Document and Entity Information
Document and Entity Information - shares | 2 Months Ended | |
Feb. 28, 2017 | Mar. 30, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Yum China Holdings, Inc. | |
Entity Central Index Key | 1,673,358 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Trading Symbol | YUMC | |
Amendment Flag | false | |
Document Period End Date | Feb. 28, 2017 | |
Entity Common Stock Shares Outstanding | 384,334,841 |
Condensed Consolidated and Comb
Condensed Consolidated and Combined Statements of Income (Unaudited) - USD ($) $ in Millions | 2 Months Ended | ||
Feb. 28, 2017 | Feb. 29, 2016 | ||
Revenues | |||
Company sales | $ 1,257 | $ 1,278 | |
Franchise fees and income | 27 | 25 | |
Total revenues | 1,284 | 1,303 | |
Costs and Expenses, Net | |||
Food and paper | 345 | 385 | |
Payroll and employee benefits | 257 | 245 | |
Occupancy and other operating expenses | 366 | 402 | |
Company restaurant expenses | 968 | 1,032 | |
General and administrative expenses | 67 | 66 | |
Franchise expenses | 13 | 14 | |
Refranchising gain, net | (1) | (3) | |
Other income, net | (17) | (15) | |
Total costs and expenses, net | 1,030 | 1,094 | |
Operating Profit | 254 | 209 | |
Interest income, net | [1] | 2 | 2 |
Income Before Income Taxes | 256 | 211 | |
Income tax provision | (76) | (62) | |
Net income – including noncontrolling interests | 180 | 149 | |
Net income – noncontrolling interests | 5 | 4 | |
Net Income – Yum China Holdings, Inc. | $ 175 | $ 145 | |
Basic Earnings Per Common Share | $ 0.45 | $ 0.40 | |
Diluted Earnings Per Common Share | $ 0.44 | $ 0.40 | |
[1] | Amounts have not been allocated to any segment for performance reporting purposes. |
Condensed Consolidated and Com3
Condensed Consolidated and Combined Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 2 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net income - including noncontrolling interests | $ 180 | $ 149 |
Other comprehensive income, net of tax of nil: | ||
Foreign currency gains (losses) arising during the period | 22 | (22) |
Comprehensive income - including noncontrolling interests | 202 | 127 |
Comprehensive income - noncontrolling interests | 6 | 4 |
Comprehensive Income - Yum China Holdings, Inc. | $ 196 | $ 123 |
Condensed Consolidated and Com4
Condensed Consolidated and Combined Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 2 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Cash Flows – Operating Activities | ||
Net income - including noncontrolling interests | $ 180 | $ 149 |
Depreciation and amortization | 64 | 68 |
Refranchising gain | (1) | (3) |
Deferred income taxes | (1) | (19) |
Equity income from investments in unconsolidated affiliates | (17) | (16) |
Share-based compensation expense | 3 | 3 |
Changes in accounts receivable | 8 | (8) |
Changes in inventories | 40 | 17 |
Changes in prepaid expenses and other current assets | 5 | 7 |
Changes in accounts payable and other current liabilities | 31 | 113 |
Changes in income taxes payable | 51 | 56 |
Other, net | (6) | 6 |
Net Cash Provided by Operating Activities | 357 | 373 |
Cash Flows – Investing Activities | ||
Capital spending | (74) | (80) |
Purchases of short-term investments | (100) | (54) |
Proceeds from refranchising of restaurants | 2 | 7 |
Other, net | (1) | (1) |
Net Cash Used in Investing Activities | (173) | (128) |
Cash Flows – Financing Activities | ||
Net transfers from Parent | 7 | |
Payment of capital lease obligation | (1) | |
Net Cash (Used in) Provided by Financing Activities | (1) | 7 |
Effect of Exchange Rates on Cash and Cash Equivalents | 6 | (5) |
Net Increase in Cash and Cash Equivalents | 189 | 247 |
Cash and Cash Equivalents - Beginning of Period | 885 | 425 |
Cash and Cash Equivalents - End of Period | 1,074 | 672 |
Supplemental Cash Flow Data | ||
Cash paid for income tax | $ 25 | $ 23 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Feb. 28, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 1,074 | $ 885 |
Short-term investments | 180 | 79 |
Accounts receivable, net | 68 | 74 |
Inventories, net | 231 | 268 |
Prepaid expenses and other current assets | 169 | 120 |
Total Current Assets | 1,722 | 1,426 |
Property, plant and equipment, net | 1,627 | 1,647 |
Goodwill | 80 | 79 |
Intangible assets, net | 87 | 88 |
Investments in unconsolidated affiliates | 37 | 71 |
Other assets | 261 | 254 |
Deferred income taxes | 163 | 162 |
Total Assets | 3,977 | 3,727 |
Current Liabilities | ||
Accounts payable and other current liabilities | 984 | 971 |
Income taxes payable | 84 | 33 |
Total Current Liabilities | 1,068 | 1,004 |
Capital lease obligations | 28 | 28 |
Other liabilities and deferred credits | 251 | 252 |
Total Liabilities | 1,347 | 1,284 |
Equity | ||
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 384,311,143 shares and 383,344,835.42 shares issued and outstanding at February 28, 2017 and December 31, 2016, respectively | 4 | 4 |
Treasury Stock | (20) | (20) |
Additional paid-in capital | 2,359 | 2,352 |
Retained earnings | 215 | 40 |
Accumulated other comprehensive income | 22 | 1 |
Total Equity – Yum China Holdings, Inc. | 2,580 | 2,377 |
Noncontrolling interests | 50 | 66 |
Total Equity | 2,630 | 2,443 |
Total Liabilities and Equity | $ 3,977 | $ 3,727 |
Condensed Consolidated Balance6
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Feb. 28, 2017 | Dec. 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 384,311,143 | 383,344,835.42 |
Common stock, shares outstanding | 384,311,143 | 383,344,835.42 |
Description of the Business
Description of the Business | 2 Months Ended |
Feb. 28, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of the Business | Note 1 – Description of the Business Yum China Holdings, Inc. (“Yum China” and, together with its subsidiaries, the “Company,” “we,” “us,” and “our”) was incorporated in Delaware on April 1, 2016. The Company separated from Yum! Brands, Inc. (“YUM” or the “Parent”) on October 31, 2016 (the “separation”), becoming an independent publicly traded company as a result of a pro rata distribution (the “distribution”) of all outstanding shares of Yum China common stock to shareholders of YUM. On October 31, 2016, YUM’s shareholders of record as of 5:00 p.m. Eastern Time on October 19, 2016 received one share of Yum China common stock for every one share of YUM common stock held as of the record date. Yum China’s common stock began trading “regular way” under the ticker symbol “YUMC” on the New York Stock Exchange on November 1, 2016. The Company owns, franchises or has ownership in entities that own and operate restaurants under the KFC, Pizza Hut Casual Dining, Pizza Hut Home Service, Taco Bell, East Dawning and Little Sheep concepts (collectively, the “Concepts”). In connection with the separation of the Company from YUM, Yum! Restaurants Asia Pte. Ltd., a wholly-owned indirect subsidiary of YUM, and Yum Restaurants Consulting (Shanghai) Company Limited (“YCCL”), a wholly-owned indirect subsidiary of Yum China, entered into a 50-year master license agreement with automatic renewals for additional consecutive renewal terms of 50 years each, subject only to YCCL being in “good standing” and unless YCCL gives notice of its intent not to renew, for the exclusive right to use and sub-license the use of intellectual property owned by YUM and its subsidiaries for the development and operation of the KFC, Pizza Hut and, subject to achieving certain agreed-upon milestones, Taco Bell brands and their related marks and other intellectual property rights for restaurant services in the People’s Republic of China excluding Hong Kong, Taiwan and Macau (the “PRC” or “China”). In exchange, we pay a license fee to YUM equal to 3% of net system sales from both our Company and franchise restaurants. We own the East Dawning and Little Sheep intellectual property and pay no license fee related to these concepts. The operations of each Concept represent an operating segment of the Company. We have two reportable segments: KFC and Pizza Hut Casual Dining. Our remaining operating segments, including the operations of Pizza Hut Home Service, East Dawning, Little Sheep and Taco Bell, are combined and referred to as All Other Segments, as those operating segments are insignificant both individually and in the aggregate. |
Basis of Presentation
Basis of Presentation | 2 Months Ended |
Feb. 28, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Note 2 – Basis of Presentation In connection with our separation from YUM, the direct and indirect equity interests of all of our operating subsidiaries and intermediate holding companies were transferred from YUM to Yum China, when Yum China was still one of YUM’s subsidiaries, through a series of transactions, which were completed in August 2016. The Company separated from YUM on October 31, 2016, becoming an independent publicly traded company as a result of a pro rata distribution of all outstanding shares of Yum China common stock to shareholders of YUM. The financial statements presented herein represent (i) for periods prior to October 31, 2016, the combined financial statements of YUM’s China businesses and operations when Yum China was a wholly owned subsidiary of YUM (referred to as “Condensed Combined Financial Statements”) and (ii) for periods subsequent to October 31, 2016, the consolidated financial statements of the Company as a separate publicly traded company following its separation from YUM (referred to as “Condensed Consolidated Financial Statements” and, together with the Condensed Combined Financial Statements, referred to as the “Condensed Consolidated and Combined Financial Statements”). Our preparation of the accompanying Condensed Consolidated and Combined Financial Statements in conformity with Generally Accepted Accounting Principles in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The accompanying Condensed Combined Financial Statements have been prepared on a standalone basis and are derived from YUM’s consolidated financial statements and underlying accounting records. Transactions between the Company and YUM that were not cash settled were considered to be effectively settled at the time the transactions are recorded. The Condensed Combined Financial Statements include all revenues, costs, assets and liabilities directly attributable to the Company either through specific identification or allocation. The Condensed Combined Statements of Income include allocations for certain of YUM’s Corporate functions which provided a direct benefit to the Company. These costs have been allocated based on Company system sales relative to YUM’s global system sales. System sales includes the sales results of all restaurants regardless of ownership. All allocated costs have been deemed to have been paid to YUM in the period in which the costs were recorded. The Company considers the cost allocation methodology and results to be reasonable for the periods prior to October 31, 2016. However, the allocations may not be indicative of the actual expense that would have been incurred had the Company operated as an independent, publicly traded company for the periods prior to October 31, 2016. Upon the separation, Parent Company Investment was adjusted as a result of settlement of certain assets and liabilities with YUM and formed the Company’s common stock and additional paid-in capital. See Note 3 for further discussion. We have prepared the Condensed Consolidated and Combined Financial Statements in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Condensed Consolidated and Combined Financial Statements include all normal and recurring adjustments considered necessary to present fairly our financial position as of February 28, 2017, and the results of our operations, comprehensive income and cash flows for the quarters ended February 28, 2017 and February 29, 2016. Our results of operations, comprehensive income and cash flows for these interim periods are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the Consolidated and Combined Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 8, 2017. Certain comparative items in the Condensed Consolidated and Combined Financial Statements have been reclassified to conform to the current period’s presentation to facilitate comparison. Our fiscal year ends on December 31. The Company operates on a fiscal monthly calendar, with two months in the first quarter, three months in the second and third quarters and four months in the fourth quarter. |
Transactions with YUM
Transactions with YUM | 2 Months Ended |
Feb. 28, 2017 | |
Related Party Transactions [Abstract] | |
Transactions with YUM | Note 3 – Transactions with YUM Prior to the separation, there existed a parent-subsidiary relationship between YUM and the Company. We had the following transactions with YUM for the quarter ended February 29, 2016: Allocation of Corporate Expenses YUM historically performed centralized corporate functions on our behalf prior to October 31, 2016. Accordingly, certain YUM costs have been allocated to the Company and reflected as expenses in the Condensed Combined Financial Statements. Management considers the allocation methodologies used to be reasonable and appropriate reflections of the historical expenses attributable to the Company. The expenses reflected in the Condensed Combined Financial Statements may not be indicative of the actual expenses that would have been incurred during the periods presented if we had operated as a separate, standalone entity. Corporate expense allocations primarily relate to centralized corporate functions, including finance, accounting, treasury, tax, legal, internal audit and risk management functions. In addition, corporate expense allocations include, among other costs, IT maintenance, professional fees for legal services and expenses related to litigation, investigations or similar matters. Corporate allocations of $3 million were allocated to the Company during the quarter ended February 29, 2016, and have been included in general and administrative (“G&A”) expenses in the Condensed Combined Statements of Income. All of the corporate allocations of costs are deemed to have been incurred and settled through Parent Company Investment in the Condensed Combined Balance Sheets in the period where the costs were recorded. Following the separation from YUM, we perform these functions using our own resources or purchased services. License Fee The Condensed Combined Statements of Income include a fee that was historically paid to YUM comprised of initial fees and continuing fees equal to 3% of our Company and franchise sales prior to October 31, 2016. License fees due to YUM for our Company-owned stores are included within restaurant margin in Occupancy and other operating expenses in the Condensed Consolidated and Combined Statements of Income. License fees due to YUM on franchise sales are included in Franchise expenses. Total license fees paid during the quarter ended February 29, 2016 are reflected in the table below: Quarter ended 2/29/2016 Initial fees - Company $ 2 Initial fees - Franchise — Continuing Fees - Company 38 Continuing Fees - Franchise 10 Total $ 50 Cash Management and Treasury The Company funds its operations through cash generated from the operation of its Company-owned stores, franchise operations and dividend payments from unconsolidated affiliates. Prior to October 31, 2016, excess cash has historically been repatriated to YUM through intercompany loans or dividends. Transfers of cash both to and from YUM are included within Parent Company Investment in the Condensed Combined Balance Sheets. YUM has issued debt for general corporate purposes but in no case has any such debt been guaranteed or assumed by the Company or otherwise secured by the assets of the Company. As YUM’s debt and related interest is not directly attributable to the Company, no such amounts have been allocated to the Condensed Combined Financial Statements. |
Earnings Per Common Share ("EPS
Earnings Per Common Share ("EPS") | 2 Months Ended |
Feb. 28, 2017 | |
Earnings Per Share [Abstract] | |
Earning Per Common Share (EPS) | Note 4 – Earnings Per Common Share (“EPS”) On October 31, 2016, YUM’s shareholders of record as of October 19, 2016 received one share of Yum China common stock for every one share of YUM’s common stock held as of the record date. For periods ended October 31, 2016 and prior, basic and diluted earnings per share were computed using the number of shares of Yum China common stock outstanding as of October 31, 2016, the date on which Yum China common stock was distributed to YUM’s shareholders. The same number of shares was used to calculate basic and diluted earnings per share for the quarter ended February 29, 2016 since there were no dilutive securities until after the separation. The following table summarizes the components of basic and diluted earnings per share: Quarter ended 2/28/2017 2/29/2016 Net Income – Yum China Holdings, Inc. $ 175 $ 145 Weighted-average common shares outstanding (for basic calculation) (a) 387,525,034 363,758,219 Effect of dilutive share-based employee compensation (a) 7,821,987 — Weighted-average common and dilutive potential common shares outstanding (for diluted calculation) 395,347,021 363,758,219 Basic Earnings Per Share $ 0.45 $ 0.40 Diluted Earnings Per Share $ 0.44 $ 0.40 Employee stock options, stock appreciation rights and warrants excluded from the diluted EPS computation (b) 18,448,360 — (a) As a result of the separation, shares of Yum China common stock were distributed to YUM’s shareholders of record as of October 19, 2016 and included in the calculated weighted-average common shares outstanding. Holders of outstanding YUM equity awards generally received both adjusted YUM awards and Yum China awards, or adjusted awards on shares of common stock of either YUM or Yum China in their entirety. Any subsequent exercise of these awards, whether held by the Company’s employees or YUM’s employees, would increase the number of common shares outstanding. The outstanding equity awards are included in the computation of diluted EPS, if there is dilutive effect. (b) These unexercised employee stock options, stock appreciation rights and warrants were not included in the computation of diluted EPS because to do so would have been antidilutive for the quarters presented. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income ("AOCI") | 2 Months Ended |
Feb. 28, 2017 | |
Stockholders Equity Note [Abstract] | |
Accumulated Other Comprehensive Income ("AOCI") | Note 5 – Accumulated Other Comprehensive Income (“AOCI”) The Company’s other comprehensive income for the quarters ended February 28, 2017 and February 29, 2016 and AOCI balances as of February 28, 2017 and December 31, 2016 were comprised solely of foreign currency translation adjustments. We recognized other comprehensive income of $22 million and other comprehensive loss of $22 million for the quarters ended February 28, 2017 and February 29, 2016, respectively. The accumulated balances reported in AOCI on the Condensed Consolidated Balance Sheets for currency translation adjustments were $22 million and $1 million as of February 28, 2017 and December 31, 2016, respectively. There was no tax effect related to the components of other comprehensive income for all periods presented. |
Items Affecting Comparability o
Items Affecting Comparability of Net Income and Cash Flows | 2 Months Ended |
Feb. 28, 2017 | |
Items Affecting Comparability Of Net Income And Cash Flows [Abstract] | |
Comparability of Prior Year Financial Data | Note 6 – Items Affecting Comparability of Net Income and Cash Flows Refranchising Gain, net The Refranchising gain, net by reportable segment and All Other Segments is presented below. We do not allocate such gains and losses to our segments for performance reporting purposes. Quarter ended 2/28/2017 2/29/2016 KFC $ 1 $ 3 Pizza Hut Casual Dining — — All Other Segments — — Total Company $ 1 $ 3 Store Closure and Impairment Activity Store closure income and Store impairment charges by reportable segment and All Other Segments are presented below: Quarter ended 2/28/2017 Total Company KFC Pizza Hut Casual Dining All Other Segments Store closure income (a) $ 2 $ 1 $ 1 $ — Store impairment charges (2 ) (2 ) — — Closure and impairment expenses $ — $ (1 ) $ 1 $ — Quarter ended 2/29/2016 Total Company KFC Pizza Hut Casual Dining All Other Segments Store closure income (a) $ 2 $ 2 $ — $ — Store impairment charges (2 ) (2 ) — — Closure and impairment expenses $ — $ — $ — $ — (a) Store closure income include proceeds from forced store closures, 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. Remaining lease obligations for closed stores were not material at February 28, 2017 or December 31, 2016. |
Other Income, Net
Other Income, Net | 2 Months Ended |
Feb. 28, 2017 | |
Other Income And Expenses [Abstract] | |
Other Income, Net | Note 7 – Other Income, net Quarter ended 2/28/2017 2/29/2016 Equity income from investments in unconsolidated affiliates $ 17 $ 16 Foreign exchange net loss and other — (1 ) Other income, net $ 17 $ 15 |
Supplemental Balance Sheet Info
Supplemental Balance Sheet Information | 2 Months Ended |
Feb. 28, 2017 | |
Supplemental Balance Sheet Information Disclosure [Abstract] | |
Supplemental Balance Sheet Information | Note 8 – Supplemental Balance Sheet Information Accounts Receivable, net 2/28/2017 12/31/2016 Accounts receivable, gross $ 70 $ 76 Allowance for doubtful accounts (2 ) (2 ) Accounts receivable, net $ 68 $ 74 Prepaid Expenses and Other Current Assets 2/28/2017 12/31/2016 Prepaid rent $ 40 $ 39 Other prepaid expenses and current assets (a) 129 81 Prepaid expenses and other current assets $ 169 $ 120 ( a ) Includes receivables of $8 million and $16 million due from payment processors or aggregators as of February 28, 2017 and December 31, 2016, respectively. Property, Plant and Equipment 2/28/2017 12/31/2016 Buildings and improvements $ 2,072 $ 2,029 Capital leases, primarily buildings 30 29 Machinery and equipment 1,075 1,081 Property, plant and equipment, gross 3,177 3,139 Accumulated depreciation and amortization (1,550 ) (1,492 ) Property, plant and equipment, net $ 1,627 $ 1,647 Accounts Payable and Other Current Liabilities 2/28/2017 12/31/2016 Accounts payable $ 509 480 Accrued capital expenditures 99 132 Accrued compensation and benefits 156 191 Accrued taxes, other than income taxes 24 14 Dividends payable 22 — Other current liabilities 174 154 Accounts payable and other current liabilities $ 984 $ 971 Other Liabilities and Deferred Credits 2/28/2017 12/31/2016 Deferred escalating minimum rent $ 155 $ 153 Other noncurrent liabilities and deferred credits 96 99 Other liabilities and deferred credits $ 251 $ 252 Noncontrolling Interests Noncontrolling interests represent the ownership interests of minority shareholders of the entities that operate KFC restaurants in Beijing and Shanghai, China. A reconciliation of the beginning and ending carrying amount of the equity attributable to noncontrolling interests is as follows: Noncontrolling Interests Balance at December 31, 2016 $ 66 Net income – noncontrolling interests 5 Dividends declared (22 ) Currency translation adjustments 1 Balance at February 28, 2017 $ 50 |
Fair Value Measurements
Fair Value Measurements | 2 Months Ended |
Feb. 28, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 9 – Fair Value Measurements As of February 28, 2017, the carrying values of cash and cash equivalents, short-term investments, accounts receivable and accounts payable approximated their fair values because of the short-term nature of these instruments. In addition, certain of the Company’s assets, such as property, plant and equipment, goodwill and intangible assets, are measured at fair value on a non-recurring basis, if determined to be impaired. During the quarter ended February 28, 2017, we recorded restaurant-level impairment (Level 3) of $2 million. The remaining net book value of the assets measured at fair value as of February 28, 2017, subsequent to these impairments, was not significant. |
Income Taxes
Income Taxes | 2 Months Ended |
Feb. 28, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10 – Income Taxes Quarter ended 2/28/2017 2/29/2016 Income tax provision $ 76 $ 62 Effective tax rate 29.9 % 29.5 % Our effective tax rate is generally lower than the U.S. federal statutory rate of 35% due to the majority of our income being earned in China where the tax rate is lower than the U.S. rate. The slightly higher effective tax rate for the first quarter of 2017 was due to non-deductibility of certain expense items. |
Reportable Operating Segments
Reportable Operating Segments | 2 Months Ended |
Feb. 28, 2017 | |
Segment Reporting [Abstract] | |
Reportable Operating Segments | Note 11 – Reportable Operating Segments We have two reportable operating segments: KFC and Pizza Hut Casual Dining. We also have four non-reportable operating segments, Pizza Hut Home Service, East Dawning, Little Sheep and Taco Bell, which are combined and referred to as All Other Segments, as these operating segments are insignificant both individually and in the aggregate. The following tables summarize Revenues and Operating Profit for each of our reportable operating segments: Quarter ended Revenues 2/28/2017 2/29/2016 KFC $ 896 $ 921 Pizza Hut Casual Dining 339 328 All Other Segments 49 54 Total $ 1,284 $ 1,303 Quarter ended Operating Profit 2/28/2017 2/29/2016 KFC (a) $ 207 $ 191 Pizza Hut Casual Dining 65 39 All Other Segments 4 — Unallocated and corporate expenses (b) (23 ) (24 ) Unallocated Refranchising gain (b) 1 3 Operating Profit $ 254 $ 209 Interest income, net (b) 2 2 Income Before Income Taxes $ 256 $ 211 (a) Includes equity income from investments in unconsolidated affiliates of $17 million and $16 million for the quarters ended February 28, 2017 and February 29, 2016, respectively. (b) Amounts have not been allocated to any segment for performance reporting purposes. |
Contingencies
Contingencies | 2 Months Ended |
Feb. 28, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Contingencies | Note 12 – Contingencies Indemnification of China Tax on Indirect Transfers of Assets In February 2015, the Chinese State Administration of Taxation (“SAT”) issued Bulletin 7 on Income arising from Indirect Transfers of Assets by Non-Resident Enterprises. Pursuant to Bulletin 7, an “indirect transfer” of Chinese taxable assets, including equity interests in a Chinese resident enterprise, by a non-resident enterprise, may be recharacterized and treated as a direct transfer of Chinese taxable assets, if such arrangement does not have reasonable commercial purpose and the transferor has avoided payment of Chinese enterprise income tax. As a result, gains derived from such an indirect transfer may be subject to Chinese enterprise income tax at a rate of 10%. YUM concluded and we concurred that it is more likely than not that YUM will not be subject to this tax with respect to the distribution. However, given how recently Bulletin 7 was promulgated, there are significant uncertainties regarding what constitutes a reasonable commercial purpose, how the safe harbor provisions for group restructurings are to be interpreted and how the taxing authorities will ultimately view the distribution. As a result, YUM’s position could be challenged by Chinese tax authorities resulting in a 10% tax assessed on the difference between the fair market value and the tax basis of the separated China business. As YUM’s tax basis in the China business is minimal, the amount of such tax could be significant. Any tax liability arising from the application of Bulletin 7 to the distribution is expected to be settled in accordance with the tax matters agreement between the Company and YUM. Pursuant to the tax matters agreement, to the extent any Chinese indirect transfer tax pursuant to Bulletin 7 is imposed, such tax and related losses will be allocated between YUM and the Company in proportion to their respective share of the combined market capitalization of YUM and the Company during the thirty trading days after the separation. Such a settlement could be significant and have a material adverse effect on our results of operations and our financial condition. At the inception of the tax indemnity being provided to YUM, the fair value of the non-contingent obligation to stand ready to perform was insignificant and the liability for the contingent obligation to make payment was not probable or estimable. Unconsolidated Affiliates Guarantees From time to time we have guaranteed certain lines of credit and loans of unconsolidated affiliates. As of February 28, 2017, there were no guarantees outstanding for unconsolidated affiliates. Our unconsolidated affiliates had total revenues of approximately $222 million and $250 million for the quarters ended February 28, 2017 and February 29, 2016, respectively, and assets and liabilities of approximately $320 million and $242 million, respectively, at February 28, 2017. Legal Proceedings The Company is subject to various lawsuits covering a variety of allegations from time to time. The Company believes that the ultimate liability, if any, in excess of amounts already provided for these matters in the Condensed Consolidated and Combined Financial Statements, is not likely to have a material adverse effect on the Company’s annual results of operations, financial condition or cash flows. Matters faced by the Company from time to time include, but are not limited to, claims from landlords, employees, customers and others related to operational, contractual or employment issues. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 2 Months Ended |
Feb. 28, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation In connection with our separation from YUM, the direct and indirect equity interests of all of our operating subsidiaries and intermediate holding companies were transferred from YUM to Yum China, when Yum China was still one of YUM’s subsidiaries, through a series of transactions, which were completed in August 2016. The Company separated from YUM on October 31, 2016, becoming an independent publicly traded company as a result of a pro rata distribution of all outstanding shares of Yum China common stock to shareholders of YUM. The financial statements presented herein represent (i) for periods prior to October 31, 2016, the combined financial statements of YUM’s China businesses and operations when Yum China was a wholly owned subsidiary of YUM (referred to as “Condensed Combined Financial Statements”) and (ii) for periods subsequent to October 31, 2016, the consolidated financial statements of the Company as a separate publicly traded company following its separation from YUM (referred to as “Condensed Consolidated Financial Statements” and, together with the Condensed Combined Financial Statements, referred to as the “Condensed Consolidated and Combined Financial Statements”). Our preparation of the accompanying Condensed Consolidated and Combined Financial Statements in conformity with Generally Accepted Accounting Principles in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The accompanying Condensed Combined Financial Statements have been prepared on a standalone basis and are derived from YUM’s consolidated financial statements and underlying accounting records. Transactions between the Company and YUM that were not cash settled were considered to be effectively settled at the time the transactions are recorded. The Condensed Combined Financial Statements include all revenues, costs, assets and liabilities directly attributable to the Company either through specific identification or allocation. The Condensed Combined Statements of Income include allocations for certain of YUM’s Corporate functions which provided a direct benefit to the Company. These costs have been allocated based on Company system sales relative to YUM’s global system sales. System sales includes the sales results of all restaurants regardless of ownership. All allocated costs have been deemed to have been paid to YUM in the period in which the costs were recorded. The Company considers the cost allocation methodology and results to be reasonable for the periods prior to October 31, 2016. However, the allocations may not be indicative of the actual expense that would have been incurred had the Company operated as an independent, publicly traded company for the periods prior to October 31, 2016. Upon the separation, Parent Company Investment was adjusted as a result of settlement of certain assets and liabilities with YUM and formed the Company’s common stock and additional paid-in capital. See Note 3 for further discussion. We have prepared the Condensed Consolidated and Combined Financial Statements in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Condensed Consolidated and Combined Financial Statements include all normal and recurring adjustments considered necessary to present fairly our financial position as of February 28, 2017, and the results of our operations, comprehensive income and cash flows for the quarters ended February 28, 2017 and February 29, 2016. Our results of operations, comprehensive income and cash flows for these interim periods are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the Consolidated and Combined Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 8, 2017. Certain comparative items in the Condensed Consolidated and Combined Financial Statements have been reclassified to conform to the current period’s presentation to facilitate comparison. Our fiscal year ends on December 31. The Company operates on a fiscal monthly calendar, with two months in the first quarter, three months in the second and third quarters and four months in the fourth quarter. |
Transactions with YUM (Tables)
Transactions with YUM (Tables) | 2 Months Ended |
Feb. 28, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of License Fees Paid | Total license fees paid during the quarter ended February 29, 2016 are reflected in the table below: Quarter ended 2/29/2016 Initial fees - Company $ 2 Initial fees - Franchise — Continuing Fees - Company 38 Continuing Fees - Franchise 10 Total $ 50 |
Earnings Per Common Share ("E21
Earnings Per Common Share ("EPS") (Tables) | 2 Months Ended |
Feb. 28, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | The following table summarizes the components of basic and diluted earnings per share: Quarter ended 2/28/2017 2/29/2016 Net Income – Yum China Holdings, Inc. $ 175 $ 145 Weighted-average common shares outstanding (for basic calculation) (a) 387,525,034 363,758,219 Effect of dilutive share-based employee compensation (a) 7,821,987 — Weighted-average common and dilutive potential common shares outstanding (for diluted calculation) 395,347,021 363,758,219 Basic Earnings Per Share $ 0.45 $ 0.40 Diluted Earnings Per Share $ 0.44 $ 0.40 Employee stock options, stock appreciation rights and warrants excluded from the diluted EPS computation (b) 18,448,360 — (a) As a result of the separation, shares of Yum China common stock were distributed to YUM’s shareholders of record as of October 19, 2016 and included in the calculated weighted-average common shares outstanding. Holders of outstanding YUM equity awards generally received both adjusted YUM awards and Yum China awards, or adjusted awards on shares of common stock of either YUM or Yum China in their entirety. Any subsequent exercise of these awards, whether held by the Company’s employees or YUM’s employees, would increase the number of common shares outstanding. The outstanding equity awards are included in the computation of diluted EPS, if there is dilutive effect. (b) These unexercised employee stock options, stock appreciation rights and warrants were not included in the computation of diluted EPS because to do so would have been antidilutive for the quarters presented. |
Items Affecting Comparability22
Items Affecting Comparability of Net Income and Cash Flows (Tables) | 2 Months Ended |
Feb. 28, 2017 | |
Refranchising Gain, Net [Member] | |
Facility Actions [Line Items] | |
Facility Actions | Refranchising Gain, net The Refranchising gain, net by reportable segment and All Other Segments is presented below. We do not allocate such gains and losses to our segments for performance reporting purposes. Quarter ended 2/28/2017 2/29/2016 KFC $ 1 $ 3 Pizza Hut Casual Dining — — All Other Segments — — Total Company $ 1 $ 3 |
Closures and Impairment (Income) Expenses [Member] | |
Facility Actions [Line Items] | |
Facility Actions | Store Closure and Impairment Activity Store closure income and Store impairment charges by reportable segment and All Other Segments are presented below: Quarter ended 2/28/2017 Total Company KFC Pizza Hut Casual Dining All Other Segments Store closure income (a) $ 2 $ 1 $ 1 $ — Store impairment charges (2 ) (2 ) — — Closure and impairment expenses $ — $ (1 ) $ 1 $ — Quarter ended 2/29/2016 Total Company KFC Pizza Hut Casual Dining All Other Segments Store closure income (a) $ 2 $ 2 $ — $ — Store impairment charges (2 ) (2 ) — — Closure and impairment expenses $ — $ — $ — $ — (a) Store closure income include proceeds from forced store closures, 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. Remaining lease obligations for closed stores were not material at February 28, 2017 or December 31, 2016. |
Other Income, Net (Tables)
Other Income, Net (Tables) | 2 Months Ended |
Feb. 28, 2017 | |
Other Income And Expenses [Abstract] | |
Other Income, Net Table | Quarter ended 2/28/2017 2/29/2016 Equity income from investments in unconsolidated affiliates $ 17 $ 16 Foreign exchange net loss and other — (1 ) Other income, net $ 17 $ 15 |
Supplemental Balance Sheet In24
Supplemental Balance Sheet Information (Tables) | 2 Months Ended |
Feb. 28, 2017 | |
Supplemental Balance Sheet Information Disclosure [Abstract] | |
Accounts Receivable, Net | Accounts Receivable, net 2/28/2017 12/31/2016 Accounts receivable, gross $ 70 $ 76 Allowance for doubtful accounts (2 ) (2 ) Accounts receivable, net $ 68 $ 74 |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets 2/28/2017 12/31/2016 Prepaid rent $ 40 $ 39 Other prepaid expenses and current assets (a) 129 81 Prepaid expenses and other current assets $ 169 $ 120 ( a ) Includes receivables of $8 million and $16 million due from payment processors or aggregators as of February 28, 2017 and December 31, 2016, respectively. |
Property, Plant and Equipment | Property, Plant and Equipment 2/28/2017 12/31/2016 Buildings and improvements $ 2,072 $ 2,029 Capital leases, primarily buildings 30 29 Machinery and equipment 1,075 1,081 Property, plant and equipment, gross 3,177 3,139 Accumulated depreciation and amortization (1,550 ) (1,492 ) Property, plant and equipment, net $ 1,627 $ 1,647 |
Accounts Payable and Other Current Liabilities | Accounts Payable and Other Current Liabilities 2/28/2017 12/31/2016 Accounts payable $ 509 480 Accrued capital expenditures 99 132 Accrued compensation and benefits 156 191 Accrued taxes, other than income taxes 24 14 Dividends payable 22 — Other current liabilities 174 154 Accounts payable and other current liabilities $ 984 $ 971 |
Other Liabilities and Deferred Credits | Other Liabilities and Deferred Credits 2/28/2017 12/31/2016 Deferred escalating minimum rent $ 155 $ 153 Other noncurrent liabilities and deferred credits 96 99 Other liabilities and deferred credits $ 251 $ 252 |
Equity Attributable to Noncontrolling Interests, rollforward | A reconciliation of the beginning and ending carrying amount of the equity attributable to noncontrolling interests is as follows: Noncontrolling Interests Balance at December 31, 2016 $ 66 Net income – noncontrolling interests 5 Dividends declared (22 ) Currency translation adjustments 1 Balance at February 28, 2017 $ 50 |
Income Taxes (Tables)
Income Taxes (Tables) | 2 Months Ended |
Feb. 28, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax And Effective Tax Rate | Quarter ended 2/28/2017 2/29/2016 Income tax provision $ 76 $ 62 Effective tax rate 29.9 % 29.5 % |
Reportable Operating Segments (
Reportable Operating Segments (Tables) | 2 Months Ended |
Feb. 28, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following tables summarize Revenues and Operating Profit for each of our reportable operating segments: Quarter ended Revenues 2/28/2017 2/29/2016 KFC $ 896 $ 921 Pizza Hut Casual Dining 339 328 All Other Segments 49 54 Total $ 1,284 $ 1,303 Quarter ended Operating Profit 2/28/2017 2/29/2016 KFC (a) $ 207 $ 191 Pizza Hut Casual Dining 65 39 All Other Segments 4 — Unallocated and corporate expenses (b) (23 ) (24 ) Unallocated Refranchising gain (b) 1 3 Operating Profit $ 254 $ 209 Interest income, net (b) 2 2 Income Before Income Taxes $ 256 $ 211 (a) Includes equity income from investments in unconsolidated affiliates of $17 million and $16 million for the quarters ended February 28, 2017 and February 29, 2016, respectively. (b) Amounts have not been allocated to any segment for performance reporting purposes. |
Description of the Business - N
Description of the Business - Narrative (Details) | Oct. 31, 2016 | Feb. 28, 2017Segment |
Segment Reporting Information [Line Items] | ||
Entity, date of incorporation | Apr. 1, 2016 | |
Entity incorporation, state name | Delaware | |
Expiration term of master license agreement | 50 years | |
Additional consecutive renewal terms of license agreement | 50 years | |
Percentage of license fees on net sales | 3.00% | |
Number of reportable segments | 2 | |
Yum Brands, Inc. [Member] | ||
Segment Reporting Information [Line Items] | ||
Exchange ratio of shares | 1 |
Transactions With YUM (Details)
Transactions With YUM (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended |
Feb. 29, 2016 | Oct. 31, 2016 | |
Related Party Transaction [Line Items] | ||
Percentage of initial fees and continuing fees to company and franchise sales | 3.00% | |
General and administrative expenses [Member] | ||
Related Party Transaction [Line Items] | ||
Corporate expense allocations | $ 3 |
Transactions With YUM (Details
Transactions With YUM (Details 2) $ in Millions | 2 Months Ended |
Feb. 29, 2016USD ($) | |
Transactions With Parent [Abstract] | |
Initial fees - Company | $ 2 |
Continuing Fees - Company | 38 |
Continuing Fees - Franchise | 10 |
Total | $ 50 |
Earnings Per Common Share ("E30
Earnings Per Common Share ("EPS") - Narrative (Details) | Oct. 31, 2016 |
Yum Brands, Inc. [Member] | |
Earnings Per Share [Line Items] | |
Exchange ratio of shares | 1 |
Earnings Per Common Share ("E31
Earnings Per Common Share ("EPS") (Details) - USD ($) $ / shares in Units, $ in Millions | 2 Months Ended | ||
Feb. 28, 2017 | Feb. 29, 2016 | ||
Earnings Per Share [Abstract] | |||
Net Income – Yum China Holdings, Inc. | $ 175 | $ 145 | |
Weighted-average common shares outstanding (for basic calculation) | [1] | 387,525,034 | 363,758,219 |
Effect of dilutive share-based employee compensation | [1] | 7,821,987 | |
Weighted-average common and dilutive potential common shares outstanding (for diluted calculation) | 395,347,021 | 363,758,219 | |
Basic Earnings Per Share | $ 0.45 | $ 0.40 | |
Diluted Earnings Per Share | $ 0.44 | $ 0.40 | |
Employee stock options, stock appreciation rights and warrants excluded from the diluted EPS computation | [2] | 18,448,360 | |
[1] | As a result of the separation, shares of Yum China common stock were distributed to YUM’s shareholders of record as of October 19, 2016 and included in the calculated weighted-average common shares outstanding. Holders of outstanding YUM equity awards generally received both adjusted YUM awards and Yum China awards, or adjusted awards on shares of common stock of either YUM or Yum China in their entirety. Any subsequent exercise of these awards, whether held by the Company’s employees or YUM’s employees, would increase the number of common shares outstanding. The outstanding equity awards are included in the computation of diluted EPS, if there is dilutive effect. | ||
[2] | These unexercised employee stock options, stock appreciation rights and warrants were not included in the computation of diluted EPS because to do so would have been antidilutive for the quarters presented. |
Accumulated Other Comprehensi32
Accumulated Other Comprehensive Income ("AOCI") - Narrative (Details) - USD ($) | 2 Months Ended | ||
Feb. 28, 2017 | Feb. 29, 2016 | Dec. 31, 2016 | |
Equity [Abstract] | |||
Other comprehensive Income (loss) | $ 22,000,000 | $ (22,000,000) | |
Accumulated other comprehensive income | 22,000,000 | $ 1,000,000 | |
Tax effect related to components of other comprehensive income | $ 0 | $ 0 |
Items Affecting Comparability33
Items Affecting Comparability of Net Income and Cash Flows (Details 1) - USD ($) $ in Millions | 2 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Refranchising gain, net | $ 1 | $ 3 |
KFC [Member] | ||
Refranchising gain, net | $ 1 | $ 3 |
Items Affecting Comparability34
Items Affecting Comparability of Net Income and Cash Flows (Details 2) - USD ($) $ in Millions | 2 Months Ended | ||
Feb. 28, 2017 | Feb. 29, 2016 | ||
Facility Actions [Line Items] | |||
Store closure income | [1] | $ 2 | $ 2 |
Store impairment charges | (2) | (2) | |
KFC [Member] | |||
Facility Actions [Line Items] | |||
Store closure income | [1] | 1 | 2 |
Store impairment charges | (2) | $ (2) | |
Closure and impairment expenses | (1) | ||
Pizza Hut Casual Dining [Member] | |||
Facility Actions [Line Items] | |||
Store closure income | [1] | 1 | |
Closure and impairment expenses | $ 1 | ||
[1] | Store closure income include proceeds from forced store closures, 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. Remaining lease obligations for closed stores were not material at February 28, 2017 or December 31, 2016. |
Other Income, Net (Details)
Other Income, Net (Details) - USD ($) $ in Millions | 2 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Other Income And Expenses [Abstract] | ||
Equity income from investments in unconsolidated affiliates | $ 17 | $ 16 |
Foreign exchange net loss and other | (1) | |
Other income, net | $ 17 | $ 15 |
Supplemental Balance Sheet In36
Supplemental Balance Sheet Information (Details) - USD ($) | Feb. 28, 2017 | Dec. 31, 2016 | |
Accounts Receivable, net | |||
Accounts receivable, gross | $ 70,000,000 | $ 76,000,000 | |
Allowance for doubtful accounts | (2,000,000) | (2,000,000) | |
Accounts receivable, net | 68,000,000 | 74,000,000 | |
Prepaid Expenses and Other Current Assets | |||
Prepaid rent | 40,000,000 | 39,000,000 | |
Other prepaid expenses and current assets | [1] | 129,000,000 | 81,000,000 |
Prepaid expenses and other current assets | 169,000,000 | 120,000,000 | |
Accounts Payable and Other Current Liabilities | |||
Accounts payable | 509,000,000 | 480,000,000 | |
Accrued capital expenditures | 99,000,000 | 132,000,000 | |
Accrued compensation and benefits | 156,000,000 | 191,000,000 | |
Accrued taxes, other than income taxes | 24,000,000 | 14,000,000 | |
Dividends payable | 22,000,000 | ||
Other current liabilities | 174,000,000 | 154,000,000 | |
Accounts payable and other current liabilities | 984,000,000 | 971,000,000 | |
Other Liabilities and Deferred Credits | |||
Deferred escalating minimum rent | 155,000,000 | 153,000,000 | |
Other noncurrent liabilities and deferred credits | 96,000,000 | 99,000,000 | |
Other liabilities and deferred credits | $ 251,000,000 | $ 252,000,000 | |
[1] | Includes receivables of $8 million and $16 million due from payment processors or aggregators as of February 28, 2017 and December 31, 2016, respectively. |
Supplemental Balance Sheet In37
Supplemental Balance Sheet Information (Parenthetical) (Details) - USD ($) $ in Millions | Feb. 28, 2017 | Dec. 31, 2016 |
Payment Processors or Aggregators [Member] | ||
Supplemental Balance Sheet Information [Line Items] | ||
Receivables due from third parties | $ 8 | $ 16 |
Supplemental Balance Sheet In38
Supplemental Balance Sheet Information (Details 1) - USD ($) $ in Millions | Feb. 28, 2017 | Dec. 31, 2016 |
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 3,177 | $ 3,139 |
Accumulated depreciation and amortization | (1,550) | (1,492) |
Property, plant and equipment, net | 1,627 | 1,647 |
Buildings and Improvements [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 2,072 | 2,029 |
Capital Leases, Primarily Buildings [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 30 | 29 |
Machinery and Equipment [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 1,075 | $ 1,081 |
Supplemental Balance Sheet In39
Supplemental Balance Sheet Information (Details 2) - USD ($) $ in Millions | 2 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Minority Interest [Line Items] | ||
Stockholders' Equity Attributable to Noncontrolling Interest, Beginning Balance | $ 66 | |
Net income – noncontrolling interests | 5 | $ 4 |
Stockholders' Equity Attributable to Noncontrolling Interest, Ending Balance | 50 | |
Noncontrolling Interests [Member] | ||
Minority Interest [Line Items] | ||
Stockholders' Equity Attributable to Noncontrolling Interest, Beginning Balance | 66 | |
Net income – noncontrolling interests | 5 | |
Dividends declared | (22) | |
Currency translation adjustments | 1 | |
Stockholders' Equity Attributable to Noncontrolling Interest, Ending Balance | $ 50 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) $ in Millions | 2 Months Ended |
Feb. 28, 2017USD ($) | |
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Impairment of Long-Lived Assets Held-for-use | $ 2 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 2 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Income Tax Disclosure [Abstract] | ||
Income tax provision | $ 76 | $ 62 |
Effective tax rate | 29.90% | 29.50% |
Effective Income Tax Rate - Federal Statutory Income Tax Rate, Percent | 35.00% |
Reportable Operating Segments -
Reportable Operating Segments - Narrative (Details) | 2 Months Ended |
Feb. 28, 2017Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Number of non-reportable operating segments | 4 |
Reportable Operating Segments43
Reportable Operating Segments (Details) - USD ($) $ in Millions | 2 Months Ended | ||
Feb. 28, 2017 | Feb. 29, 2016 | ||
Segment Reporting Information [Line Items] | |||
Revenues | $ 1,284 | $ 1,303 | |
Operating Profit | 254 | 209 | |
Unallocated and corporate expenses | [1] | (23) | (24) |
Unallocated Refranchising gain | [1] | 1 | 3 |
Interest income, net | [1] | 2 | 2 |
Income Before Income Taxes | 256 | 211 | |
KFC [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 896 | 921 | |
Operating Profit | [2] | 207 | 191 |
Pizza Hut Casual Dining [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 339 | 328 | |
Operating Profit | 65 | 39 | |
All Other Segments [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 49 | $ 54 | |
Operating Profit | $ 4 | ||
[1] | Amounts have not been allocated to any segment for performance reporting purposes. | ||
[2] | Includes equity income from investments in unconsolidated affiliates of $17 million and $16 million for the quarters ended February 28, 2017 and February 29, 2016, respectively. |
Reportable Operating Segments44
Reportable Operating Segments (Parenthetical) (Details) - USD ($) $ in Millions | 2 Months Ended | |
Feb. 28, 2017 | Feb. 29, 2016 | |
Segment Reporting [Abstract] | ||
Equity income from investments in unconsolidated affiliates | $ 17 | $ 16 |
Contingencies - Narrative (Deta
Contingencies - Narrative (Details) - USD ($) | 1 Months Ended | 2 Months Ended | ||
Feb. 28, 2015 | Feb. 28, 2017 | Feb. 29, 2016 | Dec. 31, 2016 | |
Loss Contingencies [Line Items] | ||||
Income tax rate on gains derived from indirect transfer of assets | 10.00% | |||
Percentage of tax assessed on difference between fair market value and tax basis | 10.00% | |||
Guarantees outstanding of unconsolidated affiliates | $ 0 | |||
Revenues | 1,284,000,000 | $ 1,303,000,000 | ||
Assets | 3,977,000,000 | $ 3,727,000,000 | ||
Debt | 1,347,000,000 | $ 1,284,000,000 | ||
Unconsolidated Affiliates [Member] | ||||
Loss Contingencies [Line Items] | ||||
Revenues | 222,000,000 | $ 250,000,000 | ||
Assets | 320,000,000 | |||
Debt | $ 242,000,000 |