses(b)
(54
)
 
(48
)
 
(100
)
 
(83
)
Unallocated Other income (expense)
—

 
3

 
(9
)
 
(7
)
Unallocated Refranchising gain (loss)(c)
(68
)

4


(58
)

7

Operating Profit
$
371


$
479


$
877


$
1,050

Interest expense, net
(33
)

(29
)

(67
)

(62
)
Income Before Income Taxes
$
338


$
450


$
810


$
988



(a)
Includes equity income from investments in unconsolidated affiliates of $7 million and $9 million for the quarters ended June 13, 2015 and June 14, 2014, respectively. Includes equity income from investments in unconsolidated affiliates of $16 million and $22 million for the years to date ended June 13, 2015 and June 14, 2014, respectively.

(b)
Primarily Corporate general and administrative ("G&A") expenses. Also included are costs associated with the KFC U.S. Acceleration Agreement of $8 million and $10 million for the quarter and year to date ending June 13, 2015, respectively.

(c)
See the Refranchising (Gain) Loss section of Note 4.
Pension Benefits
Pension Benefits
Pension Benefits

We sponsor qualified and supplemental (non-qualified) noncontributory defined benefit pension plans covering certain full-time salaried and hourly U.S. employees.  The most significant of these plans, the YUM Retirement Plan is funded. We fund our other U.S. plans as benefits are paid.  The YUM Retirement Plan and our most significant non-qualified plan in the U.S. are closed to new salaried participants.  
  
The components of net periodic benefit cost associated with our significant U.S. pension plans are as follows:

 
Quarter ended
 
Year to date
 
2015
 
2014
 
2015
 
2014
Service cost
$
4

 
$
4

 
$
8

 
$
8

Interest cost
12

 
13

 
25

 
25

Expected return on plan assets
(14
)
 
(13
)
 
(28
)
 
(26
)
Amortization of net loss
11

 
4

 
21

 
8

Net periodic benefit cost
$
13

 
$
8

 
$
26

 
$
15

 
 
 
 
 
 
 
 
Additional loss (gain) recognized due to:
 
 
 
 
 
 
 
Settlement (a)
$
1

 
$
2

 
$
1

 
$
5

 
 
 
 
 
 
 
 

(a)
Losses are a result of settlement transactions from a non-funded plan which exceeded the sum of annual service and interest costs for that plan. These losses were recorded in G&A expenses.

We contributed $75 million to the YUM Retirement Plan during the year to date ended June 13, 2015. We do not anticipate any additional significant contributions during 2015.
Fair Value Measurements
Fair Value Measurements
Fair Value Measurements

As of June 13, 2015 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 values of notes receivable net of allowances and lease guarantees less subsequent amortization approximates their carrying values. The Company’s debt obligations, excluding capital leases, were estimated to have a fair value of $3.4 billion (Level 2), compared to their carrying value of $3.2 billion. We estimated the fair value of debt using market quotes and calculations based on market rates.

The Company has interest rate swaps accounted for as fair value hedges, foreign currency forwards accounted for as cash flow hedges and other investments, all of which are required to be measured at fair value on a recurring basis. Interest rate swaps are used to reduce our exposure to interest rate risk and lower interest expense for a portion of our fixed-rate debt, and foreign currency forwards are used to reduce our exposure to cash flow volatility arising from foreign currency fluctuations associated with certain foreign currency denominated intercompany short-term receivables and payables. The fair values of these swaps, forwards and other investments were not material as of June 13, 2015.

The Company's long-lived assets such as property, plant and equipment, goodwill and intangible assets are measured at fair value on a non-recurring basis if determined to be impaired. During the quarter and year to date ended June 13, 2015, we recorded restaurant-level impairment (Level 3) of $17 million and $18 million, respectively. During the quarter and year to date ended June 14, 2014, we recorded restaurant-level impairment (Level 3) of $14 million and $15 million, respectively. The remaining net book value of the assets measured at fair value as of June 13, 2015, subsequent to these impairments, was not significant.

In addition, during the quarter ended June 13, 2015, we initiated plans to sell real estate within our Mexico business and determined it was held for sale. See Note 4.
Recently Adopted Accounting Pronouncements
Recently Adopted Accounting Pronouncements
Recently Adopted Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08), which limits dispositions that qualify for discontinued operations presentation to those that represent strategic shifts that have or will have a major effect on an entity’s operations and financial results.  Strategic shifts could include a disposal of a major geographical area, a major line of business, a major equity method investment or other major parts of the business.  ASU 2014-08 was effective for the Company during the quarter ended March 21, 2015.  The adoption of this standard has not had an impact on our Financial Statements.

Guarantees, Commitments and Contingencies
Guarantees, Commitments and Contingencies
Guarantees, Commitments and Contingencies

Lease Guarantees

As a result of having (a) assigned our interest in obligations under real estate leases as a condition to the refranchising of certain Company restaurants; (b) contributed certain Company restaurants to former unconsolidated affiliates; and (c) guaranteed certain other leases, we are frequently contingently liable on lease agreements.  These leases have varying terms, the latest of which expires in 2065.  As of June 13, 2015, the potential amount of undiscounted payments we could be required to make in the event of non-payment by the primary lessees was approximately $600 million.  The present value of these potential payments discounted at our pre-tax cost of debt at June 13, 2015 was approximately $525 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 agreements in the event of non-payment under the leases.  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 as of June 13, 2015 was not material.

Other Franchise Guarantees

We have provided guarantees of $23 million on behalf of franchisees for several financing programs related to specific initiatives.  The total loans outstanding under these financing programs were $76 million as of June 13, 2015.

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.

In early 2013, four putative class action complaints were filed in the U.S. District Court for the Central District of California against the Company and certain executive officers alleging claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934.  Plaintiffs alleged that defendants made false and misleading statements concerning the Company’s current and future business and financial condition.  The four complaints were subsequently consolidated and transferred to the U.S. District Court for the Western District of Kentucky.  On August 5, 2013, lead plaintiff, Frankfurt Trust Investment GmbH, filed a Consolidated Class Action Complaint (“Amended Complaint”) on behalf of a putative class of all persons who purchased the Company’s stock between February 6, 2012 and February 4, 2013 (the “Class Period”).  The Amended Complaint no longer includes allegations relating to misstatements regarding the Company’s business or financial condition and instead alleges that, during the Class Period, defendants purportedly omitted information about the Company’s supply chain in China, thereby inflating the prices at which the Company’s securities traded.  On October 4, 2013, the Company and individual defendants filed a motion to dismiss the Amended Complaint.  On December 24, 2014, the District Court granted that motion to dismiss in its entirety and dismissed the Amended Complaint with prejudice. On January 16, 2015, lead plaintiff filed a notice of appeal to the United States Court of Appeal for the Sixth Circuit. Briefing on plaintiff’s appeal is complete and oral argument has been scheduled for August 4, 2015. The Company denies liability and intends to vigorously defend against all claims in the Amended Complaint.  A reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time.

On January 24, 2013, Bert Bauman, a purported shareholder of the Company, 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.  Subsequently, similar demand letters by other purported shareholders were submitted.  Those letters were referred to a special committee of the Board of Directors (the “Special Committee”) for consideration.  The Special Committee, upon conclusion of an independent inquiry of the matters described in the letters, unanimously determined that it is not in the best interests of the Company to pursue the claims described in the letters and, accordingly, rejected each shareholder’s demand.

On May 9, 2013, Mr. Bauman filed a putative derivative action in Jefferson Circuit Court, Commonwealth of Kentucky against certain current and former officers and directors of the Company asserting breach of fiduciary duty, waste of corporate assets and unjust enrichment 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.  By agreement of the parties, the matter is temporarily stayed pending the appeal of the dismissal of the securities class action. A reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time.

On February 14, 2013, Jennifer Zona, another purported shareholder of the Company, submitted a demand letter similar to the demand letters described above.  On May 21, 2013, Ms. Zona filed a putative derivative action in the U.S. District Court for the Western District of Kentucky against certain officers and directors of the Company asserting claims similar to those asserted by Mr. Bauman.  The case was subsequently reassigned to the same judge that the securities class action is before.  On October 14, 2013, the Company filed a motion to dismiss on the basis of the Special Committee’s findings. By agreement of the parties, the matter is temporarily stayed pending the appeal of the dismissal of the securities class action. A reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time.

On May 17, 2013, Sandra Wollman, another purported shareholder of the Company, submitted a demand letter similar to the demand letters described above. On December 9, 2013, Ms. Wollman filed a putative derivative action in the U.S. District Court for the Western District of Kentucky against certain current and former officers and directors of the Company asserting claims similar to those asserted by Mr. Bauman and Ms. Zona. By agreement of the parties, the matter was consolidated with the Zona action and is temporarily stayed pending the appeal of the dismissal of the securities class action. 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.

These matters were consolidated, 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 court rejected three of the proposed classes but granted certification with respect to the late meal break class. The parties thereafter agreed on a list of putative class members, and the class notice and opportunity to opt out of the litigation were mailed on January 21, 2014.

Per order of the court, plaintiffs filed a second amended complaint to clarify the class claims. Plaintiffs also filed a motion for partial summary judgment. Taco Bell filed motions to strike and to dismiss, as well as a motion to alter or amend the second amended complaint. On August 29, 2014, the court denied plaintiffs’ motion for partial summary judgment. On that same date, the court granted Taco Bell’s motion to dismiss all but one of the California Private Attorney General Act claims. On October 29, 2014, plaintiffs filed a motion to amend the operative complaint and a motion to amend the class certification order. On December 16, 2014, the court partially granted both motions, rejecting plaintiffs’ proposed on-duty meal period class but certifying a limited rest break class and certifying an underpaid meal premium class, and allowing the plaintiffs to amend the complaint to reflect those certifications. On December 30, 2014, plaintiffs filed the third amended complaint. On February 26, 2015, the court denied a motion by Taco Bell to dismiss or strike the underpaid meal premium class. Class notice will be issued shortly to the two recently-certified classes, and discovery and expert discovery is continuing.

Taco Bell denies liability and intends to vigorously defend against all claims in this lawsuit. 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 May 16, 2013, a putative class action styled Bernardina Rodriguez v. Taco Bell Corp. was filed in California Superior Court. The plaintiff seeks to represent a class of current and former California hourly restaurant employees alleging various violations of California labor laws including failure to provide meal and rest periods, failure to pay hourly wages, failure to provide accurate written wage statements, failure to timely pay all final wages, and unfair or unlawful business practices in violation of California Business & Professions Code §17200. This case appears to be duplicative of the In Re Taco Bell Wage and Hour Actions case described above. Taco Bell removed the case to federal court and, on June 25, 2013, plaintiff filed a first amended complaint to include a claim seeking penalties for alleged violations of California’s Labor Code under California’s Private Attorneys General Act. Taco Bell’s motion to dismiss or stay the action in light of the In Re Taco Bell Wage and Hour Actions case was denied on October 30, 2013. In April 2014 the parties stipulated to address the sufficiency of plaintiff’s legal theory as to her discount meal break claim before conducting full discovery. A hearing on the parties’ cross-summary judgment motions was held on October 22, 2014, and on October 23, 2014, the court granted Taco Bell’s motion for summary judgment on the discount meal break claim and denied plaintiff’s motion. Discovery will continue as to plaintiff’s remaining claims.

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.

We are engaged in various other legal proceedings and have certain unresolved claims pending, the ultimate liability for which, if any, cannot be determined at this time. However, based upon consultation with legal counsel, we are of the opinion that such proceedings and claims are not expected to have a material adverse effect, individually or in the aggregate, on our Condensed Consolidated Financial Statements.
Earnings Per Common Share ("EPS") (Tables)
Earnings Per Common Share Table
 
 
Quarter ended
 
Year to date
 
 
2015
 
2014
 
2015
 
2014
Net Income – YUM! Brands, Inc.
 
$
235

 
$
334

 
$
597

 
$
733

 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (for basic calculation)
 
437


446

 
437

 
446

Effect of dilutive share-based employee compensation
 
8

 
9

 
9

 
10

Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)
 
445


455

 
446


456

Basic EPS
 
$
0.54

 
$
0.75

 
$
1.36

 
$
1.64

Diluted EPS
 
$
0.53

 
$
0.73

 
$
1.34

 
$
1.61

Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation(a)
 
4.3

 
5.9

 
5.3

 
6.1


(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 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
 
2015
 
2014
 
2015
 
2014
 
2015
 
 
November 2012
 
—

 
 
2,737

 
 
$
—

 
 
$
203

 
 
$
—

 
 
 
November 2013
 
1,779

 
 
1,270

 
 
133

 
 
97

 
 
—

 
 
 
November 2014
 
1,901

 
 
—

 
 
162

 
 
—

 
 
838

 
 
 
Total
 
3,680

(a) 
 
4,007

 
 
$
295

(a) 
 
$
300

 
 
$
838

 
 
 
 
 
 
 

(a)
Includes the effect of $8 million in share repurchases (0.1 million shares) with trade dates prior to June 13, 2015 but cash settlement dates subsequent to June 13, 2015.
Schedule of changes in accumulated other comprehensive income 
Changes in accumulated other comprehensive income (loss) ("OCI") are presented below.
 
 
Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Nature
 
Pension and Post-Retirement Benefits
 
Derivative Instruments
 
Total
Balance at December 27, 2014, net of tax
 
$
29

 
$
(210
)
 
$
(9
)
 
$
(190
)
 
 
 
 
 
 
 
 
 
Gains (losses) arising during the year classified into accumulated OCI, net of tax
 
(51
)
 
1

 
8

 
(42
)
 
 
 
 
 
 
 
 
 
(Gains) losses reclassified from accumulated OCI, net of tax
 
68

 
15

 
(8
)
 
75

 
 
 
 
 
 
 
 
 
OCI, net of tax
 
17

 
16

 
—

 
33

 
 
 
 
 
 
 
 
 
Balance at June 13, 2015, net of tax
$
46

 
$
(194
)
 
$
(9
)
 
$
(157
)
Items Affecting Comparability of Net Income and Cash Flows (Tables)
Facility Actions
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
 
 
2015
 
2014
 
2015
 
2014
China
 
$
(2
)
 
$
(5
)
 
$
(4
)
 
$
(6
)
KFC Division(a)
 
35

 
1

 
32

 
—

Pizza Hut Division(a)
 
36

 
(1
)
 
37

 
(1
)
Taco Bell Division
 
(1
)
 
—

 
(7
)
 
(1
)
India
 
—

 
1

 
—

 
1

Worldwide
 
$
68

 
$
(4
)
 
$
58

 
$
(7
)

(a)
In 2010 we refranchised our then-remaining Company-operated restaurants in Mexico. To the extent we owned real estate related to these restaurants, we did not sell the real estate, but instead have leased it to the franchisee. During the quarter ended June 13, 2015 we initiated plans to sell this real estate and determined it was held for sale in accordance with GAAP. The sales price we expect to receive for this real estate exceeds its book value. However, the sale of the real estate will represent a substantial liquidation of our Mexican operations under GAAP. Accordingly, we are required to include accumulated translation losses associated with our Mexican business within our held for sale impairment evaluations. As such, we recorded a $68 million non-cash charge to Refranchising Loss, consisting of losses of $36 million and $32 million for our KFC and Pizza Hut Divisions, respectively. This loss represents the excess of the sum of the book value of the real estate and related assets, an insignificant amount of goodwill and our accumulated translation losses over the expected sales price. Our current expectation is that the real estate sale will close late in 2015 with limited, if any, additional pre-tax gain or loss. The sale is ultimately expected to result in a taxable gain as the anticipated proceeds will exceed the tax basis in the real estate, though the related tax expense will not be recognized until the sale closes.

Our KFC and Pizza Hut Divisions earned approximately $3 million and $1 million, respectively, of rental income in 2014 related to this real estate that will transfer to the buyer subsequent to the sale of the real estate. We will continue to earn U.S. dollar denominated franchise fees, most of which are sales-based royalties, under our existing franchise contracts.

Other (Income) Expense (Tables)
Other (Income) Expense Table
 
Quarter ended
 
Year to date
 
2015
 
2014
 
2015
 
2014
Equity (income) loss from investments in unconsolidated affiliates
$
(7
)
 
$
(9
)
 
$
(16
)
 
$
(22
)
Foreign exchange net (gain) loss and other
1

 
1

 
7

 
12

Other (income) expense
$
(6
)
 
$
(8
)
 
$
(9
)
 
$
(10
)
Supplemental Balance Sheet Information (Tables)
Accounts and Notes Receivable 
 
6/13/2015
 
12/27/2014
Accounts and notes receivable, gross
$
366

 
$
337

Allowance for doubtful accounts
(16
)
 
(12
)
Accounts and notes receivable, net
$
350

 
$
325


Property, Plant and Equipment 
 
6/13/2015
 
12/27/2014
Property, plant and equipment, gross
$
8,076

 
$
8,082

Accumulated depreciation and amortization
(3,704
)
 
(3,584
)
Property, plant and equipment, net
$
4,372

 
$
4,498

Equity attributable to noncontrolling interests, rollforward 
 
Noncontrolling Interests
 
Reedemable Noncontrolling Interest
Balance at December 27, 2014
$
57

 
$
9

Net Income (loss) – noncontrolling interests
—


—

Currency translation adjustments and other
(1
)
 
(1
)
Balance at June 13, 2015
$
56

 
$
8

Income Taxes (Tables)
Income Tax And Effective Tax Rate
 
Quarter ended
 
Year to date
 
2015
 
2014
 
2015
 
2014
Income tax provision
$
102


$
112

 
$
213


$
251

Effective tax rate
30.4
%
 
24.9
%
 
26.3
%
 
25.4
%
Reportable Operating Segments (Tables)
Schedule of Segment Reporting Information, by Segment
The following tables summarize Revenues and Operating Profit (loss) for each of our reportable operating segments:
 
Quarter ended
 
Year to date
Revenues
2015
 
2014
 
2015
 
2014
China
$
1,636

 
$
1,709

 
$
2,892

 
$
3,088

KFC Division
694

 
754

 
1,336

 
1,418

Pizza Hut Division
264

 
265

 
535

 
532

Taco Bell Division
476


439

 
907


830

India
35


37

 
57


60

 
$
3,105


$
3,204


$
5,727


$
5,928

 
Quarter ended
 
Year to date
Operating Profit (loss)
2015
 
2014
 
2015
 
2014
China(a)
$
144


$
194


$
334


$
479

KFC Division
152


155


321


318

Pizza Hut Division
60


63


141


147

Taco Bell Division
140


109

 
255


193

India
(3
)

(1
)

(7
)

(4
)
Unallocated and General and administrative expenses(b)
(54
)
 
(48
)
 
(100
)
 
(83
)
Unallocated Other income (expense)
—

 
3

 
(9
)
 
(7
)
Unallocated Refranchising gain (loss)(c)
(68
)

4


(58
)

7

Operating Profit
$
371


$
479


$
877


$
1,050

Interest expense, net
(33
)

(29
)

(67
)

(62
)
Income Before Income Taxes
$
338


$
450


$
810


$
988



(a)
Includes equity income from investments in unconsolidated affiliates of $7 million and $9 million for the quarters ended June 13, 2015 and June 14, 2014, respectively. Includes equity income from investments in unconsolidated affiliates of $16 million and $22 million for the years to date ended June 13, 2015 and June 14, 2014, respectively.

(b)
Primarily Corporate general and administrative ("G&A") expenses. Also included are costs associated with the KFC U.S. Acceleration Agreement of $8 million and $10 million for the quarter and year to date ending June 13, 2015, respectively.

(c)
See the Refranchising (Gain) Loss section of Note 4.
Pension Benefits (Tables)
Components of Net Periodic Benefit Cost
The components of net periodic benefit cost associated with our significant U.S. pension plans are as follows:

 
Quarter ended
 
Year to date
 
2015
 
2014
 
2015
 
2014
Service cost
$
4

 
$
4

 
$
8

 
$
8

Interest cost
12

 
13

 
25

 
25

Expected return on plan assets
(14
)
 
(13
)
 
(28
)
 
(26
)
Amortization of net loss
11

 
4

 
21

 
8

Net periodic benefit cost
$
13

 
$
8

 
$
26

 
$
15

 
 
 
 
 
 
 
 
Additional loss (gain) recognized due to:
 
 
 
 
 
 
 
Settlement (a)
$
1

 
$
2

 
$
1

 
$
5

 
 
 
 
 
 
 
 

(a)
Losses are a result of settlement transactions from a non-funded plan which exceeded the sum of annual service and interest costs for that plan. These losses were recorded in G&A expenses.
Financial Statement Presentation (Details)
6 Months Ended
Jun. 13, 2015
Months
weeks
operating_segments
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Number of Reporting Segments
5 
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 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 certain of our international businesses close 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. 13, 2015
Jun. 14, 2014
Jun. 13, 2015
Jun. 14, 2014
Earnings Per Share [Abstract]
 
 
 
 
Net Income - YUM! Brands, Inc.
$ 235 
$ 334 
$ 597 
$ 733 
Weighted-average common shares outstanding (for basic calculation)
437 
446 
437 
446 
Effect of dilutive share-based employee compensation
8 
9 
9 
10 
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)
445 
455 
446 
456 
Basic EPS
$ 0.54 
$ 0.75 
$ 1.36 
$ 1.64 
Diluted EPS
$ 0.53 
$ 0.73 
$ 1.34 
$ 1.61 
Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation
4.3 1
5.9 1
5.3 1
6.1 1
Shareholders' Equity (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 13, 2015
Jun. 13, 2015
Jun. 14, 2014
Repurchase Of Shares Of Common Stock [Line Items]
 
 
 
Shares Repurchased
 
3,680,000 1
4,007,000 
Dollar Value of Shares Repurchased
 
$ 295 1
$ 300 
Remaining dollar value of shares that may be repurchased
838 
838 
 
Value Of Share Repurchases Prior To Current Reporting Date But With Settlement Dates Subsequent To Current Reporting Date
8 
 
 
Share Repurchases Prior To Current Reporting Date But With Settlement Dates Subsequent To Current Reporting Date
100,000 
 
 
November 2012 [Member]
 
 
 
Repurchase Of Shares Of Common Stock [Line Items]
 
 
 
Shares Repurchased
 
0 
2,737,000 
Dollar Value of Shares Repurchased
 
0 
203 
Remaining dollar value of shares that may be repurchased
0 
0 
 
November 2013 [Member]
 
 
 
Repurchase Of Shares Of Common Stock [Line Items]
 
 
 
Shares Repurchased
 
1,779,000 
1,270,000 
Dollar Value of Shares Repurchased
 
133 
97 
Remaining dollar value of shares that may be repurchased
0 
0 
 
November 2014 [Member]
 
 
 
Repurchase Of Shares Of Common Stock [Line Items]
 
 
 
Shares Repurchased
 
1,901,000 
0 
Dollar Value of Shares Repurchased
 
162 
0 
Remaining dollar value of shares that may be repurchased
$ 838 
$ 838 
 
Shareholders' Equity (Details 2) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 13, 2015
Jun. 14, 2014
Jun. 13, 2015
Jun. 14, 2014
Schedule of changes in accumulated comprehensive income [Line Items]
 
 
 
 
Beginning Accumulated Other Comprehensive Income (Loss), Net of Tax
 
 
$ (190)
 
Other comprehensive income (loss), net of tax
114 
(25)
32 
(62)
Ending Accumulated Other Comprehensive Income (Loss), Net of Tax
(157)
 
(157)
 
Translation Adjustments and Gains (Losses) From Intra-Entity Transactions of a Long-Term Nature
 
 
 
 
Schedule of changes in accumulated comprehensive income [Line Items]
 
 
 
 
Beginning Accumulated Other Comprehensive Income (Loss), Net of Tax
 
 
29 
 
Gains (losses) arising during the year classified into accumulated OCI, net of tax
 
 
(51)
 
(Gains) losses reclassified from accumulated OCI, net of tax
 
 
68 
 
Other comprehensive income (loss), net of tax
 
 
17 
 
Ending Accumulated Other Comprehensive Income (Loss), Net of Tax
46 
 
46 
 
Pension and Post-Retirement Benefits
 
 
 
 
Schedule of changes in accumulated comprehensive income [Line Items]
 
 
 
 
Beginning Accumulated Other Comprehensive Income (Loss), Net of Tax
 
 
(210)
 
Gains (losses) arising during the year classified into accumulated OCI, net of tax
 
 
1 
 
(Gains) losses reclassified from accumulated OCI, net of tax
 
 
15 
 
Other comprehensive income (loss), net of tax
 
 
16 
 
Ending Accumulated Other Comprehensive Income (Loss), Net of Tax
(194)
 
(194)
 
Derivative Instruments
 
 
 
 
Schedule of changes in accumulated comprehensive income [Line Items]
 
 
 
 
Beginning Accumulated Other Comprehensive Income (Loss), Net of Tax
 
 
(9)
 
Gains (losses) arising during the year classified into accumulated OCI, net of tax
 
 
8 
 
(Gains) losses reclassified from accumulated OCI, net of tax
 
 
(8)
 
Other comprehensive income (loss), net of tax
 
 
0 
 
Ending Accumulated Other Comprehensive Income (Loss), Net of Tax
(9)
 
(9)
 
Total
 
 
 
 
Schedule of changes in accumulated comprehensive income [Line Items]
 
 
 
 
Beginning Accumulated Other Comprehensive Income (Loss), Net of Tax
 
 
(190)
 
Gains (losses) arising during the year classified into accumulated OCI, net of tax
 
 
(42)
 
(Gains) losses reclassified from accumulated OCI, net of tax
 
 
75 
 
Other comprehensive income (loss), net of tax
 
 
33 
 
Ending Accumulated Other Comprehensive Income (Loss), Net of Tax
$ (157)
 
$ (157)
 
Items Affecting Comparability of Net Income and Cash Flows (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 13, 2015
Jun. 14, 2014
Jun. 13, 2015
Jun. 14, 2014
Dec. 27, 2014
(Gain) Loss on Disposition of Assets
$ 68 
$ (4)
$ 58 
$ (7)
 
Disposal Group, Including Discontinued Operation, Foreign Currency Translation Gains (Losses)
68 
 
 
 
 
China Division [Member]
 
 
 
 
 
(Gain) Loss on Disposition of Assets
(2)
(5)
(4)
(6)
 
KFC Global Division [Member]
 
 
 
 
 
(Gain) Loss on Disposition of Assets
35 1
1 
32 1
0 
 
Disposal Group, Including Discontinued Operation, Foreign Currency Translation Gains (Losses)
36 
 
 
 
 
Rental Income to transfer to purchaser of held for sale properties in Mexico
 
 
 
 
3 
Pizza Hut Global Division [Member]
 
 
 
 
 
(Gain) Loss on Disposition of Assets
36 1
(1)
37 1
(1)
 
Disposal Group, Including Discontinued Operation, Foreign Currency Translation Gains (Losses)
32 
 
 
 
 
Rental Income to transfer to purchaser of held for sale properties in Mexico
 
 
 
 
1 
Taco Bell Global Division [Member]
 
 
 
 
 
(Gain) Loss on Disposition of Assets
(1)
0 
(7)
(1)
 
India Division [Member]
 
 
 
 
 
(Gain) Loss on Disposition of Assets
0 
1 
0 
1 
 
Property, Plant and Equipment [Domain]
 
 
 
 
 
Costs associated with KFC U.S. Acceleration Agreement
8 
 
10 
 
 
Advertising [Domain]
 
 
 
 
 
Costs associated with KFC U.S. Acceleration Agreement
 
 
3 
 
 
2015 to 2017 [Domain] |
Property, Plant and Equipment [Domain]
 
 
 
 
 
Costs associated with KFC U.S. Acceleration Agreement
125 
 
 
 
 
2015 to 2017 [Domain] |
Advertising [Domain]
 
 
 
 
 
Costs associated with KFC U.S. Acceleration Agreement
60 
 
 
 
 
2015 [Domain] |
Property, Plant and Equipment [Domain]
 
 
 
 
 
Costs associated with KFC U.S. Acceleration Agreement
90 
 
 
 
 
2015 [Domain] |
Advertising [Domain]
 
 
 
 
 
Costs associated with KFC U.S. Acceleration Agreement
$ 10 
 
 
 
 
[1] In 2010 we refranchised our then-remaining Company-operated restaurants in Mexico. To the extent we owned real estate related to these restaurants, we did not sell the real estate, but instead have leased it to the franchisee. During the quarter ended June 13, 2015 we initiated plans to sell this real estate and determined it was held for sale in accordance with GAAP. The sales price we expect to receive for this real estate exceeds its book value. However, the sale of the real estate will represent a substantial liquidation of our Mexican operations under GAAP. Accordingly, we are required to include accumulated translation losses associated with our Mexican business within our held for sale impairment evaluations. As such, we recorded a $68 million non-cash charge to Refranchising Loss, consisting of losses of $36 million and $32 million for our KFC and Pizza Hut Divisions, respectively. This loss represents the excess of the sum of the book value of the real estate and related assets, an insignificant amount of goodwill and our accumulated translation losses over the expected sales price. Our current expectation is that the real estate sale will close late in 2015 with limited, if any, additional pre-tax gain or loss. The sale is ultimately expected to result in a taxable gain as the anticipated proceeds will exceed the tax basis in the real estate, though the related tax expense will not be recognized until the sale closes. Our KFC and Pizza Hut Divisions earned approximately $3 million and $1 million, respectively, of rental income in 2014 related to this real estate that will transfer to the buyer subsequent to the sale of the real estate. We will continue to earn U.S. dollar denominated franchise fees, most of which are sales-based royalties, under our existing franchise contracts.
Other (Income) Expense (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 13, 2015
Jun. 14, 2014
Jun. 13, 2015
Jun. 14, 2014
Dec. 27, 2014
Other Income and Expenses [Line Items]
 
 
 
 
 
Assets Held-for-sale, Current
$ 31 
 
$ 31 
 
$ 14 
Equity (income) loss from investments in unconsolidated affiliates
(7)
(9)
(16)
(22)
 
Foreign exchange net (gain) loss and other
1 
1 
7 
12 
 
Other (income) expense
(6)
(8)
(9)
(10)
 
Mexico [Domain]
 
 
 
 
 
Other Income and Expenses [Line Items]
 
 
 
 
 
Assets Held-for-sale, Current
$ 16 
 
$ 16 
 
 
Supplemental Balance Sheet Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 13, 2015
Jun. 14, 2014
Jun. 13, 2015
days
Jun. 14, 2014
Dec. 27, 2014
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 Notes and Loans Receivable Gross Current
$ 366 
 
$ 366 
 
$ 337 
Allowance For Doubtful Accounts Notes And Loans Receivable Current
16 
 
16 
 
12 
Accounts and notes receivable, net
350 
 
350 
 
325 
Property, Plant and Equipment [Abstract]
 
 
 
 
 
Property, plant and equipment, gross
8,076 
 
8,076 
 
8,082 
Accumulated depreciation and amortization
(3,704)
 
(3,704)
 
(3,584)
Property, plant and equipment, net
4,372 
 
4,372 
 
4,498 
Assets Held-for-sale, Current
31 
 
31 
 
14 
Noncontrolling Interest [Line Items]
 
 
 
 
 
Noncontrolling interests
56 
 
56 
 
57 
Net Income (loss) - noncontrolling interests
1 
4 
0 
4 
 
Noncontrolling Interest [Member]
 
 
 
 
 
Noncontrolling Interest [Line Items]
 
 
 
 
 
Noncontrolling interests
56 
 
56 
 
57 
Net Income (loss) - noncontrolling interests
 
 
0 
 
 
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax, Portion Attributable to Noncontrolling Interest
 
 
(1)
 
 
Redeemable Noncontrolling Interest [Member]
 
 
 
 
 
Noncontrolling Interest [Line Items]
 
 
 
 
 
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners
7.00% 
 
7.00% 
 
 
Net Income (Loss) Attributable to Redeemable Noncontrolling Interest
 
 
0 
 
 
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax, Portion Attributable to Noncontrolling Interest
 
 
(1)
 
 
Redeemable Noncontrolling Interest, Equity, Common, Carrying Amount
8 
 
8 
 
9 
Mexico [Domain]
 
 
 
 
 
Property, Plant and Equipment [Abstract]
 
 
 
 
 
Assets Held-for-sale, Current
$ 16 
 
$ 16 
 
 
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 13, 2015
Jun. 14, 2014
Jun. 13, 2015
Jun. 14, 2014
Effective Income Tax Rate - Federal Statutory Income Tax Rate, Percent
35.00% 
 
35.00% 
 
Income Tax And Effective Tax Rate [Abstract]
 
 
 
 
Income taxes provision
$ 102 
$ 112 
$ 213 
$ 251 
Effective tax rate
30.40% 
24.90% 
26.30% 
25.40% 
Disposal Group, Including Discontinued Operation, Foreign Currency Translation Gains (Losses)
68 
 
 
 
Mexico [Domain]
 
 
 
 
Income Tax And Effective Tax Rate [Abstract]
 
 
 
 
Disposal Group, Including Discontinued Operation, Foreign Currency Translation Gains (Losses)
$ 68 
 
 
 
Reportable Operating Segments (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 13, 2015
Jun. 14, 2014
Jun. 13, 2015
Jun. 14, 2014
Segment Reporting Information [Line Items]
 
 
 
 
Net Income (loss) - noncontrolling interests
$ 1 
$ 4 
$ 0 
$ 4 
Total revenues
3,105 
3,204 
5,727 
5,928 
Operating Profit (loss)
371 
479 
877 
1,050 
Interest expense, net
33 
29 
67 
62 
Income Before Income Taxes
338 
450 
810 
988 
China Division [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net Income (loss) - noncontrolling interests
7 
9 
16 
22 
Total revenues
1,636 
1,709 
2,892 
3,088 
Operating Profit (loss)
144 1
194 1
334 1
479 1
KFC Global Division [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total revenues
694 
754 
1,336 
1,418 
Operating Profit (loss)
152 
155 
321 
318 
Pizza Hut Global Division [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total revenues
264 
265 
535 
532 
Operating Profit (loss)
60 
63 
141 
147 
Taco Bell Global Division [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total revenues
476 
439 
907 
830 
Operating Profit (loss)
140 
109 
255 
193 
India
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total revenues
35 
37 
57 
60 
Operating Profit (loss)
(3)
(1)
(7)
(4)
Unallocated and General and administrative expenses
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Operating Profit (loss)
(54)2
(48)2
(100)2
(83)2
Unallocated Other income (expense) amounts to segment [Member] [Domain]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Operating Profit (loss)
0 
3 
(9)
(7)
Unallocated Refranchising amounts to segment [Member] [Domain]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Operating Profit (loss)
(68)3
4 3
(58)3
7 3
Property, Plant and Equipment [Domain]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Costs associated with KFC U.S. Acceleration Agreement
$ 8 
 
$ 10 
 
Pension Benefits (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 13, 2015
Jun. 14, 2014
Jun. 13, 2015
Jun. 14, 2014
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Contributions to defined benefit pension plans
 
 
$ (78)
$ (14)
U.S. Pension Plans
 
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Contributions to defined benefit pension plans
 
 
75 
 
Service cost
4 
4 
8 
8 
Interest cost
12 
13 
25 
25 
Expected return on plan assets
(14)
(13)
(28)
(26)
Amortization of net loss
11 
4 
21 
8 
Net periodic benefit cost
13 
8 
26 
15 
Settlement
$ 1 1
$ 2 1
$ 1 
$ 5 
Fair Value Measurements (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 13, 2015
Jun. 14, 2014
Jun. 13, 2015
Jun. 14, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Debt obligations, excluding capital leases, carrying amount
$ 3,200,000,000 
 
$ 3,200,000,000 
 
Asset Impairment Charges
17 
14 
18 
15 
Fair Value, Inputs, Level 2 [Member]
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Debt obligations, excluding capital leases, estimate of fair value
$ 3,400,000,000 
 
$ 3,400,000,000 
 
Guarantees, Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 13, 2015
Franchise lending program guarantee
 
Guarantor Obligations [Line Items]
 
Loss contingency, amount of guarantee
$ 23 
Total loans outstanding
76 
Property Lease Guarantee [Member]
 
Guarantor Obligations [Line Items]
 
Year longest lease expires
2065 
Potential amount of undiscounted payments we could be required to make in the event of non-payment by the primary lessee
600 
Present value of potential payments we could be required to make in the event of non-payment by the primary lessee
$ 525 
Guarantees, Commitments and Contingencies (Details 2)
6 Months Ended
Jun. 13, 2015
Classes
cases
Loss Contingencies [Line Items]
 
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 for which plaintiffs sought certification
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