Document and Entity Information (USD $)

12 Months Ended

Dec. 31, 2011

Feb. 14, 2012

Jun. 11, 2011

Document And Entity Information [Abstract]

Entity Registrant Name

YUM BRANDS INC

Document Type

10-K

Amendment Flag

false

Document Period End Date

Dec. 31, 2011

Entity Central Index Key

0001041061

Current Fiscal Year End Date

--12-31

Entity Well-known Seasoned Issuer

Yes

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Filer Category

Large Accelerated Filer

Entity Public Float

$ 24,430,261,521

Entity Common Stock, Shares Outstanding

460,414,239

Document Fiscal Year Focus

2011

Document Fiscal Period Focus

FY

Consolidated Balance Sheets (Parenthetical) (USD $)

Dec. 31, 2011

Dec. 25, 2010

Shareholders' Equity (Deficit)

Common Stock, par value

$ 0

Common Stock, shares authorized

750

Common Stock, shares issued

460

469

Consolidated Statements of Shareholders' Equity (Deficit) and Comprehensive Income (Loss) (Parenthetical) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Statement of Stockholders' Equity [Abstract]

Compensation-related events (tax impact)

$ (5)

$ (7)

$ (2)

Net unrealized change in derivative instruments (tax impact)

(1)

1

(3)

Pension and post-retirement benefit plans (tax impact)

65

7

(9)

Employee stock option and SARs exercises (tax impact)

$ (71)

$ (73)

$ (57)

Consolidated Statements of Income (USD $)

In Millions, except Per Share data, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Revenues

Company sales

$ 10,893

$ 9,783

$ 9,413

Franchise and license fees and income

1,733

1,560

1,423

Total revenues

12,626

11,343

10,836

Company restaurants

Food and paper

3,633

3,091

3,003

Payroll and employee benefits

2,418

2,172

2,154

Occupancy and other operating expenses

3,089

2,857

2,777

Company restaurant expenses

9,140

8,120

7,934

General and administrative expenses

1,372

1,277

1,221

Franchise and license expenses

145

110

118

Closures and impairment (income) expenses

135

47

103

Refranchising (gain) loss

72 ¹ ²

63 ¹ ³ ⁴

(26)³

Other (income) expense

(53)

(43)

(104)

Total costs and expenses, net

10,811

9,574

9,246

Operating Profit

1,815 ⁵ ⁶ ⁷ ⁸ ⁹

1,769 ¹⁰ ⁵ ⁷ ⁹

1,590 ¹¹ ⁷ ⁸ ⁹

Interest expense, net

156

175

194

Income Before Income Taxes

1,659 ⁵ ⁷ ⁸ ⁹

1,594 ⁵ ⁷ ⁹

1,396 ¹¹ ⁷ ⁸ ⁹

Income tax provision

324

416

313

Net Income - including noncontrolling interest

1,335

1,178

1,083

Net Income - noncontrolling interest

16

20

12

Net Income - YUM! Brands, Inc.

$ 1,319

$ 1,158

$ 1,071

Basic Earnings Per Common Share (in dollars per share)

$ 2.81

$ 2.44

$ 2.28

Diluted Earnings Per Common Share (in dollars per share)

$ 2.74

$ 2.38

$ 2.22

Dividends Declared Per Common Share (in dollars per share)

$ 1.07

$ 0.92

$ 0.80

[1] U.S. refranchising losses in the years ended December 31, 2011 and December 25, 2010 are primarily due to losses on sales of and offers to refranchise KFCs in the U.S. There were approximately 250 and 600 KFC restaurants offered for refranchising as of December 31, 2011 and December 25, 2010, respectively. While we did not yet believe these KFCs met the criteria to be classified as held for sale, we did, consistent with our historical practice, review the restaurants for impairment as a result of our offer to refranchise. We recorded impairment charges where we determined that the carrying value of restaurant groups to be sold was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. For those restaurant groups deemed impaired, we wrote such restaurant groups down to our estimate of their fair values, which were based on the sales price we would expect to receive from a franchisee for each restaurant group. This fair value determination considered current market conditions, real-estate values, trends in the KFC U.S. business, prices for similar transactions in the restaurant industry and preliminary offers for the restaurant groups to date. The non-cash impairment charges that were recorded related to our offers to refranchise these company-operated KFC restaurants in the U.S. decreased depreciation expense versus what would have otherwise been recorded by $10 million and $9 million in the years ended December 31, 2011 and December 25, 2010, respectively. These depreciation reductions were not allocated to the U.S. segment resulting in depreciation expense in the U.S. segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the restaurant groups for any further necessary impairment until the date they are sold. The aforementioned non-cash impairment charges do not include any allocation of the KFC reporting unit goodwill in the restaurant group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the restaurant groups, or any subset of the restaurant groups, ultimately meet the criteria to be classified as held for sale. We will also be required to record a charge for the fair value of our guarantee of future lease payments for leases we assign to the franchisee upon any sale.

[2] During the year ended December 31, 2011 we decided to refranchise or close all of our remaining Company-operated Pizza Hut restaurants in the UK market. While an asset group comprising approximately 350 dine-in restaurants did not meet the criteria for held-for-sale classification as of December 31, 2011, our- decision to sell was considered an impairment indicator. As such we reviewed this asset group for potential impairment and determined that its carrying value was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. Accordingly, we wrote this asset group down to our estimate of its fair value, which is based on the sales price we would expect to receive from a buyer. This fair value determination considered current market conditions, trends in the Pizza Hut UK business, and prices for similar transactions in the restaurant industry and resulted in a non-cash pre-tax write-down of $74 million which was recorded to Refranchising (gain) loss. This impairment charge decreased depreciation expense versus what would have otherwise been recorded by $3 million in 2011. This depreciation reduction was not allocated to the YRI segment, resulting in depreciation expense in the YRI segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the asset group for any further necessary impairment until the date it is sold. The write-down does not include any allocation of the Pizza Hut UK reporting unit goodwill in the asset group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the asset group ultimately meets the criteria to be classified as held for sale. Upon the ultimate sale of the restaurants, depending on the form of the transaction, we could also be required to record a charge for the fair value of any guarantee of future lease payments for any leases we assign to a franchisee and for the cumulative foreign currency translation adjustment associated with Pizza Hut UK. The decision to refranchise or close all remaining Pizza Hut restaurants in the UK was considered to be a goodwill impairment indicator. We determined that the fair value of our Pizza Hut UK reporting unit exceeded its carrying value and as such there was no impairment of the approximately $100 million in goodwill attributable to the reporting unit.

[3] During the year ended December 26, 2009 we recognized a non-cash $10 million refranchising loss as a result of our decision to offer to refranchise our KFC Taiwan equity market. During the year ended December 25, 2010 we refranchised all of our remaining company restaurants in Taiwan, which consisted of 124 KFCs. We included in our December 25, 2010 financial statements a non-cash write-off of $7 million of goodwill in determining the loss on refranchising of Taiwan. Neither of these losses resulted in a related income tax benefit. The amount of goodwill write-off was based on the relative fair values of the Taiwan business disposed of and the portion of the business that was retained. The fair value of the business disposed of was determined by reference to the discounted value of the future cash flows expected to be generated by the restaurants and retained by the franchisee, which include a deduction for the anticipated royalties the franchisee will pay the Company associated with the franchise agreement entered into in connection with this refranchising transaction. The fair value of the Taiwan business retained consists of expected, net cash flows to be derived from royalties from franchisees, including the royalties associated with the franchise agreement entered into in connection with this refranchising transaction. We believe the terms of the franchise agreement entered into in connection with the Taiwan refranchising are substantially consistent with market. The remaining carrying value of goodwill related to our Taiwan business of $30 million, after the aforementioned write-off, was determined not to be impaired as the fair value of the Taiwan reporting unit exceeded its carrying amount.

[4] In the year ended December 25, 2010 we recorded a $52 million loss on the refranchising of our Mexico equity market as we sold all of our Company-owned restaurants, comprised of 222 KFCs and 123 Pizza Huts, to an existing Latin American franchise partner. The buyer is serving as the master franchisee for Mexico which had 102 KFC and 53 Pizza Hut franchise restaurants at the time of the transaction. The write-off of goodwill included in this loss was minimal as our Mexico reporting unit included an insignificant amount of goodwill. This loss did not result in any related income tax benefit.

[5] 2011 and 2010 include depreciation reductions arising from the impairment of KFC restaurants we offered to sell of $10 million and $9 million, respectively. 2011 includes a depreciation reduction arising from the impairment of Pizza Hut UK restaurants we decided to sell in 2011 of $3 million. See Note 4.

[6] Includes net losses of $65 million primarily related to the LJS and A&W divestitures, $88 million primarily related to refranchising international markets and $28 million primarily related to the U.S. business transformation measures and U.S. refranchising in the first, third and fourth quarters of 2011, respectively. See Note 4. The fourth quarter of 2011 also includes the $25 million impact of the 53rd week. See Note 2.

[7] 2011, 2010 and 2009 include approximately $21 million, $9 million and $16 million, respectively, of charges relating to U.S. general and administrative productivity initiatives and realignment of resources. See Note 4.

[8] 2011 represents net losses resulting from the LJS and A&W divestitures. 2009 includes a $26 million charge to write-off goodwill associated with our LJS and A&W businesses in the U.S. See Note 9.

[9] Includes equity income from investments in unconsolidated affiliates of $47 million, $42 million and $36 million in 2011, 2010 and 2009, respectively, for China.

[10] Includes net losses of $66 million and $19 million in the first and fourth quarters of 2010, respectively, related primarily to the U.S. business transformation measures and refranchising international markets. See Note 4.

[11] 2009 includes a $68 million gain related to the acquisition of additional interest in and consolidation of a former unconsolidated affiliate in China. See Note 4.

Consolidated Statements of Cash Flows (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Cash Flows - Operating Activities

Net Income - including noncontrolling interest

$ 1,335

$ 1,178

$ 1,083

Depreciation and amortization

628 ¹

589 ¹

580

Closures and impairment (income) expenses

135

47

103

Refranchising (gain) loss

72 ² ³

63 ² ⁴ ⁵

(26)⁴

Contributions to defined benefit pension plans

(63)

(52)

(280)

Gain upon consolidation of a former unconsolidated affiliate in China

0

(68)⁶

Deferred income taxes

(137)

(110)

72

Equity income from investments in unconsolidated affiliates

(47)

(42)

(36)

Distributions of income received from unconsolidated affiliates

39

34

31

Excess tax benefit from share-based compensation

(66)

(69)

(59)

Share-based compensation expense

59

47

56

Changes in accounts and notes receivable

(39)

(12)

3

Changes in inventories

(75)

(68)

27

Changes in prepaid expenses and other current assets

(25)

61

(7)

Changes in accounts payable and other current liabilities

144

61

(62)

Changes in income taxes payable

109

104

(95)

Other, net

101

137

82

Net Cash Provided by Operating Activities

2,170

1,968

1,404

Cash Flows - Investing Activities

Capital spending

(940)

(796)

(797)

Proceeds from refranchising of restaurants

246

265

194

Acquisitions and investments

(81)

(62)

(139)

Sales of property, plant and equipment

30

33

34

Increase in restricted cash

(300)

0

Other, net

39

(19)

Net Cash Used in Investing Activities

(1,006)

(579)

(727)

Cash Flows - Financing Activities

Proceeds from long-term debt

404

350

499

Repayments of long-term debt

(666)

(29)

(528)

Revolving credit facilities, three months or less, net

0

(5)

(295)

Short-term borrowings by original maturity

More than three months - proceeds

0

More than three months - payments

0

Three months or less, net

0

(3)

(8)

Repurchase shares of Common Stock

(752)

(371)

0

Excess tax benefit from share-based compensation

66

69

59

Employee stock option proceeds

59

102

113

Dividends paid on Common Stock

(481)

(412)

(362)

Other, net

(43)

(38)

(20)

Net Cash Used in Financing Activities

(1,413)

(337)

(542)

Effect of Exchange Rates on Cash and Cash Equivalents

21

(15)

Net Increase (Decrease) in Cash and Cash Equivalents

(228)

1,073

120

Change in Cash and Cash Equivalents due to consolidation of an entity in China

0

17

Cash and Cash Equivalents - Beginning of Year

1,426

353

216

Cash and Cash Equivalents - End of Year

$ 1,198

$ 1,426

$ 353

[1] 2011 and 2010 include depreciation reductions arising from the impairment of KFC restaurants we offered to sell of $10 million and $9 million, respectively. 2011 includes a depreciation reduction arising from the impairment of Pizza Hut UK restaurants we decided to sell in 2011 of $3 million. See Note 4.

[2] U.S. refranchising losses in the years ended December 31, 2011 and December 25, 2010 are primarily due to losses on sales of and offers to refranchise KFCs in the U.S. There were approximately 250 and 600 KFC restaurants offered for refranchising as of December 31, 2011 and December 25, 2010, respectively. While we did not yet believe these KFCs met the criteria to be classified as held for sale, we did, consistent with our historical practice, review the restaurants for impairment as a result of our offer to refranchise. We recorded impairment charges where we determined that the carrying value of restaurant groups to be sold was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. For those restaurant groups deemed impaired, we wrote such restaurant groups down to our estimate of their fair values, which were based on the sales price we would expect to receive from a franchisee for each restaurant group. This fair value determination considered current market conditions, real-estate values, trends in the KFC U.S. business, prices for similar transactions in the restaurant industry and preliminary offers for the restaurant groups to date. The non-cash impairment charges that were recorded related to our offers to refranchise these company-operated KFC restaurants in the U.S. decreased depreciation expense versus what would have otherwise been recorded by $10 million and $9 million in the years ended December 31, 2011 and December 25, 2010, respectively. These depreciation reductions were not allocated to the U.S. segment resulting in depreciation expense in the U.S. segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the restaurant groups for any further necessary impairment until the date they are sold. The aforementioned non-cash impairment charges do not include any allocation of the KFC reporting unit goodwill in the restaurant group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the restaurant groups, or any subset of the restaurant groups, ultimately meet the criteria to be classified as held for sale. We will also be required to record a charge for the fair value of our guarantee of future lease payments for leases we assign to the franchisee upon any sale.

[3] During the year ended December 31, 2011 we decided to refranchise or close all of our remaining Company-operated Pizza Hut restaurants in the UK market. While an asset group comprising approximately 350 dine-in restaurants did not meet the criteria for held-for-sale classification as of December 31, 2011, our- decision to sell was considered an impairment indicator. As such we reviewed this asset group for potential impairment and determined that its carrying value was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. Accordingly, we wrote this asset group down to our estimate of its fair value, which is based on the sales price we would expect to receive from a buyer. This fair value determination considered current market conditions, trends in the Pizza Hut UK business, and prices for similar transactions in the restaurant industry and resulted in a non-cash pre-tax write-down of $74 million which was recorded to Refranchising (gain) loss. This impairment charge decreased depreciation expense versus what would have otherwise been recorded by $3 million in 2011. This depreciation reduction was not allocated to the YRI segment, resulting in depreciation expense in the YRI segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the asset group for any further necessary impairment until the date it is sold. The write-down does not include any allocation of the Pizza Hut UK reporting unit goodwill in the asset group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the asset group ultimately meets the criteria to be classified as held for sale. Upon the ultimate sale of the restaurants, depending on the form of the transaction, we could also be required to record a charge for the fair value of any guarantee of future lease payments for any leases we assign to a franchisee and for the cumulative foreign currency translation adjustment associated with Pizza Hut UK. The decision to refranchise or close all remaining Pizza Hut restaurants in the UK was considered to be a goodwill impairment indicator. We determined that the fair value of our Pizza Hut UK reporting unit exceeded its carrying value and as such there was no impairment of the approximately $100 million in goodwill attributable to the reporting unit.

[4] During the year ended December 26, 2009 we recognized a non-cash $10 million refranchising loss as a result of our decision to offer to refranchise our KFC Taiwan equity market. During the year ended December 25, 2010 we refranchised all of our remaining company restaurants in Taiwan, which consisted of 124 KFCs. We included in our December 25, 2010 financial statements a non-cash write-off of $7 million of goodwill in determining the loss on refranchising of Taiwan. Neither of these losses resulted in a related income tax benefit. The amount of goodwill write-off was based on the relative fair values of the Taiwan business disposed of and the portion of the business that was retained. The fair value of the business disposed of was determined by reference to the discounted value of the future cash flows expected to be generated by the restaurants and retained by the franchisee, which include a deduction for the anticipated royalties the franchisee will pay the Company associated with the franchise agreement entered into in connection with this refranchising transaction. The fair value of the Taiwan business retained consists of expected, net cash flows to be derived from royalties from franchisees, including the royalties associated with the franchise agreement entered into in connection with this refranchising transaction. We believe the terms of the franchise agreement entered into in connection with the Taiwan refranchising are substantially consistent with market. The remaining carrying value of goodwill related to our Taiwan business of $30 million, after the aforementioned write-off, was determined not to be impaired as the fair value of the Taiwan reporting unit exceeded its carrying amount.

[5] In the year ended December 25, 2010 we recorded a $52 million loss on the refranchising of our Mexico equity market as we sold all of our Company-owned restaurants, comprised of 222 KFCs and 123 Pizza Huts, to an existing Latin American franchise partner. The buyer is serving as the master franchisee for Mexico which had 102 KFC and 53 Pizza Hut franchise restaurants at the time of the transaction. The write-off of goodwill included in this loss was minimal as our Mexico reporting unit included an insignificant amount of goodwill. This loss did not result in any related income tax benefit.

[6] See Note 4 for further discussion of the consolidation of a former unconsolidated affiliate in Shanghai, China.

Consolidated Balance Sheets (USD $)

In Millions, unless otherwise specified

Dec. 31, 2011

Dec. 25, 2010

Current Assets

Cash and cash equivalents

$ 1,198

$ 1,426

Accounts and notes receivable, net

286

256

Inventories

273

189

Prepaid expenses and other current assets

338

269

Deferred income taxes

112

61

Advertising cooperative assets, restricted

114

112

Total Current Assets

2,321

2,313

Property, plant and equipment, net

4,042

3,830

Goodwill

681 ¹

659

Intangible assets, net

299

475

Investments in unconsolidated affiliates

167

154

Restricted cash

300

0

Other assets

475

519

Deferred income taxes

549

366

Total Assets

8,834 ²

8,316 ²

Current Liabilities

Accounts payable and other current liabilities

1,874

1,602

Income taxes payable

142

61

Short-term borrowings

320

673

Advertising cooperative liabilities

114

112

Total Current Liabilities

2,450

2,448

Long-term debt

2,997

2,915

Other liabilities and deferred credits

1,471

1,284

Total Liabilities

6,918

6,647

Shareholders' Equity

Common stock, no par value, 750 shares authorized; 460 shares and 469 shares issued in 2011 and 2010, respectively

18

86

Retained earnings

2,052

1,717

Accumulated other comprehensive income (loss)

(247)

(227)

Total Shareholders' Equity - YUM! Brands, Inc.

1,823

1,576

Noncontrolling interest

93

Total Shareholders' Equity

1,916

1,669

Total Liabilities and Shareholders' Equity

$ 8,834

$ 8,316

[1] As a result of the LJS and A&W divestitures in 2011, we disposed of $26 million of goodwill that was fully impaired in 2009.

[2] China includes investments in 4 unconsolidated affiliates totaling $167 million, $154 million and $144 million, for 2011, 2010 and 2009, respectively.

Consolidated Statements of Shareholders' Equity (Deficit) and Comprehensive Income (Loss) (USD $)

In Millions, except Share data

Total

Common Stock

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

Noncontrolling Interest

Balance at Dec. 27, 2008

$ (94)

$ 7

$ 303

$ (418)

$ 14

Balance (in shares) at Dec. 27, 2008

459,000,000

Net Income

1,083

1,071

12

Foreign currency translation adjustment

176

Pension and post-retirement benefit plans (net of tax impact)

13

Net unrealized gain (loss) on derivative instruments (net of tax impact)

5

Net unrealized change in derivative instruments (tax impact)

(3)

Comprehensive Income

1,277

Purchase of subsidiary shares from noncontrolling interest

70

Dividends declared

(385)

(378)

(7)

Repurchase of shares of Common Stock

0

Repurchase of shares of Common Stock (in shares)

0

Employee stock option and SARs exercises (includes tax impact)

168

Employee stock option and SARs exercises (includes tax impact) (in shares)

10,000,000

Compensation-related events (includes tax impact)

78

Compensation-related events (includes tax impact) (in shares)

0

Balance at Dec. 26, 2009

1,114

253

996

(224)

89

Balance (in shares) at Dec. 26, 2009

469,000,000

Net Income

1,178

1,158

20

Foreign currency translation adjustment

12

8

4

Pension and post-retirement benefit plans (net of tax impact)

(10)

Net unrealized gain (loss) on derivative instruments (net of tax impact)

(1)

Net unrealized change in derivative instruments (tax impact)

1

Comprehensive Income

1,179

Dividends declared

(457)

(437)

(20)

Repurchase of shares of Common Stock

(390)¹

(390)

0

Repurchase of shares of Common Stock (in shares)

(9,759,000)¹

(10,000,000)

Employee stock option and SARs exercises (includes tax impact)

168

Employee stock option and SARs exercises (includes tax impact) (in shares)

9,000,000

Compensation-related events (includes tax impact)

55

Compensation-related events (includes tax impact) (in shares)

1,000,000

Balance at Dec. 25, 2010

1,669

86

1,717

(227)

93

Balance (in shares) at Dec. 25, 2010

469,000,000

Net Income

1,335

1,319

16

Foreign currency translation adjustment

91

85

6

Pension and post-retirement benefit plans (net of tax impact)

(106)

Net unrealized gain (loss) on derivative instruments (net of tax impact)

1

Net unrealized change in derivative instruments (tax impact)

(1)

Comprehensive Income

1,321

Dividends declared

(523)

(501)

(22)

Repurchase of shares of Common Stock

(733)¹

(250)

(483)

Repurchase of shares of Common Stock (in shares)

(14,305,000)¹

(14,000,000)

Employee stock option and SARs exercises (includes tax impact)

119

Employee stock option and SARs exercises (includes tax impact) (in shares)

5,000,000

Compensation-related events (includes tax impact)

63

Compensation-related events (includes tax impact) (in shares)

0

Balance at Dec. 31, 2011

$ 1,916

$ 18

$ 2,052

$ (247)

$ 93

Balance (in shares) at Dec. 31, 2011

460,000,000

[1] 2011 amount excludes and 2010 amount includes the effect of $19 million in share repurchases (0.4 million shares) with trade dates prior to the 2010 fiscal year end but cash settlement dates subsequent to the 2010 fiscal year.

Description of Business

YUM! Brands, Inc. and Subsidiaries (collectively referred to as “YUM” or the “Company”) comprises the worldwide operations of KFC, Pizza Hut and Taco Bell (collectively the “Concepts”). YUM is the world’s largest quick service restaurant company based on the number of system units, with approximately 37,000 units of which approximately 50% are located outside the U.S. in more than 120 countries and territories. YUM was created as an independent, publicly-owned company on October 6, 1997 via a tax-free distribution by our former parent, PepsiCo, Inc., of our Common Stock to its shareholders. References to YUM throughout these Consolidated Financial Statements are made using the first person notations of “we,” “us” or “our.”

Through our widely-recognized Concepts, we develop, operate, franchise and license a system of both traditional and non-traditional quick service restaurants. Each Concept has proprietary menu items and emphasizes the preparation of food with high quality ingredients as well as unique recipes and special seasonings to provide appealing, tasty and attractive food at competitive prices. Our traditional restaurants feature dine-in, carryout and, in some instances, drive-thru or delivery service. Non-traditional units, which are principally licensed outlets, include express units and kiosks which have a more limited menu and operate in non-traditional locations like malls, airports, gasoline service stations, train stations, subways, convenience stores, stadiums, amusement parks and colleges, where a full-scale traditional outlet would not be practical or efficient. We also operate multibrand units, where two or more of our Concepts are operated in a single unit.

YUM consists of five operating segments: YUM Restaurants China ("China" or “China Division”), YUM Restaurants International (“YRI” or “International Division”), KFC U.S., Pizza Hut U.S., and Taco Bell U.S. The China Division includes mainland China, and the International Division includes the remainder of our international operations. For financial reporting purposes, management considers the three U.S. operating segments to be similar and, therefore, has aggregated them into a single reportable operating segment (“U.S.”). In December 2011 we sold our Long John Silver's ("LJS") and A&W All American Food Restaurants ("A&W") brands to key franchise leaders and strategic investors in separate transactions. The results for these businesses through the sale date are included in the Company's results for 2011, 2010 and 2009. As a result of changes to our management reporting structure, in the first quarter of 2012 we will begin reporting information for our India business as a standalone reporting segment separated from YRI. While our consolidated results will not be impacted, we will restate our historical segment information during 2012 for consistent presentation.

Summary of Significant Accounting Policies

Our preparation of the accompanying Consolidated Financial Statements in conformity with Generally Accepted Accounting Principles in the United States of America (“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 Company evaluated subsequent events through the date the Consolidated Financial Statements were issued and filed with the Securities and Exchange Commission.

Principles of Consolidation and Basis of Preparation. Intercompany accounts and transactions have been eliminated in consolidation. We consolidate entities in which we have a controlling financial interest, the usual condition of which is ownership of a majority voting interest. We also consider for consolidation an entity, in which we have certain interests, where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it.

Our most significant variable interests are in entities that operate restaurants under our Concepts’ franchise and license arrangements. We do not generally have an equity interest in our franchisee or licensee businesses with the exception of certain entities in China as discussed below. Additionally, we do not typically provide significant financial support such as loans or guarantees to our franchisees and licensees. However, we do have variable interests in certain franchisees through real estate lease arrangements with them to which we are a party. At the end of 2011, YUM has future lease payments due from franchisees, on a nominal basis, of approximately $320 million. As our franchise and license arrangements provide our franchisee and licensee entities the power to direct the activities that most significantly impact their economic performance, we do not consider ourselves the primary beneficiary of any such entity that might otherwise be considered a VIE.

See Note 19 for additional information on an entity that operates a franchise lending program that is a VIE in which we have a variable interest but for which we are not the primary beneficiary and thus do not consolidate.

Certain investments in entities that operate KFCs in China as well as our investment in Little Sheep Group Limited ("Little Sheep"), a Chinese casual dining concept headquartered in Inner Mongolia, China, are accounted for by the equity method. These entities are not VIEs and our lack of majority voting rights precludes us from controlling these affiliates. Thus, we do not consolidate these affiliates, instead accounting for them under the equity method. Our share of the net income or loss of those unconsolidated affiliates is included in Other (income) expense. Subsequent to fiscal year 2011, we acquired an additional 66% interest in Little Sheep. As a result, we will begin consolidating this business in 2012. In the second quarter of 2009 we began consolidating the entity that operates the KFCs in Shanghai, China, which was previously accounted for using the equity method. The increase in cash related to the consolidation of this entitiy's cash balance of $17 million is presented as a single line item on our 2009 Consolidated Statement of Cash Flows.

We report Net income attributable to the non-controlling interest in the entity that operates the KFCs in Beijing, China and since its consolidation, the Shanghai entity, separately on the face of our Consolidated Statements of Income. The portion of equity in these entities not attributable to the Company is reported within equity, separately from the Company’s equity on the Consolidated Balance Sheets.

See Note 4 for a further description of the accounting upon acquisition of additional interest in the Shanghai entity.

We participate in various advertising cooperatives with our franchisees and licensees established to collect and administer funds contributed for use in advertising and promotional programs designed to increase sales and enhance the reputation of the Company and its franchise owners. Contributions to the advertising cooperatives are required for both Company-operated and franchise restaurants and are generally based on a percent of restaurant sales. We maintain certain variable interests in these cooperatives. As the cooperatives are required to spend all funds collected on advertising and promotional programs, total equity at risk is not sufficient to permit the cooperatives to finance their activities without additional subordinated financial support. Therefore, these cooperatives are VIEs. As a result of our voting rights, we consolidate certain of these cooperatives for which we are the primary beneficiary. The Advertising cooperatives assets, consisting primarily of cash received from the Company and franchisees and accounts receivable from franchisees, can only be used to settle obligations of the respective cooperative. The Advertising cooperative liabilities represent the corresponding obligation arising from the receipt of the contributions to purchase advertising and promotional programs for which creditors do not have recourse to the general credit of the primary beneficiary. Therefore, we report all assets and liabilities of these advertising cooperatives that we consolidate as Advertising cooperative assets, restricted and Advertising cooperative liabilities in the Consolidated Balance Sheet. As the contributions to these cooperatives are designated and segregated for advertising, we act as an agent for the franchisees and licensees with regard to these contributions. Thus, we do not reflect franchisee and licensee contributions to these cooperatives in our Consolidated Statements of Income or Consolidated Statements of Cash Flows.

Fiscal Year. 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 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. All of our international businesses except China close one period or one month earlier to facilitate consolidated reporting.

Fiscal year 2011 included 53 weeks for our U.S. businesses and a portion of our YRI business. The 53^rdweek added $91 million to total revenues, $15 million to Restaurant profit and $25 million to Operating Profit in our 2011 Consolidated Statement of Income. The $25 million benefit was offset throughout 2011 by investments, including franchise development incentives, as well as higher-than-normal spending, such as restaurant closures in the U.S. and YRI.

Foreign Currency. The functional currency determination for operations outside the U.S. is based upon a number of economic factors, including but not limited to cash flows and financing transactions. Income and expense accounts are translated into U.S. dollars at the average exchange rates prevailing during the period. Assets and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Resulting translation adjustments are recorded in Accumulated other comprehensive income (loss) in the Consolidated Balance Sheet and are subsequently recognized as income or expense only upon sale or upon complete or substantially complete liquidation of the related investment in a foreign entity. Gains and losses arising from the impact of foreign currency exchange rate fluctuations on transactions in foreign currency are included in Other (income) expense in our Consolidated Statement of Income.

Reclassifications. We have reclassified certain items in the Consolidated Financial Statements for prior periods to be comparable with the classification for the fiscal year ended December 31, 2011. These reclassifications had no effect on previously reported Net Income - YUM! Brands, Inc.

Franchise and License Operations. We execute franchise or license agreements for each unit operated by third parties which set out the terms of our arrangement with the franchisee or licensee. Our franchise and license agreements typically require the franchisee or licensee to pay an initial, non-refundable fee and continuing fees based upon a percentage of sales. Subject to our approval and their payment of a renewal fee, a franchisee may generally renew the franchise agreement upon its expiration.

The internal costs we incur to provide support services to our franchisees and licensees are charged to General and Administrative (“G&A”) expenses as incurred. Certain direct costs of our franchise and license operations are charged to franchise and license expenses. These costs include provisions for estimated uncollectible fees, rent or depreciation expense associated with restaurants we lease or sublease to franchisees, franchise and license marketing funding, amortization expense for franchise-related intangible assets and certain other direct incremental franchise and license support costs.

Revenue Recognition. Revenues from Company-operated restaurants are recognized when payment is tendered at the time of sale. The Company presents sales net of sales-related taxes. Income from our franchisees and licensees includes initial fees, continuing fees, renewal fees and rental income from restaurants we lease or sublease to them. We recognize initial fees received from a franchisee or licensee as revenue when we have performed substantially all initial services required by the franchise or license agreement, which is generally upon the opening of a store. We recognize continuing fees based upon a percentage of franchisee and licensee sales and rental income as earned. We recognize renewal fees when a renewal agreement with a franchisee or licensee becomes effective. We present initial fees collected upon the sale of a restaurant to a franchisee in Refranchising (gain) loss.

Direct Marketing Costs. We charge direct marketing costs to expense ratably in relation to revenues over the year in which incurred and, in the case of advertising production costs, in the year the advertisement is first shown. Deferred direct marketing costs, which are classified as prepaid expenses, consist of media and related advertising production costs which will generally be used for the first time in the next fiscal year and have historically not been significant. To the extent we participate in advertising cooperatives, we expense our contributions as incurred which are generally based on a percentage of sales. Our advertising expenses were $593 million, $557 million and $548 million in 2011, 2010 and 2009, respectively. We report substantially all of our direct marketing costs in Occupancy and other operating expenses.

Research and Development Expenses. Research and development expenses, which we expense as incurred, are reported in G&A expenses. Research and development expenses were $34 million, $33 million and $31 million in 2011, 2010 and 2009, respectively.

Share-Based Employee Compensation. We recognize all share-based payments to employees, including grants of employee stock options and stock appreciation rights (“SARs”), in the Consolidated Financial Statements as compensation cost over the service period based on their fair value on the date of grant. This compensation cost is recognized over the service period on a straight-line basis for the fair value of awards that actually vest. We present this compensation cost consistent with the other compensation costs for the employee recipient in either Payroll and employee benefits or G&A expenses.

Legal Costs. Settlement costs are accrued when they are deemed probable and estimable. Anticipated legal fees related to self-insured workers' compensation, employment practices liability, general liability, automobile liability, product liability and property losses (collectively, "property and casualty losses") are accrued when deemed probable and estimable. Legal fees not related to self-insured property and casualty losses are recognized as incurred.

Impairment or Disposal of Property, Plant and Equipment. Property, plant and equipment (“PP&E”) is tested for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The assets are not recoverable if their carrying value is less than the undiscounted cash flows we expect to generate from such assets. If the assets are not deemed to be recoverable, impairment is measured based on the excess of their carrying value over their fair value.

For purposes of impairment testing for our restaurants, we have concluded that an individual restaurant is the lowest level of independent cash flows unless our intent is to refranchise restaurants as a group. We review our long-lived assets of such individual restaurants (primarily PP&E and allocated intangible assets subject to amortization) semi-annually for impairment, or whenever events or changes in circumstances indicate that the carrying amount of a restaurant may not be recoverable. We use two consecutive years of operating losses as our primary indicator of potential impairment for our semi-annual impairment testing of these restaurant assets. We evaluate the recoverability of these restaurant assets by comparing the estimated undiscounted future cash flows, which are based on our entity-specific assumptions, to the carrying value of such assets. For restaurant assets that are not deemed to be recoverable, we write-down an impaired restaurant to its estimated fair value, which becomes its new cost basis. Fair value is an estimate of the price a franchisee would pay for the restaurant and its related assets and is determined by discounting the estimated future after-tax cash flows of the restaurant, which include a deduction for the royalty the franchisee would pay us. The after-tax cash flows incorporate reasonable assumptions we believe a franchisee would make such as sales growth and margin improvement. The discount rate used in the fair value calculation is our estimate of the required rate of return that a franchisee would expect to receive when purchasing a similar restaurant and the related long-lived assets. The discount rate incorporates rates of returns for historical refranchising market transactions and is commensurate with the risks and uncertainty inherent in the forecasted cash flows.

In executing our refranchising initiatives, we most often offer groups of restaurants for sale. When we believe a restaurant or groups of restaurants will be refranchised for a price less than their carrying value, but do not believe the restaurant(s) have met the criteria to be classified as held for sale, we review the restaurants for impairment. We evaluate the recoverability of these restaurant assets at the date it is considered more likely than not that they will be refranchised by comparing estimated sales proceeds plus holding period cash flows, if any, to the carrying value of the restaurant or group of restaurants. For restaurant assets that are not deemed to be recoverable, we recognize impairment for any excess of carrying value over the fair value of the restaurants, which is based on the expected net sales proceeds. To the extent ongoing agreements to be entered into with the franchisee simultaneous with the refranchising are expected to contain terms, such as royalty rates, not at prevailing market rates, we consider the off-market terms in our impairment evaluation. We recognize any such impairment charges in Refranchising (gain) loss. We classify restaurants as held for sale and suspend depreciation and amortization when (a) we make a decision to refranchise; (b) the restaurants can be immediately removed from operations; (c) we have begun an active program to locate a buyer; (d) the restaurant is being actively marketed at a reasonable market price; (e) significant changes to the plan of sale are not likely; and (f) the sale is probable within one year. Restaurants classified as held for sale are recorded at the lower of their carrying value or fair value less cost to sell. We recognize estimated losses on restaurants that are classified as held for sale in Refranchising (gain) loss.

Refranchising (gain) loss includes the gains or losses from the sales of our restaurants to new and existing franchisees, including impairment charges discussed above, and the related initial franchise fees. We recognize gains on restaurant refranchisings when the sale transaction closes, the franchisee has a minimum amount of the purchase price in at-risk equity, and we are satisfied that the franchisee can meet its financial obligations. If the criteria for gain recognition are not met, we defer the gain to the extent we have a remaining financial exposure in connection with the sales transaction. Deferred gains are recognized when the gain recognition criteria are met or as our financial exposure is reduced. When we make a decision to retain a store, or group of stores, previously held for sale, we revalue the store at the lower of its (a) net book value at our original sale decision date less normal depreciation and amortization that would have been recorded during the period held for sale or (b) its current fair value. This value becomes the store’s new cost basis. We record any resulting difference between the store’s carrying amount and its new cost basis to Closure and impairment (income) expense.

When we decide to close a restaurant, it is reviewed for impairment and depreciable lives are adjusted based on the expected disposal date. Other costs incurred when closing a restaurant such as costs of disposing of the assets as well as other facility-related expenses from previously closed stores are generally expensed as incurred. Additionally, at the date we cease using a property under an operating lease, we record a liability for the net present value of any remaining lease obligations, net of estimated sublease income, if any. Any costs recorded upon store closure as well as any subsequent adjustments to liabilities for remaining lease obligations as a result of lease termination or changes in estimates of sublease income are recorded in Closures and impairment (income) expenses. To the extent we sell assets, primarily land, associated with a closed store, any gain or loss upon that sale is also recorded in Closures and impairment (income) expenses.

Considerable management judgment is necessary to estimate future cash flows, including cash flows from continuing use, terminal value, sublease income and refranchising proceeds. Accordingly, actual results could vary significantly from our estimates.

Impairment of Investments in Unconsolidated Affiliates. We record impairment charges related to an investment in an unconsolidated affiliate whenever events or circumstances indicate that a decrease in the fair value of an investment has occurred which is other than temporary. In addition, we evaluate our investments in unconsolidated affiliates for impairment when they have experienced two consecutive years of operating losses. We recorded no impairment associated with our investments in unconsolidated affiliates during 2011, 2010 and 2009.

Guarantees. We recognize, at inception of a guarantee, a liability for the fair value of certain obligations undertaken. The majority of our guarantees are issued as a result of assigning our interest in obligations under operating leases as a condition to the refranchising of certain Company restaurants. We recognize a liability for the fair value of such lease guarantees upon refranchising

and upon subsequent renewals of such leases when we remain contingently liable. The related expense and any subsequent changes in the guarantees are included in Refranchising (gain) loss. The related expense and subsequent changes in the guarantees for other franchise support guarantees not associated with a refranchising transaction are included in Franchise and license expense.

Income Taxes. We record deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Additionally, in determining the need for recording a valuation allowance against the carrying amount of deferred tax assets, we consider the amount of taxable income and periods over which it must be earned, actual levels of past taxable income and known trends and events or transactions that are expected to affect future levels of taxable income. Where we determine that it is more likely than not that all or a portion of an asset will not be realized, we record a valuation allowance.

We recognize the benefit of positions taken or expected to be taken in our tax returns in our Income tax provision when it is more likely than not (i.e. a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon settlement. Changes in judgment that result in subsequent recognition, derecognition or change in a measurement of a tax position taken in a prior annual period (including any related interest and penalties) are recognized as a discrete item in the interim period in which the change occurs.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as components of its Income tax provision.

See Note 17 for a further discussion of our income taxes.

Fair Value Measurements. Fair value is the price we would receive to sell an asset or pay to transfer a liability (exit price) in an orderly transaction between market participants. For those assets and liabilities we record or disclose at fair value, we determine fair value based upon the quoted market price, if available. If a quoted market price is not available for identical assets, we determine fair value based upon the quoted market price of similar assets or the present value of expected future cash flows considering the risks involved, including counterparty performance risk if appropriate, and using discount rates appropriate for the duration. The fair values are assigned a level within the fair value hierarchy, depending on the source of the inputs into the calculation.



Level 1	Inputs based upon quoted prices in active markets for identical assets.

Level 2	Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.

Level 3	Inputs that are unobservable for the asset.

Cash and Cash Equivalents. Cash equivalents represent funds we have temporarily invested (with original maturities not exceeding three months), including short-term, highly liquid debt securities.

Receivables. The Company’s receivables are primarily generated as a result of ongoing business relationships with our franchisees and licensees as a result of franchise, license 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 Consolidated Balance Sheets. Our provision for uncollectible franchise and licensee receivable balances is based upon pre-defined aging criteria or upon the occurrence of other events that indicate that we may not collect the balance due. Additionally, we monitor the financial condition of our franchisees and licensees and record provisions for estimated losses on receivables when we believe it probable that our franchisees or licensees will be unable to make their required payments. While we use the best information available in making our determination, the ultimate recovery of recorded receivables is also dependent upon future economic events and other conditions that may be beyond our control. Net provisions for uncollectible franchise and license trade receivables of $7 million, $3 million and $11 million were included in Franchise and license expenses in 2011, 2010 and 2009, respectively. The allowance for doubtful accounts, net of the aforementioned provisions, decreased during 2011 primarily due to write-offs and as a result of the LJS and A&W divestitures. Trade receivables that are ultimately deemed to be uncollectible, and for which collection efforts have been exhausted, are written off against the allowance for doubtful accounts.



	2011			2010
Accounts and notes receivable	$	308		$	289
Allowance for doubtful accounts	(22		)	(33		)
Accounts and notes receivable, net	$	286		$	256

Our financing receivables primarily consist of notes receivables and direct financing leases with franchisees which we enter into from time to time. As these receivables primarily relate to our ongoing business agreements with franchisees and licensees, we consider such receivables to have similar risk characteristics and evaluate them as one collective portfolio segment and class for determining the allowance for doubtful accounts. We monitor the financial condition of our franchisees and licensees and record provisions for estimated losses on receivables when we believe it probable that our franchisees or licensees will be unable to make their required payments. Balances of notes receivable and direct financing leases due within one year are included in Accounts and Notes Receivable while amounts due beyond one year are included in Other assets. Amounts included in Other assets totaled $15 million (net of an allowance of $4 million) and $57 million (net of an allowance of $30 million) at December 31, 2011 and December 25, 2010, respectively. The decline was primarily due to direct financing lease receivables sold as part of the LJS and A&W divestitures. Financing receivables that are ultimately deemed to be uncollectible, and for which collection efforts have been exhausted, are written off against the allowance for doubtful accounts. Interest income recorded on financing receivables has traditionally been insignificant.

Inventories. We value our inventories at the lower of cost (computed on the first-in, first-out method) or market.

Property, Plant and Equipment. We state property, plant and equipment at cost less accumulated depreciation and amortization. We calculate depreciation and amortization on a straight-line basis over the estimated useful lives of the assets as follows: 5 to 25 years for buildings and improvements, 3 to 20 years for machinery and equipment and 3 to 7 years for capitalized software costs. As discussed above, we suspend depreciation and amortization on assets related to restaurants that are held for sale.

Leases and Leasehold Improvements. The Company leases land, buildings or both for nearly 6,200 of its restaurants worldwide. Lease terms, which vary by country and often include renewal options, are an important factor in determining the appropriate accounting for leases including the initial classification of the lease as capital or operating and the timing of recognition of rent expense over the duration of the lease. We include renewal option periods in determining the term of our leases when failure to renew the lease would impose a penalty on the Company in such an amount that a renewal appears to be reasonably assured at the inception of the lease. The primary penalty to which we are subject is the economic detriment associated with the existence of leasehold improvements which might be impaired if we choose not to continue the use of the leased property. Leasehold improvements, which are a component of buildings and improvements described above, are amortized over the shorter of their estimated useful lives or the lease term. We generally do not receive leasehold improvement incentives upon opening a store that is subject to a lease.

We expense rent associated with leased land or buildings while a restaurant is being constructed whether rent is paid or we are subject to a rent holiday. Additionally, certain of the Company's operating leases contain predetermined fixed escalations of the minimum rent during the lease term. For leases with fixed escalating payments and/or rent holidays, we record rent expense on a straight-line basis over the lease term, including any option periods considered in the determination of that lease term. Contingent rentals are generally based on sales levels in excess of stipulated amounts, and thus are not considered minimum lease payments and are included in rent expense when attainment of the contingency is considered probable (e.g. when Company sales occur).

Internal Development Costs and Abandoned Site Costs. We capitalize direct costs associated with the site acquisition and construction of a Company unit on that site, including direct internal payroll and payroll-related costs. Only those site-specific costs incurred subsequent to the time that the site acquisition is considered probable are capitalized. If we subsequently make a determination that a site for which internal development costs have been capitalized will not be acquired or developed, any previously capitalized internal development costs are expensed and included in G&A expenses.

Goodwill and Intangible Assets. From time to time, the Company acquires restaurants from one of our Concept’s franchisees or acquires another business. Goodwill from these acquisitions represents the excess of the cost of a business acquired over the net of the amounts assigned to assets acquired, including identifiable intangible assets and liabilities assumed. Goodwill is not amortized and has been assigned to reporting units for purposes of impairment testing. Our reporting units are our operating segments in the U.S. (see Note 18), our YRI business units (typically individual countries) and our China Division brands. We evaluate goodwill for impairment on an annual basis or more often if an event occurs or circumstances change that indicate impairments might exist. Goodwill impairment tests consist of a comparison of each reporting unit’s fair value with its carrying value. Fair value is the price a willing buyer would pay for a reporting unit, and is generally estimated using discounted expected future after-tax cash flows from Company operations and franchise royalties. The discount rate is our estimate of the required rate of return that a third-party buyer would expect to receive when purchasing a business from us that constitutes a reporting unit. We believe the discount rate is commensurate with the risks and uncertainty inherent in the forecasted cash flows. If the carrying value of a reporting unit exceeds its fair value, goodwill is written down to its implied fair value. We have selected the beginning of our fourth quarter as the date on which to perform our ongoing annual impairment test for goodwill.

If we record goodwill upon acquisition of a restaurant(s) from a franchisee and such restaurant(s) is then sold within two years of acquisition, the goodwill associated with the acquired restaurant(s) is written off in its entirety. If the restaurant is refranchised two years or more subsequent to its acquisition, we include goodwill in the carrying amount of the restaurants disposed of based on the relative fair values of the portion of the reporting unit disposed of in the refranchising and the portion of the reporting unit that will be retained. The fair value of the portion of the reporting unit disposed of in a refranchising is determined by reference to the discounted value of the future cash flows expected to be generated by the restaurant and retained by the franchisee, which includes a deduction for the anticipated, future royalties the franchisee will pay us associated with the franchise agreement entered into simultaneously with the refranchising transition. Appropriate adjustments are made if such franchise agreement includes terms that are determined to not be at prevailing market rates. The fair value of the reporting unit retained is based on the price a willing buyer would pay for the reporting unit and includes the value of franchise agreements. As such, the fair value of the reporting unit retained can include expected cash flows from future royalties from those restaurants currently being refranchised, future royalties from existing franchise businesses and company restaurant operations. As a result, the percentage of a reporting unit’s goodwill that will be written off in a refranchising transaction will be less than the percentage of the reporting unit’s company restaurants that are refranchised in that transaction and goodwill can be allocated to a reporting unit with only franchise restaurants.

We evaluate the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events and circumstances continue to support an indefinite useful life. If an intangible asset that is not being amortized is subsequently determined to have a finite useful life, we amortize the intangible asset prospectively over its estimated remaining useful life. Intangible assets that are deemed to have a definite life are amortized on a straight-line basis to their residual value.

For indefinite-lived intangible assets, our impairment test consists of a comparison of the fair value of an intangible asset with its carrying amount. Fair value is an estimate of the price a willing buyer would pay for the intangible asset and is generally estimated by discounting the expected future after-tax cash flows associated with the intangible asset. We also perform our annual test for impairment of our indefinite-lived intangible assets at the beginning of our fourth quarter.

Our definite-lived intangible assets that are not allocated to an individual restaurant are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. An intangible asset that is deemed not recoverable on a undiscounted basis is written down to its estimated fair value, which is our estimate of the price a willing buyer would pay for the intangible asset based on discounted expected future after-tax cash flows. For purposes of our impairment analysis, we update the cash flows that were initially used to value the definite-lived intangible asset to reflect our current estimates and assumptions over the asset’s future remaining life.

Derivative Financial Instruments. We use derivative instruments primarily to hedge interest rate and foreign currency risks. These derivative contracts are entered into with financial institutions. We do not use derivative instruments for trading purposes and we have procedures in place to monitor and control their use.

We record all derivative instruments on our Consolidated Balance Sheet at fair value. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in the results of operations. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. For derivative instruments that are designated and qualify as a net investment hedge, the effective portion of the gain or loss on the derivative instrument is reported in the foreign currency translation component of other comprehensive income (loss). Any ineffective portion of the gain or loss on the derivative instrument for a cash flow hedge or net investment hedge is recorded in the results of operations immediately. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the results of operations immediately. See Note 12 for a discussion of our use of derivative instruments, management of credit risk inherent in derivative instruments and fair value information.

Common Stock Share Repurchases. From time to time, we repurchase shares of our Common Stock under share repurchase programs authorized by our Board of Directors. Shares repurchased constitute authorized, but unissued shares under the North Carolina laws under which we are incorporated. Additionally, our Common Stock has no par or stated value. Accordingly, we record the full value of share repurchases, upon the trade date, against Common Stock on our Consolidated Balance Sheet except when to do so would result in a negative balance in such Common Stock account. In such instances, on a period basis, we record the cost of any further share repurchases as a reduction in retained earnings. Due to the large number of share repurchases and the increase in the market value of our stock over the past several years, our Common Stock balance is frequently zero at the end of any period. Accordingly, $483 million in share repurchases were recorded as a reduction in Retained Earnings in 2011. Our Common Stock balance was such that no share repurchases impacted Retained Earnings in 2010. There were no shares of our Common Stock repurchased during 2009. See Note 16 for additional information.

Pension and Post-retirement Medical Benefits. We measure and recognize the overfunded or underfunded status of our pension and post-retirement plans as an asset or liability in our Consolidated Balance Sheet as of our fiscal year end. The funded status represents the difference between the projected benefit obligations and the fair value of plan assets. The projected benefit obligation is the present value of benefits earned to date by plan participants, including the effect of future salary increases, as applicable. The difference between the projected benefit obligations and the fair value of plan assets that has not previously been recognized in our Consolidated Statement of Income is recorded as a component of Accumulated other comprehensive income (loss).

Earnings Per Common Share ("EPS")

Earnings Per Common Share (EPS)

Earnings Per Common Share (“EPS”)



	2011		2010		2009
Net Income – YUM! Brands, Inc.	$	1,319	$	1,158	$	1,071
Weighted-average common shares outstanding (for basic calculation)	469		474		471
Effect of dilutive share-based employee compensation	12		12		12
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)	481		486		483
Basic EPS	$	2.81	$	2.44	$	2.28
Diluted EPS	$	2.74	$	2.38	$	2.22
Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation^(a)	4.2		2.2		13.3


(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.

Items Affecting Comparability of Net Income and Cash Flows

U.S. Business Transformation

As part of our plan to transform our U.S. business we took several measures in 2011, 2010 and 2009 ("the U.S. business transformation measures"). These measures include: continuation of our U.S. refranchising; General and Administrative ("G&A") productivity initiatives and realignment of resources (primarily severance and early retirement costs); and investments in our U.S. Brands made on behalf of our franchisees such as equipment purchases.

For information on our U.S. refranchising, see the Refranchising (Gain) Loss section on pages 63 and 64.

In connection with our G&A productivity initiatives and realignment of resources (primarily severance and early retirement costs), we recorded pre-tax charges of $21 million, $9 million and $16 million in the years ended December 31, 2011, December 25, 2010 and December 26, 2009, respectively. The unpaid current liability for the severance portion of these charges was $18 million and $1 million as of December 31, 2011 and December 25, 2010, respectively. Severance payments in the years ended December 31, 2011, December 25, 2010 and December 26, 2009 totaled approximately $4 million, $7 million and $26 million, respectively.

Additionally, the Company recognized a reduction to Franchise and license fees and income of $32 million in the year ended December 26, 2009 related to investments in our U.S. Brands. These investments reflected our reimbursements to KFC franchisees for installation costs of ovens for the national launch of Kentucky Grilled Chicken. The reimbursements were recorded as a reduction to Franchise and license fees and income as we would not have provided the reimbursements absent the ongoing franchise relationship.

As a result of a decline in future profit expectations for our LJS and A&W U.S. businesses due in part to the impact of a reduced emphasis on multi-branding, we recorded a non-cash charge of $26 million, which resulted in no related income tax benefit, in the fourth quarter of 2009 to write-off goodwill associated with our LJS and A&W U.S. businesses we owned at the time.

We are not including the impacts of these U.S. business transformation measures in our U.S. segment for performance reporting purposes as we do not believe they are indicative of our ongoing operations. Additionally, we are not including the depreciation reduction of $10 million and $9 million for the years ended December 31, 2011 and December 25, 2010, respectively, arising from the impairment of the KFCs offered for sale in the year ended December 25, 2010 within our U.S. segment for performance reporting purposes. Rather, we are recording such reduction as a credit within unallocated Occupancy and other operating expenses resulting in depreciation expense for the impaired restaurants we continue to own being recorded in the U.S. segment at the rate at which it was prior to the impairment charge being recorded.

LJS and A&W Divestitures

During the fourth quarter of 2011 we sold the Long John Silver's and A&W All American Food Restaurants brands to key franchise leaders and strategic investors in separate transactions.

We recognized $86 million of pre-tax losses and other costs primarily in Closures and impairment (income) expenses during 2011 as a result of these transactions. Additionally, we recognized $104 million of tax benefits related to tax losses associated with the transactions.

We are not including the pre-tax losses and other costs in our U.S. and YRI segments for performance reporting purposes as we do not believe they are indicative of our ongoing operations. In 2011, these businesses contributed 5% and 1% to Franchise and license fees and income for the U.S. and YRI segments, respectively. While these businesses contributed 1% to both the U.S. and YRI segments' Operating Profit in 2011, the impact on our consolidated Operating Profit was not significant.

Consolidation of a Former Unconsolidated Affiliate in Shanghai, China

On May 4, 2009 we acquired an additional 7% ownership in the entity that operates more than 200 KFCs in Shanghai, China for $12 million, increasing our ownership to 58%. The acquisition was driven by our desire to increase our management control over the entity and further integrate the business with the remainder of our KFC operations in China. Prior to our acquisition of this additional interest, this entity was accounted for as an unconsolidated affiliate under the equity method of accounting due to the effective participation of our partners in the significant decisions of the entity that were made in the ordinary course of business. Concurrent with the acquisition we received additional rights in the governance of the entity, and thus we began consolidating the entity upon acquisition. As required by GAAP, we remeasured our previously held 51% ownership in the entity, which had a recorded value of $17 million at the date of acquisition, at fair value and recognized a gain of $68 million accordingly. This gain, which resulted in no related income tax expense, was recorded in Other (income) expense on our Consolidated Statement of Income during 2009 and was not allocated to any segment for performance reporting purposes.

Under the equity method of accounting, we previously reported our 51% share of the net income of the unconsolidated affiliate (after interest expense and income taxes) as Other (income) expense in the Consolidated Statements of Income. We also recorded a franchise fee for the royalty received from the stores owned by the unconsolidated affiliate. From the date of the acquisition, we have reported the results of operations for the entity in the appropriate line items of our Consolidated Statements of Income. We no longer recorded franchise fee income for these restaurants nor did we report Other (income) expense as we did under the equity method of accounting. Net income attributable to our partner’s ownership percentage is recorded in Net Income – noncontrolling interests. For the year ended December 25, 2010, the consolidation of the existing restaurants upon acquisition increased Company sales by $98 million, decreased Franchise and license fees and income by $6 million and increased Operating Profit by $3 million versus the year ended December 26, 2009. The impact of the acquisition on Net Income – YUM! Brands, Inc. was not significant to the year ended December 25, 2010.

The pro forma impact on our results of operations if the acquisition had been completed as of the beginning of 2009 would not have been significant.

Little Sheep Initial Investment and Pending Acquisition

During 2009, our China Division paid approximately $103 million, in several tranches, to purchase 27% of the outstanding common shares of Little Sheep and obtain Board of Directors representation. We began reporting our investment in Little Sheep using the equity method of accounting, and this investment is included in Investments in unconsolidated affiliates on our Consolidated Balance Sheets. Equity income recognized from our investment in Little Sheep was not significant in the years ended December 31, 2011, December 25, 2010 or December 26, 2009.

In May 2011, we announced our intent to acquire an additional 66% controlling interest in Little Sheep. As a result, we placed $300 million in escrow and provided a $300 million letter of credit to demonstrate availability of funds to acquire the additional shares in this business. The funds placed in escrow were restricted to the pending acquisition of Little Sheep and are separately presented in our Consolidated Balance Sheet as of December 31, 2011 and in our Consolidated Statement of Cash Flows for the year ended December 31, 2011. See Note 21 for information regarding the completion of this acquisition subsequent to year-end.

YRI Acquisitions

On October 31, 2011, YRI acquired 68 KFC restaurants from an existing franchisee in South Africa for $71 million.

On July 1, 2010, we completed the exercise of our option with our Russian partner to purchase their interest in the co-branded Rostik’s-KFC restaurants across Russia and the Commonwealth of Independent States. As a result, we acquired company ownership of 50 restaurants and gained full rights and responsibilities as franchisor of 81 restaurants, which our partner previously managed as master franchisee. We paid cash of $60 million, net of settlement of a long-term note receivable of $11 million, and assumed long-term debt of $10 million which was subsequently repaid. The remaining balance of the purchase price of $12 million will be paid in cash in July 2012.

The impact of consolidating these businesses on all line-items within our Consolidated Statement of Income was insignificant to the comparison of our year-over-year results.

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.



	Refranchising (gain) loss
	2011			2010			2009
China	$	(14	)	$	(8	)	$	(3	)
YRI ^(a)(b)(c)	69			53			11
U.S.^(d)	17			18			(34		)
Worldwide	$	72		$	63		$	(26	)

(a)

During the year ended December 31, 2011 we decided to refranchise or close all of our remaining Company-operated Pizza Hut restaurants in the UK market. While an asset group comprising approximately 350 dine-in restaurants did not meet the criteria for held-for-sale classification as of December 31, 2011, our- decision to sell was considered an impairment indicator. As such we reviewed this asset group for potential impairment and determined that its carrying value was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. Accordingly, we wrote this asset group down to our estimate of its fair value, which is based on the sales price we would expect to receive from a buyer. This fair value determination considered current market conditions, trends in the Pizza Hut UK business, and prices for similar transactions in the restaurant industry and resulted in a non-cash pre-tax write-down of $74 million which was recorded to Refranchising (gain) loss. This impairment charge decreased depreciation expense versus what would have otherwise been recorded by $3 million in 2011. This depreciation reduction was not allocated to the YRI segment, resulting in depreciation expense in the YRI segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the asset group for any further necessary impairment until the date it is sold. The write-down does not include any allocation of the Pizza Hut UK reporting unit goodwill in the asset group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the asset group ultimately meets the criteria to be classified as held for sale. Upon the ultimate sale of the restaurants, depending on the form of the transaction, we could also be required to record a charge for the fair value of any guarantee of future lease payments for any leases we assign to a franchisee and for the cumulative foreign currency translation adjustment associated with Pizza Hut UK. The decision to refranchise or close all remaining Pizza Hut restaurants in the UK was considered to be a goodwill impairment indicator. We determined that the fair value of our Pizza Hut UK reporting unit exceeded its carrying value and as such there was no impairment of the approximately $100 million in goodwill attributable to the reporting unit.

(b)

In the year ended December 25, 2010 we recorded a $52 million loss on the refranchising of our Mexico equity market as we sold all of our Company-owned restaurants, comprised of 222 KFCs and 123 Pizza Huts, to an existing Latin American franchise partner. The buyer is serving as the master franchisee for Mexico which had 102 KFC and 53 Pizza Hut franchise restaurants at the time of the transaction. The write-off of goodwill included in this loss was minimal as our Mexico reporting unit included an insignificant amount of goodwill. This loss did not result in any related income tax benefit.

(c)

During the year ended December 26, 2009 we recognized a non-cash $10 million refranchising loss as a result of our decision to offer to refranchise our KFC Taiwan equity market. During the year ended December 25, 2010 we refranchised all of our remaining company restaurants in Taiwan, which consisted of 124 KFCs. We included in our December 25, 2010 financial statements a non-cash write-off of $7 million of goodwill in determining the loss on refranchising of Taiwan. Neither of these losses resulted in a related income tax benefit. The amount of goodwill write-off was based on the relative fair values of the Taiwan business disposed of and the portion of the business that was retained. The fair value of the business disposed of was determined by reference to the discounted value of the future cash flows expected to be generated by the restaurants and retained by the franchisee, which include a deduction for the anticipated royalties the franchisee will pay the Company associated with the franchise agreement entered into in connection with this refranchising transaction. The fair value of the Taiwan business retained consists of expected, net cash flows to be derived from royalties from franchisees, including the royalties associated with the franchise agreement entered into in connection with this refranchising transaction. We believe the terms of the franchise agreement entered into in connection with the Taiwan refranchising are substantially consistent with market. The remaining carrying value of goodwill related to our Taiwan business of $30 million, after the aforementioned write-off, was determined not to be impaired as the fair value of the Taiwan reporting unit exceeded its carrying amount.

(d)

U.S. refranchising losses in the years ended December 31, 2011 and December 25, 2010 are primarily due to losses on sales of and offers to refranchise KFCs in the U.S. There were approximately 250 and 600 KFC restaurants offered for refranchising as of December 31, 2011 and December 25, 2010, respectively. While we did not yet believe these KFCs met the criteria to be classified as held for sale, we did, consistent with our historical practice, review the restaurants for impairment as a result of our offer to refranchise. We recorded impairment charges where we determined that the carrying value of restaurant groups to be sold was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. For those restaurant groups deemed impaired, we wrote such restaurant groups down to our estimate of their fair values, which were based on the sales price we would expect to receive from a franchisee for each restaurant group. This fair value determination considered current market conditions, real-estate values, trends in the KFC U.S. business, prices for similar transactions in the restaurant industry and preliminary offers for the restaurant groups to date. The non-cash impairment charges that were recorded related to our offers to refranchise these company-operated KFC restaurants in the U.S. decreased depreciation expense versus what would have otherwise been recorded by $10 million and $9 million in the years ended December 31, 2011 and December 25, 2010, respectively. These depreciation reductions were not allocated to the U.S. segment resulting in depreciation expense in the U.S. segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the restaurant groups for any further necessary impairment until the date they are sold. The aforementioned non-cash impairment charges do not include any allocation of the KFC reporting unit goodwill in the restaurant group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the restaurant groups, or any subset of the restaurant groups, ultimately meet the criteria to be classified as held for sale. We will also be required to record a charge for the fair value of our guarantee of future lease payments for leases we assign to the franchisee upon any sale.

Store Closure and Impairment Activity

Store closure (income) costs and Store impairment charges by reportable segment are presented below. These tables exclude $80 million of net losses recorded in 2011 related to the LJS and A&W divestitures and a $26 million goodwill impairment charge recorded in 2009 related to the LJS and A&W businesses we previously owned. Neither of these amounts were allocated to segments for performance reporting purposes:



	2011
	China			YRI		U.S.		Worldwide
Store closure (income) costs^(a)	$	(1	)	$	4	$	4	$	7
Store impairment charges	13			18		17		48
Closure and impairment (income) expenses	$	12		$	22	$	21	$	55



	2010
	China		YRI		U.S.		Worldwide
Store closure (income) costs^(a)	$	—	$	2	$	3	$	5
Store impairment charges	16		12		14		42
Closure and impairment (income) expenses	$	16	$	14	$	17	$	47



	2009
	China			YRI		U.S.		Worldwide
Store closure (income) costs^(a)	$	(4	)	$	—	$	13	$	9
Store impairment charges ^(b)	13			22		33		68
Closure and impairment (income) expenses	$	9		$	22	$	46	$	77


(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.


(b)	The 2009 store impairment charges for YRI include $12 million of goodwill impairment for our Pizza Hut South Korea market.

The following table summarizes the 2011 and 2010 activity related to reserves for remaining lease obligations for closed stores.



	Beginning Balance		Amounts Used		New Decisions	Estimate/Decision Changes	CTA/ Other		Ending Balance
2011 Activity	$	28	(12	)	17	2	(1	)	$	34
2010 Activity	$	27	(12	)	8	—	5		$	28

Supplemental Cash Flow Data



	2011		2010		2009
Cash Paid For:
Interest	$	199	$	190	$	209
Income taxes	349		357		308
Significant Non-Cash Investing and Financing Activities:
Capital lease obligations incurred	$	58	$	16	$	7
Increase (decrease) in accrued capital expenditures	55		51		(17		)

Franchise and License Fees and Income

Franchise and license fees and income

Franchise and License Fees and Income



	2011			2010			2009
Initial fees, including renewal fees	$	68		$	54		$	57
Initial franchise fees included in Refranchising (gain) loss	(21		)	(15		)	(17		)
	47			39			40
Continuing fees and rental income	1,686			1,521			1,383
	$	1,733		$	1,560		$	1,423

Other (Income) Expense



	2011			2010			2009
Equity income from investments in unconsolidated affiliates	$	(47	)	$	(42	)	$	(36	)
Gain upon consolidation of a former unconsolidated affiliate in China^(a)	—			—			(68		)
Foreign exchange net (gain) loss and other	(6		)	(1		)	—
Other (income) expense	$	(53	)	$	(43	)	$	(104	)


(a)	See Note 4 for further discussion of the consolidation of a former unconsolidated affiliate in Shanghai, China.

Supplemental Balance Sheet Information



Prepaid Expenses and Other Current Assets	2011		2010
Income tax receivable	$	150	$	115
Assets held for sale	24		23
Other prepaid expenses and current assets	164		131
	$	338	$	269



Property, Plant and Equipment	2011			2010
Land	$	527		$	542
Buildings and improvements	3,856			3,709
Capital leases, primarily buildings	316			274
Machinery and equipment	2,568			2,578
Property, Plant and equipment, gross	7,267			7,103
Accumulated depreciation and amortization	(3,225		)	(3,273		)
Property, Plant and equipment, net	$	4,042		$	3,830

Depreciation and amortization expense related to property, plant and equipment was $599 million, $565 million and $553 million in 2011, 2010 and 2009, respectively.



Accounts Payable and Other Current Liabilities	2011		2010
Accounts payable	$	712	$	540
Accrued capital expenditures	229		174
Accrued compensation and benefits	440		357
Dividends payable	131		118
Accrued taxes, other than income taxes	112		95
Other current liabilities	250		318
	$	1,874	$	1,602

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill are as follows:



	China		YRI			U.S.			Worldwide
Balance as of December 26, 2009
Goodwill, gross	$	82	$	249		$	352		$	683
Accumulated impairment losses	—		(17		)	(26		)	(43		)
Goodwill, net	82		232			326			640
Acquisitions ^(a)	—		37			—			37
Disposals and other, net^(b)	3		(17		)	(4		)	(18		)
Balance as of December 25, 2010
Goodwill, gross	85		269			348			702
Accumulated impairment losses	—		(17		)	(26		)	(43		)
Goodwill, net	85		252			322			659
Acquisitions^(c)	—		32			—			32
Disposals and other, net^(b)	3		(2		)	(11		)	(10		)
Balance as of December 31, 2011^(d)
Goodwill, gross	88		299			311			698
Accumulated impairment losses	—		(17		)	—			(17		)
Goodwill, net	$	88	$	282		$	311		$	681


(a)	We recorded goodwill in our YRI segment related to the July 1, 2010 exercise of our option with our Russian partner to purchase their interest in the co-branded Rostik’s-KFC restaurants across Russia and the Commonwealth of Independent States. See Note 4.


(b)	Disposals and other, net includes the impact of foreign currency translation on existing balances and goodwill write-offs associated with refranchising.


(c)	We recorded goodwill in our YRI segment related to the acquisition of 68 stores in South Africa. See Note 4.


(d)	As a result of the LJS and A&W divestitures in 2011, we disposed of $26 million of goodwill that was fully impaired in 2009.

Intangible assets, net for the years ended 2011 and 2010 are as follows:



	2011					2010
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Definite-lived intangible assets
Franchise contract rights	$	130	$	(77	)	$	163	$	(83	)
Trademarks/brands	28		(12		)	234		(57		)
Lease tenancy rights	58		(12		)	56		(12		)
Favorable operating leases	29		(13		)	27		(10		)
Reacquired franchise rights	167		(33		)	143		(20		)
Other	5		(2		)	5		(2		)
	$	417	$	(149	)	$	628	$	(184	)

Indefinite-lived intangible assets
Trademarks/brands	$	31				$	31

Amortization expense for all definite-lived intangible assets was $31 million in 2011, $29 million in 2010 and $25 million in 2009. Amortization expense for definite-lived intangible assets will approximate $21 million annually in 2012, $19 million in 2013, $17 million in 2014 and $16 million in 2015 and 2016. The LJS and A&W divestitures impacted Trademarks/brands by $164 million (net of accumulation amortization of $48 million) and decreased future amortization expense by approximately $8 million annually.

Short-term Borrowings and Long-term Debt



	2011			2010
Short-term Borrowings
Current maturities of long-term debt	$	315		$	668
Current portion of fair value hedge accounting adjustment (See Note 12)	5			5
Unsecured International Revolving Credit Facility, expires November 2012	—			—
Unsecured Revolving Credit Facility, expires November 2012	—			—
	$	320		$	673

Long-term Debt
Senior Unsecured Notes	$	3,012		$	3,257
Capital lease obligations (See Note 11)	279			236
Other	—			64
	3,291			3,557
Less current maturities of long-term debt	(315		)	(668		)
Long-term debt excluding long-term portion of hedge accounting adjustment	2,976			2,889
Long-term portion of fair value hedge accounting adjustment (See Note 12)	21			26
Long-term debt including hedge accounting adjustment	$	2,997		$	2,915

Our primary bank credit agreement comprises a $1.15 billion syndicated senior unsecured revolving credit facility (the “Credit Facility”) which matures in November 2012 and includes 24 participating banks with commitments ranging from $20 million to $93 million. Under the terms of the Credit Facility, we may borrow up to the maximum borrowing limit, less outstanding letters of credit or banker’s acceptances, where applicable. At December 31, 2011, our unused Credit Facility totaled $727 million net of outstanding letters of credit of $423 million. There were no borrowings outstanding under the Credit Facility at December 31, 2011. The interest rate for borrowings under the Credit Facility ranges from 0.25% to 1.25% over the London Interbank Offered Rate (“LIBOR”) or is determined by an Alternate Base Rate, which is the greater of the Prime Rate or the Federal Funds Rate plus 0.50%. The exact spread over LIBOR or the Alternate Base Rate, as applicable, depends on our performance under specified financial criteria. Interest on any outstanding borrowings under the Credit Facility is payable at least quarterly.

We also have a $350 million, syndicated revolving International credit facility (the “ICF”) which matures in November 2012 and includes 6 banks with commitments ranging from $35 million to $90 million. There was available credit of $350 million and no borrowings outstanding under the ICF at the end of 2011. The interest rate for borrowings under the ICF ranges from 0.31% to 1.50% over LIBOR or is determined by a Canadian Alternate Base Rate, which is the greater of the Citibank, N.A., Canadian Branch’s publicly announced reference rate or the “Canadian Dollar Offered Rate” plus 0.50%. The exact spread over LIBOR or the Canadian Alternate Base Rate, as applicable, depends on our performance under specified financial criteria. Interest on any outstanding borrowings under the ICF is payable at least quarterly.

The Credit Facility and the ICF are unconditionally guaranteed by our principal domestic subsidiaries. Additionally, the ICF is unconditionally guaranteed by YUM. These agreements contain financial covenants relating to maintenance of leverage and fixed charge coverage ratios and also contain affirmative and negative covenants including, among other things, limitations on certain additional indebtedness and liens, and certain other transactions specified in the agreement. Given the Company’s balance sheet and cash flows, we were able to comply with all debt covenant requirements at December 31, 2011 with a considerable amount of cushion.

We are in the process of renewing the Credit Facility and ICF.

The majority of our remaining long-term debt primarily comprises Senior Unsecured Notes with varying maturity dates from 2012 through 2037 and stated interest rates ranging from 2.38% to 7.70%. The Senior Unsecured Notes represent senior, unsecured obligations and rank equally in right of payment with all of our existing and future unsecured unsubordinated indebtedness.

In the fourth quarter of 2011, we issued Chinese Yuan Renminbi 350 million ($56 million) aggregate principal amount 2.38% Senior Unsecured Notes that are due September 29, 2014. During the third quarter of 2011, we issued $350 million aggregate principal amount of 3.75% 10 year Senior Unsecured Notes. During the second quarter of 2011 we repaid $650 million of Senior Unsecured Notes upon their maturity primarily with existing cash on hand.

The following table summarizes all Senior Unsecured Notes issued that remain outstanding at December 31, 2011:



				Interest Rate
Issuance Date^(a)	Maturity Date	Principal Amount (in millions)		Stated	Effective^(b)
June 2002	July 2012	$	263	7.70%	8.06%
April 2006	April 2016	$	300	6.25%	6.03%
October 2007	March 2018	$	600	6.25%	6.38%
October 2007	November 2037	$	600	6.88%	7.29%
August 2009	September 2015	$	250	4.25%	4.44%
August 2009	September 2019	$	250	5.30%	5.59%
August 2010	November 2020	$	350	3.88%	4.01%
August 2011	November 2021	$	350	3.75%	3.88%
September 2011	September 2014	$	56	2.38%	2.92%


(a)	Interest payments commenced six months after issuance date and are payable semi-annually thereafter.


(b)	Includes the effects of the amortization of any (1) premium or discount; (2) debt issuance costs; and (3) gain or loss upon settlement of related treasury locks and forward-starting interest rate swaps utilized to hedge the interest rate risk prior to the debt issuance. Excludes the effect of any swaps that remain outstanding as described in Note 12.

Both the Credit Facility and the ICF contain cross-default provisions whereby our failure to make any payment on any of our indebtedness in a principal amount in excess of $100 million, or the acceleration of the maturity of any such indebtedness, will constitute a default under such agreement. Our Senior Unsecured Notes provide that the acceleration of the maturity of any of our indebtedness in a principal amount in excess of $50 million will constitute a default under the Senior Unsecured Notes if such acceleration is not annulled, or such indebtedness is not discharged, within 30 days after notice.

The annual maturities of short-term borrowings and long-term debt as of December 31, 2011, excluding capital lease obligations of $279 million and fair value hedge accounting adjustments of $26 million, are as follows:



Year ended:
2012	$	263
2013	—
2014	56
2015	250
2016	300
Thereafter	2,150
Total	$	3,019

Interest expense on short-term borrowings and long-term debt was $184 million, $195 million and $212 million in 2011, 2010 and 2009, respectively.

Leases

At December 31, 2011 we operated more than 7,400 restaurants, leasing the underlying land and/or building in nearly 6,200 of those restaurants with the vast majority of our commitments expiring within 20 years from the inception of the lease. Our longest lease expires in 2151. We also lease office space for headquarters and support functions, as well as certain office and restaurant equipment. We do not consider any of these individual leases material to our operations. Most leases require us to pay related executory costs, which include property taxes, maintenance and insurance.

Future minimum commitments and amounts to be received as lessor or sublessor under non-cancelable leases are set forth below:



	Commitments				Lease Receivables
	Capital		Operating		Direct Financing		Operating
2012	$	65	$	612	$	3	$	49
2013	27		578		2		42
2014	26		538		2		39
2015	26		494		2		35
2016	26		462		2		31
Thereafter	267		2,653		14		139
	$	437	$	5,337	$	25	$	335

At December 31, 2011 and December 25, 2010, the present value of minimum payments under capital leases was $279 million and $236 million, respectively. At December 31, 2011, unearned income associated with direct financing lease receivables was $14 million.

The details of rental expense and income are set forth below:



	2011		2010		2009
Rental expense
Minimum	$	625	$	565	$	541
Contingent	233		158		123
	$	858	$	723	$	664
Rental income	$	66	$	44	$	38

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 December 31, 2011, our interest rate swaps outstanding had notional amounts of $550 million and have been designated as fair value hedges of a portion of our debt. The Company's interest rate swaps 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 December 31, 2011, foreign currency forward contracts outstanding had a total notional amount of $459 million.

The fair values of derivatives designated as hedging instruments for the years ended December 31, 2011 and December 25, 2010 were:



	Fair Value						Consolidated Balance Sheet Location
	2011			2010
Interest Rate Swaps - Asset	$	10		$	8		Prepaid expenses and other current assets
Interest Rate Swaps - Asset	22			33			Other assets
Foreign Currency Forwards - Asset	3			7			Prepaid expenses and other current assets
Foreign Currency Forwards - Liability	(1		)	(3		)	Accounts payable and other current liabilities
Total	$	34		$	45

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 $5 million and $21 million to Short-term borrowings and Long-term debt, respectively at December 31, 2011 and as an addition of $5 million and $26 million to Short-term borrowings and Long-term debt, respectively at December 25, 2010. During the years ended December 31, 2011 and December 25, 2010, Interest expense, net was reduced by $24 million and $33 million, respectively for recognized gains on these interest rate swaps.

For our foreign currency forward contracts the following effective portions of gains and losses were recognized into Other Comprehensive Income (“OCI”) and reclassified into income from OCI in the years ended December 31, 2011 and December 25, 2010.



	2011		2010
Gains (losses) recognized into OCI, net of tax	$	2	$	32
Gains (losses) reclassified from Accumulated OCI into income, net of tax	$	1	$	33

The gains/losses reclassified from Accumulated OCI into income were recognized as Other income (expense) in our Consolidated Statement 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 years ended December 31, 2011 and December 25, 2010.

Additionally, we had a net deferred loss of $12 million and $13 million, net of tax, as of December 31, 2011 and December 25, 2010, respectively within Accumulated OCI due to treasury locks and forward-starting interest rate swaps that have been cash settled, as well as outstanding foreign currency forward contracts. The majority of this loss arose from the settlement of forward starting interest rate swaps entered into prior to the issuance of our Senior Unsecured Notes due in 2037, and is being reclassified into earnings through 2037 to interest expense. In each of 2011, 2010 and 2009 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 the 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 December 31, 2011 and December 25, 2010, 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 Disclosures

The following table presents fair values for those assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall. No transfers among the levels within the fair value hierarchy occurred during the years ended December 31, 2011 or December 25, 2010.



	Fair Value
	Level	2011		2010
Foreign Currency Forwards, net	2	$	2	$	4
Interest Rate Swaps, net	2	32		41
Other Investments	1	15		14
Total		$	49	$	59

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 that 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 and their fair value is determined based on the closing market prices of the respective mutual funds as of December 31, 2011 and December 25, 2010.

The following tables present the fair values for those assets and liabilities measured at fair value during 2011 or 2010 on a non-recurring basis, and that remain on our Consolidated Balance Sheet as of December 31, 2011 or December 25, 2010. Total losses include losses recognized from all non-recurring fair value measurements during the years ended December 31, 2011 and December 25, 2010 for assets and liabilities that remain on our Consolidated Balance Sheet as of December 31, 2011 or December 25, 2010:



			Fair Value Measurements Using			Total Losses
	As of December 31, 2011		Level 1	Level 2	Level 3	2011
Long-lived assets held for use	$	50	—	—	50	128

			Fair Value Measurements Using			Total Losses
	As of December 25, 2010		Level 1	Level 2	Level 3	2010
Long-lived assets held for use	$	184	—	—	184	110

Long-lived assets held for use presented in the tables above include restaurants or groups of restaurants that were impaired either as a result of our semi-annual impairment review or when it was more likely than not a restaurant or restaurant group would be refranchised. Of the $128 million in impairment charges shown in the table above for the year ended December 31, 2011, $95 million was included in Refranchising (gain) loss and $33 million was included in Closures and impairment (income) expenses in the Consolidated Statements of Income.

Of the $110 million impairment charges shown in the table above for the year ended December 25, 2010, $80 million was included in Refranchising (gain) loss and $30 million was included in Closures and impairment (income) expenses in the Consolidated Statements of Income.

At December 31, 2011 the carrying values of cash and cash equivalents, 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 $3.5 billion, compared to their carrying value of $3.0 billion. We estimated the fair value of debt using market quotes and calculations based on market rates.

Pension, Retiree Medical and Retiree Savings Plans

Pension and Post-retirement Medical Benefits

Pension, Retiree Medical and Retiree Savings Plans

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. plans 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. Benefits are based on years of service and earnings or stated amounts for each year of service. 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. Our plans in the UK have previously been amended such that new employees are not eligible to participate in these plans. Additionally, in 2011 one of our UK plans was frozen such that existing participants can no longer earn future service credits. This resulted in a curtailment gain of $10 million which was credited to Accumulated other comprehensive income (loss).

Obligation and Funded Status at Measurement Date:

The following chart summarizes the balance sheet impact, as well as benefit obligations, assets, and funded status associated with our U.S. pension plans and significant International pension plans. The actuarial valuations for all plans reflect measurement dates coinciding with our fiscal year ends.



	U.S. Pension Plans						International Pension Plans
	2011			2010			2011			2010
Change in benefit obligation
Benefit obligation at beginning of year	$	1,108		$	1,010		$	187		$	176
Service cost	24			25			5			6
Interest cost	64			62			10			9
Participant contributions	—			—			1			2

Curtailment gain	(7		)	(2		)	(10		)	—
Settlement loss	—			1			—			—
Special termination benefits	5			1			—			—
Exchange rate changes	—			—			1			(9		)
Benefits paid	(40		)	(57		)	(2		)	(4		)
Settlement payments	—			(9		)	—			—
Actuarial (gain) loss	227			77			(5		)	7
Benefit obligation at end of year	$	1,381		$	1,108		$	187		$	187
Change in plan assets
Fair value of plan assets at beginning of year	$	907		$	835		$	164		$	141
Actual return on plan assets	83			108			10			14
Employer contributions	53			35			10			17
Participant contributions	—			—			1			2
Settlement payments	—			(9		)	—			—
Benefits paid	(40		)	(57		)	(2		)	(4		)
Exchange rate changes	—			—			—			(6		)
Administrative expenses	(5		)	(5		)	—			—
Fair value of plan assets at end of year	$	998		$	907		$	183		$	164
Funded status at end of year	$	(383	)	$	(201	)	$	(4	)	$	(23	)



Amounts recognized in the Consolidated Balance Sheet:
	U.S. Pension Plans						International Pension Plans
	2011			2010			2011			2010
Accrued benefit asset - non-current	$	—		$	—		$	8		$	—
Accrued benefit liability – current	(14		)	(10		)	—			—
Accrued benefit liability – non-current	(369		)	(191		)	(12		)	(23		)
	$	(383	)	$	(201	)	$	(4	)	$	(23	)



Amounts recognized as a loss in Accumulated Other Comprehensive Income:
	U.S. Pension Plans				International Pension Plans
	2011		2010		2011		2010
Actuarial net loss	$	540	$	359	$	30	$	46
Prior service cost	3		4		—		—
	$	543	$	363	$	30	$	46

The accumulated benefit obligation for the U.S. and International pension plans was $1,496 million and $1,212 million at December 31, 2011 and December 25, 2010, respectively.



Information for pension plans with an accumulated benefit obligation in excess of plan assets:
	U.S. Pension Plans				International Pension Plans
	2011		2010		2011		2010
Projected benefit obligation	$	1,381	$	1,108	$	—	$	—
Accumulated benefit obligation	1,327		1,057		—		—
Fair value of plan assets	998		907		—		—



Information for pension plans with a projected benefit obligation in excess of plan assets:
	U.S. Pension Plans				International Pension Plans
	2011		2010		2011		2010
Projected benefit obligation	$	1,381	$	1,108	$	99	$	187
Accumulated benefit obligation	1,327		1,057		87		155
Fair value of plan assets	998		907		87		164

Our funding policy with respect to the U.S. Plan is to contribute amounts necessary to satisfy minimum pension funding requirements, including requirements of the Pension Protection Act of 2006, plus such additional amounts from time to time as are determined to be appropriate to improve the U.S. Plan’s funded status. We currently estimate that we will be required to contribute approximately $30 million to the U.S. Plan in 2012.

The funding rules for our pension plans outside of the U.S. vary from country to country and depend on many factors including discount rates, performance of plan assets, local laws and regulations. We do not believe we will be required to make significant contributions to any pension plan outside of the U.S. in 2012.

We do not anticipate any plan assets being returned to the Company during 2012 for any plans.

Components of net periodic benefit cost:



	U.S. Pension Plans									International Pension Plans
Net periodic benefit cost	2011			2010			2009			2011			2010			2009
Service cost	$	24		$	25		$	26		$	5		$	6		$	5
Interest cost	64			62			58			10			9			7
Amortization of prior service cost^(a)	1			1			1			—			—			—
Expected return on plan assets	(71		)	(70		)	(59		)	(12		)	(9		)	(7		)
Amortization of net loss	31			23			13			2			2			2
Net periodic benefit cost	$	49		$	41		$	39		$	5		$	8		$	7
Additional loss recognized due to: Settlement^(b)	$	—		$	3		$	2		$	—		$	—		$	—
Special termination benefits^(c)	$	5		$	1		$	4		$	—		$	—		$	—


(a)	Prior service costs are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits.


(b)	Settlement loss results from benefit payments from a non-funded plan exceeding the sum of the service cost and interest cost for that plan during the year.


(c)	Special termination benefits primarily related to the U.S. business transformation measures taken in 2011, 2010 and 2009.



Pension losses in accumulated other comprehensive income (loss):
	U.S. Pension Plans						International Pension Plans
	2011			2010			2011			2010
Beginning of year	$	363		$	346		$	46		$	48
Net actuarial (gain) loss	219			43			(5		)	2
Curtailment gain	(7		)	(2		)	(10		)	—
Amortization of net loss	(31		)	(23		)	(2		)	(2		)
Amortization of prior service cost	(1		)	(1		)	—			—
Exchange rate changes	—			—			1			(2		)
End of year	$	543		$	363		$	30		$	46

The estimated net loss for the U.S. and International pension plans that will be amortized from accumulated other comprehensive loss into net periodic pension cost in 2012 is $63 million and $1 million, respectively. The estimated prior service cost for the U.S. pension plans that will be amortized from accumulated other comprehensive loss into net periodic pension cost in 2012 is $1 million.



Weighted-average assumptions used to determine benefit obligations at the measurement dates:
	U.S. Pension Plans				International Pension Plans
	2011		2010		2011		2010
Discount rate	4.90	%	5.90	%	4.75	%	5.40	%
Rate of compensation increase	3.75	%	3.75	%	3.85	%	4.42	%



Weighted-average assumptions used to determine the net periodic benefit cost for fiscal years:
	U.S. Pension Plans						International Pension Plans
	2011		2010		2009		2011		2010		2009
Discount rate	5.90	%	6.30	%	6.50	%	5.40	%	5.50	%	5.51	%
Long-term rate of return on plan assets	7.75	%	7.75	%	8.00	%	6.64	%	6.66	%	7.20	%
Rate of compensation increase	3.75	%	3.75	%	3.75	%	4.41	%	4.42	%	4.12	%

Our estimated long-term rate of return on plan assets represents the weighted-average of expected future returns on the asset categories included in our target investment allocation based primarily on the historical returns for each asset category, adjusted for an assessment of current market conditions.

Plan Assets

The fair values of our pension plan assets at December 31, 2011 by asset category and level within the fair value hierarchy are as follows:



	U.S. Pension Plans		International Pension Plans
Level 1:
Cash^(a)	$	1	$	—
Level 2:
Cash Equivalents^(a)	62		—
Equity Securities – U.S. Large cap^(b)	324		—
Equity Securities – U.S. Mid cap^(b)	54		—
Equity Securities – U.S. Small cap^(b)	54		—
Equity Securities – Non-U.S.^(b)	88		109
Fixed Income Securities – U.S. Corporate^(b)	263		—
Fixed Income Securities – Non-U.S. Corporate^(b)	—		23
Fixed Income Securities – U.S. Government and Government Agencies^(c)	164		—
Fixed Income Securities – Other^(b)(c)	39		11
Other Investments^(b)	—		40
Total fair value of plan assets^(d)	$	1,049	$	183


(a)	Short-term investments in money market funds


(b)	Securities held in common trusts


(c)	Investments held by the Plan are directly held


(d)	Excludes net payable of $51 million in the U.S. for purchases of assets included in the above that were settled after year end

Our primary objectives regarding the investment strategy for the Plan’s assets, which make up 85% of total pension plan assets at the 2011 measurement date, are to reduce interest rate and market risk and to provide adequate liquidity to meet immediate and future payment requirements. To achieve these objectives, we are using a combination of active and passive investment strategies. Our equity securities, currently targeted at 55% of our investment mix, consist primarily of low-cost index funds focused on achieving long-term capital appreciation. We diversify our equity risk by investing in several different U.S. and foreign market index funds. Investing in these index funds provides us with the adequate liquidity required to fund benefit payments and plan expenses. The fixed income asset allocation, currently targeted at 45% of our mix, is actively managed and consists of long-duration fixed income securities that help to reduce exposure to interest rate variation and to better correlate asset maturities with obligations.

A mutual fund held as an investment by the Plan includes shares of YUM common stock valued at $0.7 million at December 31, 2011 and $0.6 million at December 25, 2010 (less than 1% of total plan assets in each instance).

Benefit Payments

The benefits expected to be paid in each of the next five years and in the aggregate for the five years thereafter are set forth below:



Year ended:	U.S. Pension Plans		International Pension Plans
2012	$	68	$	1
2013	50		1
2014	47		1
2015	50		1
2016	51		1
2017 - 2021	309		8

Expected benefits are estimated based on the same assumptions used to measure our benefit obligation on the measurement date and include benefits attributable to estimated future employee service.

Retiree Medical Benefits

Our post-retirement plan provides health care benefits, principally to U.S. salaried retirees and their dependents, and includes retiree cost-sharing provisions. During 2001, the plan was amended such that any salaried employee hired or rehired by YUM after September 30, 2001 is not eligible to participate in this plan. Employees hired prior to September 30, 2001 are eligible for benefits if they meet age and service requirements and qualify for retirement benefits. We fund our post-retirement plan as benefits are paid.

At the end of 2011 and 2010, the accumulated post-retirement benefit obligation was $86 million and $78 million, respectively. The actuarial loss recognized in Accumulated other comprehensive loss was $12 million at the end of 2011 and $6 million at the end of 2010. The net periodic benefit cost recorded in 2011, 2010 and 2009 was $6 million, $6 million and $7 million, respectively, the majority of which is interest cost on the accumulated post-retirement benefit obligation. 2011, 2010 and 2009 costs each included less than $1 million of special termination benefits primarily related to the U.S. business transformation measures described in Note 4. The weighted-average assumptions used to determine benefit obligations and net periodic benefit cost for the post-retirement medical plan are identical to those as shown for the U.S. pension plans. Our assumed heath care cost trend rates for the following year as of 2011 and 2010 are 7.5% and 7.7%, respectively, with expected ultimate trend rates of 4.5% reached in 2028.

There is a cap on our medical liability for certain retirees. The cap for Medicare-eligible retirees was reached in 2000 and the cap for non-Medicare eligible retirees is expected to be reached in 2014; once the cap is reached, our annual cost per retiree will not increase. A one-percentage-point increase or decrease in assumed health care cost trend rates would have less than a $1 million impact on total service and interest cost and on the post-retirement benefit obligation. The benefits expected to be paid in each of the next five years are approximately $7 million and in aggregate for the five years thereafter are $29 million.

Retiree Savings Plan

We sponsor a contributory plan to provide retirement benefits under the provisions of Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) for eligible U.S. salaried and hourly employees. Participants are able to elect to contribute up to 75% of eligible compensation on a pre-tax basis. Participants may allocate their contributions to one or any combination of multiple investment options or a self-managed account within the 401(k) Plan. We match 100% of the participant’s contribution to the 401(k) Plan up to 6% of eligible compensation. We recognized as compensation expense our total matching contribution of $14 million in 2011, $15 million in 2010 and $16 million in 2009.

Share-based and Deferred Compensation Plans

Overview

At year end 2011, we had four stock award plans in effect: the YUM! Brands, Inc. Long-Term Incentive Plan and the 1997 Long-Term Incentive Plan (collectively the “LTIPs”), the YUM! Brands, Inc. Restaurant General Manager Stock Option Plan (“RGM Plan”) and the YUM! Brands, Inc. SharePower Plan (“SharePower”). Under all our plans, the exercise price of stock options and stock appreciation rights (“SARs”) granted must be equal to or greater than the average market price or the ending market price of the Company’s stock on the date of grant.

Potential awards to employees and non-employee directors under the LTIPs include stock options, incentive stock options, SARs, restricted stock, stock units, restricted stock units (“RSUs”), performance restricted stock units, performance share units (“PSUs”) and performance units. Through December 31, 2011, we have issued only stock options, SARs, RSUs and PSUs under the LTIPs. While awards under the LTIPs can have varying vesting provisions and exercise periods, outstanding awards under the LTIPs vest in periods ranging from immediate to 5 years. Stock options and SARs expire ten years after grant.

Potential awards to employees under the RGM Plan include stock options, SARs, restricted stock and RSUs. Through December 31, 2011, we have issued only stock options and SARs under this plan. RGM Plan awards granted have a four-year cliff vesting period and expire ten years after grant. Certain RGM Plan awards are granted upon attainment of performance conditions in the previous year. Expense for such awards is recognized over a period that includes the performance condition period.

Potential awards to employees under SharePower include stock options, SARs, restricted stock and RSUs. Through December 31, 2011, we have issued only stock options and SARs under this plan. These awards generally vest over a period of four years and expire no longer than ten years after grant.

At year end 2011, approximately 19 million shares were available for future share-based compensation grants under the above plans.

Our Executive Income Deferral (“EID”) Plan allows participants to defer receipt of a portion of their annual salary and all or a portion of their incentive compensation. As defined by the EID Plan, we credit the amounts deferred with earnings based on the investment options selected by the participants. These investment options are limited to cash, phantom shares of our Common Stock, phantom shares of a Stock Index Fund and phantom shares of a Bond Index Fund. Investments in cash and phantom shares of both index funds will be distributed in cash at a date as elected by the employee and therefore are classified as a liability on our Consolidated Balance Sheets. We recognize compensation expense for the appreciation or the depreciation, if any, of investments in cash and both of the index funds. Deferrals into the phantom shares of our Common Stock will be distributed in shares of our Common Stock, under the LTIPs, at a date as elected by the employee and therefore are classified in Common Stock on our Consolidated Balance Sheets. We do not recognize compensation expense for the appreciation or the depreciation, if any, of investments in phantom shares of our Common Stock. Our EID plan also allows participants to defer incentive compensation to purchase phantom shares of our Common Stock and receive a 33% Company match on the amount deferred. Deferrals receiving a match are similar to a RSU award in that participants will generally forfeit both the match and incentive compensation amounts deferred if they voluntarily separate from employment during a vesting period that is two years. We expense the intrinsic value of the match and the incentive compensation over the requisite service period which includes the vesting period.

Historically, the Company has repurchased shares on the open market in excess of the amount necessary to satisfy award exercises and expects to continue to do so in 2012.

Award Valuation

We estimated the fair value of each stock option and SAR award as of the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:



	2011		2010		2009
Risk-free interest rate	2.0	%	2.4	%	1.9	%
Expected term (years)	5.9		6.0		5.9
Expected volatility	28.2	%	30.0	%	32.3	%
Expected dividend yield	2.0	%	2.5	%	2.6	%

We believe it is appropriate to group our stock option and SAR awards into two homogeneous groups when estimating expected term. These groups consist of grants made primarily to restaurant-level employees under the RGM Plan, which cliff-vest after four years and expire ten years after grant, and grants made to executives under our other stock award plans, which typically have a graded vesting schedule of 25% per year over four years and expire ten years after grant. We use a single weighted-average term for our awards that have a graded vesting schedule. Based on analysis of our historical exercise and post-vesting termination behavior, we have determined that our restaurant-level employees and our executives exercised the awards on average after five years and six years, respectively.

When determining expected volatility, we consider both historical volatility of our stock as well as implied volatility associated with our traded options. The expected dividend yield is based on the annual dividend yield at the time of grant.

The fair values of RSU and PSU awards are based on the closing price of our stock on the date of grant.

Award Activity

Stock Options and SARs



	Shares (in thousands)			Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (in millions)
Outstanding at the beginning of the year	36,438			$	26.91
Granted	5,023			49.59
Exercised	(6,645	)		20.33
Forfeited or expired	(1,308	)		35.52
Outstanding at the end of the year	33,508		^(a)	$	31.28	5.96	$	929
Exercisable at the end of the year	18,709			$	26.00	4.48	$	618


(a)	Outstanding awards include 8,161 options and 25,347 SARs with average exercise prices of $21.56 and $34.41, respectively.

The weighted-average grant-date fair value of stock options and SARs granted during 2011, 2010 and 2009 was $11.78, $8.21 and $7.29, respectively. The total intrinsic value of stock options and SARs exercised during the years ended December 31, 2011, December 25, 2010 and December 26, 2009, was $226 million, $259 million and $217 million, respectively.

As of December 31, 2011, there was $82 million of unrecognized compensation cost related to stock options and SARs, which will be reduced by any forfeitures that occur, related to unvested awards that is expected to be recognized over a remaining weighted-average period of approximately 2.5 years. The total fair value at grant date of awards vested during 2011, 2010 and 2009 was $43 million, $47 million and $52 million, respectively.

RSUs and PSUs

As of December 31, 2011, there was $10 million of unrecognized compensation cost related to 1.0 million unvested RSUs and PSUs.

Impact on Net Income

The components of share-based compensation expense and the related income tax benefits are shown in the following table:



	2011		2010		2009
Options and SARs	$	49	$	40	$	48
Restricted Stock Units	5		5		7
Performance Share Units	5		2		1
Total Share-based Compensation Expense	$	59	$	47	$	56
Deferred Tax Benefit recognized	$	18	$	13	$	17

EID compensation expense not share-based	$	2	$	4	$	4

Cash received from stock option exercises for 2011, 2010 and 2009, was $59 million, $102 million and $113 million, respectively. Tax benefits realized on our tax returns from tax deductions associated with stock options and SARs exercised for 2011, 2010 and 2009 totaled $72 million, $82 million and $68 million, respectively.

Shareholders' Equity

Shareholders’ Equity

Under the authority of our Board of Directors, we repurchased shares of our Common Stock during 2011 and 2010. All amounts exclude applicable transaction fees. There were no shares of our Common Stock repurchased during 2009.



	Shares Repurchased (thousands)					Dollar Value of Shares Repurchased
Authorization Date	2011		2010		2009	2011			2010			2009
November 2011	—		—		—	$	—		$	—		$	—
January 2011	10,864		—		—	562			—			—
March 2010	3,441		2,161		—	171			107			—
September 2009	—		7,598		—	—			283			—
Total	14,305	^(a)	9,759	^(a)	—	$	733	^(a)	$	390	^(a)	$	—


(a)	2011 amount excludes and 2010 amount includes the effect of $19 million in share repurchases (0.4 million shares) with trade dates prior to the 2010 fiscal year end but cash settlement dates subsequent to the 2010 fiscal year.

As of December 31, 2011, we have $188 million available for future repurchases under our January 2011 share repurchase authorization. Additionally, on November 18, 2011, our Board of Directors authorized share repurchases through May 2013 of up to $750 million (excluding applicable transaction fees) of our outstanding Common Stock. No shares have been repurchased under the November 2011 authorization as of December 31, 2011.

Accumulated Other Comprehensive Income (Loss) – Comprehensive income is Net Income plus certain other items that are recorded directly to Shareholders’ Equity. The following table gives further detail regarding the composition of accumulated other comprehensive loss at December 31, 2011 and December 25, 2010. Refer to Note 14 for additional information about our pension and post-retirement plan accounting and Note 12 for additional information about our derivative instruments.



	2011			2010
Foreign currency translation adjustment	$	140		$	55
Pension and post-retirement losses, net of tax	(375		)	(269		)
Net unrealized losses on derivative instruments, net of tax	(12		)	(13		)
Total accumulated other comprehensive loss	$	(247	)	$	(227	)

Income Taxes

U.S. and foreign income before taxes are set forth below:



	2011		2010		2009
U.S.	$	266	$	345	$	269
Foreign	1,393		1,249		1,127
	$	1,659	$	1,594	$	1,396

The details of our income tax provision (benefit) are set forth below:



		2011			2010			2009
Current:	Federal	$	78		$	155		$	(21	)
	Foreign	374			356			251
	State	9			15			11
		$	461		$	526		241

Deferred:	Federal	(83		)	(82		)	92
	Foreign	(40		)	(29		)	(30		)
	State	(14		)	1			10
		(137		)	(110		)	72
		$	324		$	416		$	313

The reconciliation of income taxes calculated at the U.S. federal tax statutory rate to our effective tax rate is set forth below:



	2011					2010					2009
U.S. federal statutory rate	$	580		35.0	%	$	558		35.0	%	$	489		35.0	%
State income tax, net of federal tax benefit	2			0.1		12			0.7		14			1.0
Statutory rate differential attributable to foreign operations	(218		)	(13.1	)	(235		)	(14.7	)	(159		)	(11.4	)
Adjustments to reserves and prior years	24			1.4		55			3.5		(9		)	(0.6	)
Net benefit from LJS and A&W divestitures	(72		)	(4.3	)	—			—		—			—
Change in valuation allowances	22			1.3		22			1.4		(9		)	(0.7	)
Other, net	(14		)	(0.9	)	4			0.2		(13		)	(0.9	)
Effective income tax rate	$	324		19.5	%	$	416		26.1	%	$	313		22.4	%

Statutory rate differential attributable to foreign operations. This item includes local taxes, withholding taxes, and shareholder-level taxes, net of foreign tax credits. The favorable impact is primarily attributable to a majority of our income being earned outside of the U.S. where tax rates are generally lower than the U.S. rate.

In 2011 and 2010, the benefit was positively impacted by the recognition of excess foreign tax credits generated by our intent to repatriate current year foreign earnings.

In 2009, the benefit was negatively impacted by withholding taxes associated with the distribution of intercompany dividends that were only partially offset by related foreign tax credits generated during the year.

Adjustments to reserves and prior years. This item includes: (1) the effects of reconciling income tax amounts recorded in our Consolidated Statements of Income to amounts reflected on our tax returns, including any adjustments to the Consolidated Balance Sheets; and (2) changes in tax reserves, including interest thereon, established for potential exposure we may incur if a taxing authority takes a position on a matter contrary to our position. We evaluate these amounts on a quarterly basis to insure that they have been appropriately adjusted for audit settlements and other events we believe may impact the outcome. The impact of certain effects or changes may offset items reflected in the ‘Statutory rate differential attributable to foreign operations’ line.

In 2009, this item included out-of-year adjustments which lowered our effective tax rate by 1.6 percentage points.

Change in valuation allowance. This item relates to changes for deferred tax assets generated or utilized during the current year and changes in our judgment regarding the likelihood of using deferred tax assets that existed at the beginning of the year. The impact of certain changes may offset items reflected in the ‘Statutory rate differential attributable to foreign operations’ line. The Company considers all available positive and negative evidence, including the amount of taxable income and periods over which it must be earned, actual levels of past taxable income and known trends and events or transactions expected to affect future levels of taxable income.

In 2011, $22 million of net tax expense was driven by $15 million for valuation allowances recorded against deferred tax assets generated during the current year and $7 million of tax expense resulting from a change in judgment regarding the future use of certain foreign deferred tax assets that existed at the beginning of the year. These amounts exclude $45 million in valuation allowance additions related to capital losses recognized as a result of the LJS and A&W divestitures, which are presented within Net Benefit from LJS and A&W divestitures.

In 2010, the $22 million of net tax expense was driven by $25 million for valuation allowances recorded against deferred tax assets generated during the current year. This expense was partially offset by a $3 million tax benefit resulting from a change in judgment regarding the future use of U.S. state deferred tax assets that existed at the beginning of the year.

In 2009, the $9 million net tax benefit was driven by $25 million of benefit resulting from a change in judgment regarding the future use of foreign deferred tax assets that existed at the beginning of the year. This benefit was partially offset by $16 million for valuation allowances recorded against deferred tax assets generated during the year.

Net benefit from LJS and A&W divestitures. This item includes a one-time $117 million tax benefit, including approximately $8 million state benefit, recognized on the LJS and A&W divestitures in 2011, partially offset by $45 million of valuation allowance, including approximately $4 million state expense, related to capital loss carryforwards recognized as a result of the divestitures. In addition, we recorded $32 million of tax benefits on $86 million of pre-tax losses and other costs, which resulted in $104 million of total net tax benefits related to the divestitures.

Other. This item primarily includes the impact of permanent differences related to current year earnings and U.S. tax credits.

In 2009, this item was positively impacted by a one-time pre-tax gain of approximately $68 million, with no related income tax expense, recognized on our acquisition of additional interest in, and consolidation of, the entity that operates KFC in Shanghai, China. This was partially offset by a pre-tax U.S. goodwill impairment charge of approximately $26 million, with no related income tax benefit.

The details of 2011 and 2010 deferred tax assets (liabilities) are set forth below:



	2011			2010
Operating losses and tax credit carryforwards	$	590		$	335
Employee benefits	259			171
Share-based compensation	106			102
Self-insured casualty claims	47			50
Lease-related liabilities	137			166
Various liabilities	72			89
Deferred income and other	49			97
Gross deferred tax assets	1,260			1,010
Deferred tax asset valuation allowances	(368		)	(306		)
Net deferred tax assets	$	892		$	704
Intangible assets, including goodwill	$	(147	)	$	(211	)
Property, plant and equipment	(92		)	(108		)
Other	(53		)	(29		)
Gross deferred tax liabilities	$	(292	)	$	(348	)
Net deferred tax assets (liabilities)	$	600		$	356



Reported in Consolidated Balance Sheets as:
Deferred income taxes – current	$	112		$	61
Deferred income taxes – long-term	549			366
Accounts payable and other current liabilities	(16		)	(20		)
Other liabilities and deferred credits	(45		)	(51		)
	$	600		$	356

We have investments in foreign subsidiaries where the carrying values for financial reporting exceed the tax basis. We have not provided deferred tax on the portion of the excess that we believe is essentially permanent in duration. This amount may become taxable upon an actual or deemed repatriation of assets from the subsidiaries or a sale or liquidation of the subsidiaries. We estimate that our total temporary difference upon which we have not provided deferred tax is approximately $1.7 billion at December 31, 2011. A determination of the deferred tax liability on this amount is not practicable.

At December 31, 2011, the Company has foreign operating and capital loss carryforwards of $1.0 billion and U.S. federal and state operating loss and tax credit carryforwards of $2.0 billion. These losses are being carried forward in jurisdictions where we are permitted to use tax losses from prior periods to reduce future taxable income and will expire as follows:



	Year of Expiration
	2012		2013-2016		2017-2031		Indefinitely		Total
Foreign	$	4	$	66	$	136	$	833	$	1,039
U.S. federal and state	22		192		1,770		5		1,989
	$	26	$	258	$	1,906	$	838	$	3,028

We recognize the benefit of positions taken or expected to be taken in tax returns in the financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities. A recognized tax position is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon settlement.

The Company had $348 million and $308 million of unrecognized tax benefits at December 31, 2011 and December 25, 2010, respectively, $197 million and $227 million of which, if recognized, would affect the 2011 and 2010 effective income tax rates, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:



	2011			2010
Beginning of Year	$	308		$	301
Additions on tax positions - current year	85			45
Additions for tax positions - prior years	38			35
Reductions for tax positions - prior years	(58		)	(19		)
Reductions for settlements	(8		)	(41		)
Reductions due to statute expiration	(22		)	(10		)
Foreign currency translation adjustment	5			(3		)
End of Year	$	348		$	308

The Company believes it is reasonably possible its unrecognized tax benefits may decrease by approximately $89 million in the next twelve months, including approximately $39 million which, if recognized upon audit settlement or statute expiration, would affect the 2012 effective tax rate. Each position is individually insignificant.

The Company’s income tax returns are subject to examination in the U.S. federal jurisdiction and numerous foreign jurisdictions. The following table summarizes our major jurisdictions and the tax years that are either currently under audit or remain open and subject to examination:



Jurisdiction		Open Tax Years
U.S. Federal		2004 – 2011
China		2008 – 2011
United Kingdom		2003 – 2011
Mexico		2005 – 2011
Australia		2007 – 2011

In addition, the Company is subject to various U.S. state income tax examinations, for which, in the aggregate, we had significant unrecognized tax benefits at December 31, 2011, each of which is individually insignificant.

The accrued interest and penalties related to income taxes at December 31, 2011 and December 25, 2010 are set forth below:



	2011		2010
Accrued interest and penalties	$	53	$	48

During 2011, 2010 and 2009, a net benefit of $2 million, expense of $13 million and expense of $6 million, respectively, for interest and penalties was recognized in our Consolidated Statements of Income as components of its income tax provision.

On June 23, 2010, the Company received a Revenue Agent Report 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 $170 million. Furthermore, if the IRS prevails it is likely to make similar claims for years subsequent to fiscal 2006. The potential additional taxes for these later years, through 2011, computed on a similar basis to the 2004-2006 additional taxes, would be approximately $350 million plus net interest to date of approximately $25 million.

We believe that the Company has properly reported taxable income and paid taxes in accordance with applicable laws and that the proposed adjustment is 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 adjustment 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

We are principally engaged in developing, operating, franchising and licensing the worldwide KFC, Pizza Hut and Taco Bell concepts. KFC, Pizza Hut and Taco Bell operate in 115, 97, and 27 countries and territories, respectively. Our five largest international markets based on operating profit in 2011 are China, Asia Franchise, Australia, Latin America Franchise, and United Kingdom.

We identify our operating segments based on management responsibility. The China Division includes only mainland China and YRI includes the remainder of our international operations. We consider our KFC, Pizza Hut and Taco Bell operating segments in the U.S. to be similar and therefore have aggregated them into a single reportable operating segment. Our U.S. and YRI segment results also include the operating results of our LJS and A&W businesses while we owned those businesses.



	Revenues
	2011		2010		2009
China	$	5,566	$	4,135	$	3,407
YRI	3,274		3,088		2,988
U.S.	3,786		4,120		4,473
Unallocated Franchise and license fees and income^(a)(b)	—		—		(32		)
	$	12,626	$	11,343	$	10,836



	Operating Profit; Interest Expense, Net; and Income Before Income Taxes
	2011			2010			2009
China ^(c)	$	908		$	755		$	596
YRI	673			589			497
U.S.	589			668			647
Unallocated Franchise and license fees and income^(a)(b)	—			—			(32		)
Unallocated Occupancy and other^(b)(d)	14			9			—
Unallocated and corporate expenses^(b)(e)	(223		)	(194		)	(189		)
Unallocated Closures and impairment expense^(b)(f)	(80		)	—			(26		)
Unallocated Other income (expense)^(b)(g)	6			5			71
Unallocated Refranchising gain (loss)^(b)(h)	(72		)	(63		)	26
Operating Profit	1,815			1,769			1,590
Interest expense, net	(156		)	(175		)	(194		)
Income Before Income Taxes	$	1,659		$	1,594		$	1,396



	Depreciation and Amortization
	2011		2010		2009
China	$	257	$	225	$	184
YRI	186		159		165
U.S.	177		201		216
Corporate^(d)	8		4		15
	$	628	$	589	$	580



	Capital Spending
	2011		2010		2009
China	$	405	$	272	$	271
YRI	256		259		251
U.S.	256		241		270
Corporate	23		24		5
	$	940	$	796	$	797



	Identifiable Assets
	2011		2010		2009
China ⁽ⁱ⁾	$	2,527	$	2,289	$	1,632
YRI	2,899		2,649		2,448
U.S.	2,070		2,398		2,575
Corporate^(j)	1,338		980		493
	$	8,834	$	8,316	$	7,148



	Long-Lived Assets^(k)
	2011		2010		2009
China	$	1,546	$	1,269	$	1,172
YRI	1,635		1,548		1,524
U.S.	1,805		2,095		2,260
Corporate	36		52		45
	$	5,022	$	4,964	$	5,001


(a)	Amount consists of reimbursements to KFC franchisees for installation costs of ovens for the national launch of Kentucky Grilled Chicken. See Note 4.


(b)	Amounts have not been allocated to the U.S., YRI or China Division segments for performance reporting purposes.


(c)	Includes equity income from investments in unconsolidated affiliates of $47 million, $42 million and $36 million in 2011, 2010 and 2009, respectively, for China.


(d)	2011 and 2010 include depreciation reductions arising from the impairment of KFC restaurants we offered to sell of $10 million and $9 million, respectively. 2011 includes a depreciation reduction arising from the impairment of Pizza Hut UK restaurants we decided to sell in 2011 of $3 million. See Note 4.


(e)	2011, 2010 and 2009 include approximately $21 million, $9 million and $16 million, respectively, of charges relating to U.S. general and administrative productivity initiatives and realignment of resources. See Note 4.


(f)	2011 represents net losses resulting from the LJS and A&W divestitures. 2009 includes a $26 million charge to write-off goodwill associated with our LJS and A&W businesses in the U.S. See Note 9.


(g)	2009 includes a $68 million gain related to the acquisition of additional interest in and consolidation of a former unconsolidated affiliate in China. See Note 4.


(h)	See Note 4 for further discussion of Refranchising gain (loss).


(i)	China includes investments in 4 unconsolidated affiliates totaling $167 million, $154 million and $144 million, for 2011, 2010 and 2009, respectively.


(j)	Primarily includes cash, deferred tax assets and property, plant and equipment, net, related to our office facilities.


(k)	Includes property, plant and equipment, net, goodwill, and intangible assets, net.

See Note 4 for additional operating segment disclosures related to impairment and store closure (income) costs.

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 2065. As of December 31, 2011, the potential amount of undiscounted payments we could be required to make in the event of non-payment by the primary lessee was approximately $625 million. The present value of these potential payments discounted at our pre-tax cost of debt at December 31, 2011 was approximately $550 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 December 31, 2011 and December 25, 2010 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. As part of this agreement, we have provided a partial guarantee of approximately $14 million and two letters of credit totaling approximately $23 million in support of the franchisee loan program at December 31, 2011. One such letter of credit could be used if we fail to meet our obligations under our guarantee. The other letter of credit could be used, in certain circumstances, to fund our participation in the funding of the franchisee loan program. The total loans outstanding under the loan pool were $63 million at December 31, 2011 with an additional $17 million available for lending at December 31, 2011. 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 described above, YUM has provided guarantees of $17 million on behalf of franchisees for several financing programs related to specific initiatives. The total loans outstanding under these financing programs were approximately $32 million at December 31, 2011.

Unconsolidated Affiliates Guarantees

From time to time we have guaranteed certain lines of credit and loans of unconsolidated affiliates. At December 31, 2011 there are no guarantees outstanding for unconsolidated affiliates. Our unconsolidated affiliates had total revenues of approximately $1.1 billion for the year ended December 31, 2011 and assets and debt of approximately $525 million and $75 million, respectively, at December 31, 2011.

Insurance Programs

We are self-insured for a substantial portion of our current and prior years’ coverage including 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.

The following table summarizes the 2011 and 2010 activity related to our self-insured property and casualty reserves as of December 31, 2011.



	Beginning Balance	Expense	Payments		Ending Balance
2011 Activity	$150	55	(65	)	$	140
2010 Activity	$173	46	(69	)	$	150

In the U.S. and in certain other countries, we are also self-insured for healthcare claims and long-term disability 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 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. 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.

On November 26, 2001, Kevin Johnson, a former Long John Silver's (“LJS”) restaurant manager, filed a collective action against LJS in the United States District Court for the Middle District of Tennessee alleging violation of the Fair Labor Standards Act (“FLSA”) on behalf of himself and allegedly similarly-situated LJS general and assistant restaurant managers. Johnson alleged that LJS violated the FLSA by perpetrating a policy and practice of seeking monetary restitution from LJS employees, including Restaurant General Managers (“RGMs”) and Assistant Restaurant General Managers (“ARGMs”), when monetary or property losses occurred due to knowing and willful violations of LJS policies that resulted in losses of company funds or property, and that LJS had thus improperly classified its RGMs and ARGMs as exempt from overtime pay under the FLSA. Johnson sought overtime pay, liquidated damages, and attorneys' fees for himself and his proposed class.

LJS moved the Tennessee district court to compel arbitration of Johnson's suit. The district court granted LJS's motion on June 7, 2004, and the United States Court of Appeals for the Sixth Circuit affirmed on July 5, 2005.

On December 19, 2003, while the arbitrability of Johnson's claims was being litigated, former LJS managers Erin Cole and Nick Kaufman, represented by Johnson's counsel, initiated arbitration with the American Arbitration Association (the “Cole Arbitration”). The Cole Claimants sought a collective arbitration on behalf of the same putative class as alleged in the Johnson lawsuit and alleged the same underlying claims.

On June 15, 2004, the arbitrator in the Cole Arbitration issued a Clause Construction Award, finding that LJS's Dispute Resolution Policy did not prohibit Claimants from proceeding on a collective or class basis. LJS moved unsuccessfully to vacate the Clause Construction Award in federal district court in South Carolina. On September 19, 2005, the arbitrator issued a Class Determination Award, finding, inter alia, that a class would be certified in the Cole Arbitration on an “opt-out” basis, rather than as an “opt-in” collective action as specified by the FLSA.

On January 20, 2006, the district court denied LJS's motion to vacate the Class Determination Award and the United States Court of Appeals for the Fourth Circuit affirmed the district court's decision on January 28, 2008. A petition for a writ of certiorari filed in the United States Supreme Court seeking a review of the Fourth Circuit's decision was denied on October 7, 2008.

An arbitration hearing on liability with respect to the alleged restitution policy and practice for the period beginning in late 1998 through early 2002 concluded in June, 2010. On October 11, 2010, the arbitrator issued a partial interim award for the first phase of the three-phase arbitration finding that, for the period from late 1998 to early 2002, LJS had a policy and practice of making impermissible deductions from the salaries of its RGMs and ARGMs.

On September 15, 2011, the parties entered into a Memorandum of Understanding setting forth the terms upon which the parties had agreed to settle this matter. On October 5, 2011, the arbitrator granted the parties' Joint Motion for Preliminary Approval of the Settlement. On December 12, 2011, the arbitrator granted final approval of the settlement. The payments associated with the settlement have been made. As the settlement was largely consistent with our previous reserve position, the settlement did not significantly impact our results of operations in the year ended December 31, 2011.

On August 4, 2006, a putative class action lawsuit against Taco Bell Corp. styled Rajeev Chhibber vs. Taco Bell Corp. was filed in Orange County Superior Court. On August 7, 2006, another putative class action lawsuit styled Marina Puchalski v. Taco Bell Corp. was filed in San Diego County Superior Court. Both lawsuits were filed by a Taco Bell RGM purporting to represent all current and former RGMs who worked at corporate-owned restaurants in California since August 2002. The lawsuits allege violations of California's wage and hour laws involving unpaid overtime and meal period violations and seek unspecified amounts in damages and penalties. The cases were consolidated in San Diego County as of September 7, 2006.

On January 29, 2010, the court granted the plaintiffs' class certification motion with respect to the unpaid overtime claims of RGMs and Market Training Managers but denied class certification on the meal period claims. The court has ruled that this case will be tried to the bench rather than a jury. Trial began on February 15, 2012.

Taco Bell denies liability and intends to vigorously defend against all claims in this lawsuit. We have provided for a reasonable estimate of the cost of 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 Consolidated Financial Statements.

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 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. Plaintiffs also seek penalties for alleged violations of California's Labor Code under California's Private Attorneys General Act and 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 on June 29, 2009, and on March 30, 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 on December 30, 2010, and the class certification hearing took place in June 2011. Taco Bell also filed, at the invitation of the court, a motion to stay the proceedings until the California Supreme Court rules on two cases concerning meal and rest breaks. On August 22, 2011, the court granted Taco Bell's motion to stay the meal and rest break claims. On September 26, 2011, the court issued its order denying the certification of the remaining vacation and final pay claims. The plaintiffs have not moved for class certification on the remaining claims in the consolidated complaint.

Taco Bell denies liability and intends to vigorously defend against all claims in this lawsuit. However, in view of the inherent uncertainties of litigation, the outcome of this case cannot be predicted at this time. Likewise, the amount of any potential loss cannot be reasonably estimated.

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 denial of class certification in the In Re Taco Bell Wage and Hour Actions, the court granted the plaintiff leave to amend her lawsuit, which the plaintiff filed and served on January 4, 2012. Taco Bell filed its responsive pleading on February 8, 2012.

Taco Bell denies liability and intends to vigorously defend against all claims in this lawsuit. However, in view of the inherent uncertainties of litigation, the outcome of this case cannot be predicted at this time. Likewise, the amount of any potential loss cannot be reasonably estimated.

On October 2, 2009, a putative class action, styled Domonique Hines v. KFC U.S. Properties, Inc., was filed in California state court on behalf of all California hourly employees alleging various California Labor Code violations, including rest and meal break violations, overtime violations, wage statement violations and waiting time penalties. Plaintiff is a former non-managerial KFC restaurant employee. KFC filed an answer on October 28, 2009, in which it denied plaintiff's claims and allegations. KFC removed the action to the United States District Court for the Southern District of California on October 29, 2009. Plaintiff filed a motion for class certification on May 20, 2010 and KFC filed a brief in opposition. On October 22, 2010, the District Court granted Plaintiff's motion to certify a class on the meal and rest break claims, but denied the motion to certify a class regarding alleged off-the-clock work. On November 1, 2010, KFC filed a motion requesting a stay of the case pending a decision from the

California Supreme Court regarding the applicable standard for employer provision of meal and rest breaks. Plaintiff filed an opposition to that motion on November 19, 2010. On January 14, 2011, the District Court granted KFC's motion and stayed the entire action pending a decision from the California Supreme Court. No trial date has been set.

KFC denies liability and intends to vigorously defend against all claims in this lawsuit. However, in view of the inherent uncertainties of litigation, the outcome of this case cannot be predicted at this time. Likewise, the amount of any potential loss cannot be reasonably estimated.

On December 17, 2002, Taco Bell was named as the defendant in a class action lawsuit filed in the United States 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 that alleges, 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 220 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.

On February 23, 2004, the District Court granted plaintiffs' motion for class certification. The class includes claims for injunctive relief and minimum statutory damages.

On May 17, 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. On August 8, 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 plaintiff to file a definitive list of remaining issues and to select one restaurant to be the subject of a trial. The exemplar trial for that restaurant began on June 6, 2011. The trial was bifurcated and the first stage addressed whether violations existed at the restaurant. Twelve alleged violations of the ADA and state law were tried. The trial ended on June 16, 2011. On October 5, 2011, the court issued its trial decision. The court found liability for the twelve items, finding that they were once out of compliance with applicable state and/or federal accessibility standards. The court also found that classwide injunctive relief is warranted. The court declined to order injunctive relief at this time, however, citing the pendency of Taco Bell's motions to decertify both the injunctive and damages class. In a separate order, the court vacated the December 12, 2011 date previously set for an exemplar trial for damages on the single restaurant.

On June 20, 2011, the United States Supreme Court issued its ruling in Wal-Mart Stores, Inc. v. Dukes. The Supreme Court held that the class in that case was improperly certified. The same legal theory was used to certify the class in the Moeller case, and Taco Bell filed a motion to decertify the class on August 3, 2011. During the exemplar trial, the court observed that the restaurant had been in full compliance with all laws since March, 2010, and Taco Bell argues in its decertification motion that, in light of the decision in the Dukes case, no damages class can be certified and that injunctive relief is not appropriate, regardless of class status. On October 19, 2011, plaintiffs filed a motion to amend the certified class to include a damages class. Discovery regarding the putative damages class is proceeding, after which the parties will complete briefing on Taco Bell's motion to decertify and plaintiffs' motion to amend the class.

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. It is not possible at this time to reasonably estimate the probability or amount of liability for monetary damages on a class wide basis to Taco Bell.

On July 9, 2009, a putative class action styled Mark Smith v. Pizza Hut, Inc. was filed in the United States 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 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, asserts 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 to which Pizza Hut filed its opposition on October 5, 2011. A decision on plaintiffs' Motion for Conditional Certification is expected during 2012.

Pizza Hut denies liability and intends to vigorously defend against all claims in this lawsuit. However, in view of the inherent uncertainties of litigation, the outcome of these cases cannot be predicted at this time. Likewise, the amount of any potential loss cannot be reasonably estimated.

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 United States 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 plaintiff also purports to represent a separate class of Colorado assistant managers under Colorado state law, which provides for daily overtime after 12 hours worked in a day. 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, which is currently on-going. Taco Bell moved to compel arbitration of certain employees in the Colorado class. The court denied the motion as premature because no class has yet been certified. On September 16, 2011, the plaintiffs filed their motion for conditional certification under the FLSA. The plaintiffs did not move for certification of a separate class of Colorado assistant managers under Colorado state law. Taco Bell opposed the motion. The court heard the motion on January 10, 2012, granted conditional certification and ordered the notice of the opt-in class be sent to the putative class members. Taco Bell expects the notices to be sent by the end of February 2012. Putative class members will have 90 days in which to elect to participate in the lawsuit. After further discovery, Taco Bell plans to seek decertification of the class.

Taco Bell denies liability and intends to vigorously defend against all claims in this lawsuit. However, in view of the inherent uncertainties of litigation, the outcome of this case cannot be predicted at this time. Likewise, the amount of any potential loss cannot be reasonably estimated.

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 consolidated financial condition or results of operations.

Selected Quarterly Financial Data (Unaudited)



	2011
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
Revenues:
Company sales	$	2,051	$	2,431	$	2,854	$	3,557	$	10,893
Franchise and license fees and income	374		385		420		554		1,733
Total revenues	2,425		2,816		3,274		4,111		12,626
Restaurant profit	360		386		494		513		1,753
Operating Profit^(a)	401		419		488		507		1,815
Net Income – YUM! Brands, Inc.	264		316		383		356		1,319
Basic earnings per common share	0.56		0.67		0.82		0.77		2.81
Diluted earnings per common share	0.54		0.65		0.80		0.75		2.74
Dividends declared per common share	—		0.50		—		0.57		1.07



	2010
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
Revenues:
Company sales	$	1,996	$	2,220	$	2,496	$	3,071	$	9,783
Franchise and license fees and income	349		354		366		491		1,560
Total revenues	2,345		2,574		2,862		3,562		11,343
Restaurant profit	340		366		479		478		1,663
Operating Profit^(b)	364		421		544		440		1,769
Net Income – YUM! Brands, Inc.	241		286		357		274		1,158
Basic earnings per common share	0.51		0.61		0.76		0.58		2.44
Diluted earnings per common share	0.50		0.59		0.74		0.56		2.38
Dividends declared per common share	0.21		0.21		—		0.50		0.92

(a)

Includes net losses of $65 million primarily related to the LJS and A&W divestitures, $88 million primarily related to refranchising international markets and $28 million primarily related to the U.S. business transformation measures and U.S. refranchising in the first, third and fourth quarters of 2011, respectively. See Note 4. The fourth quarter of 2011 also includes the $25 million impact of the 53^rd week. See Note 2.


(b)	Includes net losses of $66 million and $19 million in the first and fourth quarters of 2010, respectively, related primarily to the U.S. business transformation measures and refranchising international markets. See Note 4.

Subsequent Event

On February 1, 2012, subsequent to the end of the fourth quarter, we paid $584 million to acquire an additional 66% interest in Little Sheep, which brought our total ownership to approximately 93% of the business. Upon acquisition, we have voting control of Little Sheep and thus will begin to consolidate its results.

Summary of Significant Accounting Policies (Policies)

Principles of Consolidation and Basis of Preparation

Principles of Consolidation and Basis of Preparation. Intercompany accounts and transactions have been eliminated in consolidation. We consolidate entities in which we have a controlling financial interest, the usual condition of which is ownership of a majority voting interest. We also consider for consolidation an entity, in which we have certain interests, where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it.

Our most significant variable interests are in entities that operate restaurants under our Concepts’ franchise and license arrangements. We do not generally have an equity interest in our franchisee or licensee businesses with the exception of certain entities in China as discussed below. Additionally, we do not typically provide significant financial support such as loans or guarantees to our franchisees and licensees. However, we do have variable interests in certain franchisees through real estate lease arrangements with them to which we are a party. At the end of 2011, YUM has future lease payments due from franchisees, on a nominal basis, of approximately $320 million. As our franchise and license arrangements provide our franchisee and licensee entities the power to direct the activities that most significantly impact their economic performance, we do not consider ourselves the primary beneficiary of any such entity that might otherwise be considered a VIE.

See Note 19 for additional information on an entity that operates a franchise lending program that is a VIE in which we have a variable interest but for which we are not the primary beneficiary and thus do not consolidate.

Certain investments in entities that operate KFCs in China as well as our investment in Little Sheep Group Limited ("Little Sheep"), a Chinese casual dining concept headquartered in Inner Mongolia, China, are accounted for by the equity method. These entities are not VIEs and our lack of majority voting rights precludes us from controlling these affiliates. Thus, we do not consolidate these affiliates, instead accounting for them under the equity method. Our share of the net income or loss of those unconsolidated affiliates is included in Other (income) expense. Subsequent to fiscal year 2011, we acquired an additional 66% interest in Little Sheep. As a result, we will begin consolidating this business in 2012. In the second quarter of 2009 we began consolidating the entity that operates the KFCs in Shanghai, China, which was previously accounted for using the equity method. The increase in cash related to the consolidation of this entitiy's cash balance of $17 million is presented as a single line item on our 2009 Consolidated Statement of Cash Flows.

We report Net income attributable to the non-controlling interest in the entity that operates the KFCs in Beijing, China and since its consolidation, the Shanghai entity, separately on the face of our Consolidated Statements of Income. The portion of equity in these entities not attributable to the Company is reported within equity, separately from the Company’s equity on the Consolidated Balance Sheets.

See Note 4 for a further description of the accounting upon acquisition of additional interest in the Shanghai entity.

We participate in various advertising cooperatives with our franchisees and licensees established to collect and administer funds contributed for use in advertising and promotional programs designed to increase sales and enhance the reputation of the Company and its franchise owners. Contributions to the advertising cooperatives are required for both Company-operated and franchise restaurants and are generally based on a percent of restaurant sales. We maintain certain variable interests in these cooperatives. As the cooperatives are required to spend all funds collected on advertising and promotional programs, total equity at risk is not sufficient to permit the cooperatives to finance their activities without additional subordinated financial support. Therefore, these cooperatives are VIEs. As a result of our voting rights, we consolidate certain of these cooperatives for which we are the primary beneficiary. The Advertising cooperatives assets, consisting primarily of cash received from the Company and franchisees and accounts receivable from franchisees, can only be used to settle obligations of the respective cooperative. The Advertising cooperative liabilities represent the corresponding obligation arising from the receipt of the contributions to purchase advertising and promotional programs for which creditors do not have recourse to the general credit of the primary beneficiary. Therefore, we report all assets and liabilities of these advertising cooperatives that we consolidate as Advertising cooperative assets, restricted and Advertising cooperative liabilities in the Consolidated Balance Sheet. As the contributions to these cooperatives are designated and segregated for advertising, we act as an agent for the franchisees and licensees with regard to these contributions. Thus, we do not reflect franchisee and licensee contributions to these cooperatives in our Consolidated Statements of Income or Consolidated Statements of Cash Flows.

Fiscal Year. 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 and certain other international subsidiaries operate on a monthly calendar, and thus never have a 53rd week, with two months in

Fiscal Year

Fiscal Year. 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 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. All of our international businesses except China close one period or one month earlier to facilitate consolidated reporting.

Foreign Currency

iscal year 2011 included 53 weeks for our U.S. businesses and a portion of our YRI business. The 53^rdweek added $91 million to total revenues, $15 million to Restaurant profit and $25 million to Operating Profit in our 2011 Consolidated Statement of Income. The $25 million benefit was offset throughout 2011 by investments, including franchise development incentives, as well as higher-than-normal spending, such as restaurant closures in the U.S. and YRI.

Foreign Currency. The functional currency determination for operations outside the U.S. is based upon a number of economic factors, including but not limited to cash flows and financing transactions. Income and expense accounts are translated into U.S. dollars at the average exchange rates prevailing during the period. Assets and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Resulting translation adjustments are recorded in Accumulated other comprehensive income (loss) in the Consolidated Balance Sheet and are subsequently recognized as income or expense only upon sale or upon complete or substantially complete liquidation of the related investme

Franchise and License Operations

Franchise and License Operations. We execute franchise or license agreements for each unit operated by third parties which set out the terms of our arrangement with the franchisee or licensee. Our franchise and license agreements typically require the franchisee or licensee to pay an initial, non-refundable fee and continuing fees based upon a percentage of sales. Subject to our approval and their payment of a renewal fee, a franchisee may generally renew the franchise agreement upon its expiration.

The internal costs we incur to provide support services to our franchisees and licensees are charged to General and Administrative (“G&A”) expenses as incurred. Certain direct costs of our franchise and license operations are charged to franchise and license expenses. These costs include provisions for estimated uncollectible fees, rent or depreciation expense associated with restaurants we lease or sublease to franchisees, franchise and license marketing funding, amortization expense for franchise-related intangible assets and certain other direct incremental franchise and license support costs.

Revenue Recognition

Revenue Recognition. Revenues from Company-operated restaurants are recognized when payment is tendered at the time of sale. The Company presents sales net of sales-related taxes. Income from our franchisees and licensees includes initial fees, continuing fees, renewal fees and rental income from restaurants we lease or sublease to them. We recognize initial fees received from a franchisee or licensee as revenue when we have performed substantially all initial services required by the franchise or license agreement, which is generally upon the opening of a store. We recognize continuing fees based upon a percentage of franchisee and licensee sales and rental income as earned. We recognize renewal fees when a renewal agreement with a franchisee or licensee becomes effective. We present initial fees collected upon the sale of a restaurant to a franchisee in Refranchising (gain) loss.

Direct Marketing Costs

Direct Marketing Costs. We charge direct marketing costs to expense ratably in relation to revenues over the year in which incurred and, in the case of advertising production costs, in the year the advertisement is first shown. Deferred direct marketing costs, which are classified as prepaid expenses, consist of media and related advertising production costs which will generally be used for the first time in the next fiscal year and have historically not been significant. To the extent we participate in advertising cooperatives, we expense our contributions as incurred which are generally based on a percentage of sales. Our advertising expenses were $593 million, $557 million and $548 million in 2011, 2010 and 2009, respectively. We report substantially all of our direct marketing costs in Occupancy and other operating expenses

Research and Development Expenses

Research and Development Expenses. Research and development expenses, which we expense as incurred, are reported in G&A expenses

Share-Based Employee Compensation

Share-Based Employee Compensation. We recognize all share-based payments to employees, including grants of employee stock options and stock appreciation rights (“SARs”), in the Consolidated Financial Statements as compensation cost over the service period based on their fair value on the date of grant. This compensation cost is recognized over the service period on a straight-line basis for the fair value of awards that actually vest. We present this compensation cost consistent with the other compensation costs for the employee recipient in either Payroll and employee benefits or G&A expenses

Legal Costs

Legal Costs. Settlement costs are accrued when they are deemed probable and estimable. Anticipated legal fees related to self-insured workers' compensation, employment practices liability, general liability, automobile liability, product liability and property losses (collectively, "property and casualty losses") are accrued when deemed probable and estimable. Legal fees not related to self-insured property and casualty losses are recognized as incurred

Impairment or Disposal of Property, Plant and Equipment

Impairment or Disposal of Property, Plant and Equipment. Property, plant and equipment (“PP&E”) is tested for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The assets are not recoverable if their carrying value is less than the undiscounted cash flows we expect to generate from such assets. If the assets are not deemed to be recoverable, impairment is measured based on the excess of their carrying value over their fair value.

For purposes of impairment testing for our restaurants, we have concluded that an individual restaurant is the lowest level of independent cash flows unless our intent is to refranchise restaurants as a group. We review our long-lived assets of such individual restaurants (primarily PP&E and allocated intangible assets subject to amortization) semi-annually for impairment, or whenever events or changes in circumstances indicate that the carrying amount of a restaurant may not be recoverable. We use two consecutive years of operating losses as our primary indicator of potential impairment for our semi-annual impairment testing of these restaurant assets. We evaluate the recoverability of these restaurant assets by comparing the estimated undiscounted future cash flows, which are based on our entity-specific assumptions, to the carrying value of such assets. For restaurant assets that are not deemed to be recoverable, we write-down an impaired restaurant to its estimated fair value, which becomes its new cost basis. Fair value is an estimate of the price a franchisee would pay for the restaurant and its related assets and is determined by discounting the estimated future after-tax cash flows of the restaurant, which include a deduction for the royalty the franchisee would pay us. The after-tax cash flows incorporate reasonable assumptions we believe a franchisee would make such as sales growth and margin improvement. The discount rate used in the fair value calculation is our estimate of the required rate of return that a franchisee would expect to receive when purchasing a similar restaurant and the related long-lived assets. The discount rate incorporates rates of returns for historical refranchising market transactions and is commensurate with the risks and uncertainty inherent in the forecasted cash flows.

In executing our refranchising initiatives, we most often offer groups of restaurants for sale. When we believe a restaurant or groups of restaurants will be refranchised for a price less than their carrying value, but do not believe the restaurant(s) have met the criteria to be classified as held for sale, we review the restaurants for impairment. We evaluate the recoverability of these restaurant assets at the date it is considered more likely than not that they will be refranchised by comparing estimated sales proceeds plus holding period cash flows, if any, to the carrying value of the restaurant or group of restaurants. For restaurant assets that are not deemed to be recoverable, we recognize impairment for any excess of carrying value over the fair value of the restaurants, which is based on the expected net sales proceeds. To the extent ongoing agreements to be entered into with the franchisee simultaneous with the refranchising are expected to contain terms, such as royalty rates, not at prevailing market rates, we consider the off-market terms in our impairment evaluation. We recognize any such impairment charges in Refranchising (gain) loss. We classify restaurants as held for sale and suspend depreciation and amortization when (a) we make a decision to refranchise; (b) the restaurants can be immediately removed from operations; (c) we have begun an active program to locate a buyer; (d) the restaurant is being actively marketed at a reasonable market price; (e) significant changes to the plan of sale are not likely; and (f) the sale is probable within one year. Restaurants classified as held for sale are recorded at the lower of their carrying value or fair value less cost to sell. We recognize estimated losses on restaurants that are classified as held for sale in Refranchising (gain) loss.

Refranchising (gain) loss includes the gains or losses from the sales of our restaurants to new and existing franchisees, including impairment charges discussed above, and the related initial franchise fees. We recognize gains on restaurant refranchisings when the sale transaction closes, the franchisee has a minimum amount of the purchase price in at-risk equity, and we are satisfied that the franchisee can meet its financial obligations. If the criteria for gain recognition are not met, we defer the gain to the extent we have a remaining financial exposure in connection with the sales transaction. Deferred gains are recognized when the gain recognition criteria are met or as our financial exposure is reduced. When we make a decision to retain a store, or group of stores, previously held for sale, we revalue the store at the lower of its (a) net book value at our original sale decision date less normal depreciation and amortization that would have been recorded during the period held for sale or (b) its current fair value. This value becomes the store’s new cost basis. We record any resulting difference between the store’s carrying amount and its new cost basis to Closure and impairment (income) expense.

When we decide to close a restaurant, it is reviewed for impairment and depreciable lives are adjusted based on the expected disposal date. Other costs incurred when closing a restaurant such as costs of disposing of the assets as well as other facility-related expenses from previously closed stores are generally expensed as incurred. Additionally, at the date we cease using a property under an operating lease, we record a liability for the net present value of any remaining lease obligations, net of estimated sublease income, if any. Any costs recorded upon store closure as well as any subsequent adjustments to liabilities for remaining lease obligations as a result of lease termination or changes in estimates of sublease income are recorded in Closures and impairment (income) expenses. To the extent we sell assets, primarily land, associated with a closed store, any gain or loss upon that sale is also recorded in Closures and impairment (income) expenses.

Considerable management judgment is necessary to estimate future cash flows, including cash flows from continuing use, terminal value, sublease income and refranchising proceeds. Accordingly, actual results could vary significantly from our estimates.

Impa

Impairment of Investments in Unconsolidated Affiliates

Impairment of Investments in Unconsolidated Affiliates. We record impairment charges related to an investment in an unconsolidated affiliate whenever events or circumstances indicate that a decrease in the fair value of an investment has occurred which is other than temporary. In addition, we evaluate our investments in unconsolidated affiliates for impairment when they have experienced two consecutive years of operating losses

Guarantees

Guarantees. We recognize, at inception of a guarantee, a liability for the fair value of certain obligations undertaken. The majority of our guarantees are issued as a result of assigning our interest in obligations under operating leases as a condition to the refranchising of certain Company restaurants. We recognize a liability for the fair value of such lease guarantees upon refranchising

and upon subsequent renewals of such leases when we remain contingently liable. The related expense and any subsequent changes in the guarantees are included in Refranchising (gain) loss. The related expense and subsequent changes in the guarantees for other franchise support guarantees not associated with a refranchising transaction are included in Franchise and license expense.

Income Taxes

Income Taxes. We record deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Additionally, in determining the need for recording a valuation allowance against the carrying amount of deferred tax assets, we consider the amount of taxable income and periods over which it must be earned, actual levels of past taxable income and known trends and events or transactions that are expected to affect future levels of taxable income. Where we determine that it is more likely than not that all or a portion of an asset will not be realized, we record a valuation allowance.

We recognize the benefit of positions taken or expected to be taken in our tax returns in our Income tax provision when it is more likely than not (i.e. a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon settlement. Changes in judgment that result in subsequent recognition, derecognition or change in a measurement of a tax position taken in a prior annual period (including any related interest and penalties) are recognized as a discrete item in the interim period in which the change occurs.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as components of its Income tax provision.

See

Fair Value Measurements

Fair Value Measurements. Fair value is the price we would receive to sell an asset or pay to transfer a liability (exit price) in an orderly transaction between market participants. For those assets and liabilities we record or disclose at fair value, we determine fair value based upon the quoted market price, if available. If a quoted market price is not available for identical assets, we determine fair value based upon the quoted market price of similar assets or the present value of expected future cash flows considering the risks involved, including counterparty performance risk if appropriate, and using discount rates appropriate for the duration. The fair values are assigned a level within the fair value hierarchy, depending on the source of the inputs into the calculation.



Level 1	Inputs based upon quoted prices in active markets for identical assets.

Level 2	Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.

Level 3	Inputs that are unobservable for the asset.

Cash and Cash Equivalents

Cash and Cash Equivalents. Cash equivalents represent funds we have temporarily invested (with original maturities not exceeding three months), including short-term, highly liquid debt securities.

Receivables

Receivables. The Company’s receivables are primarily generated as a result of ongoing business relationships with our franchisees and licensees as a result of franchise, license 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 Consolidated Balance Sheets. Our provision for uncollectible franchise and licensee receivable balances is based upon pre-defined aging criteria or upon the occurrence of other events that indicate that we may not collect the balance due. Additionally, we monitor the financial condition of our franchisees and licensees and record provisions for estimated losses on receivables when we believe it probable that our franchisees or licensees will be unable to make their required payments. While we use the best information available in making our determination, the ultimate recovery of recorded receivables is also dependent upon future economic events and other conditions that may be beyond our control. Net provisions for uncollectible franchise and license trade receivables of $7 million, $3 million and $11 million were included in Franchise and license expenses in 2011, 2010 and 2009, respectively. The allowance for doubtful accounts, net of the aforementioned provisions, decreased during 2011 primarily due to write-offs and as a result of the LJS and A&W divestitures. Trade receivables that are ultimately deemed to be uncollectible, and for which collection efforts have been exhausted, are written off against the allowance for doubtful accounts.



	2011			2010
Accounts and notes receivable	$	308		$	289
Allowance for doubtful accounts	(22		)	(33		)
Accounts and notes receivable, net	$	286		$	256

Our financing receivables primarily consist of notes receivables and direct financing leases with franchisees which we enter into from time to time. As these receivables primarily relate to our ongoing business agreements with franchisees and licensees, we consider such receivables to have similar risk characteristics and evaluate them as one collective portfolio segment and class for determining the allowance for doubtful accounts. We monitor the financial condition of our franchisees and licensees and record provisions for estimated losses on receivables when we believe it probable that our franchisees or licensees will be unable to make their required payments. Balances of notes receivable and direct financing leases due within one year are included in Accounts and Notes Receivable while amounts due beyond one year are included in Other assets. Amounts included in Other assets totaled $15 million (net of an allowance of $4 million) and $57 million (net of an allowance of $30 million) at December 31, 2011 and December 25, 2010, respectively. The decline was primarily due to direct financing lease receivables sold as part of the LJS and A&W divestitures. Financing receivables that are ultimately deemed to be uncollectible, and for which collection efforts have been exhausted, are written off against the allowance for doubtful accounts. Interest income recorded on financing receivables has tradi

Inventories

Inventories. We value our inventories at the lower of cost (computed on the first-in, first-out method) or market

Property, Plant and Equipment

Property, Plant and Equipment. We state property, plant and equipment at cost less accumulated depreciation and amortization. We calculate depreciation and amortization on a straight-line basis over the estimated useful lives of the assets as follows: 5 to 25 years for buildings and improvements, 3 to 20 years for machinery and equipment and 3 to 7 years for capitalized software costs. As discussed above, we suspend depreciation and amortization on assets related to restaurants that are held for sale

Leases and Leasehold Improvements

Leases and Leasehold Improvements. The Company leases land, buildings or both for nearly 6,200 of its restaurants worldwide. Lease terms, which vary by country and often include renewal options, are an important factor in determining the appropriate accounting for leases including the initial classification of the lease as capital or operating and the timing of recognition of rent expense over the duration of the lease. We include renewal option periods in determining the term of our leases when failure to renew the lease would impose a penalty on the Company in such an amount that a renewal appears to be reasonably assured at the inception of the lease. The primary penalty to which we are subject is the economic detriment associated with the existence of leasehold improvements which might be impaired if we choose not to continue the use of the leased property. Leasehold improvements, which are a component of buildings and improvements described above, are amortized over the shorter of their estimated useful lives or the lease term. We generally do not receive leasehold improvement incentives upon opening a store that is subject to a lease.

We expense rent associated with leased land or buildings while a restaurant is being constructed whether rent is paid or we are subject to a rent holiday. Additionally, certain of the Company's operating leases contain predetermined fixed escalations of the minimum rent during the lease term. For leases with fixed escalating payments and/or rent holidays, we record rent expense on a straight-line basis over the lease term, including any option periods considered in the determination of that lease term. Contingent rentals are generally based on sales levels in excess of stipulated amounts, and thus are not considered minimum lease payments and are included in rent expense when attainment of the contingency is considered probable (e.g. when Company sales occur).

Interna

Internal Development Costs and Abandoned Site Costs

Internal Development Costs and Abandoned Site Costs. We capitalize direct costs associated with the site acquisition and construction of a Company unit on that site, including direct internal payroll and payroll-related costs. Only those site-specific costs incurred subsequent to the time that the site acquisition is considered probable are capitalized. If we subsequently make a determination that a site for which internal development costs have been capitalized will not be acquired or developed, any previously capitalized internal development costs are expensed and included in G&A expenses

Goodwill and Intangible Assets

Goodwill and Intangible Assets. From time to time, the Company acquires restaurants from one of our Concept’s franchisees or acquires another business. Goodwill from these acquisitions represents the excess of the cost of a business acquired over the net of the amounts assigned to assets acquired, including identifiable intangible assets and liabilities assumed. Goodwill is not amortized and has been assigned to reporting units for purposes of impairment testing. Our reporting units are our operating segments in the U.S. (see Note 18), our YRI business units (typically individual countries) and our China Division brands. We evaluate goodwill for impairment on an annual basis or more often if an event occurs or circumstances change that indicate impairments might exist. Goodwill impairment tests consist of a comparison of each reporting unit’s fair value with its carrying value. Fair value is the price a willing buyer would pay for a reporting unit, and is generally estimated using discounted expected future after-tax cash flows from Company operations and franchise royalties. The discount rate is our estimate of the required rate of return that a third-party buyer would expect to receive when purchasing a business from us that constitutes a reporting unit. We believe the discount rate is commensurate with the risks and uncertainty inherent in the forecasted cash flows. If the carrying value of a reporting unit exceeds its fair value, goodwill is written down to its implied fair value. We have selected the beginning of our fourth quarter as the date on which to perform our ongoing annual impairment test for goodwill.

If we record goodwill upon acquisition of a restaurant(s) from a franchisee and such restaurant(s) is then sold within two years of acquisition, the goodwill associated with the acquired restaurant(s) is written off in its entirety. If the restaurant is refranchised two years or more subsequent to its acquisition, we include goodwill in the carrying amount of the restaurants disposed of based on the relative fair values of the portion of the reporting unit disposed of in the refranchising and the portion of the reporting unit that will be retained. The fair value of the portion of the reporting unit disposed of in a refranchising is determined by reference to the discounted value of the future cash flows expected to be generated by the restaurant and retained by the franchisee, which includes a deduction for the anticipated, future royalties the franchisee will pay us associated with the franchise agreement entered into simultaneously with the refranchising transition. Appropriate adjustments are made if such franchise agreement includes terms that are determined to not be at prevailing market rates. The fair value of the reporting unit retained is based on the price a willing buyer would pay for the reporting unit and includes the value of franchise agreements. As such, the fair value of the reporting unit retained can include expected cash flows from future royalties from those restaurants currently being refranchised, future royalties from existing franchise businesses and company restaurant operations. As a result, the percentage of a reporting unit’s goodwill that will be written off in a refranchising transaction will be less than the percentage of the reporting unit’s company restaurants that are refranchised in that transaction and goodwill can be allocated to a reporting unit with only franchise restaurants.

We evaluate the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events and circumstances continue to support an indefinite useful life. If an intangible asset that is not being amortized is subsequently determined to have a finite useful life, we amortize the intangible asset prospectively over its estimated remaining useful life. Intangible assets that are deemed to have a definite life are amortized on a straight-line basis to their residual value.

For indefinite-lived intangible assets, our impairment test consists of a comparison of the fair value of an intangible asset with its carrying amount. Fair value is an estimate of the price a willing buyer would pay for the intangible asset and is generally estimated by discounting the expected future after-tax cash flows associated with the intangible asset. We also perform our annual test for impairment of our indefinite-lived intangible assets at the beginning of our fourth quarter.

Our definite-lived intangible assets that are not allocated to an individual restaurant are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. An intangible asset that is deemed not recoverable on a undiscounted basis is written down to its estimated fair value, which is our estimate of the price a willing buyer would pay for the intangible asset based on discounted expected future after-tax cash flows. For purposes of our impairment analysis, we update the cash flows that were initially used to value the definite-lived intangible asset to reflect our current estimates and assumptions over the asset’s future remaining life.

Derivative Financial Instruments

Derivative Financial Instruments. We use derivative instruments primarily to hedge interest rate and foreign currency risks. These derivative contracts are entered into with financial institutions. We do not use derivative instruments for trading purposes and we have procedures in place to monitor and control their use.

We record all derivative instruments on our Consolidated Balance Sheet at fair value. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in the results of operations. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. For derivative instruments that are designated and qualify as a net investment hedge, the effective portion of the gain or loss on the derivative instrument is reported in the foreign currency translation component of other comprehensive income (loss). Any ineffective portion of the gain or loss on the derivative instrument for a cash flow hedge or net investment hedge is recorded in the results of operations immediately. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the results of operations immediately. See Note 12 for a discussion of our use of derivative instruments, management of credit risk inherent in derivative instruments and fair value information.

Com

Common Stock Share Repurchases

Common Stock Share Repurchases. From time to time, we repurchase shares of our Common Stock under share repurchase programs authorized by our Board of Directors. Shares repurchased constitute authorized, but unissued shares under the North Carolina laws under which we are incorporated. Additionally, our Common Stock has no par or stated value. Accordingly, we record the full value of share repurchases, upon the trade date, against Common Stock on our Consolidated Balance Sheet except when to do so would result in a negative balance in such Common Stock account. In such instances, on a period basis, we record the cost of any further share repurchases as a reduction in retained earnings

Pension and Post-retirement Medical Benefits

Pension and Post-retirement Medical Benefits. We measure and recognize the overfunded or underfunded status of our pension and post-retirement plans as an asset or liability in our Consolidated Balance Sheet as of our fiscal year end. The funded status represents the difference between the projected benefit obligations and the fair value of plan assets. The projected benefit obligation is the present value of benefits earned to date by plan participants, including the effect of future salary increases, as applicable. The difference between the projected benefit obligations and the fair value of plan assets that has not previously been recognized in our Consolidated Statement of Income is recorded as a component of Accumulated other comprehensive income (loss).

Summary of Significant Accounting Policies (Tables)

Accounts and notes receivable, net



	2011			2010
Accounts and notes receivable	$	308		$	289
Allowance for doubtful accounts	(22		)	(33		)
Accounts and notes receivable, net	$	286		$	256

Earnings Per Common Share ("EPS") (Tables)

Earnings Per Common Share



	2011		2010		2009
Net Income – YUM! Brands, Inc.	$	1,319	$	1,158	$	1,071
Weighted-average common shares outstanding (for basic calculation)	469		474		471
Effect of dilutive share-based employee compensation	12		12		12
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation)	481		486		483
Basic EPS	$	2.81	$	2.44	$	2.28
Diluted EPS	$	2.74	$	2.38	$	2.22
Unexercised employee stock options and stock appreciation rights (in millions) excluded from the diluted EPS computation^(a)	4.2		2.2		13.3


(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.

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

The following table summarizes the 2011 and 2010 activity related to reserves for remaining lease obligations for closed stores.



	Beginning Balance		Amounts Used		New Decisions	Estimate/Decision Changes	CTA/ Other		Ending Balance
2011 Activity	$	28	(12	)	17	2	(1	)	$	34
2010 Activity	$	27	(12	)	8	—	5		$	28

Facility Actions

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.



	Refranchising (gain) loss
	2011			2010			2009
China	$	(14	)	$	(8	)	$	(3	)
YRI ^(a)(b)(c)	69			53			11
U.S.^(d)	17			18			(34		)
Worldwide	$	72		$	63		$	(26	)

(a)

During the year ended December 31, 2011 we decided to refranchise or close all of our remaining Company-operated Pizza Hut restaurants in the UK market. While an asset group comprising approximately 350 dine-in restaurants did not meet the criteria for held-for-sale classification as of December 31, 2011, our- decision to sell was considered an impairment indicator. As such we reviewed this asset group for potential impairment and determined that its carrying value was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. Accordingly, we wrote this asset group down to our estimate of its fair value, which is based on the sales price we would expect to receive from a buyer. This fair value determination considered current market conditions, trends in the Pizza Hut UK business, and prices for similar transactions in the restaurant industry and resulted in a non-cash pre-tax write-down of $74 million which was recorded to Refranchising (gain) loss. This impairment charge decreased depreciation expense versus what would have otherwise been recorded by $3 million in 2011. This depreciation reduction was not allocated to the YRI segment, resulting in depreciation expense in the YRI segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the asset group for any further necessary impairment until the date it is sold. The write-down does not include any allocation of the Pizza Hut UK reporting unit goodwill in the asset group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the asset group ultimately meets the criteria to be classified as held for sale. Upon the ultimate sale of the restaurants, depending on the form of the transaction, we could also be required to record a charge for the fair value of any guarantee of future lease payments for any leases we assign to a franchisee and for the cumulative foreign currency translation adjustment associated with Pizza Hut UK. The decision to refranchise or close all remaining Pizza Hut restaurants in the UK was considered to be a goodwill impairment indicator. We determined that the fair value of our Pizza Hut UK reporting unit exceeded its carrying value and as such there was no impairment of the approximately $100 million in goodwill attributable to the reporting unit.

(b)

In the year ended December 25, 2010 we recorded a $52 million loss on the refranchising of our Mexico equity market as we sold all of our Company-owned restaurants, comprised of 222 KFCs and 123 Pizza Huts, to an existing Latin American franchise partner. The buyer is serving as the master franchisee for Mexico which had 102 KFC and 53 Pizza Hut franchise restaurants at the time of the transaction. The write-off of goodwill included in this loss was minimal as our Mexico reporting unit included an insignificant amount of goodwill. This loss did not result in any related income tax benefit.

(c)

During the year ended December 26, 2009 we recognized a non-cash $10 million refranchising loss as a result of our decision to offer to refranchise our KFC Taiwan equity market. During the year ended December 25, 2010 we refranchised all of our remaining company restaurants in Taiwan, which consisted of 124 KFCs. We included in our December 25, 2010 financial statements a non-cash write-off of $7 million of goodwill in determining the loss on refranchising of Taiwan. Neither of these losses resulted in a related income tax benefit. The amount of goodwill write-off was based on the relative fair values of the Taiwan business disposed of and the portion of the business that was retained. The fair value of the business disposed of was determined by reference to the discounted value of the future cash flows expected to be generated by the restaurants and retained by the franchisee, which include a deduction for the anticipated royalties the franchisee will pay the Company associated with the franchise agreement entered into in connection with this refranchising transaction. The fair value of the Taiwan business retained consists of expected, net cash flows to be derived from royalties from franchisees, including the royalties associated with the franchise agreement entered into in connection with this refranchising transaction. We believe the terms of the franchise agreement entered into in connection with the Taiwan refranchising are substantially consistent with market. The remaining carrying value of goodwill related to our Taiwan business of $30 million, after the aforementioned write-off, was determined not to be impaired as the fair value of the Taiwan reporting unit exceeded its carrying amount.

(d)

U.S. refranchising losses in the years ended December 31, 2011 and December 25, 2010 are primarily due to losses on sales of and offers to refranchise KFCs in the U.S. There were approximately 250 and 600 KFC restaurants offered for refranchising as of December 31, 2011 and December 25, 2010, respectively. While we did not yet believe these KFCs met the criteria to be classified as held for sale, we did, consistent with our historical practice, review the restaurants for impairment as a result of our offer to refranchise. We recorded impairment charges where we determined that the carrying value of restaurant groups to be sold was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. For those restaurant groups deemed impaired, we wrote such restaurant groups down to our estimate of their fair values, which were based on the sales price we would expect to receive from a franchisee for each restaurant group. This fair value determination considered current market conditions, real-estate values, trends in the KFC U.S. business, prices for similar transactions in the restaurant industry and preliminary offers for the restaurant groups to date. The non-cash impairment charges that were recorded related to our offers to refranchise these company-operated KFC restaurants in the U.S. decreased depreciation expense versus what would have otherwise been recorded by $10 million and $9 million in the years ended December 31, 2011 and December 25, 2010, respectively. These depreciation reductions were not allocated to the U.S. segment resulting in depreciation expense in the U.S. segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the restaurant groups for any further necessary impairment until the date they are sold. The aforementioned non-cash impairment charges do not include any allocation of the KFC reporting unit goodwill in the restaurant group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the restaurant groups, or any subset of the restaurant groups, ultimately meet the criteria to be classified as held for sale. We will also be required to record a charge for the fair value of our guarantee of future lease payments for leases we assign to the franchisee upon any sale.

Facility Actions

Store closure (income) costs and Store impairment charges by reportable segment are presented below. These tables exclude $80 million of net losses recorded in 2011 related to the LJS and A&W divestitures and a $26 million goodwill impairment charge recorded in 2009 related to the LJS and A&W businesses we previously owned. Neither of these amounts were allocated to segments for performance reporting purposes:



	2011
	China			YRI		U.S.		Worldwide
Store closure (income) costs^(a)	$	(1	)	$	4	$	4	$	7
Store impairment charges	13			18		17		48
Closure and impairment (income) expenses	$	12		$	22	$	21	$	55



	2010
	China		YRI		U.S.		Worldwide
Store closure (income) costs^(a)	$	—	$	2	$	3	$	5
Store impairment charges	16		12		14		42
Closure and impairment (income) expenses	$	16	$	14	$	17	$	47



	2009
	China			YRI		U.S.		Worldwide
Store closure (income) costs^(a)	$	(4	)	$	—	$	13	$	9
Store impairment charges ^(b)	13			22		33		68
Closure and impairment (income) expenses	$	9		$	22	$	46	$	77


(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.


(b)	The 2009 store impairment charges for YRI include $12 million of goodwill impairment for our Pizza Hut South Korea market.

Supplemental Cash Flow Data (Tables)

Cash paid for interest and income taxes, and significant non-cash investing and financing activities



	2011		2010		2009
Cash Paid For:
Interest	$	199	$	190	$	209
Income taxes	349		357		308
Significant Non-Cash Investing and Financing Activities:
Capital lease obligations incurred	$	58	$	16	$	7
Increase (decrease) in accrued capital expenditures	55		51		(17		)

Franchise and License Fees and Income (Tables)

Franchise and License Fees and Income



	2011			2010			2009
Initial fees, including renewal fees	$	68		$	54		$	57
Initial franchise fees included in Refranchising (gain) loss	(21		)	(15		)	(17		)
	47			39			40
Continuing fees and rental income	1,686			1,521			1,383
	$	1,733		$	1,560		$	1,423

Other (Income) Expense (Tables)

Other (Income) Expense Table



	2011			2010			2009
Equity income from investments in unconsolidated affiliates	$	(47	)	$	(42	)	$	(36	)
Gain upon consolidation of a former unconsolidated affiliate in China^(a)	—			—			(68		)
Foreign exchange net (gain) loss and other	(6		)	(1		)	—
Other (income) expense	$	(53	)	$	(43	)	$	(104	)


(a)	See Note 4 for further discussion of the consolidation of a former unconsolidated affiliate in Shanghai, China.

Supplemental Balance Sheet Information (Tables)

Prepaid Expenses and Other Current Assets



Prepaid Expenses and Other Current Assets	2011		2010
Income tax receivable	$	150	$	115
Assets held for sale	24		23
Other prepaid expenses and current assets	164		131
	$	338	$	269

Property, Plant and Equipment



Property, Plant and Equipment	2011			2010
Land	$	527		$	542
Buildings and improvements	3,856			3,709
Capital leases, primarily buildings	316			274
Machinery and equipment	2,568			2,578
Property, Plant and equipment, gross	7,267			7,103
Accumulated depreciation and amortization	(3,225		)	(3,273		)
Property, Plant and equipment, net	$	4,042		$	3,830

Accounts Payable and Other Current Liabilities



Accounts Payable and Other Current Liabilities	2011		2010
Accounts payable	$	712	$	540
Accrued capital expenditures	229		174
Accrued compensation and benefits	440		357
Dividends payable	131		118
Accrued taxes, other than income taxes	112		95
Other current liabilities	250		318
	$	1,874	$	1,602

Goodwill and Intangible Assets (Tables)

Changes in the carrying amount of goodwill

The changes in the carrying amount of goodwill are as follows:



	China		YRI			U.S.			Worldwide
Balance as of December 26, 2009
Goodwill, gross	$	82	$	249		$	352		$	683
Accumulated impairment losses	—		(17		)	(26		)	(43		)
Goodwill, net	82		232			326			640
Acquisitions ^(a)	—		37			—			37
Disposals and other, net^(b)	3		(17		)	(4		)	(18		)
Balance as of December 25, 2010
Goodwill, gross	85		269			348			702
Accumulated impairment losses	—		(17		)	(26		)	(43		)
Goodwill, net	85		252			322			659
Acquisitions^(c)	—		32			—			32
Disposals and other, net^(b)	3		(2		)	(11		)	(10		)
Balance as of December 31, 2011^(d)
Goodwill, gross	88		299			311			698
Accumulated impairment losses	—		(17		)	—			(17		)
Goodwill, net	$	88	$	282		$	311		$	681


(a)	We recorded goodwill in our YRI segment related to the July 1, 2010 exercise of our option with our Russian partner to purchase their interest in the co-branded Rostik’s-KFC restaurants across Russia and the Commonwealth of Independent States. See Note 4.


(b)	Disposals and other, net includes the impact of foreign currency translation on existing balances and goodwill write-offs associated with refranchising.


(c)	We recorded goodwill in our YRI segment related to the acquisition of 68 stores in South Africa. See Note 4.


(d)	As a result of the LJS and A&W divestitures in 2011, we disposed of $26 million of goodwill that was fully impaired in 2009.

Schedule Of Finite And Indefinite Lived Intangible Assets By Major Class [Text Block]

Intangible assets, net for the years ended 2011 and 2010 are as follows:



	2011					2010
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Definite-lived intangible assets
Franchise contract rights	$	130	$	(77	)	$	163	$	(83	)
Trademarks/brands	28		(12		)	234		(57		)
Lease tenancy rights	58		(12		)	56		(12		)
Favorable operating leases	29		(13		)	27		(10		)
Reacquired franchise rights	167		(33		)	143		(20		)
Other	5		(2		)	5		(2		)
	$	417	$	(149	)	$	628	$	(184	)

Indefinite-lived intangible assets
Trademarks/brands	$	31				$	31

Short-term Borrowings and Long-term Debt (Tables)

Schedule of Debt [Table Text Block]



	2011			2010
Short-term Borrowings
Current maturities of long-term debt	$	315		$	668
Current portion of fair value hedge accounting adjustment (See Note 12)	5			5
Unsecured International Revolving Credit Facility, expires November 2012	—			—
Unsecured Revolving Credit Facility, expires November 2012	—			—
	$	320		$	673

Long-term Debt
Senior Unsecured Notes	$	3,012		$	3,257
Capital lease obligations (See Note 11)	279			236
Other	—			64
	3,291			3,557
Less current maturities of long-term debt	(315		)	(668		)
Long-term debt excluding long-term portion of hedge accounting adjustment	2,976			2,889
Long-term portion of fair value hedge accounting adjustment (See Note 12)	21			26
Long-term debt including hedge accounting adjustment	$	2,997		$	2,915

Annual maturities of short-term borrowings and long-term debt excluding capital lease obligations and derivative instrument adjustments

The annual maturities of short-term borrowings and long-term debt as of December 31, 2011, excluding capital lease obligations of $279 million and fair value hedge accounting adjustments of $26 million, are as follows:



Year ended:
2012	$	263
2013	—
2014	56
2015	250
2016	300
Thereafter	2,150
Total	$	3,019

Senior Unsecured Notes issued that remain outstanding

The following table summarizes all Senior Unsecured Notes issued that remain outstanding at December 31, 2011:



				Interest Rate
Issuance Date^(a)	Maturity Date	Principal Amount (in millions)		Stated	Effective^(b)
June 2002	July 2012	$	263	7.70%	8.06%
April 2006	April 2016	$	300	6.25%	6.03%
October 2007	March 2018	$	600	6.25%	6.38%
October 2007	November 2037	$	600	6.88%	7.29%
August 2009	September 2015	$	250	4.25%	4.44%
August 2009	September 2019	$	250	5.30%	5.59%
August 2010	November 2020	$	350	3.88%	4.01%
August 2011	November 2021	$	350	3.75%	3.88%
September 2011	September 2014	$	56	2.38%	2.92%


(a)	Interest payments commenced six months after issuance date and are payable semi-annually thereafter.


(b)	Includes the effects of the amortization of any (1) premium or discount; (2) debt issuance costs; and (3) gain or loss upon settlement of related treasury locks and forward-starting interest rate swaps utilized to hedge the interest rate risk prior to the debt issuance. Excludes the effect of any swaps that remain outstanding as described in Note 12.

Leases (Tables)

Future minimum commitments and amounts to be received as lessor or sublessor under non-cancelable leases

Future minimum commitments and amounts to be received as lessor or sublessor under non-cancelable leases are set forth below:



	Commitments				Lease Receivables
	Capital		Operating		Direct Financing		Operating
2012	$	65	$	612	$	3	$	49
2013	27		578		2		42
2014	26		538		2		39
2015	26		494		2		35
2016	26		462		2		31
Thereafter	267		2,653		14		139
	$	437	$	5,337	$	25	$	335

Details of rental expense and income

The details of rental expense and income are set forth below:



	2011		2010		2009
Rental expense
Minimum	$	625	$	565	$	541
Contingent	233		158		123
	$	858	$	723	$	664
Rental income	$	66	$	44	$	38

Derivative Instruments (Tables)

Fair Values of Derivatives Designated as Hedging Instruments

The fair values of derivatives designated as hedging instruments for the years ended December 31, 2011 and December 25, 2010 were:



	Fair Value						Consolidated Balance Sheet Location
	2011			2010
Interest Rate Swaps - Asset	$	10		$	8		Prepaid expenses and other current assets
Interest Rate Swaps - Asset	22			33			Other assets
Foreign Currency Forwards - Asset	3			7			Prepaid expenses and other current assets
Foreign Currency Forwards - Liability	(1		)	(3		)	Accounts payable and other current liabilities
Total	$	34		$	45

Other Comprehensive Income (OCI) from the Effective Portions of Gains and Losses of Foreign Currency Forward Contracts

For our foreign currency forward contracts the following effective portions of gains and losses were recognized into Other Comprehensive Income (“OCI”) and reclassified into income from OCI in the years ended December 31, 2011 and December 25, 2010.



	2011		2010
Gains (losses) recognized into OCI, net of tax	$	2	$	32
Gains (losses) reclassified from Accumulated OCI into income, net of tax	$	1	$	33

Fair Value Disclosures (Tables)

Fair Value Measurements, Recurring Basis

The following table presents fair values for those assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall. No transfers among the levels within the fair value hierarchy occurred during the years ended December 31, 2011 or December 25, 2010.



	Fair Value
	Level	2011		2010
Foreign Currency Forwards, net	2	$	2	$	4
Interest Rate Swaps, net	2	32		41
Other Investments	1	15		14
Total		$	49	$	59

Fair Value Measurements and Total Losses, Non-Recurring Basis

The following tables present the fair values for those assets and liabilities measured at fair value during 2011 or 2010 on a non-recurring basis, and that remain on our Consolidated Balance Sheet as of December 31, 2011 or December 25, 2010. Total losses include losses recognized from all non-recurring fair value measurements during the years ended December 31, 2011 and December 25, 2010 for assets and liabilities that remain on our Consolidated Balance Sheet as of December 31, 2011 or December 25, 2010:



			Fair Value Measurements Using			Total Losses
	As of December 31, 2011		Level 1	Level 2	Level 3	2011
Long-lived assets held for use	$	50	—	—	50	128

			Fair Value Measurements Using			Total Losses
	As of December 25, 2010		Level 1	Level 2	Level 3	2010
Long-lived assets held for use	$	184	—	—	184	110

Pension, Retiree Medical and Retiree Savings Plans (Tables)

Funded status of pension plans

The following chart summarizes the balance sheet impact, as well as benefit obligations, assets, and funded status associated with our U.S. pension plans and significant International pension plans. The actuarial valuations for all plans reflect measurement dates coinciding with our fiscal year ends.



	U.S. Pension Plans						International Pension Plans
	2011			2010			2011			2010
Change in benefit obligation
Benefit obligation at beginning of year	$	1,108		$	1,010		$	187		$	176
Service cost	24			25			5			6
Interest cost	64			62			10			9
Participant contributions	—			—			1			2

Curtailment gain	(7		)	(2		)	(10		)	—
Settlement loss	—			1			—			—
Special termination benefits	5			1			—			—
Exchange rate changes	—			—			1			(9		)
Benefits paid	(40		)	(57		)	(2		)	(4		)
Settlement payments	—			(9		)	—			—
Actuarial (gain) loss	227			77			(5		)	7
Benefit obligation at end of year	$	1,381		$	1,108		$	187		$	187
Change in plan assets
Fair value of plan assets at beginning of year	$	907		$	835		$	164		$	141
Actual return on plan assets	83			108			10			14
Employer contributions	53			35			10			17
Participant contributions	—			—			1			2
Settlement payments	—			(9		)	—			—
Benefits paid	(40		)	(57		)	(2		)	(4		)
Exchange rate changes	—			—			—			(6		)
Administrative expenses	(5		)	(5		)	—			—
Fair value of plan assets at end of year	$	998		$	907		$	183		$	164
Funded status at end of year	$	(383	)	$	(201	)	$	(4	)	$	(23	)

Amounts recognized in the Consolidated Balance Sheet



Amounts recognized in the Consolidated Balance Sheet:
	U.S. Pension Plans						International Pension Plans
	2011			2010			2011			2010
Accrued benefit asset - non-current	$	—		$	—		$	8		$	—
Accrued benefit liability – current	(14		)	(10		)	—			—
Accrued benefit liability – non-current	(369		)	(191		)	(12		)	(23		)
	$	(383	)	$	(201	)	$	(4	)	$	(23	)

Amounts recognized as a loss in Accumulated Other Comprehensive Income



Amounts recognized as a loss in Accumulated Other Comprehensive Income:
	U.S. Pension Plans				International Pension Plans
	2011		2010		2011		2010
Actuarial net loss	$	540	$	359	$	30	$	46
Prior service cost	3		4		—		—
	$	543	$	363	$	30	$	46

Pension plans with an accumulated benefit obligation in excess of pan assets



Information for pension plans with an accumulated benefit obligation in excess of plan assets:
	U.S. Pension Plans				International Pension Plans
	2011		2010		2011		2010
Projected benefit obligation	$	1,381	$	1,108	$	—	$	—
Accumulated benefit obligation	1,327		1,057		—		—
Fair value of plan assets	998		907		—		—

Pension plans with a projected benefit obligation in excess of plan assets



Information for pension plans with a projected benefit obligation in excess of plan assets:
	U.S. Pension Plans				International Pension Plans
	2011		2010		2011		2010
Projected benefit obligation	$	1,381	$	1,108	$	99	$	187
Accumulated benefit obligation	1,327		1,057		87		155
Fair value of plan assets	998		907		87		164

Components of net periodic benefit cost

Components of net periodic benefit cost:



	U.S. Pension Plans									International Pension Plans
Net periodic benefit cost	2011			2010			2009			2011			2010			2009
Service cost	$	24		$	25		$	26		$	5		$	6		$	5
Interest cost	64			62			58			10			9			7
Amortization of prior service cost^(a)	1			1			1			—			—			—
Expected return on plan assets	(71		)	(70		)	(59		)	(12		)	(9		)	(7		)
Amortization of net loss	31			23			13			2			2			2
Net periodic benefit cost	$	49		$	41		$	39		$	5		$	8		$	7
Additional loss recognized due to: Settlement^(b)	$	—		$	3		$	2		$	—		$	—		$	—
Special termination benefits^(c)	$	5		$	1		$	4		$	—		$	—		$	—


(a)	Prior service costs are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits.


(b)	Settlement loss results from benefit payments from a non-funded plan exceeding the sum of the service cost and interest cost for that plan during the year.


(c)	Special termination benefits primarily related to the U.S. business transformation measures taken in 2011, 2010 and 2009.

Pension losses in accumulated other comprehensive income (loss)



Pension losses in accumulated other comprehensive income (loss):
	U.S. Pension Plans						International Pension Plans
	2011			2010			2011			2010
Beginning of year	$	363		$	346		$	46		$	48
Net actuarial (gain) loss	219			43			(5		)	2
Curtailment gain	(7		)	(2		)	(10		)	—
Amortization of net loss	(31		)	(23		)	(2		)	(2		)
Amortization of prior service cost	(1		)	(1		)	—			—
Exchange rate changes	—			—			1			(2		)
End of year	$	543		$	363		$	30		$	46

Weighted-average assumptions used to determine benefit obligations and net periodic benefit cost



Weighted-average assumptions used to determine benefit obligations at the measurement dates:
	U.S. Pension Plans				International Pension Plans
	2011		2010		2011		2010
Discount rate	4.90	%	5.90	%	4.75	%	5.40	%
Rate of compensation increase	3.75	%	3.75	%	3.85	%	4.42	%



Weighted-average assumptions used to determine the net periodic benefit cost for fiscal years:
	U.S. Pension Plans						International Pension Plans
	2011		2010		2009		2011		2010		2009
Discount rate	5.90	%	6.30	%	6.50	%	5.40	%	5.50	%	5.51	%
Long-term rate of return on plan assets	7.75	%	7.75	%	8.00	%	6.64	%	6.66	%	7.20	%
Rate of compensation increase	3.75	%	3.75	%	3.75	%	4.41	%	4.42	%	4.12	%

Fair values of pension plan assets

The fair values of our pension plan assets at December 31, 2011 by asset category and level within the fair value hierarchy are as follows:



	U.S. Pension Plans		International Pension Plans
Level 1:
Cash^(a)	$	1	$	—
Level 2:
Cash Equivalents^(a)	62		—
Equity Securities – U.S. Large cap^(b)	324		—
Equity Securities – U.S. Mid cap^(b)	54		—
Equity Securities – U.S. Small cap^(b)	54		—
Equity Securities – Non-U.S.^(b)	88		109
Fixed Income Securities – U.S. Corporate^(b)	263		—
Fixed Income Securities – Non-U.S. Corporate^(b)	—		23
Fixed Income Securities – U.S. Government and Government Agencies^(c)	164		—
Fixed Income Securities – Other^(b)(c)	39		11
Other Investments^(b)	—		40
Total fair value of plan assets^(d)	$	1,049	$	183


(a)	Short-term investments in money market funds


(b)	Securities held in common trusts


(c)	Investments held by the Plan are directly held


(d)	Excludes net payable of $51 million in the U.S. for purchases of assets included in the above that were settled after year end

Expected benefit payments

The benefits expected to be paid in each of the next five years and in the aggregate for the five years thereafter are set forth below:



Year ended:	U.S. Pension Plans		International Pension Plans
2012	$	68	$	1
2013	50		1
2014	47		1
2015	50		1
2016	51		1
2017 - 2021	309		8

Share-based and Deferred Compensation Plans (Tables)

Weighted-average assumptions used in the Black-Scholes option-pricing model

We estimated the fair value of each stock option and SAR award as of the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:



	2011		2010		2009
Risk-free interest rate	2.0	%	2.4	%	1.9	%
Expected term (years)	5.9		6.0		5.9
Expected volatility	28.2	%	30.0	%	32.3	%
Expected dividend yield	2.0	%	2.5	%	2.6	%

Summary of award activity

Stock Options and SARs



	Shares (in thousands)			Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (in millions)
Outstanding at the beginning of the year	36,438			$	26.91
Granted	5,023			49.59
Exercised	(6,645	)		20.33
Forfeited or expired	(1,308	)		35.52
Outstanding at the end of the year	33,508		^(a)	$	31.28	5.96	$	929
Exercisable at the end of the year	18,709			$	26.00	4.48	$	618


(a)	Outstanding awards include 8,161 options and 25,347 SARs with average exercise prices of $21.56 and $34.41, respectively.

Impact on net income

The components of share-based compensation expense and the related income tax benefits are shown in the following table:



	2011		2010		2009
Options and SARs	$	49	$	40	$	48
Restricted Stock Units	5		5		7
Performance Share Units	5		2		1
Total Share-based Compensation Expense	$	59	$	47	$	56
Deferred Tax Benefit recognized	$	18	$	13	$	17

EID compensation expense not share-based	$	2	$	4	$	4

Shareholders' Equity (Tables)

Repurchase of Shares of the Company's Common Stock



	Shares Repurchased (thousands)					Dollar Value of Shares Repurchased
Authorization Date	2011		2010		2009	2011			2010			2009
November 2011	—		—		—	$	—		$	—		$	—
January 2011	10,864		—		—	562			—			—
March 2010	3,441		2,161		—	171			107			—
September 2009	—		7,598		—	—			283			—
Total	14,305	^(a)	9,759	^(a)	—	$	733	^(a)	$	390	^(a)	$	—


(a)	2011 amount excludes and 2010 amount includes the effect of $19 million in share repurchases (0.4 million shares) with trade dates prior to the 2010 fiscal year end but cash settlement dates subsequent to the 2010 fiscal year.

Accumulated other comprehensive income (loss)

The following table gives further detail regarding the composition of accumulated other comprehensive loss at December 31, 2011 and December 25, 2010. Refer to Note 14 for additional information about our pension and post-retirement plan accounting and Note 12 for additional information about our derivative instruments.



	2011			2010
Foreign currency translation adjustment	$	140		$	55
Pension and post-retirement losses, net of tax	(375		)	(269		)
Net unrealized losses on derivative instruments, net of tax	(12		)	(13		)
Total accumulated other comprehensive loss	$	(247	)	$	(227	)

Income Taxes (Tables)

Income before income taxes

U.S. and foreign income before taxes are set forth below:



	2011		2010		2009
U.S.	$	266	$	345	$	269
Foreign	1,393		1,249		1,127
	$	1,659	$	1,594	$	1,396

Details of income tax provision (benefit)

The details of our income tax provision (benefit) are set forth below:



		2011			2010			2009
Current:	Federal	$	78		$	155		$	(21	)
	Foreign	374			356			251
	State	9			15			11
		$	461		$	526		241

Deferred:	Federal	(83		)	(82		)	92
	Foreign	(40		)	(29		)	(30		)
	State	(14		)	1			10
		(137		)	(110		)	72
		$	324		$	416		$	313

Effective income tax and tax rate reconciliation

The reconciliation of income taxes calculated at the U.S. federal tax statutory rate to our effective tax rate is set forth below:



	2011					2010					2009
U.S. federal statutory rate	$	580		35.0	%	$	558		35.0	%	$	489		35.0	%
State income tax, net of federal tax benefit	2			0.1		12			0.7		14			1.0
Statutory rate differential attributable to foreign operations	(218		)	(13.1	)	(235		)	(14.7	)	(159		)	(11.4	)
Adjustments to reserves and prior years	24			1.4		55			3.5		(9		)	(0.6	)
Net benefit from LJS and A&W divestitures	(72		)	(4.3	)	—			—		—			—
Change in valuation allowances	22			1.3		22			1.4		(9		)	(0.7	)
Other, net	(14		)	(0.9	)	4			0.2		(13		)	(0.9	)
Effective income tax rate	$	324		19.5	%	$	416		26.1	%	$	313		22.4	%

Details of deferred tax assets (liabilities)

The details of 2011 and 2010 deferred tax assets (liabilities) are set forth below:



	2011			2010
Operating losses and tax credit carryforwards	$	590		$	335
Employee benefits	259			171
Share-based compensation	106			102
Self-insured casualty claims	47			50
Lease-related liabilities	137			166
Various liabilities	72			89
Deferred income and other	49			97
Gross deferred tax assets	1,260			1,010
Deferred tax asset valuation allowances	(368		)	(306		)
Net deferred tax assets	$	892		$	704
Intangible assets, including goodwill	$	(147	)	$	(211	)
Property, plant and equipment	(92		)	(108		)
Other	(53		)	(29		)
Gross deferred tax liabilities	$	(292	)	$	(348	)
Net deferred tax assets (liabilities)	$	600		$	356



Reported in Consolidated Balance Sheets as:
Deferred income taxes – current	$	112		$	61
Deferred income taxes – long-term	549			366
Accounts payable and other current liabilities	(16		)	(20		)
Other liabilities and deferred credits	(45		)	(51		)
	$	600		$	356

Loss carryforwards, by year of expiration

These losses are being carried forward in jurisdictions where we are permitted to use tax losses from prior periods to reduce future taxable income and will expire as follows:



	Year of Expiration
	2012		2013-2016		2017-2031		Indefinitely		Total
Foreign	$	4	$	66	$	136	$	833	$	1,039
U.S. federal and state	22		192		1,770		5		1,989
	$	26	$	258	$	1,906	$	838	$	3,028

Unrecognized tax benefits reconciliation

A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:



	2011			2010
Beginning of Year	$	308		$	301
Additions on tax positions - current year	85			45
Additions for tax positions - prior years	38			35
Reductions for tax positions - prior years	(58		)	(19		)
Reductions for settlements	(8		)	(41		)
Reductions due to statute expiration	(22		)	(10		)
Foreign currency translation adjustment	5			(3		)
End of Year	$	348		$	308

Summary of income tax examinations

The following table summarizes our major jurisdictions and the tax years that are either currently under audit or remain open and subject to examination:



Jurisdiction		Open Tax Years
U.S. Federal		2004 – 2011
China		2008 – 2011
United Kingdom		2003 – 2011
Mexico		2005 – 2011
Australia		2007 – 2011

In addition, the Company is subject to various U.S. state income tax examinations, for which, in the aggregate, we had significant unrecognized tax benefits at December 31, 2011, each of which is individually insignificant.

The accrued interest and penalties related to income taxes at December 31, 2011 and December 25, 2010 are set forth below:



	2011		2010
Accrued interest and penalties	$	53	$	48

Reportable Operating Segments (Tables)

Schedule of Segment Reporting Information, by Segment [Text Block]



	Revenues
	2011		2010		2009
China	$	5,566	$	4,135	$	3,407
YRI	3,274		3,088		2,988
U.S.	3,786		4,120		4,473
Unallocated Franchise and license fees and income^(a)(b)	—		—		(32		)
	$	12,626	$	11,343	$	10,836



	Operating Profit; Interest Expense, Net; and Income Before Income Taxes
	2011			2010			2009
China ^(c)	$	908		$	755		$	596
YRI	673			589			497
U.S.	589			668			647
Unallocated Franchise and license fees and income^(a)(b)	—			—			(32		)
Unallocated Occupancy and other^(b)(d)	14			9			—
Unallocated and corporate expenses^(b)(e)	(223		)	(194		)	(189		)
Unallocated Closures and impairment expense^(b)(f)	(80		)	—			(26		)
Unallocated Other income (expense)^(b)(g)	6			5			71
Unallocated Refranchising gain (loss)^(b)(h)	(72		)	(63		)	26
Operating Profit	1,815			1,769			1,590
Interest expense, net	(156		)	(175		)	(194		)
Income Before Income Taxes	$	1,659		$	1,594		$	1,396



	Depreciation and Amortization
	2011		2010		2009
China	$	257	$	225	$	184
YRI	186		159		165
U.S.	177		201		216
Corporate^(d)	8		4		15
	$	628	$	589	$	580



	Capital Spending
	2011		2010		2009
China	$	405	$	272	$	271
YRI	256		259		251
U.S.	256		241		270
Corporate	23		24		5
	$	940	$	796	$	797



	Identifiable Assets
	2011		2010		2009
China ⁽ⁱ⁾	$	2,527	$	2,289	$	1,632
YRI	2,899		2,649		2,448
U.S.	2,070		2,398		2,575
Corporate^(j)	1,338		980		493
	$	8,834	$	8,316	$	7,148



	Long-Lived Assets^(k)
	2011		2010		2009
China	$	1,546	$	1,269	$	1,172
YRI	1,635		1,548		1,524
U.S.	1,805		2,095		2,260
Corporate	36		52		45
	$	5,022	$	4,964	$	5,001


(a)	Amount consists of reimbursements to KFC franchisees for installation costs of ovens for the national launch of Kentucky Grilled Chicken. See Note 4.


(b)	Amounts have not been allocated to the U.S., YRI or China Division segments for performance reporting purposes.


(c)	Includes equity income from investments in unconsolidated affiliates of $47 million, $42 million and $36 million in 2011, 2010 and 2009, respectively, for China.


(d)	2011 and 2010 include depreciation reductions arising from the impairment of KFC restaurants we offered to sell of $10 million and $9 million, respectively. 2011 includes a depreciation reduction arising from the impairment of Pizza Hut UK restaurants we decided to sell in 2011 of $3 million. See Note 4.


(e)	2011, 2010 and 2009 include approximately $21 million, $9 million and $16 million, respectively, of charges relating to U.S. general and administrative productivity initiatives and realignment of resources. See Note 4.


(f)	2011 represents net losses resulting from the LJS and A&W divestitures. 2009 includes a $26 million charge to write-off goodwill associated with our LJS and A&W businesses in the U.S. See Note 9.


(g)	2009 includes a $68 million gain related to the acquisition of additional interest in and consolidation of a former unconsolidated affiliate in China. See Note 4.


(h)	See Note 4 for further discussion of Refranchising gain (loss).


(i)	China includes investments in 4 unconsolidated affiliates totaling $167 million, $154 million and $144 million, for 2011, 2010 and 2009, respectively.


(j)	Primarily includes cash, deferred tax assets and property, plant and equipment, net, related to our office facilities.


(k)	Includes property, plant and equipment, net, goodwill, and intangible assets, net.

Reconciliation of Other Significant Reconciling Items from Segments to Consolidated [Text Block]



	Depreciation and Amortization
	2011		2010		2009
China	$	257	$	225	$	184
YRI	186		159		165
U.S.	177		201		216
Corporate^(d)	8		4		15
	$	628	$	589	$	580



	Capital Spending
	2011		2010		2009
China	$	405	$	272	$	271
YRI	256		259		251
U.S.	256		241		270
Corporate	23		24		5
	$	940	$	796	$	797



	Identifiable Assets
	2011		2010		2009
China ⁽ⁱ⁾	$	2,527	$	2,289	$	1,632
YRI	2,899		2,649		2,448
U.S.	2,070		2,398		2,575
Corporate^(j)	1,338		980		493
	$	8,834	$	8,316	$	7,148



	Long-Lived Assets^(k)
	2011		2010		2009
China	$	1,546	$	1,269	$	1,172
YRI	1,635		1,548		1,524
U.S.	1,805		2,095		2,260
Corporate	36		52		45
	$	5,022	$	4,964	$	5,001

Contingencies (Tables)

Activity related to self-insured property and casualty reserves

The following table summarizes the 2011 and 2010 activity related to our self-insured property and casualty reserves as of December 31, 2011.



	Beginning Balance	Expense	Payments		Ending Balance
2011 Activity	$150	55	(65	)	$	140
2010 Activity	$173	46	(69	)	$	150

Selected Quarterly Financial Data (Unaudited) (Tables)

Selected income (loss) and common share financial data



	2011
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
Revenues:
Company sales	$	2,051	$	2,431	$	2,854	$	3,557	$	10,893
Franchise and license fees and income	374		385		420		554		1,733
Total revenues	2,425		2,816		3,274		4,111		12,626
Restaurant profit	360		386		494		513		1,753
Operating Profit^(a)	401		419		488		507		1,815
Net Income – YUM! Brands, Inc.	264		316		383		356		1,319
Basic earnings per common share	0.56		0.67		0.82		0.77		2.81
Diluted earnings per common share	0.54		0.65		0.80		0.75		2.74
Dividends declared per common share	—		0.50		—		0.57		1.07



	2010
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
Revenues:
Company sales	$	1,996	$	2,220	$	2,496	$	3,071	$	9,783
Franchise and license fees and income	349		354		366		491		1,560
Total revenues	2,345		2,574		2,862		3,562		11,343
Restaurant profit	340		366		479		478		1,663
Operating Profit^(b)	364		421		544		440		1,769
Net Income – YUM! Brands, Inc.	241		286		357		274		1,158
Basic earnings per common share	0.51		0.61		0.76		0.58		2.44
Diluted earnings per common share	0.50		0.59		0.74		0.56		2.38
Dividends declared per common share	0.21		0.21		—		0.50		0.92

(a)

Includes net losses of $65 million primarily related to the LJS and A&W divestitures, $88 million primarily related to refranchising international markets and $28 million primarily related to the U.S. business transformation measures and U.S. refranchising in the first, third and fourth quarters of 2011, respectively. See Note 4. The fourth quarter of 2011 also includes the $25 million impact of the 53^rd week. See Note 2.


(b)	Includes net losses of $66 million and $19 million in the first and fourth quarters of 2010, respectively, related primarily to the U.S. business transformation measures and refranchising international markets. See Note 4.

Description of Business (Details)

12 Months Ended

Dec. 31, 2011

operating_segments

countries_and_territiories

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Approximate number of system units

37,000

Percent of system units located outside the U.S. (in hundredths)

50.00%

Approximate number of countries and territories where system units are located

120

Segment Reporting Information [Line Items]

Number of operating segments

5

U.S.

Segment Reporting Information [Line Items]

Number of operating segments

3

Summary of Significant Accounting Policies (Details) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Feb. 1, 2012

Little Sheep Group Limited [Member]

Dec. 26, 2009

Affiliate in Shanghai, China [Member]

Schedule of Equity Method Investments [Line Items]

Future lease payments due from franchisees on a nominal basis

$ 320

Additional percentage of ownership acquired (in hundredths)

66.00%

Change in Cash and Cash Equivalents due to consolidation of an entity in China

$ 0

$ 17

Summary of Significant Accounting Policies (Details 2) (USD $)

In Millions, unless otherwise specified

3 Months Ended

4 Months Ended

12 Months Ended

Sep. 3, 2011

Jun. 11, 2011

Mar. 19, 2011

Sep. 4, 2010

Jun. 12, 2010

Mar. 20, 2010

Dec. 31, 2011

Dec. 25, 2010

Dec. 31, 2011

weeks

Dec. 25, 2010

Dec. 26, 2009

Fiscal Period Adjustment [Line Items]

Week added as a result of the fiscal year ending on the last Saturday in December

53rd

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 months

Number of months in the second and third quarters for certain international subsidiaries that operate on monthly calendars

3 months

Number of months in the fourth quarter for certain international subsidiaries that operate on monthly calendars

4 months

Number of periods or months in advance that all international businesses except China close their books

1 month

Total revenues

$ 3,274

$ 2,816

$ 2,425

$ 2,862

$ 2,574

$ 2,345

$ 4,111

$ 3,562

$ 12,626

$ 11,343

$ 10,836

Restaurant profit

494

386

360

479

366

340

513

478

1,753

1,663

Operating Profit

488 ¹

419

401 ¹

544

421

364 ²

507 ¹

440 ²

1,815 ¹ ³ ⁴ ⁵ ⁶

1,769 ² ³ ⁵ ⁶

1,590 ³ ⁴ ⁵ ⁷

53rd Week Impact

Fiscal Period Adjustment [Line Items]

Total revenues

91

Restaurant profit

15

Operating Profit

$ 25

[1] Includes net losses of $65 million primarily related to the LJS and A&W divestitures, $88 million primarily related to refranchising international markets and $28 million primarily related to the U.S. business transformation measures and U.S. refranchising in the first, third and fourth quarters of 2011, respectively. See Note 4. The fourth quarter of 2011 also includes the $25 million impact of the 53rd week. See Note 2.

[2] Includes net losses of $66 million and $19 million in the first and fourth quarters of 2010, respectively, related primarily to the U.S. business transformation measures and refranchising international markets. See Note 4.

[3] 2011, 2010 and 2009 include approximately $21 million, $9 million and $16 million, respectively, of charges relating to U.S. general and administrative productivity initiatives and realignment of resources. See Note 4.

[4] 2011 represents net losses resulting from the LJS and A&W divestitures. 2009 includes a $26 million charge to write-off goodwill associated with our LJS and A&W businesses in the U.S. See Note 9.

[5] Includes equity income from investments in unconsolidated affiliates of $47 million, $42 million and $36 million in 2011, 2010 and 2009, respectively, for China.

[6] 2011 and 2010 include depreciation reductions arising from the impairment of KFC restaurants we offered to sell of $10 million and $9 million, respectively. 2011 includes a depreciation reduction arising from the impairment of Pizza Hut UK restaurants we decided to sell in 2011 of $3 million. See Note 4.

[7] 2009 includes a $68 million gain related to the acquisition of additional interest in and consolidation of a former unconsolidated affiliate in China. See Note 4.

Summary of Significant Accounting Policies (Details 3) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

restaurants

Dec. 25, 2010

Dec. 26, 2009

Direct Marketing Costs [Abstract]

Advertising expenses

$ 593

$ 557

$ 548

Research and Development Expenses [Abstract]

Research and development expenses

34

33

31

Impairment or Disposal of Property, Plant and Equipment [Abstract]

Number of consecutive years of operating losses used as primary indicator of potential impairment for our semi-annual impairment testing of restaurant assets

2 years

Number of years within which a sale is probable to classify a restaurant as held for sale and suspend depreciation and amortization

1 year

Impairment of Investments in Unconsolidated Affiliates [Abstract]

Number of consecutive years of operating losses used as indicator of impairment of investments in unconsolidated affiliates

2 years

Recorded impairment associated with unconsolidated affiliates

0

Income Taxes [Abstract]

Percentage threshold that the positions taken or expected to be taken is more likely than not sustained upon examination by tax authorities (in hundredths)

50.00%

Receivables [Abstract]

Number of days from the period in which the corresponding sales occur that trade receivables are generally due

30 days

Net provisions for uncollectible franchise and license trade receivables included in Franchise and license expenses

7

3

11

Accounts and notes receivable [Abstract]

Accounts and notes receivable

308

289

Allowance for doubtful accounts

(22)

(33)

Accounts and notes receivable, net

286

256

Number of years notes receivable and direct financing leases are due within and would be included in accounts and notes receivable

1 year

Number of years notes receivable and direct financing leases are beyond and would be included in other assets

1 year

Net amounts included in Other Assets

15

57

Allowance for doubtful accounts related to notes and direct financing lease receivables

$ 4

$ 30

Leases and Leasehold Improvements [Abstract]

Approximate number of restaurants operated on leased land and/or buildings

6,200

Goodwill and Intangible Assets [Abstract]

Number of years from acquisition that goodwill is written off in its entirety, if a Company restaurant is sold within this period

2 years

Minimum number of years from acquisition that a company restaurant is sold, after which we include goodwill in the carrying amount of the restaurants disposed of based on the relative fair values of the portion of the reporting unit disposed of in the refranchising and the portion of the reporting unit that will be retained

2 years

Buildings and improvements

Property, Plant and Equipment [Line Items]

Minimum estimated useful life used in the calculation of the depreciation and amortization on a straight-line basis (in years)

5

Maximum estimated useful life used in the calculation of the depreciation and amortization on a straight-line basis (in years)

25

Machinery and equipment

Property, Plant and Equipment [Line Items]

Minimum estimated useful life used in the calculation of the depreciation and amortization on a straight-line basis (in years)

3

Maximum estimated useful life used in the calculation of the depreciation and amortization on a straight-line basis (in years)

20

Capitalized software costs

Property, Plant and Equipment [Line Items]

Minimum estimated useful life used in the calculation of the depreciation and amortization on a straight-line basis (in years)

3

Maximum estimated useful life used in the calculation of the depreciation and amortization on a straight-line basis (in years)

7

Summary of Significant Accounting Policies (Details 4) (USD $)

In Millions, except Share data in Thousands, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Repurchase Of Shares Of Common Stock [Abstract]

Stock Repurchased During Period, Value

$ 733 ¹

$ 390 ¹

$ 0

Repurchase of shares of Common Stock (in shares)

(14,305)¹

(9,759)¹

0

Reduction to Retained earnings

Repurchase Of Shares Of Common Stock [Abstract]

Stock Repurchased During Period, Value

$ 483

$ 0

[1] 2011 amount excludes and 2010 amount includes the effect of $19 million in share repurchases (0.4 million shares) with trade dates prior to the 2010 fiscal year end but cash settlement dates subsequent to the 2010 fiscal year.

Earnings Per Common Share ("EPS") (Details) (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

4 Months Ended

12 Months Ended

Sep. 3, 2011

Jun. 11, 2011

Mar. 19, 2011

Sep. 4, 2010

Jun. 12, 2010

Mar. 20, 2010

Dec. 31, 2011

Dec. 25, 2010

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Earnings Per Share [Abstract]

Net Income - YUM! Brands, Inc.

$ 383

$ 316

$ 264

$ 357

$ 286

$ 241

$ 356

$ 274

$ 1,319

$ 1,158

$ 1,071

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

469

474

471

Effect of dilutive share-based employee compensation (in shares)

12

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

481

486

483

Basic EPS (in dollars per share)

$ 0.82

$ 0.67

$ 0.56

$ 0.76

$ 0.61

$ 0.51

$ 0.77

$ 0.58

$ 2.81

$ 2.44

$ 2.28

Diluted EPS (in dollars per share)

$ 0.80

$ 0.65

$ 0.54

$ 0.74

$ 0.59

$ 0.50

$ 0.75

$ 0.56

$ 2.74

$ 2.38

$ 2.22

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

4.2 ¹

2.2 ¹

13.3 ¹

[1] 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.

Items Affecting Comparability of Net Income and Cash Flows (Details) (USD $)

In Millions, unless otherwise specified

12 Months Ended

3 Months Ended

12 Months Ended

Dec. 31, 2011

restaurants

Dec. 25, 2010

Dec. 26, 2009

Dec. 31, 2011

Closed Stores [Member]

Dec. 25, 2010

Closed Stores [Member]

Dec. 31, 2011

LJS and AW

Dec. 31, 2011

LJS and AW

Closures and impairment (income) expenses

Dec. 31, 2011

China

Dec. 25, 2010

China

Dec. 26, 2009

China

Dec. 31, 2011

YRI

Dec. 25, 2010

YRI

Dec. 26, 2009

YRI

Jul. 1, 2010

YRI

Russia

restaurants

Dec. 25, 2010

YRI

Mexico

Dec. 31, 2011

YRI

LJS and AW

Dec. 31, 2011

YRI

PH

UK

restaurants

Dec. 31, 2011

YRI

PH

UK

Refranchising (gain) loss

Dec. 25, 2010

YRI

PH

Mexico

restaurants

Dec. 26, 2009

YRI

PH

South Korea

Oct. 31, 2011

YRI

KFC

South Africa

restaurants

Dec. 25, 2010

YRI

KFC

Mexico

restaurants

Dec. 25, 2010

YRI

KFC

Taiwan

restaurants

Dec. 26, 2009

YRI

KFC

Taiwan

Dec. 31, 2011

U.S.

Dec. 25, 2010

U.S.

Dec. 26, 2009

U.S.

Dec. 31, 2011

U.S.

Employee Severance [Member]

Dec. 25, 2010

U.S.

Employee Severance [Member]

Dec. 26, 2009

U.S.

Employee Severance [Member]

Dec. 31, 2011

U.S.

LJS and AW

Dec. 26, 2009

U.S.

LJS and AW

Dec. 31, 2011

U.S.

KFC

restaurants

Dec. 25, 2010

U.S.

KFC

restaurants

Dec. 26, 2009

U.S.

KFC

Franchise and license fees and income

Dec. 31, 2011

Total amount allocated to segments

Dec. 25, 2010

Total amount allocated to segments

Dec. 26, 2009

Total amount allocated to segments

Mar. 24, 2012

Little Sheep Group Limited [Member]

Dec. 26, 2009

Little Sheep Group Limited [Member]

Feb. 1, 2012

Little Sheep Group Limited [Member]

Dec. 31, 2011

Little Sheep Group Limited [Member]

Dec. 26, 2009

Affiliate in Shanghai, China [Member]

Dec. 25, 2010

Affiliate in Shanghai, China [Member]

KFC

Dec. 26, 2009

Affiliate in Shanghai, China [Member]

KFC

May 4, 2009

Affiliate in Shanghai, China [Member]

KFC

restaurants

Facility Actions [Line Items]

Number of restaurants refranchised

123

222

124

Number of restaurants offered or decided to refranchise

350

250

600

Total losses related to long-lived assets held for use and measured at fair value on a non-recurring basis

$ 74

Goodwill impairment loss

0

12

7

26

U.S. Business Transformation [Abstract]

Charges relating to U.S. general and administrative productivity initiatives and realignment of resources

21

9

16

Unpaid portion of current severance liability related to U.S. Business Transformation

18

1

U.S. Business Transformation severance payments

4

7

26

Investments In US Brands

32

Income tax expense (benefit) related to goodwill impairment

0

Depreciation reduction from the impairment of restaurants we offered to sell

3

10

9

Divestiture of Business [Abstract]

Pre-tax losses recognized on business divestitures

86

80

Net tax benefit on business divestitures, including benefit on pre-tax losses and valuation allowance related to capital losses

(104)

Percentage impact on Franchise license fees and income

1.00%

5.00%

Percentage impact on Operating Profit

1.00%

Business Combination

Current ownership percentage

93.00%

27.00%

58.00%

Escrow deposit for pending acquisition

300

0

300

Letter of credit provided for pending acquisition

300

Number of restaurants acquired

68

Number of company owned stores acquired

50

Number of franchise owned stores to which we gained full rights and responsibilities as franchisor

81

Amount of cash paid to acquire interest in restaurants

60

71

Amount of long term note receivable settled as part of acquisition

11

Amount of long term debt assumed as part of acquisition

10

Remaining balance of the purchase price anticipated to be paid in cash

12

Additional percentage of ownership acquired (in hundredths)

66.00%

7.00%

Approximate number of restaurants operated

7,400

200

Amount paid to acquire an additional ownership percentage

584

103

12

Ownership percentage prior to acquisition (in hundredths)

51.00%

Recorded value of previously held ownership prior to acquisition

17

Gain on consolidation of a former unconsolidated affiliate in China

0

(68)¹

(68)

Income tax expense (benefit) related to consolidation of a former unconsolidated affiliate

0

Impact on Company Sales due to consolidation of a former unconsolidated affiliate in China

98

Impact on Franchise and license fees and income due to consolidation of a former unconsolidated affiliate in China

6

Impact on Operating Profit due to consolidation of a former unconsolidated affiliate in China

3

Facility Actions [Abstract]

Refranchising (gain) loss

72 ² ³

63 ² ⁴ ⁵

(26)⁴

(14)

(8)

(3)

69 ³

53 ⁴ ⁵

11 ⁴

52

10

17 ²

18 ²

(34)

Store closure (income) costs

(1)⁶

0 ⁶

(4)⁶

4 ⁶

2 ⁶

0 ⁶

4 ⁶

3 ⁶

13 ⁶

7 ⁶

5 ⁶

9 ⁶

Store impairment charges

13

16

13

18

12

22 ⁷

17

14

33

48

42

68 ⁷

Closure and impairment (income) expenses

135

47

103

12

16

9

22

14

22

21

17

46

55

47

77

Number of KFCs a Latin American franchise buyer will serve as the master franchisor for Mexico

102

Number of PHs a Latin American franchise buyer will serve as the master franchisor for Mexico

53

Carrying value of goodwill

681 ⁸

659

640

88

85

82

282

252

232

100

30

311 ⁸

322

326

Activity related to reserves for remaining lease obligations for closed stores [Roll Forward]

Beginning Balance

28

27

Amounts Used

(12)

New Decisions

17

8

Estimate/Decision Changes

2

0

CTA/Other

(1)

5

Ending Balance

$ 34

$ 28

[1] See Note 4 for further discussion of the consolidation of a former unconsolidated affiliate in Shanghai, China.

[2] U.S. refranchising losses in the years ended December 31, 2011 and December 25, 2010 are primarily due to losses on sales of and offers to refranchise KFCs in the U.S. There were approximately 250 and 600 KFC restaurants offered for refranchising as of December 31, 2011 and December 25, 2010, respectively. While we did not yet believe these KFCs met the criteria to be classified as held for sale, we did, consistent with our historical practice, review the restaurants for impairment as a result of our offer to refranchise. We recorded impairment charges where we determined that the carrying value of restaurant groups to be sold was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. For those restaurant groups deemed impaired, we wrote such restaurant groups down to our estimate of their fair values, which were based on the sales price we would expect to receive from a franchisee for each restaurant group. This fair value determination considered current market conditions, real-estate values, trends in the KFC U.S. business, prices for similar transactions in the restaurant industry and preliminary offers for the restaurant groups to date. The non-cash impairment charges that were recorded related to our offers to refranchise these company-operated KFC restaurants in the U.S. decreased depreciation expense versus what would have otherwise been recorded by $10 million and $9 million in the years ended December 31, 2011 and December 25, 2010, respectively. These depreciation reductions were not allocated to the U.S. segment resulting in depreciation expense in the U.S. segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the restaurant groups for any further necessary impairment until the date they are sold. The aforementioned non-cash impairment charges do not include any allocation of the KFC reporting unit goodwill in the restaurant group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the restaurant groups, or any subset of the restaurant groups, ultimately meet the criteria to be classified as held for sale. We will also be required to record a charge for the fair value of our guarantee of future lease payments for leases we assign to the franchisee upon any sale.

[3] During the year ended December 31, 2011 we decided to refranchise or close all of our remaining Company-operated Pizza Hut restaurants in the UK market. While an asset group comprising approximately 350 dine-in restaurants did not meet the criteria for held-for-sale classification as of December 31, 2011, our- decision to sell was considered an impairment indicator. As such we reviewed this asset group for potential impairment and determined that its carrying value was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. Accordingly, we wrote this asset group down to our estimate of its fair value, which is based on the sales price we would expect to receive from a buyer. This fair value determination considered current market conditions, trends in the Pizza Hut UK business, and prices for similar transactions in the restaurant industry and resulted in a non-cash pre-tax write-down of $74 million which was recorded to Refranchising (gain) loss. This impairment charge decreased depreciation expense versus what would have otherwise been recorded by $3 million in 2011. This depreciation reduction was not allocated to the YRI segment, resulting in depreciation expense in the YRI segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the asset group for any further necessary impairment until the date it is sold. The write-down does not include any allocation of the Pizza Hut UK reporting unit goodwill in the asset group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the asset group ultimately meets the criteria to be classified as held for sale. Upon the ultimate sale of the restaurants, depending on the form of the transaction, we could also be required to record a charge for the fair value of any guarantee of future lease payments for any leases we assign to a franchisee and for the cumulative foreign currency translation adjustment associated with Pizza Hut UK. The decision to refranchise or close all remaining Pizza Hut restaurants in the UK was considered to be a goodwill impairment indicator. We determined that the fair value of our Pizza Hut UK reporting unit exceeded its carrying value and as such there was no impairment of the approximately $100 million in goodwill attributable to the reporting unit.

[4] During the year ended December 26, 2009 we recognized a non-cash $10 million refranchising loss as a result of our decision to offer to refranchise our KFC Taiwan equity market. During the year ended December 25, 2010 we refranchised all of our remaining company restaurants in Taiwan, which consisted of 124 KFCs. We included in our December 25, 2010 financial statements a non-cash write-off of $7 million of goodwill in determining the loss on refranchising of Taiwan. Neither of these losses resulted in a related income tax benefit. The amount of goodwill write-off was based on the relative fair values of the Taiwan business disposed of and the portion of the business that was retained. The fair value of the business disposed of was determined by reference to the discounted value of the future cash flows expected to be generated by the restaurants and retained by the franchisee, which include a deduction for the anticipated royalties the franchisee will pay the Company associated with the franchise agreement entered into in connection with this refranchising transaction. The fair value of the Taiwan business retained consists of expected, net cash flows to be derived from royalties from franchisees, including the royalties associated with the franchise agreement entered into in connection with this refranchising transaction. We believe the terms of the franchise agreement entered into in connection with the Taiwan refranchising are substantially consistent with market. The remaining carrying value of goodwill related to our Taiwan business of $30 million, after the aforementioned write-off, was determined not to be impaired as the fair value of the Taiwan reporting unit exceeded its carrying amount.

[5] In the year ended December 25, 2010 we recorded a $52 million loss on the refranchising of our Mexico equity market as we sold all of our Company-owned restaurants, comprised of 222 KFCs and 123 Pizza Huts, to an existing Latin American franchise partner. The buyer is serving as the master franchisee for Mexico which had 102 KFC and 53 Pizza Hut franchise restaurants at the time of the transaction. The write-off of goodwill included in this loss was minimal as our Mexico reporting unit included an insignificant amount of goodwill. This loss did not result in any related income tax benefit.

[6] 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.

[7] The 2009 store impairment charges for YRI include $12 million of goodwill impairment for our Pizza Hut South Korea market.

[8] As a result of the LJS and A&W divestitures in 2011, we disposed of $26 million of goodwill that was fully impaired in 2009.

Supplemental Cash Flow Data (Details) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Cash Paid For:

Interest

$ 199

$ 190

$ 209

Income taxes

349

357

308

Significant Non-Cash Investing and Financing Activities:

Capital lease obligations incurred to acquire assets

58

16

7

Increase (decrease) in accrued capital expenditures

$ 55

$ 51

$ (17)

Franchise and License Fees and Income (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

4 Months Ended

12 Months Ended

Sep. 3, 2011

Jun. 11, 2011

Mar. 19, 2011

Sep. 4, 2010

Jun. 12, 2010

Mar. 20, 2010

Dec. 31, 2011

Dec. 25, 2010

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Franchise And License Fees And Income [Abstract]

Initial fees, including renewal fees

$ 68

$ 54

$ 57

Initial franchise fees included in refranchising gains

(21)

(15)

(17)

Initial fees, net

47

39

40

Continuing fees and rental income

1,686

1,521

1,383

Franchise and license fees and income

$ 420

$ 385

$ 374

$ 366

$ 354

$ 349

$ 554

$ 491

$ 1,733

$ 1,560

$ 1,423

Other (Income) Expense (Details) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Other Income and Expenses [Abstract]

Equity income from investments in unconsolidated affiliates

$ (47)

$ (42)

$ (36)

Gain upon consolidation of a former unconsolidated affiliate in China

0

(68)¹

Foreign exchange net (gain) loss and other

(6)

(1)

0

Other (income) expense

$ (53)

$ (43)

$ (104)

[1] See Note 4 for further discussion of the consolidation of a former unconsolidated affiliate in Shanghai, China.

Supplemental Balance Sheet Information (Details) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Prepaid Expenses and Other Current Assets

Income tax receivable

$ 150

$ 115

Assets held for sale

24

23

Other prepaid expenses and current assets

164

131

Prepaid expenses and other current assets

338

269

Property, Plant and Equipment [Line Items]

Property, Plant and equipment, gross

7,267

7,103

Accumulated depreciation and amortization

(3,225)

(3,273)

Property, Plant and equipment, net

4,042

3,830

Depreciation and amortization expense related to property, plant and equipment

599

565

553

Accounts Payable and Other Current Liabilities

Accounts payable

712

540

Accrued capital expenditures

229

174

Accrued compensation and benefits

440

357

Dividends payable

131

118

Accrued taxes, other than income taxes

112

95

Other current liabilities

250

318

Accounts payable and other current liabilities

1,874

1,602

Land

Property, Plant and Equipment [Line Items]

Property, Plant and equipment, gross

527

542

Buildings and improvements

Property, Plant and Equipment [Line Items]

Property, Plant and equipment, gross

3,856

3,709

Capital leases, primarily buildings

Property, Plant and Equipment [Line Items]

Property, Plant and equipment, gross

316

274

Machinery and equipment

Property, Plant and Equipment [Line Items]

Property, Plant and equipment, gross

$ 2,568

$ 2,578

Goodwill and Intangible Assets (Details) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 31, 2011

LJS and AW

Dec. 31, 2011

U.S.

Dec. 25, 2010

U.S.

Dec. 31, 2011

YRI

Dec. 25, 2010

YRI

Oct. 31, 2011

YRI

KFC

South Africa

restaurants

Dec. 31, 2011

China

Dec. 25, 2010

China

Changes in the carrying amount of goodwill [Roll Forward]

Goodwill, gross (beginning balance)

$ 702

$ 683

$ 348

$ 352

$ 269

$ 249

$ 85

$ 82

Accumulated impairment losses (beginning balance)

(43)

(26)

(17)

0

Goodwill, net (beginning balance)

659

640

322

326

252

232

85

82

Acquisitions

32 ¹

37 ²

0

32 ¹

37 ²

0

Disposals and other, net

(10)³

(18)³

(11)³

(4)³

(2)³

(17)³

3 ³

Goodwill, gross (ending balance)

698 ⁴

702

311 ⁴

348

299

269

88

85

Accumulated impairment losses (ending balance)

(17)⁴

(43)

0 ⁴

(26)

(17)

0

Goodwill, net (ending balance)

681 ⁴

659

311 ⁴

322

282

252

88

85

Number of restaurants acquired

68

Non-cash write-off of previously fully impaired Goodwill related to business divestitures

$ (26)

[1] We recorded goodwill in our YRI segment related to the acquisition of 68 stores in South Africa. See Note 4.

[2] We recorded goodwill in our YRI segment related to the July 1, 2010 exercise of our option with our Russian partner to purchase their interest in the co-branded Rostik’s-KFC restaurants across Russia and the Commonwealth of Independent States. See Note 4.

[3] Disposals and other, net includes the impact of foreign currency translation on existing balances and goodwill write-offs associated with refranchising.

[4] As a result of the LJS and A&W divestitures in 2011, we disposed of $26 million of goodwill that was fully impaired in 2009.

Goodwill and Intangible Assets (Details 2) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Definite-lived intangible assets

Gross Carrying Amount

$ 417

$ 628

Accumulated Amortization

(149)

(184)

Definite-lived intangible assets, amortization expense

31

29

25

Approximate amortization expense for definite-lived intangible assets - 2012

21

Approximate amortization expense for definite-lived intangible assets - 2013

19

Approximate amortization expense for definite-lived intangible assets - 2014

17

Approximate amortization expense for definite-lived intangible assets - 2015

16

Approximate amortization expense for definite-lived intangible assets - 2016

16

Trademarks/brands [Member]

Indefinite-lived intangible assets

Gross Carrying Amount

31

Trademarks/brands [Member] |
LJS and AW

Definite-lived intangible assets

Net definite-lived intangible assets written off related to divestiture of LJS and A&W

164

Finite-lived intangible assets, accumulated amortization written off related to divestiture of LJS and A&W

48

Finite-lived intangible assets, future amortization expense, reduction due to divestiture of LJS and A&W

8

Franchise contract rights [Member]

Definite-lived intangible assets

Gross Carrying Amount

130

163

Accumulated Amortization

(77)

(83)

Trademarks/brands [Member]

Definite-lived intangible assets

Gross Carrying Amount

28

234

Accumulated Amortization

(12)

(57)

Lease tenancy rights [Member]

Definite-lived intangible assets

Gross Carrying Amount

58

56

Accumulated Amortization

(12)

Favorable operating leases [Member]

Definite-lived intangible assets

Gross Carrying Amount

29

27

Accumulated Amortization

(13)

(10)

Reacquired franchise rights [Member]

Definite-lived intangible assets

Gross Carrying Amount

167

143

Accumulated Amortization

(33)

(20)

Other [Member]

Definite-lived intangible assets

Gross Carrying Amount

5

Accumulated Amortization

$ (2)

Short-term Borrowings and Long-term Debt (Details)

In Millions, unless otherwise specified

3 Months Ended

12 Months Ended

3 Months Ended

12 Months Ended

Jun. 11, 2011

USD ($)

Dec. 31, 2011

USD ($)

Dec. 25, 2010

USD ($)

Dec. 26, 2009

USD ($)

Dec. 31, 2011

Senior Unsecured Notes Due July 2012 [Member]

USD ($)

Dec. 31, 2011

Senior Unsecured Notes Due April 2016 [Member]

USD ($)

Dec. 31, 2011

Senior Unsecured Notes Due March 2018 [Member]

USD ($)

Dec. 31, 2011

Senior Unsecured Notes Due November 2037 [Member]

USD ($)

Dec. 31, 2011

Senior Unsecured Notes Due September 2015 [Member]

USD ($)

Dec. 31, 2011

Senior Unsecured Notes Due September 2019 [Member]

USD ($)

Dec. 31, 2011

Senior Unsecured Notes Due November 2020 [Member]

USD ($)

Sep. 3, 2011

Senior Unsecured Notes Due November 2021 [Member]

USD ($)

Years

Dec. 31, 2011

Senior Unsecured Notes Due November 2021 [Member]

USD ($)

Dec. 31, 2011

Senior Unsecured Notes Due September 2014 [Member]

USD ($)

Dec. 31, 2011

Senior Unsecured Notes Due September 2014 [Member]

CNY

Dec. 31, 2011

Line of Credit [Member]

USD ($)

Dec. 31, 2011

Line of Credit [Member]

Unsecured International Revolving Credit Facility [Member]

USD ($)

days

Dec. 25, 2010

Line of Credit [Member]

Unsecured International Revolving Credit Facility [Member]

USD ($)

Dec. 31, 2011

Line of Credit [Member]

Unsecured International Revolving Credit Facility [Member]

LIBOR [Member]

Dec. 31, 2011

Line of Credit [Member]

Unsecured International Revolving Credit Facility [Member]

Canadian Alternate Base Rate [Member]

Dec. 31, 2011

Line of Credit [Member]

Unsecured Revolving Credit Facility [Member]

USD ($)

Banks

Dec. 25, 2010

Line of Credit [Member]

Unsecured Revolving Credit Facility [Member]

USD ($)

Dec. 31, 2011

Line of Credit [Member]

Unsecured Revolving Credit Facility [Member]

LIBOR [Member]

Dec. 31, 2011

Line of Credit [Member]

Unsecured Revolving Credit Facility [Member]

Alternate Base Rate [Member]

Dec. 31, 2011

Senior Unsecured Notes [Member]

USD ($)

Months

days

Dec. 25, 2010

Senior Unsecured Notes [Member]

USD ($)

Dec. 31, 2011

Other Debt [Member]

USD ($)

Dec. 25, 2010

Other Debt [Member]

USD ($)

Short-term Borrowings

Current maturities of long-term debt

$ 315

$ 668

Current portion of fair value hedge accounting adjustment

5

Revolving credit facilities, current

0

Total Short-term Borrowings

320

673

Long-term Debt

Long-term debt

3,012

3,257

0

64

Capital lease obligations

279

236

Total long-term debt

3,291

3,557

Current maturities of long-term debt

(315)

(668)

Long-term debt excluding long-term portion of hedge accounting adjustment

2,976

2,889

Long-term portion of fair value hedge accounting adjustment

21

26

Long-term debt including hedge accounting adjustment

2,997

2,915

Capital Lease Obligations Excluded from Annual Maturities

279

236

Derivative Instrument Adjustments Excluded from Annual Maturities Table

26

Minimum principal payment failure amount that constitutes default

100

50

Line of Credit Facility [Abstract]

Line of credit facility, maximum borrowing capacity

350

1,150

Line of credit facility, expiration date

November 2012

Line of credit facility, number of participating banks

6

24

Line of credit facility, minimum commitment from participating banks

35

20

Line of credit facility, maximum commitment from participating banks

90

93

Unused Credit Facility

350

727

Outstanding letters of credit

423

Outstanding borrowings

0

Debt instrument, lower range of basis spread on variable rate

0.31%

0.25%

Debt instrument, upper range of basis spread on variable rate

1.50%

1.25%

Debt instrument, description of variable rate basis

LIBOR

Canadian Alternate Base Rate

LIBOR

Alternate Base Rate

Debt instrument, basis spread on variable rate

0.50%

Senior Unsecured Notes [Abstract]

Issuance date

June 2002 ¹

April 2006 ¹

October 2007 ¹

August 2009 ¹

August 2010 ¹

August 2011 ¹

September 2011 ¹

Maturity date

July 2012

April 2016

March 2018

November 2037

September 2015

September 2019

November 2020

November 2021

September 2014

Principal amount

263

300

600

250

350

56

350

Interest rate, stated (in hundredths)

7.70%

6.25%

6.88%

4.25%

5.30%

3.88%

3.75%

2.38%

Interest rate, effective (in hundredths)

8.06% ²

6.03% ²

6.38% ²

7.29% ²

4.44% ²

5.59% ²

4.01% ²

3.88% ²

2.92% ²

Maturity date range, start

2012

Maturity date range, end

2037

Interest rate, stated, minimum (in hundredths)

2.38%

Interest rate, stated, maximum (in hundredths)

7.70%

Maturity term

10

Repayments of Senior Unsecured Notes

650

Number of months until first required interest payment after debt issuance

6

Frequency of interest payments

semi-annually

Senior unsecured notes number of days notice on default

30

Annual maturities of short-term borrowings and long-term debt excluding capital lease obligations and derivative instrument adjustments [Abstract]

2012

263

2013

0

2014

56

2015

250

2016

300

Thereafter

2,150

Total

3,019

Interest expense on short-term borrowings and long-term debt

$ 184

$ 195

$ 212

[1] Interest payments commenced six months after issuance date and are payable semi-annually thereafter.

[2] Includes the effects of the amortization of any (1) premium or discount; (2) debt issuance costs; and (3) gain or loss upon settlement of related treasury locks and forward-starting interest rate swaps utilized to hedge the interest rate risk prior to the debt issuance. Excludes the effect of any swaps that remain outstanding as described in Note 12.

Leases (Details) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Years

restaurants

Dec. 25, 2010

Dec. 26, 2009

Leases [Abstract]

Approximate number of restaurants operated

7,400

Approximate number of restaurants operated on leased land and/or buildings

6,200

Maximum duration of lease commitments from inception for the vast majority of our lease commitments (in years)

20

Year longest lease expires

2151

Capital leases, future minimum commitments [Abstract]

2012

$ 65

2013

27

2014

26

2015

26

2016

26

Thereafter

267

Capital leases, total future minimum commitments

437

Operating leases, future minimum commitments [Abstract]

2012

612

2013

578

2014

538

2015

494

2016

462

Thereafter

2,653

Operating leases, total future minimum commitments

5,337

Direct financing leases, lease receivables [Abstract]

2012

3

2013

2

2014

2

2015

2

2016

2

Thereafter

14

Direct financing leases, total lease receivables

25

Operating leases, lease receivables [Abstract]

2012

49

2013

42

2014

39

2015

35

2016

31

Thereafter

139

Operating leases, total lease receivables

335

Present value of minimum payments under capital leases

279

236

Unearned income associated with direct financing lease receivables

14

Rental expense

Minimum

625

565

541

Contingent

233

158

123

Total rental expense

858

723

664

Minimum rental income

$ 66

$ 44

$ 38

Derivative Instruments (Details) (USD $)

In Millions, unless otherwise specified

Dec. 31, 2011

Dec. 25, 2010

Derivatives, Fair Value [Line Items]

Total fair value of derivatives designated as hedging instruments

$ 34

$ 45

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

26

Interest Rate Swaps

Derivatives, Fair Value [Line Items]

Notional amount of interest rate derivative instruments outstanding

550

Interest Rate Swaps |
Prepaid Expenses and other current assets

Derivatives, Fair Value [Line Items]

Derivative assets

10

8

Interest Rate Swaps |
Other assets

Derivatives, Fair Value [Line Items]

Derivative assets

22

33

Interest Rate Swaps |
Short-term borrowings

Derivatives, Fair Value [Line Items]

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

5

Interest Rate Swaps |
Long-term debt

Derivatives, Fair Value [Line Items]

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

21

26

Foreign Currency Forwards

Derivatives, Fair Value [Line Items]

Notional amount of foreign currency derivative instruments outstanding

459

Foreign Currency Forwards |
Prepaid Expenses and other current assets

Derivatives, Fair Value [Line Items]

Derivative assets

3

7

Foreign Currency Forwards |
Accounts payable and other current liabilities

Derivatives, Fair Value [Line Items]

Derivative liability

$ (1)

$ (3)

Derivative Instruments (Details 2) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Derivative Instruments, Gain (Loss) [Line Items]

Net deferred loss within AOCI due to treasury locks and forward starting interest rate swaps that have been cash settled

$ 12

$ 13

Interest Rate Swaps |
Fair value hedging |
Interest expense, net

Derivative Instruments, Gain (Loss) [Line Items]

Reduction to Interest Expense, net for recognized gains on interest rate swaps

24

33

Foreign Currency Forwards

Derivative Instruments, Gain (Loss) [Line Items]

Gains (losses) recognized into OCI, net of tax

2

32

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

$ 1

$ 33

Fair Value Disclosures (Details) (USD $)

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]

Fair Value, Level 1 to level 2 Transfers, Amount

$ 0

Fair Value, Level 2 to level 1 Transfers, Amount

0

Debt obligations, excluding capital leases, estimate of fair value

3,500,000,000

Debt obligations, excluding capital leases, carrying amount

3,000,000,000

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Derivative assets (liabilities), net

34,000,000

45,000,000

Recurring basis

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Total

49,000,000

59,000,000

Recurring basis |
Level 1 [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Other Investments

15,000,000

14,000,000

Recurring basis |
Level 2 [Member] |
Foreign Currency Forwards, net

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Derivative assets (liabilities), net

2,000,000

4,000,000

Recurring basis |
Level 2 [Member] |
Interest Rate Swaps, net

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Derivative assets (liabilities), net

32,000,000

41,000,000

Non-recurring basis

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Long-lived assets held for use

50,000,000

184,000,000

Total losses related to long-lived assets held for use and measured at fair value on a non-recurring basis

128,000,000

110,000,000

Non-recurring basis |
Refranchising (gain) loss

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Total losses related to long-lived assets held for use and measured at fair value on a non-recurring basis

95,000,000

80,000,000

Non-recurring basis |
Closures and impairment (income) expenses

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Total losses related to long-lived assets held for use and measured at fair value on a non-recurring basis

33,000,000

30,000,000

Non-recurring basis |
Level 1 [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Long-lived assets held for use

0

Non-recurring basis |
Level 2 [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Long-lived assets held for use

0

Non-recurring basis |
Level 3 [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Long-lived assets held for use

$ 50,000,000

$ 184,000,000

Pension, Retiree Medical and Retiree Savings Plans (Details) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Amounts recognized as a loss in Accumulated Other Comprehensive Income:

Accumulated benefit obligation

$ 1,496

$ 1,212

Assumed health care cost trend rates [Abstract]

Year that rate reaches ultimate trend rate

2028

Effect of one-percentage point change in assumed health care cost trend rates [Abstract]

Maximum 401(k) participant contribution of eligible compensation

75.00%

Company match of participant contribution up to 6% of eligible compensation

100.00%

Maximum company match of participant contribution of eligible compensation

6.00%

Defined Contribution Plan, Cost Recognized

14

15

16

U.S. Pension Plans [Member]

Change in benefit obligation

Benefit obligation at beginning of year

1,108

1,010

Service cost

24

25

26

Interest cost

64

62

58

Participant contributions

0

Curtailment gain

(7)

(2)

Settlement loss

0

(1)

Special termination benefits

5 ¹

1 ¹

4 ¹

Exchange rate changes

0

Benefits paid

(40)

(57)

Settlement payments

0

(9)

Actuarial (gain) loss

227

77

Benefit obligation at end of year

1,381

1,108

1,010

Change in plan assets

Fair value of plan assets at beginning of year

907

835

Actual return on plan assets

83

108

Employer contributions

53

35

Participant contributions

0

Settlement payments

0

(9)

Benefits paid

(40)

(57)

Exchange rate changes

0

Administrative expenses

(5)

Fair value of plan assets at end of year

998

907

835

Funded status at end of year

(383)

(201)

Amounts recognized in the Consolidated Balance Sheet:

Accrued benefit asset - non-current

0

Accrued benefit liability - current

(14)

(10)

Accrued benefit liability - non-current

(369)

(191)

Accrued benefit amounts recognized

(383)

(201)

Amounts recognized as a loss in Accumulated Other Comprehensive Income:

Actuarial net loss

540

359

Prior service cost

3

4

Amounts recognized as a loss in Accumulated Other Comprehensive Income

543

363

346

Information for pension plans with an accumulated benefit obligation in excess of plan assets:

Projected benefit obligation

1,381

1,108

Accumulated benefit obligation

1,327

1,057

Fair value of plan assets

998

907

Information for pension plans with a projected benefit obligation in excess of plan assets:

Projected benefit obligation

1,381

1,108

Accumulated benefit obligation

1,327

1,057

Fair value of plan assets

998

907

Discretionary funding contributions in next year

30

Components of net periodic benefit cost:

Service cost

24

25

26

Interest cost

64

62

58

Amortization of prior service cost

1 ²

Expected return on plan assets

(71)

(70)

(59)

Amortization of net loss

31

23

13

Net periodic benefit cost

49

41

39

Additional loss recognized due to:

Settlement

0 ³

3 ³

2 ³

Special termination benefits

5 ¹

1 ¹

4 ¹

Pension losses in accumulated other comprehensive income (loss):

Beginning of year

363

346

Net actuarial (gain) loss

219

43

Curtailment gain

(7)

(2)

Amortization of net loss

(31)

(23)

Amortization of prior service cost

(1)

Exchange rate changes

0

End of year

543

363

346

Amounts that will be amortized from accumulated other comprehensive loss in next fiscal year [Abstract]

Estimated net loss that will be amortized from accumulated other comprehensive loss into net periodic pension cost next year

63

Estimated prior service cost that will be amortized from accumulated other comprehensive loss into net periodic pension cost next year

1

Weighted-average assumptions used to determine benefit obligations at the measurement dates:

Discount rate (in hundredths)

4.90%

5.90%

Rate of compensation increase (in hundredths)

3.75%

Weighted-average assumptions used to determine the net periodic benefit cost for fiscal years:

Discount rate (in hundredths)

5.90%

6.30%

6.50%

Long-term rate return on plan assets (in hundredths)

7.75%

8.00%

Rate of compensation increase (in hundredths)

3.75%

Plan Assets [Abstract]

Percentage of total pension plan assets composed of investments (in hundredths)

85.00%

Equity securities, target allocation (in hundredths)

55.00%

Fixed income securities, target allocation (in hundredths)

45.00%

Value of mutual fund held as an investment that includes YUM stock

0.7

0.6

Approximate percentage of total plan assets in investment that includes YUM stock (in hundredths)

1.00%

Net payable for unsettled transactions

51

Benefit Payments [Abstract]

2012

68

2013

50

2014

47

2015

50

2016

51

2017 - 2021

309

U.S. Pension Plans [Member] |
Level 1 [Member] |
Cash [Member]

Change in plan assets

Fair value of plan assets at end of year

1 ⁴

U.S. Pension Plans [Member] |
Level 2 [Member] |
Cash Equivalents [Member]

Change in plan assets

Fair value of plan assets at end of year

62 ⁴

U.S. Pension Plans [Member] |
Level 2 [Member] |
Equity Securities - U.S. Large cap [Member]

Change in plan assets

Fair value of plan assets at end of year

324 ⁵

U.S. Pension Plans [Member] |
Level 2 [Member] |
Equity Securities - U.S. Mid cap [Member]

Change in plan assets

Fair value of plan assets at end of year

54 ⁵

U.S. Pension Plans [Member] |
Level 2 [Member] |
Equity Securities - U.S. Small cap [Member]

Change in plan assets

Fair value of plan assets at end of year

54 ⁵

U.S. Pension Plans [Member] |
Level 2 [Member] |
Equity Securities - Non-U.S. [Member]

Change in plan assets

Fair value of plan assets at end of year

88 ⁵

U.S. Pension Plans [Member] |
Level 2 [Member] |
Fixed Income Securities - U.S. Corporate [Member]

Change in plan assets

Fair value of plan assets at end of year

263 ⁵

U.S. Pension Plans [Member] |
Level 2 [Member] |
Fixed Income Securities - Non-U.S. Corporate [Member]

Change in plan assets

Fair value of plan assets at end of year

0 ⁵

U.S. Pension Plans [Member] |
Level 2 [Member] |
Fixed Income Securities - U.S. Government and Government Agencies [Member]

Change in plan assets

Fair value of plan assets at end of year

164 ⁶

U.S. Pension Plans [Member] |
Level 2 [Member] |
Fixed Income Securities - Non-U.S. Government [Member]

Change in plan assets

Fair value of plan assets at end of year

39 ⁵ ⁶

U.S. Pension Plans [Member] |
Level 2 [Member] |
Alternative Investments [Member]

Change in plan assets

Fair value of plan assets at end of year

0 ⁵

U.S. Pension Plans [Member] |
Amount settled prior to year end [Member]

Change in plan assets

Fair value of plan assets at end of year

1,049 ⁷

International Pension Plans [Member]

Change in benefit obligation

Benefit obligation at beginning of year

187

176

Service cost

5

6

5

Interest cost

10

9

7

Participant contributions

1

2

Curtailment gain

(10)

0

Settlement loss

0

Special termination benefits

0

Exchange rate changes

1

(9)

Benefits paid

(2)

(4)

Settlement payments

0

Actuarial (gain) loss

(5)

7

Benefit obligation at end of year

187

176

Change in plan assets

Fair value of plan assets at beginning of year

164

141

Actual return on plan assets

10

14

Employer contributions

10

17

Participant contributions

1

2

Settlement payments

0

Benefits paid

(2)

(4)

Exchange rate changes

0

(6)

Administrative expenses

0

Fair value of plan assets at end of year

183

164

141

Funded status at end of year

(4)

(23)

Amounts recognized in the Consolidated Balance Sheet:

Accrued benefit asset - non-current

8

0

Accrued benefit liability - current

0

Accrued benefit liability - non-current

(12)

(23)

Accrued benefit amounts recognized

(4)

(23)

Amounts recognized as a loss in Accumulated Other Comprehensive Income:

Actuarial net loss

30

46

Prior service cost

0

Amounts recognized as a loss in Accumulated Other Comprehensive Income

30

46

48

Information for pension plans with an accumulated benefit obligation in excess of plan assets:

Projected benefit obligation

0

Accumulated benefit obligation

0

Fair value of plan assets

0

Information for pension plans with a projected benefit obligation in excess of plan assets:

Projected benefit obligation

99

187

Accumulated benefit obligation

87

155

Fair value of plan assets

87

164

Discretionary funding contributions in next year

0

Components of net periodic benefit cost:

Service cost

5

6

5

Interest cost

10

9

7

Amortization of prior service cost

0 ²

Expected return on plan assets

(12)

(9)

(7)

Amortization of net loss

2

Net periodic benefit cost

5

8

7

Additional loss recognized due to:

Settlement

0 ³

Special termination benefits

0

Pension losses in accumulated other comprehensive income (loss):

Beginning of year

46

48

Net actuarial (gain) loss

(5)

2

Curtailment gain

(10)

0

Amortization of net loss

(2)

Amortization of prior service cost

0

Exchange rate changes

1

(2)

End of year

30

46

48

Amounts that will be amortized from accumulated other comprehensive loss in next fiscal year [Abstract]

Estimated net loss that will be amortized from accumulated other comprehensive loss into net periodic pension cost next year

1

Weighted-average assumptions used to determine benefit obligations at the measurement dates:

Discount rate (in hundredths)

4.75%

5.40%

Rate of compensation increase (in hundredths)

3.85%

4.42%

Weighted-average assumptions used to determine the net periodic benefit cost for fiscal years:

Discount rate (in hundredths)

5.40%

5.50%

5.51%

Long-term rate return on plan assets (in hundredths)

6.64%

6.66%

7.20%

Rate of compensation increase (in hundredths)

4.41%

4.42%

4.12%

Benefit Payments [Abstract]

2012

1

2013

1

2014

1

2015

1

2016

1

2017 - 2021

8

International Pension Plans [Member] |
Level 1 [Member] |
Cash [Member]

Change in plan assets

Fair value of plan assets at end of year

0 ⁴

International Pension Plans [Member] |
Level 2 [Member] |
Cash Equivalents [Member]

Change in plan assets

Fair value of plan assets at end of year

0 ⁴

International Pension Plans [Member] |
Level 2 [Member] |
Equity Securities - U.S. Large cap [Member]

Change in plan assets

Fair value of plan assets at end of year

0 ⁵

International Pension Plans [Member] |
Level 2 [Member] |
Equity Securities - U.S. Mid cap [Member]

Change in plan assets

Fair value of plan assets at end of year

0 ⁵

International Pension Plans [Member] |
Level 2 [Member] |
Equity Securities - U.S. Small cap [Member]

Change in plan assets

Fair value of plan assets at end of year

0 ⁵

International Pension Plans [Member] |
Level 2 [Member] |
Equity Securities - Non-U.S. [Member]

Change in plan assets

Fair value of plan assets at end of year

109 ⁵

International Pension Plans [Member] |
Level 2 [Member] |
Fixed Income Securities - U.S. Corporate [Member]

Change in plan assets

Fair value of plan assets at end of year

0 ⁵

International Pension Plans [Member] |
Level 2 [Member] |
Fixed Income Securities - Non-U.S. Corporate [Member]

Change in plan assets

Fair value of plan assets at end of year

23 ⁵

International Pension Plans [Member] |
Level 2 [Member] |
Fixed Income Securities - U.S. Government and Government Agencies [Member]

Change in plan assets

Fair value of plan assets at end of year

0 ⁶

International Pension Plans [Member] |
Level 2 [Member] |
Fixed Income Securities - Non-U.S. Government [Member]

Change in plan assets

Fair value of plan assets at end of year

11 ⁵ ⁶

International Pension Plans [Member] |
Level 2 [Member] |
Alternative Investments [Member]

Change in plan assets

Fair value of plan assets at end of year

40 ⁵

International Pension Plans [Member] |
Amount settled prior to year end [Member]

Change in plan assets

Fair value of plan assets at end of year

183

Post-retirement Plan [Member]

Change in benefit obligation

Special termination benefits

1

Amounts recognized as a loss in Accumulated Other Comprehensive Income:

Actuarial net loss

(12)

(6)

Accumulated benefit obligation

86

78

Components of net periodic benefit cost:

Net periodic benefit cost

6

7

Additional loss recognized due to:

Special termination benefits

1

Benefit Payments [Abstract]

2012

7

2013

7

2014

7

2015

7

2016

7

2017 - 2021

29

Assumed health care cost trend rates [Abstract]

Assumed health care cost trend rate (in hundredths)

7.50%

7.70%

Ultimate trend rate (in hundredths)

4.50%

Effect of one-percentage point change in assumed health care cost trend rates [Abstract]

One percentage-point increase in assumed health care cost trend rates, maximum impact to service and interest cost

1

One percentage-point decrease in assumed health care cost trend rates, maximum impact to service and interest cost

1

One percentage-point increase in assumed health care cost trend rates, maximum impact to post-retirement benefit obligation

1

One percentage-point decrease in assumed health care cost trend rates, maximum impact to post-retirement benefit obligation

1

Accumulated Other Comprehensive Income (Loss) [Member] |
UK Pension Plans [Member]

Defined Benefit Plan Disclosure [Line Items]

Recognized net gain (loss) due to curtailment

$ 10

[1] Special termination benefits primarily related to the U.S. business transformation measures taken in 2011, 2010 and 2009.

[2] Prior service costs are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits.

[3] Settlement loss results from benefit payments from a non-funded plan exceeding the sum of the service cost and interest cost for that plan during the year.

[4] Short-term investments in money market funds

[5] Securities held in common trusts

[6] Investments held by the Plan are directly held

[7] Excludes net payable of $51 million in the U.S. for purchases of assets included in the above that were settled after year end

Share-based and Deferred Compensation Plans (Details) (USD $)

In Millions, except Share data, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Years

groups

plans

Dec. 25, 2010

Years

Dec. 26, 2009

Years

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Number of stock award plans in effect

4

Approximate number of shares available for grant (in shares)

19,000,000

Weighted-average assumptions used in the Black-Scholes option-pricing model [Abstract]

Risk-free interest rate (in hundredths)

2.00%

2.40%

1.90%

Expected term (years)

5.9

6.0

5.9

Expected volatility (in hundredths)

28.20%

30.00%

32.30%

Expected dividend yield (in hundredths)

2.00%

2.50%

2.60%

Number of homogeneous groups appropriate to group awards into when estimating expected term

2

Graded vesting schedule of grants made to executives under other stock award plans

25% per year

Average number of years after which restaurant-level employees exercised stock awards

5 years

Average number of years after which executives exercised stock awards

6 years

Summary of award activity - Stock options and SARs, additional disclosures [Abstract]

Options outstanding at the end of the year (in shares)

8,161,000

SARs outstanding at the end of the year (in shares)

25,347,000

Options outstanding at the end of the year, Weighted-average exercise price (in dollars per share)

$ 21.56

SARs outstanding at the end of the year, Weighted-average exercise price (in dollars per share)

$ 34.41

Impact on net income [Abstract]

Allocated Share-based Compensation Expense

$ 59

$ 47

$ 56

Deferred Tax Benefit recognized

18

13

17

EID compensation expense not share-based

2

4

Cash received from stock options exercises

59

102

113

Tax benefit realized on tax returns from tax deductions associated with stock options and SARs exercised

72

82

68

Restricted Stock Units and Performance Share Units [Member]

Summary of award activity - Stock options and SARs, additional disclosures [Abstract]

Unrecognized compensation cost

10

Unvested RSUs and PSUs

1,000,000

Stock Options and Stock Appreciation Rights [Member]

Summary of award activity - Stock options and SARs [Roll Forward]

Outstanding at the beginning of the year (in shares)

36,438,000

Granted (in shares)

5,023,000

Exercised (in shares)

(6,645,000)

Forfeited or expired (in shares)

(1,308,000)

Outstanding at the end of the year (in shares)

33,508,000 ¹

36,438,000

Summary of award activity - Stock options and SARs, additional disclosures [Abstract]

Outstanding at the beginning of the year, Weighted-average exercise price (in dollars per share)

$ 26.91

Granted, Weighted-average exercise price (in dollars per share)

$ 49.59

Exercised, Weighted-average exercise price (in dollars per share)

$ 20.33

Forfeited or expired, Weighted-average exercise price (in dollars per share)

$ 35.52

Outstanding at the end of the year, Weighted-average exercise price (in dollars per share)

$ 31.28

$ 26.91

Outstanding at the end of the year, Weighted-average remaining contractual term (in years)

5.96

Outstanding at the end of the year, Aggregate intrinsic value (in dollars)

929

Exercisable at the end of the year (in shares)

18,709,000

Exercisable at the end of the year, Weighted-average exercise price (in dollars per share)

$ 26.00

Exercisable at the end of the year, Weighted-average remaining contractual term (in years)

4.48

Exercisable at the end of the year, Aggregate intrinsic value (in dollars)

618

Weighted-average grant-date fair value of awards granted (in dollars per share)

$ 11.78

$ 8.21

$ 7.29

Total intrinsic value of stock options and SARs exercised

226

259

217

Unrecognized compensation cost

82

Unrecognized compensation cost, weighted-average period of recognition (in years)

2.5

Total fair value at grant date of awards vested

43

47

52

Impact on net income [Abstract]

Allocated Share-based Compensation Expense

49

40

48

Restricted Stock Units (RSUs) [Member]

Impact on net income [Abstract]

Allocated Share-based Compensation Expense

5

7

Performance Share Units [Member]

Impact on net income [Abstract]

Allocated Share-based Compensation Expense

$ 5

$ 2

$ 1

Long Term Incentive Plans [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Minimum vesting period of outstanding awards (in years)

immediate

Maximum vesting period of outstanding awards (in years)

5 years

Period after grant when outstanding awards expire (in years)

10 years

Restaurant General Manager Stock Option Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Period after grant when outstanding awards expire (in years)

10 years

Vesting period (in years)

4 years

SharePower Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Period after grant when outstanding awards expire (in years)

10 years

Vesting period (in years)

4 years

Executive Income Deferral Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Percentage of Company match on amount deferred (in hundredths)

33.00%

Vesting period of deferred incentive compensation receiving Company match (in years)

2 years

[1] Outstanding awards include 8,161 options and 25,347 SARs with average exercise prices of $21.56 and $34.41, respectively.

Shareholders' Equity (Details) (USD $)

In Millions, except Share data, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Repurchase Of Shares Of The Company's Common Stock [Line Items]

Shares Repurchased (in shares)

14,305,000 ¹

9,759,000 ¹

0

Dollar Value of Shares Repurchased

$ 733 ¹

$ 390 ¹

$ 0

Value of share repurchases in current fiscal year but with settlement dates in subsequent year

19

Value of share repurchases in current fiscal year but with settlement dates in subsequent year (in shares)

400,000

Accumulated other comprehensive income (loss), net of tax [Abstract]

Foreign currency translation adjustment

140

55

Pension and post-retirement losses, net of tax

(375)

(269)

Net unrealized losses on derivative instruments, net of tax

(12)

(13)

Total accumulated other comprehensive income (loss)

(247)

(227)

November 2011 [Member]

Repurchase Of Shares Of The Company's Common Stock [Line Items]

Shares Repurchased (in shares)

0

Dollar Value of Shares Repurchased

0

Authorized Share Repurchases

750

Expiration Date Of Share Repurchase Authorization

May 2013

January 2011 [Member]

Repurchase Of Shares Of The Company's Common Stock [Line Items]

Shares Repurchased (in shares)

10,864,000

0

Dollar Value of Shares Repurchased

562

0

Remaining dollar value of shares that may be repurchased

188

March 2010 [Member]

Repurchase Of Shares Of The Company's Common Stock [Line Items]

Shares Repurchased (in shares)

3,441,000

2,161,000

0

Dollar Value of Shares Repurchased

171

107

0

September 2009 [Member]

Repurchase Of Shares Of The Company's Common Stock [Line Items]

Shares Repurchased (in shares)

0

7,598,000

0

Dollar Value of Shares Repurchased

$ 0

$ 283

$ 0

[1] 2011 amount excludes and 2010 amount includes the effect of $19 million in share repurchases (0.4 million shares) with trade dates prior to the 2010 fiscal year end but cash settlement dates subsequent to the 2010 fiscal year.

Income Taxes (Details) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

U.S. and foreign income before income taxes [Abstract]

U.S.

$ 266

$ 345

$ 269

Foreign

1,393

1,249

1,127

Income Before Income Taxes

1,659 ¹ ² ³ ⁴

1,594 ¹ ³ ⁴

1,396 ¹ ² ³ ⁵

Details of income tax provision (benefit) [Abstract]

Current: Federal

78

155

(21)

Current: Foreign

374

356

251

Current: State

9

15

11

Total current income tax provision (benefit)

461

526

241

Deferred: Federal

(83)

(82)

92

Deferred: Foreign

(40)

(29)

(30)

Deferred: State

(14)

1

10

Total deferred income tax provision (benefit)

(137)

(110)

72

Total income tax provision (benefit)

324

416

313

Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract]

U.S. federal statutory tax

580

558

489

State income tax, net of federal tax benefit

2

12

14

Statutory rate differential attributable to foreign operations

(218)

(235)

(159)

Adjustments to reserves and prior years

24

55

(9)

Net tax benefit from LJS and A&W divestitures

(72)

0

Change in valuation allowance

22

(9)

Other, net

(14)

4

(13)

Total income tax provision (benefit)

324

416

313

Effective income tax rate reconciliation [Abstract]

U.S. federal statutory rate (in hundredths)

35.00%

State income tax, net of federal tax benefit (in hundredths)

0.10%

0.70%

1.00%

Statutory rate differential attributable to foreign operations (in hundredths)

(13.10%)

(14.70%)

(11.40%)

Adjustments to reserves and prior years (in hundredths)

1.40%

3.50%

(0.60%)

Net tax benefit from LJS and A&W divestitures (in hundreths)

(4.30%)

0.00%

Change in valuation allowance (in hundredths)

1.30%

1.40%

(0.70%)

Other, net (in hundredths)

(0.90%)

0.20%

(0.90%)

Effective income tax rate (in hundredths)

19.50%

26.10%

22.40%

Change in adjustments to reserves and prior years, impact on effective tax rate (in hundredths)

(1.60%)

Income Tax And Effective Tax Rate [Abstract]

Gain on consolidation of a former unconsolidated affiliate in China

0

(68)⁶

Affiliate in Shanghai, China [Member]

Income Tax And Effective Tax Rate [Abstract]

Gain on consolidation of a former unconsolidated affiliate in China

(68)

Income tax expense (benefit) related to consolidation of a former unconsolidated affiliate

0

LJS and AW

Income Tax And Effective Tax Rate [Abstract]

Tax benefit recognized on business divestitures

(117)

Tax benefit on net pre-tax losses and other costs related to business divestitures

(32)

Pre-tax losses recognized on business divestitures

86

Net tax benefit on business divestitures, including benefit on pre-tax losses and valuation allowance related to capital losses

(104)

U.S. |
LJS and AW

Income Tax And Effective Tax Rate [Abstract]

Goodwill impairment loss

26

Income tax expense (benefit) related to goodwill impairment

0

U.S. state [Member] |
LJS and AW

Income Tax And Effective Tax Rate [Abstract]

Tax benefit recognized on business divestitures

(8)

Current Year Operations

Changes in valuation allowance [Roll Forward]

Valuation Allowance, Change in Amount

15

25

16

Current Year Operations |
LJS and AW

Changes in valuation allowance [Roll Forward]

Valuation Allowance, Change in Amount

45

Current Year Operations |
U.S. state [Member] |
LJS and AW

Changes in valuation allowance [Roll Forward]

Valuation Allowance, Change in Amount

4

Changes in Judgement

Changes in valuation allowance [Roll Forward]

Valuation Allowance, Change in Amount

$ 7

$ (3)

$ (25)

[1] 2011, 2010 and 2009 include approximately $21 million, $9 million and $16 million, respectively, of charges relating to U.S. general and administrative productivity initiatives and realignment of resources. See Note 4.

[2] 2011 represents net losses resulting from the LJS and A&W divestitures. 2009 includes a $26 million charge to write-off goodwill associated with our LJS and A&W businesses in the U.S. See Note 9.

[3] Includes equity income from investments in unconsolidated affiliates of $47 million, $42 million and $36 million in 2011, 2010 and 2009, respectively, for China.

[4] 2011 and 2010 include depreciation reductions arising from the impairment of KFC restaurants we offered to sell of $10 million and $9 million, respectively. 2011 includes a depreciation reduction arising from the impairment of Pizza Hut UK restaurants we decided to sell in 2011 of $3 million. See Note 4.

[5] 2009 includes a $68 million gain related to the acquisition of additional interest in and consolidation of a former unconsolidated affiliate in China. See Note 4.

[6] See Note 4 for further discussion of the consolidation of a former unconsolidated affiliate in Shanghai, China.

Income Taxes (Details 2) (USD $)

Dec. 31, 2011

Dec. 25, 2010

Net deferred tax assets (liabilities) [Abstract]

Operating loss and tax credit carryforwards

$ 590,000,000

$ 335,000,000

Employee benefits

259,000,000

171,000,000

Share-based compensation

106,000,000

102,000,000

Self-insured casualty claims

47,000,000

50,000,000

Lease related liabilities

137,000,000

166,000,000

Various liabilities

72,000,000

89,000,000

Deferred income and other

49,000,000

97,000,000

Gross deferred tax assets

1,260,000,000

1,010,000,000

Deferred tax asset valuation allowances

(368,000,000)

(306,000,000)

Net deferred tax assets

892,000,000

704,000,000

Intangible assets, including goodwill

(147,000,000)

(211,000,000)

Property, plant and equipment

(92,000,000)

(108,000,000)

Other

(53,000,000)

(29,000,000)

Gross deferred tax liabilities

(292,000,000)

(348,000,000)

Net deferred tax assets (liabilities)

600,000,000

356,000,000

Reported in Consolidated Balance Sheets as:

Deferred income taxes - current

112,000,000

61,000,000

Deferred income taxes - long-term

549,000,000

366,000,000

Accounts payable and other current liabilities

(16,000,000)

(20,000,000)

Other liabilities and deferred credits

(45,000,000)

(51,000,000)

Net deferred tax assets (liabilities)

600,000,000

356,000,000

Undistributed foreign earnings [Member]

Deferred tax liability not recognized [Line Items]

Cumulative amount of the temporary difference

$ 1,700,000,000

Income Taxes (Details 3) (USD $)

In Millions, unless otherwise specified

Dec. 31, 2011

Operating and capital loss carryforwards [Line Items]

Amount of operating and capital loss carryforwards due to expire in 2012

$ 26

Amount of operating and capital loss carryforwards due to expire between 2013 and 2016

258

Amount of operating and capital loss carryforwards due to expire between 2017 and 2031

1,906

Amount of operating and capital loss carryforwards which may be carried forward indefinitely

838

Total operating and capital loss carryforwards

3,028

Foreign [Member]

Operating and capital loss carryforwards [Line Items]

Amount of operating and capital loss carryforwards due to expire in 2012

4

Amount of operating and capital loss carryforwards due to expire between 2013 and 2016

66

Amount of operating and capital loss carryforwards due to expire between 2017 and 2031

136

Amount of operating and capital loss carryforwards which may be carried forward indefinitely

833

Total operating and capital loss carryforwards

1,039

U.S. federal and state [Member]

Operating and capital loss carryforwards [Line Items]

Amount of operating and capital loss carryforwards due to expire in 2012

22

Amount of operating and capital loss carryforwards due to expire between 2013 and 2016

192

Amount of operating and capital loss carryforwards due to expire between 2017 and 2031

1,770

Amount of operating and capital loss carryforwards which may be carried forward indefinitely

5

Total operating and capital loss carryforwards

$ 1,989

Income Taxes (Details 4) (USD $)

In Millions, unless otherwise specified

Dec. 31, 2011

Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]

Amount of unrecognized tax benefits that may decrease in the next 12 months

$ 89

Impact On Next Years' Effective Tax Rate [Member]

Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]

Amount of unrecognized tax benefits that may decrease in the next 12 months

$ 39

Income Taxes (Details 5) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Unrecognized tax benefits [Abstract]

Percentage threshold that the positions taken or expected to be taken is more likely than not sustained upon examination by tax authorities (in hundredths)

50.00%

Unrecognized tax benefits, which, if recognized, would affect effective tax rate

$ 197

$ 227

Unrecognized tax benefits reconciliation [Roll Forward]

Beginning of Year

308

301

Additions on tax positions related to the current year

85

45

Additions for tax positions of prior years

38

35

Reductions for tax positions of prior years

(58)

(19)

Reductions for settlements

(8)

(41)

Reductions due to statute expiration

(22)

(10)

Foreign currency translation adjustment

5

(3)

End of Year

348

308

301

Income Tax Examination [Line Items]

Accrued interest and penalties

53

48

Total interest and penalties recorded during the period

(2)

13

6

U.S. federal [Member]

Income Tax Examination [Line Items]

Open tax years

2004 – 2011

U.S. federal [Member] |
Income Tax Expense (Benefit) [Member] |
2004 - 2006

Income Tax Examination [Line Items]

Possible losses due to an IRS proposed adjustment to increase the taxable value of rights to intangibles transferred to foreign subsidiaries

700

U.S. federal [Member] |
Income Tax Expense (Benefit) [Member] |
2007 - present

Income Tax Examination [Line Items]

Possible losses due to an IRS proposed adjustment to increase the taxable value of rights to intangibles transferred to foreign subsidiaries

350

U.S. federal [Member] |
Interest Expense [Member] |
2004 - 2006

Income Tax Examination [Line Items]

Possible losses due to an IRS proposed adjustment to increase the taxable value of rights to intangibles transferred to foreign subsidiaries

170

U.S. federal [Member] |
Interest Expense [Member] |
2007 - present

Income Tax Examination [Line Items]

Possible losses due to an IRS proposed adjustment to increase the taxable value of rights to intangibles transferred to foreign subsidiaries

$ 25

China tax authority [Member]

Income Tax Examination [Line Items]

Open tax years

2008 – 2011

United Kingdom tax authority [Member]

Income Tax Examination [Line Items]

Open tax years

2003 – 2011

Mexico tax authority [Member]

Income Tax Examination [Line Items]

Open tax years

2005 – 2011

Australia tax authority [Member]

Income Tax Examination [Line Items]

Open tax years

2007 – 2011

Reportable Operating Segments (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

4 Months Ended

12 Months Ended

Sep. 3, 2011

Jun. 11, 2011

Mar. 19, 2011

Sep. 4, 2010

Jun. 12, 2010

Mar. 20, 2010

Dec. 31, 2011

Dec. 25, 2010

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Segment Reporting Information [Line Items]

Total revenues

$ 3,274

$ 2,816

$ 2,425

$ 2,862

$ 2,574

$ 2,345

$ 4,111

$ 3,562

$ 12,626

$ 11,343

$ 10,836

Franchise and license fees and income

420

385

374

366

354

349

554

491

1,733

1,560

1,423

Operating Profit

488 ¹

419

401 ¹

544

421

364 ²

507 ¹

440 ²

1,815 ¹ ³ ⁴ ⁵ ⁶

1,769 ² ³ ⁵ ⁶

1,590 ³ ⁴ ⁵ ⁷

Occupancy and other operating expenses

3,089

2,857

2,777

Closures and impairment (income) expenses

135

47

103

Other (income) expense

(53)

(43)

(104)

Refranchising (gain) loss

72 ⁸ ⁹

63 ¹⁰ ¹¹ ⁸

(26)¹⁰

Interest expense, net

156

175

194

Income Before Income Taxes

1,659 ³ ⁴ ⁵ ⁶

1,594 ³ ⁵ ⁶

1,396 ³ ⁴ ⁵ ⁷

Depreciation and amortization

628 ⁶

589 ⁶

580

Capital Spending

940

796

797

Identifiable Assets

8,834 ¹²

8,316 ¹²

8,834 ¹²

8,316 ¹²

7,148 ¹²

Long Lived Assets

5,022 ¹³

4,964 ¹³

5,022 ¹³

4,964 ¹³

5,001 ¹³

Equity income from investments in unconsolidated affiliates

47

42

36

Gain on consolidation of a former unconsolidated affiliate in China

0

(68)¹⁴

Investments in unconsolidated affiliates

167

154

167

154

Affiliate in Shanghai, China [Member]

Segment Reporting Information [Line Items]

Gain on consolidation of a former unconsolidated affiliate in China

(68)

KFC

Segment Reporting Information [Line Items]

Number of countries and territories where each concept operates

115

KFC |
Affiliate in Shanghai, China [Member]

Segment Reporting Information [Line Items]

Gain on consolidation of a former unconsolidated affiliate in China

(68)

Pizza Hut

Segment Reporting Information [Line Items]

Number of countries and territories where each concept operates

97

Taco Bell

Segment Reporting Information [Line Items]

Number of countries and territories where each concept operates

27

China

Segment Reporting Information [Line Items]

Total revenues

5,566

4,135

3,407

Operating Profit

908 ⁵

755 ⁵

596 ⁵

Closures and impairment (income) expenses

12

16

9

Refranchising (gain) loss

(14)

(8)

(3)

Depreciation and amortization

257

225

184

Capital Spending

405

272

271

Identifiable Assets

2,527 ¹²

2,289 ¹²

2,527 ¹²

2,289 ¹²

1,632 ¹²

Long Lived Assets

1,546 ¹³

1,269 ¹³

1,546 ¹³

1,269 ¹³

1,172 ¹³

Equity income from investments in unconsolidated affiliates

47

42

36

Number of unconsolidated affiliates

4

Investments in unconsolidated affiliates

167

154

167

154

144

YRI

Segment Reporting Information [Line Items]

Total revenues

3,274

3,088

2,988

Operating Profit

673

589

497

Closures and impairment (income) expenses

22

14

22

Refranchising (gain) loss

69 ⁹

53 ¹⁰ ¹¹

11 ¹⁰

Depreciation and amortization

186

159

165

Capital Spending

256

259

251

Identifiable Assets

2,899

2,649

2,899

2,649

2,448

Long Lived Assets

1,635 ¹³

1,548 ¹³

1,635 ¹³

1,548 ¹³

1,524 ¹³

YRI |
Pizza Hut |
UK

Segment Reporting Information [Line Items]

Depreciation reduction from the impairment of restaurants we offered to sell

3

Goodwill impairment loss

0

U.S.

Segment Reporting Information [Line Items]

Total revenues

3,786

4,120

4,473

Operating Profit

589

668

647

Closures and impairment (income) expenses

21

17

46

Refranchising (gain) loss

17 ⁸

18 ⁸

(34)

Depreciation and amortization

177

201

216

Capital Spending

256

241

270

Identifiable Assets

2,070

2,398

2,070

2,398

2,575

Long Lived Assets

1,805 ¹³

2,095 ¹³

1,805 ¹³

2,095 ¹³

2,260 ¹³

Charges relating to U.S. general and administrative productivity initiatives and realignment of resources

21

9

16

U.S. |
KFC

Segment Reporting Information [Line Items]

Depreciation reduction from the impairment of restaurants we offered to sell

10

9

U.S. |
LJS and AW

Segment Reporting Information [Line Items]

Goodwill impairment loss

26

Unallocated Amount to Segment [Member]

Segment Reporting Information [Line Items]

Franchise and license fees and income

0 ¹⁵

(32)¹⁵ ¹⁶

Occupancy and other operating expenses

(14)¹⁵ ⁶

(9)¹⁵ ⁶

0 ¹⁵

Corporate expenses

223 ¹⁵ ³

194 ¹⁵ ³

189 ¹⁵ ³

Closures and impairment (income) expenses

80 ¹⁵ ⁴

0 ¹⁵

26 ¹⁵ ⁴

Other (income) expense

(6)¹⁵

(5)¹⁵

(71)¹⁵ ⁷

Refranchising (gain) loss

72 ¹⁵ ¹⁷

63 ¹⁵ ¹⁷

(26)¹⁵ ¹⁷

Depreciation and amortization

8 ⁶

4 ⁶

15

Capital Spending

23

24

5

Identifiable Assets

1,338 ¹⁸

980 ¹⁸

1,338 ¹⁸

980 ¹⁸

493 ¹⁸

Long Lived Assets

$ 36 ¹³

$ 52 ¹³

$ 36 ¹³

$ 52 ¹³

$ 45 ¹³

[1] Includes net losses of $65 million primarily related to the LJS and A&W divestitures, $88 million primarily related to refranchising international markets and $28 million primarily related to the U.S. business transformation measures and U.S. refranchising in the first, third and fourth quarters of 2011, respectively. See Note 4. The fourth quarter of 2011 also includes the $25 million impact of the 53rd week. See Note 2.

[2] Includes net losses of $66 million and $19 million in the first and fourth quarters of 2010, respectively, related primarily to the U.S. business transformation measures and refranchising international markets. See Note 4.

[3] 2011, 2010 and 2009 include approximately $21 million, $9 million and $16 million, respectively, of charges relating to U.S. general and administrative productivity initiatives and realignment of resources. See Note 4.

[4] 2011 represents net losses resulting from the LJS and A&W divestitures. 2009 includes a $26 million charge to write-off goodwill associated with our LJS and A&W businesses in the U.S. See Note 9.

[5] Includes equity income from investments in unconsolidated affiliates of $47 million, $42 million and $36 million in 2011, 2010 and 2009, respectively, for China.

[6] 2011 and 2010 include depreciation reductions arising from the impairment of KFC restaurants we offered to sell of $10 million and $9 million, respectively. 2011 includes a depreciation reduction arising from the impairment of Pizza Hut UK restaurants we decided to sell in 2011 of $3 million. See Note 4.

[7] 2009 includes a $68 million gain related to the acquisition of additional interest in and consolidation of a former unconsolidated affiliate in China. See Note 4.

[8] U.S. refranchising losses in the years ended December 31, 2011 and December 25, 2010 are primarily due to losses on sales of and offers to refranchise KFCs in the U.S. There were approximately 250 and 600 KFC restaurants offered for refranchising as of December 31, 2011 and December 25, 2010, respectively. While we did not yet believe these KFCs met the criteria to be classified as held for sale, we did, consistent with our historical practice, review the restaurants for impairment as a result of our offer to refranchise. We recorded impairment charges where we determined that the carrying value of restaurant groups to be sold was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. For those restaurant groups deemed impaired, we wrote such restaurant groups down to our estimate of their fair values, which were based on the sales price we would expect to receive from a franchisee for each restaurant group. This fair value determination considered current market conditions, real-estate values, trends in the KFC U.S. business, prices for similar transactions in the restaurant industry and preliminary offers for the restaurant groups to date. The non-cash impairment charges that were recorded related to our offers to refranchise these company-operated KFC restaurants in the U.S. decreased depreciation expense versus what would have otherwise been recorded by $10 million and $9 million in the years ended December 31, 2011 and December 25, 2010, respectively. These depreciation reductions were not allocated to the U.S. segment resulting in depreciation expense in the U.S. segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the restaurant groups for any further necessary impairment until the date they are sold. The aforementioned non-cash impairment charges do not include any allocation of the KFC reporting unit goodwill in the restaurant group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the restaurant groups, or any subset of the restaurant groups, ultimately meet the criteria to be classified as held for sale. We will also be required to record a charge for the fair value of our guarantee of future lease payments for leases we assign to the franchisee upon any sale.

[9] During the year ended December 31, 2011 we decided to refranchise or close all of our remaining Company-operated Pizza Hut restaurants in the UK market. While an asset group comprising approximately 350 dine-in restaurants did not meet the criteria for held-for-sale classification as of December 31, 2011, our- decision to sell was considered an impairment indicator. As such we reviewed this asset group for potential impairment and determined that its carrying value was not recoverable based upon our estimate of expected refranchising proceeds and holding period cash flows anticipated while we continue to operate the restaurants as company units. Accordingly, we wrote this asset group down to our estimate of its fair value, which is based on the sales price we would expect to receive from a buyer. This fair value determination considered current market conditions, trends in the Pizza Hut UK business, and prices for similar transactions in the restaurant industry and resulted in a non-cash pre-tax write-down of $74 million which was recorded to Refranchising (gain) loss. This impairment charge decreased depreciation expense versus what would have otherwise been recorded by $3 million in 2011. This depreciation reduction was not allocated to the YRI segment, resulting in depreciation expense in the YRI segment results continuing to be recorded at the rate at which it was prior to the impairment charges being recorded for these restaurants. We will continue to review the asset group for any further necessary impairment until the date it is sold. The write-down does not include any allocation of the Pizza Hut UK reporting unit goodwill in the asset group carrying value. This additional non-cash write-down would be recorded, consistent with our historical policy, if the asset group ultimately meets the criteria to be classified as held for sale. Upon the ultimate sale of the restaurants, depending on the form of the transaction, we could also be required to record a charge for the fair value of any guarantee of future lease payments for any leases we assign to a franchisee and for the cumulative foreign currency translation adjustment associated with Pizza Hut UK. The decision to refranchise or close all remaining Pizza Hut restaurants in the UK was considered to be a goodwill impairment indicator. We determined that the fair value of our Pizza Hut UK reporting unit exceeded its carrying value and as such there was no impairment of the approximately $100 million in goodwill attributable to the reporting unit.

[10] During the year ended December 26, 2009 we recognized a non-cash $10 million refranchising loss as a result of our decision to offer to refranchise our KFC Taiwan equity market. During the year ended December 25, 2010 we refranchised all of our remaining company restaurants in Taiwan, which consisted of 124 KFCs. We included in our December 25, 2010 financial statements a non-cash write-off of $7 million of goodwill in determining the loss on refranchising of Taiwan. Neither of these losses resulted in a related income tax benefit. The amount of goodwill write-off was based on the relative fair values of the Taiwan business disposed of and the portion of the business that was retained. The fair value of the business disposed of was determined by reference to the discounted value of the future cash flows expected to be generated by the restaurants and retained by the franchisee, which include a deduction for the anticipated royalties the franchisee will pay the Company associated with the franchise agreement entered into in connection with this refranchising transaction. The fair value of the Taiwan business retained consists of expected, net cash flows to be derived from royalties from franchisees, including the royalties associated with the franchise agreement entered into in connection with this refranchising transaction. We believe the terms of the franchise agreement entered into in connection with the Taiwan refranchising are substantially consistent with market. The remaining carrying value of goodwill related to our Taiwan business of $30 million, after the aforementioned write-off, was determined not to be impaired as the fair value of the Taiwan reporting unit exceeded its carrying amount.

[11] In the year ended December 25, 2010 we recorded a $52 million loss on the refranchising of our Mexico equity market as we sold all of our Company-owned restaurants, comprised of 222 KFCs and 123 Pizza Huts, to an existing Latin American franchise partner. The buyer is serving as the master franchisee for Mexico which had 102 KFC and 53 Pizza Hut franchise restaurants at the time of the transaction. The write-off of goodwill included in this loss was minimal as our Mexico reporting unit included an insignificant amount of goodwill. This loss did not result in any related income tax benefit.

[12] China includes investments in 4 unconsolidated affiliates totaling $167 million, $154 million and $144 million, for 2011, 2010 and 2009, respectively.

[13] Includes property, plant and equipment, net, goodwill, and intangible assets, net.

[14] See Note 4 for further discussion of the consolidation of a former unconsolidated affiliate in Shanghai, China.

[15] Amounts have not been allocated to the U.S., YRI or China Division segments for performance reporting purposes.

[16] Amount consists of reimbursements to KFC franchisees for installation costs of ovens for the national launch of Kentucky Grilled Chicken. See Note 4.

[17] See Note 4 for further discussion of Refranchising gain (loss).

[18] Primarily includes cash, deferred tax assets and property, plant and equipment, net, related to our office facilities.

Contingencies (Details) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Guarantor Obligations [Line Items]

Year longest lease expires

2151

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

$ 625

Present value of potential payments we could be required to make in the event of non-payment

$ 550

Contingencies (Details 2) (USD $)

12 Months Ended

Dec. 31, 2011

plaintiffs

restaurants

days

Hours

States

violations

cases

Loss Contingencies [Line Items]

Number of cases concerning meals and rest breaks at Taco Bell in California Supreme Court

2

Number of company-owned restaurants that may be in the class

220

Minimum statutory damages per offense under Unruh Act

$ 4,000

Minimum statutory damages per offense under California Disabled Persons Act

1,000

Number of individuals contended by plaintiffs that may be in the class

100,000

Number of restaurants to be subject of trial on ADA claims

1

Number of alleged violations of ADA and state law tried

12

Number of states that assert state-law class action claims

16

Number of hours worked per week after which overtime pay was allegedly not received

40

Number of hours worked per day after which overtime pay was allegedly not received

12

Number of days in which putative class members can elect to participate in the lawsuit

90

Financial standby letter of credit |
Franchise Loan Pool Guarantees [Member]

Loss Contingencies [Line Items]

Loss contingency, amount of guarantee

23,000,000

Number of letters of credit provided

2

Franchise Lending Program Guarantees

Loss Contingencies [Line Items]

Loss contingency, amount of guarantee

17,000,000

Total loans outstanding

32,000,000

Guarantee of Indebtedness of Others

Loss Contingencies [Line Items]

Outstanding guarantees of lines of credit and loans for unconsolidated affiliates

0

Guarantee of Indebtedness of Others |
Franchise Loan Pool Guarantees [Member]

Loss Contingencies [Line Items]

Loss contingency, amount of guarantee

14,000,000

Total loans outstanding

63,000,000

Additional amount under the franchisee loan pool available for lending

17,000,000

Guarantee of Indebtedness of Others |
Unconsolidated Affiliate Guarantees

Loss Contingencies [Line Items]

Total revenues of unconsolidated affiliates

1,100,000,000

Total assets of unconsolidated affiliates

525,000,000

Total debt of unconsolidated affiliates

$ 75,000,000

Contingencies (Details 3) (Self Insured Property And Casualty Reserves [Member], USD $)

In Millions, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 25, 2010

Self Insured Property And Casualty Reserves [Member]

Valuation and Qualifying Accounts Disclosure [Line Items]

Beginning balance

$ 150

$ 173

Expense

55

46

Payments

(65)

(69)

Ending balance

$ 140

$ 150

Selected Quarterly Financial Data (Unaudited) (Details) (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

4 Months Ended

12 Months Ended

Sep. 3, 2011

Jun. 11, 2011

Mar. 19, 2011

Sep. 4, 2010

Jun. 12, 2010

Mar. 20, 2010

Dec. 31, 2011

Dec. 25, 2010

Dec. 31, 2011

Dec. 25, 2010

Dec. 26, 2009

Revenues:

Company sales

$ 2,854

$ 2,431

$ 2,051

$ 2,496

$ 2,220

$ 1,996

$ 3,557

$ 3,071

$ 10,893

$ 9,783

$ 9,413

Franchise and license fees and income

420

385

374

366

354

349

554

491

1,733

1,560

1,423

Total revenues

3,274

2,816

2,425

2,862

2,574

2,345

4,111

3,562

12,626

11,343

10,836

Restaurant profit

494

386

360

479

366

340

513

478

1,753

1,663

Operating Profit

488 ¹

419

401 ¹

544

421

364 ²

507 ¹

440 ²

1,815 ¹ ³ ⁴ ⁵ ⁶

1,769 ² ³ ⁵ ⁶

1,590 ³ ⁴ ⁵ ⁷

Net Income (Loss)

383

316

264

357

286

241

356

274

1,319

1,158

1,071

Basic Earnings Per Common Share (in dollars per share)

$ 0.82

$ 0.67

$ 0.56

$ 0.76

$ 0.61

$ 0.51

$ 0.77

$ 0.58

$ 2.81

$ 2.44

$ 2.28

Diluted Earnings Per Common Share (in dollars per share)

$ 0.80

$ 0.65

$ 0.54

$ 0.74

$ 0.59

$ 0.50

$ 0.75

$ 0.56

$ 2.74

$ 2.38

$ 2.22

Dividends Declared Per Common Share (in dollars per share)

$ 0.00

$ 0.50

$ 0.00

$ 0.21

$ 0.57

$ 0.50

$ 1.07

$ 0.92

$ 0.80

Net loss primarily related to LJS and A&W divestitures

(65)

Net loss primarily related to refranchising international markets

(88)

Net loss primarily related to U.S. business transformation measures and U.S. refranchising

(28)

Net Loss Related To U.S. Business Transformation Measures And Refranchising International Markets

(66)

(19)

53rd Week Impact

Revenues:

Total revenues

91

Restaurant profit

15

Operating Profit

$ 25

[1] Includes net losses of $65 million primarily related to the LJS and A&W divestitures, $88 million primarily related to refranchising international markets and $28 million primarily related to the U.S. business transformation measures and U.S. refranchising in the first, third and fourth quarters of 2011, respectively. See Note 4. The fourth quarter of 2011 also includes the $25 million impact of the 53rd week. See Note 2.

[2] Includes net losses of $66 million and $19 million in the first and fourth quarters of 2010, respectively, related primarily to the U.S. business transformation measures and refranchising international markets. See Note 4.

[3] 2011, 2010 and 2009 include approximately $21 million, $9 million and $16 million, respectively, of charges relating to U.S. general and administrative productivity initiatives and realignment of resources. See Note 4.

[4] 2011 represents net losses resulting from the LJS and A&W divestitures. 2009 includes a $26 million charge to write-off goodwill associated with our LJS and A&W businesses in the U.S. See Note 9.

[5] Includes equity income from investments in unconsolidated affiliates of $47 million, $42 million and $36 million in 2011, 2010 and 2009, respectively, for China.

[6] 2011 and 2010 include depreciation reductions arising from the impairment of KFC restaurants we offered to sell of $10 million and $9 million, respectively. 2011 includes a depreciation reduction arising from the impairment of Pizza Hut UK restaurants we decided to sell in 2011 of $3 million. See Note 4.

[7] 2009 includes a $68 million gain related to the acquisition of additional interest in and consolidation of a former unconsolidated affiliate in China. See Note 4.

Subsequent Event (Details) (Little Sheep Group Limited [Member], USD $)

In Millions, unless otherwise specified

3 Months Ended

12 Months Ended

Mar. 24, 2012

Dec. 26, 2009

Little Sheep Group Limited [Member]

Schedule of Equity Method Investments [Line Items]

Amount paid to acquire an additional ownership percentage

$ 584

$ 103