[ü]
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
|
|
EXCHANGE ACT OF 1934 for
the fiscal year ended December 26, 2009
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||
OR
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||
[ ]
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
|
|
EXCHANGE
ACT OF 1934
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North Carolina
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13-3951308
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||
(State
or other jurisdiction of
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(I.R.S.
Employer
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||
incorporation
or organization)
|
Identification
No.)
|
||
1441
Gardiner Lane, Louisville, Kentucky
|
40213
|
||
(Address
of principal executive offices)
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(Zip
Code)
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||
Registrant’s
telephone number, including area code: (502)
874-8300
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Securities
registered pursuant to Section 12(b) of the Act
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|||
Title of Each Class
|
Name of Each Exchange on Which
Registered
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||
Common
Stock, no par value
|
New
York Stock Exchange
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||
Securities
registered pursuant to Section 12(g) of the Act:
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|||
None
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Item
1.
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Business.
|
(a)
|
General
Development of Business
|
(b)
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Financial
Information about Operating
Segments
|
(c)
|
Narrative
Description of Business
|
·
|
KFC
was founded in Corbin, Kentucky by Colonel Harland D. Sanders, an early
developer of the quick service food business and a pioneer of the
restaurant franchise concept. The Colonel perfected his secret
blend of 11 herbs and spices for Kentucky Fried Chicken in 1939 and signed
up his first franchisee in 1952. KFC is based in Louisville,
Kentucky.
|
·
|
As
of year end 2009, KFC was the leader in the U.S. chicken QSR segment among
companies featuring chicken-on-the-bone as their primary product offering,
with a 42 percent market share (Source: The NPD Group, Inc.; NPD
Foodworld; CREST) in that segment, which is more than three times that of
its closest national competitor.
|
·
|
KFC
operates in 108 countries and territories throughout the
world. As of year end 2009, KFC had 5,162 units in the U.S.,
and 11,102 units outside the U.S., including 2,872 units in mainland
China. Approximately 17 percent of the U.S. units and 31
percent of the non-U.S. units are operated by the
Company.
|
·
|
Traditional
KFC restaurants in the U.S. offer fried and non-fried chicken-on-the-bone
products, primarily marketed under the names Original Recipe, Extra Tasty
Crispy and Kentucky Grilled Chicken. Other principal entree
items include chicken sandwiches (including the Snacker and the Twister),
KFC Famous Bowls, Colonel’s Crispy Strips, Wings, Popcorn Chicken and
seasonally, Chunky Chicken Pot Pies. KFC restaurants in the
U.S. also offer a variety of side items, such as biscuits, mashed potatoes
and gravy, coleslaw, corn, and potato wedges, as well as
desserts. While many of these products are offered outside of
the U.S., international menus are more focused on chicken sandwiches and
Colonel’s Crispy Strips, and include side items that are suited to local
preferences and tastes. Restaurant decor throughout the world
is characterized by the image of the
Colonel.
|
·
|
The
first Pizza Hut restaurant was opened in 1958 in Wichita, Kansas, and
within a year, the first franchise unit was opened. Today,
Pizza Hut is the largest restaurant chain in the world specializing in the
sale of ready-to-eat pizza products. Pizza Hut is based in
Dallas, Texas.
|
·
|
As
of year end 2009, Pizza Hut was the leader in the U.S. pizza QSR segment,
with a 14 percent market share (Source: The NPD Group, Inc.; NPD
Foodworld; CREST) in that segment.
|
·
|
Pizza
Hut operates in 92 countries and territories throughout the world. As of
year end 2009, Pizza Hut had 7,566 units in the U.S., and 5,715 units
outside of the U.S. Approximately 8 percent of the U.S. units
and 25 percent of the non-U.S. units are operated by the
Company.
|
·
|
Pizza
Hut features a variety of pizzas, which may include Pan Pizza, Thin ‘n
Crispy, Hand Tossed, Sicilian, Stuffed Crust, Twisted Crust, Sicilian
Lasagna Pizza, Cheesy Bites Pizza, The Big New Yorker, The Insider, The
Chicago Dish, the Natural, Pizza Mia and 4forALL. Each of these
pizzas is offered with a variety of different toppings. Pizza
Hut now also offers a variety of Tuscani Pastas. WingStreet
chicken wings are served in over 3,000 Pizza Hut locations, primarily in
the U.S. Menu items outside of the U.S. are generally similar
to those offered in the U.S., though pizza toppings are often suited to
local preferences and tastes.
|
·
|
The
first Taco Bell restaurant was opened in 1962 by Glen Bell in Downey,
California, and in 1964, the first Taco Bell franchise was
sold. Taco Bell is based in Irvine,
California.
|
·
|
As
of year end 2009, Taco Bell was the leader in the U.S. Mexican QSR
segment, with a 52 percent market share (Source: The NPD Group, Inc.; NPD
Foodworld; CREST) in that segment.
|
·
|
Taco
Bell operates in 20 countries and territories throughout the world. As of
year end 2009, there were 5,604 Taco Bell units in the U.S., and 251 units
outside of the U.S. Approximately 23 percent of the U.S. units
and 1 percent of the non-U.S. units are operated by the
Company.
|
·
|
Taco
Bell specializes in Mexican-style food products, including various types
of tacos, burritos, gorditas, chalupas, quesadillas, taquitos, salads,
nachos and other related items. Additionally, proprietary
entrée items include Grilled Stuft Burritos and Border
Bowls. Taco Bell units feature a distinctive bell logo on their
signage.
|
·
|
The
first LJS restaurant opened in 1969 and the first LJS franchise unit
opened later the same year. LJS is based in Louisville,
Kentucky.
|
·
|
As
of year end 2009, LJS was the leader in the U.S. seafood QSR segment, with
a 36 percent market share (Source: The NPD Group, Inc.; NPD Foodworld;
CREST) in that segment.
|
·
|
LJS
operates in 6 countries and territories throughout the
world. As of year end 2009, there were 989 LJS units in the
U.S., and 35 units outside the U.S. All single-brand units
inside and outside of the U.S. are operated by franchisees or
licensees. As of year end 2009, there were 110 company operated
multi-brand units that included the LJS concept.
|
·
|
LJS
features a variety of seafood and chicken items, including meals featuring
batter-dipped fish, chicken and shrimp, non-fried salmon, shrimp and
tilapia, hushpuppies and portable snack items. LJS units
typically feature a distinctive seaside/nautical
theme.
|
·
|
A&W
was founded in Lodi, California by Roy Allen in 1919 and the first A&W
franchise unit opened in 1925. A&W is based in Louisville,
Kentucky.
|
·
|
A&W
operates in 9 countries and territories throughout the
world. As of year end 2009, there were 344 A&W units in the
U.S., and 293 units outside the U.S. As of year end 2009, all
units were operated by franchisees.
|
·
|
A&W
serves A&W draft Root Beer and a signature A&W Root Beer float, as
well as hot dogs and hamburgers.
|
(d)
|
Financial
Information about Geographic Areas
|
(e)
|
Available
Information
|
Item
1A.
|
Risk
Factors.
|
Item
1B.
|
Unresolved
Staff Comments.
|
Item
2.
|
Properties.
|
·
|
The
Company and its Concepts owned more than 1,000 units and leased land,
building or both in more than 1,700 units in the U.S.
|
·
|
The
International Division owned more than 400 units and leased land, building
or both in more than 1,100 units.
|
·
|
The
China Division leased land, building or both in more than 3,300
units.
|
Item
3.
|
Legal
Proceedings.
|
Item
4.
|
Submission
of Matters to a Vote of Security
Holders.
|
Item
5.
|
Market
for the Registrant’s Common Stock, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
2009
|
|||||||||||||||||
Quarter
|
|
High
|
Low
|
Dividends
Declared
|
Dividends
Paid
|
||||||||||||
First
|
$
|
32.87
|
$
|
23.47
|
$
|
—
|
$
|
0.19
|
|||||||||
Second
|
36.64
|
27.48
|
0.38
|
0.19
|
|||||||||||||
Third
|
36.56
|
32.57
|
—
|
0.19
|
|||||||||||||
Fourth
|
36.06
|
32.50
|
0.42
|
0.21
|
2008
|
|||||||||||||||||
Quarter
|
|
High
|
Low
|
Dividends
Declared
|
Dividends
Paid
|
||||||||||||
First
|
$
|
39.00
|
$
|
33.12
|
$
|
0.15
|
$
|
0.15
|
|||||||||
Second
|
41.34
|
36.85
|
0.19
|
0.15
|
|||||||||||||
Third
|
38.68
|
33.78
|
—
|
0.19
|
|||||||||||||
Fourth
|
39.23
|
22.25
|
0.38
|
0.19
|
12/23/04
|
12/30/05
|
12/29/06
|
12/28/07
|
12/26/08
|
12/25/09
|
|||||||||
YUM!
|
$ 100
|
$ 102
|
$ 130
|
$ 173
|
$ 138
|
$ 166
|
||||||||
S&P
500
|
$ 100
|
$ 105
|
$ 122
|
$ 129
|
$ 78
|
$ 103
|
||||||||
S&P
Consumer
Discretionary
|
$ 100
|
$ 95
|
$ 113
|
$ 98
|
$ 63
|
$ 93
|
Item
6.
|
Selected
Financial Data.
|
Fiscal
Year
|
|||||||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
|||||||||||
Summary
of Operations
|
|||||||||||||||
Revenues
|
|||||||||||||||
Company
sales
|
$
|
9,413
|
$
|
9,843
|
$
|
9,100
|
$
|
8,365
|
$
|
8,225
|
|||||
Franchise
and license fees and income
|
1,423
|
1,461
|
1,335
|
1,196
|
1,124
|
||||||||||
Total
|
10,836
|
11,304
|
10,435
|
9,561
|
9,349
|
||||||||||
Closures
and impairment income (expenses)(a)
|
(103
|
)
|
(43
|
)
|
(35
|
)
|
(59
|
)
|
(62
|
)
|
|||||
Refranchising
gain (loss)(a)
|
26
|
5
|
11
|
24
|
43
|
||||||||||
Operating
Profit(b)
|
1,590
|
1,517
|
1,357
|
1,262
|
1,153
|
||||||||||
Interest
expense, net
|
194
|
226
|
166
|
154
|
127
|
||||||||||
Income
before income taxes
|
1,396
|
1,291
|
1,191
|
1,108
|
1,026
|
||||||||||
Net
Income – including noncontrolling interest
|
1,083
|
972
|
909
|
824
|
762
|
||||||||||
Net
Income – YUM! Brands, Inc.
|
1,071
|
964
|
909
|
824
|
762
|
||||||||||
Basic
earnings per common share(c)
|
2.28
|
2.03
|
1.74
|
1.51
|
1.33
|
||||||||||
Diluted
earnings per common share(c)
|
2.22
|
1.96
|
1.68
|
1.46
|
1.28
|
||||||||||
Diluted
earnings per common share before special items(d)
|
2.17
|
1.91
|
1.68
|
1.46
|
1.27
|
||||||||||
Cash
Flow Data
|
|||||||||||||||
Provided
by operating activities
|
$
|
1,404
|
$
|
1,521
|
$
|
1,551
|
$
|
1,257
|
$
|
1,233
|
|||||
Capital
spending, excluding acquisitions
|
797
|
935
|
726
|
572
|
609
|
||||||||||
Proceeds
from refranchising of restaurants
|
194
|
266
|
117
|
257
|
145
|
||||||||||
Repurchase
shares of Common Stock
|
—
|
1,628
|
1,410
|
983
|
1,056
|
||||||||||
Dividends
paid on Common Stock
|
362
|
322
|
273
|
144
|
123
|
||||||||||
Balance
Sheet
|
|||||||||||||||
Total
assets
|
$
|
7,148
|
$
|
6,527
|
$
|
7,188
|
$
|
6,368
|
$
|
5,797
|
|||||
Long-term
debt
|
3,207
|
3,564
|
2,924
|
2,045
|
1,649
|
||||||||||
Total
debt
|
3,266
|
3,589
|
3,212
|
2,272
|
1,860
|
||||||||||
Other
Data
|
|||||||||||||||
Number
of stores at year end
|
|||||||||||||||
Company
|
7,666
|
7,568
|
7,625
|
7,736
|
7,587
|
||||||||||
Unconsolidated Affiliates
|
469
|
645
|
1,314
|
1,206
|
1,648
|
||||||||||
Franchisees
|
26,745
|
25,911
|
24,297
|
23,516
|
22,666
|
||||||||||
Licensees
|
2,200
|
2,168
|
2,109
|
2,137
|
2,376
|
||||||||||
System
|
37,080
|
36,292
|
35,345
|
34,595
|
34,277
|
||||||||||
U.S.
same store sales growth(e)
|
(5%
|
)
|
2%
|
—
|
1%
|
3%
|
|||||||||
YRI
system sales growth(e)
|
|||||||||||||||
Reported
|
(3%
|
)
|
10%
|
15%
|
7%
|
9%
|
|||||||||
Local currency(f)
|
5%
|
8%
|
10%
|
7%
|
6%
|
||||||||||
China
Division system sales growth(e)
|
|||||||||||||||
Reported
|
10%
|
31%
|
31%
|
26%
|
13%
|
||||||||||
Local
currency(f)
|
9%
|
20%
|
24%
|
23%
|
11%
|
||||||||||
Shares
outstanding at year end(c)
|
469
|
459
|
499
|
530
|
556
|
||||||||||
Cash
dividends declared per Common Stock(c)
|
$
|
0.80
|
$
|
0.72
|
$
|
0.45
|
$
|
0.43
|
$
|
0.22
|
|||||
Market
price per share at year end (c)
|
$
|
35.38
|
$
|
30.28
|
$
|
38.54
|
$
|
29.40
|
$
|
23.44
|
(a)
|
Fiscal
year 2009 included non-cash charges of $26 million and $12 million to
write-off goodwill related to our LJS/A&W U.S. and Pizza Hut South
Korea businesses, respectively. See Note 5 to the Consolidated
Financial Statements for a description of our store closures, store
impairment expenses and Refranchising Gain (Loss) in 2009, 2008 and
2007. Additionally, see Note 10 describing our goodwill
impairment expense recognized in 2009.
|
(b)
|
Fiscal
year 2009 included a gain of $68 million related to the consolidation of a
former unconsolidated affiliate in China, a loss of $40 million related to
U.S. business transformation measures, including the $26 million goodwill
charge described in (a), and a loss of $10 million as a result of our
decision to offer to refranchise an equity market outside the
U.S. Fiscal year 2008 included a gain of $100 million related
to the sale of our interest in our unconsolidated affiliate in Japan and a
loss of $61 million related to U.S. business transformation
measures. These items are discussed further within our
MD&A. Fiscal year 2005 included gains of $2 million for
recoveries related to both the Wrench litigation and Ameriserve
bankruptcy.
|
(c)
|
Adjusted
for the two for one stock split on June 26, 2007. See Note 3 to
the Consolidated Financial Statements.
|
(d)
|
In
addition to the results provided in accordance with U.S. Generally
Accepted Accounting Principles (“GAAP”) throughout this document, the
Company has provided non-GAAP measurements which present operating results
on a basis before Special Items. The Company uses earnings
before Special Items as a key performance measure of results of operations
for the purpose of evaluating performance internally. This
non-GAAP measurement is not intended to replace the presentation of our
financial results in accordance with GAAP. Rather, the Company
believes that the presentation of earnings before Special Items provides
additional information to investors to facilitate the comparison of past
and present operations, excluding items that the Company does not believe
are indicative of our ongoing operations due to their size and/or
nature. The gains and charges described in (b), above, are
considered Special Items. The 2009 and 2008 Special Items are
discussed in further detail within the MD&A.
|
(e)
|
System
sales growth includes the results of all restaurants regardless of
ownership, including Company owned, franchise, unconsolidated affiliate
and license restaurants. Sales of franchise, unconsolidated
affiliate and license restaurants generate franchise and license fees for
the Company (typically at a rate of 4% to 6% of
sales). Franchise, unconsolidated affiliate and license
restaurant sales are not included in Company sales we present on the
Consolidated Statements of Income; however, the fees are included in the
Company’s revenues. We believe system sales growth is useful to
investors as a significant indicator of the overall strength of our
business as it incorporates all our revenue drivers, Company and franchise
same store sales as well as net unit development. Same store
sales growth includes the results of all restaurants that have been open
one year or more.
|
(f)
|
Local
currency represents the percentage change excluding the impact of foreign
currency translation. These amounts are derived by translating
current year results at prior year average exchange rates. We
believe the elimination of the foreign currency translation impact
provides better year-to-year comparability without the distortion of
foreign currency fluctuations.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
|
·
|
The
Company provides the percentage changes excluding the impact of foreign
currency translation (“FX” or “Forex”). These amounts are
derived by translating current year results at prior year average exchange
rates. We believe the elimination of the foreign currency
translation impact provides better year-to-year comparability without the
distortion of foreign currency fluctuations.
|
·
|
System
sales growth includes the results of all restaurants regardless of
ownership, including Company-owned, franchise, unconsolidated affiliate
and license restaurants. Sales of franchise, unconsolidated
affiliate and license restaurants generate franchise and license fees for
the Company (typically at a rate of 4% to 6% of
sales). Franchise, unconsolidated affiliate and license
restaurant sales are not included in Company sales on the Consolidated
Statements of Income; however, the franchise and license fees are included
in the Company’s revenues. We believe system sales growth is
useful to investors as a significant indicator of the overall strength of
our business as it incorporates all of our revenue drivers, Company and
franchise same store sales as well as net unit
development.
|
·
|
Same
store sales is the estimated growth in sales of all restaurants that have
been open one year or more.
|
·
|
Company
restaurant profit is defined as Company sales less expenses incurred
directly by our Company restaurants in generating Company
sales. Company restaurant margin as a percentage of sales is
defined as Company restaurant profit divided by Company
sales.
|
·
|
Operating
margin is defined as Operating Profit divided by Total
revenue.
|
The
following table summarizes the 2008 and 2007 impact of the revised
allocations by segment:
|
||||||||||||||||||||
Increase/(Decrease)
|
2008
|
2007
|
||||||||||||||||||
U.S.
G&A
|
$
|
53
|
$
|
54
|
||||||||||||||||
YRI
G&A
|
6
|
6
|
||||||||||||||||||
Unallocated
and corporate G&A expenses
|
(59
|
)
|
(60
|
)
|
·
|
Diluted
EPS growth of 13% or $2.17 per share, excluding Special
Items.
|
·
|
Worldwide
system sales growth of 1% prior to foreign currency
translation.
|
·
|
Worldwide
revenue declined 4% driven by foreign currency translation and
refranchising.
|
·
|
International
development of 1,467 new restaurants including 509 in mainland China and
898 in YRI.
|
·
|
Worldwide
Operating Profit growth of 9% prior to foreign currency translation and
Special Items, including growth of 23% in the China Division, 5% in YRI
and 1% in the U.S. After foreign currency translation, but
prior to Special Items, worldwide Operating Profit growth was
6%.
|
·
|
Worldwide
restaurant margin improved by 1.7 percentage points driven by the China
Division and the U.S.
|
·
|
Diluted
EPS growth was negatively impacted by approximately $0.07 per share due to
foreign currency translation that was fully offset by lower interest
expense and a lower tax rate.
|
Amount
|
%
B/(W)
|
||||||||||||||||||
2009
|
2008
|
2007
|
2009
|
2008
|
|||||||||||||||
Company
sales
|
$
|
9,413
|
$
|
9,843
|
$
|
9,100
|
(4
|
)
|
8
|
||||||||||
Franchise
and license fees and income
|
1,423
|
1,461
|
1,335
|
(3
|
)
|
9
|
|||||||||||||
Total
revenues
|
$
|
10,836
|
$
|
11,304
|
$
|
10,435
|
(4
|
)
|
8
|
||||||||||
Company
restaurant profit
|
$
|
1,479
|
$
|
1,378
|
$
|
1,327
|
7
|
4
|
|||||||||||
%
of Company sales
|
15.7%
|
14.0%
|
14.6%
|
1.7
|
ppts.
|
(0.6
|
)
ppts.
|
||||||||||||
Operating
Profit
|
1,590
|
1,517
|
1,357
|
5
|
12
|
||||||||||||||
Interest
expense, net
|
194
|
226
|
166
|
14
|
(36
|
)
|
|||||||||||||
Income
tax provision
|
313
|
319
|
282
|
2
|
(13
|
)
|
|||||||||||||
Net
Income – including noncontrolling interest
|
1,083
|
972
|
909
|
11
|
7
|
||||||||||||||
Net
Income – noncontrolling interest
|
12
|
8
|
—
|
NM
|
NM
|
||||||||||||||
Net
Income – YUM! Brands, Inc.
|
$
|
1,071
|
$
|
964
|
$
|
909
|
11
|
6
|
|||||||||||
Diluted
EPS(a)
|
$
|
2.22
|
$
|
1.96
|
$
|
1.68
|
13
|
17
|
|||||||||||
Diluted
EPS before Special Items(a)
|
$
|
2.17
|
$
|
1.91
|
$
|
1.68
|
13
|
14
|
|||||||||||
Effective
tax rate
|
22.4%
|
24.7%
|
23.7%
|
(a)
|
See
Note 4 for the number of shares used in these
calculations.
|
Year
|
||||||
12/26/09
|
12/27/08
|
|||||
Detail
of Special Items
|
||||||
U.S.
Refranchising gain (loss)
|
$
|
34
|
$
|
(5)
|
||
Long
John Silver’s/A&W U.S. Goodwill impairment charge
|
(26)
|
—
|
||||
Charges
relating to U.S. G&A productivity initiatives and realignment of
resources
|
(16)
|
(49)
|
||||
Investments
in our U.S. Brands
|
(32)
|
(7)
|
||||
Gain
upon consolidation of a former unconsolidated affiliate in
China
|
68
|
—
|
||||
Loss
as a result of our offer to refranchise an equity market outside the
U.S.
|
(10)
|
—
|
||||
Gain
upon the sale of our interest in our Japan unconsolidated
affiliate
|
—
|
100
|
||||
Total
Special Items Income (Expense)
|
18
|
39
|
||||
Tax Benefit (Expense) on Special Items(a)
|
5
|
(14)
|
||||
Special
Items Income (Expense), net of tax
|
$
|
23
|
$
|
25
|
||
Average
diluted shares outstanding
|
483
|
491
|
||||
Special
Items diluted EPS
|
$
|
0.05
|
$
|
0.05
|
||
Reconciliation
of Operating Profit Before Special Items to Reported Operating
Profit
|
||||||
Operating
Profit before Special Items
|
$
|
1,572
|
$
|
1,478
|
||
Special
Items Income (Expense)
|
18
|
39
|
||||
Reported
Operating Profit
|
$
|
1,590
|
$
|
1,517
|
||
Reconciliation
of EPS Before Special Items to Reported EPS
|
||||||
Diluted
EPS before Special Items
|
$
|
2.17
|
$
|
1.91
|
||
Special
Items EPS
|
0.05
|
0.05
|
||||
Reported
EPS
|
$
|
2.22
|
$
|
1.96
|
||
Reconciliation
of Effective Tax Rate Before Special Items to Reported Effective Tax
Rate
|
||||||
Effective
Tax Rate before Special Items
|
23.1%
|
24.3%
|
||||
Impact on Tax Rate as a result of Special
Items(a)
|
(0.7)%
|
0.4%
|
||||
Reported
Effective Tax Rate
|
22.4%
|
24.7%
|
(a)
|
The
tax benefit (expense) was determined based upon the impact of the nature,
as well as the jurisdiction of the respective individual components within
Special Items.
|
2009
|
2008
|
2007
|
||||||||||||
Number
of units refranchised
|
613
|
775
|
420
|
|||||||||||
Refranchising
proceeds, pre-tax
|
$
|
194
|
$
|
266
|
$
|
117
|
||||||||
Refranchising
net gains, pre-tax
|
$
|
26
|
$
|
5
|
$
|
11
|
2009
|
||||||||||||||||||
U.S.
|
YRI
|
China
Division
|
Worldwide
|
|||||||||||||||
Decreased
Company sales
|
$
|
(640
|
)
|
$
|
(77
|
)
|
$
|
(5
|
)
|
$
|
(722
|
)
|
||||||
Increased
Franchise and license fees and income
|
36
|
5
|
—
|
41
|
||||||||||||||
Decrease
in Total revenues
|
$
|
(604
|
)
|
$
|
(72
|
)
|
$
|
(5
|
)
|
$
|
(681
|
)
|
2008
|
||||||||||||||||||
U.S.
|
YRI
|
China
Division
|
Worldwide
|
|||||||||||||||
Decreased
Company sales
|
$
|
(300
|
)
|
$
|
(106
|
)
|
$
|
(5
|
)
|
$
|
(411
|
)
|
||||||
Increased
Franchise and license fees and income
|
16
|
6
|
—
|
22
|
||||||||||||||
Decrease
in Total revenues
|
$
|
(284
|
)
|
$
|
(100
|
)
|
$
|
(5
|
)
|
$
|
(389
|
)
|
2009
|
||||||||||||||||||
U.S.
|
YRI
|
China
Division
|
Worldwide
|
|||||||||||||||
Decreased
Restaurant profit
|
$
|
(63
|
)
|
$
|
(2
|
)
|
$
|
(1
|
)
|
$
|
(66
|
)
|
||||||
Increased
Franchise and license fees and income
|
36
|
5
|
—
|
41
|
||||||||||||||
Decreased
G&A
|
14
|
—
|
—
|
14
|
||||||||||||||
Increase
(decrease) in Operating Profit
|
$
|
(13
|
)
|
$
|
3
|
$
|
(1
|
)
|
$
|
(11
|
)
|
2008
|
||||||||||||||||||
U.S.
|
YRI
|
China
Division
|
Worldwide
|
|||||||||||||||
Decreased
Restaurant profit
|
$
|
(19
|
)
|
$
|
(8
|
)
|
$
|
(1
|
)
|
$
|
(28
|
)
|
||||||
Increased
Franchise and license fees and income
|
16
|
6
|
—
|
22
|
||||||||||||||
Decreased
G&A
|
7
|
1
|
—
|
8
|
||||||||||||||
Increase
(decrease) in Operating Profit
|
$
|
4
|
$
|
(1
|
)
|
$
|
(1
|
)
|
$
|
2
|
Worldwide
|
Company
|
Unconsolidated
Affiliates
|
Franchisees
|
Total
Excluding
Licensees(a)
|
||||||||||||
Balance
at end of 2007
|
7,625
|
1,314
|
24,297
|
33,236
|
||||||||||||
New
Builds
|
596
|
89
|
1,173
|
1,858
|
||||||||||||
Acquisitions
|
106
|
—
|
(105
|
)
|
1
|
|||||||||||
Refranchising
|
(775
|
)
|
(1
|
)
|
776
|
—
|
||||||||||
Closures
|
(166
|
)
|
(8
|
)
|
(800
|
)
|
(974
|
)
|
||||||||
Other(b)(c)
|
182
|
(749
|
)
|
570
|
3
|
|||||||||||
Balance
at end of 2008
|
7,568
|
645
|
25,911
|
34,124
|
||||||||||||
New
Builds
|
595
|
70
|
1,068
|
1,733
|
||||||||||||
Acquisitions
|
57
|
—
|
(57
|
)
|
—
|
|||||||||||
Refranchising
|
(613
|
)
|
—
|
612
|
(1
|
)
|
||||||||||
Closures
|
(178
|
)
|
(10
|
)
|
(756
|
)
|
(944
|
)
|
||||||||
Other(d)
|
237
|
(236
|
)
|
(33
|
)
|
(32
|
)
|
|||||||||
Balance
at end of 2009
|
7,666
|
469
|
26,745
|
34,880
|
||||||||||||
%
of Total
|
22%
|
1%
|
77%
|
100%
|
United States
|
Company
|
Unconsolidated
Affiliates
|
Franchisees
|
Total
Excluding
Licensees(a)
|
||||||||||||
Balance
at end of 2007
|
3,896
|
—
|
14,081
|
17,977
|
||||||||||||
New
Builds
|
94
|
—
|
269
|
363
|
||||||||||||
Acquisitions
|
95
|
—
|
(94
|
)
|
1
|
|||||||||||
Refranchising
|
(700
|
)
|
—
|
700
|
—
|
|||||||||||
Closures
|
(71
|
)
|
—
|
(477
|
)
|
(548
|
)
|
|||||||||
Other
|
—
|
—
|
3
|
3
|
||||||||||||
Balance
at end of 2008
|
3,314
|
—
|
14,482
|
17,796
|
||||||||||||
New
Builds
|
45
|
—
|
221
|
266
|
||||||||||||
Acquisitions
|
42
|
—
|
(42
|
)
|
—
|
|||||||||||
Refranchising
|
(541
|
)
|
—
|
540
|
(1
|
)
|
||||||||||
Closures
|
(60
|
)
|
—
|
(354
|
)
|
(414
|
)
|
|||||||||
Other
|
—
|
—
|
(28
|
)
|
(28
|
)
|
||||||||||
Balance
at end of 2009
|
2,800
|
—
|
14,819
|
17,619
|
||||||||||||
%
of Total
|
16%
|
—
|
84%
|
100%
|
YRI
|
Company
|
Unconsolidated
Affiliates
|
Franchisees
|
Total
Excluding
Licensees(a)
|
||||||||||||
Balance
at end of 2007
|
1,642
|
568
|
9,963
|
12,173
|
||||||||||||
New
Builds
|
55
|
—
|
869
|
924
|
||||||||||||
Acquisitions
|
4
|
—
|
(4
|
)
|
—
|
|||||||||||
Refranchising
|
(71
|
)
|
(1
|
)
|
72
|
—
|
||||||||||
Closures
|
(41
|
)
|
—
|
(310
|
)
|
(351
|
)
|
|||||||||
Other(b)
|
—
|
(567
|
)
|
567
|
—
|
|||||||||||
Balance
at end of 2008
|
1,589
|
—
|
11,157
|
12,746
|
||||||||||||
New
Builds
|
74
|
—
|
824
|
898
|
||||||||||||
Acquisitions
|
—
|
—
|
—
|
—
|
||||||||||||
Refranchising
|
(61
|
)
|
—
|
61
|
—
|
|||||||||||
Closures
|
(46
|
)
|
—
|
(387
|
)
|
(433
|
)
|
|||||||||
Other
|
—
|
—
|
(5
|
)
|
(5
|
)
|
||||||||||
Balance
at end of 2009
|
1,556
|
—
|
11,650
|
13,206
|
||||||||||||
%
of Total
|
12%
|
—
|
88%
|
100%
|
China Division
|
Company
|
Unconsolidated
Affiliates
|
Franchisees
|
Total
Excluding
Licensees(a)
|
||||||||||||
Balance
at end of 2007
|
2,087
|
746
|
253
|
3,086
|
||||||||||||
New
Builds
|
447
|
89
|
35
|
571
|
||||||||||||
Acquisitions
|
7
|
—
|
(7
|
)
|
—
|
|||||||||||
Refranchising
|
(4
|
)
|
—
|
4
|
—
|
|||||||||||
Closures
|
(54
|
)
|
(8
|
)
|
(13
|
)
|
(75
|
)
|
||||||||
Other(c)
|
182
|
(182
|
)
|
—
|
—
|
|||||||||||
Balance
at end of 2008
|
2,665
|
645
|
272
|
3,582
|
||||||||||||
New
Builds
|
476
|
70
|
23
|
569
|
||||||||||||
Acquisitions
|
15
|
—
|
(15
|
)
|
—
|
|||||||||||
Refranchising
|
(11
|
)
|
—
|
11
|
—
|
|||||||||||
Closures
|
(72
|
)
|
(10
|
)
|
(15
|
)
|
(97
|
)
|
||||||||
Other(d)
|
237
|
(236
|
)
|
—
|
1
|
|||||||||||
Balance
at end of 2009
|
3,310
|
469
|
276
|
4,055
|
||||||||||||
%
of Total
|
81%
|
12%
|
7%
|
100%
|
(a)
|
The
Worldwide, U.S. and YRI totals exclude 2,200, 2,046 and 154 licensed
units, respectively, at December 26,
2009. There are no licensed units in the China
Division. As licensed units have lower average unit sales
volumes than our traditional units and our current strategy does not place
a significant emphasis on expanding our licensed units, we do not believe
that providing further detail of licensed unit activity provides
significant or meaningful information.
|
(b)
|
In
our fiscal quarter ended March 22, 2008, we sold our interest in our
unconsolidated affiliate in Japan. While we will no longer have
an ownership interest in the entity that operates both KFCs and Pizza Huts
in Japan, it will continue to be a franchisee as it was when it operated
as an unconsolidated affiliate. See Note 5.
|
(c)
|
On
January 1, 2008, we began consolidating an entity in China in which we
have a majority ownership interest. This entity was previously
accounted for as an unconsolidated affiliate and we reclassified the units
accordingly. See Note 5.
|
(d)
|
During
the second quarter of 2009 we acquired additional ownership in and began
consolidating an entity that operates the KFC business in Shanghai, China
and have reclassified the units accordingly. This entity was
previously accounted for as an unconsolidated
affiliate.
|
2009
vs. 2008
|
||||||||||||||
U.S.
|
YRI
|
China
Division
|
Worldwide
|
|||||||||||
Same
store sales growth (decline)
|
(5)
|
%
|
1
|
%
|
(2)
|
%
|
(2)
|
%
|
||||||
Net
unit growth and other
|
1
|
4
|
11
|
3
|
||||||||||
Foreign
currency translation
|
N/A
|
(8)
|
1
|
(3)
|
||||||||||
%
Change
|
(4)
|
%
|
(3)
|
%
|
10
|
%
|
(2)
|
%
|
||||||
%
Change, excluding forex
|
N/A
|
5
|
%
|
9
|
%
|
1
|
%
|
|||||||
2008
vs. 2007
|
||||||||||||||
U.S.
|
YRI
|
China
Division
|
Worldwide
|
|||||||||||
Same
store sales growth (decline)
|
2
|
%
|
4
|
%
|
6
|
%
|
3
|
%
|
||||||
Net
unit growth and other
|
1
|
4
|
14
|
4
|
||||||||||
Foreign
currency translation
|
N/A
|
2
|
11
|
1
|
||||||||||
%
Change
|
3
|
%
|
10
|
%
|
31
|
%
|
8
|
%
|
||||||
%
Change, excluding forex
|
N/A
|
8
|
%
|
20
|
%
|
7
|
%
|
|||||||
U.S.
|
|||||||||||||||||||
2009
vs. 2008
|
|||||||||||||||||||
Income
/ (Expense)
|
2008
|
Store
Portfolio
Actions
|
Other
|
FX
|
2009
|
||||||||||||||
Company
Sales
|
$
|
4,410
|
$
|
(515
|
)
|
$
|
(157
|
)
|
$
|
N/A
|
$
|
3,738
|
|||||||
Cost
of Sales
|
(1,335
|
)
|
158
|
107
|
N/A
|
(1,070
|
)
|
||||||||||||
Cost
of Labor
|
(1,329
|
)
|
157
|
51
|
N/A
|
(1,121
|
)
|
||||||||||||
Occupancy
and Other
|
(1,195
|
)
|
154
|
13
|
N/A
|
(1,028
|
)
|
||||||||||||
Restaurant
Profit
|
$
|
551
|
$
|
(46
|
)
|
$
|
14
|
$
|
N/A
|
$
|
519
|
||||||||
Restaurant
Margin
|
12.5
|
%
|
13.9
|
%
|
2008
vs. 2007
|
|||||||||||||||||||
Income
/ (Expense)
|
2007
|
Store
Portfolio
Actions
|
Other
|
FX
|
2008
|
||||||||||||||
Company
Sales
|
$
|
4,518
|
$
|
(242
|
)
|
$
|
134
|
$
|
N/A
|
$
|
4,410
|
||||||||
Cost
of Sales
|
(1,317
|
)
|
75
|
(93
|
)
|
N/A
|
(1,335
|
)
|
|||||||||||
Cost
of Labor
|
(1,377
|
)
|
75
|
(27
|
)
|
N/A
|
(1,329
|
)
|
|||||||||||
Occupancy
and Other
|
(1,221
|
)
|
77
|
(51
|
)
|
N/A
|
(1,195
|
)
|
|||||||||||
Restaurant
Profit
|
$
|
603
|
$
|
(15
|
)
|
$
|
(37
|
)
|
$
|
N/A
|
$
|
551
|
|||||||
Restaurant
Margin
|
13.3
|
%
|
12.5
|
%
|
YRI
|
|||||||||||||||||||
2009
vs. 2008
|
|||||||||||||||||||
Income
/ (Expense)
|
2008
|
Store
Portfolio
Actions
|
Other
|
FX
|
2009
|
||||||||||||||
Company
Sales
|
$
|
2,375
|
$
|
26
|
$
|
34
|
$
|
(382
|
)
|
$
|
2,053
|
||||||||
Cost
of Sales
|
(752
|
)
|
(11
|
)
|
(16
|
)
|
123
|
(656
|
)
|
||||||||||
Cost
of Labor
|
(618
|
)
|
(6
|
)
|
(6
|
)
|
97
|
(533
|
)
|
||||||||||
Occupancy
and Other
|
(742
|
)
|
(6
|
)
|
(9
|
)
|
122
|
(635
|
)
|
||||||||||
Restaurant
Profit
|
$
|
263
|
$
|
3
|
$
|
3
|
$
|
(40
|
)
|
$
|
229
|
||||||||
Restaurant
Margin
|
11.1
|
%
|
11.1
|
%
|
|||||||||||||||
2008
vs. 2007
|
|||||||||||||||||||
Income
/ (Expense)
|
2007
|
Store
Portfolio
Actions
|
Other
|
FX
|
2008
|
||||||||||||||
Company
Sales
|
$
|
2,507
|
$
|
(75
|
)
|
$
|
(10
|
)
|
$
|
(47
|
)
|
$
|
2,375
|
||||||
Cost
of Sales
|
(751
|
)
|
17
|
(29
|
)
|
11
|
(752
|
)
|
|||||||||||
Cost
of Labor
|
(655
|
)
|
25
|
(1
|
)
|
13
|
(618
|
)
|
|||||||||||
Occupancy
and Other
|
(794
|
)
|
27
|
3
|
22
|
(742
|
)
|
||||||||||||
Restaurant
Profit
|
$
|
307
|
$
|
(6
|
)
|
$
|
(37
|
)
|
$
|
(1
|
)
|
$
|
263
|
||||||
Restaurant
Margin
|
12.3
|
%
|
11.1
|
%
|
China Division
|
|||||||||||||||||||
2009
vs. 2008
|
|||||||||||||||||||
Income
/ (Expense)
|
2008
|
Store
Portfolio
Actions
|
Other
|
FX
|
2009
|
||||||||||||||
Company
Sales
|
$
|
3,058
|
$
|
548
|
$
|
(22
|
)
|
$
|
38
|
$
|
3,622
|
||||||||
Cost
of Sales
|
(1,152
|
)
|
(199
|
)
|
87
|
(13
|
)
|
(1,277
|
)
|
||||||||||
Cost
of Labor
|
(423
|
)
|
(81
|
)
|
8
|
(4
|
)
|
(500
|
)
|
||||||||||
Occupancy
and Other
|
(919
|
)
|
(196
|
)
|
12
|
(11
|
)
|
(1,114
|
)
|
||||||||||
Restaurant
Profit
|
$
|
564
|
$
|
72
|
$
|
85
|
$
|
10
|
$
|
731
|
|||||||||
Restaurant
Margin
|
18.4
|
%
|
20.2
|
%
|
2008
vs. 2007
|
|||||||||||||||||||
Income
/ (Expense)
|
2007
|
Store
Portfolio
Actions
|
Other
|
FX
|
2008
|
||||||||||||||
Company
Sales
|
$
|
2,075
|
$
|
588
|
$
|
150
|
$
|
245
|
$
|
3,058
|
|||||||||
Cost
of Sales
|
(756
|
)
|
(220
|
)
|
(84
|
)
|
(92
|
)
|
(1,152
|
)
|
|||||||||
Cost
of Labor
|
(273
|
)
|
(88
|
)
|
(29
|
)
|
(33
|
)
|
(423
|
)
|
|||||||||
Occupancy
and Other
|
(629
|
)
|
(196
|
)
|
(21
|
)
|
(73
|
)
|
(919
|
)
|
|||||||||
Restaurant
Profit
|
$
|
417
|
$
|
84
|
$
|
16
|
$
|
47
|
$
|
564
|
|||||||||
Restaurant
Margin
|
20.1
|
%
|
18.4
|
%
|
Amount
|
%
Increase
(Decrease)
|
%
Increase
(Decrease)
excluding
foreign
currency translation
|
||||||||||||||||||||||
2009
|
2008
|
2007
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||||||
U.S.
|
$
|
735
|
$
|
722
|
$
|
684
|
2
|
5
|
N/A
|
N/A
|
||||||||||||||
YRI
|
660
|
669
|
582
|
(1
|
)
|
15
|
7
|
14
|
||||||||||||||||
China
Division
|
60
|
70
|
69
|
(15
|
)
|
2
|
(16
|
)
|
(6
|
)
|
||||||||||||||
Unallocated
|
(32
|
)
|
—
|
—
|
N/A
|
—
|
N/A
|
N/A
|
||||||||||||||||
Worldwide
|
$
|
1,423
|
$
|
1,461
|
$
|
1,335
|
(3
|
)
|
9
|
1
|
8
|
|||||||||||||
Worldwide
Franchise and license fees and income for 2009 included a reduction of $32
million as a result of our reimbursements to KFC franchisees for
installation costs for the national launch of Kentucky Grilled Chicken
that has not been allocated to the U.S. segment for performance reporting
purposes.
|
U.S.
Franchise and license fees and income for 2009 and 2008 was positively
impacted by 5% and 2%, respectively, due to the impact of
refranchising.
|
China
Division Franchise and license fees and income for 2009 and 2008 was
negatively impacted by 17% and 19%, respectively, related to the
consolidation of two former China unconsolidated
affiliates. See Note 5.
|
Amount
|
%
Increase
(Decrease)
|
%
Increase
(Decrease)
excluding
foreign
currency translation
|
||||||||||||||||||||||
2009
|
2008
|
2007
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||||||
U.S.
|
$
|
482
|
$
|
547
|
$
|
564
|
(12
|
)
|
(3
|
)
|
N/A
|
N/A
|
||||||||||||
YRI
|
341
|
371
|
381
|
(8
|
)
|
(3
|
)
|
2
|
(3
|
)
|
||||||||||||||
China
Division
|
209
|
186
|
151
|
12
|
24
|
11
|
16
|
|||||||||||||||||
Unallocated
|
189
|
238
|
197
|
(21
|
)
|
21
|
N/A
|
N/A
|
||||||||||||||||
Worldwide
|
$
|
1,221
|
$
|
1,342
|
$
|
1,293
|
(9
|
)
|
4
|
(6
|
)
|
3
|
||||||||||||
2009
|
2008
|
2007
|
|||||||||||
Equity
income from investments in unconsolidated affiliates
|
$
|
(36
|
)
|
$
|
(41
|
)
|
$
|
(51
|
)
|
||||
Gain
upon consolidation of a former unconsolidated affiliate in China(a)
|
(68
|
)
|
—
|
—
|
|||||||||
Gain
upon sale of investment in unconsolidated affiliate(b)(c)
|
—
|
(100
|
)
|
(6
|
)
|
||||||||
Wrench
litigation income(d)
|
—
|
—
|
(11
|
)
|
|||||||||
Foreign
exchange net (gain) loss and other
|
—
|
(16
|
)
|
(3
|
)
|
||||||||
Other
(income) expense
|
$
|
(104
|
)
|
$
|
(157
|
)
|
$
|
(71
|
)
|
(a)
|
See
Note 5 for further discussion of the consolidation of a former
unconsolidated affiliate.
|
(b)
|
Fiscal
year 2008 reflects the gain recognized on the sale of our interest in our
unconsolidated affiliate in Japan. See Note
5.
|
(c)
|
Fiscal
year 2007 reflects recognition of income associated with receipt of
payment for a note receivable arising from the 2005 sale of our fifty
percent interest in the entity that operated almost all KFCs and Pizza
Huts in Poland and the Czech Republic to our then partner in the
entity.
|
(d)
|
Fiscal
year 2007 reflects financial recoveries from settlements with insurance
carriers related to a lawsuit settled by Taco Bell Corporation in
2004.
|
Amount
|
%
B/(W)
|
||||||||||||||||||
2009
|
2008
|
2007
|
2009
|
2008
|
|||||||||||||||
United
States
|
$
|
647
|
$
|
641
|
$
|
685
|
1
|
(6
|
)
|
||||||||||
YRI
|
491
|
522
|
474
|
(6
|
)
|
10
|
|||||||||||||
China
Division
|
602
|
480
|
375
|
25
|
28
|
||||||||||||||
Unallocated
Franchise and license fees and income
|
(32
|
)
|
—
|
—
|
NM
|
NM
|
|||||||||||||
Unallocated
and corporate expenses
|
(189
|
)
|
(248
|
)
|
(197
|
)
|
24
|
(26
|
)
|
||||||||||
Unallocated
Impairment expense
|
(26
|
)
|
—
|
—
|
NM
|
NM
|
|||||||||||||
Unallocated
Other income (expense)
|
71
|
117
|
9
|
NM
|
NM
|
||||||||||||||
Unallocated
Refranchising gain (loss)
|
26
|
5
|
11
|
NM
|
NM
|
||||||||||||||
Operating
Profit
|
$
|
1,590
|
$
|
1,517
|
$
|
1,357
|
5
|
12
|
|||||||||||
United
States operating margin
|
14.5
|
%
|
12.5
|
%
|
13.2
|
%
|
2.0
|
ppts.
|
(0.7
|
)
ppts.
|
|||||||||
International
Division operating margin
|
18.1
|
%
|
17.1
|
%
|
15.4
|
%
|
1.0
|
ppts.
|
1.7
|
ppts.
|
2009
|
2008
|
2007
|
|||||||||||
Interest
expense
|
$
|
212
|
$
|
253
|
$
|
199
|
|||||||
Interest
income
|
(18
|
)
|
(27
|
)
|
(33
|
)
|
|||||||
Interest
expense, net
|
$
|
194
|
$
|
226
|
$
|
166
|
2009
|
2008
|
2007
|
|||||||||||
Reported
|
|||||||||||||
Income
taxes
|
$
|
313
|
$
|
319
|
$
|
282
|
|||||||
Effective
tax rate
|
22.4
|
%
|
24.7
|
%
|
23.7
|
%
|
2009
|
2008
|
2007
|
||||||||||
U.S.
federal statutory rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||||||
State
income tax, net of federal tax benefit
|
1.0
|
0.6
|
1.0
|
|||||||||
Foreign
and U.S. tax effects attributable to foreign operations
|
(11.4
|
)
|
(14.5
|
)
|
(5.7
|
)
|
||||||
Adjustments
to reserves and prior years
|
(0.6
|
)
|
3.5
|
2.6
|
||||||||
Valuation
allowance additions (reversals)
|
(0.7
|
)
|
0.6
|
(9.0
|
)
|
|||||||
Other,
net
|
(0.9
|
)
|
(0.5
|
)
|
(0.2
|
)
|
||||||
Effective
income tax rate
|
22.4
|
%
|
24.7
|
%
|
23.7
|
%
|
Total
|
Less
than 1
Year
|
1-3
Years
|
3-5
Years
|
More
than 5
Years
|
||||||||||||||||||||
Long-term
debt obligations(a)
|
$
|
4,844
|
$
|
178
|
$
|
1,207
|
$
|
258
|
$
|
3,201
|
||||||||||||||
Capital
leases(b)
|
409
|
67
|
51
|
48
|
243
|
|||||||||||||||||||
Operating
leases(b)
|
4,675
|
535
|
938
|
778
|
2,424
|
|||||||||||||||||||
Purchase
obligations(c)
|
737
|
551
|
173
|
11
|
2
|
|||||||||||||||||||
Other(d)
|
50
|
22
|
11
|
7
|
10
|
|||||||||||||||||||
Total
contractual obligations
|
$
|
10,715
|
$
|
1,353
|
$
|
2,380
|
$
|
1,102
|
$
|
5,880
|
(a)
|
Debt
amounts include principal maturities and expected interest
payments. Rates utilized to determine interest payments for
variable rate debt are based on the LIBOR forward yield
curve. Excludes a fair value adjustment of $36 million included
in debt related to interest rate swaps that hedge the fair value of a
portion of our debt. See Note 11.
|
(b)
|
These
obligations, which are shown on a nominal basis, relate to nearly 6,200
restaurants. See Note 12.
|
(c)
|
Purchase
obligations include agreements to purchase goods or services that are
enforceable and legally binding on us and that specify all significant
terms, including: fixed or minimum quantities to be purchased; fixed,
minimum or variable price provisions; and the approximate timing of the
transaction. We have excluded agreements that are cancelable
without penalty. Purchase obligations relate primarily to
information technology, marketing, commodity agreements, purchases of
property, plant and equipment as well as consulting, maintenance and other
agreements.
|
(d)
|
Other
consists of 2010 pension plan funding obligations, the current portion of
liabilities for unrecognized tax benefits and projected payments for
deferred compensation.
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market
Risk.
|
Item
8.
|
Financial
Statements and Supplementary Data.
|
Page
Reference
|
||
Consolidated
Financial Statements
|
||
Report
of Independent Registered Public Accounting Firm
|
60
|
|
Consolidated
Statements of Income for the fiscal years ended December 26, 2009,
December 27, 2008 and December 29, 2007
|
61
|
|
Consolidated
Statements of Cash Flows for the fiscal years ended December 26, 2009,
December 27, 2008 and December 29, 2007
|
62
|
|
Consolidated
Balance Sheets as of December 26, 2009 and December 27,
2008
|
63
|
|
Consolidated
Statements of Shareholders’ Equity (Deficit) and Comprehensive Income
(Loss) for the fiscal years ended December 26, 2009, December 27, 2008 and
December 29, 2007
|
64
|
|
Notes
to Consolidated Financial Statements
|
65
|
|
Management’s
Responsibility for Financial Statements
|
116
|
2009
|
2008
|
2007
|
||||||||||||
Revenues
|
||||||||||||||
Company
sales
|
$
|
9,413
|
$
|
9,843
|
$
|
9,100
|
||||||||
Franchise
and license fees and income
|
1,423
|
1,461
|
1,335
|
|||||||||||
Total
revenues
|
10,836
|
11,304
|
10,435
|
|||||||||||
Costs
and Expenses, Net
|
||||||||||||||
Company
restaurants
|
||||||||||||||
Food
and paper
|
3,003
|
3,239
|
2,824
|
|||||||||||
Payroll
and employee benefits
|
2,154
|
2,370
|
2,305
|
|||||||||||
Occupancy
and other operating expenses
|
2,777
|
2,856
|
2,644
|
|||||||||||
Company
restaurant expenses
|
7,934
|
8,465
|
7,773
|
|||||||||||
General
and administrative expenses
|
1,221
|
1,342
|
1,293
|
|||||||||||
Franchise
and license expenses
|
118
|
99
|
59
|
|||||||||||
Closures
and impairment (income) expenses
|
103
|
43
|
35
|
|||||||||||
Refranchising
(gain) loss
|
(26
|
)
|
(5
|
)
|
(11
|
)
|
||||||||
Other
(income) expense
|
(104
|
)
|
(157
|
)
|
(71
|
)
|
||||||||
Total
costs and expenses, net
|
9,246
|
9,787
|
9,078
|
|||||||||||
Operating
Profit
|
1,590
|
1,517
|
1,357
|
|||||||||||
Interest
expense, net
|
194
|
226
|
166
|
|||||||||||
Income
Before Income Taxes
|
1,396
|
1,291
|
1,191
|
|||||||||||
Income
tax provision
|
313
|
319
|
282
|
|||||||||||
Net
Income – including noncontrolling interest
|
1,083
|
972
|
909
|
|||||||||||
Net
Income – noncontrolling interest
|
12
|
8
|
—
|
|||||||||||
Net
Income – YUM! Brands, Inc.
|
$
|
1,071
|
$
|
964
|
$
|
909
|
||||||||
Basic
Earnings Per Common Share
|
$
|
2.28
|
$
|
2.03
|
$
|
1.74
|
||||||||
Diluted
Earnings Per Common Share
|
$
|
2.22
|
$
|
1.96
|
$
|
1.68
|
||||||||
Dividends
Declared Per Common Share
|
$
|
0.80
|
$
|
0.72
|
$
|
0.45
|
2009
|
2008
|
2007
|
||||||||||||
Cash
Flows – Operating Activities
|
||||||||||||||
Net
Income – including noncontrolling interest
|
$
|
1,083
|
$
|
972
|
$
|
909
|
||||||||
Depreciation
and amortization
|
580
|
556
|
542
|
|||||||||||
Closures
and impairment (income) expenses
|
103
|
43
|
35
|
|||||||||||
Refranchising
(gain) loss
|
(26
|
)
|
(5
|
)
|
(11
|
)
|
||||||||
Contributions
to defined benefit pension plans
|
(280
|
)
|
(66
|
)
|
(8
|
)
|
||||||||
Gain
upon consolidation of a former unconsolidated affiliate in
China
|
(68
|
)
|
—
|
—
|
||||||||||
Gain
on sale of interest in Japan unconsolidated affiliate
|
—
|
(100
|
)
|
—
|
||||||||||
Deferred
income taxes
|
72
|
1
|
(41
|
)
|
||||||||||
Equity
income from investments in unconsolidated affiliates
|
(36
|
)
|
(41
|
)
|
(51
|
)
|
||||||||
Distributions
of income received from unconsolidated affiliates
|
31
|
41
|
40
|
|||||||||||
Excess
tax benefit from share-based compensation
|
(59
|
)
|
(44
|
)
|
(74
|
)
|
||||||||
Share-based
compensation expense
|
56
|
59
|
61
|
|||||||||||
Changes
in accounts and notes receivable
|
3
|
(6
|
)
|
(4
|
)
|
|||||||||
Changes
in inventories
|
27
|
(8
|
)
|
(31
|
)
|
|||||||||
Changes
in prepaid expenses and other current assets
|
(7
|
)
|
4
|
(6
|
)
|
|||||||||
Changes
in accounts payable and other current liabilities
|
(62
|
)
|
18
|
102
|
||||||||||
Changes
in income taxes payable
|
(95
|
)
|
39
|
70
|
||||||||||
Other
non-cash charges and credits, net
|
82
|
58
|
18
|
|||||||||||
Net
Cash Provided by Operating Activities
|
1,404
|
1,521
|
1,551
|
|||||||||||
Cash
Flows – Investing Activities
|
||||||||||||||
Capital
spending
|
(797
|
)
|
(935
|
)
|
(726
|
)
|
||||||||
Proceeds
from refranchising of restaurants
|
194
|
266
|
117
|
|||||||||||
Acquisition
of restaurants from franchisees
|
(24
|
)
|
(35
|
)
|
(4
|
)
|
||||||||
Acquisitions
and disposals of investments
|
(115
|
)
|
—
|
128
|
||||||||||
Sales
of property, plant and equipment
|
34
|
72
|
56
|
|||||||||||
Other,
net
|
(19
|
)
|
(9
|
)
|
13
|
|||||||||
Net
Cash Used in Investing Activities
|
(727
|
)
|
(641
|
)
|
(416
|
)
|
||||||||
Cash
Flows – Financing Activities
|
||||||||||||||
Proceeds
from long-term debt
|
499
|
375
|
1,195
|
|||||||||||
Repayments
of long-term debt
|
(528
|
)
|
(268
|
)
|
(24
|
)
|
||||||||
Revolving
credit facilities, three months or less, net
|
(295
|
)
|
279
|
(149
|
)
|
|||||||||
Short-term
borrowings by original maturity
|
||||||||||||||
More
than three months – proceeds
|
—
|
—
|
1
|
|||||||||||
More
than three months – payments
|
—
|
—
|
(184
|
)
|
||||||||||
Three
months or less, net
|
(8
|
)
|
(11
|
)
|
(8
|
)
|
||||||||
Repurchase
shares of Common Stock
|
—
|
(1,628
|
)
|
(1,410
|
)
|
|||||||||
Excess
tax benefit from share-based compensation
|
59
|
44
|
74
|
|||||||||||
Employee
stock option proceeds
|
113
|
72
|
112
|
|||||||||||
Dividends
paid on Common Stock
|
(362
|
)
|
(322
|
)
|
(273
|
)
|
||||||||
Other,
net
|
(20
|
)
|
—
|
(12
|
)
|
|||||||||
Net
Cash Used in Financing Activities
|
(542
|
)
|
(1,459
|
)
|
(678
|
)
|
||||||||
Effect
of Exchange Rates on Cash and Cash Equivalents
|
(15
|
)
|
(11
|
)
|
13
|
|||||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
120
|
(590
|
)
|
470
|
||||||||||
Change
in Cash and Cash Equivalents due to consolidation of entities in
China
|
17
|
17
|
—
|
|||||||||||
Cash
and Cash Equivalents – Beginning of Year
|
216
|
789
|
319
|
|||||||||||
Cash
and Cash Equivalents – End of Year
|
$
|
353
|
$
|
216
|
$
|
789
|
2009
|
2008
|
||||||||
ASSETS
|
|||||||||
Current
Assets
|
|||||||||
Cash
and cash equivalents
|
$
|
353
|
$
|
216
|
|||||
Accounts
and notes receivable, net
|
239
|
229
|
|||||||
Inventories
|
122
|
143
|
|||||||
Prepaid
expenses and other current assets
|
314
|
172
|
|||||||
Deferred
income taxes
|
81
|
81
|
|||||||
Advertising
cooperative assets, restricted
|
99
|
110
|
|||||||
Total
Current Assets
|
1,208
|
951
|
|||||||
Property,
plant and equipment, net
|
3,899
|
3,710
|
|||||||
Goodwill
|
640
|
605
|
|||||||
Intangible
assets, net
|
462
|
335
|
|||||||
Investments
in unconsolidated affiliates
|
144
|
65
|
|||||||
Other
assets
|
544
|
561
|
|||||||
Deferred
income taxes
|
251
|
300
|
|||||||
Total
Assets
|
$
|
7,148
|
$
|
6,527
|
|||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY (DEFICIT)
|
|||||||||
Current
Liabilities
|
|||||||||
Accounts
payable and other current liabilities
|
$
|
1,413
|
$
|
1,473
|
|||||
Income
taxes payable
|
82
|
114
|
|||||||
Short-term
borrowings
|
59
|
25
|
|||||||
Advertising
cooperative liabilities
|
99
|
110
|
|||||||
Total
Current Liabilities
|
1,653
|
1,722
|
|||||||
Long-term
debt
|
3,207
|
3,564
|
|||||||
Other
liabilities and deferred credits
|
1,174
|
1,335
|
|||||||
Total
Liabilities
|
6,034
|
6,621
|
|||||||
Shareholders’
Equity (Deficit)
|
|||||||||
Common
Stock, no par value, 750 shares authorized; 469 shares and 459 shares
issued in 2009 and 2008, respectively
|
253
|
7
|
|||||||
Retained
earnings
|
996
|
303
|
|||||||
Accumulated
other comprehensive loss
|
(224
|
)
|
(418
|
)
|
|||||
Total
Shareholders’ Equity (Deficit) – YUM! Brands, Inc.
|
1,025
|
(108
|
)
|
||||||
Noncontrolling
interest
|
89
|
14
|
|||||||
Total
Shareholders’ Equity (Deficit)
|
1,114
|
(94
|
)
|
||||||
Total
Liabilities and Shareholders’ Equity (Deficit)
|
$
|
7,148
|
$
|
6,527
|
Yum!
Brands, Inc.
|
||||||||||||||||||||||||
Issued
Common Stock
|
Retained
|
Accumulated
Other
Comprehensive
|
Noncontrolling
|
|||||||||||||||||||||
Shares
|
Amount
|
Earnings
|
Income(Loss)
|
Interest
|
Total
|
|||||||||||||||||||
Balance
at December 30, 2006
|
530
|
$
|
—
|
$
|
1,608
|
$
|
(156
|
)
|
$
|
—
|
$
|
1,452
|
||||||||||||
Net
Income
|
909
|
909
|
||||||||||||||||||||||
Foreign
currency translation adjustment
|
93
|
93
|
||||||||||||||||||||||
Foreign
currency translation adjustment included in Net Income
|
1
|
1
|
||||||||||||||||||||||
Pension
and post-retirement benefit plans (net of tax impact of $55
million)
|
96
|
96
|
||||||||||||||||||||||
Net
unrealized loss on derivative instruments (net of tax impact of $8
million)
|
(14
|
)
|
(14
|
)
|
||||||||||||||||||||
Comprehensive
Income
|
1,085
|
|||||||||||||||||||||||
Adjustment
for change in accounting for uncertainty in income taxes
|
(13
|
)
|
(13
|
)
|
||||||||||||||||||||
Dividends
declared
|
(231
|
)
|
(231
|
)
|
||||||||||||||||||||
Repurchase
of shares of Common Stock
|
(42
|
)
|
(252
|
)
|
(1,154
|
)
|
(1,406
|
)
|
||||||||||||||||
Employee
stock option and SARs exercises (includes tax impact of $69
million)
|
10
|
181
|
181
|
|||||||||||||||||||||
Compensation-related
events (includes tax impact of $5 million)
|
1
|
71
|
71
|
|||||||||||||||||||||
Balance
at December 29, 2007
|
499
|
$
|
—
|
$
|
1,119
|
$
|
20
|
$
|
—
|
$
|
1,139
|
|||||||||||||
Net
Income
|
964
|
8
|
972
|
|||||||||||||||||||||
Foreign
currency translation adjustment
|
(198
|
)
|
(198
|
)
|
||||||||||||||||||||
Foreign
currency translation adjustment included in Net Income
|
(25
|
)
|
(25
|
)
|
||||||||||||||||||||
Pension
and post-retirement benefit plans (net of tax impact of $114
million)
|
(208
|
)
|
(208
|
)
|
||||||||||||||||||||
Net
unrealized loss on derivative instruments (net of tax impact of $4
million)
|
(7
|
)
|
(7
|
)
|
||||||||||||||||||||
Comprehensive
Income
|
534
|
|||||||||||||||||||||||
Consolidation
of a former unconsolidated affiliate
|
12
|
12
|
||||||||||||||||||||||
Adjustment
to change pension plans measurement dates (net of tax impact of $4
million)
|
(7
|
)
|
(7
|
)
|
||||||||||||||||||||
Dividends
declared
|
(339
|
)
|
(6
|
)
|
(345
|
)
|
||||||||||||||||||
Repurchase
of shares of Common Stock
|
(47
|
)
|
(181
|
)
|
(1,434
|
)
|
(1,615
|
)
|
||||||||||||||||
Employee
stock option and SARs exercises (includes tax impact of $40
million)
|
6
|
112
|
112
|
|||||||||||||||||||||
Compensation-related
events (includes tax impact of $6 million)
|
1
|
76
|
76
|
|||||||||||||||||||||
Balance
at December 27, 2008
|
459
|
$
|
7
|
$
|
303
|
$
|
(418
|
)
|
$
|
14
|
$
|
(94
|
)
|
|||||||||||
Net
Income
|
1,071
|
12
|
1,083
|
|||||||||||||||||||||
Foreign
currency translation adjustment
|
176
|
176
|
||||||||||||||||||||||
Pension
and post-retirement benefit plans (net of tax impact of $9
million)
|
13
|
13
|
||||||||||||||||||||||
Net
unrealized gain on derivative instruments (net of tax impact of $3
million)
|
5
|
5
|
||||||||||||||||||||||
Comprehensive
Income
|
1,277
|
|||||||||||||||||||||||
Purchase
of subsidiary shares from noncontrolling interest
|
70
|
70
|
||||||||||||||||||||||
Dividends
declared
|
(378
|
)
|
(7
|
)
|
(385
|
)
|
||||||||||||||||||
Employee
stock option and SARs exercises (includes tax impact of $57
million)
|
10
|
168
|
168
|
|||||||||||||||||||||
Compensation-related
events (includes tax impact of $2 million)
|
—
|
78
|
78
|
|||||||||||||||||||||
Balance
at December 26, 2009
|
469
|
$
|
253
|
$
|
996
|
$
|
(224
|
)
|
$
|
89
|
$
|
1,114
|
The
following table summarizes the 2008 and 2007 impact of the revised
allocations by segment:
|
||||||||||||||||||||
Increase/(Decrease)
|
2008
|
2007
|
||||||||||||||||||
U.S.
G&A
|
$
|
53
|
$
|
54
|
||||||||||||||||
YRI
G&A
|
6
|
6
|
||||||||||||||||||
Unallocated
and corporate G&A expenses
|
(59
|
)
|
(60
|
)
|
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.
|
2009
|
2008
|
2007
|
|||||||||||
Net
Income – YUM! Brands, Inc.
|
$
|
1,071
|
$
|
964
|
$
|
909
|
|||||||
Weighted-average
common shares outstanding (for basic calculation)
|
471
|
475
|
522
|
||||||||||
Effect
of dilutive share-based employee compensation
|
12
|
16
|
19
|
||||||||||
Weighted-average
common and dilutive potential common shares outstanding (for diluted
calculation)
|
483
|
491
|
541
|
||||||||||
Basic
EPS
|
$
|
2.28
|
$
|
2.03
|
$
|
1.74
|
|||||||
Diluted
EPS
|
$
|
2.22
|
$
|
1.96
|
$
|
1.68
|
|||||||
Unexercised
employee stock options and SARs (in millions) excluded from the diluted
EPS compensation(a)
|
13.3
|
5.9
|
5.7
|
(a)
|
These
unexercised employee stock options and SARs were not included in the
computation of diluted EPS because to do so would have been antidilutive
for the periods presented.
|
Note
5 – Items Affecting Comparability of Net Income and Cash
Flows
|
Acquisition of
Interest in Little Sheep
|
Current
assets, including cash of $17
|
$
|
27
|
|
Property,
plant and equipment
|
61
|
||
Goodwill
|
53
|
||
Intangible
assets
|
114
|
||
Other
long-term assets
|
2
|
||
Total
assets acquired
|
257
|
||
Current
liabilities
|
55
|
||
Other
long-term liabilities
|
35
|
||
Total
liabilities assumed
|
90
|
||
Net
assets acquired
|
$
|
167
|
Sale of Our Interest
in Our Japan Unconsolidated
Affiliate
|
2009
|
|||||||||||||||||||
U.S.
|
YRI
|
China
Division
|
Worldwide
|
||||||||||||||||
Refranchising
(gain) loss(a)
|
$
|
(34
|
)
|
$
|
—
|
$
|
8
|
$
|
(26
|
)
|
|||||||||
Store
closure (income) costs(b)
|
$
|
13
|
$
|
(1
|
)
|
$
|
(3
|
)
|
$
|
9
|
|||||||||
Store
impairment charges(c)
|
33
|
19
|
16
|
68
|
|||||||||||||||
Closure
and impairment (income) expenses(d)
|
$
|
46
|
$
|
18
|
$
|
13
|
$
|
77
|
2008
|
|||||||||||||||||||
U.S.
|
YRI
|
China
Division
|
Worldwide
|
||||||||||||||||
Refranchising
(gain) loss(a)
|
$
|
5
|
$
|
(9
|
)
|
$
|
(1
|
)
|
$
|
(5
|
)
|
||||||||
Store
closure (income) costs(b)
|
$
|
(4
|
)
|
$
|
(6
|
)
|
$
|
(2
|
)
|
$
|
(12
|
)
|
|||||||
Store
impairment charges
|
34
|
11
|
10
|
55
|
|||||||||||||||
Closure
and impairment (income) expenses
|
$
|
30
|
$
|
5
|
$
|
8
|
$
|
43
|
2007
|
|||||||||||||||||||
U.S.
|
YRI
|
China
Division
|
Worldwide
|
||||||||||||||||
Refranchising
(gain) loss(a)
|
$
|
(12
|
)
|
$
|
3
|
$
|
(2
|
)
|
$
|
(11
|
)
|
||||||||
Store
closure (income) costs(b)
|
$
|
(9
|
)
|
$
|
1
|
$
|
—
|
$
|
(8
|
)
|
|||||||||
Store
impairment charges
|
23
|
13
|
7
|
43
|
|||||||||||||||
Closure
and impairment (income) expenses
|
$
|
14
|
$
|
14
|
$
|
7
|
$
|
35
|
(a)
|
Refranchising
(gain) loss is not allocated to segments for performance reporting
purposes. During 2009 we recognized a $10 million refranchising
loss as a result of our decision to offer to refranchise our KFC Taiwan
equity market. The sale of the market was consummated in the
first quarter of 2010.
|
(b)
|
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.
|
(c)
|
The
2009 store impairment charges for YRI include $12 million of goodwill
impairment for our Pizza Hut South Korea market. See Note
10.
|
(d)
|
An
additional $26 million of goodwill impairment related to our LJS and
A&W-U.S. businesses was not allocated to segments for performance
reporting purposes and is not included in this table. See Note
10.
|
Beginning
Balance
|
Amounts
Used
|
New
Decisions
|
Estimate/Decision
Changes
|
CTA/
Other
|
Ending
Balance
|
||||||||||||||||||||||
2009
Activity
|
$
|
27
|
(12
|
)
|
10
|
4
|
4
|
$
|
33
|
||||||||||||||||||
2008
Activity
|
$
|
34
|
(7
|
)
|
3
|
—
|
(3
|
)
|
$
|
27
|
2009
|
2008
|
2007
|
||||||||||||
Cash
Paid For:
|
||||||||||||||
Interest
|
$
|
209
|
$
|
248
|
$
|
177
|
||||||||
Income
taxes
|
308
|
260
|
264
|
|||||||||||
Significant
Non-Cash Investing and Financing Activities:
|
||||||||||||||
Capital
lease obligations incurred to acquire assets
|
$
|
7
|
$
|
24
|
$
|
59
|
||||||||
Net
investment in direct financing leases
|
8
|
26
|
33
|
2009
|
2008
|
2007
|
|||||||||||
Initial
fees, including renewal fees
|
$
|
57
|
$
|
61
|
$
|
49
|
|||||||
Initial
franchise fees included in refranchising gains
|
(17
|
)
|
(20
|
)
|
(10
|
)
|
|||||||
40
|
41
|
39
|
|||||||||||
Continuing
fees
|
1,383
|
1,420
|
1,296
|
||||||||||
$
|
1,423
|
$
|
1,461
|
$
|
1,335
|
2009
|
2008
|
2007
|
|||||||||||
Equity
income from investments in unconsolidated affiliates
|
$
|
(36
|
)
|
$
|
(41
|
)
|
$
|
(51
|
)
|
||||
Gain
upon consolidation of a former unconsolidated affiliate in China(a)
|
(68
|
)
|
—
|
—
|
|||||||||
Gain
upon sale of investment in unconsolidated affiliate(b)(c)
|
—
|
(100
|
)
|
(6
|
)
|
||||||||
Wrench
litigation income(d)
|
—
|
—
|
(11
|
)
|
|||||||||
Foreign
exchange net (gain) loss and other
|
—
|
(16
|
)
|
(3
|
)
|
||||||||
Other
(income) expense
|
$
|
(104
|
)
|
$
|
(157
|
)
|
$
|
(71
|
)
|
(a)
|
See
Note 5 for further discussion of the consolidation of a former
unconsolidated affiliate in Shanghai, China.
|
(b)
|
Fiscal
year 2008 reflects the gain recognized on the sale of our interest in our
unconsolidated affiliate in Japan. See Note
5.
|
(c)
|
Fiscal
year 2007 reflects recognition of income associated with receipt of
payments for a note receivable arising from the 2005 sale of our fifty
percent interest in the entity that operated almost all KFCs and Pizza
Huts in Poland and the Czech Republic to our then partner in the
entity.
|
(d)
|
Fiscal
year 2007 reflects financial recoveries from settlements with insurance
carriers related to a lawsuit settled by Taco Bell Corporation in
2004.
|
2009
|
2008
|
|||||||||
Accounts
and notes receivable
|
$
|
274
|
$
|
252
|
||||||
Allowance
for doubtful accounts
|
(35
|
)
|
(23
|
)
|
||||||
Accounts
and notes receivable, net
|
$
|
239
|
$
|
229
|
Prepaid Expenses and Other Current
Assets
|
2009
|
2008
|
||||||||
Income
tax receivable
|
$
|
158
|
$
|
20
|
||||||
Other
prepaid expenses and current assets
|
156
|
152
|
||||||||
$
|
314
|
$
|
172
|
Property, Plant and
Equipment
|
2009
|
2008
|
||||||||
Land
|
$
|
538
|
$
|
517
|
||||||
Buildings
and improvements
|
3,800
|
3,596
|
||||||||
Capital
leases, primarily buildings
|
282
|
259
|
||||||||
Machinery
and equipment
|
2,627
|
2,525
|
||||||||
Property,
Plant and equipment, gross
|
7,247
|
6,897
|
||||||||
Accumulated
depreciation and amortization
|
(3,348
|
)
|
(3,187
|
)
|
||||||
Property,
Plant and equipment, net
|
$
|
3,899
|
$
|
3,710
|
Accounts Payable and Other Current
Liabilities
|
2009
|
2008
|
||||||||
Accounts
payable
|
$
|
499
|
$
|
508
|
||||||
Capital
expenditure liability
|
114
|
130
|
||||||||
Accrued
compensation and benefits
|
342
|
376
|
||||||||
Dividends
payable
|
98
|
87
|
||||||||
Accrued
taxes, other than income taxes
|
100
|
100
|
||||||||
Other
current liabilities
|
260
|
272
|
||||||||
$
|
1,413
|
$
|
1,473
|
U.S.
|
YRI
|
China
Division
|
Worldwide
|
||||||||||||||||
Balance
as of December 29, 2007
|
|||||||||||||||||||
Goodwill,
gross
|
$
|
358
|
$
|
259
|
$
|
60
|
$
|
677
|
|||||||||||
Accumulated
impairment losses
|
—
|
(5
|
)
|
—
|
(5
|
)
|
|||||||||||||
Goodwill,
net
|
358
|
254
|
60
|
672
|
|||||||||||||||
Acquisitions
|
10
|
—
|
6
|
16
|
|||||||||||||||
Impairment
losses
|
—
|
—
|
—
|
—
|
|||||||||||||||
Disposals
and other, net(a)
|
(12
|
)
|
(71
|
)
|
—
|
(83
|
)
|
||||||||||||
Balance
as of December 27, 2008
|
|||||||||||||||||||
Goodwill,
gross
|
|
356
|
|
188
|
|
66
|
|
610
|
|||||||||||
Accumulated
impairment losses
|
—
|
(5
|
)
|
—
|
(5
|
)
|
|||||||||||||
Goodwill,
net
|
356
|
183
|
66
|
605
|
|||||||||||||||
Acquisitions
|
1
|
—
|
53
|
54
|
|||||||||||||||
Impairment
losses(b)(c)
|
(26
|
)
|
(12
|
)
|
—
|
(38
|
)
|
||||||||||||
Disposals
and other, net(a)
|
(5
|
)
|
24
|
—
|
19
|
||||||||||||||
Balance
as of December 26, 2009
|
|||||||||||||||||||
Goodwill,
gross
|
352
|
212
|
119
|
683
|
|||||||||||||||
Accumulated
impairment losses
|
(26
|
)
|
(17
|
)
|
—
|
(43
|
)
|
||||||||||||
Goodwill,
net
|
$
|
326
|
$
|
195
|
$
|
119
|
$
|
640
|
(a)
|
Disposals
and other, net for YRI primarily reflects the impact of foreign currency
translation on existing balances. Disposals and other, net for
the U.S. Division, primarily reflects goodwill write-offs associated with
refranchising.
|
(b)
|
We
recorded a non-cash goodwill impairment charge of $26 million, which
resulted in no related tax benefit, associated with our LJS and
A&W-U.S. reporting unit in the fourth quarter of 2009 as the carrying
value of this reporting unit exceeded its fair value. The fair
value of the reporting unit was based on our discounted expected after-tax
cash flows from the future royalty stream, net of G&A, expected to be
earned from the underlying franchise agreements. These cash
flows incorporated the decline in future profit expectations for our LJS
and A&W-U.S. reporting unit which were due in part to the impact of a
reduced emphasis on multi-branding as a U.S. growth
strategy. This charge was recorded in Closure and impairment
(income) expenses in our Consolidated Statement of Income and was not
allocated to the U.S. segment for performance reporting
purposes. See Note 5.
|
(c)
|
We
recorded a non-cash goodwill impairment charge of $12 million for our
Pizza Hut South Korea reporting unit in the fourth quarter of 2009 as the
carrying value of this reporting unit exceeded its fair
value. The fair value of this reporting unit was based on the
discounted expected after-tax cash flows from company operations and
franchise royalties for the business. Our expectations of
future cash flows were negatively impacted by recent profit declines the
business has experienced. This charge was recorded in Closure
and impairment (income) expenses in our Consolidated Statement of Income
and was allocated to our International segment for performance reporting
purposes.
|
2009
|
2008
|
||||||||||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
||||||||||||||||
Definite-lived
intangible assets
|
|||||||||||||||||||
Franchise
contract rights
|
$
|
153
|
$
|
(78
|
)
|
$
|
147
|
$
|
(71
|
)
|
|||||||||
Trademarks/brands
|
225
|
(48
|
)
|
225
|
(39
|
)
|
|||||||||||||
Lease tenancy rights
|
66
|
(24
|
)
|
31
|
(7
|
)
|
|||||||||||||
Favorable operating leases
|
27
|
(8
|
)
|
9
|
(8
|
)
|
|||||||||||||
Reacquired
franchise rights
|
121
|
(8
|
)
|
14
|
(1
|
)
|
|||||||||||||
Other
|
7
|
(2
|
)
|
6
|
(2
|
)
|
|||||||||||||
$
|
599
|
$
|
(168
|
)
|
$
|
432
|
$
|
(128
|
)
|
||||||||||
Indefinite-lived
intangible assets
|
|||||||||||||||||||
Trademarks/brands
|
$
|
31
|
$
|
31
|
2009
|
2008
|
||||||||
Short-term
Borrowings
|
|||||||||
Current
maturities of long-term debt
|
$
|
56
|
$
|
15
|
|||||
Other
|
3
|
10
|
|||||||
$
|
59
|
$
|
25
|
Long-term
Debt
|
|||||||||
Unsecured
International Revolving Credit Facility, expires November
2012
|
$
|
—
|
$
|
—
|
|||||
Unsecured
Revolving Credit Facility, expires November 2012
|
5
|
299
|
|||||||
Senior,
Unsecured Term Loan, due July 2011
|
—
|
375
|
|||||||
Senior
Unsecured Notes
|
2,906
|
2,542
|
|||||||
Capital
lease obligations (See Note 12)
|
249
|
234
|
|||||||
Other,
due through 2019 (11%)
|
67
|
70
|
|||||||
3,227
|
3,520
|
||||||||
Less
current maturities of long-term debt
|
(56
|
)
|
(15
|
)
|
|||||
Long-term
debt excluding hedge accounting adjustment
|
3,171
|
3,505
|
|||||||
Derivative
instrument hedge accounting adjustment (See Note 13)
|
36
|
59
|
|||||||
Long-term
debt including hedge accounting adjustment
|
$
|
3,207
|
$
|
3,564
|
Interest
Rate
|
|||||||||
Issuance
Date(a)
|
Maturity
Date
|
Principal
Amount
(in
millions)
|
Stated
|
Effective(b)
|
|||||
April
2001
|
April
2011
|
$
|
650
|
8.88%
|
9.20%
|
||||
June
2002
|
July
2012
|
$
|
263
|
7.70%
|
8.04%
|
||||
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%
|
||||
September
2009
|
September
2015
|
$
|
250
|
4.25%
|
4.44%
|
||||
September
2009
|
September
2019
|
$
|
250
|
5.30%
|
5.59%
|
(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
13.
|
Year
ended:
|
|||||
2010
|
$
|
5
|
|||
2011
|
654
|
||||
2012
|
273
|
||||
2013
|
5
|
||||
2014
|
6
|
||||
Thereafter
|
2,045
|
||||
Total
|
$
|
2,988
|
Commitments
|
Lease
Receivables
|
||||||||||||||||||
Capital
|
Operating
|
Direct
Financing
|
Operating
|
||||||||||||||||
2010
|
$
|
67
|
$
|
535
|
$
|
13
|
$
|
50
|
|||||||||||
2011
|
26
|
492
|
13
|
41
|
|||||||||||||||
2012
|
25
|
446
|
13
|
35
|
|||||||||||||||
2013
|
24
|
409
|
17
|
31
|
|||||||||||||||
2014
|
24
|
369
|
16
|
28
|
|||||||||||||||
Thereafter
|
243
|
2,424
|
72
|
118
|
|||||||||||||||
$
|
409
|
$
|
4,675
|
$
|
144
|
$
|
303
|
2009
|
2008
|
2007
|
|||||||||||
Rental
expense
|
|||||||||||||
Minimum
|
$
|
541
|
$
|
531
|
$
|
474
|
|||||||
Contingent
|
123
|
113
|
81
|
||||||||||
$
|
664
|
$
|
644
|
$
|
555
|
||||||||
Minimum
rental income
|
$
|
38
|
$
|
28
|
$
|
23
|
The
fair values of derivatives designated as hedging instruments for the year
ended December 26, 2009 were:
|
||||||
Fair
Value
|
Consolidated
Balance Sheet Location
|
|||||
Interest
Rate Swaps
|
$
|
44
|
Other
assets
|
|||
Foreign
Currency Forwards – Asset
|
6
|
Prepaid
expenses and other current assets
|
||||
Foreign
Currency Forwards – Liability
|
(3)
|
Accounts
payable and other current liabilities
|
||||
Total
|
$
|
47
|
2009
|
|||||||
Gains
(losses) recognized into OCI, net of tax
|
$
|
(4)
|
|||||
Gains
(losses) reclassified from Accumulated OCI into income, net of
tax
|
$
|
(9)
|
Fair
Value
|
||||||||||||||||||
Description
|
Level
|
2009
|
2008
|
|||||||||||||||
Foreign
Currency Forwards, net
|
2
|
$
|
3
|
$
|
12
|
|||||||||||||
Interest
Rate Swaps, net
|
2
|
44
|
62
|
|||||||||||||||
Other
Investments
|
1
|
13
|
10
|
|||||||||||||||
Total
|
$
|
60
|
$
|
84
|
Fair
Value Measurements Using
|
Total
Losses
|
|||||||||||||||||||
Description
|
As
of
December
26, 2009
|
Level
1
|
Level
2
|
Level
3
|
2009
|
|||||||||||||||
Long-lived
assets held for use
|
$
|
30
|
$
|
—
|
$
|
—
|
$
|
30
|
$
|
56
|
||||||||||
Goodwill
|
—
|
—
|
—
|
—
|
38
|
U.S.
Pension Plans
|
International
Pension Plans
|
||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||||
Change
in benefit obligation
|
|||||||||||||||||||
Benefit
obligation at beginning of year
|
$
|
923
|
$
|
842
|
$
|
126
|
$
|
161
|
|||||||||||
Measurement
date adjustment
|
—
|
21
|
—
|
2
|
|||||||||||||||
Service
cost
|
26
|
30
|
5
|
8
|
|||||||||||||||
Interest
cost
|
58
|
53
|
7
|
8
|
|||||||||||||||
Participant
contributions
|
—
|
—
|
2
|
2
|
|||||||||||||||
Plan
amendments
|
1
|
1
|
—
|
—
|
|||||||||||||||
Acquisitions
|
—
|
—
|
—
|
—
|
|||||||||||||||
Curtailment
gain
|
(9
|
)
|
(6
|
)
|
—
|
—
|
|||||||||||||
Settlement
loss
|
2
|
1
|
—
|
—
|
|||||||||||||||
Special
termination benefits
|
4
|
13
|
—
|
—
|
|||||||||||||||
Exchange
rate changes
|
—
|
—
|
15
|
(48
|
)
|
||||||||||||||
Benefits
paid
|
(47
|
)
|
(48
|
)
|
(3
|
)
|
(3
|
)
|
|||||||||||
Settlement
payments
|
(10
|
)
|
(9
|
)
|
—
|
—
|
|||||||||||||
Actuarial
(gain) loss
|
62
|
25
|
18
|
(4
|
)
|
||||||||||||||
Benefit
obligation at end of year
|
$
|
1,010
|
$
|
923
|
$
|
170
|
$
|
126
|
|||||||||||
Change
in plan assets
|
|||||||||||||||||||
Fair
value of plan assets at beginning of year
|
$
|
513
|
$
|
732
|
$
|
83
|
$
|
139
|
|||||||||||
Actual
return on plan assets
|
132
|
(213
|
)
|
20
|
(33
|
)
|
|||||||||||||
Employer
contributions
|
252
|
54
|
28
|
12
|
|||||||||||||||
Participant
contributions
|
—
|
—
|
2
|
2
|
|||||||||||||||
Settlement
payments
|
(10
|
)
|
(9
|
)
|
—
|
—
|
|||||||||||||
Benefits
paid
|
(47
|
)
|
(48
|
)
|
(3
|
)
|
(3
|
)
|
|||||||||||
Exchange
rate changes
|
—
|
—
|
11
|
(34
|
)
|
||||||||||||||
Administrative
expenses
|
(5
|
)
|
(3
|
)
|
—
|
—
|
|||||||||||||
Fair
value of plan assets at end of year
|
$
|
835
|
$
|
5133
|
$
|
141
|
$
|
83
|
|||||||||||
Funded
status at end of year
|
$
|
(175
|
)
|
$
|
(410
|
)
|
$
|
(29
|
)
|
$
|
(43
|
)
|
Amounts
recognized in the Consolidated Balance Sheet:
|
|||||||||||||||||||
U.S.
Pension Plans
|
International
Pension Plans
|
||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||||
Accrued
benefit liability – current
|
$
|
(8
|
)
|
$
|
(11
|
)
|
$
|
—
|
$
|
—
|
|||||||||
Accrued
benefit liability – non-current
|
(167
|
)
|
(399
|
)
|
(29
|
)
|
(43
|
)
|
|||||||||||
$
|
(175
|
)
|
$
|
(410
|
)
|
$
|
(29
|
)
|
$
|
(43
|
)
|
Amounts
recognized as a loss in Accumulated Other Comprehensive
Income:
|
|||||||||||||||||||
U.S.
Pension Plans
|
International
Pension Plans
|
||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||||
Actuarial
net loss
|
$
|
342
|
$
|
371
|
$
|
48
|
$
|
41
|
|||||||||||
Prior
service cost
|
4
|
3
|
—
|
—
|
|||||||||||||||
$
|
346
|
$
|
374
|
$
|
48
|
$
|
41
|
Information
for pension plans with an accumulated benefit obligation in excess of plan
assets:
|
|||||||||||||||||||
U.S.
Pension Plans
|
International
Pension Plans
|
||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||||
Projected
benefit obligation
|
$
|
1,010
|
$
|
923
|
$
|
82
|
$
|
63
|
|||||||||||
Accumulated
benefit obligation
|
958
|
867
|
76
|
58
|
|||||||||||||||
Fair
value of plan assets
|
835
|
513
|
71
|
34
|
Information
for pension plans with a projected benefit obligation in excess of plan
assets:
|
|||||||||||||||||||
U.S.
Pension Plans
|
International
Pension Plans
|
||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||||
Projected
benefit obligation
|
$
|
1,010
|
$
|
923
|
$
|
170
|
$
|
126
|
|||||||||||
Accumulated
benefit obligation
|
958
|
867
|
141
|
103
|
|||||||||||||||
Fair
value of plan assets
|
835
|
513
|
141
|
83
|
U.S.
Pension Plans
|
International
Pension Plans
|
|||||||||||||||||||||||||||||
Net
periodic benefit cost
|
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
||||||||||||||||||||||||
Service
cost
|
$
|
26
|
$
|
30
|
$
|
33
|
$
|
5
|
$
|
8
|
$
|
9
|
||||||||||||||||||
Interest
cost
|
58
|
53
|
50
|
7
|
8
|
8
|
||||||||||||||||||||||||
Amortization
of prior service cost(a)
|
1
|
—
|
1
|
—
|
—
|
—
|
||||||||||||||||||||||||
Expected
return on plan assets
|
(59
|
)
|
(53
|
)
|
(51
|
)
|
(7
|
)
|
(9
|
)
|
(9
|
)
|
||||||||||||||||||
Amortization
of net loss
|
13
|
6
|
23
|
2
|
—
|
1
|
||||||||||||||||||||||||
Net
periodic benefit cost
|
$
|
39
|
$
|
36
|
$
|
56
|
$
|
7
|
$
|
7
|
$
|
9
|
||||||||||||||||||
Additional
loss recognized due to:
Settlement(b)
|
$
|
2
|
$
|
2
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||||||||
Special
termination benefits(c)
|
$
|
4
|
$
|
13
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
Pension losses in accumulated
other comprehensive income (loss):
|
|||||||||||||||||||||||
U.S.
Pension Plans
|
International
Pension Plans
|
||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||||||||
Beginning
of year
|
$
|
374
|
$
|
80
|
$
|
41
|
$
|
13
|
|||||||||||||||
Net
actuarial loss
|
(15
|
)
|
301
|
5
|
40
|
||||||||||||||||||
Amortization
of net loss
|
(13
|
)
|
(6
|
)
|
(2
|
)
|
—
|
||||||||||||||||
Settlements
|
(1
|
)
|
(1
|
)
|
—
|
—
|
|||||||||||||||||
Prior
service cost
|
2
|
—
|
—
|
—
|
|||||||||||||||||||
Amortization
of prior service cost
|
(1
|
)
|
—
|
—
|
—
|
||||||||||||||||||
Exchange
rate changes
|
—
|
—
|
4
|
(12
|
)
|
||||||||||||||||||
End
of year
|
$
|
346
|
$
|
374
|
$
|
48
|
$
|
41
|
(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 2008 and 2009.
|
Weighted-average
assumptions used to determine benefit obligations at the measurement
dates:
|
|||||||||||||||||||
U.S.
Pension Plans
|
International
Pension Plans
|
||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||||
Discount
rate
|
6.30%
|
6.50%
|
5.50%
|
5.50%
|
|||||||||||||||
Rate
of compensation increase
|
3.75%
|
3.75%
|
4.41%
|
4.10%
|
Weighted-average
assumptions used to determine the net periodic benefit cost for fiscal
years:
|
|||||||||||||||||||||||||||||
U.S.
Pension Plans
|
International
Pension Plans
|
||||||||||||||||||||||||||||
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
||||||||||||||||||||||||
Discount
rate
|
6.50%
|
6.50%
|
5.95%
|
5.50%
|
5.60%
|
5.00%
|
|||||||||||||||||||||||
Long-term
rate of return on plan assets
|
8.00%
|
8.00%
|
8.00%
|
7.20%
|
7.28%
|
7.07%
|
|||||||||||||||||||||||
Rate
of compensation increase
|
3.75%
|
3.75%
|
3.75%
|
4.11%
|
4.30%
|
3.78%
|
U.S.
Pension
Plans
|
International
Pension
Plans
|
|||||||
Level
1:
|
||||||||
Cash
|
$
|
4
|
$
|
7
|
||||
Level
2:
|
||||||||
Cash
Equivalents(a)
|
39
|
—
|
||||||
Equity
Securities - U.S. Large cap(b)
|
271
|
5
|
||||||
Equity
Securities - U.S. Mid cap(b)
|
46
|
—
|
||||||
Equity
Securities - U.S. Small cap(b)
|
46
|
—
|
||||||
Equity
Securities - Non-U.S.(b)
|
89
|
96
|
||||||
Fixed
Income Securities – U.S. Corporate(b)
|
194
|
14
|
||||||
Fixed
Income Securities – U.S. Government and Government Agencies(c)
|
132
|
—
|
||||||
Fixed
Income Securities – Non-U.S. Government(b)(c)
|
14
|
19
|
||||||
Total
fair value of plan assets
|
$
|
835
|
$
|
141
|
(a)
|
Short-term
investments in money market funds
|
(b)
|
Securities
held in common trusts
|
(c)
|
Investments
held by the U.S. Plan are directly
held
|
Year
ended:
|
U.S.
Pension
Plans
|
International
Pension
Plans
|
|||||||||
2010
|
$
|
52
|
$
|
2
|
|||||||
2011
|
51
|
2
|
|||||||||
2012
|
40
|
2
|
|||||||||
2013
|
48
|
2
|
|||||||||
2014
|
46
|
2
|
|||||||||
2015
- 2019
|
278
|
10
|
2009
|
2008
|
2007
|
|||||||||
Risk-free
interest rate
|
1.9
|
%
|
3.0
|
%
|
4.7
|
%
|
|||||
Expected
term (years)
|
5.9
|
6.0
|
6.0
|
||||||||
Expected
volatility
|
32.3
|
%
|
30.9
|
%
|
28.9
|
%
|
|||||
Expected
dividend yield
|
2.6
|
%
|
1.7
|
%
|
2.0
|
%
|
Shares
|
Weighted-Average
Exercise
Price
|
Weighted-Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
(in
millions)
|
|||||||||||||
Outstanding
at the beginning of the year
|
46,918
|
$
|
20.55
|
|||||||||||||
Granted
|
7,766
|
29.30
|
||||||||||||||
Exercised
|
(10,646
|
)
|
12.82
|
|||||||||||||
Forfeited
or expired
|
(2,373
|
)
|
30.46
|
|||||||||||||
Outstanding
at the end of the year
|
41,665
|
$
|
23.59
|
5.78
|
$
|
502
|
||||||||||
Exercisable
at the end of the year
|
25,127
|
$
|
18.74
|
4.20
|
$
|
420
|
Shares
Repurchased
(thousands)
|
Dollar
Value of Shares
Repurchased
|
||||||||||||||||||
Authorization
Date
|
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
|||||||||||||
September
2009
|
—
|
—
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||
January
2008
|
—
|
23,943
|
—
|
—
|
802
|
—
|
|||||||||||||
October
2007
|
—
|
22,875
|
11,431
|
—
|
813
|
437
|
|||||||||||||
March
2007
|
—
|
—
|
15,092
|
—
|
—
|
500
|
|||||||||||||
September
2006
|
—
|
—
|
15,274
|
—
|
—
|
469
|
|||||||||||||
Total
|
—
|
46,818
|
41,797
|
$
|
—
|
$
|
1,615
|
(a)
|
$
|
1,406
|
(b)
|
(a)
|
Amount
excludes the effect of $13 million in share repurchases (0.4 million
shares) with trade dates prior to the 2007 fiscal year end but cash
settlement dates subsequent to the 2007 fiscal year
end.
|
(b)
|
Amount
excludes the effects of $17 million in share repurchases (0.6 million
shares) with trade dates prior to the 2006 fiscal year end but cash
settlement dates subsequent to the 2006 fiscal year end and includes the
effect of $13 million in share repurchases (0.4 million shares) with trade
dates prior to the 2007 fiscal year end but cash settlement dates
subsequent to the 2007 fiscal year.
|
2009
|
2008
|
|||||||||
Foreign
currency translation adjustment
|
$
|
47
|
$
|
(129
|
)
|
|||||
Pension
and post-retirement losses, net of tax
|
(259
|
)
|
(272
|
)
|
||||||
Net
unrealized losses on derivative instruments, net of tax
|
(12
|
)
|
(17
|
)
|
||||||
Total
accumulated other comprehensive income (loss)
|
$
|
(224
|
)
|
$
|
(418
|
)
|
2009
|
2008
|
2007
|
|||||||||||||
Current:
|
Federal
|
$
|
(21
|
)
|
$
|
168
|
$
|
175
|
|||||||
Foreign
|
251
|
151
|
151
|
||||||||||||
State
|
11
|
(1
|
)
|
(3
|
)
|
||||||||||
241
|
318
|
323
|
|||||||||||||
Deferred:
|
Federal
|
92
|
(12
|
)
|
(71
|
)
|
|||||||||
Foreign
|
(30
|
)
|
3
|
27
|
|||||||||||
State
|
10
|
10
|
3
|
||||||||||||
72
|
1
|
(41
|
)
|
||||||||||||
$
|
313
|
$
|
319
|
$
|
282
|
2009
|
2008
|
2007
|
|||||||||||
U.S.
|
$
|
269
|
$
|
430
|
$
|
527
|
|||||||
Foreign
|
1,127
|
861
|
664
|
||||||||||
$
|
1,396
|
$
|
1,291
|
$
|
1,191
|
2009
|
2008
|
2007
|
||||||||||
U.S.
federal statutory rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||||||
State
income tax, net of federal tax benefit
|
1.0
|
0.6
|
1.0
|
|||||||||
Foreign
and U.S. tax effects attributable to foreign operations
|
(11.4
|
)
|
(14.5
|
)
|
(5.7
|
)
|
||||||
Adjustments
to reserves and prior years
|
(0.6
|
)
|
3.5
|
2.6
|
||||||||
Valuation
allowance additions (reversals)
|
(0.7
|
)
|
0.6
|
(9.0
|
)
|
|||||||
Other,
net
|
(0.9
|
)
|
(0.5
|
)
|
(0.2
|
)
|
||||||
Effective
income tax rate
|
22.4
|
%
|
24.7
|
%
|
23.7
|
%
|
2009
|
2008
|
|||||||
Net
operating loss and tax credit carryforwards
|
$
|
230
|
$
|
256
|
||||
Employee
benefits
|
148
|
233
|
||||||
Share-based
compensation
|
106
|
96
|
||||||
Self-insured
casualty claims
|
59
|
71
|
||||||
Lease
related liabilities
|
157
|
150
|
||||||
Various
liabilities
|
100
|
98
|
||||||
Deferred
income and other
|
30
|
41
|
||||||
Gross
deferred tax assets
|
830
|
945
|
||||||
Deferred
tax asset valuation allowances
|
(187
|
)
|
(254
|
)
|
||||
Net
deferred tax assets
|
$
|
643
|
$
|
691
|
||||
Intangible
assets and property, plant and equipment
|
$
|
(184
|
)
|
$
|
(164
|
)
|
||
Lease
related assets
|
(75
|
)
|
(69
|
)
|
||||
Other
|
(125
|
)
|
(134
|
)
|
||||
Gross
deferred tax liabilities
|
(384
|
)
|
(367
|
)
|
||||
Net
deferred tax assets (liabilities)
|
$
|
259
|
$
|
324
|
Reported
in Consolidated Balance Sheets as:
|
||||||||
Deferred
income taxes – current
|
$
|
81
|
$
|
81
|
||||
Deferred
income taxes – long-term
|
251
|
300
|
||||||
Accounts
payable and other current liabilities
|
(7
|
)
|
(4
|
)
|
||||
Other
liabilities and deferred credits
|
(66
|
)
|
(53
|
)
|
||||
$
|
259
|
$
|
324
|
2009
|
2008
|
|||||||||
Beginning
of Year
|
$
|
296
|
$
|
343
|
||||||
Additions
on tax positions related to the current year
|
48
|
53
|
||||||||
Additions
for tax positions of prior years
|
59
|
21
|
||||||||
Reductions
for tax positions of prior years
|
(68
|
)
|
(110
|
)
|
||||||
Reductions
for settlements
|
(33
|
)
|
(2
|
)
|
||||||
Reductions
due to statute expiration
|
(6
|
)
|
(7
|
)
|
||||||
Foreign
currency translation adjustment
|
5
|
(2
|
)
|
|||||||
End
of Year
|
$
|
301
|
$
|
296
|
||||||
Revenues
|
||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||
U.S.
|
$
|
4,473
|
$
|
5,132
|
$
|
5,202
|
||||||||||
YRI(a)
|
2,713
|
3,044
|
3,089
|
|||||||||||||
China
Division(a)
|
3,682
|
3,128
|
2,144
|
|||||||||||||
Unallocated(b)(c)
|
(32
|
)
|
—
|
—
|
||||||||||||
$
|
10,836
|
$
|
11,304
|
$
|
10,435
|
Operating
Profit; Interest Expense, Net; and
Income
Before Income Taxes
|
||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||
U.S.
|
$
|
647
|
$
|
641
|
$
|
685
|
||||||||||
YRI
|
491
|
522
|
474
|
|||||||||||||
China
Division(d)
|
602
|
480
|
375
|
|||||||||||||
Unallocated
Franchise and license fees and income(b)(c)
|
(32
|
)
|
—
|
—
|
||||||||||||
Unallocated
and corporate expenses(c)(e)
|
(189
|
)
|
(248
|
)
|
(197
|
)
|
||||||||||
Unallocated
Impairment expense(c)(f)
|
(26
|
)
|
—
|
—
|
||||||||||||
Unallocated
Other income (expense)(c)(g)
|
71
|
117
|
9
|
|||||||||||||
Unallocated
Refranchising gain (loss)(c)
|
26
|
5
|
11
|
|||||||||||||
Operating
Profit
|
1,590
|
1,517
|
1,357
|
|||||||||||||
Interest
expense, net
|
(194
|
)
|
(226
|
)
|
(166
|
)
|
||||||||||
Income
Before Income Taxes
|
$
|
1,396
|
$
|
1,291
|
$
|
1,191
|
Depreciation
and Amortization
|
||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||
U.S.
|
$
|
216
|
$
|
231
|
$
|
247
|
||||||||||
YRI
|
149
|
158
|
161
|
|||||||||||||
China
Division
|
200
|
151
|
117
|
|||||||||||||
Corporate
|
15
|
16
|
17
|
|||||||||||||
$
|
580
|
$
|
556
|
$
|
542
|
Capital
Spending
|
||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||
U.S.
|
$
|
270
|
$
|
349
|
$
|
320
|
||||||||||
YRI
|
232
|
260
|
179
|
|||||||||||||
China
Division
|
290
|
320
|
224
|
|||||||||||||
Corporate
|
5
|
6
|
3
|
|||||||||||||
$
|
797
|
$
|
935
|
$
|
726
|
Identifiable
Assets
|
||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||
U.S.
|
$
|
2,575
|
$
|
2,739
|
$
|
2,884
|
||||||||||
YRI(h)
|
2,294
|
1,873
|
2,254
|
|||||||||||||
China
Division(h)
|
1,786
|
1,395
|
1,116
|
|||||||||||||
Corporate(i)
|
493
|
520
|
934
|
|||||||||||||
$
|
7,148
|
$
|
6,527
|
$
|
7,188
|
Long-Lived
Assets(j)
|
||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||
U.S.
|
$
|
2,260
|
$
|
2,413
|
$
|
2,595
|
||||||||||
YRI(k)
|
1,413
|
1,162
|
1,450
|
|||||||||||||
China
Division(k)
|
1,283
|
1,012
|
757
|
|||||||||||||
Corporate
|
45
|
63
|
73
|
|||||||||||||
$
|
5,001
|
$
|
4,650
|
$
|
4,875
|
(a)
|
Includes
revenues of $1.1 billion, $1.2 billion and $1.3 billion for entities in
the United Kingdom for 2009, 2008 and 2007, respectively. Includes revenues
of $3.4 billion, $2.8 billion and $1.9 billion in mainland China for 2009,
2008 and 2007, respectively.
|
(b)
|
Amount
consists of reimbursements to KFC franchisees for installation costs of
ovens for the national launch of Kentucky Grilled Chicken. See
Note 5.
|
(c)
|
Amounts
have not been allocated to the U.S., YRI or China Division segments for
performance reporting purposes.
|
(d)
|
Includes
equity income of unconsolidated affiliates of $36 million, $40 million and
$47 million in 2009, 2008 and 2007, respectively, for the China
Division.
|
(e)
|
2009
and 2008 includes approximately $16 million and $49 million, respectively,
of charges relating to U.S. general and administrative productivity
initiatives and realignment of resources. Additionally, 2008
includes $7 million of charges relating to investments in our U.S.
Brands. See Note 5.
|
(f)
|
2009
includes a $26 million charge to write-off goodwill associated with our
LJS and A&W businesses in the U.S. See Note
10.
|
(g)
|
2009
includes a $68 million gain related to the acquisition of additional
interest in and consolidation of a former unconsolidated affiliate and
2008 includes a $100 million gain recognized on the sale of our interest
in our unconsolidated affiliate in Japan. See Note
5.
|
(h)
|
There
was no investment in unconsolidated affiliates for YRI in 2009 or 2008, as
we sold our interest in our unconsolidated affiliate in Japan during
2008. See Note 5. YRI had an investment in our Japan
unconsolidated affiliate of $63 million for 2007. China
Division includes investment in 4 unconsolidated affiliates totaling $144
million for 2009. 2008 and 2007 includes investments in
unconsolidated affiliates of $65 million and $90 million, respectively,
for the China Division. The 2009 increase was driven by our
acquisition of interest in Little Sheep, net of our acquisition of
additional interest in and consolidation of our unconsolidated affiliate
in Shanghai, China. See Note 5.
|
(i)
|
Primarily
includes deferred tax assets, property, plant and equipment, net, related
to our office facilities and cash.
|
(j)
|
Includes
property, plant and equipment, net, goodwill, and intangible assets,
net.
|
(k)
|
Includes
long-lived assets of $660 million, $602 million and $843 million for
entities in the United Kingdom for 2009, 2008 and 2007,
respectively. The yearly fluctuations in long-lived assets were
primarily driven by the impact of foreign currency. Includes
long-lived assets of $1.2 billion, $905 million and $651 million in
mainland China for 2009, 2008 and 2007,
respectively.
|
Beginning
Balance
|
Expense
|
Payments
|
Ending
Balance
|
||||||||||||
2009
Activity
|
$
|
196
|
44
|
(67
|
)
|
$
|
173
|
||||||||
2008
Activity
|
$
|
197
|
68
|
(69
|
)
|
$
|
196
|
2009
|
|||||||||||||||
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Total
|
|||||||||||
Revenues:
|
|||||||||||||||
Company
sales
|
$
|
1,918
|
$
|
2,152
|
$
|
2,432
|
$
|
2,911
|
$
|
9,413
|
|||||
Franchise
and license fees and income
|
299
|
324
|
346
|
454
|
1,423
|
||||||||||
Total
revenues
|
2,217
|
2,476
|
2,778
|
3,365
|
10,836
|
||||||||||
Restaurant
profit
|
308
|
324
|
425
|
422
|
1,479
|
||||||||||
Operating
Profit(a)
|
351
|
394
|
470
|
375
|
1,590
|
||||||||||
Net
Income – YUM! Brands, Inc.
|
218
|
303
|
334
|
216
|
1,071
|
||||||||||
Basic
earnings per common share
|
0.47
|
0.65
|
0.71
|
0.46
|
2.28
|
||||||||||
Diluted
earnings per common share
|
0.46
|
0.63
|
0.69
|
0.45
|
2.22
|
||||||||||
Dividends
declared per common share
|
—
|
0.38
|
—
|
0.42
|
0.80
|
2008
|
|||||||||||||||
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Total
|
|||||||||||
Revenues:
|
|||||||||||||||
Company
sales
|
$
|
2,094
|
$
|
2,323
|
$
|
2,482
|
$
|
2,944
|
$
|
9,843
|
|||||
Franchise
and license fees and income
|
319
|
336
|
360
|
446
|
1,461
|
||||||||||
Total
revenues
|
2,413
|
2,659
|
2,842
|
3,390
|
11,304
|
||||||||||
Restaurant
profit
|
308
|
311
|
358
|
401
|
1,378
|
||||||||||
Operating
Profit(b)
|
426
|
317
|
411
|
363
|
1,517
|
||||||||||
Net
Income – YUM! Brands, Inc.
|
254
|
224
|
282
|
204
|
964
|
||||||||||
Basic
earnings per common share
|
0.52
|
0.47
|
0.60
|
0.44
|
2.03
|
||||||||||
Diluted
earnings per common share
|
0.50
|
0.45
|
0.58
|
0.43
|
1.96
|
||||||||||
Dividends
declared per common share
|
0.15
|
0.19
|
—
|
0.38
|
0.72
|
(a)
|
Includes
net losses of $17 million, $3 million and $22 million in the first, third
and fourth quarters of 2009, respectively, and a net gain of $60 million
in the second quarter of 2009 related to the consolidation of a former
unconsolidated affiliate, charges related to the U.S. business
transformation measures and an impairment of an international
market. See Note 5.
|
(b)
|
Includes
a net gain of $68 million, net loss of $3 million and net loss of $26
million in the first, second and fourth quarters of 2008, respectively,
related to the gain on the sale of our interest in our Japan
unconsolidated affiliate and charges related to the U.S. business
transformation measures. See Note
5.
|
Item
9.
|
Changes In and Disagreements
with Accountants on Accounting and Financial
Disclosure.
|
Item
9A.
|
Controls
and Procedures.
|
Item
9B.
|
Other
Information.
|
Item
10.
|
Directors,
Executive Officers and Corporate
Governance.
|
Item
11.
|
Executive
Compensation.
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence.
|
Item
14.
|
Principal
Accountant Fees and Services.
|
Item
15.
|
Exhibits
and Financial Statement Schedules.
|
(a)
|
(1)
|
Financial
Statements: Consolidated financial statements filed as part of
this report are listed under Part II, Item 8 of this Form
10-K.
|
(2)
|
Financial
Statement Schedules: No schedules are required because either
the required information is not present or not present in amounts
sufficient to require submission of the schedule, or because the
information required is included in the financial statements or the
related notes thereto filed as a part of this Form
10-K.
|
|
(3)
|
Exhibits: The
exhibits listed in the accompanying Index to Exhibits are filed as part of
this Form 10-K. The Index to Exhibits specifically identifies each
management contract or compensatory plan required to be filed as an
exhibit to this Form 10-K.
|
|
SIGNATURES
|
Date:
|
February
17, 2010
|
YUM!
BRANDS, INC.
|
By:
|
/s/
David C. Novak
|
Signature
|
Title
|
Date
|
||
/s/
David C. Novak
David C. Novak |
Chairman
of the Board,
Chief
Executive Officer and President
(principal
executive officer)
|
February
17, 2010
|
||
/s/
Richard T. Carucci
Richard T. Carucci |
Chief
Financial Officer
(principal
financial officer)
|
February
17, 2010
|
||
/s/
Ted F. Knopf
Ted F. Knopf |
Senior
Vice President Finance and Corporate Controller
(principal
accounting officer)
|
February
17, 2010
|
||
/s/
David W. Dorman
David W. Dorman |
Director
|
February
17, 2010
|
||
/s/
Massimo Ferragamo
Massimo Ferragamo |
Director
|
February
17, 2010
|
||
/s/
J. David Grissom
J. David Grissom |
Director
|
February
17, 2010
|
||
/s/
Bonnie G. Hill
Bonnie G. Hill |
Director
|
February
17, 2010
|
/s/
Robert Holland, Jr.
Robert Holland, Jr. |
Director
|
February
17, 2010
|
||
/s/
Kenneth G. Langone
Kenneth G. Langone |
Director
|
February
17, 2010
|
||
/s/
Jonathan S. Linen
Jonathan S. Linen |
Director
|
February
17, 2010
|
||
/s/
Thomas C. Nelson
Thomas C. Nelson |
Director
|
February
17, 2010
|
||
/s/
Thomas M. Ryan
Thomas M. Ryan |
Director
|
February
17, 2010
|
||
/s/
Jing-Shyh S. Su
Jing-Shyh S. Su |
Vice-Chairman
of the Board
|
February
17, 2010
|
||
/s/
Jackie Trujillo
Jackie Trujillo |
Director
|
February
17, 2010
|
||
/s/
Robert D. Walter
Robert D. Walter |
Director
|
February
17, 2010
|
Exhibit
Number
|
Description of Exhibits
|
||
3.1
|
Restated
Articles of Incorporation of YUM, which is incorporated herein by
reference from Exhibit 3.1 to YUM’s Annual Report on Form 10-K for the
fiscal year ended December 27, 2008.
|
||
3.2
|
Amended
and restated Bylaws of YUM, which are incorporated herein by reference
from Exhibit 3.1 on Form 8-K filed on November 23,
2009.
|
||
4.1
|
Indenture,
dated as of May 1, 1998, between YUM and J.P. Morgan Chase Bank, National
Association, successor in interest to The First National Bank of Chicago,
pertaining to 7.65% Senior Notes due May 15, 2008, 8.5% Senior Notes and
8.875% Senior Notes due April 15, 2006 and April 15, 2011, respectively,
and 7.70% Senior Notes due July 1, 2012, which is incorporated herein by
reference from Exhibit 4.1 to YUM’s Report on Form 8-K filed on May 13,
1998.
|
||
(i)
|
6.25%
Senior Notes due April 15, 2016 issued under the foregoing May 1, 1998
indenture, which notes are incorporated by reference from Exhibit 4.2 to
YUM’s Report on Form 8-K filed on April 17, 2006.
|
||
(ii)
|
6.25%
Senior Notes due March 15, 2018 issued under the foregoing May 1, 1998
indenture, which notes are incorporated by reference from Exhibit 4.2 to
YUM’s Report on Form 8-K filed on October 22, 2007.
|
||
(iii)
|
6.875%
Senior Notes due November 15, 2037 issued under the foregoing May 1, 1998
indenture, which notes are incorporated by reference from Exhibit 4.3 to
YUM’s Report on Form 8-K filed on October 22, 2007.
|
||
(iv)
|
4.25%
Senior Notes due September 15, 2015 issued under the foregoing May 1, 1998
indenture, which notes are incorporated by reference from Exhibit 4.1 to
YUM’s Report on Form 8-K filed on August 25, 2009.
|
||
(v)
|
5.30%
Senior Notes due September 15, 2019 issued under the foregoing May 1, 1998
indenture, which notes are incorporated by reference from Exhibit 4.1 to
YUM’s Report on Form 8-K filed on August 25, 2009.
|
||
10.1
|
Amended
and Restated Sales and Distribution Agreement between AmeriServe Food
Distribution, Inc., YUM, Pizza Hut, Taco Bell and KFC, effective as of
November 1, 1998, which is incorporated herein by reference from Exhibit
10 to YUM’s Annual Report on Form 10-K for the fiscal year ended December
26, 1998, as amended by the First Amendment thereto, which is incorporated
herein by reference from Exhibit 10.5 to YUM’s Annual Report on Form 10-K
for the fiscal year ended December 30, 2000.
|
||
10.2
|
Amended
and Restated Credit Agreement, dated November 29, 2007 among YUM, the
lenders party thereto, JP Morgan Chase Bank, N.A., as Administrative
Agent, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as
Lead Arrangers and Bookrunners and Citibank N.A., as Syndication Agent,
which is incorporated herein by reference from Exhibit 10.6 to YUM’s
Annual Report on Form 10-K for the fiscal year ended December 29,
2007.
|
10.3†
|
YUM
Director Deferred Compensation Plan, as effective October 7, 1997, which
is incorporated herein by reference from Exhibit 10.7 to YUM’s Annual
Report on Form 10-K for the fiscal year ended December 27,
1997.
|
|
10.3.1†
|
YUM
Director Deferred Compensation Plan, Plan Document for the 409A Program,
as effective January 1, 2005, and as Amended through November 14, 2008,
which is incorporated by reference from Exhibit 10.7.1 to YUM’s Quarterly
Report on Form 10-Q for the quarter ended June 13,
2009.
|
|
10.4†
|
YUM
1997 Long Term Incentive Plan, as effective October 7, 1997, which is
incorporated herein by reference from Exhibit 10.8 to YUM’s Annual Report
on Form 10-K for the fiscal year ended December 27,
1997.
|
|
10.5†
|
YUM
Executive Incentive Compensation Plan, as effective May 20, 2004, and as
Amended through the Second Amendment, as effective May 21, 2009, which is
incorporated herein by reference from Exhibit A of YUM’s Definitive Proxy
Statement on Form DEF 14A for the Annual Meeting of Shareholders held on
May 21, 2009.
|
|
10.6†
|
YUM
Executive Income Deferral Program, as effective October 7, 1997, and as
amended through May 16, 2002, which is incorporated herein by reference
from Exhibit 10.10 to YUM’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2005.
|
|
10.6.1†
|
YUM!
Brands Executive Income Deferral Program, Plan Document for the 409A
Program, as effective January 1, 2005, and as Amended through June 30,
2009, which is incorporated by reference from Exhibit 10.10.1 to YUM’s
Quarterly Report on Form 10-Q for the quarter ended June 13,
2009.
|
|
10.7†
|
YUM
Pension Equalization Plan, as effective October 7, 1997, which is
incorporated herein by reference from Exhibit 10.14 to YUM’s Annual Report
on Form 10-K for the fiscal year ended December 27,
1997.
|
|
10.7.1†
|
YUM!
Brands, Inc. Pension Equalization Plan, Plan Document for the 409A
Program, as effective January 1, 2005, and as Amended through December 30,
2008, which is incorporated by reference from Exhibit 10.13.1 to YUM’s
Quarterly Report on Form 10-Q for the quarter ended June 13,
2009.
|
|
10.8†
|
Form
of Directors’ Indemnification Agreement, which is incorporated herein by
reference from Exhibit 10.17 to YUM’s Annual Report on Form 10-K for the
fiscal year ended December 27, 1997.
|
|
10.9†
|
Amended
and restated form of Severance Agreement (in the event of a change in
control), which is incorporated herein by reference from Exhibit 10.17 to
YUM’s Annual Report on Form 10-K for the fiscal year ended December 30,
2000.
|
|
10.9.1†
|
YUM!
Brands, Inc. 409A Addendum to Amended and restated form of Severance
Agreement, as effective December 31, 2008, which is incorporated by
reference from Exhibit 10.17.1 to YUM’s Quarterly Report on Form 10-Q for
the quarter ended June 13, 2009.
|
|
10.10†
|
YUM
Long Term Incentive Plan, as Amended through the Fourth Amendment, as
effective November 21, 2008, which is incorporated by reference from
Exhibit 10.18 to YUM’s Quarterly Report on Form 10-Q for the quarter ended
June 13, 2009.
|
|
10.11
|
Amended
and Restated YUM Purchasing Co-op Agreement, dated as of August 26, 2002,
between YUM and the Unified FoodService Purchasing Co-op, LLC, which is
incorporated herein by reference from Exhibit 10.20 to YUM’s Annual Report
on Form 10-K for the fiscal year ended December 28,
2002.
|
|
10.12†
|
YUM
Restaurant General Manager Stock Option Plan, as effective April 1, 1999,
and as amended through June 23, 2003, which is incorporated herein by
reference from Exhibit 10.22 to YUM’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2005.
|
|
10.13†
|
YUM
SharePower Plan, as effective October 7, 1997, and as amended through June
23, 2003, which is incorporated herein by reference from Exhibit 10.23 to
YUM’s Annual Report on Form 10-K for the fiscal year ended December 31,
2005.
|
|
10.14†
|
Form
of YUM Director Stock Option Award Agreement, which is incorporated herein
by reference from Exhibit 10.25 to YUM’s Quarterly Report on Form 10-Q for
the quarter ended September 4, 2004.
|
|
10.15†
|
Form
of YUM 1999 Long Term Incentive Plan Award Agreement, which is
incorporated herein by reference from Exhibit 10.26 to YUM’s Quarterly
Report on Form 10-Q for the quarter ended September 4,
2004.
|
|
10.16†
|
YUM!
Brands, Inc. International Retirement Plan, as in effect January 1, 2005,
which is incorporated herein by reference from Exhibit 10.27 to YUM’s
Annual Report on Form 10-K for the fiscal year ended December 25,
2004.
|
|
10.17†
|
Letter
of Understanding, dated July 13, 2004, by and between the Company and
Samuel Su, which is incorporated herein by reference from Exhibit 10.28 to
YUM’s Annual Report on Form 10-K for the fiscal year ended December 25,
2004.
|
|
10.18†
|
Form
of 1999 Long Term Incentive Plan Award Agreement (Stock Appreciation
Rights) which is incorporated by reference from Exhibit 99.1 to YUM’s
Report on Form 8-K as filed on January 30, 2006.
|
|
10.19
|
Amended
and Restated Credit Agreement, dated November 29, 2007, among YUM, the
lenders party thereto, Citigroup Global Markets Ltd. and J.P. Morgan
Securities Inc., as Lead Arrangers and Bookrunners, and Citigroup
International Plc and Citibank, N.A., Canadian Branch, as Facility Agents,
which is incorporated herein by reference from Exhibit 10.30 to YUM’s
Annual Report on Form 10-K for the fiscal year ended December 29,
2007.
|
|
10.20†
|
Severance
Agreement (in the event of change in control) for Emil Brolick, dated as
of February 15, 2001, which is incorporated herein by reference from
Exhibit 10.31 to YUM’s Annual Report on Form 10-K for the fiscal year
ended December 30, 2006.
|
|
10.20.1†
|
YUM!
Brands 409A Addendum to Severance Agreement for Emil Brolick, as effective
December 31, 2008, which is incorporated by reference from Exhibit 10.31.1
to YUM’s Quarterly Report on Form 10-Q for the quarter ended June 13,
2009.
|
|
10.21†
|
YUM!
Brands Leadership Retirement Plan, as in effect January 1, 2005, which is
incorporated herein by reference from Exhibit 10.32 to YUM’s Quarterly
Report on Form 10-Q for the quarter ended March 24,
2007.
|
|
10.21.1†
|
YUM!
Brands Leadership Retirement Plan, Plan Document for the 409A Program, as
effective January 1, 2005, and as Amended through December, 2009 (as filed
herewith).
|
|
10.22†
|
1999
Long Term Incentive Plan Award (Restricted Stock Unit Agreement) by and
between the Company and David C. Novak, dated as of January 24, 2008,
which is incorporated herein by reference from Exhibit 10.33 to YUM’s
Annual Report on Form 10-K for the fiscal year ended December 29,
2007.
|
|
10.23
|
Credit
Agreement, dated July 11, 2008, among YUM, and the lenders party thereto,
JPMorgan Chase Bank, N.A., as Administrative Agent, J.P. Morgan Securities
Inc. as Lead Arranger and Sole Bookrunner and Bank of America, N.A., as
Syndication Agent, which is incorporated by reference from Exhibit 10.34
to YUM’s Quarterly Report on Form 10-Q for the quarter ended June 14,
2008.
|
|
10.24†
|
YUM!
Performance Share Plan, as effective January 1, 2009 (as filed
herewith).
|
|
10.25†
|
YUM!
Brands Third Country National Retirement Plan, as effective January 1,
2009 (as filed herewith).
|
|
10.26†
|
2010
YUM! Brands Supplemental Long Term Disability Coverage Summary, as
effective January 1, 2010 (as filed herewith).
|
|
12.1
|
Computation
of ratio of earnings to fixed charges.
|
|
21.1
|
Active
Subsidiaries of YUM.
|
|
23.1
|
Consent
of KPMG LLP.
|
|
31.1
|
Certification
of the Chairman, Chief Executive Officer and President pursuant to Rule
13a-14(a) of Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification
of the Chief Financial Officer pursuant to Rule 13a-14(a) of Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification
of the Chairman, Chief Executive Officer and President pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
101.INS*
|
XBRL
Instance Document
|
|
101.SCH*
|
XBRL
Taxonomy Extension Schema Document
|
|
101.CAL*
|
XBRL
Taxonomy Extension Calculation Linkbase Document
|
|
101.LAB*
|
XBRL
Taxonomy Extension Label Linkbase Document
|
|
101.PRE*
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XBRL
Taxonomy Extension Presentation Linkbase Document
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101.DEF*
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XBRL
Taxonomy Extension Definition Linkbase Document
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*
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In
accordance with Regulation S-T, the XBRL-related information in Exhibit
101 to this Annual Report on this Form 10-K shall be deemed to be
“furnished” and not “filed.”
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